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LITONJUA SHIPPING VS. NATIONAL SEAMEN BOARD

DOCTRINE: Kinds of Charter PartiesKEYWORD: bareboat, time and voyage charterPONENTE: FELICIANO, J.

FACTS:Petitioner Litonjua is the duly appointed local crewing Managing Office of the Fairwind Shipping Corporation ('Fairwind).The M/V Dufton Bay is an ocean-going vessel of foreign registry owned by the R.D. Mullion Ship Broking Agency Ltd.("Mullion"). While the Dufton Bay was in the port of Cebu and while under charter by Fairwind, the vessel's mastercontracted the services of, among others, private respondent Gregorio Candongo to serve as Third Engineer for a periodof twelve (12) months with a monthly wage of US$500.00. This agreement was executed before the Cebu Area ManningUnit of the NSB. Thereafter, private respondent boarded the vessel. Before expiration of his contract, privaterespondent was required to disembark at Port Kelang, Malaysia, and was returned to the Philippines. The cause of thedischarge 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, forviolation of contract, against Mullion as the shipping company and petitioner Litonjua as agent of the shipowner and ofthe charterer of the vessel.

At the initial hearing, the NSB hearing officer held a conference with the parties, at which conference petitioner Litonjuawas represented by one of its supercargos, Edmond Cruz. Edmond Cruz asked, in writing, that the hearing be postponedfor a month upon the ground that the employee of Litonjua in charge of the case was out of town. The hearing officerdenied this request and then declared petitioner Litonjua in default. At the hearing, private respondent testified that

when he was recruited by the Captain of the Dufton Bay, the latter was accompanied to the NSB Cebu Area ManningUnit by two (2) supercargos sent by petitioner Litonjua to Cebu, and that the two (2) supercargos Edmond Cruz andRenato Litonjua assisted private respondent in the procurement of his National Investigation and Security Agency (NISA)

clearance. Messrs. Cruz and Litonjua were also present during private respondent's interview by Captain Ho King Yiu ofthe Dufton Bay.

NSB HEARING OFFICER:From the evidence on record it clearly appears that there was no sufficient or valid cause for the respondents toterminate the services of complainant prior to the expiry date of the contract. For this reason the respondents haveviolated the conditions of the contract of employment which is a sufficient justification for this Board to render award infavor of the complainant of the unpaid salaries due the latter as damages corresponding to the unexpired portion of thecontract including the accrued leave pay.


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NSB CENTRAL OFFICE:While it appears that in the preparation of the employment papers of the complainant, what was indicated therein wasR.D. Mullion Co. (HK) Ltd. as thecompany whom Captain Ho King Yiu, the Master of the vessel Dufton Bay, wasrepresenting to be the shipowner, the fact remains that at the time of the recruitment of the complainant, as dulyverified by the National Seamen Board, Cebu Area Manning Unit, the Litonjua Shipping Company was the authorizedagent of the vessel's charterer, the Fairwind Shipping Corporation, and that in the recruitment process, the LitonjuaShipping Company through its supercargos in the persons of Edmund Cruz and Renato Litonjua, had knowledge thereofand in fact assisted in the interviews conducted by the Master of the crew applicants as admitted by Renato Litonjua

including the acts of facilitating the crew's NISA clearances as testified to by complainant. Moreover, the participation ofthe Litonjua Shipping Corporation in the recruitment of complainant, together with the other crewmembers, in Cebu canbe traced to the contents of the letter by the Fairwind Shipping Limited, thru its Director David H.L. Wu addressed to theNational Seamen Board.The NSB then lifted the suspension of the hearing officer's decision.

Petitioner Litonjua once more moved for reconsideration.On public respondent NSB rendered a decision which affirmed its hearing offices decision:

The master of the vessel acted for and in behalf of Fairwind Shipping Corporation who had the obligation to pay thesalary of the complainant. It necessarily follows that Fairwind Shipping Corporation is the employer of said complainant.Moreover, it had been established by complainant that Litonjua Shipping Company, Inc., had knowledge of andparticipated, through its employee, in the recruitment of herein complainant.

ISSUE:Whether or not the charterer Fairwind was properly regarded as the employer of private respondent Candongo.

PETITIONER'S CONTENTION:Litonjua contends that the shipowner, not the charterer, was the employer of private respondent; and that liability fordamages cannot be imposed upon petitioner which was a mere agent of the charterer. It is insisted that privaterespondent's contract of employment and affidavit of undertaking clearly showed that the party with whom he hadcontracted was none other than Mullion, the shipowner, represented by the ship's master. Petitioner also argues that itssupercargos merely assisted Captain Ho King Yiu of the Dufton Bay in being private respondent as Third Engineer.

Petitioner also points to the circumstance that the discharge and the repatriation of private respondent was specified inhis Seaman's Book as having been "by owner's arrange." Litonjua thus argues that being the agent of the charterer andnot of the shipowner, it accordingly should not have been held liable on the contract of employment of privaterespondent.

SUPREME COURT:In modern maritime law and usage, 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 realproperty. 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 theterms 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 underthe charterer's direction, such that the master and crew provided by the shipowner become the agents and servants oremployees of the charterer, and the charterer (and not the owner) through the agency of the master, has possessionand 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 oftime 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 masterand crew who remain his employees. What the time charterer acquires is the right to utilize the carrying capacity and


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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, fromone 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.

It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, thecharterer 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 notof the shipowner. The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for theexpenses of the voyage including the wages of the seamen.

It is important to note that petitioner Litonjua did not place into the record of this case a copy of the charter partycovering the M/V Dufton Bay. We must assume that petitioner Litonjua was aware of the nature of a bareboat ordemise charter and that if petitioner did not see fit to include in the record a copy of the charter party, which had beenentered into by its principal, it was because the charter party and the provisions thereof were not supportive of theposition adopted by petitioner Litonjua in the present case, a position diametrically opposed to the legal consequence ofa bareboat charter. Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it was notsuch, we believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held liable on thecontract of employment between the ship captain and the private respondent.

There is a ethically more compelling basis for holding petitioner Litonjua liable on the contract of employment of privaterespondent. The charterer of the vessel, Fairwind, clearly benefitted from the employment of private respondent asThird Engineer of the Dufton Bay, along with the ten other Filipino crewmembers recruited by Captain Ho in Cebu at thesame occasion. If private respondent had not agreed to serve as such Third Engineer, the ship would not have been ableto proceed with its voyage. Secondly, the scope of authority or the responsibility of petitioner Litonjua was not clearlydelimited.

There is the circumstance that extreme hardship would result for the private respondent if petitioner Litonjua, asPhilippine agent of the charterer, is not held liable to private respondent upon the contract of employment. Clearly, theprivate respondent, and the other Filipino crew members of the vessel, would be defenseless against a breach of their

respective contracts. While wages of crew members constitute a maritime lien upon the vessel, private respondent is inno position to enforce that lien. If only because the vessel, being one of foreign registry and not ordinarily doingbusiness in the Philippines or making regular calls on Philippine ports cannot be effectively held to answer for suchclaims in a Philippine forum. Upon the other hand, it seems quite clear that petitioner Litonjua, should it be held liable toprivate respondent for the latter's claims, would be better placed to secure reimbursement from its principal Fairwind.In turn, Fairwind would be in an indefinitely better position (than private respondent) to seek and obtain recourse fromMullion, the foreign shipowner, should Fairwind feel entitled to reimbursement of the amounts paid to privaterespondent through petitioner Litonjua. #Dugena


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PLANTERS PRODUCTS, INC VS. CA

KEYWORDS: Charter-Party; UREA FERTILIZER

DOCTRINE:A public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by oneor more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-charter.It isonly when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomesprivate, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in atime or voyage charter retains possession and control of the ship, although her holds may, for the moment, be theproperty of the charterer.

FACTS:Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of New York,U.S.A., Urea 46% fertilizer which the latter shipped in bulk aboard the cargo vessel M/V Sun Plum owned by private

respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Alaska, U.S.A., to Port Point, San Fernando, La Union, Philippines.

Prior to its voyage, a time charter-party on the vessel M/V Sun Plum pursuant to the Uniform General Charterwas entered into between Mitsubishi as shipper/charterer and KKKK as shipowner.

Before loading the fertilizer aboard the vessel, four (4) of herholdswere all presumably inspected by the charterers

representative and found fit to take a load of urea in bulk. The vessels hold to be properlyswept, cleaned and dried at

the vessels expense and the vessel to be presented clean for use in bulk to the satisfaction of the inspector before

daytime commences.

After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steelhatches were closed with heavy iron lids, covered with three (3) layers of tarpaulin, then tied with steel bonds. The

hatches remained closed and tightly sealed throughout the entire voyage.

Upon arrival of the vessel at her port of call, the steel pontoon hatches were opened with the use of the vessels boom.

The hatches remained open throughout the duration of the discharge.

It took eleven (11) days for PPI to unload the cargo. The survey report submitted by CSCI (CargoSuperintendentsCompany Inc.) to the consignee (PPI) dated 19 July 1974 revealed a shortage in the approximating 18M/T was contaminated with dirt.

ISSUE:WON the charter party changed the character of the public carrier to a private carrier?

LOWER COURT:IN FAVOR OF PETITIONER. Lower Court held the carrier liable. A common carrier is presumed negligentin case of loss or damage of the goods it contracts to transport


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CA:REVERSED. The cargo vessel M/V Sun Plum owned by private respondent KKKK was a private carrier and not a

common carrier by reason of the time charter-party.

SC:NO. A charter-party is defined as a contract by which an entireship, or some principal part thereof, is let by theowner toanother person for a specified time or use. A contract ofaffreightment by which the owner of a ship or othervessel lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage,in consideration of the payment of freight.

Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space on vessels leasedby the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by theterms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession andconsequent control over its navigation, including the master and the crew, who are his servants.

Contract of affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed period oftime, or voyage charter, wherein the ship is leased for a single voyage.In both cases, the charter-party provides for thehire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the shipowner tosupply the ships stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of

the ship.

When petitioner chartered the vessel M/V Sun Plum, the ship captain, its officers and compliment were under theemploy of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can wecharge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer didnot have any control of the means in doing so. This is evident in the present case considering that the steering of theship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritimenavigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner.

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portionof a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter orvoyage-charter.

HOWEVER, the presumption of negligence on the part of the respondent carrier has been efficaciously overcome by the

showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo. The period during whichprivate respondent was to observe the degree of diligence required of it as a public carrier began from the time thecargo was unconditionally placed in its charge after the vessels holds were duly inspected and passed scrutiny by the

shipper, up to and until the vessel reached its destination and its hull was re-examined by the consignee, but prior tounloading. #ENCARNACION


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CALTEX VS SULPICIO

KEYWORD/S: MT VECTOR AND DOA PAZ COLLISION, DUMALI POINT, CONTRACT OF AFFREIGHTMENT--VOYAGECHARTER

FACTS:

MT VECTOR owned and operated by Vector Shipping left Limay, Bataan at about 8:00pm on Dec 19, 1987 eon route toMasbate, loaded with petroleum products shipped by CALTEX. On the other hand, on Dec 20, 1987 at about 6:30 ampassenger ship owned by SULPICIO LINES MV DOA PAZ left the port of Tacloban headed for Manila with a complementof 59 crew members including the master and his officers and passengers totaling 1,493 as indicated in the coastguardclearance.

At about 10:30 pm of Dec 20, 1987 the two vessels collided in the open sea within the vicinity of Dumali Point betweenMARINDUQUE AND ORIENTAL MINDORO. All crew members of MV DOA PAZ died, while 2 survivors from MT VECTORclaimed that they were sleeping at the time of the incident.

THE MV DOA PAZ carried an estimated 4,000 passengers; many were not in the manifest. Only 24 survived the tragedyThe BUREAU OF MARINE INQUIRY(BMI) after investigation found that MT VECTOR, it's registered owner and operatorwere at fault. SULPICIO alleged that CALTEX chartered MT VECTOR with gross and evident bad faith knowing fully wellthat MT VECTOR WAS IMPROPERLY MANNED, ILL-EQUIPPED, UNSEAWORTHY AND A HAZARD TO SAFE NAVIGATION.

ISSUE:WHETHER OR NOT THE CALTEX IS LIABLE

RULING :

No, the charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it charteredcomplied with all legal requirements. The duty rests upon the common carrier simply being engaged in "public service".The civil code demands diligence which is required by the nature of the obligation and that which corresponds with the

circumstances of the persons, time and of the place.

In the case at bar, CALTEX AND VECTOR entered into a contract of affreightment, also known as voyage charter whereinthe ship is leased for a single voyage. The charter party provides for the hire of the VESSEL ONLY, the ship owner tosupply the ship's store, pay for wages of the master of the crew and defray expenses for the maintenance of the ship. Ifthe charterer is a contract of affreightment, which leaves the general owner in possession of the ship as owner for thevoyage, THE RIGHTS AND RESPONSIBILITIES OF OWNERSHIP REST ON THE OWNER. THE CHARTERER IS FREE FROMLIABILITY TO THIRD PERSONS IN RESPECT OF THE SHIP.

THE SUPREME COURT CHARACTERIZED THE SAID SPECIE OF CHARTER PARTY AS ONE WHICH DOES NOT AFFECT THE ATALL THE NATURE OF THE BUSINESS OF SULPICIO LINES AS A COMMON CARRIER.#ESGUERRA


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WILLIAMS V YANGCO

KEYWORD: Subic

DOCTRINE:Since it does NOT appear from the evidence that the perilous situation of the launch in time to avoid theaccident by the exercise of ordinary care, it is very clear that the plaintiff cannot escape the legal consequences of thecontributory negligence of his launch, even were we to hold that the doctrine is applicable in this jurisdiction.

FACTS:

The steamer Subic, owned by the defendant, collided with the launch Euclid owned by the plaintiff, in the Bay of Manilaat an early hour on the morning of January 9, 1911, and the Euclid sank five minutes thereafter. The findings of recorddisclosed that the officers on both boats were negligent in the performance of their duties at the time of the accident,and that both vessels were to blame for the disaster. (Yes, ito lang ang facts na nasa full text ng case)

Plaintiffs defensebased his contentions upon the theory of the facts as contended for by him, insists that under thedoctrine of "the last clear chance," the defendant should be held liable because, as he insists, even if the officers on

board the plaintiffs launch were negligent in failing to exhibit proper lights and in failing to take the proper steps tokeep out of the path of the defendants vessel, nevertheless the officers on defendants vessel,by the exercise of dueprecautions might have avoided the collision by a very simple maneuver.

ISSUES:WON plaintiff (Elucid) has a cause of action against defendant. RULING:

Trial court

Euclid was worth at a fair valuation P10,000; that both vessels were responsible for the collision; and that the loss

should be divided equally between the respective owners, P5,000 to be paid to the plaintiff by the defendant, andP5,000 to be borne by the plaintiff himself.The trial judge was of opinion that the vessels were jointly responsible for the collision and should be held jointly liable

for the loss resulting from the sinking of the launch. But actions for damages resulting from maritime collisions aregoverned in this jurisdiction by the provisions of section 3, title 4, Book III of the Code of Commerce, and among theseprovisions we find the following:"ART. 827. If both vessels may be blamed for the collision, each one shall be liable for its own damages, and both shallbe jointly responsible for the loss and damage suffered by their cargoes."

CA

We are all agreed with the trial judge in his holding that the responsible officers on both vessels were negligent in theperformance of their duties at the time when the accident occurred, and that both vessels were to blame for thecollision.


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SUPREME COURT:

None. In disposing of this case the trial judge apparently had in mind that portion of the section which treats of the jointliability of both vessels for loss or damage suffered by their cargoes. In the case at bar, however, the only loss incurredwas that of the launch Euclid itself, which went to the bottom soon after the collision.In cases of a disaster arising from mutual negligence of two parties, the party who has a last clear opportunity ofavoiding the accident, notwithstanding the negligence of his opponent, is considered wholly responsible for it under thecommon-law rule of liability as applied in the courts of common law in the United States. But this, is limited in itsapplication by the further rule, that where the previous act of negligence of one vessel has created a position of danger,

the other vessel is not necessarily liable for the mere failure to recognize the perilous situation; and it is only when infact it does discover it in time to avoid the casualty by the use of ordinary care, that it becomes liable for the failure tomake use of this last clear opportunity to avoid the accidentIn the case at bar, the most that can be said in support of plaintiffs contention is that there was negligence on the partof the officers on defendants vessel in failing to recognize the perilous situation created by the negligence of those in

charge of plaintiffs launch, and that had they recognized it in time, they might have avoided the accident. But since itdoes NOT appear from the evidence that they did, in fact, discover the perilous situation of the launch in time to avoidthe accident by the exercise of ordinary care, it is very clear that under the above set out limitation to the rule, theplaintiff cannot escape the legal consequences of the contributory negligence of his launch, even were we to hold thatthe doctrine is applicable in this jurisdiction, upon which point we expressly reserve our decision at this time.#FLORANDA

Smith Bell And Company Inc. And Tokyo Marine And Fire Insurance Co., Inc Vs. Court Of Appeals And Carlos A. Go

Thong And Co.,KEYWORD: #DonCarlos #YotaiMaru #Banggaantayu...then selfie after XD

DOCTRINE:CIVIL LAW; QUASI-DELICT; NEGLIGENCE; FACTORS CONSTITUTIVE THEREOF WHICH NEGLIGENCE WAS THEPROXIMATE CAUSE OF THE COLLISION; 3 Principal Factors

SHORT FACTS:On 3 May 1970, 3:50 a.m., on the approaches to the port of Manila near Caballo Island, a collision tookplace between the M/V Don Carlos, an inter-island vessel owned and operated by Carlos A. Go Thong and Company(Go Thong), and the M/S Yotai Maru, a merchant vessel of Japanese registry. The Don Carlos was then sailing

south bound leaving the port of Manila for Cebu, while the Yotai Maru was approaching the port of Manila, coming infrom Kobe, Japan. The bow of the Don Carlos rammed the portside (left side) of the Yotai Maru inflicting a 3 cm.

gaping hole on her portside near Hatch 3, through which seawater rushed in and flooded that hatch and her bottomtanks, damaging all the cargo stowed therein. The consignees of the damaged cargo got paid by their insurancecompanies.


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The insurance companies in turn, having been subrogated to the interests of the consignees of the damaged cargo,commenced actions against Go Thong for damages sustained by the various shipments in the then CFI of Manila. 2 caseswere filed in the CFI of Manila.

The first case was commenced by Smith Bell and Sumitomo Marine and Fire Insurance Company Ltd., against Go Thong,in Branch 3, which was presided over by Judge Bernardo P. Fernandez.The second case was filed by Smith Bell and Company, Inc. and Tokyo Marine and Fire Insurance Company, Inc. againstGo Thong in Branch 4, which was presided over by then Judge, later Associate Justice of this Court, Serafin R. Cuevas.

Civil Cases 82567 (Judge Fernandez) and 82556 (Judge Cuevas) were tried under the same issues and evidence relatingto the collision between the Don Carlos and the Yotai Maru the parties in both cases having agreed that the

evidence on the collision presented in one case would be simply adopted in the other.

ISSUE:Whether or not M/V Don Carlos was negligent and thus shall be held liable for the collision

PETITIONERS CONTENTION:

In their Petition for Review, petitioners assail the finding and conclusion of the Sison Decision, that the "Yotai Maru" wasnegligent and at fault in the collision, rather than the "Don Carlos."

RESPONDENTS CONTENTION:

Private respondent Go Thong, upon the other hand, argues that the Supreme Court, in rendering its minute Resolutionin G.R. No. L-48839, had merely dismissed Go Thongs Petition for Review of the Reyes, L.B., J. Decision for lack of meritbut had not affirmed in toto that Decision. Thus, Go Thong concludes, this Court did not hold that the "Don Carlos" hadbeen negligent in the collision.

RULING:

1. TRIAL COURT:In favor of petitioner. In both cases, the Manila CFI held that the officers and crew of the Don Carlos

had been negligent, that such negligence was the proximate cause of the collision and accordingly held Go Thong liablefor damages to the insurance companies.2. APPELLATE COURT

a) In CA-GR 61320-R, the Court of Appeals through Reyes, L.B., J., rendered affirmed the Decision of Judge Fernandez. GoThong moved for reconsideration, without success.

b) In CA-GR 61206-R, the Court of Appeals through Sison, P.V., J., reversed the Cuevas Decision and held the officers ofthe Yotai Maru at fault in the collision with the Don Carlos, and dismissed the insurance companies complaint.

Smith Bell & Co. and the Tokyo Marine & Fire Insurance Co. Inc. asked for reconsideration, to no avail. Hence, thepetition for review on certiorari.

3. SUPREME COURT:M/V Don Carlos was negligent.(a) Reyes ( ) J. Fernandez decision: Go Thong then went to the Supreme Court on Petition for Review. Supreme Court

denied the Petition for lack of merit. Go Thong filed a Motion for Reconsideration; the Motion was denied by the

Supreme Court .(b) Sison ( X )Cuevas decision: The Supreme Court reversed and set aside the Decision of the Court of Appeals in CA-GR61206-R, and reinstated and affirmed the decision of the trial court in its entirety; with costs against Go Thong.

The SC ruled that M/V Don Carlos was negligent and its negligence was the sole proximate cause of the collision and ofthe resulting damages. The Court believes that there are three (3) principal factors which are constitutive of negligenceon the part of the "Don Carlos," which negligence was the proximate cause of the collision.1) The failure of the "Don Carlos" to comply with the requirements of Rule 18 (a) of the International Rules of the Road.(page 499 footnote in Aquino transpo book 2011 ed)2) "Don Carlos" was its failure to have on board that might a "proper look-out" as required by Rule I (B). Under Rule 29of the same set of Rules, all consequences arising from the failure of the "Don Carlos" to keep a "proper look-out" mustbe borne by the "Don Carlos.A "proper look-out" is one who has been trained as such and who is given no other duty save to act as a look-out andwho is stationed where he can see and hear best and maintain good communication with the officer in charge of thevessel, and who must, of course, be vigilant.


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3) The third factor constitutive of negligence on the part of the "Don Carlos" relates to the fact that Second Mate BenitoGerman was, immediately before and during the collision, in command of the "Don Carlos." Second Mate Germansimply did not have the level of experience, judgment and skill essential for recognizing and coping with the risk ofcollision as it presented itself that early morning when the "Don Carlos," running at maximum speed and having justovertaken the "Don Francisco" then approximately one mile behind to the starboard side of the "Don Carlos," founditself head-on or nearly head-on vis-a-vis the "Yotai Maru." It is essential to point out that this situation was created bythe "Don Carlos" itself.Article 633 of the Code of Commerce provides: The second mate shall take command of the vessel in case of the

inability or disqualification of the captain and sailing mate, assuming, in such case, their powers and liability. #GUETA

National Development Company vs. Court of Appeals

TOPIC: CollisionsKEYWORD/s: Doa Nati


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PETITIONERS CONTENTION:

The Carriage of Goods by Sea Act should apply to the case at bar and not the Civil Code or the Code of Commerce, indetermining the liability for loss of cargos resulting from the collision outside the territorial jurisdiction of the PHUnder Section 4 (2) of said Act, the carrier is NOT responsible for the loss or damage resulting from the "act, neglect ordefault of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship."Petitioners insist that based on the findings of the trial court which were adopted by the Court of Appeals, both pilots ofthe colliding vessels were at fault and negligent.

PRIVATE RESPONDENTS CONTENTION:DISC had paid as insurer the total amount of P364,915.86 to the consignees or their successors-in-interest, for the saidlost or damaged cargoes., and thus entitled to recovery from the ship owner or carrier.

ISSUE:W/N the COGSA will apply to collision of vessels in foreign waters

RULING:

TRIAL COURT

NDC and MCP are liable to DISC; COGSA was not applied in determining the liability of NDC and MCP

COURT OF APPEALS: affirmed in toto

SUPREME COURT:NO. The Code of Commerce is applicable in the case. It was held that the law ofthe country to which the goods are tobe transported governs the liability of the common carrier in case of their loss, destruction or deterioration. Thus, the

rule was specifically laid down that for cargoes transported from Japan to the Philippines, the liability of the carrier isgoverned primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations of commoncarrier shall be governed by the Code of Commerce and by special laws.

It appears, however, that collision falls among matters NOT specifically regulated by the Civil Code, so that no reversibleerror can be found in respondent courts application to the case at bar of Articles 826 to 839, Book Three of the Code of

Commerce, which deal exclusively with collision of vessels.

More specifically, Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a

vessel, the owner of the vessel at fault, shall indemnify the losses and damages incurred after an expert appraisal. Butmore in point to the instant case is Article 827 of the same Code, which provides that if the collision is imputable to bothvessels, each one shall suffer its own damages and both shall be solidarily responsible for the losses and damagessuffered by their cargoes.

Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839, the ship owner or carrier, isnot exempt from liability for damages arising from collision due to the fault or negligence of the captain.Primary liability is imposed on the shipowner or carrier in recognition of the universally accepted doctrine that the

shipmaster or captain is merely the representative of the owner who has the actual or constructive control over theconduct of the voyage.

MCPsclaim that the fault or negligence can only be attributed to the pilot of the vessel SS Yasushima Maru and not tothe Japanese Coast pilot navigating the vessel Dona Nati, need not be discussed lengthily as said claim is not only atvariance with NDCs posture, but also contrary to the factual findings of the trial court affirmed no less by the Court ofAppeals, that both pilots were at fault for not changing their excessive speed despite the thick fog obstructing theirvisibility. #LEANO


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Mecenas (v) CA, Capt. Santisteban and Negros Navigation Co. Inc.

Key Phrase : Green Light Starboard (Chap3 keyword : mahjong)

Doctrine:"Route observance" of the International Rules of the Road (Rule18) will not relieve a vessel from responsibilityif the collision could have been avoided by proper care and skill on her part or even by a departure from the rules.

FACTS:

"M/V Don Juan" sank within 10-15 min from impact causing the death of hundreds of its passengers (the collisionincident happened around 10:30pm of April 22, 1980 when the sea was calm, the weather fair and the visibility wasgood)

Defendant PNOC's version

An interisland vessel (M/V Don Juan) owned and operated by Negros Navigation was first sighted at about 5 or 6miles from a barge-type oil tanker (M/T Tacloban City) owned by the Philippine National Oil Company (PNOC)and operated PNOC Shipping

Don Juan was on the starboard (right) side of Tacloban City and as it approached, Tacloban City gave a leeway of

10 to the left to enable Tacloban to see the direction of Don Juan. Don Juan switched to green light, signifying that it will pass Tacloban City's right side; it will be a starboard to

starboard passing and Tacloban City's purpose in giving a leeway of 10 at this point, is to give Don Juan morespace for her passage (this leeway was increased by Tacloban City to an additional 15 towards the left) at thistime the way was clear and Don Juan has not changed its course.When Tacloban City altered its course thesecond time, from 300 to 285, Don Juan was about 4.5 miles away and despite executing a hardportmaneuver, the collision nonetheless occurred as Don Juan rammed the Tacloban City near the starboard bow

Negros Navigations version

Don Juan first sighted Tacloban City 4 miles away and Tacloban City showed its red and green lights twice; itproceeded to, and will cross, the path of Don Juan (Tacloban was on the left side of Don Juan)

Upon seeing Tacloban's red and green lights, Don Juan executed hard starboard (Tacloban was about 1,500 feetaway) in conformity with the rule that "when both vessels are head on or nearly head on, each vessel must turnto the right in order to avoid each other"; nonetheless, Tacloban appeared to be heading towards Don Juan.

Don Juan, after execution of hard starboard, will move forward 200 meters before the vessel will respond tosuch maneuver; Between 9 to 15 seconds from execution of hard starboard, collision occurred.

Alleging negligence of defendants, the 7 legitimate children of Sps. Mecenas file a complaint against Negros Navigationand the captain of the "Don Juan" (Capt. Roger Santisteban).

ISSUES:Whether or not private respondents acted recklessly (with gross negligence).


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RULING:

Regional Trial Court of QCdefendants are equally negligent and liableM/ V Don Juan and Tacloban City became aware of each other's presence in the area by visual contact at a distance ofsomething like 6 miles from each other and they were fully aware that if they continued on their course, they will meethead on. They executed maneuvers inadequate, and too late, to avoid collision thus the defendants are equallynegligent and are liable for damages.

Court of Appeals

"Don Juan" was at least as negligent as the M/T "Tacloban City" in the events leading up to the collision and the sinkingof the "Don Juan."

Supreme Courtpetition for review on certiorari is granted (CA = reversed & set aside)1. Grossness of the negligence of "Don Juan" underscored in the context of the following facts:

"Don Juan" was more than twice as fast as the "Tacloban City" because The "Don Juan's" top speed was 17 knotswhile that of the "Tacloban City" was 6.3. knots

"Don Juan" carried the full complement of officers and crew members specified for a passenger vessel of herclass

"Don Juan" was equipped with radar which was functioning that night

"Don Juan's" officer on-watch had sighted the "Tacloban City" on his radar screen while the latter was still four

(4) nautical miles away and visual confirmation of radar contact was established by the "Don Juan" while the"Tacloban City" was still 2.7 miles away

2. Had "Don Juan" taken seriously its duty of extraordinary diligence, it could have easily avoided the collision with the"Tacloban City," and indeed, the "Don Juan" might well have avoided the collision even if it had exercised ordinarydiligence merely.

3. In ordinary circumstances, a vessel discharges her duty to another by a faithful and literal observance of the Rules ofNavigation, and she cannot be held at fault for so doing even though a different course would have prevented the

collision BUT this rule is not to be applied where it is apparent, as in the instant case, that her captain was guilty ofnegligence or of a want of seamanship in not perceiving the necessity for, or in so acting as to create such necessity for,a departure from the rule and acting accordingly.

4. "Don Juan" having sighted the "Tacloban City" when it was still a long way off was negligent in failing to take earlypreventive action and in allowing the 2 vessels to come to such close quarters as to render the collision inevitable whenthere was no necessity for passing so near to the "Tacloban City" as to create that hazard or inevitability, for the "DonJuan" could choose its own distance AND it is noteworthy that the "Tacloban City," upon turning hard to port shortlybefore the moment of collision, signaled its intention to do so by giving two (2) short blasts with horn while the "DonJuan " gave no answering horn blast to signal its own intention and proceeded to turn hard to starboard.5. We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence in connectionwith the collision of the "Don Juan" and "Tacloban City" and the sinking of the "Don Juan" leading to the death ofhundreds of passengers and we find no necessity for passing upon the degree of negligence or culpability properly

attributable to PNOC and PNOC Shipping or the master of the "Tacloban City," since they were never impleaded here.

#LUALHATIMARQUEZ


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Aboitiz Shipping vs General Accident Fire and Life Insurance Corp

Keyword: sinking ship, varying decisions of the TC and CA

Facts:

Aboitiz Shipping is the owner and operator of M/V P. Aboitiz. The vessel sank while on a voyage from Hongkong to thePhilippines. Several suits for recovery of the lost cargo either by the shippers, their successors-in-interest, or the cargoinsurers like General Accident (GAFLAC) were filed. The Board of Marine Inquiry (BMI), on its initial investigation foundthat such sinking was due to force majeure and that subject vessel, at the time of the sinking was seaworthy. The trialcourt ruled against the carrier on the ground that the loss did not occur as a result of force majeure. This was affirmedby the CA and ordered the immediate execution of the full judgment award. However, other cases have resulted in thefinding that vessel was seaworthy at the time of the sinking, and that such sinking was due to force majeure. Due tothese different rulings, Aboitiz seeks a pronouncement as to the applicability of the doctrine of limited liability on thetotality of the claims vis a vis the losses brought about by the sinking of the vessel M/V P. ABOITIZ, as based on the realand hypothecary nature of maritime law. Aboitiz argued that the Limited Liability Rule warrants immediate stay ofexecution of judgment to prevent impairment of other creditors' shares.

Issue:Whether the Limited Liability Rule arising out of the real and hypothecary nature of maritime law should apply inthis and related cases.

Petitioners Contention:1. The Limited Liability Rule warrants immediate stay of execution of judgment to prevent impairment of other creditorsshares;2. The finding of unseaworthiness of a vessel is not necessarily attributable to the shipowner; and3 The principle of "Law of the Case" is not applicable to the present petition.

Respondents Contention:1. There is no limited liability to speak of or applicable real and hypothecary rule under Article 587, 590, and 837 of the

Code of Commerce in the face of the facts found by the lower court (Civil Case No. 144425), upheld by the AppellateCourt (CA G.R. No. 10609), and affirmed in toto by the Supreme Court in G.R. No. 89757 which cited G.R. No. 88159 asthe Law of the Case; and2. Under the doctrine of the Law of the Case, cases involving the same incident, parties similarly situated and the sameissues litigated should be decided in conformity therewith following the maxim stare decisis et non quieta movere.

Ruling:

Trial Court and CA:The rulings vary which prompted petitioner to file the present action.


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Supreme Court:The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with lossesrelated to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as theguaranty for their settlement. It has its origin by reason of the conditions and risks attending maritime trade in itsearliest years when such trade was replete with innumerable and unknown hazards since vessels had to go throughlargely uncharted waters to ply their trade. It was designed to offset such adverse conditions and to encourage peopleand entities to venture into maritime commerce despite the risks and the prohibitive cost of shipbuilding.Thus, the liability of the vessel owner and agent arising from the operation of such vessel were confined to the vessel

itself, its equipment, freight, and insurance, if any, which limitation served to induce capitalists into effectively wageringtheir resources against the consideration of the large profits attainable in the trade. The Limited Liability Rule in thePhilippines is taken up in Book III of the Code of Commerce, particularly in Articles 587,590, and 837, hereunder quotedin toto :

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

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

Art. 837. The civil liability incurred by shipowners in the case prescribed in this section (on collisions), shall beunderstood as limited to the value of the vessel with all its appurtenances and freightage served during the voyage.The only time the Limited Liability Rule does not apply is when there is an actual finding of negligence on the part of thevessel owner or agent.

In the instant case, there is, therefore, a need to collate all claims preparatory to their satisfaction from the insuranceproceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss. No claimant can be givenprecedence over the others by the simple expedience of having filed or completed its action earlier than the rest. Thus,execution of judgment in earlier completed cases, even those already final and executory, must be stayed pendingcompletion of all cases occasioned by the subject sinking. Then and only then can all such claims be simultaneously

settled, either completely or pro-rata should the insurance proceeds and freightage be not enough to satisfy all claims.The petition was granted. #LUZADIO

The Philippine American General Insurance Company v. Court of Appeals- SEE NTBK


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ERLANGER & GALINGER vs. THE SWEDISH EAST ASIATIC CO.

DOCTRINE: Three elements are necessary to a valid salvage claim: (1) A marine peril. (2) Service voluntarily renderedwhen not required as an existing duty or from a special contract. (3) Success, in whole or in part, or that the servicerendered contributed to such success.

FACTS:

May 7, 1913: Steamship NIPPON loaded with copra and other general merchandise sailed from Manila to Singapore.May 8, 1914 :4:30PM: It went aground Scarborough Reef.May 9, 1913: Chief officer Weston and 9 other members of crew left NIPPON.May 12, 1913 :

- Morning: They reached Santa Cruz, Zambales and Weston sent a telegram to Helm, Director of Bureau ofNavigation, Manila stating that NIPPON was stranded on Scarborough Reef and wants immediate assistance forsaving crew.

-

1:30PM: Government of the Phil Islands orderd coast guard cutter MINDORO with life-saving appliances to thescene of the wreck.

-

3:00PM: Steamship MANCHURIA sailed from Manila to Hongkong was requested to pass by Scarborough Reef.

May 13, 1912: MANCHURIA arrived before MINDORO and took on board the captain and remainder of crew.MANCHURIA was still near Scarborough Reef when MINDORO arrived. Captain of MANCHURIA informed captain ofMINDORO that the crew and captain were on board and proceeding to Hongkong. Captain of MINDORO offeredassistance but MANCHURIA declined. MINDORO proceeded to NIPPON and removed balance of baggage found on deck.MINDORO proceeded to Santa Cruz, Zambales, took Weston and 9 crew members on board and brought to Manila.

Captain Dixon of MANCHURIA sent a message that all were rescued from NIPPON and that it was stranded onthe extreme north end of shoal. It also stated that the streamer was full of water fore and fat and is badly ashore and it

was abandoned. Captain of NIPPON saw said message before it was sent. The crew boarding MANCHURIA took withthem the chronometer, ships register, ships articles, ships logs and much of crews baggage amounting to P 156,

231.73.

May 14, 1913: Erlanger & Galinger applied to Director of Navigation for a charter of a coast guard cutter for the purposeof proceeding to the stranded steamer NIPPON. The coast guard cutter MINDORO was chartered to Erlanger & Galinger.

May 17, 1913: Erlanger & Galinger took possession of NIPPON and continued in possession until about July 1 when thelast cargo was shipped to Manila. NIPPON was floated and towed to Olongapo and temporary repairs were made. It wasthen brought to Manila.

The ship was valued at P 250, 000.00. Erlanger & Galingersclaim was settled for P 145, 800.00. they filed this actionagainst the insurance companies who represented the cargo salved from NIPPON, to have the amount of salvage theywere entitled, determined.


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THE RESPONDENTS: The Oelwerke Teutonia is a corporation as claimant of copra.New Zealand Insurance Company as insurer and assignee of ownders of 33 crates of agar-agar.Tokio Marine Insurance Company as insurer and assigne of 1, 000 cases of bean oil and 2 cases of bamboo lacquer work.The Thames and Mersey Marine Insurance Company as a reinsurer to the extent of P6,500 on the cargo of copra

PETITIONERS CONTENTION: They are entitled to a reimbursement of their expenses, out of the gross value of thesalved property. They also contended that the cargo and vessel are equally chargeable with the expense of the salvage.They also claim that that the NIPPON was a derelict or quasi-derelict.

RESPONDENTS CONTENTION: They contended that Erlanger & Galinger were not salvors of the copra and that thelatter were not entitled to recover one-half of the proceeds of copra. They also contended that the captain and the crewdid not leave the shipsine animo revertendi, but that it was their intention to go to Hongkong and procure assistancewith which to save the ship and her cargo.

ISSUE:

1. Whether or not the ship was abandoned.2. Whether or not the salvage was conducted with skill, diligence and efficiency.

RULING:

Honorable A. S. Crossfield: The court found that the plaintiffs were "entitled to recover one-half of the net proceedsfrom the property salved and sold (which has nothing to do with the steamship itself), and one-half the value of theproperty delivered to the claimants."

Supreme Court:

The question whether or not a particular ship and her cargo is a fit object of salvage depends upon her condition at thetime the salvage services are performed.Three elements are necessary to a valid salvage claim: (1) A marine peril. (2) Service voluntarily rendered when notrequired as an existing duty or from a special contract. (3) Success, in whole or in part, or that the service renderedcontributed to such success.

The ship was abandoned.

At the time the plaintiff commenced the attempt to salve what was possible of the S. S. Nippon and cargo, it wasjustified, from all the conditions existing, in believing that it had been abandoned and in taking possession, even thoughthe master of the vessel intended when he left it, to return and attempt salvage. Captain Dixon also sent telegramsstating that NIPPON was stranded.The evidence also proves that the Nippon was in peril; that the captain left in order to protect his life and the lives of thecrew; that the animo revertendiwas slight. The argument of the defendant-appellant to the effect that the ship was inno danger is a bit out of place in view of the statement of the captain that she would sink with the first gale, coupledwith the fact that a typhoon was the cause of her stranding.

The plaintiffs were diligent in commencing the work and were careful and efficient in its pursuit and conclusion.While the plaintiff entered upon the salvage proceedings without proper means and not being adapted by their businessto conduct their work, and while it may appear that possibly the salvage might have been conducted in a better manner

and have accomplished somewhat better results in the saving of the copra cargo, yet it appears that they quicklyremedied their lack of means and corrected the conduct of the work so that it accomplished fairly good results. It doesnot appear from the evidence that anyone then or subsequently suggested or found any other course which might havebeen pursued and which would have brought better results.The plaintiffs commenced the actual work of salving the ship and cargo on May 18, 1913. The last of the cargo was abrought to Manila the latter part of June. The last of the dry copra was brought to Manila on June 5. The estimates ofthe experts with regard to the time necessary to remove the cargo ranged from eight to twenty days. The greaterportion of the cargo was brought in by the plaintiffs within fifteen days. The delay after June 5 was due to the difficultyin inducing laborers to work with wet copra. This difficulty would have arisen with any set of salvors and cannot beattributed to a lack of care or diligence on the part of the plaintiffs.#MAGALIT


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Honorio Barrios vs. Carlos A. Go Thong

KEYWORD: Salvage vs Towage

DOCTRINE:When the ship stranded is not in a perilous condition, the services rendered by another ship in attaching it intow is merely towage and not salvage.PONENTE: Barrera, J.

FACTS:

Honorio Barrios, the captain of MV Henry I of William Lines Incorporated, received an SOS signal by blinkers from theMV Don Alfredo, owned and operated by Carlos A. Go Thong & Company, causing the former to alter its course to

render aid. MV Don Alfredo was found to be in trouble due to engine failure and the loss of a propeller. With theconsent of Captain Loresto of the distressed vessel, the plaintiff tied MV Don Alfredo to MV Henry I and had it in towtowards the direction of Dumaguete City. The next morning they came across MV Lux, a sister ship of MV Don Alfredo.And Upon the request of Captain Lorseto, the tow lines were released.

ISSUE:Whether the services rendered by the petitioner to the respondent constituted salvage or towage.

PETITIONERS CONTNETION:claims salvage of the distressed ship amounting to P100,000

RESPONDENTS CONTENTION: the petitioner cannot claim separate compensation from that they own from theshipping company

COURT OF FIRST INSTANCE

Dismissed. The MV Don Alfredo was not in a perilous condition, therefore cannot be considered quasi-derelict and the

Salvage Law (Act 2616) is not applicable.

SUPREME COURT

The Court ruled that the service was towage.Section 1 of the Salvage Law (Act 2616) provides: When in case of shipwreck, the vessel or its cargo shall be beyond thecontrol of the crew, or shall have been abandoned by them, and picked up and conveyed to a safe place by otherpersons, the latter shall be entitled to reward for the salvage.

Salvage, has been defined as the compensation allowed to persons by whose assistance a ship or her cargo has beensaved, in whole or in part, from impending peril on the sea, or in recovering such property from actual loss, as in case ofshipwreck,derelict, or recapture. It has three elements, namely: (1) a marine peril; (2) service voluntarily rendered whennot required as an existing duty or from a special contract; and (3) success in whole or in part, or that the servicerendered contributed to such success. The court opined that there was no sea peril to begin with to warrant the claimfor salvage. Although it is true that the ship was in a helpless condition due to engine failure, there was no peril. The


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weather was fair and clear, the waves were small, there was no risk in floundering, and in case the ship were to drift, theanchor could easily be lowered. The crew did not even find it necessary to lower the motor boats and evacuate itspassengers, neither was there a necessity to jettison the cargo for safety measures. The vessel was crew were onlyprevented from moving the vessel, such case did not make the vessel a quasi-derelict.Instead, what constituted was a towage. By the consent of the respondent from the petitioners offer to tow the vessel,

they impliedly entered into a juridical relationship of towage.

***the material distinction between TOWAGE and SALVAGE is that a reward ought to sometimes be given to the crew of

the salvage vessel and other participants in the salvage service; no such reward is given in case of towage. In towage, themaster and crew are not entitled to remuneration pursuant to the contract of towage.#MANALANG

ELSER, INC., vs. COURT OF APPEALS

KEYWORD: COGSA

DOCTRINE:A carrier cannot limit its liability in a manner contrary to what is provided for in the COGSA.

SHORT FACTS:In December 1945 the goods specified in the Bill of Lading, were shipped on the 'S.S. Sea Hydra,' of Isthmian SteamshipCompany, from New York to Manila, and were received by the consignee 'Udharam Bazar and Co.', except one case ofvanishing cream valued at P159.78. The goods were insured against damage or loss by the 'Atlantic Mutual InsuranceCo.'; Udharam Bazar and Co.' Inc., who denied having received the goods for custody; and the 'International HarvesterCo. of the Philippines,' as agent for the shipping company, who answer that the goods were landed and delivered to theCustoms authorities. Finally, 'Udaharam Bazar and Co.' claimed for indemnity of the loss from the insurer, 'AtlanticMutual Insurance Co.', and was paid by the latter's agent 'E. E. Elser Inc.' the amount involved, that is, P159.78.

PETITIONERS CONTENTION:Petitioners contend that the finding of the appellate court is erroneous in the light of theprovisions of the Carriage of Goods by Sea Act of 1936, which apply to this case, the same having been made an integral

part of the covenants agreed upon in the bill of lading.

ISSUE:Whether clause 18 of the bill of lading shall prevail over the provisions in the Carriage of Goods by Sea Act.

COURT OF APPEALS:the Court of Appeals held that petitioners have already lost their right to press their claim againstrespondent because of their failure to serve notice thereof upon the carrier within 30 days after receipt of the notice ofloss or damage as required by clause 18 of the bill of lading

SUPREME COURT:That clause 18 must of necessity yields to the provisions of the Carriage of Goods by Sea Act in viewof the proviso contained in the same Act which says: "any clause, covenant, or agreement in a contract of carriagerelieving the carrier or the ship from liability for loss or damage to or in connection with the goods . . . or lessening such


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liability otherwise than as provided in this Act, shall be null and void and of no effect." (section 3.) This means that acarrier cannot limit its liability in a manner contrary to what is provided for in said act and so clause 18 of the bill oflading must of necessity be null and void.

Dole v Maritime Company of the PhilKeywords: Cogsa's one year prescriptive period for claimsPonente: Narvasa, J

Facts:

Subject matter of action against Maritime: loss and/or damage to a shipment of machine parts

The cargo subject of the instant case was discharged in Dadiangas unto the custody of the consignee onDecember 18, 1971

The corresponding claim for the damages sustained by the cargo was filed by the plaintiff with the defendantvessel on May 4, 1972;

On June 11, 1973 the plaintiff filed a complaint in the Court of First Instance of Manila having three causes of

action, the third one is the claim for loss and/damage upon the said cargo shipment

The complaints for two causes of action were dismissed but the third cause of action was dismissed without prejudiced,hence the petitioner filed again a complaint on January 6, 1975.

Issuewhether or not Article 1155 of the Civil Code providing that the prescription of actions is interrupted by the making of anextrajudicial written demand by the creditor is applicable to actions brought under the Carriage of Goods by Sea Act

Petitioner's contention:It concedes that its action is subject to the one-year period of limitation prescribe. Dole's contention that the

prescriptive period "*** remained tolled as of May 4, 1972 and that in legal contemplation the case (Civil Case No.96353) was filed on January 6, 1975 , well within the one-year prescriptive period in Sec. 3(6) of the Carriage of Goods bySea Actand because Dole's claim for loss or damage made on May 4, 1972 amounted to a written extrajudicial demandwhich would toll or interrupt prescription under Article 1155, it operated to toll prescription also in actions under theCarriage of Goods by Sea Act.

Defendant's contention:Prescribed action

RulingCourt rejected the contention that an extrajudicial demand toiled the prescriptive period provided for in the Carriage ofGoods by Sea Act. Similarly, we now hold that in such a case the general provisions of the new Civil Code (Art. 1155)


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cannot be made to apply, as such application would have the effect of extending the one-year period of prescriptionfixed in the law. It is desirable that matters affecting transportation of goods by sea be decided in as short a time aspossible; the application of the provisions of Article 1155 of the new Civil Code would unnecessarily extend the periodand permit delays in the settlement of questions affecting transportation, contrary to the clear intent and purpose ofthe law. It is clearly fallacious and merits no consideration. #MARIANO

SEA-LAND SERVICE, INC., vs. INTERMEDIATE APPELLATE COURT and PAULINO CUE, doing business under the name

and style of "SEN HIAP HING"KEYWORD: no value declared; stolen

DOCTRINE:Even if Section 4(5) of COGSA did not exist, the validity and binding effect of the liability limitation clause inthe bill of lading here are fully sustainable on the basis alone of Article 1749 and 1750 of the Civil Code. That saidstipulation is just and reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liabilityonly if a greater value is not declared for the shipment in the bill of lading. To hold otherwise would amount toquestioning the justice and fairness of that law itself.

FACTS:Sea-Land Service, Inc., a foreign shipping and forwarding company licensed to do business in the Philippines, receivedfrom Seaborne Trading Company in Oakland, California a shipment consigned to Sen Hiap Hing the business name usedby Paulino Cue. The shipper not having declared the value of the shipment, no value was indicated in the bill of lading.The bill described the shipment only as "8 CTNS on 2 SKIDS-FILES." The shipment arrived in Manila, and while awaitingtransshipment to Cebu,the cargo was stolen by pilferers and has never been recovered.

Paulino Cue, the consignee, made formal claim upon Sea-Land for the value of the lost shipment allegedly amounting to

P179,643.48. 5 Sea-Land offered to settle for US$4,000.00, or its then Philippine peso equivalent of P30,600.00.asserting that said amount represented its maximum liability for the loss of the shipment under the package limitationclause in the covering bill of lading. Cue rejected the offer and thereafter brought suit for damages against Sea-Land in

the then Court of First Instance of Cebu, Branch X.

ISSUE:Whether or not the consignee of seaborne freight is bound by stipulations in the covering bill of lading limiting toa fixed amount the liability of the carrier for loss or damage to the cargo where its value is not declared in the bill.

RULING:YES. Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriageis governed by the laws of the country of destination and the goods in question were shipped from the United States tothe Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil Code, and as ordained by the saidCode, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of thesesupplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the carriage


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by sea to and from the Philippines Ports in Foreign Trade by Commonwealth Act. 65.

Even if Section 4(5) of COGSA did not exist, the validity and binding effect of the liability limitation clause in the bill oflading here are fully sustainable on the basis alone of Article 1749 and 1750 of the Civil Code. That said stipulation is justand reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a greatervalue is not declared for the shipment in the bill of lading. To hold otherwise would amount to questioning the justiceand fairness of that law itself, and this the private respondent does not pretend to do.But over and above that consideration, the lust and reasonable character of such stipulation is implicit in it giving the

shipper or owner the option of avoiding acrrual of liability limitation by the simple and surely far from onerousexpedient of declaring the nature and value of the shipment in the bill of lading.

The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment covered bySection 4(5) of COGSA to US$500 per package unless the shipper declares the value of the shipment and pays additionalcharges is valid and binding on Cue. #MEDINA

Maritime Agencies and Services, Inc. vs CA

KEYWORD: Urea; Prescription period for filing claim

DOCTRINE:

In any event, the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit isbrought within one year after delivery of the goods or the date when the goods should have been delivered; Provided,that if a notice of loss for damage; either apparent or concealed, is not given as provided for in this section, that factshall not effect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or thedate when the goods should have been delivered.

FACTS:

Transcontinental Fertilizer Company of London chartered from Hongkong Island Shipping Company of Hongkong the

motor vessel named "Hongkong Island" for the shipment of 8073.35 MT (gross) bagged urea from Novorossisk, Odessa,USSR to the Philippines, the parties signing for this purpose a Uniform General Charter. Of the total shipment, 5,400.04MT was for the account of Atlas Fertilizer Company as consignee, 3,400.04 to be discharged in Manila and the remaining2,000 MT in Cebu. The goods were insured by the consignee with the Union Insurance Society of Canton, Ltd. forP6,779,214.00 against all risks. Maritime Agencies & Services, Inc. was appointed as the charterer's agent andMacondray Company, Inc. as the owner's agent. The vessel arrived in Manila on October 3, 1979, and unloaded part ofthe consignee's goods, then proceeded to Cebu on October 19, 1979, to discharge the rest of the cargo. On October 31,1979, the consignee filed a formal claim against Maritime, copy furnished Macondray, for the amount of P87,163.54,representing C & F value of the 1,383 shortlanded bags. On January 12, 1980, the consignee filed another formal claim,this time against Viva Customs Brokerage, for the amount of P36,030.23, representing the value of 574 bags of netunrecovered spillage. These claims having been rejected, the consignee then went to Union, which on demand paid the


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total indemnity of P113,123.86 pursuant to the insurance contract. As subrogee of the consignee, Union then filed onSeptember 19, 1980, a complaint for reimbursement of this amount, with legal interest and attorney's fees, againstHongkong Island Company, Ltd., Maritime Agencies & Services, Inc. and/or Viva Customs Brokerage. On April 20, 1981,the complaint was amended to drop Viva and implead Macondray Company, Inc. as a new defendant. The trial courtrendered judgment holding the defendants liable. The CA modified said decision.

ISSUE: Whether or not the period for filing the claim had already prescribed.

RULING:SCWe do agree that the period for filing the claim is one year, in accordance with the Carriage of Goods by Sea Act.This was adopted and embodied by our legislature in Com. Act No. 65 which, as a special law, prevails over the generalprovisions of the Civil Code on prescription of actions. Section 3(6) of that Act provides as follows:In any event, the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit isbrought within one year after delivery of the goods or the date when the goods should have been delivered; Provided,that if a notice of loss for damage; either apparent or concealed, is not given as provided for in this section, that factshall not effect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or thedate when the goods should have been delivered.

The one-year period in the cases at bar should commence on October 20, 1979, when the last item was delivered to theconsignee. 18 Union's complaint was filed against Hongkong on September 19, 1980, but tardily against Macondray onApril 20, 1981. The consequence is that the action is considered prescribed as far as Macondray is concerned but notagainst its principal, which is what matters anyway. #NERI

Mayer Steel Pipe Corporation vs. Court of Appeals

Doctine:Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be discharged from allliability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date when

they should have been delivered. Under this provision, only the carriers liability is extinguished if no suit is broughtwithin one year. But the liability of the insurer is not extinguished because the insurers liability is based not on thecontract of carriage but on the contract of insurance. A close reading of the law reveals that the Carriage of Goods bySea Act governs the relationship between the carrier on the one hand and the shipper, the consignee and or insurer onthe other hand. It defines the obligations of the carrier under the contract of carriage. It does not, however, affect therelationship between the shipper and the insurer. The latter case is governed by the Insurance Code.

Facts:

In 1983, petitioner Hong Kong Government Supplies Department (Hongkong) contracted petitioner Mayer Steel PipeCorporation (Mayer) to manufacture and supply various steel pipes and fittings. From August to October 1983, Mayershipped the pipes and fittings to Hongkong.


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Prior to the shipping, petitioner Mayer insured pipes and fittings against all risks with private respondents South SeaSurety and Insurance Co. Inc. (South Sea) and Charter Insurance Corp. (Charter).Petitioners Mayer and Hongkong jointly appointed Industrial Inspection (International) Inc. as third-party inspector toexamine whether the pipes and fittings are manufactured in accordance with the specifications in the contract.Industrial Inspection certified all the pipes and fittings to be in good order condition before they were loaded in thevessel. Nonetheless, when the goods reached Hongkong, it was discovered that a substantial portion thereof wasdamaged.

Issue:Whether or not Section 3 (6) of COGSA will apply in the case at bar

Respondents claim:Private respondents averred that they have no obligation to pay the amount claimed by petitionersbecause the damage to the goods is due to the factory defects which are not covered by the insurance policies.

Trial Court:Damage to the goods is not due to the manufacturing defects. Insurance contracts executed by petitionerMayer and private respondents are all-risks policies which insure against all causes of conceivable loss or damage.

CA:Affirmed TCs ruling. However, it set aside the decision of the trial court and dismissed the complaint on the groundof prescription. It held that the action is barred under Sec. 3 (6) of the COGSA since it was filed only on April 17, 1986,more than two years from the time the goods were unloaded from the vessel. Sec. 3 (6) of the COGSA provides that the

carrier and the ship will be discharged from all liability in respect of loss or damage unless suit is brought within one yearafter delivery of the goods or the date when the goods should have been delivered. Respondent court ruled that this

provision applies not only to the carrier but also to the insurer, citing Filipino Merchants Insurance Co. V. Alejandro.

SC:Under Sec 3 (6) of COGSA, only the carriers liability is extinguished if no suit is brought within one year. But theliability of the insurer is not extinguished because the insurers liability is based not on the contract of carriage but onthe contract of insurance. COGSA governs the relationship between the carrier on the one hand and the shipper, theconsignee and/or the insurer on the other hand. It defines the obligations of the carrier under the contract of carriage. Itdoes not, however, affect the relationship between the shipper and the insurer. The latter case is governed by theInsurance Code.The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was the insurer which filed a claimagainst the carrier for reimbursement of the amount it paid to the shipper. In the case at bar, it was the shipper which

filed a claim against the insurer. The basis of the shippers claim is the all-risks insurance policies issued by the privaterespondents to petitioner Mayer.When the Court said in Filipino Merchants that Section 3 (6) of the COGSA applied to the insurer, it meant that theinsurer, like the shipper, may no longer file a claim against the carrier beyond the one year period provided in the law.#PASCUA


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LUZON STEVEDORING vs. THE PUBLIC SERVICE COMMISSION

KEYWORD: considered as a public carrier

DOCTRINE:Section 13 (b) of the Public Service Law (Commonwealth Act No. 146) defines public service thus: "The term 'publicservice' includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire orcompensation, with general or limited clientele, whether permanent, occasional or accidental, and done for generalbusiness purposes any common carrier, railroad, street railway, traction railway, subway, motor vehicle, either forfreight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier serviceof any class, express service, steamboat, or steamship line, pontines, ferries, and small water craft

FACTS:Petitioners are engaged in the stevedoring or lighterage and harbor towage business. They are also engaged ininterisland service which consist of hauling cargoes such as sugar, oil, fertilizer and other commercial commodities.There is no fixed route in the transportation of these cargoes, the same being left at the indication of the owner orshipper of the goods. Petitioners, in their hauling business, serve only a limited portion of the public. During the period

from January, 1949 and up to the present, respondent Luzon Stevedoring Co. Inc., has been rendering to PRATRAregularly and on many occasions such service by carrying fertilizer from Manila to various points in the provinces, and onthe return trip sugar was loaded from said provinces to Manila. For these services, respondent Luzon StevedoringCompany, Inc., charged PRATRA at the rate of P0.60 per picul or bag of sugar and, according to Mr. Mauricio Rodriguez,chief of the division in charge of sugar and fertilizer of the PRATRA, for the transportation of fertilizer, this respondentcharged P12 per metric ton.

The Philippine Shipowners Association complained to the Public Service Commission that petitioners were engaged in

the transportation of cargo in the Philippines for hire or compensation without authority or approval of the CommissionThe rates petitioners charged resulted in ruinous competition. The Public Service Commission restrained petitionersfrom further operating their watercraft to transport goods for hire or compensation between points in the Philippines

until the commission approves the rates they propose to charge.

ISSUE:Whether or not the petitioners fall under the definition in Section 13 (b) of the Public Service Law

PETITIONERS CONTENTION: Luzon Stevedoring asserts that it is a private carrier and not a public carrier. Being so, it isnot subject to CA 146 which regulates common carriers.

RESPONDENTS CONTENTION:It was upon these findings that the Commission made the order now sought to bereviewed, upon complaint of the Philippine Shipowners' Association charging that the then respondents were engagedin the transportation of cargo in the Philippines for hire or compensation without authority or approval of theCommission, having adopted, filed and collected freight charges at the rate of P0.60 per bag or picul, particularly sugar,


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loaded and transported in their lighters and towed by their tugboats between different points in the Province of NegrosOccidental and Manila, which said rates resulted in ruinous competition with complainant.RULING: Upon the foregoing considerations, the appealed order of the Public Service Commission is affirmed, with costsagainst the petitioners. It is not necessary, under this definition, that one holds himself out as serving or willing to servethe public in order to be considered public service.

In that case, the Luzon Brokerage Company, a customs broker, had been receiving, depositing and delivering goodsdischarged from ships at the pier to its customers. As here, the Luzon Brokerage was then rendering transportation

service for compensation to a limited clientele, not to the public at large.

In the United States where, it is said, there is no fixed definition of what constitutes public service or public utility, it isalso held that it is not always necessary, in order to be a public service, that an organization be dedicated to public use,i.e., ready and willing to serve the public as a class. It is only necessary that it must in some way be impressed with apublic interest; and whether the operation of a given business is a public utility depends upon whether or not the servicerendered by it is of a public character and of public consequence and concern. (51 C. J. 5.) Thus, a business may beaffected with public interest and regulated for public good although not under any duty to serve the public. (43 Am. Jur.,572.)

It has been already shown that the petitioners' lighters and tugboats were not leased, but used to carry goods forcompensation at a fixed rate for a fixed weight. At the very least, they were hired, hired in the sense that the shippersdid not have direction, control, and maintenance thereof, which is a characteristic feature of lease. Commonwealth ActNo. 146 declares in unequivocal language that an enterprise of any of the kinds therein enumerated is a public service ifconducted for hire or compensation even if the operator deals only with a portion of the public or limited clientele.#QUINTOS

Epitancio San Pablo vs. Pantranco South Express IncKeyword: black double

Doctrine:Ferry implies the crossing of open seas, thus the service is not merely a ferry service but is actually a coastwiseshipping which requires the application of separate CPC.

Facts:PANTRANCO is engaged in the land transportation business with PUB service for passengers and freight andvarious certificates for public conveniences CPC to operate passenger buses from Metro Manila to Bicol Region andEastern Samar. PANTRANCO twrote to Maritime Industry Authority (MARINA) requesting authority to lease/purchase avessel named M/V "Black Double" "to be used for its project to operate a ferryboat service from Matnog, Sorsogon andAllen, Samar that will provide service to company buses and freight trucks that have to cross San Bernardo Strait.Despite the refusal or the Marina to give due course to the request, Pantranco nevertheless acquired the MV Double . Itwrote the Chairman of the Board of Transportation (BOT) that it proposes to operate a ferry service to carry its


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passenger buses and freight trucks between Allen and Matnog in connection with its trips to Tacloban City.Withoutawaiting action on its request PANTRANCO started to operate said ferry service. Acting Chairman Jose C. Campos, Jr. ofBOT ordered PANTRANCO not to operate its vessel until the application for hearing. BOT rendered its decision holdingthat the ferry boat service is part of its CPC to operate from Pasay to Samar/Leyte by amending PANTRANCO's CPC.Epitacio San Pablo and Cardinal Shipping Corporation who are franchise holders of the ferry service in this areainterposed their opposition.

RC:It claims that it can operate a ferry service in connection with its franchise for bus operation in the highway from

Pasay City to Tacloban City "for the purpose of continuing the highway, which is interrupted by a small body of water,the said proposed ferry operation is merely a necessary and incidental service to its main service and obligation oftransporting its passengers from Pasay City to Tacloban City. Such being the case, there is no need to obtain a separatecertificate for public convenience to operate a ferry service between Allen and Matnog to cater exclusively to itspassenger buses and freight trucks.

PC:They claim they adequately service the PANTRANCO by ferrying its buses, trucks and passengers.

Issue:Whether or not Pantranco is authorized to operate a ferry service or coastwise or interisland shipping servicealong its authorized route as an incident to its franchise without the need of filing a separate application for the sam

Ruling:No. The term "ferry" implied the continuation by means of boats, barges, or rafts, of a highway or the connection ofhighways located on the opposite banks of a stream or other body of water. The term necessarily implies transportationfor a short distance, almost invariably between two points, which is unrelated to other transportation while steamboator motorboat service is between the different islands, involving more or less great distance and over more or lessturbulent and dangerous waters of the open sea, to be coastwise or inter-island service. The conveyance of passengers,trucks and cargo from Matnog to Allen is certainly not a ferry boat service but a coastwise or interisland shippingservice. Under no circumstance can the sea between Matnog and Allen be considered a continuation of the highway.While a ferry boat service has been considered as a continuation of the highway when crossing rivers or even lakes,which are small body of waters - separating the land, however, when as in this case the two terminals, Matnog and Allenare separated by an open sea it can not be considered as a continuation of the highway.Respondent PANTRANCO should secure a separate CPC for the operation of an interisland or coastwise shipping service

in accordance with the provisions of law. Its CPC as a bus transportation cannot be merely amended to include thiswater service under the guise that it is a mere private ferry service. #SANTOS, A.


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Mansanal vs Ausejo

Keyword: Holp-up incident thinking that driver has direct participation to the crime.

Doctrine:The power of the Commission to suspend or revoke any certificate received under the provisions of the Act may only beexercised whenever the holder thereof has violated or willfully and contumaciously refused to comply with any order,rule or regulation of the Commission or any provision of the Act. In the absence of showing that there is willful andcontumacious violation on the part of petitioner, no certificate of public convenience may be validly revoked.

Facts:

Mr. Ausejo and Mr. Caballes, strolling along the seasided embankment of Dewey or Roxas Boulevard at about 6:00o'clock in the morning of March 13, 1966 towards the direction of Pasay City. As they were in front of the L & S Building,they noticed that the three (3) men alighted from a vehicle behind them. Immediately thereafter, these men accostedand held-up both of them. Since the two offered some resistance, they attracted the attention of other promenaders aswell as the attention of about twelve passing motorists who stopped to watch the spectacle, Two of the hold-upperswent after Mr. Caballes and the other one took care of Mr. Ausejo who fought back and succeeded in disarming the

hold-uppers of his knife. He then drew his pistol and tried to shoot him but it jammed. As the two other hold-uppers rantowards his direction, presumably to assist their companion, they were warned that Mr. Ausejo had a gun and so theystopped and rushed instead to a waiting taxi bearing Plate No. 6100.

Issue:Whether or not the certificate of public convenience issued should be cancelled for not rendering safe, adequateand proper service by employing a driver with criminal tendencies, in violation of the Public Service Law

Held:

All that was proved during the investigation was the hold-up incident of March 13, 1966. But proof of the hold-upincident is not proof of the charges under Section 19 (a) of the Public Service Law and Sec. 47 of the Revised Order No.17. Most importantly, even the precise Identity of the taxicab boarded by the hold-uppers as they escaped had not been

established. The only testimony linking the taxicab of petitioner was that of the companion of private respondent Ausejothat he saw the malefactors scamper away and seize a taxi whose plate number was "6100". With respect to thedescription of the alleged taxi, he said that the taxi was red in the entire body while private respondent Ausejo said thatthe taxi was red and it had parts painted blue. Both confirmed each other that the plate color was orange.

We find that petitioner has successfully refuted the alleged participation of her taxi.

Even on the assumption that it was petitioner's taxicab that was used by the escaping hold-uppers, there is no evidencethat the driver is a co-conspirator in the commission of the offense of robbery. Conspiracy must be proved by clear andconvincing evidence. The mere claim that the taxicab was there and probably waiting is not proof of conspiracy in thiscase as it should be recalled that there were about twelve vehicles that stopped to view the spectacle. Further, it is


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possible that the driver did not act voluntarily as no person in his right senses would defy the wishes of armedpassengers. Even on the assumption that the driver had participated voluntarily in the incident, his culpability should notbe made a ground for the cancellation of the certificate of petitioner.

While an employer may be subsidiarily liable for the employee's civil liability in a criminal action, subsidiary liabilitypresupposes that there was a criminal action. Besides, in order that an employer may be subsidiarily liable, it should beshown that the employee committed the offense in the discharge of his duties. While it is true also that an employermay be primarily liable under Article 2180 of the Civil Code for the acts or omissions of persons for whom one is

responsible, this liability extends only to damages caused by his employees acting within the scope of their assignedtasks. Clearly, the act in question is totally alien to the business of petitioner as an operator and hence, the driver's illicitact is not within the scope of the functions entrusted to him. Moreover, th

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