MAURO GANZON v. COURT OF APPEALS and watermelons which caused him to slip and fall.
im to slip and fall. Where Whether or not the common carrier, Philippine Rabbit
GELACIO E. TUMAMBING
G.R. No. L-48757
May 30, 1988
Sarmiento, J.
Facts:
Gelacio Tumambing contracted the services of
Mauro B. Ganzon to haul 305 tons of scrap iron.
Gelacio Tumambing delivered the scrap iron, when
about half was loaded Mayor Jose Advincula of
Mariveles, Bataan, arrived and demanded P5,000.00
from Gelacio Tumambing. The latter resisted the
shakedown.
After sometime, the loading of the scrap iron
was resumed. But acting Mayor Basilio Rub, ordered
the captain to dump the scrap iron where the lighter
was docked. Later on Acting Mayor Rub issued a
receipt stating that the Municipality of Mariveles had
taken custody of the scrap iron.
Issue:
Whether the order by the local government in
taking in custody the scrap iron was due to fortuitous
event?
Held:
No before the appellee Ganzon could be
absolved from responsibility on the ground that he was
ordered by competent public authority to unload the
scrap iron, it must be shown that Acting Mayor Basilio
Rub had the power to issue the disputed order, or that it
was lawful, or that it was issued under legal process of
authority. The appellee failed to establish this.
DEFENSES IN CARRIAGE OF PASSENGERS
G.R. No. 12191. October 14, 1918.
JOSE CANGCO, Plaintiff-Appellant,
v.
MANILA RAILROAD CO., Defendant-Appellee.
Facts:
On January 20, 1915, as the train was drawing near the
San Mateo station, Cangco had already risen from his
seat when before the train came to a full stop, Cangco,
one or both his feet came in contact with a sack of
his right arm was badly crushed and lacerated.
Thereafter, he instituted the action to recover damages
from Manila Railroad Co, on the ground of negligence
of its employees to the prejudice of the safety of
passengers alighting from the company’s trains.
Manila Railroad cannot be held liable because it had
exercised due diligence in the selection of its
employees.
Issue: Whether Manila Railroad is excused from liability
on the ground that it had exercised due diligence in the
selection and control of its employees?
Ruling:
No. It cannot be doubted that the employees of the
railroad company were guilty of negligence in piling the
sacks on the platform in the manner prejudicial to
alighting passengers; and that the presence of such
sacks caused Cangco to fall as he alighted from the
train. Having established such, it necessarily follow that
the defendant company is liable for the damage caused
unless recovery is barred by the plaintiff’s own
contributory negligence.
DEFENSES IN CARRIAGE OF PASSENGERS
G.R. No. L-24471. August 30, 1968
SILVERIO MARCHAN and PHILIPPINE RABBIT Bus
Co., INC., petitioners,
Vs.
ARSENIO MENDOZA, LEONARDA ILAYA, and
ZENAIDA MENDOZA, respondents.
Facts:
While respondents Arsenio Mendoza, were waiting for
a passenger bus they boarded defendants-appellants'
bus. As they travelled along the highway bound for
Manila, said bus was traveling at a high rate of speed
without due regard to the safety of the passengers. As a
result, they met an accident.
Consequently, Arsenio sought to recover damages
against the driver of the Philippine Rabbit Bus Lines,
predicated not only on a breach of contract of carriage
but also on account of a criminal negligence on the part
of defendant Silverio resulting to plaintiff-appellee's
multiple physical injuries.
Issues:
Bus Lines, can be held responsible for injuries of
passengers?
Held:
Yes. Since it is undisputed by the evidence on
record that appellant Marchan was then at the steering
wheel of the vehicle of the defendant transportation
company at that moment, the riding public is not
expected to inquire from time to time before they board
the passenger bus whether or not the driver who is at
the steering wheel of said bus was authorized to drive
said vehicle or that said driver is acting within the scope
of his authority and observing the existing rules and
regulations required of him by the management. To
hold otherwise would in effect render Article 1759 of the
Civil Code ineffective."
G.R. No. L-22272 June 26, 1967
ANTONIA MARANAN, plaintiff-appellant,
vs.
PASCUAL PEREZ, ET AL., defendants.
PASCUAL PEREZ, defendant appellant.
Facts: Rogelio Corachea was a passenger in a taxicab
owned and operated by Pascual Perez when he was
stabbed and killed by the driver, Simeon Valenzuela.
Valenzuela was prosecuted for homicide in the Court of
First Instance of Batangas. Found guilty, he was
sentenced to suffer imprisonment and to indemnify the
heirs of the deceased. Appeal from said conviction was
taken to the Court of Appeals.
Issue: Whether or not Perez is liable for the death of
the passenger Rogelio Corachea?
Held: Yes. Here, the killing was perpetrated by the
driver of the very cab transporting the passenger, in
whose hands the carrier had entrusted the duty of
executing the contract of carriage.
The new Civil Code of the Philippines expressly makes
the common carrier liable for intentional assaults
committed by its employees upon its passengers, under
Art. 1759 of the Civil Code
The basis of the carrier's liability for assaults on
passengers committed by its drivers rests either on (1)
the doctrine of respondeat superior or (2) the principle
that it is the carrier's implied duty to transport the
passenger safely.
G.R. No. L-10195 December 29, 1916
YU CON, plaintiff-appellee, vs.
GLICERIO IPIL, NARCISO LAURON, and
JUSTO SOLAMO, defendants-appellants.
ARAULLO, J.:
FACTS:
On or about the 17th of October, 1911, the plaintiff
chartered the same banca from the defendant
Lauron for the transportation of various
merchandise. On the time scheduled for the
departure from the port of Cebu, said master and
said supercargo both the trunk and the money
disappeared during that same night, and that the
investigations, made to ascertain their
whereabouts, produced no result.
The master Ipil and the supercargo Solamo also
testified that they left the cabin-boy Simeon
Solamo on guard that night; but this affirmation
was not corroborated by Solamo at the trial, for he
was not introduced as a witness.
ISSUE:
Whether or not the defendants are liable
HELD:
Yes, it is unquestionable that the defendants were
the carriers of the said belonging to the plaintiff,
and that they received this sum from the latter for
the purpose of delivering it to the store of the town
of Catmon, to which it had been consigned. Under
such circumstances, said defendants were the
depositaries of the money.
Manila Railroad Company vs. Ballesteros, et
al.
G.R. No. L-19161. April 29, 1966.
MAKALINTAL, J.:
Facts:
Ballesteros et. al were passengers on petitioner’s
bus driven by one Jose Anastacio. However,
when Anastacio stopped the bus and got off to
replace a defective spark plug, one
passenger, Dionisio Abello took the wheel
and told the driver to sit somewhere else. With
Abello driving, the bus proceeded on its way, from
time to time stopping to pick up passengers.
Along the way, the bus and a freight truck driven
by Marcial Nocum encountered resulting in
extensive damages to the body of the bus and
injuries to seventeen of its passengers including
the respondents.
Issue:
Whether or not petitioner may be held liable on
account of such negligence, considering that he
was not its employee.
Ruling:
Yes. Considering the provisions of Article 1763 of
the Civil Code and section 48(b) of the Motor
Vehicle Law. The acts of the bus personnel,
particularly “in allowing Mr. Abello to drive despite
two occasions when the bus stopped and the
regular driver could have taken over, constitute
reckless imprudence and wanton injurious
conduct on the part of the MRR employees
ROSITO Z. BACARRO, WILLIAM SEVILLA, and
FELARIO MONTEFALCON vs. GERUNDIO B.
CASTAÑO, and the COURT OF APPEALS
G.R. No. L-34597 November 5, 1982
FACTS:
Castano boarded the jeep driven by
Montefalcon. The jeep was running quite fast and
while approaching a bridge there was a cargo
truck who blew its horn for a right of way. The jeep
gave way but did not change speed. In so doing
the driver was not able to return the jeep to the
proper place instead, it ran obliquely towards the
canal; that is why, they fell to the ditch.
Castano was pushed by the two passengers
beside him resulting to injuries.
ISSUE:
Did Montefalcon exercised
extraordinary diligence.
RULING:
No. The Supreme Court held that
petitioner-driver Montefalcon did not slacken his
speed but instead continued to run the jeep at
about forty (40) kilometers per hour even at the
time the overtaking cargo truck was running side
by side for about twenty (20) meters. He should
have foreseen that at the speed he was running,
the vehicles were getting nearer the bridge and as
the road was getting narrower the truck would be
too close to the jeep and would eventually
sideswiped it. Otherwise stated, he should have
slackened his jeep when he swerved it to the right
to give way to the truck because the two vehicles
could not cross the bridge at the same time.
Oligario Sy v. Malate Taxi Cab and Garage Inc.
G.R. No. L-8937 November 29, 1957
Endencia, J.
Facts: Sy engaged a taxicab owned and operated by
Malate Taxicab and Garage, Inc. and driven by Catalino
Ermino. At the intersection, the taxi collided with an
army wagon, as a result of which Sy was jammed.
Thereafter, Sy filed an action against the Malate
Taxicab & Garage, Inc., based upon a contract of
carriage, to recover damages. The latter alleged that
the collision subject of the complaint was not due to the
negligence of its driver but to that of Sgt. Jesus Dequito,
the driver of the army wagon.
Issue: Was Malate Taxi Cab and Garage Inc
responsible for the collision?
Ruling: Yes. Under the law, the court need not make
an express finding of fault or negligence on the part of
the defendant appellant in order to hold it responsible to
pay the damages sought for by the plaintiff, for the
action initiated therefore is based on a contract of
carriage and not on tort. When plaintiff rode on
defendant-appellant's taxicab, the latter assumed the
express obligation to transport him to his destination
safely, and to observe extraordinary diligence with a
due regard for all the circumstances, and any injury that
might be suffered by the passenger is right away
attributable to the fault or negligence of the carrier.
[G.R. No. 125138. March 2, 1999]
NICHOLAS Y. CERVANTES, petitioner, vs.
COURT OF APPEALS AND THE PHILIPPINE
AIR LINES, INC., respondent.

FACTS: Private respondent PAL issued to
the herein petitioner, Cervantes, a round trip plane
ticket, which expressly provided an expiry of date of one
year from issuance. On March 23, 1990, four days
before the expiry date of subject ticket, the petitioner
used it. Upon his arrival in Los Angeles on the same
day, he immediately booked his return ticket with the
PAL office, and it was confirmed. On April 2, 1990,
when the petitioner checked in at the PAL counter in
San Francisco, he was not allowed to board. The PAL
personnel did not accept the ticket due to the expiration
of its validity.
ISSUE: (1) Whether or not the act of the
PAL agents in confirming subject ticket extended
the period of validity of petitioner’s ticket;
RULING:
1.) No, the employees of PAL had no
authority to extend the validity or lifetime of the
ticket in question.
Under Article 1898 of the New Civil Code, the acts
of an agent beyond the scope of his authority do
not bind the principal, unless the latter ratifies the
same expressly or impliedly.
Since the PAL agents are not privy to the said
Agreement and petitioner knew that a written
request to the legal counsel of PAL was
necessary, he cannot use what the PAL agents
did to his advantage. The said agents, therefore,
acted without authority when they confirmed the
flights of the petitioner.
OBLIGATIONS OF SHIPPER, CONSIGNEE AND
PASSENGER
EMMA ADRIANO BUSTAMANTE v. THE
HONORABLE COURT OF APPEALS,
FEDERICO DEL PILAR AND EDILBERTO
MONTESIANO
G.R. No. 89880
February 6, 1991
Medialdea, J.
Facts:
A collision occurred between a gravel and
sand truck. Due to the impact, several passengers
of the bus were thrown out and died. The vehicle
was registered in the name of defendant Novelo
but was owned and/or operated as a passenger
bus jointly by defendants Magtibay and Serrado,
under a franchise, which Novelo sold to and which
the latter transferred to Cerrado
The Trial Court reached the conclusion
"that the negligent acts of both drivers contributed
to or combined with each other in directly causing
the accident which led to the death of the
aforementioned persons”
Issue:
Whether the respondent court has
properly applied the doctrine of "last clear chance"
in the present case?
Held:
No, since the case at bar is not a suit
between the owners and drivers of the colliding
vehicles but a suit brought by the heirs of the
deceased passengers against both owners and
drivers of the colliding vehicles.
As the doctrine is usually stated, a person
who has the last clear chance or opportunity of
avoiding an accident is considered in law solely
responsible for the consequences of the accident.
G.R. No. Nos. 66102-04 August 30, 1990
PHILIPPINE RABBIT BUS LINES, INC., Petitioner,
vs.
THE HONORABLE INTERMEDIATE APPELLATE
COURT AND CASIANO PASCUA, ET AL.,
Respondents.
Facts: Catalina Pascua, boarded a jeepney, driven by
Tranquilino Manalo. Upon reaching Tarlac, the right
rear wheel of the jeepney was detached causing it to
run in an unbalanced position. Almost at the same time
when the jeepney made the sudden U-turn, a bus,
owned by Philippine Rabbit Lines, Inc., bumped the
right rear portion of the jeepney. As a result of the
collision, three passengers died while the others
sustained physical injuries.
Issue: Who is liable for the death and physical injuries
suffered by the passengers of the jeepney?
Ruling:
Only the spouses Mangune and Carreon, Manalo and
their insurance are liable to the victims or their heirs for
the damage and loss of life caused.
There’s a presumption that drivers who bump the rear
of another vehicle is considered guilty and is the cause
of the accident. However, the spirit behind the said
presumption is for the driver following a vehicle to be at
all times prepared of a pending accident should the
driver in front suddenly come to a full stop, or change its
course either through change of mind of the front driver,
mechanical trouble, or to avoid an accident.
Here, the u-turn made was abrupt, the jeepney skid to
the other side of the road. Hence, delos Reyes could
not have anticipated the sudden U-turn executed by
Manalo. Moreover, even if the bus was running at a
speed of more or less 50kph at the time of the accident.
G.R. No. 118664. August 7, 1998
JAPAN AIRLINES, petitioner,
vs.
THE COURT OF APPEALS, ENRIQUE AGANA, et. al,
respondents.
FACTS: Private respondents left Los Angeles,
California for Manila. Both flights had a stopover at
Japan, at the airlines' expense, thereafter proceeding to
Manila. The next day, however, due to the Mt. Pinatubo
eruption, there was airline traffic. Hence, the trip gwas
cancelled.
To accommodate the needs of its stranded passengers,
JAL rebooked all passengers and also paid for the hotel
expenses for their unexpected overnight stay. However,
their anticipated flight was again cancelled due to
NAIA's indefinite closure. At this point, JAL informed the
private respondents that it would no longer defray their
hotel and accommodation expense during their stay in
Narita.
Issue:
Whether or not JAL, as a common carrier has the
obligation to shoulder the accomodations of its
stranded passengers, even if the delay were caused by
“force majeure.”?
Held:
No. JAL has no obligation to shoulder the entire hotel
and meal expenses of its stranded passengers even if
the delay were caused by force majeure. Accordingly,
there is no question that when a party is unable to fulfill
his obligation because of “force majeure,” the general
rule is that he cannot be held liable for damages for
non-performance. Corollarily, when JAL was prevented
from resuming its flight to Manila due to the effects of
Mt. Pinatubo eruption, whatever losses or damages
in the form of hotel and meal expenses the stranded
passengers incurred, cannot be charged to JAL.
Extraordinary Diligence in Carriage by Air
G.R. No. 141314 April 9, 2003
REPUBLIC OF THE PHILIPPINES, REPRESENTED
BY ENERGY REGULATORY BOARD, petitioner,
MANILA ELECTRIC COMPANY, respondent.
Facts: Manila Electric Company (MERALCO) filed with
the Energy Regulatory Board (ERB) an application for
the revision of its rate schedules. The application also
included a prayer for provisional approval of the
increase.
The Commission on Audit (COA) conducted an
examination of the books of accounts and records of
MERALCO. Thereafter, ERB adopted the
recommendations of the COA and authorized
MERALCO to adopt a rate adjustment.
Issue: Whether or not MERALCO’s deduction of all
kinds of taxes from the gross revenues of a public utility
is proper?
Held: NO. Public utilities cannot be allowed to
overcharge at the expense of the public and worse,
they cannot complain that they are not overcharging
enough.
Rate regulators should strain to strike a
balance between the clashing interests of the public
utility and the consuming public and the balance must
assure a reasonable rate of return to public utilities
without being unreasonable to the consuming public.
FINALS
1.1
GR No. 1600. June 1, 1906.
THE PHILIPPINE SHIPPING COMPANY ET AL.,
plaintiffs and appellants,
vs. FRANCISCO GARCIA VERGARA, defendant and
appellee.
Facts: Steamship Nuestra Sra. de Lourdes and
steamship Navarra collided, resulting to the entire
loss of their respective cargoes.
The Court construing article 837 of the Code of
Commerce, held that the defendant was not
responsible. Philippine Shipping Company
appealed contending that the extent of the liability
of the owner of the colliding vessel for the
damages is to be determined in accordance with
such value.
Issue: What is the extent of the liability, both of
the agent and of the owner of the vessel?
Ruling: Garcia-Vergara is liable for the
indemnification to which the plaintiff is entitled by
reason of the collision, but he is not required to
pay such indemnification for the reason that the
obligation thus incurred has been extinguished on
account of the loss of the thing bound for the
payment thereof pursuant to Article 837 of the
Code of Commerce.
1.2
G.R. No. 92735. June 8, 2000
MONARCH INSURANCE CO., INC.,
TABACALERA INSURANCE CO., INC. and Hon.
Judge AMANTE PURISIMA, petitioners,
vs.
COURT OF APPEALS and ABOITIZ SHIPPING
CORPORATION, respondents
Facts:
Monarch and Tabacalera are insurance carriers of
lost cargoes. They indemnified the shippers and
were consequently subrogated to their rights,
against Aboitiz, the cargo carrier. Because Aboitiz
refused to compensate Monarch, filed two
complaints against Aboitiz.
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. Aboitiz was
subsequently declared as in default and allowed
Monarch and Tabacalera to present evidence ex-
parte.
Issue:
Whether or not the limited liability rule applies in
this case
Held:
No, the limited liability rule does not apply in this
case.
“No vessel, no liability,” expresses in a nutshell
the limited liability rule. The shipowner’s or agent’s
liability is merely co-extensive with his interest in
the vessel such that a total loss thereof results in
its extinction. 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.
1.3
Aboitiz shipping Corp. V General Accident Fire and
Life Assurance Corporation Ltd. GR No. 100446
FACTS: Aboitiz Shipping is the owner of M/V P. Aboitiz,
a vessel which sank on a voyage from Hongkong to the
Philippines. This sinking of the vessel gave rise to the
recovery of the lost cargo. Board of Marine Inquiry
(BMI), on its initial investigation found that such sinking
was due to force majeure and that subject vessel, at the
time of the sinking was seaworthy.
Due to these different rulings, Aboitiz seeks a
pronouncement as to the applicability of the doctrine of
limited liability on the totality of the claims.
ISSUE: Whether the Limited Liability Rule should
apply?
RULING: 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.
1.4
[G.R. No. 46846; February 3, 1940]
Guison v. Philippine Shipping Co. 69 Phil 536
FACTS: Plaintiff, Guison, owns the steam
launch "Martha" and the defendant Philippine Fish
Company owns the motorboat "Manila X". Both
boats, had a collision which resulted in the boat
the "Martha" sank.
The Lower Court having come to the conclusion
that the collision was due to recklessness and
negligence of the employer of the boat "Manila X"
without any contributory negligence by the pattern
of "Marta" condemn the defendant to pay the
claimed amount. The defendant asked for the
reconsideration for a declaration in accordance
with Article 837 of the Commercial Code, is limited
to the value of your boat.
ISSUE:
Whether the liability of the defendant under the
circumstances is limited to the value of the boat.
HELD:
Yes. Article 837 of the Commercial Code declares
it so strictly. In this sense the Court applied this
provision in the case against Garcia Philippine
Shipping Co., stating that the maritime law is only
true character and limits the liability of the
shipowner to the value of the ship.
1.5
TEODORO R. YANGCO, ETC. Vs. MANUEL
LASERNA, ET AL.
G.R. No. L-47447-47449 ;October 29, 1941
MORAN, J.:
Facts:
Steamer S.S. Negros, left the port of Romblon on
its return trip to Manila. Typhoon signal No. 2 was
then up, which fact the captain was duly advised.
The boat was overloaded. The captain ordered
the vessel to return to port, however, the vessel
was caught sidewise by a big wave which caused
it to capsize and sink. The respondents instituted
separate civil actions against petitioner to recover
damages for the death of the passengers.
Issue: May the shipowner or agent, be properly
held liable?
Ruling: NO, pursuant to Article 587 of the Code
of Commerce accords the shipowner or agent the
right of abandonment; and by necessary
implication, his liability is con to that which he is
entitled as of right to abandon. It is true that the
article appears to deal only with the limited liability
of shipowners or agents for damages arising from
the misconduct of the captain in the care of the
goods which the vessel carries, but this is a mere
deficiency of language and in no way indicates the
true extent of such liability.
1.6 MANILA. STEAMSHIP CO. v.
INSA ABDUL-HAMAN
GR No. L-9534, Sep 29,
1956
FACTS:
The family of Insa Abdulhaman boarded
M/L Consuelo V bound for Siokon. In the evening,
a collision occurred with M/V Bowline Knot. M/L
Consuelo V capsized that resulted to the death of
passengers and the loss of the cargoes on board.
Court of Appeals held that the vessels
are both negligent and solidarily liable to plaintiff
under Article 827 of the Code of Commerce.
ISSUE: Whether petitioner is exempt from any
liability?
RULING:
No. Under Article 827 of the Code of
Commerce, in case of collision between
two vessels imputable to both of them, each
vessel shall suffer her own damage and both
shall be solidarity liable for the damages
occasioned to their cargoes.
1.7 G.R. No. L-773 December 17, 1946
DIONISIA ABUEG, ET AL., plaintiffs-appellees,
vs.
BARTOLOME SAN DIEGO, defendant-appellant.
Padilla, J.
Facts: The M/S San Diego II and the M/S
Bartolome, while engaged in fishing operations
around Mindoro Island were caught by a typhoon
as a consequence of which they sunk and totally
lost.
The real and hypothecary nature of the Maritime
Law, deemed necessary to confine the liability of
the owner or agent from the operation of a ship to
the vessel, equipment, and freight, or insurance, if
any.
Issue: Was the liability of San Diego
extinguished?
Ruling: NO. 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.
1.8
[G.R. No. 110398. November 7, 1997]
NEGROS NAVIGATION CO., INC. vs. THE
COURT OF APPEALS, RAMON MIRANDA,
SPS. RICARDO and VIRGINIA DE LA VICTORIA
FACTS: Private respondent purchased
from the Negros Navigation Co., Inc. four special
cabin tickets for his family. However, a collision
happened. As a result, the M/V Don Juan sank.
Several of her passengers perished in the sea
tragedy.
Private respondents filed a complaint
seeking damages for the death of their family
members.
ISSUE: Whether petitioner is liable for
damages to the full extent.
RULING: YES.

The rule is well-entrenched in our
jurisprudence that a shipowner may be held liable
for injuries to passengers notwithstanding the
exclusively real and hypothecary nature of
maritime law if fault can be attributed to the
shipowner.
1.9 THE PHILIPPINE AMERICAN GENERAL
INSURANCE COMPANY, INC. v. COURT OF
APPEALS
G.R. No. 116940
June 11, 1997
Bellosillo, J.
Facts:
Coca-Cola Bottlers Philippines, Inc., loaded on board
"MV Asilda," a vessel owned and operated by
respondent Felman Shipping Lines, Coca-Cola softdrink
bottles. The shipment was insured with petitioner
Philippine American General Insurance Co., Inc.
However, the vessel sank in the waters.
Thereafter, the consignee Coca-Cola Bottlers
Philippines, Inc., Cebu plant, filed a claim with
respondent Felman for recovery of damages.
Respondent denied the claim thus prompting the
consignee to file an insurance claim with Philamgen
which paid its claim.
Claiming its right of subrogation Philamgen sought
recourse against respondent Felman which disclaimed
any liability for the loss. Consequently, Philamgen sued
the shipowner for sum of money and damages.
Issue:
Whether Philamgen was properly subrogated to the
rights and legal actions which the shipper had against
Felman?
Held:
Yes, generally in every marine insurance policy the
assured impliedly warrants to the assurer that the
vessel is seaworthy and such warranty is as much a
term of the contract as if expressly written on the face of
the policy. The result of the admission of seaworthiness
by the assurer Philamgen is in recognition of the
realistic fact that cargo owners cannot control the state
of the vessel. Thus it can be said that with such
categorical waiver, Philamgen has accepted the risk of
unseaworthiness so that if the ship should sink by
unseaworthiness, as what occurred in this case,
Philamgen is liable.
1.10
PEDRO VASQUEZ, SOLEDAD ORTEGA, CLETO B.
BAGAIPO, AGUSTINA VIRTUDES, ROMEO
VASQUEZ and MAXIMINA CAINAY, petitioners,
vs.
COURT OF APPEALS and FILIPINAS PIONEER
LINES, INC., respondents.
G.R. No. L-42926
September 13, 1985
MELENCIO-HERRERA, J.:
FACTS: When the inter-island vessel MV "Pioneer
Cebu" left the Port of Manila bound for Cebu, it had on
board the spouses Alfonso Vasquez and Filipinas
Bagaipo. The MV "Pioneer Cebu" encountered typhoon
"Klaring" and struck a reef in Malapascua Island and
subsequently sunk. The aforementioned passengers
were unheard from since then.
The parents of the victims (petitioners) seek the
recovery of damages due to the loss of the three
passengers during said voyage. The respondent
Filipinas Pioneer Lines, Inc. alleged that the sinking of
the vessel was caused by force majeure, and that their
liability had been extinguished by the total loss of the
vessel.
ISSUE: Whether or not the loss of the vessel
extinguished the liability of the carrier’s
insurer?
RULING:
No, With respect to private respondent's
submission that the total loss of the vessel extinguished
its liability pursuant to Article 587 of the Code of
Commerce as construed in Yangco vs. Laserna, 73
Phil. 330 [1941], suffice it to state that even in the cited
case, it was held that the liability of a shipowner is
limited to the value of the vessel or to the insurance
thereon. Despite the total loss of the vessel therefore,
its insurance answers for the damages that a shipowner
or agent may be held liable for by reason of the death of
its passengers.
1.12
No. 10195. December 29, 1916.
YU CON, plaintiff and appellee,
vs.
GLICERIO IPIL, NARCISO LAURON, and
JUSTO SOLAMO, defendants and appellants.
Facts:
Yu Con was a merchant engaged in the sale of
cloth and domestic articles. He had several times
chartered from the defendant Narciso Lauron, a
banca named Maria.
A sum of money, was delivered by Yu Con to
Glicerio Ipil and Justo Solamo, master and
supercargo, respectively, of the banca Maria,
which is engaged in the coastwise trade in the
waters of the Philippine Islands, to be carried
together with various merchandise from the port of
Cebu to the town of Catmon of the Province of
Cebu. This money disappeared from said craft,
while it was anchored in the port of Cebu and
ready to sail for its destination, Catmon, and was
not afterwards found. The plaintiff based his
action on the charge that the disappearance of
said sum was due to the negligence.
Issues:
(2) Whether or not the master and supercargo of
vessel is liable for loss of money entrusted to their
care.
Held:
(2) Yes. The Supreme Court held that it was
beyond all doubt that the loss or disappearance,
on the night aforementioned, of the P450, the
property of the plaintiff, which, were in the
possession of the defendants, the master and the
supercargo of the banca Maria,occurred through
the manifest fault and negligence of said
defendants, for, not only did they fail to take the
necessary precautions in order that the stateroom
containing the trunk in which they kept the money
should be properly guarded by members of the
crew and put in such condition that it would be
impossible to steal the trunk from it or that
persons not belonging to the vessel might force
an entrance into the stateroom from the outside,
but also they did not expressly station some
person inside the stateroom for the guarding and
safe-keeping of the trunk.
1.14
RUBISO V. RIVERA 37 PHIL 72

FACTS:
Rubiso filed a complaint against Rivera for the recovery
of a pilot boat. He alleged that he is the rightful
owner of a pilot boat, which was stranded and
recovered by Rivera. The latter refused to return the
said boat as he alleged too that he was the owner
thereof.
It was known that the original owners of the boat had
secretly sold the pilot boat to Rivera on an earlier date
than the sale in a public auction to
Rubiso. Nonetheless, material is the fact that the entry
into the customs registry of the sale of the boat was
later than the recording of the sale to Rubiso.
ISSUE:
Is registration necessary?
HELD:
Yes. The requisite of registration in the registry, of the
purchase of the vessel, is necessary and
indispensable in order that the purchaser’s rights
may be maintained against a third person. Such
registration is required both by the Code of
Commerce and Act 1900. It is undeniable, ergo, that
Rivera doesn’t have a better right than Rubiso over the
pilot boat.
Ships and vessels, whether moved by steam or by
sail, partake, to a certain extent of the nature and
conditions of real property, on account of their value
and importance in world commerce; and for this, the
provisions of the Code of Commerce are nearly
identical with Article 573 of the CC.
1.15 Macondray and Company Inc. vs. Acting
Commissioner of Customs
G.R. No. L-25783 February 25, 1975
ESGUERRA, J.:
Facts:
The vessel S/S TAI PING", of which petitioner is
the local agent, conveying various shipments of
merchandise. The shipment, except the one (1)
coil carbon steel was not reflected in the Inward
Cargo Manifest as required by Section 1005 in
relation to Section 2521 of the Tariff and
Customs Code of the Philippines. Allied
Brokerage Corporation, acting for and in behalf of
Bogo Medellin Milling Co. requested petitioner
Macondray & Co., agent of the vessel S/S TAI
PING", to correct the manifest of the steamer so
that it may take delivery of the goods at Customs
House. Meanwhile, the Collector of Customs
required herein petitioner to explain and show
cause why no administrative fine should be
imposed upon said vessel. Petitioner contends
that the fact the whole shipment was indicated in
the bill of lading, it is clear that the deficiency of
the original vessel's manifest was adequately
supplied by the entries of said bill of lading and,
therefore, no violation of the provision of the Tariff
and Customs Code, was committed."
Issue: Whether or not the inclusion of the
unmanifested cargoes in the Bill of Lading satisfy
the requirement of the aforequoted sections of the
Tariff and Customs Code.
Ruling:
No. The inclusion of the unmanifested cargoes in
the Bill of Lading does not satisfy the requirement
of the aforequoted sections of the Tariff and
Customs Code
It is to be noted that nowhere in the said section is
the presentation of a Bill of Lading required, but
only the presentation of a Manifest containing a
true and accurate description of the cargoes. This
is for the simple reason that while a manifest is a
declaration of the entire cargo, a bill of lading is
but a declaration of a specific part of the cargo
and is a matter of business convenience based
exclusively on a contract. In short, while a bill of
lading is ordinarily merely a convenient
commercial instrument designed to protect the
importer or consignee, a manifest of the cargo is
absolutely essential to the exportation or
importation of property in all vessels, the evident
intent and object of which is to impose upon the
owners and officers of such vessel an imperative
obligation to submit lists of the entire loading of
the ship in the prescribed form, to facilitate the
labors of the customs and immigration officers
and to defeat any attempt to make use of such
vessels to secure the unlawful entry of persons or
things into the country.
1.16 CALTEX (PHILIPPINES), INC. vs SULPICIO
LINES,INC., GO SIOC SO, ENRIQUE S. GO,
EUSEBIO S. GO, CARLOSS. GO, VICTORIANO S.
GO, DOMINADOR S. GO, RICARDO S.GO, EDWARD
S. GO, ARTURO S. GO, EDGAR S. GO, EDMUNDS.
GO, FRANCISCO SORIANO, VECTOR SHIPPING
CORPORATION, TERESITA G. CAÑEZAL AND
SOTERA E.CAÑEZAL
G.R. No. 131166. September 30, 1999
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 passengers. On March 22, 1988,
the board of marine inquiry found that Vector Shipping
Corporation was at fault. The family of the passengers
filed 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.
1.17 Coastwise Lighterage v CA
G.R. No. 114167. July 12,1995
Francisco R. J.
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, while approaching
Pier 18, 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
1
the cargo tanks were contaminated and rendered
unfit for the use it was intended. This prompted
the consignee, Pag-asa Sales, Inc. to reject the
shipment of molasses as a total loss. Thereafter,
Pag-asa Sales, Inc. filed a formal claim with the
insurer of its lost cargo, herein private respondent,
Philippine General Insurance Company (PhilGen,
for short) and against the carrier, herein petitioner,
Coastwise Lighterage. Coastwise Lighterage
denied the claim and it was PhilGen which paid
the consignee, Pag-asa Sales, Inc., the amount of
P700,000.00, representing the value of the
damaged cargo of molasses.
In turn, PhilGen then filed an action against
Coastwise Lighterage before the Regional Trial
Court of Manila, seeking to recover the amount of
P700,000.00 which it paid to Pag-asa Sales, Inc.
for the latter's lost cargo. PhilGen now claims to
be subrogated to all the contractual rights and
claims which the consignee may have against the
carrier, which is presumed to have violated the
contract of carriage.
Issue: First, whether or not petitioner Coastwise
Lighterage was transformed into a private carrier,
by virtue of the contract of affreightment which it
entered into with the consignee, Pag-asa Sales,
Inc. Corollarily, if it were in fact transformed into a
private carrier, did it exercise the ordinary
diligence to which a private carrier is in turn
bound?
Second, whether or not the insurer was
subrogated into the rights of the consignee
against the carrier, upon payment by the insurer
of the value of the consignee's goods lost while on
board one of the carrier's vessels.
Ruling:
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.
On the issue of subrogation, which petitioner
contends as inapplicable in this case, we once
more rule against the petitioner. We have already
found petitioner liable for breach of the contract of
carriage it entered into with Pag-asa Sales, Inc.
However, for the damage sustained by the loss of
the cargo which petitioner-carrier was
transporting, it was not the carrier which paid the
value thereof to Pag-asa Sales, Inc. but the
latter's insurer, herein private respondent PhilGen.
Article 2207 of the Civil Code is explicit on this
point:
Art. 2207. If the plaintiffs property has been
insured, and he has received indemnity from the
insurance company for the injury or loss arising
out of the wrong or breach of contract complained
of, the insurance company shall be subrogated to
the rights of the insured against the wrongdoer or
the person who violated the contract. . . .
This legal provision containing the equitable
principle of subrogation has been applied in a long
line of cases including Compania Maritima v.
Insurance Company of North America Fireman's
Fund Insurance Company v. Jamilla & Company,
Inc. and Pan Malayan Insurance Corporation v.
Court of Appeals wherein this Court explained:
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
privity of contract or upon written assignment of
claim. It accrues simply upon payment of the
insurance claim by the insurer.
Undoubtedly, upon payment by respondent
insurer PhilGen of the amount of P700,000.00 to
Pag-asa Sales, Inc., the consignee of the cargo of
molasses totally damaged while being transported
by petitioner Coastwise Lighterage, the former
was subrogated into all the rights which Pag-asa
Sales, Inc. may have had against the carrier,
herein petitioner Coastwise Lighterage.

1.18
G.R. No. L-51910 August 10, 1989
LITONJUA SHIPPING COMPANY INC. vs.
NATIONAL SEAMEN BOARD and GREGORIO
P. CANDONGO
FACTS: Petitioner Litonjua is the duly
appointed local crewing Managing Office of the
Fairwind Shipping Corporation. The M/V Dufton
Bay is an ocean-going vessel of foreign registry
owned by the R.D. Mullion Ship Broking Agency
Ltd. While the Dufton Bay was under charter by
Fairwind, the vessel's master contracted the
services of private respondent Gregorio
Candongo to serve as Third Engineer for a period
of twelve (12) months. This agreement was
executed before the Cebu Area Manning Unit of
the NSB. Thereafter, private respondent boarded
the vessel. Before expiration of his contract,
private respondent was required to disembark at
Port Kelang, Malaysia, and was returned to the
Philippines. The cause of the discharge was
described in his Seaman's Book as 'by owner's
arrange".
Shortly after returning to the Philippines,
private respondent filed a complaint before public
respondent NSB, for violation of contract, against
Mullion as the shipping company and petitioner
Litonjua as agent of the shipowner and of the
charterer of the vessel.
The hearing officer of the NSB rendered a
judgment by default, thereby ordering R.D. Mullion
Shipbrokers Co., Ltd., and Litonjua Shipping Co.,
Inc., jointly and solidarily to pay Gregorio
Candongo.
Petitioner Litonjua contends that the
shipowner, not the charterer, was the employer of
private respondent; and that liability for damages
cannot be imposed upon petitioner which was a
mere agent of the charterer. It is insisted that
private respondent's contract of employment and
affidavit of undertaking clearly showed that the
party with whom he had contracted was Mullion,
the shipowner, represented by the ship's
master. Petitioner Litonjua thus argues that being
the agent of the charterer and not of the
shipowner, it accordingly should not have been
held liable on the contract of employment of
private respondent.
ISSUE: Whether or not Litonjua may be
held liable to the private respondent on the
contract of employment.
RULING: YES. There are two (2) grounds
upon which petitioner Litonjua may be held liable
to the private respondent on the contract of
employment.
FIRST BASIS:
The first basis is the charter party which
existed between Mullion, the shipowner, and
Fairwind, the charterer. Their agreement is under
a bareboat or demise charter. 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, the Court believes 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.
SECOND BASIS:
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.
There is also no question that petitioner Litonjua
did assist the Master of the vessel in locating and
recruiting private respondent as Third Engineer of
the vessel as well as ten (10) other Filipino
seamen as crew members. 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.
Therefore, private respondent was
properly regarded as an employee of the charterer
Fairwind and that petitioner Litonjua may be held
to answer to private respondent for the latter's
claims as the agent in the Philippines of Fairwind.
ADDITIONAL:
There are three (3) distinguishable types of
charter parties: (a) the "bareboat" or "demise"
charter; (b) the "time" charter; and (c) the
"voyage" or "trip" charter.
A bareboat or demise charter is a demise of a
vessel, much as a lease of an unfurnished house
is a demise of real property. The shipowner turns
over possession of his vessel to the charterer,
who then undertakes to provide a crew and
victuals and supplies and fuel for her during the
term of the charter. The shipowner is not normally
required by the terms of a demise charter to
provide a crew, and so the charterer gets the
"bare boat", i.e., without a crew. Sometimes, of
course, the demise charter might provide that the
shipowner is to furnish a master and crew to man
the vessel under the charterer's direction, such
that the master and crew provided by the
shipowner become the agents and servants or
employees of the charterer, and the charterer
(and not the owner) through the agency of the
master, has possession and control of the vessel
during the charter period.
A time charter, upon the other hand, like a
demise charter, is a contract for the use of a
vessel for a specified period of time or for the
duration of one or more specified voyages. In this
case, however, the owner of a time-chartered
vessel (unlike the owner of a vessel under a
demise or bare-boat charter), retains possession
and control through the master and crew who
remain his employees. What the time charterer
acquires is the right to utilize the carrying capacity
and facilities of the vessel and to designate her
destinations during the term of the charter.
A voyage charter, or trip charter, is simply a
contract of affreightment, that is, a contract for the
carriage of goods, from one or more ports of
loading to one or more ports of unloading, on one
or on a series of voyages. In a voyage charter,
master and crew remain in the employ of the
owner of the vessel.
1.19 PLANTERS PRODUCTS, INC. v. COURT OF
APPEALS
G.R. No. 101503
September 15, 1993
Bellosillo, J.
Facts:
Planters Products, Inc. purchased from Mitsubishi, Urea
fertilizer which the latter shipped in bulk aboard the
cargo vessel M/V "Sun Plum" owned by private
respondent Kyosei Kisen Kabushiki Kaisha. Prior to its
voyage, a time charter-party on the vessel was entered
into between Mitsubishi as shipper/charterer and KKKK
as shipowner.
Upon arrival of the vessel at her port of call, it took
eleven days for PPI to unload the cargo. Thereafter, a
private marine and cargo surveyor, was hired by PPI to
determine the "outturn" of the cargo shipped. The
survey report revealed a shortage in the cargo and that
a portion of the Urea fertilizer was contaminated with
dirt.
Consequently, PPI sent a claim letter to Soriamont
Steamship Agencies, the resident agent of the carrier,
KKKK, of the alleged shortage in the goods shipped
and the diminution in value of that portion said to have
been contaminated with dirt.
Respondent SSA explained that the request was denied
by them because they had nothing to do with the
discharge of the shipment. Hence, PPI filed an action
for damages. 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.
Issues:
(1) Whether a common carrier becomes a private
carrier by reason of a charter-party?
Held:
(1) No, 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. This is evident in the present
case considering that the steering of the ship, the
manning of the decks, the determination of the course
of the voyage and other technical incidents of maritime
navigation were all consigned to the officers and crew
who were screened, chosen and hired by the
shipowner.
1.20
G.R. No. L-10986 March 31, 1917
COMPAGNIE DE COMMERCE ET DE NAVIGATION
D'EXTREME ORIENT, plaintiff-appellant,
vs.
THE HAMBURG AMERIKA PACKETFACHT ACTIEN
GESELLSCHAFT, defendant-appellant.
CARSON, J.:
Warning: Hello taas ang case and lisod siya sabton ☹ I hope masabtan
ni siya :D
COMPAGNIE DE COMMERCE
 plaintiff
 corporation organized in France, with a branch
in Saigon
 Cargo Owner
HAMBURG AMERIKA
 Defendant
 organized in Germany, with a principal office in
Hamburg, Germany and represented in Manila
by Behn, Meyer & Company.
 Shipowner
FACTS: Compagnie De Commerce (plaintiff) alleged
that on June 17, 1914, Hamburg Amerika (defendant)
chartered and hired unto plaintiff the steamship or
vessel called the Sambia for the purpose of carrying a
full cargo of rice, rice bran and cargo meal from the port
of Saigon to the port of Dunkirk and Hamburg, via Suez
Canal, upon the terms and conditions set forth and
contained in the written charter party made and
executed between the said parties. There were rumors
of impending war between Germany and France and
other nations of Europe. The master of the steamship
was told to take refuge at a neutral port (because
Saigon was a French port). Plaintiff asked for
compulsory detention of its vessel to prevent its
property from leaving Saigon. However, the Governor of
Saigon refused to issue an order because he had not
been officially notified of the declaration of the war.
The said steamship sailed from Saigon, having cleared
officially for Dunkirk and Hamburg, but the master and
the agent of said steamship also obtained and took
along a bill of health for Manila, issued by the United
States consul at Saigon. The steamship remained
continuously in Manila and defendant said that it will be
compelled to stay until the war ceases. No attempt was
made on the part of the defendants to transfer and
deliver the cargo to the destinations as stipulated in the
charter party.
The defendant's agent in Manila, Behn, Meyer &
Company offered to purchase the cargo from the
plaintiff, but the latter never received the cable
messages so they never answered. When a survey was
done on the ship, it was found that the cargo was
infested with beetles, so Behn, Meyer & Company
asked for court authority to sell the cargo and the
balance to be dumped at sea. The proceeds of the sale
were deposited in the court, waiting for orders as to
what to do with it. Behn, Meyer & Company wrote the
plaintiff again informing the latter of the disposition
which it made upon the cargo. Plaintiff answered that it
was still waiting for orders as to what to do.
Plaintiff wants all the proceeds of the sale to be given to
them (as damages for the defendants’ failure to deliver
the cargo to the destinations Dunkirk and Hamburg),
while defendants contended that they have a lien on the
proceeds of the sale (amount due to them because of
the upkeep and maintenance of the ship crew and for
commissions for the sale of the cargo).
The trial court ruled in favor of the plaintiffs.
ISSUE: Is Hamburg (defendant) entitled to freight?
*not sure if this is the correct statement of the issue but it’s about
freight, some discussions are about PIL*
RULING: NO.
The claim advanced on behalf of the shipowner for
freights is wholly without merit. Under the terms of
the contract of affreightment, the amount of the
freight was made payable on delivery of the cargo
at the designated port of destination. It is clear
then, that under the terms of that instrument freight
never became payable. Carrying the cargo from
Saigon to Manila was not even a partial
performance of a contract to carry it from Saigon to
Europe; and even it if could be treated as such, the
shipowner would have no claim for freight, in the
absence of any agreement, express or implied, to
make payment for a partial performance of the
contract.
The citation from Carver (section 307) referred to in the
decision of the trial court is as follows:
Should the master relinquish the attempt either to
carry on the goods in his own ship or to send them
to their destination in another ship, he will thereby
wholly abandon any claim for freight in respect to
them, unless it has been made payable in advance,
or irrespective of delivery. Where freight is only
payable on delivery, no part is earned until it is
earned completely. So that whether the abandonment
of the voyage be due to inability, or prevention of the
ship, or to the necessity of selling the goods, either to
raise funds for the ship's repairs or their owner's
interest, the shipowner loses the whole freight.
On the other hand, if the cargo be accepted at the port
of refuge under an agreement that delivery there shall
be treated as a performance by the shipowner of his
contract; or if the owner of the goods, by any act or
default, prevents the shipowner from carrying them on
to their destination, the whole of the freight becomes at
once payable.
Also sometimes the shipowner becomes entitled, by
agreement, on delivery at a port of refuge, to freight in
proportion to the part of the voyage which has been
accomplished. This subject will be discussed more fully
hereafter. Here it is enough to say that no agreement of
this kind can arise, by implication, unless the cargo
owner has consented to accept the goods under
circumstances which left him an option to have them
carried on to their destination by the shipowner, in his
own or some other vessel.
Where the vessel has been abandoned at sea by the
master and crew, without any intention of returning
to her, the freighter is entitled to treat the contract
as abandoned; so that if she be brought into port by
salvors, he may claim the goods without becoming
liable to pay freight.
In The Cito, the Court of Appeal decided that the ship
owner had no claim for freight after the abandonment;
but declined to say that that put an end to the contract
of affreightment. By the abandonment the shipowners
gave the cargo owners a right to elect to treat the
contract as at and end. "We do not decided what would
have been the result if, after the ship had been brought
in as it was by the salvors, and before the cargo owners
had come ion and excercised their right to the cargo,
the shipowners had given bail for the ship and cargo,
and had carried the cargo on.”
Principle from Atty. Bangoy’s Syllabus
 The failure of the captain or master to carry
goods on his ship or to send them to the point
of destination in another vessel resulted in the
abandonment upon any claim for freight
thereon, except where it has been made
payable in advance.
1.21 G.R. No. 96453. August 4, 1999.*
NATIONAL FOOD AUTHORITY, ROSELINDA
GERALDEZ, RAMON SARGAN and ADELINA
A. YAP, petitioners,
vs.
THE HON. COURT OF APPEALS and HONGFIL
SHIPPING CORPORATION, respondents.
Doctrine:
 Deadfreight is the amount paid by or
recoverable from a charterer of a ship for
the portion of the ship’s capacity the latter
contracted for but failed to occupy;
Liability for deadfreight is on the charterer.
 Demurrage is the sum fixed in a charter
party as a renumeration to the owner of
the ship for the detention of his vessel
beyond the number of days allowed by
the charter party for loading or unloading
or for sailing; Liability for demurrage exists
only when expressly stipulated in the
contract.
Facts:
National Food Authority (NFA), thru its officers,
entered into a “Letter of Agreement for
Vessel/Barge Hire” with Hongfil Shipping
Corporation for the shipment of 200,000 bags of
corn grains from Cagayan de Oro City to Manila.
The vessel arrived in Cagayan on February
6,1987 and notified the provincial manager of NFA
in Cagayan about its readiness to load, the latter
received the notification on February 9, 1987.
Later, Gold City Integrated Port Services, Inc.
(INPORT), the arrestre firm in Cagayan, certified
that it’ll take 7 days, 8 hours and 43 minutes to
load the 200,000 bags of NFA corn grains.
However, it took 21 days, 15 hours and 18
minutes to finish because a strike was staged by
the arrastre workers and the stevedores refused
to attend to their work. (Period: Feb 10, 1987-
March 4, 1987)
On March 6, 1987, it was allowed to depart for
Manila. It arrived at Manila on March 11 and a
certification of discharging rate was issued at the
instance of Hongfil stating that it would take 12
days, 6 hours and 22 minutes to discharge the
bags of corn grains.
Unfortunately, unloading only commenced on
March 15, 1987. It took a period of 20 days, 14
hours and 33 minutes to finish the unloading due
to the unavailability of a berthing space for the
vessel. (Period: March 15, 1987-April 4, 1987)
After the discharging was completed, NFA paid
Hongfil the amount of the shipment which was
less than what was stipulated. Hongfil, however,
billed 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.
NFA refused to pay which prompted Hongfil to file
an action action against NFA and its
officers for recovery of deadfreight and
demurrage.
Issues:
(1) Whether NFA can be held liable for the
deadfreight
(2) Whether NFA can be held liable for the
demurrage
Ruling:
LIABILITY ON DEADFREIGHT
1. Yes. NFA is liable for the deadfreight.
Under the law, the cargo not loaded is
considered as deadfreight. It is the amount paid
by or recoverable from a charterer of a ship for the
portion of the ship’s capacity the latter contracted
for but failed to occupy. Explicit and succinct is the
law that the liability for deadfreight is on the
charterer. The law in point is Article 680 of the
Code of Commerce, which provides:
“Art. 680. A charterer who does not
complete the full cargo he bound himself to
ship shall pay the freightage of the amount
he fails to ship, if the captain does not take
other freight to complete the load of the
vessel, in which case the first charterer shall
pay the difference, should there be any.”
NFA based their contention on the phrase
200,000 bags more or less meaning, NFA can
only pay for the amount which is actually
unloaded, and in this instance, less than 200,000
bags. The SC held that such contention is
untenable. The words “more or less” when used in
relation to quantity or distance, are words of
safety and caution, intended to cover some slight
or unimportant inaccuracy. It allows an adjustment
to the demands of circumstances which do not
weaken or destroy the statements of distance and
quantity when no other guides are available.
Moreover, the letter of agreement between NFA
and Hongfil covered 200,000 bags of corn grains
but only 166,798 bags were unloaded at the Port
of Manila. Consequently, shut-out load or
deadfreight of 33,201 bags at P7.30 per bag or
P242,367.30 should be paid by NFA to Hongfil
Shipping Corporation.
LIABILITY ON THE DEMURRAGE
2. No. NFA is not liable for the demurrage.
Demurrage is the sum fixed in a charter party as a
renumeration to the owner of the ship for the
detention of his vessel beyond the number of days
allowed by the charter party for loading or
unloading or for sailing. Liability for demurrage,
using the word in its strict technical sense, exists
only when expressly stipulated in the contract.
Shipper or charterer is liable for the payment of
demurrage claims when he exceeds the period for
loading or unloading as agreed upon or the
agreed “laydays.” The period for such may or may
not be stipulated in the contract. A charter party
may either provide for a fixed laydays or contain
general or indefinite words such as “customary
quick dispatch” or “as fast as the steamer can
load.”
In this case, the charter party provides merely for
a general or indefinite words of “customary quick
dispatch.”
The stipulation “Laydays (Loading and
Unloading): Customary Quick Dispatch” implies
that loading and unloading of the cargo should be
within a reasonable period of time. Due diligence
should be exercised according to the customs and
usages of the port or ports of call. The
circumstances obtaining at the time of loading and
unloading are to be taken into account in the
determination of “Customary Quick Dispatch.”
What is a reasonable time depends on the
existing as opposed to normal circumstances, at
the port of loading and the custom of the port.
While what was certified to by the arrastre did not
tally with the actual period of loading and
unloading, it appears that the cause of delay was
not imputable to either of the parties. The cause of
delay during the loading was the strike staged by
the crew of the arrastre operator, and the
unavailability of a berthing space for the vessel
during the unloading. The lack of a berthing space
was understandable under the circumstances
since the North Harbor in Manila, where the
unloading took place, is a large port but there was
congestion due to the number of ships or vessels
which were all waiting to dock.
Delay in loading or unloading, to be deemed
as a demurrage, runs against the charterer as
soon as the vessel is detained for an
unreasonable length of time from the arrival of
the vessel because no available berthing space
was provided for the vessel due to the negligence
of the charterer or by reason of circumstances
caused by the fault of the charterer.
In the present case, charterer NFA could not
be held liable for demurrage for the delay
resulting from the aforementioned
circumstances. The provision “Laydays:
Customary Quick Dispatch” invoked by Hongfil is
unavailing as a basis for requiring the charterer to
pay for demurrage absent convincing proof that
the time for the loading or unloading in question
was beyond the “reasonable time” within the
contemplation of the charter party. Here, the
Supreme Court holds that the delay sued upon
was still within the “reasonable time” embraced in
the stipulation of “Customary Quick Dispatch.”
Furthermore, the subject contract of affreightment
contains an express provision
“Demurrage/Dispatch: NONE,” the same left the
parties with no other recourse but to apply the
literal meaning of such stipulation. The cardinal
rule is that where, as in this case, the terms of the
contract are clear and leave no doubt over the
intention of the contracting parties, the literal
meaning of its stipulations is controlling.
The provision “Demurrage/Dispatch: NONE”
can be interpreted as a waiver by Hongfil of
the right to claim for demurrages. Waiver is a
renunciation of what has been established in favor
of one or for his benefit, because he prejudices
nobody thereby; if he suffers loss, he is the one to
blame. As Hongfil freely entered into subject
charter party which providing for
“Demurrage/Dispatch: NONE,” it cannot escape
the inevitable consequence of its inability to
collect demurrage. Well-settled is the doctrine that
a contract between parties which is not contrary to
law, morals, good customs, public order or public
policy, is the law binding on both of them.
1.22
No. 4395. September 9, 1908.
BEHN, MEYER & Co., LTD., plaintiffs and appellees,
vs.
EL. BANCO ESPAÑOL-FILIPINO, defendant and
appellant.
Facts:
On November 3, 1906, Sander, Wieler & Co., as agents
for the German steamship Hilary, chartered her to the
interveners, Siu Liong & Co., of Manila. Ullman acted as
agent for Pujalte & Co., of Manila. This firm had made a
contract with the interveners for the transportation from
Phu Yen Harbor to Manila of 200 head of cattle.
Upon the arrival of the ship there on the November 18,
Ullman was all ready to proceed with the loading. He
went on board the vessel the afternoon of her arrival
and told the captain that he was prepared to load 202
head of cattle. One hundred and fifty of these were
cows and 52 carabaos. The captain told him that he
might load the cows, but that he could not load the
carabaos. At that time, the weather was fine and
continued so until about 10 o’clock the morning of the
19th.
The weather was then very stormy and he did not
succeed in getting on board until half past 1 in the
afternoon. The captain then consented to receive the
carabaos on board. The weather, however, was so
bad that they could not be shipped, and it remained
in this condition from that time until the 27th, when the
ship sailed for Manila without the cattle.
On November 26, he made demand on Ullman for 30
tons of fresh water, saying that Ullman would not
be permitted to ship his cattle unless he brought
with them that amount. Ullman stated that he was
unable to do so. On November 27, the captain wrote a
letter to Ullman telling him that he saw that it was
impossible for him to load the cattle or to bring the
water, and that he would leave that afternoon for
Manila, which he did.
On December 3, the vessel arrived in Manila. By the
terms of the charter party, the freight for the voyage
from Saigon to Manila, which was 9,250 Hong Kong
dollars, was to be paid on or before the delivery of the
cargo and cattle at Manila.
The charterers refused to pay it; application was then
made by Behn, Meyer & Co. to the defendant bank, and
it refused to pay, saying that the damages they suffered
is caused by the violation on the part of the captain of
the terms of the charter party in refusing to receive the
cattle on board at Phu Yen on the 19th day of
November.
Issue:
Whether or not the refusal of the captain was a violation
of the terms of the charter party
Held:
Yes. The captain violated the terms of the charter party
in refusing on November 8 to receive on board the
carabaos which Ullman then had ready to embark. If the
captain had agreed to take the carabaos on board when
he was first asked to, he would have left Phu Yen on
the 19th in the afternoon. The evidence shows that the
journey from Phu Yen to Manila is one of about four
days, and if he had left on the 19th he would have had
on board plenty of water for his trip to Manila. Moreover,
there was evidence undisputed that, although by the
terms of the charter party the charterers were bound to
pay for the water, yet it was the universal custom for the
captain to furnish the water and charge the charterers
therefor.
It was proven that they had made a contract with
Pujalte & Co., by the terms of which they had agreed to
transport 200 head of cattle from Phu Yen to Manila in
this boat and were to receive therefor P12 for each cow
and P13 for each carabao. Pujalte & Co. had ready for
transportation 202 head of cattle and the testimony was
that, although the contract mentioned 200, yet they had
a right thereunder to transport 200, or 202, or 204. This
freight, amounting to P2,476, the charterers have never
received from Pujalte & Co., and of course have no
claim against them therefor. Their failure to receive it
was directly due to the violation of the terms of the
contract by the captain in his refusal to take the cattle
on board when they were ready to be shipped, and that
violation was the direct and.proximate cause of the loss
to the charterers of this P2,476.
If the captain had complied with the contract and loaded
the cattle at Phu Yen when he should have done so, not
more than two days would have been used there. Not
more than three days were used in unloading here. The
time employed at Iloilo does not appear and in no event
could that be considered, for that voyage was the
subject of a special contract. So that even if the delay
from the 24th of November to the 27th be charged to
the charterers, no more than nine days were consumed,
which was the time allowed by the charter party.
2.1
G.R. No. L-6393 January 31, 1955
A. MAGSAYSAY INC., plaintiff-appellee,
vs.
ANASTACIO AGAN, defendant-appellant.
Facts: Plaintiff's vessel, S S "San Antonio", left Manila
bound for Basco, Batanes, vis Aparri, Cagayan, with
general cargo belonging to different shippers, among
them the belonged to defendant.
The vessel reached Aparri, Cagayan. 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.
Plaintiff avers that the expenses incurred in floating the
vessel constitute general average to which both ship
and cargo should contribute. Hence, plaintiff brought
the present action in the Court of First Instance of
Manila to make defendant pay his contribution.
Defendant, in his answer, denies liability to his amount,
alleging, among other things, that the stranding of the
vessel was due to the fault, negligence and lack of skill
of its master, that the expenses incurred in putting it
afloat did not constitute general average, and that the
liquidation of the average was not made in accordance
with law.
The CFI ruled in favor of the plaintiff, hence prompting
the defendant to appeal the case to the Supreme Court
Issue: Whether or not allowing the general average for
floating the vessel was proper?
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.
With respect to the first requisite, the evidence does not
disclose that the expenses sought to be recovered from
defendant were incurred to save vessel and cargo from
a common danger. The vessel ran aground in fine
weather inside the port at the mouth of a river, a place
described as "very shallow". In the present case there is
no proof that the vessel had to be put afloat to save it
from imminent danger.
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.
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.
Additional Discussion on General Averages:
The law on averages is contained in the Code
of Commerce. Under that law, averages are classified
into simple or particular and general or gross. Generally
speaking, simple or particular averages include all
expenses and damages caused to the vessel or cargo
which have not inured to the common benefit (Art. 809),
and are, therefore, to be borne only by the owner of the
property gave rise to same (Art. 810); while general or
gross averages include "all the damages and expenses
which are deliberately caused in order to save the
vessel, its cargo, or both at the same time, from a real
and known risk" (Art. 811). Being for the common
benefit, gross averages are to be borne by the owners
of the articles saved (Art. 812).
In classifying averages into simple o particular
and general or gross and defining each class, the Code
(Art. 809 and 811) at the same time enumerates certain
specific cases as coming specially under one or the
other denomination. Going over the specific cases
enumerated we find that, while the expenses incurred in
putting plaintiff's vessel afloat may well come under
number 2 of article 809-which refers to expenses
suffered by the vessel "by reason of an accident of the
sea of the force majuere" — and should therefore be
classified as particular average, the said expenses do
not fit into any of the specific cases of general average
enumerated in article 811. No. 6 of this article does
mention "expenses caused in order to float a vessel,"
but it specifically refers to "a vessel intentionally
stranded for the purpose of saving it" and would have
no application where, as in the present case, the
stranding was not intentional.
2.2
G.R. No. L-11515 July 29, 1918
INTERNATIONAL HARVESTER COMPANY IN
RUSSIA, plaintiff-appellee,vs.
HAMBURG-AMERICAN LINE, defendant-appellant.
Crossfield & O'Brien for appellant.
Lawrence & Ross for appellee.
 STREET, J.:
FACTS:
International Harvester delivered to the Hamburg-
American Line a large consignment of agricultural
machinery, to be delivered to the order of the consignor
at Vladivostock, Russia. Shipment to be transported
from Baltimore, Maryland to Hamburg, Germany.
The bill of lading provided, among other things, that
the goods should be forwarded by Hamburg-American
Line from Hamburg to Vladivostock at the ship’s
expense but at the risk of the owner of the goods. It was
also provided that goods thus destined for points
beyond Hamburg should be subject to the terms
expressed in the customary form of bill of lading in use
at the time of shipment by the carrier completing the
transit.
When the shipment arrived at Hamburg the carrier
company transferred the cargo to the Suevia, a ship of
its own line, and issued to itself therefor, as forwarding
agent, another bill of lading in the customary form in
use in the port of Hamburg, covering the transportation
from Hamburg to Vladivostock.
While the ship was en route to Russia, war broke out in
Europe; and as the Suevia was a German vessel, the
master considered it necessary to take refuge in the
nearest neutral port, which happened to be Manila.
Accordingly the ship was put into this harbor on August
1914. International Harverster in January, 1915, made
demand upon Hamburg-American Line in Manila that it
should forward the cargo to Vladivostock.
This Hamburg-American refused to do except upon the
condition that International Harvester would agree to
subject said cargo to liability upon general average to
satisfy the costs and expenses of the Suevia incident to
its stay in the port of Manila. International Harvester
refused.
Hamburg-American Line offered to deliver the cargo
provided the owner would deposit with Hamburg-
American Line a sum of money equivalent to 20% of the
value of said cargo, as security for the costs and
expenses to be adjusted as general average. The costs
and expenses amounted to P63,024.50, which included
port charges, repairs, and wages and maintenance of
officers and crew.
International Harvester instituted an action in the CFI of
Manila. Meanwhile, International Harvester obtained the
delivery of the property from the Suevia by means of a
writ of replevin and forwarded it to Vladivostock by
another steamer.
Hamburg-American Line denies liability for damages
and asserts that it has a lien on the property for general
average.
CFI: Ruled in favor of International Harvesting.
ISSUES:
(1) Whether the cargo is liable to be made to contribute,
by way of general average, to the costs and expenses
incurred by reason of the internment of the Suevia in
the port of Manila.
(2) Whether the defendant is liable for the expenses of
transferring the cargo to another ship and transporting it
to the port of destination.
ISSUE 1:
NO. Cargo not liable to general average; No
common danger to ship and cargo
Herein, it is not claimed that the agricultural machinery
was contraband of war; and being neutral goods, it was
not liable to forfeiture in the event of capture by the
enemies of the ship’s flag. It follows that when the
master of the Suevia decided to take refuge in the port
of Manila, he acted exclusively with a view to the
protection of his vessel. There was no common danger
to the ship and cargo; and therefore it was not a case
for a general average.
“When a ship shall have entered a port of refuge in
consequence of accident, sacrifice, or other
extraordinary circumstance which renders that
necessary for the common safety, the expense of
entering such port shall be admitted as general
average.” (Section 10, York-Antwerp Rules)
ISSUE 2:
YES. Hamburg-American Line is liable for the
expenses incident to the transhipment and conveyance
of the cargo to Vladivostock. The original bill of lading
issued to the shipper in Baltimore contained the
provision that the goods should be forwarded from
Hamburg to Vladivostock at the steamer’s expense.
Outbreak of war between Germany and Russia
would have absolved carrier from contract of
affreightment, if not for the latter’s terms
The outbreak of the war between Germany and Russia
undoubtedly absolved Hamburg-American Line from so
much of the contract of affreightment as required
Hamburg-American Line to convey the goods to
Vladivostock upon the ship on which it was embarked.
But by the terms of the contract of affreightment,
Hamburg-American Line was bound to forward the
cargo to Vladivostock at the steamer’s expense, not
necessarily by a steamer belonging to it; and thus
Hamburg American Line is liable for the expenses
incurred by the owner in completing the unfinished
portion of the voyage in another ship.
Election to discharge at another port not made by
master
Under paragraph X of the bill of lading, the master is
given the election to discharge at another port, if war
should interfere with the completion of the voyage to the
port of destination. No such election has been made by
the master. On the contrary, after arrival in Manila, he
refused to discharge the goods, and must be held to
have elected to retain them, leaving the obligations of
the contract intact.
Stipulations exempting a shipowner from liability
construed against it
Stipulations, in a bill of lading exempting a shipowner
from the liability which would ordinarily attach to him
under the law are to be strictly construed against him.
This rule should be applied all the more in a case where
the bill of lading under which the exemption is claimed
was issued by Hamburg-American Line to itself.
2.3
2.4
EASTERN SHIPPING LINES, INC. V. MARGARINE-
VERKAUFS-UNION GMBH – G.R. NO. L-31087 – 93
SCRA 257
Facts:
MARGARINE-VERKAUFS-UNION, a corporation not
engaged in business in the Philippines, was the
consignee of copra in bulk shipped from Cebu on board
EASTERN SHIPPING LINES’s vessel for discharge at
Hamburg, Germany. Petitioner’s bill of lading for the
cargo provided that the contract shall be governed by
the laws of the Flag of the Ship carrying the goods. In
case of average, same shall be adjusted according to
York-Antwerp Rules. While the vessel was off Gibraltar,
a fire broke out aboard the and caused water damage
to the copra. EASTERN SHIPPING LINES rejected
MARGARINE-VERKAUFS-UNION GmbH ‘s claim for
payment.
Issue:
Should Article 848 of the Code of Commerce govern
this case despite the bill of lading which expressly
contained for the application of the York-Antwerp Rules
which provide for MARGARINE-VERKAUFS-UNION
GmbH’s fun recovery of the damage loss?
Held:
No. We hold that the lower court correctly ruled the
cited codal article to be not applicable in this particular
case for the reason that the bill of lading contains an
agreement to the contrary. There is a clear and
irreconcilable inconsistency between the York-Antwerp
Rules expressly adopted by the parties as their contract
under the bill of lading which sustains Eastern’s claim
and the codal article cited by Margarine which would
bar the same.
what is here involved is a contract of adhesion as
embodied in the printed bill of lading issued by
petitioner for the shipment to which respondent as the
consignee merely adhered, having no choice in the
matter, and consequently, any ambiguity therein must
be construed against petitioner as the author.
The Court finds no error and upholds the lower court's
ruling sustaining respondent's damage claim although
the amount thereof did not exceed 5% of respondent's
interest in the cargo and would have been barred by the
cited article of the Commerce Code. We hold that the
lower court correctly ruled the cited codal article to be
"not applicable in this particular case for the reason that
the bill of lading (Exhibit "F") contains "an agreement to
the contrary" for it is expressly provided in the last
sentence of the first paragraph (Exhibit "1-A") that "In
case of average, same shall be adjusted according to
York-Antwerp Rules of 1950." The insertion of said
condition is expressly authorized by Commonwealth Act
No. 65 which has adopted in toto the U.S. Carriage of
Goods by Sea Act. Now, it has not been shown that
said rules limit the recovery of damage to cases within a
certain percentage or proportion that said damage may
bear to claimant's interest either in the vessel or cargo
as provided in Article 848 of the Code of Commerce On
the contrary, Rule 3 of said York-Antwerp Rules
expressly states that "Damage done to a ship and
cargo, or either of them, by water or otherwise,
including damage by breaching or scuttling a burning
ship, in extinguishing a fire on board the ship, shall be
made good as general average. ... "
2.5
2.6
[G.R. No. 18957. January 16, 1923. ]
THE GOVERNMENT OF THE PHILIPPINE ISLANDS
v. PHILIPPINE STEAMSHIP CO., INC., and
FERNANDEZ HERMANOS
1. ADMIRALTY AND MARITIME LAW; COLLISION;
SOLIDARY LIABILITY OF COLLIDING VESSELS. —
Under articles 827 and 828 of the Code of Commerce,
in case of a collision between two vessels at sea, both
are solidarily liable for the loss of cargo carried by
either, not only in the case where both vessels may be
shown to be actually blameworthy but also in the case
where it is obvious that only one was at fault but the
proof does not show which.
2. ID.; ID.; ID.; RESPONSIBILITY OF VESSEL
SURVIVING COLLISION. — Where two ships
approaching each other at sea are both negligently
managed, with the result that a collision occurs and one
is sunk with total loss of both ship and cargo, the owner
of the other vessel is liable to any shipper of cargo
aboard the sunken vessel to the full extent of the value
thereof; and it makes no difference that the negligence
imputable to the two vessels may have differed
somewhat in character and degree and that the
negligence of the sunken ship was somewhat more
marked than that of the other.
FACTS: In this action the Government of the
Philippine Islands seeks to recover the sum of
P14,648.25, the alleged value of 911 sacks of rice
which were lost at sea as a result of a collision between
the steamer Antipolo, owned by the defendant
company, and the vessel Isabel, upon which said rice
was embarked.
At about 10 o’clock at night on February 10,
1920, the coastwise vessel Isabel left the port of Manila
with primary destination to Balayan, Batangas, carrying,
among its cargo, 911 sacks of rice belonging to the
plaintiff. After the boat had passed the San Nicolas
Light near the entrance into Manila Bay, the watch and
the mate on the bridge of the Isabel discerned the light
of another vessel, which proved to be the Antipolo,
also a coastwise vessel, on its way to Manila and
coming towards the Isabel. At about the same time both
the watch and mate on the bridge of the Antipolo also
saw the Isabel, the two vessels being then about one
mile and a half or two miles apart. Each vessel was
going approximately at the speed of 6 miles an hour,
and in about ten minutes they had together traversed
the intervening space and were in close proximity to
each other.
When the mate of the Antipolo, who was then
at the wheel, awoke to the danger of the situation and
saw the Isabel "almost on top of him," he put his helm
hard to the starboard. However, the mate on the Isabel
placed his own helm hard to port, with the result that his
boat veered around directly in the path of the other
vessel and a collision became inevitable. Upon this the
mate on the Antipolo fortunately stopped his engines,
but the Isabel continued with full speed ahead, and the
two vessels came together near the bows. The Isabel
immediately sank, with total loss of vessel and cargo,
though the members of her crew were picked up from
the water and saved.
The CFI rendered judgment for full recovery of the
amount claimed by the plaintiff from the Philippine
Steamship Company, with interest from the date of the
filing of the complaint. Hence this appeal.
ISSUE: Whether or not defendant Philippine
Steamship Company is liable to pay the petitioner.
RULING: YES. The trial judge was entirely right in
finding that negligence was imputable to both vessels,
though differing somewhat in character and degree with
respect to each. The mate of the Antipolo was clearly
negligent in having permitted that vessel to
approach directly towards the Isabel until the two
were in dangerous proximity. Negligence shortly
preceding the moment of collision is, however,
undoubtedly chargeable to the Isabel, for the incorrect
and incompetent way in which this vessel was then
handled.
It results that both vessels were at fault;
and although the negligence on the part of the mate
of the incoming vessel preceded the negligence on
the part of the mate of the outgoing vessel by an
appreciable interval of time, the first vessel cannot
on that account be absolved from responsibility.
Indeed, in G. Urrutia & Co. v. Baco River Plantation
Co., supra, the Supreme Court found reason for holding
that the responsibility rested exclusively on a steamer
which had allowed dangerous proximity to a sailing
vessel to be brought about under somewhat similar
conditions.
The trial judge committed no error in holding
that both vessels were to blame and in applying article
827 of the Code of Commerce to the situation before
him. It is there declared that where both vessels are to
blame, both shall be solidarily responsible for the
damage occasioned to their cargoes. As the Isabel
was a total loss and cannot sustain any part of this
liability, the burden of responding to the
Government of the Philippine Islands, as owner of
the rice embarked on the Isabel, must fall wholly
upon the owner of the other ship, that is, upon the
defendant, the Philippine Steamship Company, Inc.
2.7
GORGONIO DE SARASOLA v. YU BIAO SONTUA
G.R. No. L-22630
January 31, 1925
Johns, J.
Facts:
Motorboat Mercedes entered the Manila Bay. It
navigated in the direction of the lighthouse, several
minutes thereafter it was struck by the steamship Y.
Sontua, and as a result of the collision it suffered
damages by reason of which it sank within half an hour.
The Court held that from what has been said the
negligence of the Y. Sontua was the primary cause of
the accident, and that the Mercedes was guilty of
contributory negligence in failing to maintain its course,
and that the case comes under the provisions of article
827.
However, plaintiff has filed a petition for a rehearing in
which he contended that there is no evidence that if the
Mercedes had remained true to its course, there would
not have been any collision, and that for such reason
article 827 of the Code of Commerce is not in point.
Issue:
Whether both vessels will be held liable for the collision
which resulted from both vessels’ negligence pursuant
to Article 827 of the Code of Commerce?
Held:
Yes, the court said that in this case we have this
situation wherein one vessel is going out of the bay and
the other coming in ; each on its own course. If both
had followed their respective course there would have
been a full clearance and no collision. That the officers
on the one vessel at a distance of two or three miles
could clearly see the course and maneuvers of the
other vessel. The Y. Sontua changed its course which
was the primary cause of the collision. Even so, if the
Mercedes had remained true to its course, there would
have been a full clearance. It appears from the physical
facts that by the aid of natural light, at the time of and
prior to the collision, either vessel could be clearly and
distinctly seen for a considerable distance.
Pursuant to Article 827 of the Code of Commerce
If both vessels may be blamed for the collision,
each one shall be liable for his own damages,
and both shall be jointly responsible for the
losses and damages suffered by their cargoes.
2.8
LUZON STEVEDORING CORPORATION, petitioner,
vs.
COURT OF APPEALS, HIJOS DE F. ESCANO, INC.,
and DOMESTIC INSURANCE COMPANY OF THE
PHILIPPINES, respondents.
G.R. No. L-58897 December 3, 1987
GANCAYCO, J.:
FACTS: On May 30, 1968, a maritime collision
occurred within the vicinity of the entrance to the North
Harbor, Manila between the tanker LSCO "Cavite"
owned by Luzon Stevedoring Corporation and MV
"Fernando Escano" a passenger ship owned by Hijos
de F. Escano, Inc. as a result of which said passenger
ship sunk. An action in admiralty was filed by Hijos de
F. Escano, Inc. and Domestic Insurance Company of
the Philippines against the Luzon Stevedoring
Company (LSC) in the CFI of Cebu.
 CFI: LSCO "Cavite" was solely to blame for
the collision. With respect to the defense that
LSCO's liability is limited to the value of the
LSCO "Cavite" and freight earned, invoking
Art. 837 of the Code of Commerce, the Court
believes and so holds that the defense has not
been established. Moreover, the evidence is
such that in principle Art. 837 does not apply
here.
 CA: affirmed in toto
ISSUE: W/N under Art. 837 of the Code of Commerce
abandonment of vessel at fault is necessary in order
that the liability of owner of said vessel shall be limited
only to the extent of the value thereof, its
appurtenances and freightage earned in the voyage
RULING: YES, abandonment is necessary.
There is no question that the action arose from a
collision and the fault is laid at the doorstep of LSCO
"Cavite" of petitioner. Undeniably petitioner has not
abandoned the vessel. Hence petitioner can not
invoke the benefit of the provisions of Article 837 of
the Code of Commerce to limit its liability to the
value of the vessel, all the appurtenances and
freightage earned during the voyage.
We reiterate what We said in previous decisions that
the real and hypothecary nature of the liability of the
shipowner or agent is embodied in the provisions of the
Maritime Law, Book III, Code of Commerce. Articles21
587, 590 and 837 of the same code are precisely
intended to limit the liability of the shipowner or agent to
the value of the vessel, its appurtenances and
freightage earned in the voyage, provided that owner or
agent abandons the vessel. Although it is not
specifically provided for in Article 837 of the same code
that in case of collision there should be such
abandonment to enjoy such limited liability, said article
on collision of vessels is a mere amplification of the
provisions of Articles 587 and 590 of same code where
abandonment of the vessel is a pre-condition. Even
without said article, the parties may avail of the
provisions of Articles 587 and 590 of same code in case
of collision. This is the reason why Article 837 of the
same code is considered a superfluity. 22
Hence the rule is that in case of collision there should
be abandonment of the vessel by the shipowner or
agent in order to enjoy the limited liability provided for
under said Article 837.

The exception to this rule is when the vessel is totally
lost in which case there is no vessel to abandon so
abandonment is not required. Because of such total
loss the liability of the shipowner or agent for damages
is extinguished. Nevertheless, the shipowner or agent is
personally liable for claims under the Workmen's
Compensation Act and for repairs of the vessel before
its loss.
23
In case of illegal or tortious acts of the captain the
liability of the shipowner and agent is subsidiary. In
such instance the shipowner or agent may avail of the
provisions of Article 837 of the Code by abandoning the
vessel.24
However, if the injury or damage is caused by the
shipowner's fault as where he engages the services of
an inexperienced and unlicensed captain or engineer,
he cannot avail of the provisions of Article 837 of the
Code by abandoning the vessel. 25
He is personally
liable for the damages arising thereby.
ART. 587. The ship agent shall also be civilly liable for
the indemnities in favor of third persons which arise
from the conduct of the captain in the vigilance over the
goods which the vessel carried; but he may exempt
himself therefrom by abandoning the vessel with all her
equipment and the freight he may have earned during
the voyage.
xxx xxx xxx
ART. 590. The co-owners of the vessel shall be civilly
liable in the proportion of their contribution to the
common fund for the results of the acts of the captain,
referred to in Article 587.
Each co-owner may exempt himself from this liability by
the abandonment, before a notary, of that part of the
vessel belonging to him.
xxx xxx xxx
ART. 837. The civil liability incurred by the shipowners
in the cases prescribed in this section, shall be
understood as limited to the value of the vessel with all
her appurtenances and freight earned during the
voyage.
2.9
ERLANGER & GALINGER, plaintiffs and appellants,
Vs.
THE SWEDISH EAST ASIATIC Co. (LTD.) ET AL.,
defendants. THE "OELWERKE TEUTONIA" and NEW
ZEALAND INSURANCE Co. (LTD.), appellants.
GR No. 10051. March 9, 1916.
Facts:
The steamship Nippon was loaded with copra and
some other general merchandise. It sailed from Manila
on May 7, 1913 and was bound for Singapore.
However, it went aground the Scarborough Reef which
is 120-130 miles from the nearest island in Luzon.
Some crew left Nippon to ask for assistance. The
Philippine Government sent the coast guard cutter,
Mindoro, to where Nippon was stranded.
On May 12, the steamship Machuria which was bound
for Hong Kong was requested to pass by Scarborough
Reef. Machuria took the captain and the remaining crew
in the ship and such were preceeding to Hong Kong.
Meanwhile, the steamship Mindoro proceeded to the
Nippon and removed the balance of the baggage of the
officers and crew which was found on the deck. On May
14, 1913, the plaintiff applied to the Director of
Navigation for a charter of a coast guard cutter, for the
purpose of proceeding to "the stranded and abandoned
steamer Nippon." The plaintiffs took possession of the
Nippon on or about May 17, 1913, and continued in
possession until about the 1st of July, when the last of
the cargo was shipped to Manila. The Nippon was
floated and towed to Olongapo, where temporary
repairs were made, and then brought to Manila.
The plaintiffs brought the present action against the
insurance companies and underwriters, who
represented the cargo salved from the Nippon, to have
the amount of salvage, to which the plaintiffs were
entitled, determined.
Issue: Whether the plaintiffs are entitled to recover
proceeds from salvaged goods.
Ruling: Yes. The SC allowed salvage in this case.
They held that the master had taken insufficient
precautions to protect his vessel and although the ship
was not a legal derelict, the libelants were salvors and
entitled to salvage.
Generally salvage may be defined as a service which
one person renders to the owner of a ship or goods by
his own labor, preserving the goods or ship which the
owner or those entrusted with the care of them have
either abandoned in distress at sea or are unable to
protect and secure. It is found on the equity of
remunerating private and Individual services performed
in saving, in whole or in part, a ship or its cargo from
impending peril, or of recovering them after actual loss.
It is a compensation for actual services rendered to the
property charged with it, and is allowed for meritorious
conduct of the salvor and in consideration of a benefit
conferred upon the person whose property he has
saved.
Three elements are necessary to a valid salvage
claim:
(a) A marine peril;
(b) service voluntarily rendered when not required as an
existing duty or from special contract;
(c) success, in whole or in part, or that the services
rendered contributed to such success.
From the circumstances of the case, it can be seen that
the captain had over 2 days to arrange for salvage
operations but he did nothing, while the plaintiffs, who
were strangers and had no interest, sent out a salvage
expedition in twenty-four hours after they discovered
that the ship was wrecked.
The evidence proves that the Nippon was in peril; that
the captain left in order to protect his life and the lives of
the crew; that the animo revertendi (without any
intention of returning to it) was slight.
A salvor, in the view of the maritime law, has an interest
in the property; this is called a lien, but it never goes, in
the absence of a contract expressly made, upon the
idea of a debt due by the owner to the salvor for
services rendered, but upon the principle that the
service creates a property in the thing saved. He is, to
all intents and purposes, a joint owner and if the
property is lost lie must bear his share like the other
joint owners.
Moreover, in the present case the plaintiff-appellant
claims that the Nippon was a derelict or quasi-derelict
and that their claim should be adjudged upon this
basis. A "derelict" is defined as "a ship or her cargo
which is abandoned and deserted at sea by those who
are in charge of it, without any hope of recovering it, or
without any intention of returning to it." If those in
charge of the property quitted it or left it with the
intention of finally leaving it, it is derelict, and the
change of their intention and an attempt to return will
not change its nature.
RIGHT OF POSSESSION OF DERELICT.
When a vessel is found at sea, deserted, and has been
abandoned by the master and crew without the
intention of returning and resuming possession, she is,
in the sense of the law, derelict, abandoned, and the
finder who takes possession with the intention of saving
her gains a right of possession which he can maintain
against the true owner. The owner does not, indeed,
renounce his right of property. This is not presumed to
be his intention, nor does the finder acquire any such
right. But the owner does abandon, temporarily, his
right of possession, which is transferred to the finder
who becomes bound to preserve the property with good
faith and bring it to a place of safety for the owner's use;
and lie acquires a right to be paid for his services a
reasonable and proper compensation out of the
property itself. He is not bound to part with the
possession until it is paid, or the property is taken into
the possession of the law preparatory to the amount of
salvage being legally ascertained.
2.10
No. 3488. August 10, 1907
C. S. ROBINSON ET AL., plaintiffs and appellees,
Vs.
THE SHIP "ALTA" ET AL., defendants and appellants.
Doctrine:
Where a contract is entered into by competent persons,
and is free from fraud or misrepresentation, whereby
one of the parties thereto agrees, for a fixed price, to
perform certain salvage services with respect, to a
vessel in distress, payable only in case of success, the
contract will not be set aside so as to permit a recovery
as for the reasonable value of such services, solely
because the contractor afterwards finds that the price
agreed upon is inadequate by reason of the increased
coat of the work which was not foreseen when the
contract was made.
Facts:
On the 26th day of September, 1905, the sailing vessel
Alta was wrecked and stranded upon the coast of
Cavite Province. The captain of the ship removed the
cargo and after working ten or twelve days in attempts
to float the ship made a contract, in writing, with the
plaintiffs, which is as follows:
"Mr. CHARLES S. ROBINSON, Manila.
"DEAR SIR: Referring to your offer of 31st ultimo,
re the raising of the ship Alta—viz, to put her into
Cavite and in such condition that it will admit of
her being sailed to Hongkong or other port,
subject to being passed by Lloyds' surveyor—for
the sum of fifteen thousand pesos (P15,000),
Philippine currency, I accept the same and shall
esteem it a favor if you will commence the work
with the least possible delay. Should you not be
successful, it is distinctly understood that, no
money whatever is to be paid for any work done
or appliances used.
"Yours, faithfully, (Sgd.) "W. THONAGEL.
The plaintiffs went to work immediately upon the vessel,
raised it, and towed it to Cavite on the 10th day of
December, 1905. It was at once decided to put her into
the dry dock or slip there for the purpose of examining
her hull and ascertaining the extent of the damages.
This could not be done until the 18th day of January,
owing to other demands upon the dock company. On
that day she was put upon the slip, was examined, and
again taken off. On the 20th day of January plaintiffs
removed all of their machinery, tackle, and utensils from
the shipand did no more work upon her.
The plaintiffs, on the 30th day of December, 1905,
were paid by the defendants the sum of 3,000 pesos on
account of the contract. They brought this action
against the ship and her master on the 27th day of
February, 1906, claiming to recover the reasonable
worth and value of the services performed by them,
which they fixed at 15,000 pesos.
Defendants’ contention is that the contract in this case,
being contingent upon success, their claim is that they
are not bound by it. In effect they claim that where a
contract, Contingent upon success, is fairly made
between the master of a ship and the salvors, with full
knowledge on the part of all theparties as to the
condition of the vessel, and the contract is performed by
the salvors, they, if it turns out that the work is more
expensive than they thought it would be at the time
they made the contract, can repudiate it and
recover what they would have been entitled to recover
had no contract been made, and that, on the other
hand, the owners of the ship if it turns out that the
, W. Rob. Adm., 176, 180 (a case very much like the
work was less expensive than they thought it would
be at the time the contract was made, can repudiate
it and are bound to pay only what such services are
reasonably worth.
Issue:
Whether or not salvors are bound to the contract they
signed
Held:
Yes. Where a contract is entered into by competent
persons, and is free from fraud or misrepresentation,
whereby one of the parties thereto agrees, for a fixed
price, to perform certain salvage services with respect,
to a vessel in distress, payable only in case of success,
the contract will not be set aside so as to permit a
recovery as for the reasonable value of such services,
solely because the contractor afterwards finds that the
price agreed upon is inadequate by reason of the
increased coat of the work which was not foreseen
when the contract was made.
There are numerous cases in which it has been held
that the salvors are bound by contracts which they have
made. In the case of The Silver Spray (1 Brown's
Admiralty, 349, s. c. 22 Fed. Cases, 141), the court
said:
"On the part of the respondent it is contended that
the compensation must be limited to the contract price,
and, on the part of the libellants the court is asked to
disregard the contract and award them a sum as
salvage somewhat commensurate to their expenditures.
As the matter turned out, it was no doubt a hard bargain
for the libellants. But I do not understand that a court
of admiralty will set aside a contract for that cause
alone, where it is free from all fraud, deception,
mistake, or circumstances of controlling necessity.
McArthur had ample time for consideration, and
there is no pretense of any fraud or deception on
the part of Moore or his agent Reilly, or that
McArthur did not know all about the situation, and
the difficulties in the way of getting the boilers out,
and there was no controlling necessity of duty or
otherwise to undertake the job.
"The contract appears to have been entered into
openly and fairly in all "respects, and there is no
principle or authority upon which the court can
disregard it, or make a new contract for the parties.
It must, therefore, be enforced as it stands. [See 2
Pars. Shipp & Adm., 307, notes 2-5; The True Blue, 2
present except that in that case the expense was
largely increased by a storm having come on, and yet
the contract was enforced although the disparity was
great.
"McArthur was under no obligation to continue the
work after he saw it must be a losing operation. His
compensation was dependent upon success and he
was at liberty to abandon the work at any time. Parties,
after having entered into a deliberate and explicit
agreement, must not be encouraged to make large
expenditures beyond the contract price at the expense
of the owners, by the courts, loosely or without the most
cogent reasons, disregarding contracts thus entered
into, and free from all circumstances of fraud,
deception, mistake, or oppression existing at the time
the contract was made. Parties must understand that
contracts fairly entered into will be strictly enforced
in admiralty, as well as elsewhere."
2.11
2.12
G.R. No. L-15871 November 7, 1921
THE ATLANTIC, GULF & PACIFIC COMPANY OF
MANILA and SIMMIE & GRILK, plaintiffs-appellants,
vs.
UCHIDA KISEN KAISHA and MITSUI BUSSAN
KAISHA, defendants-appellants.
VICENTE MADRIGAL, defendant-appellee.
Kincaid, Perkins & Kincaid for plaintiffs and
appellants.
Cohn & Fisher for defendants and appellants.
Felix M. Roxas and Williams & Ferrier for appellee.
JOHNSON, J.:
FACTS:
While the steamship Kyodo Maru was discharging a
cargo of coal, the property of Vicente Madrigal, in the
harbor of Manila, inside the breakwater, one of the
lighters alongside said vessel sank. In swinging with the
tide, the Kyodo Maru came violently in contact with this
submerged lighter, the result being that her hull was
perforated.
The said steamer began to sink during the morning of
October 22 and touched the bottom of the harbor at 10
a.m. She continued to sink deeper into the mud until, on
October 23, the forward half of the vessel was entirely
submerged, while the stern half was still afloat. The
value of the vessel at the time of the accident was
about P1,300,000, Philippine currency.
On the afternoon of October 23, the Atlantic Gulf &
Pacific Company of Manila and Simmie & Grilk, at the
request of the captain and agents of the ship, took
possession of the sinking vessel as salvors and
commenced salvage operation at once. At that time
they had submitted two propositions to the captain and
agents of the ship as to compensation for the salvage
services to be performed: one for P150,000 in case of
success and reimbursement of expenses in case of
failure, and another for P300,000 “no cure no pay.”
Atlantic Gulf and Simmie were informed that the
propositions would be transmitted to the owners of the
vessel in Japan for acceptance or rejection, but they
were requested to continue work in the meantime, upon
the understanding that if no special contract should be
made they would be compensated as salvors. The
vessel was floated on October 30 and the salvage
operations ended the
following day.
On the afternoon of October 30, Atlantic Gulf and
Simmie were informed in writing that the head office of
the steamship company in Japan had, by cable,
rejected both of the propositions, and that it was
proposed to settle with them on the basis of the
reasonable value of their services as salvors.
Atlantic Gulf and Simmie then made demand for
payment of P150,000. Uchida Kisen Kaisha and Mitsui
Bussan Kaisha (not including Madrigal) offered to pay
P75,000. Atlantic Gulf and Simmie then made a counter
offer of P125,000. This was rejected. Atlantic Guld and
Simmie then brought the present action for the recovery
of a salvage award of P300,000; but, in their trial brief,
they reduced this demand to P297,443.40.
Judgment was rendered in favor of Atlantic Gulf and
Simmie and against the Uchida Kisen Kaisha and Mitsui
Bussan Kaisha in solidum for the sum of P140,000 and
for costs. The action was dismissed as regards Vicente
Madrigal, the owner of the cargo.
From that judgment Altantic Gulf and Simmie and
Uchida Kisen Kaisha and Mitsui Bussan Kaisha
appealed to the Supreme Court. The Supreme Court
modified the judgment appealed from, ordered decreed
that Atlantic Gulf and Simmie have and recover the sum
of P98,000, Philippine currency, from Uchida Kisen
Kaisha and Mitsui Bussan Kaisha, jointly and severally,
and the sum of P2,000, Philippine currency, from
Vicente Madrigal, without any finding as to costs.
ISSUES:
1. Is the petitioner entitled to the 300,000 compensation
claim?
2. Is Vicente Madrigal (owner of the cargo) liable?
HELD:
ISSUE 1:
This question of compensation involves two elements:
(a) The actual expenses incurred in the salvage
operation, and (b) the reward for services rendered by
the plaintiffs as salvors.
A. Suffice it to say that after a perusal of the luminous
briefs of the eminent counsel for both parties, in relation
with the evidence adduced during the trial of the cause,
we are persuaded that most of the charges for
expenses made by the plaintiffs are really exorbitant.
Considering all of the facts and circumstances of this
case, and specially the inflated war prices of materials
at the time the salvage in question was performed, we
are of the opinion that the sum of P50,000 would be a
very reasonable allowance to the plaintiffs for their cash
outlay and the rental value of their equipment.
B. With regard to the reward for salvage services,
defendants-appellants maintain that the sum of P35,000
would be a liberal net award to the salvors.
Section 10 of Act No. 2616 prescribes the rule for
determining the reward for salvage as follows:
In a case coming under the last preceding
section as well as in the absence of an
agreement, the reward for salvage or
assistance shall be fixed by the Court of First
Instance of the province where the things
salvage are found, taking into account
principally the expenditures made to recover or
save the vessel or the cargo or both, the zeal
demonstrated, the time employed, the services
rendered, the excessive expenses occasioned,
the number of persons who aided, the danger
to which they and their vessels were exposed,
as well as that which menaced the things
recovered or salvaged, and the value of such
things after deducting the expenses.
Applying now the rules prescribed by section 10 of said
Act No. 2616, above quoted, in determining the reward
for the salvage in question, the following facts should be
taken into account:
(1) That the salvage operations in question
were performed in Manila Bay, inside the
breakwater, where the depth of the water was
only about 21 feet at low tide;
(2) that those operations lasted eight days —
from noon of October 23rd to October 31st —
 although the salvors appear to have rendered
services until the 8th of November;
(3) that the vessel salved and its cargo were
never in danger of total loss, although it is
admitted that if the vessel had sunk and listed,
the expenses of recovering the same would
have been considerable;
(4) that the salvage operation was
comparatively simple, consisting merely of
using pumps to prevent the vessel from
sinking any further, while the salvors were
building a cofferdam around the submerged
forehatch preparatory to pumping her out;
(5) that there was no danger to the lives and
property of the salvors in view of the proximity
to the shore of the place where the work was
performed;
(6) that the value of the equipment used,
including the launches employed to maintain
the ferry service, was about P300,000;
(7) that the plaintiffs' outlay, together with the
reasonable rental value of their equipment,
was, as we have heretofore estimated, the
sum of P50,000;
(8) that the Kyodo Maru was, at the time she
was salved, valued at P1,300,000;
(9) that the captain of said vessel was in a
hurry to get her out because he had to meet a
new charter in Japan; and
(10) that the plaintiffs accomplished the
salvage with energy and promptitude, to the
entire satisfaction of the captain and agents of
the vessel.
Considering all of the foregoing facts in relation with the
award heretofore made by this court in the salvage
cases of Erlanger and Galinger vs. Swedish East
Asiatic Co., Ltd. (34 Phil., 178), Manila Railroad Co. vs.
Macondray and Co. (37 Phil., 850), and G Urrutia and
Co. vs. Pasig Steamer and Lighter Co. (22 Phil., 330),
we are persuaded that the sum of P50,000 would be
an equitably liberal net compensation to the
plaintiffs as salvors of the Kyodo Maru. This
together with the sum of P50,000 which we have
found should be allowed them for their expenses
and the reasonable rental value of their equipment,
makes a total award to the plaintiffs of the sum of
P100,000. We are persuaded that this amount is a
sufficient compensation for the outlay and effort of
the salvors in the present case, and that the same is
liberal enough to constitute an inducement to
others to render like services in similar
emergencies in the future.
ISSUE 2:
The next question for determination is the liability, if
any, of the defendant Vicente Madrigal as owner of the
cargo, to contribute to the salvage award above-
mentioned.
Considering, however, that the removal of said coal
from the sinking vessel was merely incidental to salving
her; and considering that only 573 tons of such cargo
were actually taken by the plaintiffs from the ship, it
being no longer necessary to touch the rest for the
purpose of raising her, we are of the opinion that full
justice would be done to all the parties concerned by
taking the value of the said 573 tons of coal in relation
with the value of the ship, and thus apportion the
salvage award between their respective owners. The
said 573 tons of coal, at P45 a ton, are worth P25,785,
which is approximately 2 per cent of the value of the
ship (which is estimated at P1,300,000). Hence the
defendant-appellee should be made to pay 2 per
cent of the award of P100,000, or the sum of P2,000.
Wherefore, the judgment appealed from is hereby
modified, and it is hereby ordered and decreed that the
plaintiffs have and recover the sum of P98,000,
Philippine currency, from the defendants Uchida Kisen
Kaisha and Mitsui Bussan Kaisha, jointly and severally,
and the sum of P2,000, Philippine currency, from the
defendant Vicente Madrigal, without any findings as to
costs in this instance. So ordered.
2.13
2.14 JOSE FERNANDEZ, O. N. HOLMSEN, and M. A.
MACLEOD vs. THOMPSON & CO., W.F.
STEVENSON & CO., KER & CO., Captain GUY,
Captain SWAN, JOHN DOE, RICHARD ROE and
HENRY JONES,
FACTS:
On September 13, 1914, the British steamer Bengloe
owned by W. Thompson & co., while en route from
Manila to European ports, stranded on the Mayone
shoal in the Sulu. On the same day, officers of the
vessel, with four seamen, were sent in search of
assistance. No word having been received from these
men. the captain later arrived at Puerto Princesa,
Palawan. While at that place, the captain sent a
telegram informing:
“Bengloe abandoned last Thursday eighteen days on
Corral Reef no assistance whatever to hand ship
dangerous position settling down forward and listed
heavily to Port Cargo in aft holds possible to salve.
Crew all safe. Proceeding Manila per Panglima due
fifteenth advise Leith. (Sgd.) Guy, Master."
Plaintiffs, residents of Palawan, learned of the
abandonment of the Bengloe by her crew, then formed
a partnership, with a capital of P1,500, for the purpose
of salving the vessel and cargo. They hired the launch
Florence of between thirty and forty tons capacity from
the provincial authorities of Puerto Princesa, and with a
number of laborers proceeded to the wreck to ascertain
its condition immediately took possession of the vessel
and removed 14.937 kilos of copra and certain furniture
and effects, of the approximate value of P2,500 and
stored in the Government warehouse. The copra being
perishable was later sold by an order of court and the
proceeds amounting to P2,051.63 deposited with the
clerk of court. The other articles were left in the custody
of the provincial treasurer of Palawan. Holmsen and
Fernandez began negotiations with various owners of
vessels in Manila, however, the boat was ever
chartered or placed at the disposition of the plaintiffs.
In the meantime, the London Salvage Association
acting in the interest of the underwriters of the ship and
the cargo, and with the consent of the ship's agents,
engaged Ker & Co. to take charge of the salvage
operations. They employed William Swan, an engineer
and marine surveyor, to conduct the work. Swan left
Manila and met captain and members of the crew of the
Bengloe on board, and took them back to the wreck.
But discovered that the copra and other effects had
been removed and was forced to leave the vessel by
the captain of the Polillo and a lieutenant of the
Constabulary sent to the wreck with constabulary
soldiers to protect it from plunder. When the other
plaintiffs Holmsen and Fernandez, returned on the
launch, they were prevented from taking any further
part in the salvage operations.
Then began action in the Court of First Instance of the
city of Manila to recover from the owners of the Bengloe
and other parties the sum of P179,780, claimed to be
due as compensation for the salvage of merchandise
and effects of the value of P2,500 from the steamship
Bengloe and as damages because of having been
forcibly deprived of the possession of the steamship
and thereby prevented from prosecuting salvage
operations.
The defendants originally claimed the sole and salvage of the remainder of the cargo. The quantum for
exclusive possession of the wreck on the ground that salvage allowed by the trial court of P1,200 was
they had not abandoned it but only left to seek therefore approximately one-half of the value of this
assistance. The trial court, however, found that the property and gave plaintiffs, in addition to their
appearances justified the conclusion that the Bengloe expenses, only a little more than P200 as a
was abandoned by the defendants. The trial court bounty.chanroblesvirtualawlibrary chanrobles virtual law
further found that the equipment of the plaintiffs was library
utterly inadequate for the task they endeavored to
undertake, and that they had no right to insist upon Compensation for salvage services necessarily
retaining possession of the wreck as against the depends on the circumstances of the particular case. In
representative of the owners and underwriters, who had this instance, we are inclined to agree with appellants
superior equipment and ample financial resources. that a reasonable, and at the same time liberal award,
for their services as meritorious salvors, would be
Issue: P2,000.
Had the plaintiffs adequate equipment to effect the
salvage of the ship and cargo? Courts of admiralty usually consider the following
Had plaintiffs the right to insist upon retaining circumstances as the main ingredients in determining
possession of the Bengloe and her cargo for the the amount of the reward to be decreed for a salvage
purpose of salvage as against the salvors employed by service: (1) The labor expended by the salvors in
the owners and underwriters? rendering the salvage service. (2) The promptitude,
skill, and energy displayed in rendering the service and
Ruling: saving the property. (3) The value of the property
No. The only equipment actually in the possession of employed by the salvors rendering the service, and the
the plaintiffs for salving the Bengloe and he cargo was a danger to which such property was exposed. (4) The
small launch and some baskets and sacks.That such risk incurred by the salvors in securing the property
equipment was inadequate for the salvage of a vessel from the impending peril. (5) The value of the property
valued at P100,000, laden with sugar, copra, and saved. (6) The degree of danger from which the
bunker coal of a value of P352,500, perilously situated, property was rescued.
seems undeniable. But plaintiffs also made futile efforts,
presumably in good faith, to acquire adequate salvage
equipment. We thus have presented this unique
situation: Well-intentioned men with inadequate
equipment are first on the scene of a wreck, and while
in technical possession, are driven off and operations
begun by a second salvage party under an expert
superintendent and with adequate equipment. No
evidence was submitted, and in fact no satisfactory
evidence could have been presented, to show that the
vessel could have been saved and the cargo salved
with the small launch at plaintiffs' disposal. Nor can we
do more than speculate as to the value of plaintiffs'
services if they had been permitted to help and the two
parties had worked together. The services rendered by
the plaintiffs contributed immediately to the preservation
of a small amount of property on the stranded vessel,
but as an actual fact, their further exertions, however
meritorious they were intended to be were not
successful in any degree and cannot be compensated
in damages.

The amount of the property saved was valued at

approximately P2,500. Plaintiffs incurred expenditures
in the sum of P972.95 in the salvage of the copra and
other effects and in making arrangements for the