1

Lessons Applicable: Charter The hatches remained closed and tightly sealed taking draft readings of the vessel prior to and after
Party (Transportation) throughout the entire voyage discharge

July 3, 1974: PPI unloaded the cargo from the holds shortage in the cargo of 106.726 M/T and that a
into its steelbodied dump trucks which were parked portion of the Urea fertilizer approximating 18 M/T
FACTS: alongside the berth, using metal scoops attached to the was contaminated with dirt
June 16 1974: Mitsubishi ship, pursuant to the terms and conditions of the
charter-partly Certificate of Shortage/Damaged Cargo prepared by
International Corporation PPI
(Mitsubishi) of New York, hatches remained open throughout the duration of the
U.S.A., 9,329.7069 M/T of discharge short of 94.839 M/T and about 23 M/T were rendered
Urea 46% fertilizer bought unfit for commerce, having been polluted with sand,
by Planters Products, Inc. Each time a dump truck was filled up, its load of Urea rust and dirt
(PPI) on aboard the cargo was covered with tarpaulin before it was transported
vessel M/V "Sun Plum" owned to the consignee's warehouse located some 50 meters PPI sent a claim letter 1974 to Soriamont Steamship
by private Kyosei Kisen from the wharf Agencies (SSA), the resident agent of the carrier,
Kabushiki Kaisha (KKKK) KKKK, for P245,969.31 representing the cost of the
from Kenai, Alaska, U.S.A., to Midway to the warehouse, the trucks were made to alleged shortage in the goods shipped and the
Poro Point, San Fernando, La pass through a weighing scale where they were diminution in value of that portion said to have been
Union, Philippines, as individually weighed for the purpose of ascertaining contaminated with dirt
evidenced by Bill of Lading the net weight of the cargo.
SSA: what they received was just a request for
May 17 1974: a time The port area was windy, certain portions of the route shortlanded certificate and not a formal claim, and
charter-party on the vessel M/V to the warehouse were sandy and the weather was that they "had nothing to do with the discharge of the
"Sun Plum" pursuant to the variable, raining occasionally while the discharge was shipment
Uniform General Charter was in progress.
RTC: failure to destroy the presumption of negligence
entered into between Tarpaulins and GI sheets were placed in-between and against them, SSA are liable
Mitsubishi as shipper/charterer alongside the trucks to contain spillages of the
and KKKK as shipowner, in ferilizer CA: REVERSED - failed to prove the basis of its
Tokyo, Japan cause of action
It took 11 days for PPI to unload the cargo
Before loading the fertilizer ISSUE: W/N a time charter between a shipowner and
aboard the vessel, 4 of her Cargo Superintendents Company Inc. (CSCI), private a charterer transforms a common carrier into a private
holds were all presumably marine and cargo surveyor, was hired by PPI to one as to negate the civil law presumption of
inspected by the charterer's determine the "outturn" of the cargo shipped, by negligence in case of loss or damage to its cargo
representative and found fit
 2

weather condition prevalent during its unloading the shipment of molasses as a total loss. Thereafter,
Pag-asa Sales, Inc. filed a formal claim with the
HELD: NO. petition This is a risk the shipper or the owner of the goods insurer of its lost cargo, herein private respondent,
is DISMISSED has to face. Clearly, KKKK has sufficiently proved Philippine General Insurance Company (PhilGen, for
the inherent character of the goods which makes it short) and against the carrier, herein petitioner,
When PPI chartered the vessel highly vulnerable to deterioration; as well as the
M/V "Sun Plum", the ship Coastwise Lighterage. Coastwise Lighterage denied
inadequacy of its packaging which further contributed the claim and it was PhilGen which paid the
captain, its officers and to the loss.
compliment were under the consignee, Pag-asa Sales, Inc., the amount of
employ of the shipowner and P700,000.00, representing the value of the damaged
therefore continued to be under cargo of molasses. Issues: Whether or not whether or
its direct supervision and On the other hand, no proof was adduced by the not petitioner Coastwise Lighterage was transformed
control. Hardly then can we petitioner showing that the carrier was remise in the into a private carrier, by virtue of the contract of
charge the charterer, a stranger exercise of due diligence in order to minimize the loss affreightment which it entered into with the consignee,
to the crew and to the ship, with or damage to the goods it carried. Pag-asa Sales, Inc. Whether or not the insurer was
the duty of caring for his cargo subrogated into the rights of the consignee against the
when the charterer did not have carrier, upon payment by the insurer of the value of
any control of the means in the consignee's goods lost while on board one of the
doing so carrier's vessels. Held: No, petitioner Coastwise
Third Division Coastwise Lighterage Corp. v. Court Lighterage was not transformed into a private carrier,
carrier has sufficiently of Appeals GR No. 114167 July 12, 1995 Francisco, J: by virtue of the contract of affreightment. Yes, the
overcome, by clear and Facts: Pag-asa Sales, Inc. entered into a contract to insurer was subrogated into the rights of the consignee
convincing proof, the prima transport molasses from the province of Negros to against the carrier. Ratio: As regards the first issue:
facie presumption of Manila with Coastwise Lighterage Corporation using Although a charter party may transform a common
negligence. The hatches the latter's dumb barges. The barges were towed in carrier into a private one, the same however is not true
remained close and tightly tandem by the tugboat MT Marica, which is likewise in a contract of affreightment on account of the
sealed while the ship was in owned by Coastwise. Upon reaching Manila Bay, aforementioned distinctions between the two.
transit as the weight of the steel while approaching Pier 18, one of the barges, Petitioner admits that the contract it entered into with
covers made it impossible for a "Coastwise 9", struck an unknown sunken object. The the consignee was one of affreightment. We agree.
person to open without the use forward buoyancy compartment was damaged, and Pag-asa Sales, Inc. only leased three of petitioner's
of the ship's boom. water gushed in through a hole "two inches wide and vessels, in order to carry cargo from one point to
twenty-two inches long". As a consequence, the another, but the possession, command and navigation
bulk shipment of highly soluble molasses at the cargo tanks were contaminated and of the vessels remained with petitioner Coastwise
goods like fertilizer carries with rendered unfit for the use it was intended. This Lighterage. Pursuant therefore to the ruling in the
it the risk of loss or damage. prompted the consignee, Pag-asa Sales, Inc. to reject aforecited Puromines case, Coastwise Lighterage, by
More so, with a variable
 3

the contract of affreightment, Coastwise Lighterage, the former was subrogated into board of marine inquiry in BMI Case No. 653-87 after
was not converted into a private all the rights which Pag-asa Sales, Inc. may have had investigation found that the MT Vector, its registered
carrier, but remained a common against the carrier, herein petitioner Coastwise operator Francisco Soriano, and its owner and actual
carrier and was still liable as Lighterage. operator Vector Shipping Corporation, were at fault
such. As a common carrier, and responsible for its collision with MV Doña Paz
petitioner is liable for breach of
the contract of carriage, having February 13, 1989: Teresita Cañezal and Sotera E.
Transportation Case Digest: Caltex V. Sulpicio Lines Cañezal, Sebastian Cañezal’s wife and mother
failed to overcome the (1999)
presumption of negligence with respectively, filed a complaint for “Damages Arising
the loss and destruction of G.R.No. 131166 September 30, 1999 from Breach of Contract of Carriage” against Sulpicio
goods it transported, by proof Lessons Applicable: Charter Party (Transportation) Lines, Inc. for the death of Sebastian E.
of its exercise of extraordinary Cañezal (public school teacher 47 years old) and his
diligence. As regards the FACTS: 11-year old daughter Corazon G. Cañezal
second issue: Article 2207 of Sulpicio, in turn, filed a 3rd party complaint against
December 19, 1987 8 pm: motor tanker MT
the Civil Code is explicit on Francisco Soriano, Vector Shipping Corporation and
Vector owned and operated by Vector Shipping
this point: Art. 2207. If the Caltex
Corporation carried 8,800 barrels of
plaintiffs property has been
petroleum products of Caltex by virtue of a charter Sulpicio alleged that Caltex chartered MT Vector with
insured, and he has received
contract gross and evident bad faith knowing fully well that
indemnity from the insurance
company for the injury or loss December 20, 1987 6:30 am: MV Doña Paz passenger MT Vector was improperly manned, ill-equipped,
arising out of the wrong or and cargo vessel owned and operated by Sulpicio unseaworthy and a hazard to safe navigation
breach of contract complained Lines, Inc. left the port of Tacloban headed for Manila RTC: dismissed the third party complaint and favored
of, the insurance company shall with 1,493 passengers indicated in the Coast Guard the Cañezal's against Sulpicio Lines
be subrogated to the rights of Clear
the insured against the CA: included Caltex as liable party
wrongdoer or the person who December 20, 1987: MT Vector collided with MV
violated the contract. . . . Doña Paz in the open sea within the vicinity of ISSUE: W/N Caltex as a voyage charterer of a sea
Undoubtedly, upon payment by Dumali Point between Marinduque and Oriental vessel liable for damages resulting from a collision
respondent insurer PhilGen of Mindoro, killing almost all the passengers and crew between the chartered vessel and a passenger ship
the amount of P700,000.00 to members of both ships except for 24 survivors
Pagasa Sales, Inc., the HELD: NO. Grants Petition. CA set aside.
MV Doña Paz carried an estimated 4,000 passengers
consignee of the cargo of
most were not in the passenger manifest respective rights and duties of a shipper and the
molasses totally damaged while
carrier depends not on whether the carrier is public or
being transported by petitioner
private, but on whether the contract of carriage:
 4

bill of lading or equivalent merchant or other person for the conveyance of goods,
shipping documents; or on a particular voyage, in consideration of the
payment of freight
charter party or similar contract
on the other may be either:

Caltex and Vector entered into (2)time charter - wherein the leased vessel is leased to (a) Make the ship seaworthy;
a contract of affreightment, also the charterer for a fixed period of time
known as a voyage charter
(3) voyage charter - wherein the ship is leased for a
charter party single voyage

contract by which an entire ship, charter-party provides for the hire of the vessel only,
or some principal part thereof, either for a determinate period of time or for a single (b) Properly man, equip, and supply the ship;
is let by the owner to another or consecutive voyage, the ship owner to supply the
person for a specified time or ship’s store, pay for the wages of the master of the
use crew, and defray the expenses for the maintenance of
the ship
Charter parties fall into three
main categories: charterer is free from liability to third persons in
respect of the ship xxx xxx xxx
(1) Demise or bareboat
does not convert the common carrier into a private
charterer mans the vessel with carrier
his own people and becomes, in
effect, the owner for the voyage
Thus, the carriers are deemed to warrant impliedly the
or service stipulated, subject to
Carriage of Goods by Sea Act : seaworthiness of the ship. For a vessel to be
liability for damages caused by
seaworthy, it must be adequately equipped for the
negligence
voyage and manned with a sufficient number of
common carrier becomes competent officers and crew. The failure of a
private common carrier to maintain in seaworthy condition
the vessel involved in its contract of carriage is a clear
contract of affreightment breach of its duty prescribed in Article 1755 of the
Sec. 3. (1) The carrier shall be bound before and at Civil Code
one by which the owner of a the beginning of the voyage to exercise due diligence
ship or other vessel lets the to - a passenger or a shipper of goods is under no
whole or part of her to a obligation to conduct an inspection of the ship and its
 5

crew, the carrier being obliged Respondent Ernesto Cendaña, a junk dealer, was On 6 January 1971, petitioner commenced action
by law to impliedly warrant its engaged in buying up used bottles and scrap metal in against private respondent in the Court of First
seaworthiness Pangasinan. Upon gathering sufficient quantities of Instance of Pangasinan, demanding payment of
such scrap material, respondent would bring such P22,150.00, the claimed value of the lost merchandise,
nature of the obligation of material to Manila for resale. He utilized two (2) plus damages and attorney’s fees. On December 10,
Caltex demands ordinary six-wheeler trucks which he owned for hauling the 1975, the trial court rendered a Decision finding
diligence like any other shipper material to Manila. On the return trip to Pangasinan, private respondent to be a common carrier and
in shipping his cargoes respondent would load his vehicles with cargo which holding him liable for the value of the undelivered
Caltex and Vector Shipping various merchants wanted delivered to differing goods (P22,150.00) as well as for P4,000.00 as
Corporation had been doing establishments in Pangasinan. For that service, damages and P2,000.00 as attorney’s fees.
business since 1985, or for respondent charged freight rates which were
commonly lower than regular commercial rates. The Court of Appeals reversed the judgment of the
about two years before the trial court and held that respondent had been engaged
tragic incident occurred in Sometime in November 1970, petitioner Pedro de in transporting return loads of freight, as a casual
1987. Past services rendered Guzman, a merchant and authorized dealer of General occupation a sideline to his scrap iron business and
showed no reason for Caltex to Milk Company (Philippines), Inc. in Urdaneta, not as a common carrier.
observe a higher degree of Pangasinan, contracted with respondent for the
diligence. hauling of 750 cartons of Liberty filled milk from a ISSUE:

Caltex had the right to presume warehouse of General Milk in Makati, Rizal, to Whether or not the private respondent is considered a
that the ship was seaworthy as petitioner’s establishment in Urdaneta on or before 4 common carrier.
even the Philippine Coast December 1970. Accordingly, on 1 December 1970,
Guard itself was convinced of respondent loaded in Makati the merchandise on to Whether or not the hijacking of respondent’s truck
its seaworthiness his trucks: 150 cartons were loaded on a truck driven was force majeure.
by respondent himself; while 600 cartons were placed
HELD:
on board the other truck which was driven by Manuel
Estrada, respondent’s driver and employee. 1. The Civil Code defines common carriers in the
De Guzman v. Court of
Appeals following terms:
Only 150 boxes of Liberty filled milk were delivered
G.R. No. L-47822; December to petitioner. The other 600 boxes never reached Article 1732. Common carriers are persons,
22, 1988 petitioner, since the truck which carried these boxes corporations, firms, or associations engaged in the
FELICIANO, J.: was hijacked somewhere along the MacArthur business of carrying or transporting passengers or
Highway in Paniqui, Tarlac, by armed men who took goods or both, by land, water, or air for compensation,
Topic: Liability of Common
with them the truck, its driver, his helper and the offering their services to the public.
Carriers
cargo.
FACTS:
 6

The above article makes no every person that now or hereafter may own, operate, may be overthrown by proof of extraordinary
distinction between one whose manage, or control in the Philippines, for hire or diligence on the part of private respondent.
principal business activity is the compensation, with general or limited clientele,
carrying of persons or goods or whether permanent, occasional or accidental, and However, under Article 1745 (6) above, a common
both, and one who does such done for general business purposes, any common carrier is held responsible and will not be allowed to
carrying only as an ancillary carrier, railroad, street railway, traction railway, divest or to diminish such responsibility· even for acts
activity (in local idiom, as a subway motor vehicle, either for freight or passenger, of strangers like thieves or robbers, except where such
sideline). Article 1732 also or both, with or without fixed route and whatever may thieves or robbers in fact acted with grave or
carefully avoids making any be its classification, freight or carrier service of any irresistible threat, violence or force. The court
distinction between a person or class, express service, steamboat, or steamship line, believes and so holds that the limits of the duty of
enterprise offering pontines, ferries and water craft, engaged in the extraordinary diligence in the vigilance over the
transportation service on a transportation of passengers or freight or both, goods carried are reached where the goods are lost as
regular or scheduled basis and shipyard, marine repair shop, wharf or dock, ice plant, a result of a robbery which is attended by grave or
one offering such service on an ice-refrigeration plant, canal, irrigation system, gas, irresistible threat, violence or force.
occasional, episodic or electric light, heat and power, water supply and power In the instant case, armed men held up the second
unscheduled basis. Neither does petroleum, sewerage system, wire or wireless truck owned by private respondent which carried
Article 1732 distinguish communications systems, wire or wireless petitioner’s cargo. The robbers not only took away the
between a carrier offering its broadcasting stations and other similar public services. truck and its cargo but also kidnapped the driver and
services to the general public Xxx his helper, detaining them for several days and later
i.e., the general community or releasing them in another province (in Zambales). In
population, and one who offers Further, a certificate of public convenience is not a
requisite for the incurring of liability under the Civil these circumstances, we hold that the occurrence of
services or solicits business the loss must reasonably be regarded as quite beyond
only from a narrow segment of Code provisions governing common carriers. That
liability arises the moment a person or firm acts as a the control of the common carrier and properly
the general population. We regarded as a fortuitous event. It is necessary to recall
think that Article 1733 common carrier, without regard to whether or not
such carrier has also complied with the requirements that even common carriers are not made absolute
deliberately refrained from insurers against all risks of travel and of transport of
making such distinctions. of the applicable regulatory statute and implementing
regulations and has been granted a certificate of goods, and are not held liable for acts or events which
The concept of “common public convenience or other franchise. cannot be foreseen or are inevitable, provided that
carrier” under Art. 1732 may be they shall have complied with the rigorous standard of
seen to coincide neatly with the 2. The hijacking of the carrier’s truck does not fall extraordinary diligence.
notion of “public service” within any of the five (5) categories of exempting
causes in Art. 1734. Hence, the private respondent as PUROMINES, INC., petitioner, vs. COURT OF
under the Public Service Act APPEAL and PHILIPP BROTHERS OCEANIC,
which states in section 13, par b, common carrier is presumed to have been at fault or
to have acted negligently. This presumption, however, INC., respondents. G.R. No. 91228. March 22, 1993
public service includes: xxx
 7

Facts: Puromines, Inc. and Petitioner should comply with the arbitration clause in absolutely to close the doors of the courts against the
Makati Agro Trading, Inc. the sales contract. Puromines opposed contending that parties, which agreement would be void, the courts
entered into a contract with the sales contract does not include contract of carriage, will look with favor upon such amicable arrangements
private respondents Philipp therefore, the latter is not covered by the agreement and will only interfere with great reluctance to
Brothers Oceanic, Inc. for the on arbitration. Issue: Whether or not the arbitration anticipate or nullify the action of the arbitrator.
sale of prilled Urea in bulk. The clause in the sales contract covers claims for WHEREFORE, petition is hereby DISMISSED and
Sales Contract provided, among violations of contract of carriage. Held: Yes. The sales decision of the court a quo is AFFIRMED.
others an arbitration clause contract is comprehensive enough to include claims
which states, thus: "9. for damages arising from carriage and delivery of the
Arbitration - Any disputes goods. Puromines derives its right to the cargo from GR 13695, 18 October 1921
arising under this contract shall the bill of lading which is the contract of
be settled by arbitration in affreightment together with the sales contract. Standard Oil Co. of New York vs. Lopez Castelo
London in accordance with the Consequently, it is bound by the provisions and terms
First Division
Arbitration Act 1950 and any of the said bill of lading and of the arbitration clause
statutory amendment or incorporated in the sales contract. Responsibility to
modification thereof. XXXX" third persons for goods shipped on board a vessel
The shipment covered by 3 follows the vessel's possession and employment. Facts:
bills of lading was loaded on Assuming the cause of action is based on contract of
By contract of charter, Castelo, as owner, let the small
MV Liliana Dimitrova with carriage, it must be first determined what kind of
interisland steamer Batangueño for the term of 1 year
Philipp Brothers as charterer of charter party had with the ship owner to determine
to Chumbuque for use in the conveying of cargo
said vessel. When the shipment liability. If it is a contract of affreightment, the
between certain ports of the Philippine Islands.
covered by Bill of Lading 1 and charterer is not liable as possession is still with owner.
3 were discharged in Manila, it If it is a charter of demise or bareboat, then the
was found to be in bad order charterer is liable as it is considered the owner and
and condition, caked, hardened therefore would be liable for damage or loss. In any In this contract it was stipulated that the officers and
and lumpy, discoloured and case, whether the liability of respondent should be crew of the Batangueño should be supplied by the
contaminated with rust and dirt. based on the same contract or that of the bill of lading, owner, and that the charterer should have no other
Puromines filed a complaint the parties are nevertheless obligated to respect the control over the captain, pilot, and engineers than to
with the Trial Court for breach arbitration provisions on the sales contract and/or the specify the voyages that they should make and to
of contract of carriage against bill of lading. Petitioner being a signatory and party to require the owner to discipline or relieve them as soon
Maritime, as ship-agent and the sales contract cannot escape from his obligation as possible in case they should fail to perform the
Philipp Brothers, as charterer. under the arbitration clause as stated therein. duties respectively assigned to them.
Philipp filed a motion to Arbitration has been held valid and constitutional. The
dismiss on the ground that rule now is that unless the agreement is such as
 8

While the boat was being thus managing the ship. Moreover, especially in the case of
used by the charterer in the small vessels, it renders the boat top-heavy and thus
interisland trade, the Standard When the storm abated the ship made port, and 13 may have to be cast overboard sooner than would be
Oil Company delivered to the cases of the petroleum were recovered, but the necessary if it were in the hold; and naturally it is
agent of the boat in Manila a remainder was wholly lost. always the first cargo to go over in case of emergency.
quantity of petroleum to be Indeed, in Art 815 of Code of Commerce, it is
conveyed to the port of expressly declared that deck cargo shall be cast
Casiguran, in the Province of To recover the value of the petroleum thus jettisoned overboard before cargo stowed in the hold.
Sorsogon. but not recovered, an action was instituted by the
Standard Oil Company against the owner of the ship
in the CFI Manila. However, with the advent of the steamship as the
For this consignment a bill of principal conveyer of cargo by sea, it has been felt
lading of the usual form was that the reason for the rule has become less weighty,
delivered, with the stipulation CFI Manila – in favor of Standard Oil especially with reference to coastwise trade; and it is
that freight should be paid at now generally held that jettisoned goods carried on
the destination. Said bill of deck, according to the custom of trade, by steam
lading contained no provision SC – AFFIRMED with modifications vessels navigating coastwise and inland waters, are
with respect to the storage of entitled to contribution as a general average loss.
the petroleum, but it was in fact
placed upon the deck of the
ISSUE: WON the loss of this petroleum was a general
ship and not in the hold. Hence, plaintiff is entitled to recover in some way and
average loss or a particular loss to be borne solely by
the owner of the cargo from somebody an amount bearing such proportion to
its total loss as the value of both the ship and the
While the boat was on her way saved cargo bears to the value of the ship and entire
to the port mentioned, and off cargo before the jettison was effected.
HELD: GENERAL AVERAGE LOSS
the western coast of Sorsogon,
a violent typhoon passed over
that region, and while the storm ISSUE: Who is the person, or persons, who are liable
was at its height the captain It is a general rule… (xxx) that ordinarily the loss of
to make good this loss, and what are the conditions
was compelled for the safety of cargo carried on deck shall not be considered a
under which the action can be maintained?
all to jettison the entire general average loss. The reason for this rule is found
consignment of petroleum in the fact that deck cargo is in an extra-hazardous
consisting of 200 cases. position and, if on a sailing vessel, its presence is
likely to obstruct the free action of the crew in
 9

HELD: The shipper may, in the proper steps to protect any shipper whose goods may rights of the latter. Issue: Whether or not Citadel
court’s opinion, go at once have been jettisoned for the general safety Lines, Inc. may be held primarily liable for the
upon the owner and the latter, if loss/damage found to have been sustained by subject
so minded, may have his shipment while on board and/or still in the custody of
recourse for indemnization In the case before us the captain of the vessel did not the said vessel. Held: Yes. The Code of Commerce
against his captain. take those steps; and the court is of the opinion that provides, among others, that the ship agent shall also
the failure of the captain to take those steps gave rise be liable for the indemnities in favor of third persons
to a liability for which the owner of the ship must which arise from the conduct of the captain in the care
Primary liability is placed upon answer. of the goods which the vessel carried; but he may
the person who has actual exempt himself therefrom by abandoning the vessel
control over the conduct of the with all her equipments and the freightage he may
voyage and who has most have earned during the voyage. (Article 587).cha
Switzerland General Insurance Co., Ltd. v. Ramirez,
capital embarked in the venture, Citadel Lines as the ship agent for the vessel S/S "St.
96 SCRA 297 ANTONIO, J.: Facts: On December 24,
namely, the owner of the ship, Lourdes" is liable to the petitioner, solidarily with its
1975, petitioner, a foreign insurance company
leaving him to obtain principal, Oyama Shipping Co., Ltd law
authorized to do business in the Philippines thru its
recourse**, as it is very easy to agent, F. E. Zuellig Inc., filed an admiralty case [G.R. No. 4602. October 4, 1909. ]
do, from other individuals who against Oyama Shipping Co., Ltd., a foreign firm
have been drawn into the doing business in the Philippines, and Citadel Lines, JUAN CO, by Martin M. Levering, his curator ad
venture as shippers Inc. which is the local agent of Oyama Shipping Co., litem, Plaintiff-Appellant, v. JAMES J. RAFFERTY,
Inc. The complaint alleged that on December 21, 1974, collector of customs, Defendant-Appellee.
60,000 bags of Urea Nitrogen were shipped from
**Recourse against his captain. Niihama Japan, on board the S/S St. Lourdes", owned Martin M. Levering for Appellant.
and operated by Citadel Lines, Inc. The goods were
consigned to Borden International Phils., Inc., and Solicitor-General Harvey for Appellee.
By article 852 of the Code of insured by petitioner for the sum of P9,319,105.00
Commerce the captain is against all risks.irtual law library The shipment was SYLLABUS
required to initiate the discharged from the vessel S/S "St. Lourdes" shipside
into lighters owned by Mabuhay Brokerage Company, 1. IMMIGRATION LAWS; CHINESE
proceedings for the adjustment,
Inc., but when the same was subsequently delivered to IMMIGRANTS. — Held, That the Chinese
liquidation, and distribution of
and received by the consignee, it was found to have immigration laws are enforced in these Islands by the
any gross average to which the
sustained losses and/or damage amounting to customs officials, and their decision that a person
circumstances of the voyage
P38.698.94. This amount was paid by petitioner seeking to enter these Islands is not a citizen is final
may have given origin; and it is
insurance company to the consignee/assured, by when no abuse of authority by such officials is
therefore his duty to take the
virtue of which payment it became subrogated to the shown.
 10

and declarations by the plaintiff, and of his alleged

2. ID.; ID. — Held, That the mother and all other witnesses whom the plaintiff
status of a Chinaman and his MORELAND, J. : desired to produce, and, after having carefully
right to enter these Islands are investigated the merits of the case, rendered a
to be determined as of the time decision in which they found that the contentions of
when he presents himself for On or about the 18th day of February, 1905, Juan Co, the plaintiff were not sustained and that he was not
entry, and not by events which the plaintiff in this action, arrived on board a vessel in entitle to land in the Philippine Islands.
subsequently transpired. the harbor of Cebu direct from China and sought to
land. Disembarkation was refused by the customs A careful investigation of the record in this case
3. ID.; ID. — Where a authorities on the ground that he was a subject of discloses that the plaintiff has not been deprived of
Chinaman presented himself China and as such was not entitled to enter the any opportunity to present such proofs as he desired
for entry in these Islands, Philippine Islands. He alleged that he was 17 years of and has been denied no privilege which the law
claiming a right to enter, and, age and a native of the Philippine Islands; that he was confers. He was given every opportunity to protect his
upon his being refused entry, the illegitimate son of a Filipino woman and of a rights. A fair and impartial hearing was given him in
gave a bond to the customs Chinese merchant, both residents of Cebu at the time the manner prescribed by law, and, after due
authorities conditioned that if of his birth; that he was taken to China by his father deliberation upon the part of those authorities, based
his claim to enter was when he was 6 or 7 years of age; and that his father upon the proofs of the case, it was found as a fact that
disallowed he would present had not since that time returned to the Philippine the plaintiff was not born in the Philippine Islands, but
himself for deportation, and Islands, but had remained continuously in China; that, was born in China, and that he had no right to be
upon giving said bond was on arriving at an age where he could care for himself, admitted into the Philippine Islands. the proceedings
allowed to land, and while in he had left his father in China and returned to the referred to were duly transmitted to the defendant by
the Islands under and by virtue Philippine Islands, desiring to resume a residence in the commission, and he, after having personally
of said bond, he was adopted as the country where he was born. These claims of the investigated the matter himself, approved the findings
a son by another Chinaman, plaintiff were duly and personally investigated by the of the commission and ordered the deportation of the
domiciled in the Islands, by defendant in the case, who was then, as now, collector plaintiff. After having been passed upon by the
virtue of proceeding for such of customs of the city of Cebu. At hearings appointed defendant, the matter, with all the record, was
adoption had in accordance for the purpose the defendant heard the declarations transmitted to the Collector of Customs for the
with the laws of these Islands: and the testimony of the plaintiff, of his alleged Philippine Islands, who, after a careful review of the
Held, That such adoption had mother, and of all other witnesses whom the plaintiff whole case, in a written opinion, approved the action
no effect upon his right to enter desired to produce in favor of his contentions. of the defendant and of the commission appointed by
or remain in the Islands. Thereafter the defendant appointed a commission to him. Late the matter was presented, at the request of
investigate the allegations of the plaintiff as to his the plaintiff, to the Secretary of Finance and Justice,
right to land and his claim to citizenship in the who, after a careful review of the whole proceedings,
DECISION Philippine Islands. that Commission heard the proofs approved the same.
 11

referred to, the plaintiff, by his attorney, Martin M. be, and is, denied. That question has been settled
While the proceedings above Levering, on or about the 28th day of February, 1907, adversely to plaintiff’s claims by the Supreme Court
mentioned were being carried instituted the action at bar, in which the plaintiff asked of the United States and by the Supreme Court of the
on, the plaintiff was permitted that the court decree an order of perpetual prohibition Philippine Islands. In the case of Ngo-Ti v. W.
to land in the City of Cebu preventing the defendant from deporting the plaintiff Morgan Shuster, Collector of Customs (7 Phil. Rep.,
upon giving a bond conditioned from the Philippine Islands. He alleges two grounds 355), the court, in discussing the precise question
that he would hold himself as the basis of such action:chanrob1es virtual 1aw presented here, says (p. 358):jgc:chanrobles.com.ph
ready for deportation if it library
should finally be determined "The principal and important question, whether the
that he was not entitled to land. First. That the plaintiff was born in the city of Cebu of decision of the administrative officers is final or not
While enjoying the privileges a Chinese father and a Filipino mother and that he was upon question of citizenship has, we think, been
thus given to him in the city of a natural-born citizen of the Philippine Islands. decided in the case of the United States v. Ju-Toy
Cebu, the plaintiff on or about (198 U.S., 253). In that case the court
the 27th day of February, 1905, Second. That having been duly adopted as a son of Co said:jgc:chanrobles.com.ph
caused proceedings to be Kip Jat in the proceedings above referred to, he, upon
instituted in the Court of First the successful termination of those proceedings, "‘It is established, as we have said, that the act
Instance of the city of Cebu became a citizen of the Philippine Islands and had the purports to make the decision of the Department final,
having for their abject the right to remain therein. whatever the ground on which the right to enter the
adoption of the plaintiff by a country is claimed, as well when it is citizenship as
Chinese resident of the city of That action was brought to trial before the Court of when it is domicile, and the belonging to a class
Cebu named Co. Kip Jat. Such First Instance of the city of Cebu on the 20th day of excepted from the exclusion acts. . . . If, for the
proceedings were carried to a April, 1907. Substantially the same evidence was purpose of argument, we assume that the fifth
successful issue and the produced by the plaintiff in this case as was produced amendment applies to him, and that to deny entrance
plaintiff was on said date duly by him before the collector of customs and his to a citizen is to deprive him of liberty, we
adopted as a son of the said Co commission above referred to. The only substantial nevertheless, are of opinion that with regard to him
Kip Jat pursuant to the laws of difference was the testimony relative to the adoption due process of law does not require judicial trial.’
the Philippine Islands, under of the plaintiff by Co Kip Jat. At the conclusion of the
which said proceedings were trial the court rendered a decision adverse to the "In the case of Pearson v. Williams (202 U.S., 281),
brought. plaintiff’s claim. From that judgment the plaintiff the court said at page 286:jgc:chanrobles.com.ph
appealed to this court.
The claims of the plaintiff as to "But the matter which was before the mind of
the right to land having been As to the claim of the plaintiff that he has a right in Congress presumably was that which had been before
defeated by the decision of the the Philippine Islands because of his having been born it on the former occasion, which had been the subject
customs authorities above here under the circumstances above set forth, it must of judicial discussion (Lem Moon Sing v. United
 12

States, 105 U.S., 538; Fok became a citizen of the Philippine Islands in the sense for and in behalf of its account. In 1964, while en
Yung Yo v. United States, 185 that he was not subject to deportation but had a route to Japan from San Francisco, Dona Nati collided
U.S. 296), and which was not perfect right to remain here regardless of the with a Japanese vessel, ‘SS Yasushima Maru’,
quite disposed of until the last conditions upon which he was allowed to land, I am causing its cargo to be damaged and lost. The private
term of this court. (United of the opinion that that claim must also be disallowed. respondent, as insurer to the consigners, paid almost
States v. Ju-Toy, U.S. 253.) ’ The status and right of the plaintiff to enter the Php400,000.00 for said lost and damaged cargo.
Philippine Islands under the circumstances of this Hence, the private respondent instituted an action to
"According to this judgment, case are to be determined as of the time when he recover from NDC.
the decision of the presented himself for entry and not by events that
administrative officers upon the subsequently transpired. (U.S. v. Ju-Toy, 198 U. S.,
question of citizenship is final 253, 263.) If he was not entitled to land in the Issue:
where no abuse of authority of Philippine Islands of right at the time he was admitted
any kind on their part is alleged. under bond, he could not while in them under that
there is no allegation of that bond do anything which would render valid and
Which laws govern the loss and destruction of goods
character in this case."cralaw unconditional his original entry.
due to collision of vessels outside Philippine waters?
virtua1aw library
For the reasons above expressed, the judgment of the
While an abuse of discretion lower court must be, and hereby is, affirmed, with
and authority upon the part of costs against the Appellant. Ruling:
the customs officials in the
proceedings referred to is
alleged by the plaintiff, no NATIONAL DEVELOPMENT COMPANY vs. THE In a previously decided case, it was held that the law
proof sustaining that allegation COURT OF APPEALS and DEVELOPMENT of the country to which the goods are to be
appears in the record. There is INSURANCE AND SURETY CORPORATION transported governs the liability of the common
not a scintilla of evidence carrier in case of their loss, destruction or
indicating that the customs G.R. No. L-49407 19 August 1988 deterioration pursuant to Article 1753 of the Civil
officials in any way abused Code. It is immaterial that the collision actually
their authority or discretion. occurred in foreign waters, such as Ise Bay, Japan.
Facts:
As to the other contention of
the plaintiff, viz, that, having
It appears, however, that collision falls among matters
been adopted by a person
National Development Company (NDC) appointed not specifically regulated by the Civil Code, hence,
domiciled in the Philippine
Maritime Company of the Philippines (MCP) as its we apply Articles 826 to 839, Book Three of the Code
Islands, he himself thereupon
agent to manage and operate its vessel, ‘Dona Nati’,
 13

of Commerce, which deal and Tabacalera to present evidence ex-parte.

exclusively with collision of
vessels. ISSUE: Heirs of Amparo de los Santos v. CA | Medialdea, J.
Whether or not the doctrine of limited liability applies (1990)
in the instant case.

CASE DIGEST HELD:

(Transportation Law): RATIO DECIDENDI
Yes.
Monarch Insurance Co., Inc. The failure of Aboitiz to present sufficient evidence to The limited liability doctrine applies not only to
vs. CA exculpate itself from fault and/or negligence in the
goods but also in all cases like death or injury to
MONARCH INSURANCE sinking of its vessel in the face of the foregoing expert
testimony constrains us to hold that Aboitiz was passengers wherein the shipowner or agent may
CO., INC vs. COURT OF
APPEALS and ABOITIZ concurrently at fault and/or negligent with the ship properly be held liable for the negligent or illicit
SHIPPING CORPORATION captain and crew of the M/V P. Aboitiz. [This is in acts of the captain and it only applies in situations
G.R. No. 92735. June 8, 2000 accordance with the rule that in cases involving the where the fault or negligence is committed solely
limited liability of shipowners, the initial burden of by the captain.
FACTS: proof of negligence or unseaworthiness rests on the
Monarch and Tabacalera are claimants. However, once the vessel owner or any
insurance carriers of lost party asserts the right to limit its liability, the burden
FACTS
cargoes. They indemnified the of proof as to lack of privity or knowledge on its part
shippers and were consequently with respect to the matter of negligence or
 M/V Mindoro sailed from Manila to New
subrogated to their rights, unseaworthiness is shifted to it. This burden, Aboitiz
Washington, Aklan with many passengers
interests and actions against had unfortunately failed to discharge.] That Aboitiz
Aboitiz, the cargo carrier. failed to discharge the burden of proving that the aboard.
Because Aboitiz refused to unseaworthiness of its vessel was not due to its fault
 The vessel met typhoon Welming and it sank.
compensate Monarch, it filed and/or negligence should not however mean that the
two complaints against Aboitiz limited liability rule will not be applied to the present o Many of its passengers died. One of them
which were consolidated and cases. The peculiar circumstances here demand that was Amparo delos Santos.
jointly tried. there should be no strict adherence to procedural rules
on evidence lest the just claims of shippers/insurers be  In a decision by the Board of Marine Inquiry, it
Aboitiz rejected responsibility frustrated. The rule on limited liability should be was found that the captain and some officers of
for the claims on the ground applied in accordance with the latest ruling in Aboitiz the crew were negligent in operating the vessel.
that the sinking of its cargo Shipping Corporation v. General Accident Fire and
vessel was due to force majeure Life Assurance Corporation, Ltd.,] promulgated on  The Heirs of Amparo contends that there was
or an act of God. Aboitiz was January 21, 1993, that claimants be treated as negligence on the part of the vessel. On the other
subsequently declared as in "creditors in an insolvent corporation whose assets are hand, Compania Maritima contends that no
default and allowed Monarch not enough to satisfy the totality of claims against it."
 14

negligence was ever o It is highly improbable due to the late  The limited liability doctrine applies not only to
established and that the departure of the ship that the Weather Bureau goods but also in all cases like death or injury
drowning of the passengers had not yet issued any typhoon bulletin at to passengers wherein the shipowner or agent
was due to force majeure. any time during the day to the shipping may properly be held liable for the negligent or
companies. illicit acts of the captain.

 Maritima displayed lack of foresight and o Art. 587 speaks only of situations where the
ISSUE/HELD minimum concern for the safety of its passengers. fault or negligence is committed solely by
the captain.
[1] WoN Compania Maritima o The ship was delayed for 4 hours and it did
was negligent – YES not check from the captain the reasons o In cases where the shipowner is likewise to
behind the delay nor send its representative be blamed, Art. 587 does not apply.
[2] WoN Art. 587 is
to inquire into the cause of the delay.
applicable in this case – NO Such a situation will be covered by the New Civil
o A closer supervision could have prevented Code provisions on common carriers
the overloading of the vessel.
RATIO
o Maritima also did not install a radar which
[1] Compania Maritima was could have allowed the ship to navigate
negligent. safely for shelter during the storm. The DIONISIA ABUEG, ET AL.,vs. BARTOLOME
vessel was left at the mercy of Welming. SAN DIEGO
 Modern technology belies
the claim of Compania [2] Art. 587 is inapplicable because the shipowner G.R. No. L-773
Maritima that it did not was also negligent.
December 17, 1946
have any information about  Under Art. 587 of the Code of Commerce, a
typhoon Welming until shipowner or agent has the right of abandonment;
after the boat was already and by necessary implication, his liability is
at sea. FACTS:
confined to that which he is entitled of right to
o The Weather Bureau abandon – the vessel with all her equipments and 1. Dionisia, Marciana and Rosario are widows
is equipped with the freight it may have earned during the voyage. of machinists working in the motor
modern apparatus ships/fishing boats (San Diego II and
o This rule is necessary to offset against the
which enables it to Bartolome S), who perished when the boats
innumerable hazards and perils of sea voyage
detect any incoming sank (they were caught in a typhoon on Oct.
and to encourage shipbuilding and maritime
atmospheric 1, 1941 while around Mindoro Island, filed a
commerce.
disturbances.
 15

case against the owner, carried is extinguished (Yangco vs.  It is not the liability for the damage or loss of
San Diego for Laserna, 73 Phil., 330) the cargo or injury to, or death of, a
compensation b. Article 837- CoC= in cases of passenger by or through the misconduct of
2. CFI Manila granted collision, the ship owners' liability the captain or master of the ship; nor the
the petition, and is limited to the value of the vessel liability for the loss of the ship as result of
awarded compensation with all her equipment and freight collision; nor the responsibility for wages of
provided for in the earned during the voyage the crew, but a liability created by a statute
Workmen’s (Philippine Shipping Company vs. to compensate employees and laborers in
Compensation Act. Garcia, 6 Phil., 281) cases of injury received by or inflicted upon
San Diego appealed c. Article 643-CoC= if the vessel and them, while engaged in the performance of
3. CA forwarded to SC, freight are totally lost, the agent's their work or employment, or the heirs and
since there were no liability for wages of the crew is dependents and laborers and employees in
questions of fact. extinguished the event of death caused by their
4. Claims of the owner: 5. employment.
a. Article  Such compensation has nothing to do with
587-Code of the provisions of the Code of Commerce
Commerce ISSUE/S: regarding maritime commerce. It is an item
=if the vessel in the cost of production, which must be
together with included in the budget of any well-managed
all her tackle industry.
W/N the owner of the ships which sank as a result of a
and freight  The WCA was enacted to abrogate the
typhoon is liable for compensation? YES
money earned common law and our Civil Code upon
during the culpable acts and omissions, and that the
voyage are employer need not be guilty of neglect or
abandoned, HELD: fault, in order that responsibility may attach
the agent's to him.
liability to o The rights and responsibilities defined
third persons  Provisions of the Code of Commerce in WCA must be governed by its
for tortious invoked have no room in the application of own peculiar provisions in complete
acts of the the Workmen's Compensation Act (WCA) disregard of other similar mercantile
captain in the which seeks to improve, and aims at the law. If an accident is compensable
care of the amelioration of, the condition of laborers and under the WCA, it must be
goods which employees. compensated even when the
the ship workman's right is not recognized
 16

by or is in paragraph (d), as amended, for industrial

conflict with employment "includes all employment or work at
other a trade, occupation or profession exercised by an Eastern Shipping Lines loaded the following to boat
provisions of employer for the purpose of gain." SS Eastern Explorer in Kobe, Japan for shipping to
the Civil Manila and Cebu,(all with their corresponding Bills of
Code or the lading):
Code of BUT-BUT the term "coastwise and interisland o
Commerce trade" cannot have a narrow meaning as to
confine it to the carriage for hire of passengers 2 boxes internal combustion engine parts, consigned
and/or merchandise on vessels between ports and to William Lines
Note: The new point raised places in the Philippines, because while fishing is o
by the owner (the an industry, if the catch is brought to a port for
motorboats engaged in sale, it is at the same time a trade. 10 tons (or 334 bags) ammonium chloride, consigned
fishing could not be to Orca's Company
deemed to be in the
o
coastwise and interisland Philippine Home Assurance Corp v. CA and Eastern
trade, as contemplated in Shipping Lines (1996)Kapunan, J. A boat burned 200 bags of Glue 300, consigned to Pan Oriental
section 38 of the down and its cargo was subsequently salvaged. The Match Company
Workmen's Compensation shipping company asked for additional payment from
Act (No. 3428), as o
the peoplewho were supposed to get the shipment of
amended by Act no. 3812) the cargo (the consignees) for the salvage of the cargo. Some garments, consigned to Ding Velayo
was inconsistent with the The charges were all paid byPhil Home Assurance.
provisions they invoked, Phil Home Assurance, as subrogee of the rights of the
since CoC would then not people who were supposed to get the shipment,
apply to them. While the boat was in Okinawa, a small flame started
nowwants to seek reimbursement from the shipping
on the
company. Issue: Is Phil Assurance entitled to the
reimbursement? SC says yesthey are. The fire “
But even if so true, owner occurred because of the negligence of the shipping
is still liable since the company and its captain and crew. It stored a cylinder acetylene cylinder
deceased officers of the withflammable substances close to the engine room,
” in the
motor ships in question which is heat producing. This caused an explosion.
were still industrial And so, the fire was not anatural calamity. Therefore, accomodation area near theengine room.
employees within the the liable one is the shipping company.
purview of section 39,
 17

As the crew tried to extinguish the cargos which were saved wereloaded to another That the fire was caused by an unforeseen event
the fire, the boat for delivery to Manila and/or Cabu.
o
“
That the additional freight charges are due and
acetylene cylinder Eastern Shipping charged the consignees some demandable pursuant to the Bill of Lading;
amounts corresponding to additional freight and
” salvage charges, o

suddenly exploded, causing fire That salvage charges are properly collectible under
in the accommodationarea. the Salvage Law.
The charges were all paid by Philippine Home
Assurance Corp under protest.
Death and severe injuries
happened. The whole boat was
on fire. This forced the master Phil Assurance, as subrogee of the consignees, filed a RTC dismissed Phil Assurance’s
and the crew to abandon ship. complaint in RTC-Manila against Eastern Shipping to complaint.
recover thesum paid under protest.

Thereafter, the boat was found CA affirmed.

to be a constructive total loss Phil Assurance says:
and its voyage was declared
abandoned. o
In the SC, Phil Assurance questions the finding of the
The charges were actually damages directly brought RTC and CA that the fire was a natural disaster.Issue:
about by the fault and/or breach of contract of Is Phil Assurance entitled to recover what it had
After several hours, a tugboat EasternShipping. paid?Held: Yes.Ratio:
arrived near the boat and towed
the boat for the port of Naha,
Japan. Eastern Shipping says: (First, the SC says the assignment of errors by the
o petitioners in this case by raising the case to the SC
are challenges to
Fire fighting operations were That it exercised the diligence required by law in the
again conducted at the handling of the shipment; findings of fact. And it is well settled that this Court is
port. After the fire was put out, not a trier of factsblah blah blah…)
o
 18

Re: What is the issue in this In Phil jurisprudence, fire may not be considered a Quijano, Alidio & Azores for appellee.
case? natural disaster since it almost always arises from
some act of man. Itcannot be an act of God unless
caused by lightning or a natural disaster or casualty SYLLABUS
The goods were not lost or not attributable to human agency.
damaged by the fire. The goods 1. ADMIRALTY LAW; VESSELS;
were all delivered to the ACCIDENTAL STRANDING; AVERAGES. —
consignees, even if In this case, there was no showing, and none was The law on averages is contained in the Code of
thetransshipment took longer. alleged by the parties, that the fire was caused by a Commerce. Under that law, averages are
natural. Actually,there is strong evidence indicating classified into simple or particular and general or
that the gross. Generally speaking, simple or particular
What is at issue, therefore, is averages include all expenses and damages
“acetylene cylinder ”caught fire because of the caused to the vessel or cargo which have not
NOT whether or not the carrier negligence of Eastern Shipping,its captain, and its
is liable for the loss, damage, or inured to the common benefit (Art. 809) and are,
crew:o First, the“acetylene cylinder ” should not have therefore, to be borne only by the owner of the
deterioration of the goodsbut been stored in the accommodation area near the
WHO, among the carrier, property which gave rise to the same (Art. 810);
engine roomwhere the heat generated could cause the while general or gross averages include "all the
consignee or insurer of the cylinder to explode by spontaneous
goods, is liable for the damages and expenses which are deliberately
combustion. Eastern Shippingshould have foreseen caused in order to save the vessel, its cargo, or
additional charges incurred by that since the cylinder contained highly flammable
the owner of the ship in the both at the same time, from a real and known
material it was in danger of exploding,being close to risk" (Art. 811). Being for the common benefit,
salvage operations and in the the engine room
transshipment of the goods via gross averages are to be borne by the owners of
a different carrier.Re: Natural the articles saved (Art. 812).
disaster 2. ID.; ID.; ID.; CLASSIFICATION OF
[G.R. No. L-6393. January 31, 1955.]
AVERAGES. — In classifying averages into
simple or particular and general or gross and
CA affirmed RTC ruling that A. MAGSAYSAY, defining each class, the Code (Arts. 809 and 811)
the fire was a natural disaster or INC., plaintiff-appellee, vs. at the same time enumerates certain specific cases
calamity. Phil Assurance ANASTACIO as coming specially under one or the other
questions this, and SC agrees AGAN, defendant-appellant. denomination. While the expenses incurred in
withPhil Assurance. putting a vessel afloat may well come under
number 2 of article 809 — which refers to
Custodio A. Villalva for appellant. expenses suffered by the vessel "by reason of an
 19

accident of the sea or force should have been incurred or inflicted after taking 6, 1949, bound for Basco, Batanes, via Aparri,
majeure" — and should proper legal steps and authority. Cagayan, with general cargo belonging to
therefore be classified as 4. ID.; ID.; ID.; ID. — It is the different shippers, among them the defendant.
particular average, the said The vessel reached Aparri on the 10th of that
deliverance from an immediate peril, by a
expenses do not fit into any common sacrifice, that constitutes the essence of month, and after a day's stopover in that port,
of the specific cases of weighed anchor to proceed to Basco. But while
general average (Columbian Insurance Co. of
general average still in port, it ran aground at the mouth of the
Alejandria vs. Ashby & Stribling, 13 Peters 331,
enumerated in article 811. Cagayan river, and, attempts to refloat it under its
10 L. ed. 186). Where there is no proof that the
No. 6 of this article does own power having failed, plaintiff had it refloated
stranded vessel had to be put afloat to save it
mention "expenses caused from an imminent danger, and what does appear by the Luzon Stevedoring Co. at an agreed
in order to float a vessel," compensation. Once afloat, the vessel returned to
is that the vessel had to be salvaged in order to
but it specifically refers to enable it "to proceed to its port or destination," Manila to refuel and then proceeded to Basco, the
"a vessel intentionally port of destination. There the cargoes were
the expenses incurred in floating the vessel do not
stranded for the purpose of delivered to their respective owners or consignees,
constitute general average. It is the safety of the
saving it" and would have property, and not of the voyage, which constitutes who, with the exception of defendant, made a
no application where the deposit or signed a bond to answer for their
the true foundation of general average.
stranding was not contribution to the average.
intentional. 5. ID.; ID.; ID.; ID. — Even if the
salvage operation was a success, yet if the On the theory that the expenses incurred
3. ID.; ID.; in floating the vessel constitute general average to
sacrifice was for the benefit of the vessel - to
GENERAL AVERAGE; which both ship and cargo should contribute,
enable it to proceed to its destination — and not
ITS REQUISITES. — The plaintiff brought the present action in the Court of
for the purpose of saving the cargo, the cargo
following are the requisites First Instance of Manila to make defendant pay
owners are not in law bound to contribute to the
for general average: (1) expense. his contribution, which, as determined by the
there must be a common average adjuster, amounts to P841.40. Defendant,
danger; (2) for the in his answer, denies liability for this amount,
common safety part of the alleging, among other things, that the stranding of
vessel or of the cargo or DECISION the vessel was due to the fault, negligence and
both is sacrificed lack of skill of its master, that the expenses
deliberately; (3) from the incurred in putting it afloat did not constitute
expenses or damages general average, and that the liquidation of the
REYES, A., J p:
caused follows the average was not made in accordance with law.
successful saving of the After trial, the lower court found for plaintiff and
The S S "San Antonio", a vessel owned
vessel and cargo; and (4) rendered judgment against the defendant for the
and operated by plaintiff, left Manila on October
the expenses or damages amount of the claim, with legal interests. From
 20

this judgment defendant sandbars at the mouth of the river which the port should therefore be classified as particular
has appealed directly to pilot did not anticipate. The standing may, average, the said expenses do not fit into any of
this Court. therefore, be regarded as accidental, and the the specific cases of general average enumerated
question is whether the expenses incurred in in article 811. No. 6 of this article does mention
Although
appellant assigns various floating a vessel so stranded should be considered "expenses caused in order to float a vessel," but it
general average and shared by the cargo owners. specifically refers to "a vessel intentionally
errors, under our view of
stranded for the purpose of saving it" and would
the case only the following The law on averages is contained in the
have no application where, as in the present case,
need be considered: Code of Commerce. Under that law, averages are
the stranding was not intentional.
classified into simple or particular and general or
"T
gross. Generally speaking, simple or particular Let us now see whether the expenses
he trial
court erred averages include all expenses and damages here in question could come within the legal
caused to the vessel or cargo which have not concept of general average. Tolentino, in his
in allowing
the general inured to the common benefit (Art. 809, and are, commentaries on the Code of Commerce, gives
therefore, to be borne only by the owner of the the following requisites for general average:
average for
property which gave rise to the same (Art. 810);
floating a "First, there must be a
while general or gross averages include "all the
vessel common danger. This means, that
damages and expenses which are deliberately
unintention both the ship and the cargo, after
ally caused in order to save the vessel, its cargo, or it has been loaded, are subject to
both at the same time, from a real and known
stranded the same danger, whether during
risk" (Art. 811). Being for the common benefit,
inside a the voyage, or in the port of
gross averages are to be borne by the owners of
port and at loading or unloading; that the
the articles saved (Art. 812).
the mouth danger arises from accidents of
of a river In classifying averages into simple or the sea, dispositions of the
during a particular and general or gross and defining each authority, or faults of men,
fine class, the Code (Art. 809 and 811) at the same provided, that the circumstance
weather." time enumerates certain specific cases as coming producing the peril should be
specially under one or the other denomination. ascertained and imminent - or
For the purposes
Going over the specific cases enumerated we find may rationally be said to be
of this assignment of error
that, while the expenses incurred in putting certain and imminent. This last
we may well accept the
plaintiff's vessel afloat may well come under requirement excludes measures
finding below that the
stranding of plaintiff's number 2 of article 809 — which refers to undertaken against a distant peril.
expenses suffered by the vessel "by reason of an
vessel was due to the "Second, that for the
sudden shifting of the accident of the sea or force majeure" — and common safety part of the vessel
 21

or of the ed., p. 155.) incurred for the common safety of vessel and
cargo or cargo, since they, or at least the cargo, were not
With respect to the first requisite, the
both is evidence does not disclose that the expenses in imminent peril. The cargo could, without need
sacrificed of expensive salvage operation, have been
sought to be recovered from defendant were
deliberately incurred to save vessel and cargo from a common unloaded by the owners if they had been required
. to do so.
danger. The vessel ran aground in fine weather
"T inside the port at the mouth of a river, a place With respect to the third requisite, the
hird, that described as "very shallow". It would thus appear salvage operation, it is true, was a success. But as
from the that vessel and cargo were at the time in no the sacrifice was for the benefit of the vessel —
expenses or imminent danger or a danger which might to enable it to proceed to destination — and not
damages "rationally be sought to be certain and imminent." for the purpose of saving the cargo, the cargo
caused It is, of course, conceivable that, if left owners are not in law bound to contribute to the
follows the indefinitely at the mercy of the elements, they expenses.
successful would run the risk of being destroyed. But as
The final requisite has not been proved,
saving of stated in the above quotation, "this last
for it does not appear that the expenses here in
the vessel requirement excludes measures undertaken
question were incurred after following the
and cargo. against a distant peril." It is the deliverance from
procedure laid down in articles 813 et seq.
"F an immediate, impending peril, by a common
sacrifice, that constitutes the essence of general In conclusion, we find that plaintiff has
ourth, that not made out a case for general average, with the
average. (The Columbian Insurance- Company of
the
Alexandria vs. Ashby & Stribling et al., 13 Peters result that its claim for contribution against the
expenses or defendant cannot be granted.
331; 10 L. Ed., 186). In the present case there is
damages
should no proof that the vessel had to be put afloat to Wherefore, the decision appealed from
save it from an imminent danger. What does is reversed and plaintiff's complaint ordered
have been
incurred or appear from the testimony of plaintiff's manager dismissed with costs.
is that the vessel had to be salvaged in order to
inflicted Paras, C. J., Bengzon, Padilla,
enable it "to proceed to its port of destination."
after taking Montemayor, Jugo, Bautista Angelo, and Reyes, J.
proper But as was said in the case just cited, it is the
safety of the property, and not of the voyage, B. L., JJ., concur.
legal steps
and which constitutes the true foundation of general ||| LUZON STEVEDORING CORPORATION
average.
authority." , petitioner,vs.
(Vol. I, 7th As to the second requisite, we need only
repeat that the expenses in question were not COURT OF APPEALS, HIJOS DE F. ESCANO, INC
 22

., Issue:Held: M/V “Don Carlos,” an inter-island vessel owned and

operated by private respondent Go Thong was sailing
and DOMESTIC INSURANCE The Supreme Court ruled that;Articles 587, 590, and south bound for Cebu, when it collided with M/S
COMPANY OF 837 of the Code of Commerce provide as “Yotai Maru,” a merchant vessel of Japanese registry
THEPHILIPPINES follows:ART. 587. The ship agent shall also be civilly which was approaching the port of Manila coming in
liable for the indemnities in favor of third persons from Kobe, Japan. The bow of the “Don Carlos”
, respondents.G.R. No. L-58897 whicharise from the conduct of the captain in the
December 3, 1987 rammed the left side of the “Yotai Maru” inflicting a
vigilance over the goods which the vessel carried; but gaping hole through which seawater rushed in and
Facts: hemay exempt himself therefrom by abandoning the flooded the hatch, damaging all the cargo stowed
vessel with all her equipment and the freight he therein. The consignees of the damaged cargo having
A maritime collision occurred mayhave earned during the voyage.xxx xxx xxxART. been paid by their insurance companies, the latter in
within the vicinity of the entran 590. The co-owners of the vessel shall be civilly liable turn commenced actions against private respondent
ce to the North Harbor,Manila in the proportion of their contribution to thecommon Go Thong for damages sustained by the various
between the tanker fund for the results of the acts of the captain, referred shipments. 2 cases were filed before the RTC. The
LSCO "Cavite" owned by to in Article 587.Each co-owner may exempt himself first case (Smith Bell and Sumitomo Insurance v. Go
Luzon Stevedoring Corporation from this liability by the abandonment, before a Thong) reached the SC which ruled in finality that
and MV "FernandoEscano" a notary, of that partof the vessel belonging to him.xxx negligence was with the officers and crew of “Don
passenger ship owned by Hijos xxx xxxART. 837. The civil liability incurred by the Carlos.” On the contrary, the second case (Smith Bell
de F. Escano, Inc. as a result of shipowners in the cases prescribed in this section, and Tokyo Insurance v. Go Thong) was decided by
which said passenger ship shall beunderstood as limited to the value of the CA holding the officers and crew of “Yotai Maru”
sunk.An action in admiralty the vessel with all her appurtenances and freight at fault in the collision. Hence the present petition.
was filed by Hijos de F. Escano, earned duringthe voyage.This is the difference which
Inc. and Domestic Insurance exists between the lawful acts and lawful obligations
Company of thePhilippines of the captain and theliability which he incurs on Issue:
against the Luzon Stevedoring account of any unlawful act committed by him. In the
Company (LSC) in the Court of first case, the lawfu
First Instance of Cebu. In Whether or not inscrutable fault is present in said
thecourse of the trial, the trial collision.
court appointed two
commissioners representing the SMITH BELL AND COMPANY PHILS. V. CA
plaintiffs anddefendant to (G.R. NO. L-56294) Ruling: NO.
determine the value of the
LSCO "CAVITE." Said
commissioners found the value Facts: The Court believes that there are three (3) principal
thereof tobe P180,000.00. factors which are constitutive of negligence on the
 23

part of the “Don Carlos,” which Maru, thus involving risk of collision. FOR ALL THE FOREGOING, the Decision of the
negligence was the proximate Court of Appeals is hereby REVERSED and SET
cause of the collision. ASIDE.
(2) The second circumstance constitutive of
negligence on the part of the “Don Carlos” was its
(1) The first of these factors failure to have on board that night a “proper look-out” MECENAS V. CA (G.R. NO. 88052)
was the failure of the “Don as required by Rule I (B) Under Rule 29 of the same
Carlos” to comply with the set of Rules, all consequences arising from the failure
requirements of Rule 18 (a) of of the “Don Carlos” to keep a “proper look-out” must Facts:
the International Rules of the be borne by the “Don Carlos.” In the case at bar, the
Road which provides as follows: failure of the “Don Carlos” to recognize in a timely
(a) When two power-driven manner the risk of collision with the “Yotai Maru” On the morning of 22 April 1980, the M/T “Tacloban
vessels are meeting end on, or coming in from the opposite direction, was at least in City,” a barge-type oil tanker owned and operated by
nearly end on, so as to involve part due to the failure of the “Don Carlos” to maintain Philippine National Oil Company (PNOC), having
risk of collision, each shall alter a proper look-out. unloaded its cargo of petroleum products, left Negros
her course to starboard, so that Occidental and headed towards Bataan. On the same
each may pass on the port side day, the M/V “Don Juan,” an interisland vessel owned
of the other. The evidence on (3) The third factor constitutive of negligence on the and operated by Negros Navigation, left Manila
this factor state that “Don part of the “Don Carlos” relates to the fact that bound for Bacolod with 750 passengers listed in its
Carlos” altered its course by Second Mate Benito German was, immediately before manifest, and a complete set of officers and crew
five degrees to the left instead and during the collision, in command of the “Don members. On the evening of the same day, the two
of to the right which maneuver Carlos.” Second Mate German simply did not have vessels became aware of each other’s presence in the
was the error that caused the the level of experience, judgment and skill essential area by visual contact at a distance of 6 miles. They
collision in question. Why it for recognizing and coping with the risk of collision were fully aware that if they continued on their course,
did so is because “Don Carlos” as it presented itself that early morning when the they will meet head on. Don Juan steered to the right;
was overtaking another vessel, “Don Carlos,” running at maximum speed and having Tacloban City continued its course to the left. The two
the “Don Francisco”, and was just overtaken the “Don Francisco” then vessels thus collided and as a result, the “Don Juan”
then at the right side of the approximately one mile behind to the right side of the sank and hundreds of its passengers perished.
aforesaid vessel. It was in the “Don Carlos,” found itself head-on or nearly head Petitioners who were the children of the spouses
process of overtaking “Don on vis-a-vis the “Yotai Maru. ” It is essential to point Perfecto and Sofia Mecenas, their parents among the
Francisco” that “Don Carlos” out that this situation was created by the “Don passengers whose bodies were never found, filed a
was finally brought into a Carlos” itself. complaint against Negros Navigation and its Captain
situation where he was meeting Roger Santisteban. The trial court ruled that both
end-on or nearly end-on “Yotai vessels were at fault in the collision and awarded
 24

petitioners actual or “Tacloban City” in the events leading up to the from common carriers and in creating a presumption
compensatory damages, which collision and the sinking of the “Don Juan.” The of negligence against them, the law seeks to compel
was reduced on appeal. remaining question is whether the negligence on the them to control their employees, to tame their reckless
Petitioners likewise claim for part of the “Don Juan” reached that level of instincts and to force them to take adequate care of
exemplary damages. recklessness or gross negligence that our Civil Code human beings and their property. The Court will take
requires for the imposition of exemplary damages. judicial notice of the dreadful regularity with which
Our own review of the record in the case at bar grievous maritime disasters occur in our waters with
Issue: requires us to answer this in the affirmative. massive loss of life. The bulk of our population is too
poor to afford domestic air transportation. So it is that
notwithstanding the frequent sinking of passenger
Whether or not petitioners M/S Don Juan’s Master, Capt. Rogelio Santisteban, vessels in our waters, crowds of people continue to
herein are also entitled to was playing mahjong before and up to the time of travel by sea. This Court is prepared to use the
exemplary damages. collision. Moreover, after the collision, he failed to instruments given to it by the law for securing the
institute appropriate measures to delay the sinking ends of law and public policy. One of those
M/S Don Juan and to supervise properly the execution instruments is the institution of exemplary damages;
Ruling: YES. of his order of abandonship. As regards the officer on one of those ends, of special importance in an
watch, Senior 3rd Mate Rogelio Devera, he admitted archipelagic state like the Philippines, is the safe and
that he failed or did not call or inform Capt. reliable carriage of people and goods by sea.
In respect of the petitioners’
Santisteban of the imminent danger of collision and of Considering the foregoing, we believe that an
claim for exemplary damages,
the actual collision itself. Also, he failed to assist his additional award in the amount of P200,000.00 as
it is only necessary to refer to
master to prevent the fast sinking of the ship. The exemplary damages is quite modest.
Article 2232 of the Civil Code:
record also indicates that Auxiliary Chief Mate
Antonio Labordo displayed laxity in maintaining
Article 2332. In contracts and order among the passengers after the collision. There
quasi-contracts, the court may is also evidence that the “Don Juan” was carrying
more passengers than she had been certified as BELGIAN OVERSEAS CHARTERING AND
exemplary damages if the SHIPPING N.V. and JARDINE DAVIES
defendant acted in a wanton, allowed to carry.
TRANSPORT SERVICES,INC.,
fraudulent, reckless, oppressive
or malevolent manner. petitioners,
Exemplary damages are designed by our civil law to
permit the courts to reshape behaviour that is socially
There is, therefore, no question deleterious in its consequence by creating negative
incentives or deterrents against such behaviour. In vs.
that the “Don Juan” was at least
as negligent as the M/T requiring compliance with the standard which is in
fact that of the highest possible degree of diligence,
 25

PHILIPPINE and, within thesubsequent days, discharged the Mere proof of delivery of the goods in good order to a
FIRST INSURANCE CO., subject cargo. Four (4) coils were found to be in bad common carrier and of their arrival in badorder at
INC., order. Finding the four(4) coils in their damaged state their destination
to be unfit for the intended purpose, the consignee
respondents, Philippine Steel TradingCorporation declared the constitutes a prima facie case of fault or negligence
same as total loss.Petitioners refused to submit to the against the carrier
G.R. No. 143133, June 5,2002
consignee's claim. Consequently, respondent paid the . If noadequate explanation is given as to how the
consignee and wassubrogated to the latter's rights. deterioration, the loss or the destruction of the goods
Subsequently, respondent instituted this complaint for happened,the transporter shall be held responsible.
Proof of the delivery of goods
recovery of the amount paid by them, to the consignee Petitioners failed to rebut the prima facie presumption
in good order to a common
as insured.Petitioners imputed that the damage and/or of negligencein the case at bar. True, the words "metal
carrier and of their arrival in
loss was due to pre-shipment damage. In addition envelopes rust stained and slightly dented" were noted
bad order at their destination
thereto, theyargued that their liability, if there be any, on the Bill of Lading; however,
constitutes prima facie fault or
should not exceed the limitations of liability provided
negligence on the part of the there is no showing that petitioners exercised due
for in the bill of lading and other pertinent laws.
carrier. If no adequate diligence to forestall or lessen theloss
Finally, they averred that, in any event, they exercised
explanation is given as to how
due diligence andforesight required by law to prevent
the loss, the destruction or the . Having failed to discharge the burden of proving that
any damage/loss to said shipment.RTC dismissed the
deterioration of the goods they have exercised the extraordinary
Complaint because respondent had failed to prove its
happened, the carrier shall be diligencerequired by law,
claims. In reversing the trial court, theCA ruled that
held liabletherefor.
petitioners were liable for the loss or the damage petitioners cannot escape liability for the damage to
Facts: of the goods shipped, because they had failed the four coils
toovercome the presumption of negligence imposed
On June 13, 1990, CMC on common carriers. .
Trading A.G. shipped on board
the M/V 'Anangel Sky' at Issue #1: Issue #2:
Hamburg, Germany 242coils of Whether or not the consignee/plaintiff filed the
Whether or not a notation in the bill of lading at the
various Prime Cold Rolled required notice of loss within the time required bylaw.
time of loading is sufficient to show pre-shipment
Steel sheets for transportation
damage and to exempt herein defendants from
to Manila consigned to the Held: YES.
liability.
Philippine SteelTrading
Pursuant to Section 3, paragraph 6 of the Carriage of
Corporation. On July 28, Held: NO.
Goods by Sea Act (COGSA), a failure to file anotice
1990, M/V Anangel Sky
of claim within three days
arrived at the port of Manila
 26

will not bar recovery if it is Lading limiting the carrier's liability.Neither did the to Manila, with SR Farms as consignee. The vessel is
nonetheless filed within one shipper declare a higher valuation of the goods to be owned and operated by Conti-Feed, withpetitioner
year shipped. This fact notwithstanding, theinsertion of the Wallem as its ship agent.
words "L/C No. 90/02447 cannot be the basis for
. This one-year prescriptive petitioners' liability.A notation in the Bill of Lading On April 11, 1992, the said vessel, M/V “Hui Yang”
period also which indicated the amount of the Letter of Credit arri

applies to the shipper, obtained by the shipper forthe importation of steel ved at the port of Manila and was dischargedand
the consignee, the insurer of sheets did not effect a declaration of the value of the transferred into the custody of the receiving barges.
the goods goods as required by the bill. Inthe light of the Upon checking the cargo, a shortage in theshipment
foregoing, of 80.467 metric tons was found. Petitioner then
or any legalholder of the bill of filed a Complaint for damages against Conti-Feed and
lading. In the present case, the petitioners' liability should be computed based on
US$500 per package on June 7, 1993, respondent filed an Amended
cargo was discharged on July Complaint impleading hereinpetitioner as defendant.P
31, 1990, while and not on the per metric ton price declared in the
the Complaint was filed by Letter of Credit etitioner denied the allegations of respondent claiming,
respondent on July 25, 1991, among others, that respondent’s claim is
within the one-year prescriptive
period. already barred by laches and/or prescription. RTC
WALLEM PHILIPPINES SHIPPING, INC., dismissed the petition. The CA reversed thedecision
Issue #3: of the RTC. Hence, this petition.

Whether or not the Issue:

"PACKAGE LIMITATION" Petitioner
of liability under Section 4 (5) Whether or not the claim against petitioner was timely
vs. filed.
of COGSA is applicable.
S.R. FARMS, INC., Held: NO.
Respondent, Under Section 3 (6) of the COGSA,
G.R. No.161849, July 9, 2010Facts: notice of loss or damages must be filed within
On March 25, 1992, Continental Enterprises, Ltd. threedays of delivery
Held: YES. loaded on board the vessel M/V “Hui Yang,” a . Admittedly, respondent did not comply with this
In the case before us, there was shipment of Indian Soya Bean Meal weighing 1,100 provision. Under the sameprovision, however, a
no stipulation in the Bill of metric tons, for transportation and delivery fromIndia
 27

failure to file a notice of claim Hence, reckoned from April 15, 1992, the one-year 3. ID.; ID.; FORCE MAJEURE;
within three days will not bar prescriptive period hadalready lapsed BURDEN OF PROOF. — In case where an
recovery if asuit is nonetheless unforeseen accident or stress of weather is
filed within one year from alleged as constituting an exemption in favor of
delivery of the goods or from [G.R. No. L-3649. October 24, 1907.] the party responsible for the property, it is his
the date when thegoods should duty to prove the existence of such
have been delivered circumstances.
JOSE
.There is no dispute that GUZMAN, plaintiff-appellee, vs.
the vessel carrying the WILLIAM X, captain of the
shipment arrived at the Port steamer Kudat, and BEHN, DECISION
of Manila on April 11,1992 and MEYER and
that the cargo was completely CO., defendants-appellants.
discharged therefrom on April
TORRES, J p:
15, 1992. However,respondent
erred in arguing that the Kinney, Odlin and Lawrence, for appellants.
On the 19th of February, 1904, Attorney
complaint for damages, insofar
A. V. Herrero, for appellee. A. Herrero, on behalf of the plaintiff, Jose
as the petitioner is
Guzman, filed a complaint with the Court of First
concerned,was filed on March
Instance of Manila against the captain and owners
11, 1993.In the instant case,
SYLLABUS of the steamer Kudat, alleging that in the early
petitioner was only impleaded part of January of said year an agent of the
in the amended Complaint 1. ADMIRALTY; CONTRACT OF plaintiff contracted with Behn, Meyer & Co.,
of June 7, 1993, orone (1) year, TOWAGE. — An agreement by virtue of which a agents of the said steamer, in the sum of P150,
one (1) month and twenty-three party binds itself to tow another vessel by means for the towing of the lorcha Nevada, owned by
(23) days from April 15, 1992 of a steamer, and for a certain consideration, from the plaintiff, to the port of Iloilo. That on the 4th
one port to another, is not a charter party but a day of the month aforesaid the captain of the
, the date when thesubject cargo steamer Kudat took charge of the lorcha, which
contract for the hire of services, and is subject to
was fully unloaded from the was manned by a master and four sailors, and on
the provisions of the Civil Code.
vessel. The filing of an the following day, the 5th, at noon, the steamer
amended pleading does not 2. ID.; ID.; DAMAGES. — The person left the port of Manila with the lorcha in tow; that
retroact to the date of the filing who engages to do towing is liable for the loss at about 9:30 p. m. of the same date, as the Kudat
of the original; the statute of and caused to the vessel in two, in case of fraud, with her tow was within sight of the Island of
limitation runs until the negligence, or breach of contract. Cabras, between Luzon and Island of Mindoro,
submission of theamendment. the port tow line broke, and that thereupon the
 28

captain of the Kudat where one of the tow lines broke was close to the was rendered sentencing the defendants, Behn,
ordered the crew of Islands of Mindoro, Cabras, and Luban, at any of Meyer & Co., to pay the plaintiff herein the sum
the Nevada, as the latter which places the lorcha might have been left in of 9,000 pesos, Philippine currency and costs.
neared the stern of the safety. The captain of the Kudat did not enter any The judgment was excepted to by the defendant
steamer, to come on board protest at Iloilo in order to justify the firm, who moved for a new trial on the ground
the Kudat and to abandon abandonment of the lorcha nor the circumstances that the decision was contrary to law and to the
the lorcha; that as the connected therewith. The abandonment was weight of the evidence, and because the findings
master (arraez) protested evidently due to carelessness and unpardonable of fact of the judgment are contrary to the
several times against such negligence because there was no force preponderance of the proofs. This motion was
order, the captain insisted majeure nor any like reason to justify the overruled and the defendant duly excepted
and threatened to cut the nonfulfillment of his duty to tow the lorcha to the thereto.
other tow line; that in port of Iloilo. The contract entered into between the
consequence of the attitude
For the foregoing reasons the plaintiff agent of Jose Guzman, owner of the
of the captain the crew
asked that, after due process of law, judgment be lorcha Nevada, and the firm of Behn, Meyer &
abandoned the lorcha and entered sentencing the owners and captain of the Co., as agents and representatives of the captain
boarded the steamer and
steamer Kudat to pay him the sum of P49,000 as and owners of the steamer Kudat, is not a charter
the captain then ordered indemnity for damages suffered for the party. It is a contract for the hire of services by
the abandonment of the
abandonment of the lorcha Nevada, and to pay virtue of which the said firm, by means of the
lorcha and cast her adrift
the costs of the proceedings, together with any said steamer, under the management of its captain,
by having the tow line cut, other relief which the court might consider just officers, and crew, engaged to tow the said lorcha
and the steamer then
and equitable. from this port of Manila to that of Iloilo for a
proceeded on her voyage consideration of P150. The provisions of articles
to Iloilo. It does not appear that the captain,
William X, of the Kudat, was ever summoned to 652 et seq. of the Code of Commerce with
It further appears reference to charter parties are not applicable in
appear before the court, but Behn, Meyer & Co.
that upon arriving at the were, and on the 23d of March of said year firm, this case because the lorcha was not shipped or
latter port on the 7th day of placed on board the steamer, but, as had been
in answer to the complaint, denied each and all of
the said month the master agreed to, should have been towed from this port
the allegations therein contained.
or pilot of the lorcha went of Iloilo.
to the collector of customs Upon evidence being adduced by the
Notwithstanding the fact that the
and entered a protest, in plaintiff, the defendant moved for the dismissal
defendant has denied the making of the said
which he stated that the of the case, and as the motion was overruled by
the court the defendant firm excepted thereto and contract, its existence is unquestionable, as
weather was fair, the sea
proven by Exhibit E on page 12 of the record, this
calm, that the moon was afterwards produced its evidence, which was
bright, and that the spot made of record. On the 19th of October judgment
 29

document not having been was not towed to nor did she ever reach the port It can not be doubted that the captain
objected to or impugned by of Iloilo, as had been stipulated between her who commanded the steamer Kudat failed to
the defendant. owner and the firm of Behn, Meyer & Co. comply with the contract for towage and acted for
contravention of what had been stipulated therein
Notwithstanding Articles 1101 and 1601 of the Civil
the fact that the agreement Code provide that — between the owner of the lorcha in tow and the
agents who represented the owners of the steamer,
entered into by the agent of "Those who in fulfilling and when abandoning the lorcha in mid-ocean
the steamer Kudat was to
their obligations are guilty of with the full knowledge that it would disappear
tow the said lorcha from fraud, negligence, or delay, and and become a loss, he acted with marked
the port of Manila to that
those who in any manner negligence and a perfect knowledge of the loss
of Iloilo, the truth of the
whatsoever act in contravention and damage he was about to cause the owner.
matter is that the captain of of the stipulations of the same,
the Kudat took charge of Therefore, pursuant to the provisions of law
shall be subject to indemnify for above quoted, the owner of the lorcha must be
the lorcha on the 4th of the losses and the damages indemnified, the contract of towage involving the
January, 1904, and sailed
caused thereby." (Art. 1101.) obligation to use due diligence (art. 1104) the
at noon of the following
"Carriers of goods by omission of which would imply fault or
day, and when the steamer
was within sight of the land or by water shall be subject, negligence on the part of the obligee, because the
with regard to the keeping and lorcha Nevadawas abandoned with the intent of
Islands of Cabras, between
preservation of the things casting her adrift to become a total loss.
the Islands of Luzon and
Mindoro, at about 9:30 p.m. entrusted to them, to the same The record does not show that force
of the 5th, on account of obligations as determined for majeure or other such casualty intervened to
the breaking of the port innkeepers by articles seventeen cause the loss of the lorcha in tow. Rather to the
tow line, he ordered that by hundred and eighty three and contrary, as from the evidence adduced at the trial
means of the starboard line seventeen hundred and eighty it is inferred that there was not only negligence
the lorcha be brought to the four. but a willful intent to cause the total loss of the
stern of the steamer. After "The provisions of this lorcha, without any reason whatever which
compelling the crew of the article shall be understood required its abandonment at the time. It should be
lorcha to board the steamer, without prejudice to what is noted, however, that the duty to prove or show
the captain then ordered prescribed by the Code of the reasons for exemption from the liability rests
the steel tow line cut, and Commerce with regard to with the defendant, who thereupon bases his
the lorcha was thus transportation by sea and land." exception.
abandoned entirely. As the (Art. 1601.) Article 624 of the Code of Commerce
lorcha was lost sight of and
imposes on a captain, in case he has been
became a total loss, she
 30

wrecked or the cargo of his "The owner of a vessel bound to indemnify the owner of the Nevada in
vessel damaged, the duty and the agent shall be civilly the amount of the damages sustained by him
of making the liable for the acts of the captain through the loss of the above-mentioned lorcha,
corresponding protest and for the obligations contracted considering the negligent, not to say criminal,
before the proper authority by the latter to repair, equip, and action of the captain, who, without any cause or
at the first port where the provision the vessel, provided the reason and without any unforeseen accident or
vessel touches, within the creditor proves that the amount stress of weather, willfully abandoned the lorcha,
twenty four-hours claimed was invested therein. well-knowing that it would be lost, as really
following his arrival. happened.
"By agent is understood
The captain of the person entrusted with the Behn, Meyer & Co. were unable to deny
the Kudat did not make provisioning of a vessel or who the existence of the said contract of towage, and,
any protest before any represents her in the port in which as a matter of fact, they actually tried to recover
officer or competent she happens to be. (Art. 586.) the amount of the consideration for such service
authority at Iloilo stating which had not been rendered by the
the reasons which steamer Kudat, for which they were the agents.
compelled him to abandon "The agent shall also be The court, in the judgment appealed from, having
the lorcha. On the other civilly liable for the indemnities considered the amount of the indemnity to be
hand, the master in favor of third persons which paid to the plaintiff, who, on his part, has
or patron of the lost lorcha arise from the conduct of the consented thereto notwithstanding that in his
complied with this duty captain in the care of the goods complaint he claimed a larger amount, it is proper
imposed by law and which the vessel carried; but he to affirm the same.
appeared before the may exempt himself therefrom by
In view of the foregoing, and accepting
collector of customs of abandoning the vessel with all her
those conclusions of the judgment appealed from
Iloilo and set forth his equipment's and the freight he
may have earned during the trip. which are in accordance with this decision, said
protest in duplicate, as per judgment is hereby affirmed, with the costs
documents marked with (Art. 587.)
against the appellants. So ordered.
the letters "A" and "F", The firm Behn, Meyer & Co. contracted
wherein, upon request of for the towage or conveyance by sea of the lorcha Arellano, C.J., Johnson,
the patron, a statement of Willard, and Tracey, JJ., concur.
Nevada from Manila to Iloilo, undoubtedly in
what had occurred was their capacity of agents, charged by the owners of ||| .
inscribed. Articles 586 and the steamer Kudat to represent them in this port
587 of the Code of of Manila. According to the provisions of the two COGSA - Period for Filing Claims and Filing of
Commerce provide that — foregoing articles of the Code of Commerce, ActionsDOLE v. Maritime Company of the
therefore, the aforesaid firm is the only party Philippines, 1987DOCTRINE:In a case governed by
 31

the Carriage of Goods by Sea therein involved the cargo now subject of this present the delivery of the goods or the date when the goods
Act, the general provisions on litigation;On December 11, 1974, Judge Serafin should have been delivered.
prescription (of theCivil Code Cuevas issued an Order in Civil Case No. 91043
or of the Rules on Civil dismissing thefirst two causes of action in the ”
Procedure) should not be made aforesaid case with prejudice and without Dole concedes that its action is subject to the
to apply.FACTS:This appeal pronouncement as to costsbecause the parties had one-year period of limitation prescribed in the
relates to a claim for loss and/or settled or compromised the claims involved therein. above-citedprovision. The substance of its argument
damage to a shipment of The third cause of actionwhich covered the cargo is that since the provisions of the Civil Code are, by
machine parts sought to subject of this case now was likewise dismissed but expressmandate of said Code, suppletory of
beenforced by the consignee, without prejudice as it wasnot covered by the deficiencies in the Code of Commerce and special
appellant Dole Philippines, Inc. settlement. The dismissal of that complaint containing laws in mattersgoverned by the latter, and there being
(hereinafter caged Dole) the three causes of action wasupon a joint motion to "*** a patent deficiency *** with respect to the
against the carrier,Maritime dismiss filed by the parties;Because of the dismissal tolling of theprescriptive period ***" provided for in
Company of the Philippines of the (complaint in Civil Case No. 91043 with the Carriage of Goods by Sea Act, prescription under
(hereinafter called Maritime), respect to the third cause ofaction without prejudice, said Act issubject to the provisions of Article 1155 of
under the provisions of the plaintiff instituted this present complaint on January 6, the Civil Code on tolling and because Dole's claim for
Carriage ofGoods by Sea Act 1975.ISSUE:W/N Article 1155 of the Civil Code loss ordamage made on May 4, 1972 amounted to a
(CoGSA).The cargo subject of providing that the prescription of actions is written extrajudicial demand which would toll or
the instant case was discharged interrupted by the making ofan extrajudicial written interruptprescription under Article 1155, it operated to
in Dadiangas unto the custody demand by the creditor is applicable to actions toll prescription also in actions under the Carriage of
of the consignee onDecember brought under the Carriage ofGoods by Sea Goods
18, 1971;The corresponding Act.HELD:CoGSA, Section 3, paragraph 6, provides
claim for the damages sustained that:
by the cargo was filed by the
plaintiff with thedefendant “
G.R. No. L-25266 January 15, 1975
vessel on May 4, 1972;On June *** the carrier and the ship shall be discharged from
11, 1973 the plaintiff filed a all liability in respect of loss or damage unless suit AETNA INSURANCE
complaint in the Court of First isbrought within one year after delivery of the goods COMPANY, plaintiff-appellant,
Instance of Manila, docketed or the date when the goods should have beendelivered; vs.
thereinas Civil Case No. 91043, Provided, That, if a notice of loss or damage, either BARBER STEAMSHIP LINES, INC., and/or
embodying three (3) causes of apparent or conceded, is not given asprovided for in LUZON STEVEDORING CORPORATION
action involving three (3) this section, that fact shall not affect or prejudice the and/or LUZON BROKERAGE
separate and differentshipments. right of the shipper to bring suit withinone year after CORPORATION, defendants-appellees.
The third cause of action
 32

Camacho, Zapa Andaya and On February 22, 1965 Aetna Insurance Company, as vessel, was the Wilh, Wilhemsen Group. (Note,
Associates for insurer, filed a complaint against Barber Steamship however, that the same bill of lading indicated that
plaintiff-appellant. Lines, Inc., Luzon Stevedoring Corporation and Barber Steamship Lines, Inc. was the vessel's agent).
Luzon Brokerage Corporation.
Rose, Selph, Salcedo, Del Two days later, or on April 7, 1965 plaintiff Aetna
Rosario, Bito and Mesa for It sought to recover from the defendants the sum of Insurance Company filed a manifestation stating that
defendant-appellee Barber P12,100.06 as the amount of the damages which were the name of defendant Barber Steamship Lines, Inc.
Steamship Lines, Inc. caused to a cargo of truck parts shipped on the was incorrect and that the correct name was Barber
SS Turandot. The insurer paid the damages to Manila Line Far East Service. Attached to the manifestation
H. San Luis and L. V. Simbulan Trading & Supply Company, the consignee. was an amended complaint containing the correction.
for defendant-appellee Luzon Aetna Insurance Company manifested that copies of
Stevedoring Corporation. In a manifestation dated March 31, 1965, Barber the amended complaint would be served on the parties
Steamship Lines, Inc., without submitting to the by means of alias summons.
Jalandoni and Jamir for court's jurisdiction, alleged that it was a foreign
defendant-appellee Luzon corporation not licensed to do business in the On April 20, 1965 Aetna Insurance Company filed a
Brokerage Corporation. Philippines, that it was not engaged in business here, motion for the admission of its amended complaint.
that it had no Philippine agent and that it did not own Barber Steamship Lines, Inc. opposed the motion. It
nor operate the SS Turandot. contended that its pending motion to dismiss the
original complaint should first be resolved before the
On April 5, 1965 Barber Steamship Lines, Inc., again amended complaint may be admitted.
AQUINO, J.:
with the caveat that it was not submitting to the court's
Aetna Insurance Company jurisdiction, filed a motion to dismiss on the grounds Judge Ramon O. Nolasco in an order dated April 19,
appealed on a legal question of (a) lack of jurisdiction over the person and (b) that 1965 dismissed the complaint against Barber
from the order of the Court of it was not the real party in interest. Steamship Lines, Inc. and directed that alias
First Instance of Manila, summonses be issued to the defendants named in the
dismissing its amended Barber Steamship Lines, Inc. alleged that the service amended complaint.
complaint against Barber Line of summons was not effected upon it in accordance
Far East Service on the ground with section 14, Rule 14 of the Rules of Court. It On May 19, 1965 Barber Line Far East Service,
of prescription. clarified that the summons intended for it was served supposedly without admitting to the court's
upon Macondray & Co., Inc. which was not its agent. jurisdiction, moved for the dismissal of the amended
The facts are as follows: complaint on the grounds (1) that it is not a juridical
It asserted that it was not the real party in interest person and, hence, it could not be sued; (2) that the
because according to the bill of lading annexed to the court had no jurisdiction over its person; (3) that it
complaint the owner of the SS Turandot, the carrying was not the real party in interest and (4) that the
 33

action had prescribed according Aetna Insurance Company and which arrived in shall not affect or prejudice the right of the shipper to
to the bill of lading and the Manila on the SS Turandot and were delivered in bad bring suit within one year after the delivery of the
Carriage of Goods by Sea Act. order to the consignee on February 25, 1968 (4 goods or the date when the goods should have been
Aetna Insurance Company Record on Appeal). delivered.
opposed the motion.
The bill of lading covering the shipment provides: Aetna Insurance Company contends in this appeal that
Judge Nolasco in his order of the trial court erred (1) in holding that the Barber Line
July 7, 1965 ruled that 19. In any event the Carrier and the ship shall be Far East Service was substituted for Barber Steamship
inasmuch as according to the discharged from all liability in respect of loss or Lines, Inc. and (2) in dismissing the action on the
complaint the shipment arrived damage unless suit is brought within one year after ground of prescription.
in Manila on February 22, 1964 the delivery of the goods or the dates when the goods
and the amended complaint, should have been delivered. Suit shall not be deemed There is no merit in the appeal. The trial court
impleading Barber Line Far brought until jurisdiction shall have been obtained correctly held that the one-year statutory and
East Service, was filed on April over the Carrier and/or the ship by service of process contractual prescriptive period had already expired
7, 1965, or beyond the one-year or by an agreement to appear. when appellant company filed on April 7, 1965 its
period fixed in the Carriage of action against Barber Line Far East Service. The one
Goods by Sea Act, the action On the other hand, the Carriage of Goods by Sea Act, year period commenced on February 25, 1964 when
had already prescribed. The Commonwealth Act No. 65 (Public Act No. 521 of the damaged cargo was delivered to the consignee.
case was dismissed as to Barber the 74th Congress of the United States) provides: (See Chua Kuy vs. Everrett Steamship Corporation,
Line Far East Service. 93 Phil. 207; Yek Tong Fire & Marine Insurance Co.,
RESPONSIBILITIES AND LIABILITIES Ltd. vs. American President Lines, Inc., 103 Phil.
The legal question under the 1125).
above facts is whether the Section 3. xxx xxx xxx
action of Aetna Insurance Appellant company invokes the rule that where the
Company against Barber Line original complaint states a cause of action but does it
(6) xxx xxx xxx
Far East Service, as ventilated imperfectly, and afterwards an amended complaint is
in its amended complaint, filed, correcting the defect, the plea of prescription
which was filed on April 7, In any event the carrier and the ship shall be
will relate to the time of the filing of the original
1965, had prescribed. discharged from all liability in respect of loss or
complaint (Pangasinan Transportation Co. vs. Phil.
damage unless suit is brought within one year after
Farming Co., Ltd., 81 Phil. 273). It contends that
delivery of the goods or the date when the goods
As previously stated, the action inasmuch as the original complaint was filed within
should have been delivered: Provided, That, if a
was for the recovery of the one year period, the action had not prescribed.
notice of loss or damage, either apparent or concealed,
damages to a cargo of truck
is not given as provided for in this section, that fact
parts which was insured by
 34

That ruling would apply to court's order of dismissal is affirmed. Costs against ISSUE: Whether or not Filipino Merchants is
defendants Luzon Stevedoring the plaintiff-appellant. precluded by the said time-bar rule.
Corporation and Luzon
HELD: Yes. The pertinent provision of the Carriage
Brokerage Corporation. But it SO ORDERED. of Goods by Sea Act does not only apply to the
would not apply to Barber Line
shipper but also applies to the insurer. The coverage
Far East Service which was Filipino Merchants Insurance Company, Inc. vs Judge of the Carriage of Goods by Sea Act includes the
impleaded for the first time in Jose Alejandro insurer of the goods. Otherwise, what the Act intends
the amended complaint.
to prohibit after the lapse of the one year prescriptive
In 1976, Choa Tiek Seng contracted Frota Oceanica
period can be done indirectly by the shipper or owner
It should be recalled that the Brasiliera for the latter to deliver goods. Choa Tiek
of the goods by simply filing a claim against the
original complaint was Seng insured the goods with Filipino Merchants
insurer even after the lapse of one year. This would be
dismissed as to Barber Insurnace Company. The goods left the port of Manila
the result if the insurer can, at any time, proceed
Steamship Lines, Inc. in the on December 13, 1976 and reached its point of
against the carrier and the ship since it is not bound by
lower court's order of April 19, destination on December 17, 1976. The goods were
the time-bar provision. In this situation, the one year
1965. New summons had to be however damaged.
limitation will be practically useless. This could not
issued to Barber Line Far East Choa Tiek Seng then filed an insurance claim. have been the intention of the law which has also for
Service which had replaced Filipino Merchants refused to pay so in August 1977, its purpose the protection of the carrier and the ship
Barber Steamship Lines, Inc. as it was sued by Choa Tiek Seng. In January 1978, from fraudulent claims by having “matters affecting
a defendant. Filipino Merchants filed a third party complaint transportation of goods by sea be decided in as short a
against the carrier Frota Oceanica Brasiliera as it time as possible” and by avoiding incidents which
The filing of the original alleged that it is the carrier who is liable to pay would “unnecessarily extend the period and permit
complaint interrupted the damages to Choa Tiek Seng. Judge Jose Alejandro of delays in the settlement of questions affecting the
prescriptive period as to Barber the trial court ruled against Filipino Merchants. The transportation.”
Steamship Lines, Inc. but not as Court of Appeals affirmed the ruling of the judge. The
to Barber Line Far East Service, lower courts ruled that Filipino Merchants is already
an entity supposedly distinct barred from filing a claim because under the Carriage
from the former. Appellant's of Goods by Sea Act, the suit against the carrier must
Transportation Case Digest: Mayer Steel Pipe Corp. V.
contention that there was be filed “within one year after delivery of the goods or
merely a correction in the name the date when the goods should have been delivered”
of a party-defendant is or one year from December 17, 1976. The insurance CA (1997)
untenable. * company is already barred for it filed its third party
complaint only in January 1978. G.R. No. 124050 June 19, 1997
In view of the foregoing Lessons Applicable: Ancillary Contracts
considerations, the lower
 35

(transportation) Charter Insurance Corp. (Charter)  Defense: insurance surveyor's report

 South Sea:Invoice Nos. allegedly showed that the damage is a factory
FACTS: MSPC-1014, 1015 and 1025 for US$212,772.09 defect
 Charter: Invoice Nos. 1020, 1017  Trial Court: in favor of Mayer and
 1983: Hongkong
and 1022 for US$149,470.00 Hongkong
Government Supplies
 Mayer and Hongkong jointly appointed  CA: reversed
Department (Hongkong)
Industrial Inspection (International) Inc. as  affirmed the finding of the trial
contracted Mayer Steel
third-party inspector to examine whether the court that the damage is not due to factory defect
Pipe Corporation (Mayer)
pipes and fittings are manufactured in accordance and that it was covered by the "all risks"
to manufacture and supply
with the specifications in the contract insurance policies
various steel pipes and
 Industrial Inspection certified all the  BUT held that Section 3(6) of the
fittings
pipes and fittings to be in good order condition Carriage of Goods by Sea Act provides that "the
 August to October,
before they were loaded in the vessel carrier and the ship shall be discharged from all
1983: Mayer shipped the
 When the goods reached Hongkong, liability in respect of loss or damage unless suit is
pipes and fittings to
it was discovered that a substantial portion brought within one year after delivery of the
Hongkong as evidenced by
thereof was damaged goods or the date when the goods should have
Invoice Nos. MSPC-1014,
 Mayer and Hongkong a claim against private been delivered
MSPC-1015, MSPC-1025,
respondents for indemnity under the insurance  applies not only to the carrier but
MSPC-1020, MSPC-1017
contract also to the insurer
and MSPC-1022
 Charter paid petitioner Hongkong ISSUE: W/N Section 3(6) of the Carriage of Goods
 Prior to the shipping,
the amount of HK$64,904.75 by Sea also applies to insurer
Mayer insured the pipes
 demanded payment of the balance
and fittings against all
of HK$299,345.30 which was refused HELD: NO. Petition is granted. CA reversed. RTC
risks with South Sea
 April 17, 1986: filed an action to reinstated
Surety and Insurance Co.,
recover HK$299,345.30  Section 3(6) of the Carriage of Goods by Sea
Inc. (South Sea) and
Act states that the carrier and the ship shall be
 36

products at Iligan City and discharge them at North

discharged from all which he may suffer from a specified peril
Harbor, Manila
liability for loss or damage  "all risks" insurance policy covers
The shipment was placed in the 3 hatches of the ship
to the goods if no suit is all kinds of loss other than those due to willful
which arrived with the cargo at Pier 12, North Harbor,
filed within one year after and fraudulent act of the insured Manila, on 12 August 1974. The following day, when
delivery of the goods or  prescribes in ten years, in the vessel’s 3 hatches containing the shipment were
opened by NSC’s agents, nearly all the skids of
the date when they should accordance with Article 1144 of the New Civil
tinplates and hot rolled sheets were allegedly found to
have been Code be wet and rusty. The cargo was discharged and
delivered. Under this unloaded by stevedores hired by the Charterer.
National Steel vs. CA G.R. No. 112287 December
provision, only the carrier's 12,1997 VLASONS SHIPPING, INC. vs. CA AND On 6 September 1974 NSC filed with VSI its claim
liability is extinguished if NATIONAL STEEL CORPORATION G.R. No. for damages suffered due to the downgrading of the
112350. December 12, 1997 Article 1732 of the Civil damaged tinplates in the amount of P941,145.18.
no suit is brought within
Code, Article 361 of the Code of Commerce, Article Then on 3 October 1974, NSC formally demanded
one year. But the liability 362 of the Code of Commerce, common carrier, payment of said claim but VSI refused and failed to
of the insurer is not transportation pay.
extinguished because the OCTOBER 6, 2017 On appeal, and on 12 August 1993, the Court of
insurer's liability is based Appeals modified the decision of the trial court by
reducing the demurrage from P88,000.00 to
not on the contract of
FACTS: P44,000.00 and deleting the award of attorneys fees
carriage but on the contract and expenses of litigation. NSC and VSI filed
of insurance - governed by The MV Vlasons I is a vessel which renders tramping separate motions for reconsideration. The CA denied
service and, as such, does not transport cargo or both motions. NSC and VSI filed their respective
the Insurance Code
shipment for the general public. Its services are petitions for review before the Supreme Court.
 An insurance contract available only to specific persons who enter into a
special contract of charter party with its owner. The ISSUE: Whether or not VSI contracted with NSC as a
is a contract whereby one
ship is a private carrier, and it is in this capacity that common carrier or a private carrier.
party, for a consideration
its owner, Vlasons Shipping, Inc. (VSA), entered into RULING:
known as the premium, a contract of affreightment or contract of voyage
agrees to indemnify charter hire with National Steel Corporation (NSC) on Article 1732 of the Civil Code defines a common
17 July 1974, whereby NSC hired VSI’s vessel, the carrier as “persons, corporations, firms or associations
another for loss or damage
MV ‘VLASONS I’ to make 1 voyage to load steel engaged in the business of carrying or transporting
 37

passengers or goods or both, by MV Vlasons I “was not a common but a private which cargo was carried, fit and safe for its reception,
land, water, or air, for carrier.” Consequently, the rights and obligations of carriage and preservation.” The NANYOZAI Charter
compensation, offering their VSI and NSC, including their respective liability for Party also provided that “owners shall not be
services to the public.” It has damage to the cargo, are determined primarily by responsible for split, chafing and/or any damage
been held that the true test of a stipulations in their contract of private carriage or unless caused by the negligence or default of the
common carrier is the carriage charter party. master or crew.”
of passengers or goods,
provided it has space, for all In Valenzuela Hardwood and Industrial Supply, Inc., Herein, NSC must prove that the damage to its
who opt to avail themselves of vs. Court of Appeals and Seven Brothers Shipping shipment was caused by VSI’s willful negligence or
its transportation service for a Corporation, the Court ruled that “in a contract of failure to exercise due diligence in making MV
fee. private carriage, the parties may freely stipulate their Vlasons I seaworthy and fit for holding, carrying and
duties and obligations which perforce would be safekeeping the cargo. Ineluctably, the burden of
A carrier which does not binding on them. Unlike in a contract involving a proof was placed on NSC by the parties’ agreement.
qualify under the test of a common carrier, private carriage does not involve the
common carrier is deemed a general public. Hence, the stringent provisions of the Article 361 of the Code of Commerce provides that
private carrier. “Generally, Civil Code on common carriers protecting the general “Merchandise shall be transported at the risk and
private carriage is undertaken public cannot justifiably be applied to a ship venture of the shipper, if the contrary has not been
by special agreement and the transporting commercial goods as a private carrier. expressly stipulated. Therefore, the damage and
carrier does not hold himself Consequently, the public policy embodied therein is impairment suffered by the goods during the
out to carry goods for the not contravened by stipulations in a charter party that transportation, due to fortuitous event, force majeure,
general public. The most lessen or remove the protection given by law in or the nature and inherent defect of the things, shall be
typical, although not the only contracts involving common carriers.” for the account and risk of the shipper. The burden of
form of private carriage, is the proof of these accidents is on the carrier.”
charter party, a maritime From the parties’ Contract of Voyage Charter Hire,
dated 17 July 1974, VSI “shall not be responsible for Article 362 of the Code of Commerce provides that
contract by which the charterer, “The carrier, however, shall be liable for damages
a party other than the losses except on proven willful negligence of the
officers of the vessel.” The NANYOZAI Charter arising from the cause mentioned in the preceding
shipowner, obtains the use and article if proofs against him show that they occurred
service of all or some part of a Party, which was incorporated in the parties’ contract
of transportation further provided that the shipowner on account of his negligence or his omission to take
ship for a period of time or a the precautions usually adopted by careful persons,
voyage or voyages.”Herein, shall not be liable for loss of or damage to the cargo
arising or resulting from unseaworthiness, unless the unless the shipper committed fraud in the bill of
VSI did not offer its services to lading, making him to believe that the goods were of a
the general public. It carried same was caused by its lack of due diligence to make
the vessel seaworthy or to ensure that the same was class or quality different from what they really were.”
passengers or goods only for
those it chose under a “special “properly manned, equipped and supplied,” and to As the MV Vlasons I was a private carrier, the
contract of charter party.” The “make the holds and all other parts of the vessel in shipowner’s obligations are governed by the
 38

foregoing provisions of the BARRERA, J.: for which the 2% common carrier's percentage tax
Code of Commerce and not by imposed by Section 192 of the National Internal
the Civil Code which, as a This is an appeal by the Commissioner of Internal Revenue Code was never paid.
general rule, places the prima Revenue from the decision of the Court of Tax
facie presumption of Appeals (in CTA Case No. 556) holding the U.S. As a consequence, the Commissioner of Internal
negligence on a common Lines Company liable for payment of common Revenue assessed and demanded from the Company,
carrier. carrier's tax deficiency and surcharges in the total sum as deficiency tax, (a) the sum of P6,691.36 for its own
of only P502.75 instead of P25,769.41 as originally business under the name American Pioneer Lines; (b)
The Supreme Court denied the
assessed and demanded by appellant Commissioner. P5,429.00 as agent of Pacific Far East Line, Inc.; and
consolidated petitions; and
(c) P13,649.05 on the freight revenue of the West
affirmed the questioned
As found and stated in the decision of the Court of Coast Trans-Oceanic Steamship Lines Co. from the
Decision of the Court of
Tax Appeals, the U.S. Lines Company, a foreign carriage or transportation of the chrome ores, or a
Appeals with the modification
corporation duly licensed to do business in the total of P25,769.41.1äwphï1.ñët
that the demurrage awarded to
VSI is deleted. No Philippines, under the trade name "American Pioneer
pronouncement as to costs. Lines" (for short hereinafter referred to as the At the instance of the Company, a reinvestigation of
Company), is the operator of ocean-going vessels the case was conducted and a hearing thereon held
transporting passengers and freight to and from the before the Appellate Division of the Bureau of
Philippines. It is also the sole agent and representative Internal Revenue. These, notwithstanding, the
G.R. No. of the Pacific Far East Line, Inc., another shipping Commissioner maintained his demand. Thus, the
L-16850 May 30, company engaged in business in the Philippines as a Company filed a petition with the Court of Tax
1962 common carrier by water. Appeals contesting the correctness of (1) the
conversion of "collect" revenues or those freight and
COMMISSIONER OF In the examination of its books of accounts and other passage receipts, commissions, and agency fees for
INTERNAL records to determine its tax liabilities for the period services in the Philippines, but payable in the United
REVENUE, petitioner, from January 1, 1950 to September 30, 1955, it was States, at the rate of P2.00375 to $1.00 and (2) the
vs. found that the Company also acted in behalf of the demand on the Company of the 2% carrier's
UNITED STATES LINES West Coast Trans-Oceanic Steamship Lines Co., Inc., percentage tax on the gross receipts of the West Coast
COMPANY, respondent. a non-resident foreign corporation, in connection with Trans-Oceanic Steamship Lines from the chrome ore
the transportation, on board the "SS Portland Trader" shipments of November 27, 1951 and April 29, 1952.
Office of the Solicitor General belonging to the latter, on November 27, 1951 and
for petitioner. April 29, 1952, of chrome ores from Masinloc, The Court of Tax Appeals, in its decision, ruled for
Ross, Selph and Carrascoso for Zambales to the United States, from which carriage or the Company on the first issue, thus —
respondent. transportation freight revenue in the total sum of
$272,470.00 was realized by the vessel's owner, and
 39

We wish to make it clear that As to the second issue, it ruled that the 2% percentage received certain amounts from its home office in the
from the records of the case, it tax under Section 192 of the Tax Code is imposable United States to meet its local expenses, and these
appears that all the "collect" only on owners or operators of the common carrier, were withdrawn from a letter of credit in the First City
revenues, or those freight and as there is no law constituting the shipping agent Bank of New York in Manila at the rate of P2.00375
charges, passage fares, the withholding agent of the taxes due from the to a dollar. But the Company asserts — and there is
commissions and agency fees, principal, said shipping agent is not personally liable no evidence to the contrary — that there is no
collected in the United States in for the tax obligations of the latter, unless the agent relationship whatsoever between these funds and the
United States currency belong voluntarily assumes such obligation which, in this freight fees collected in the United States.
to petitioner's home office in case, the agent Company did not. Consequently, the
the United States and were not petitioning taxpayer was ordered to pay only a tax The other issue is whether on the facts of the case, the
remitted to petitioner's local deficiency and surcharge in the sum of P502.75. Company, as agent of the vessel "SS Portland Trader"
office in the Philippines. In Hence, the institution of this appeal. in behalf of its owner, the West Coast Trans-Oceanic
short, the United States dollars Steamship Lines Company, can be compelled to pay
collected abroad were not The ruling by the lower court that the conversion of the 2% percentage tax on the freight revenue earned
actually converted to and the "collect" freight fees (or those earned in the from the shipment of chrome ores transported from
received in Philippine pesos, Philippines but actually paid in the United States in the Philippines to the United States. As stated earlier,
and therefore there is no dollars) should be at the rate of P2.00 to $1.00 as the Court of Tax Appeals ruled in the negative, citing
occasion nor reason to use a established by law (Sec. 48, Rep. Act No. 265), and and adopting a unanimous decision of the defunct
conversion rate aside from the not the rate or exchange of P2.00375 to $1.00, as Board of Tax Appeals rendered on July 30, 1953,
legal rate of exchange, i.e., fixed by the Monetary Board, must be upheld. No purporting to interpret Section 192 of the National
$1.00 to P2.00. If we have evidence was presented rebutting the positive Internal Revenue Code, in which it held that a
placed the judicial stamp of allegation of respondent taxpayer, which was shipping agent is not personally responsible for the
approval on the agreed sustained by the Tax Court, that the "collect" payment of the tax obligations of its principal,
conversion rates of $1.00 to freightage fees were not remitted to the local office of reasoning that there is no law constituting a shipping
P2.015 and $1.00 to P2.02 with the U.S. Lines Company (in the Philippines) nor agent as a withholding agent of the taxes due from its
regard to the "prepaid" freight actually converted to and received in Philippine pesos. principal. It further stated that a shipping agent can
and passage revenues, In other words, no foreign exchange operations were only be held liable for the payment of the common
respectively, we did so in order involved here. The statement made in the carrier's percentage tax if such obligation is stipulated
to arrive at the actual amounts Commissioner's brief (p. 20) that "it is uncontroverted in the agency agreement, or if the agent voluntarily
collected by the petitioner in that the respondent's (Company's) dollar earnings here assumes the tax liability.
Philippine pesos — the correct representing its so-called "collect" revenues were
taxable gross receipts. accounted for thru its bank, the National City Bank of We can not agree to this view as applied to the present
(Emphasis supplied.) New York at P2.00375 to a dollar", is not borne out case, because it adopts a very restrictive interpretation
by the records. What appears is that the Company of Section 192 of the Tax Code.1 What the legal
 40

provision purports to tax is the contract is not extant in the records. Still, from the Concerning the second shipment, we have first the
business of transportation, so correspondence between the principal West Coast letter of West Coast Trans-Oceanic Steamship Lines,
much so that the tax is based on Trans-Oceanic Steamship Lines and the Company dated February 21, 1952 addressed to respondent
the gross receipts. The person itself, and with other entities regarding the shipment Company, advising it of the second trip of "SS
liable is of course the owner or in question, the real nature of the agency may be Portland Trader" and stating: "We trust that you will
operator, but this does not mean gleaned. Thus, in the letter of West Coast handle the vessel at Manila and that your usual fee
that he and he alone can be Trans-Oceanic Steamship Lines, dated October 20, will apply", and requesting respondent Company to
made actually to pay the tax. In 1951 (Exh. 30), giving instructions to the master of its act also as supervisory agent at Saigon and Haiphong
other words, whoever acts on vessel "SS Portland Trader", it referred to respondent (p. 57, BIR records). The steamship company,
his behalf and for his benefit Company as the "Owner's agents" at the loading point likewise, advised the master of its vessel that "its
may be held liable to pay, for (Masinloc) to which the vessel had to be consigned. In agents for Masinloc" will be the respondent Company
and on behalf of the carrier or line with its designation as the "Owner's agent" and from which "full assistance and information" could be
operator, such percentage tax the vessel's consignee, respondent Company wrote the obtained (Exh. 18, dated March 12, 1952). Evidently
on the business. master of the vessel (Exh. 23) advising him that it had accepting the designation, respondent Company,
secured Customs authority for the vessel to proceed to representing itself as "the local agents" of the vessel
It is claimed for the Company Masinloc, as well as the Export Entry covering the (Exh. 21, dated March 26, 1952), secured the entry
that it merely acted as a loading of ore, giving instructions how to proceed and clearance of the vessel at the customs. After the
"husbanding agent" of the with the loading and to keep it closely advised of all loading of ore at Masinloc, again respondent
vessel with limited powers. movements and daily tonnages laden. It also Company prepared the shipping documents and
This appears not to be so. A undertook to and did in fact prepare all the cargo signed the bill of lading "As Agent for the West Coast
"husbanding agent" is the documents. The corresponding bill of lading for the Trans-Oceanic Steamship Lines" (p. 114, BIR record).
general agent of the owner in cargo was prepared and signed by the respondent
relation to the ship, with Company "As Agent for West Coast Trans-Oceanic All these documents show that respondent Company
powers, among others, to Steamship Lines" wherein it acknowledged the receipt clearly acted — as it held itself to the public and to
engage the vessel for general of 9,900 long tons of chrome, a prerogative act of a the Government (specifically the Bureau of Customs)
freight and the usual conditions, common carrier itself. (p. 114, BIR record). Again, — as the shipowner's local agent or the ship agent
and settle for freight and adjust signing "As Agents for West Coast Trans-Oceanic representing the ownership of the vessel. To adopt the
averages with the Steamship Lines", respondent Company transmitted view of the trial court would be to sanction the doing
2
merchant. But whatever may the shipping documents covering the shipment of ore of business in the Philippines by non-resident
be the technical functions of a to Castle Cooke, Ltd., the vessel's agent at Honolulu corporations over which we have no jurisdiction,
"ship's husband", the Company, (Exh. 20). All these were in respect to the first without subjecting the same to the operation of our
in the case at bar, was shipment on November 27, 1951. revenue and tax laws, to the detriment and
considered and acted more as a discrimination of local business enterprises. We,
general agent. The agency therefore, hold that in the circumstances, said
 41

respondent is under obligation shipping agent liable for the taxes due from his, of the records is necessary to determine the exact
to pay, for and in behalf of its principal. This is, of course, without prejudice to the taxable amount on which the 2% common carrier's
principal, the tax due from the right of the agent to seek reimbursement from his percentage tax is to be computed in accordance with
latter. And, this is but logical, principal. the terms of this decision.
because, as provided in Article
595 of the Code of Commerce, The contention that the agreement between the WHEREFORE, the decision of the Court of Tax
"the ship agent shall represent principal and agent solely determines the liability of Appeals in this case is modified at above-indicated,
the ownership of the vessel, and the agent, is not tenable. Any agreement or contract to and the records remanded to the court a quo for the
may, in his own name and in be enforceable in this jurisdiction is understood to purpose herein directed. No costs. So ordered.
such capacity, take judicial and incorporate therein the provision or provisions of law
extrajudicial steps in matters specifying the obligations of the parties under such Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L.,
relating to commerce". If the contract. The contract between herein respondent Paredes Dizon and Regala, JJ
shipping agent represents the Company and its principal consequently imposed
ownership of the vessel in upon the parties not only the rights and duties CASE DIGEST (Transportation Law): Barrios vs.
matters relating to commerce, delineated therein, but also the provisions of law such Go Thong
then any liability arising in as that of the Code of Commerce aforecited. Barrios vs. Go Thong
connection therewith may be
enforced against the agent who As to the third assigned error, i.e., the amount of GR L-17192, 30 March 1963)
is, as a consequence thereof, taxable receipts, the records are not clear. Petitioner
authorized to take judicial or Commissioner of Internal Revenue claims that there FACTS:
extrajudicial steps, either in the are contradictions in and among the three sets of Petitioner Honorio Barrios, captain and/or master of
prosecution or defense of the summaries submitted by the respondent Company and the MV Henry I, received or otherwise intercepted an
owner's rights or interests. As a they should not have been considered by the trial S.O.S. distress signal by blinkers from the MV
matter of fact, if a foreign court. On the other hand, we find also that the Alfredo, owned and/or operated by respondent Carlos
shipping company has a claim assessments issued by the Commissioner are, likewise, Go Thong & Company. Thereafter, he altered the
against the Government in conflicting. In his present petition, the prayer sets the course of said vessel, and steered and headed towards
relation to commerce, its local tax delinquency of the respondent Company at the beckoning MV Don Alfredo, which Barrios found
shipping agent, by virtue of P26,436.17, which is the amount demanded in his to be in trouble, due to engine failure and the loss of
Article 595 of the Code of her propeller. Upon getting close to the MV Don
letter of June 6, 1952, (Exh. E, also marked as Exh.
Commerce, can file such a Alfreco, with the consent and knowledge of the
34). In his brief, the Commissioner prays that captain and/or master of the MV Don Alfredo, Barrios
claim in his own name. respondent Company be ordered to pay the sum of caused the latter vessel to be tied to, or well-secured
Conversely, and logically, it P25,769.41, the amount demanded in his letter of June and connected with tow lines from the MV Henry,
must be admitted, the 28, 1956 (Exh. A, also marked as Exh. 26). In view of and proceeded moving until such time that a sister
Government can hold the local these discrepancies, a re-examination and verification ship of MV Don Alfredo was sighted so that the tow
 42

lines were also released. are necessary to a valid salvage claim, namely, (1) a vessel, Go Thong (through the captain of its vessel
marine peril, (2) service voluntarily rendered when MV Don Alfredo) thereby impliedly entered into a
Brought to the CFI of Manila, not required as an existing duty or from a special juridical relation of “towage” with the owner of the
the court therein dismissed the contract, and (3) success in whole or in part, or that vessel MV Henry I, captained by Barrios, the William
case; with cost against Barrios. the service rendered contributed to such success. Lines.
Barrios interposed an appeal.
No marine peril to justify valid salvage claim Only owner entitled to remuneration in towage
ISSUE: There was no marine peril to justify a valid salvage If the contract thus created is one for towage, then
Whether under the facts of the claim by Barrios against Go Thong. It appears that only the owner of the towing vessel, to the exclusion
case, the service rendered by although Go Thong’s vessel in question was, on the of the crew of the said vessel, may be entitled to
plaintiff to defendant night of 1 May 1958, in a helpless condition due to remuneration. The courts have to draw a distinct line
constituted "salvage" or engine failure, it did not drift too far from the place between salvage and towage; for the reason that a
"towage", and if so, whether where it was. The weather was fair, clear, and good. reward ought sometimes to be given to the crew of the
plaintiff may recover from The waves were small and too slight, so much so, that salvage vessel and to other participants in salvage
defendant compensation for there were only ripples on the sea, which was quite services, and such reward should not be given if the
such service. smooth. During the towing of the vessel on the same services were held to be merely towage. The master
night, there was moonlight. Although said vessel was and members of the crew of a tug were not entitled to
HELD: drifting towards the open sea, there was no danger of participate in payment by liberty ship for services
It is not a salvage service. its foundering or being stranded, as it was far from rendered by tug which were towage services and not
any island or rocks. In case of danger of stranding, its salvage services. The distinction between salvage and
Salvage defined anchor could be released, to prevent such occurrence. towage is of importance to the crew of the salvaging
“Salvage” has been defined as There was no danger that Go Thong’s vessel would ship, for the following reasons: If the contract for
“the compensation allowed to sink in view of the smoothness of the sea and the towage is in fact towage, then the crew does not have
persons by whose assistance a fairness of the weather. That there was absence of any interest or rights in the remuneration pursuant to
ship or her cargo has been danger is shown by the fact that said vessel or its crew the contract. But if the owners of the respective
saved, in whole or in part, from did not even find it necessary to lower its launch and vessels are of a salvage nature, the crew of the
impending peril on the sea, or two motor boats, in order to evacuate its passengers salvaging ship is entitled to salvage, and can look to
in recovering such property aboard. Neither did they find occasion to jettison the the salved vessel for its share.
from actual loss, as in case of vessel’s cargo as a safety measure. Neither the
shipwreck, derelict, or passengers nor the cargo were in danger of perishing. Equity cannot be resorted if there is an express
recapture.” All that the vessel’s crew members could not do was provision of law
to move the vessel on its own power. That did not Barrios cannot invoke equity in support of his claim
Elements for a valid salvage make the vessel a quasi-derelict. for compensation against Go Thong. There being an
claim; Erlanger & Galinger express provision of law (Art. 2142, Civil Code)
case Contract of towage perfected even without written applicable to the relationship created in the case, i.e.
In the Erlanger & Galinger case, agreement that of a quasi-contract of towage where the crew is
it was held that three elements Herein, in consenting to Barrios’ offer to tow the not entitled to compensation separate from that of the
 43

vessel, there is no occasion to

resort to equitable
considerations.