TransportationLaw|Atty.

Ang|Week10
18November2014

DUE:November16,2014,SUNDAY,10PM(EVENING)
Format:
Doctrine:
Parties:
Facts:
+ MTC/RTC/CAdecisionsifapplicable
Issue:
Held/Rulings:
+ SCdecision

Letsfocusonwhatthesyllabusislooking.

CollisionandAllisionArrivalUnderStressShipwreck

a. CollisionArticles826839oftheCodeofCommerce
b. ArrivalUnderStressArticles819824oftheCodeofCommerce
c. ShipwreckArticles840845oftheCodeofCommerce
d. G. Urrutia & Co. v. Baco River Plantation Co., G.R. No. L7675, March 25, 1913
SUPAPO
(Myapology.thedigestisquitelong.HIndikonakayangpaiklianpayungheld.)
Doctrines:
1. Inallcollisionsbetweenvesselsatseathereexist3divisionsorzonesoftime:
(1) The first division covers allthe time uptothemomentwhentheriskof collision
maybesaidtohavebegun.
(2) The second division covers the time between the moment when the risk of
collisionbeginsandthemomentwhenithasbecomepracticallycertain.
(3) The third zone covers the time between the moment when the collision has
becomeapracticalcertaintyandthemomentofactualcontact.
2. Nautical rules require that,where a steamship and sailing vessel are approaching
each other from opposite directions, or on intersecting lines, the steamship, from
the moment the sailing vessel is seen, shall watch with the highest diligenceher
course and movementsso as to be able toadoptsuch timelymeansofprecaution
aswillnecessarilypreventthe2boatsfromcomingincontact.
3. Nautical rules also requires that, where a steamship and a sailing vessel are
approaching each other from opposite directions, or on intersecting lines, the
sailing vessel is required to keephercourseunlessthecircumstancesaresuchas
to render a departure from the rule necessary in order toavoidimmediatedanger.
Where a steamship and a sailingvesselareapproaching eachotherbowon,oron
intersecting lines, the steamship must give way. In case of collision between
suchvesselsthesteamshipisprimafacieinfault.
4. Fault on the part of thesailingvesselatthemomentprecedingacollisiondoesnot
absolve thesteamship. The steamer having incurred a far greater faultinallowing
suchproximitytobebroughtaboutischargeablewithallthedamageresultingfrom
thecollision.
(Note: remember the GR: No vessel,no liability. XPN: if insured. Article 837 and 826
ofCoCisinapplicableinthiscase.)

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Facts:
1. The case is about the collision between a steamship (Nuestra Senora Del Pilar)
andanschooner/sailingship(Mangyan)inVerdeIslandNorthPassage.
2. Theshipswereapproachinginanoppositedirection.
3. Thoseonboardthesailingvesselsawthesteamersometimebeforethecollision.
4. Despite this fact, the sailing ship kept its course steady until just before theactual
contact. (It was during the time when the sail vesselwaspassing throughthethird
zonethatitchangeditscoursetoportinordertoavoid,ifpossible,thecollision.)
5. As such, the sailing ship rammed the steamer, wherein the steamer sank and 8
died.
6. An action was filed by the owner of the steamship against the owner of the sail
vessel, to recover the value of thedestroyedsteamerandthedamagescausedby
reasonofitsdestruction,allegingthatthesailingshipwasnegligent.
7. Notethatthesteamerwasinsuredinthiscase.

Issue: Whether the sailing ship should be held liable in continuing its course without
variationuptothemomentthatitfounditselfinextremis.

Held: No! In case of collision between a steamship and a sailing ship the
steamshipisprimafacieinfault.
Article 20oftheInternationalRulesforthePreventionofCollisionatSeastates:"Iftwo
ships,oneofwhichisasailingshipandtheotherasteam ship,areproceedinginsuch
directions as to involve riskofcollision,thesteamshipshallkeepoutoftheway,of
thesailingship."

Article 21 states: "where byany of these rules oneoftwovesselsistokeepoutofthe

way,theothershallkeephercourseandspeed."

Generally speaking, in collisions between vessels there exist three divisions of

time, or zones: the first divisioncovers allthetimeuptothemomentwhentheriskof
collision may be said to have begun. Within this zone no rule is applicable because
none is necessary. Each vessel is free to direct its course as it deems best without
reference to the movements of the other vessel. The second division covers the time
between the moment when the risk of collision begins and the moment when it has
become a practical certainty. The third division covers the time between the moment
whencollisionhasbecomeapracticalcertaintyandthemomentofactualcontact.

The rule is that vessels may eachassume thattheotherwillobeythelawisone

of the most important in the law of collision. Were it otherwise and were vessels
required to take all sorts of measures to keep out the way, when theyarenotineach
other's way, navigation would be impossible. PROVIDED that a steamer must not
approach so nearasailingvessel,andonsuchacourseastoalarmamanofordinary
skill and prudence. If the man on the sailing vessel makes an impropermanuever,he
isnotresponsible.Itiswhatiscalledan"errorinextremis."

Article 21 renders it obligatory on the vessel, which has the right ofwaytopursueher
course, she must rely on theother vessel toavoidthe collisionandnotembarrassher
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by any maneuver. All she need do is to do nothing. Then the other vessel knows to
expectandnavigatesaccordingly.

The statutoryrulesofnavigationarethelawoflawsincasesofcollision.Theyadmitof
no option or choice. Nonavigator is at liberty to set up his discretion againstthem. If
these rules were subjecttothecapriceorelectionof mastersandpilots,theywouldbe
not only useless, but worse than useless. These rules are imperative. They yield to
necessity,indeed,butonlytoactualandobviousnecessity.

The duties imposed upon vessels are of a mutual character and where the statute
directs one to give way to the other, it imposes an equal duty upon the latter to
continue on its course,andachangeofcourseonitspartisasunlawfulasitwouldbe
fortheotherrefusetoyieldtherightofway.

It is one of theconditions ofthedutytokeepoutoftheway,thattheothervesselshall

act intelligently, and afford reasonable evidence of her intention while it is doubtful
what the other willdo, the formershould hold her course. Until it plainly appears that
there is no other alternative, a vessel should hold her course when in a position
requiredtodosobythestatute.

As a general rule, therefore, when meeting a sailing vessel, whether close hauled or
with the wind free, the latter has a right to keep her course, and it isthe duty of the
steamertoadoptprecautionsaswillavoidher.

This way, the steamer can adopt the necessary measures to avoid the danger, and it
will have a right to assume that the sailing vessel will keepitscourse.Ifthelatterfails
to do this, the fault will be attributable to it, and the master of the steamer will be
responsible only for a fair exertion of the power of his vessel to avoid the collision
under theunexpectedchangeof thecourseoftheothervessel,andthecircumstances
ofthecase.

Rules of navigation are obligatory from the time the necessity for precaution begins,
and continue to be applicable as the vessels advance, so long as the means and
opportunity to avoid the danger remain but they do not apply to avessel required to
keep her course after the approach is so near that the collisionis inevitable, and are
equally inapplicable to vessels of every description while they are yet so distant from
eachotherthatmeasuresofprecautionhavenotbecomenecessary.

Accordingly, in the first zone no rules apply. In the second theburdenisonthe

vessel required to keep away and avoid the danger. The third zonecovers the
period in which errors in extremis occur and the rule is thatthe vessel which
has forced the privileged vesselintodangerisresponsibleeveniftheprivileged
vesselhascommittedanerrorwithinthatzone.

"Nautical rules require that where a steamship and sailing vessel are approaching
each other from opposite directions, or on intersecting lines, the steamship from the
moment the sailing vessel is seen, shall watch with the highest diligence her course
and movements so as to be able to adopt such timely means of precaution as will
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necessarily prevent the two boats from coming in contact. Fault on the part of the
sailing vessel atthe momentpreceeding a collision doesnotabsolveasteamerwhich
has suffered herself and a sailing vessel to get in such dangerous proximity as to
cause inevitable alarm and confusion and collusion as a consequence. The steamer,
as having committed afar greaterfault inallowingsuch proximity tobebroughtabout,
ischargeablewithallthedamagesresultingfromacollision."

Summaryofnauticalrulesbetweensteamerandschooner:
1. Upon the steamship and schooner discovering each other proceeding in such
directions as to involve risk of collision, as stated in the foregoing findings of fact, it
was the right and duty of the schooner to keep her course, and the duty of the
steamship to keep out of the way of the schooner, andthe steamship was in fault in
failingtoperformthatduty.
2. It was also the duty of thesteamship under the circumstances stated, topursue a
course which should not needlessly put the schooner in imminent peril and the
steamshipwasinfaultinfailingtoperformthatduty.
3. It was the duty of the steamship before the time when she did so, to slackenher
speedorstop,andthesteamshipwasinfaultinfailingtoperformthatduty.
4. If, when a collision had become imminent by reason of the fault of thesteamship,
any error was committed in extremisbythoseinchargeofthe schooner,theschooner
isnotresponsibletherefor.
5. The steamship had no right, under the circumstances stated, needlessly to place
herself in such close proximity to the schooner that theerrororamomentwouldbring
destruction.
6. The collision was occasioned by the fault of the steamship, and the steamship
shouldbecondemnedtherefor.

Where a sailing levelandonepropelledby steamareapproachingeachotherbow,on

the steamer must give away, In case of a collision between such vessels, the
steamerisprimafacieinfault.

e. Smith BellandCompany(Philippines)Inc.v.CourtofAppeals, G.R.No.L56294,May

20,1991VELASCO

FACTS
A collision tookplacebetweentheM/V"DonCarlos,"aninterisland vesselownedand
operated by private respondent Carlos A. Go Thong andCompan,andtheM/S"Yotai
Maru,"amerchantvesselofJapaneseregistry.
The consignees of the damaged cargo got paid by their insurance companies. The
insurance companies in turn, having been subrogated to the interests of the
consignees of the damagedcargo,commencedactionsagainstprivaterespondentGo
Thongfordamagessustainedbythevariousshipments.
Two(2)caseswerefiledintheCourtofFirstInstanceofManila.
The first case: petitioner Smith Bell and Company (Philippines), Inc. and
Sumitomo Marine andFireInsuranceCompanyLtd.againstprivaterespondent
GoThong.
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The second case: petitioners Smith Bell and Company (Philippines),Inc. and
Tokyo MarineandFireInsuranceCompany,Inc.againstprivaterespondentGo
Thong.
CFI: In both cases, theManilaCourtofFirstInstanceheldthattheofficersandcrewof
the "Don Carlos" had beennegligentthatsuchnegligencewastheproximatecauseof
the collision and accordingly held respondent Go Thong liable for damages to the
plaintiffinsurancecompanies.
CA: (in relation to collision issue) reversed the lower court and held theofficersofthe
"Yotai Maru"at faultinthecollisionwiththe"DonCarlos,"anddismissedthe insurance
companies'complaint.

ISSUE:WONDonCarloshadbeennegligentandatfaultinthecollision.

HELD:YES

The Court believes that there are three (3) principal factors which are constitutive of
negligenceon the part of the "Don Carlos," whichnegligencewastheproximatecauseofthe
collision.

The first of these factors was the failureof the "Don Carlos" to comply withtherequirements
ofRule18(a)oftheInternationalRulesoftheRoad("Rules"),"whichprovidesasfollows:

(a) When twopowerdrivenvesselsaremeetingendon, ornearlyendon,soastoinvolve

risk of collision, each shallalterhercoursetostarboard,so that eachmaypassonthe
port side of the other. This Rule only applies to caseswherevesselsaremeetingend
on or nearly end on, in such a manner as to involve risk of collision, and does not
apply to two vessels which must, ifbothkeepontheirrespectivecourse,passclearof
each other. Theonlycasestowhichitdoesapplyarewheneachoftwovesselsisend
on, or nearly end on, to the other in other words, to cases in which, by day, each
vessel sees the masts of the other in a line or nearly in a line with her ownandby
night to cases in which each vessel is in such a position as to see boththesidelights
of the other. It doesnot apply, by day, tocasesinwhichavesselseesanotherahead
crossing her own course or, by night, to cases where the red light of one vessel is
opposedto the redlight of the otherorwherethegreenlightofonevesselisopposed
to the green light of theother orwherearedlight withoutagreenlightoragreenlight
without a red light is seen ahead, or Where both green and red lights are seen
anywherebutahead.(Emphasissupplied)

Don Carlos altered its course byfive degrees to the left at 0343 hours instead of to the right
whichmaneuverwastheerrorthatcausedthecollisioninquestion.
"Don Carlos" was overtaking anothervessel,the"DonFrancisco",andwasthenatthe
starboard(rightside)oftheaforesaidvesselat3:40a.m.
It was in the process of overtaking "Don Francisco" that "Don Carlos' was finally
brought into a situation where he was meeting endonor nearly endon "Yotai Maru,
thusinvolvingriskofcollision.

Forherpart,the"YotaiMaru"didcomplywithitsobligationsunderRule18(a).
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As the "Yotai Maru" found herself on an "endon" or a "nearly endon" situation

visavis the "Don Carlos, " andas the distance between them was rapidly shrinking,
the "Yotai Maru" turned starboard (to its right) and atthesame timegavetherequired
signalconsistingofoneshorthornblast.

The "Don Carlos" turned to portside (to its left), instead of turning to starboard asdemanded
byRule18(a).
The "DonCarlos"alsoviolatedRule28(c)foritfailedtogivetherequiredsignaloftwo
(2) short horn blastsmeaning"Iamalteringmycoursetoport."Whenthe"YotaiMaru"
saw that the "Don Carlos" was turningto port, the master of the "YotaiMaru"ordered
thevesselturned"hardstarboard"at3:45a.m.andstoppedherenginesatabout3:46
a.m. the "Yotai Maru" went "full astern engine." The collision occurred at exactly 3:50
a.m.

The second circumstance constitutive of negligence on the part ofthe "Don Carlos" wasits
failure to have onboardthatnighta"proper lookout"asrequiredbyRuleI(B)UnderRule29
of thesamesetofRules,allconsequencesarisingfromthefailureofthe"DonCarlos"tokeep
a"properlookout"mustbebornebythe"DonCarlos."
A "proper lookout" is one who has been trained as such and who is given no other
duty save to act as a lookout and who is stationed where he can see and hear best
and maintain good communication with the officer in charge of the vessel, and who
must,ofcourse,bevigilant.
The "lookout" should haveno other duty toperform.Hehas onlyoneduty,thatwhich
its name impliesto keep "lookout". So a deckhand who has other duties, is not a
proper "lookout". The navigating officer is not a sufficient "lookout". Neither the
captain nor the [helmsman] in the pilothouse can be considered to be a "lookout"
within the meaning of the maritimelaw. Nor should he be stationed inthe bridge. He
should be as near as practicable to the surface of the water soas to beable to see
lowlyinglights.
It is hardly probable that neither German or Leo Enriquez may qualify as"lookout"in
therealsenseoftheword.
In the case atbar, the failure of the "Don Carlos" to recognize in a timely mannerthe
risk of collision with the "Yotai Maru" coming in from the opposite direction, was at
leastinpartduetothefailureofthe"DonCarlos"tomaintainaproperlookout.

The third factor constitutive of negligence on the part of the "Don Carlos" relates to the fact
that Second Mate Benito German was, immediately before and during the collision, in
commandofthe"DonCarlos."
The evidence on record clearly discloses that "Don Carlos" was, at the time of the
collision and immediately prior thereto, under the command of Benito German, a
second mate although its captain,Captain Rivera,wasverymuchinthesaidvesselat
thetime.
The defendant's evidence appears bereft of any explanation as to why second mate
German was at the helm of the aforesaid vessel when Captain Rivera did not appear
tobeunderanydisabilityatthetime.
Inthisconnection,Article[633]oftheCodeofCommerceprovides:

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Art. [633] The second mate shall take commandofthevesselincaseofthe

inability or disqualification of the captain and sailing mate, assuming, insuch
case,theirpowersandliability.
The fact that second mate German was allowed to be in command of "Don Carlos"
and not the chief or thesailing mateintheabsenceofCaptainRivera,givesrisetono
other conclusion except that said vessel [had] no chief mate.Otherwise, the defense
evidence should have at leastexplainedwhyitwasGerman,onlyasecondmate,who
wasatthehelmofthevessel"DonCarlos"atthetimeofthefatalcollision.

Aside from German's being only a second mate, is his apparent lack of sufficient knowledge
of the basic and generally established rules of navigation. There is every reasonable ground
to believe that his inability to grasp actual situation and the implication brought about by
inadequacy of experience and technical knowhow was mainly responsible and decidedly
accountedforthecollisionofthevessels.

f. Government of the Philippine Islands v. Phil. Steamship Co., Inc., G.R. No. 18957,
January16,1923BUENAVENTURA

DOCTRINES: It results that both vessels were at fault and although the negligenceon the
part ofthemateoftheincomingvesselprecededthenegligenceonthepartofthemate ofthe
outgoingvessel by anappreciable interval of time, the first vessel cannot on that accountbe
absolvedfromresponsibility

The application of article 827 of the Code of Commerce is not limited by article 828 tothe
case where it cannot be determined which of the two vessels was the cause of the collision.
On the contrary article 828 mustbeconsideredasanextensionofarticle827toanadditional
case. In otherwords, under the two articles combined the ruleofliabilityannouncedinarticle
827 is applicable not only to the case where both vessels may be shown to be actually
blameworthy but also to the case where it is obvious that only one wasat fault but the proof
doesnotshowwhich.

FACTS: At about 10 p.m. on 10 February 1920, the coastwise vessel Isabel (owned by
Fernandez Hermanos),equipped with motor and sails, left the port of Manila with primary
destination to Balayan, Batangas, carrying, among its cargo, 911 sacks of rice belonging to
the Government of the Philippine Islands and consigned to points in thesouth.Aftertheboat
had been under weigh for about 4 hours, and had passed the San Nicolas Light near the
entrance into Manila Bay, the watch and the mate on thebridge of the Isabel discerned the
light of another vessel,which proved to be the Antipolo (owned by Philippine Steamship Co.
Inc.), also a coastwise vessel, on its way toManila and coming towards theIsabel. At about
the same time both the watch and mate onthebridgeoftheAntipoloalsosawtheIsabel, the
two vessels being then about one mile and a half or twomilesapart. Each vessel wasgoing
approximately at the speed of 6 miles an hour, and in about 10 minutes they had together
traversed the intervening space and were in close proximity to each other.Whenthemateof
the Antipolo, who was then at the wheel, awoke to the danger of the situation and saw the
Isabel almost on top of him, to use the words of the committee on marine accidents
reporting the incident, he put his helm hard to the starboard. As chance would have it,
however, the mate on the Isabel at this critical juncture lost his wits and, indisregard ofthe
regulations and of common prudence, at once placed his own helm hard to port, with the
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result that his boat veered around directly in the path of the other vessel and a collision
became inevitable. Upon this the mate on the Antipolo fortunately stopped his engines, but
the Isabelcontinuedwithfullspeedahead, andthetwovesselscametogethernear thebows.
The Isabel immediately sank, with total loss of vessel and cargo, though themembersofher
crewwerepickedupfromthewaterandsaved.

The Government of the Philippine Islands sought to recover the sum of P14,648.25, the
alleged value of 911 sacks of rice which were lost at sea on 11 February 1920. In the CFI
judgment was entered for the recovery by the Government from the Philippine Steamship
Company, Inc.,ofthefullamountclaimed,withinterestfromthedateoffilingofthecomplaint.
Fromthisjudgment,saidcompanyappealed.

ISSUE:WONPhil.Steamshipwasnegligent?

HELD: The Supreme Court affirmed the judgment appealed from with costs against
PhilippineSteamshipCo.Inc.

Negligence was imputable to both vessels, though differing somewhat in character and
degree with respect to each. The mate of the Antipolo was clearly negligent in having
permitted that vessel to approach directly towards the Isabel until the two were in
dangerous proximity.Forthistherewasnoexcusewhatever,sincethenavigableseaatthis
point is wide and the incoming steamer could easily have given the outgoing vessel a wide
berth. On the other hand it is not clear that the Isabel was chargeable with negligence in
keeping on its course for this boat had its jib sail hoisted, and may for that reason be
consideredtohavehadtherightofway.

Negligence shortly precedingthemomentofcollisionisundoubtedlychargeabletothe

Isabel, for the incorrect and incompetent way in which this vessel was then handled.
The explanationmay befound in thefactthatthemateontheIsabelhadbeenoncontinuous
duty during the whole preceding day and night and being almost absolutely exhausted, he
probablywaseitherdozingorinattentivetodutyatthetimetheothervesselapproached.

It results that both vessels were at fault and although the negligence on the part of the
mate of the incoming vessel preceded the negligence on the part of the mate of the
outgoing vessel by an appreciable interval of time, the first vessel cannot on that
account be absolved from responsibility. Indeed, in G. Urrutia & Co. vs. Baco River
Plantation Co., supra, this court found reason for holding that the responsibility rested
exclusively on a steamer which had allowed dangerous proximity to a sailing vessel to be
broughtaboutundersomewhatsimilarconditions.

Where both vessels are to blame, both shall be solidarily responsible for the damage
occasioned to their cargoes. As the Isabel was a total loss and cannot sustain any part of
this liability, the burden ofresponding to the Government of the Philippine Islands, as owner
of the rice embarked on the Isabel, must fall wholly upon the owner of the othership,thatis,
uponthedefendant,thePhilippineSteamshipCompany,Inc.

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The application of article 827 of the Code of Commerce is not limited by article 828 tothe
case where it cannot be determined which of the two vessels was the cause of the collision.
On the contrary article 828 mustbeconsideredasanextensionofarticle827toanadditional
case. In otherwords, under the two articles combined the ruleofliabilityannouncedinarticle
827 is applicable not only to the case where both vessels may be shown to be actually
blameworthy but also to the case where it is obvious that only one wasat fault but the proof
doesnotshowwhich.

g. *National Development Company v. Court of Appeals, G.R. No. L49407 and 49469,
August19,1988DORIA

PARTIES:
Common Carrier: National Development Company (NDC) and Maritime Corporation of the
Philippines(MCP)asagent
Shipper:E.PhilippCorporationandKyokutoBoekui,Kaisa,Ltd.
Consignee:ManilaBankingCorporation
Insurer:DevelopmentInsurance&SuretyCorporation

DOCTRINE:
Lawofcountryofdestinationgovernsliabilityofcommoncarrier
For cargoes transported from another country to the Philippines, the liability of the
carrier is governedprimarilybytheCivilCodeandinallmattersnotregulatedbyit,the
rightsandobligationsofcommoncarriershallbegovernedbytheCodeofCommerce.
Collision does not fall undermattersregulated by the Civil Code, hence, the Code of
Commerceshallapply

FACTS:
In a memorandum agreement between National Development Company (NDC) and
Maritime Corporation of the Philippines Inc. (MCP), NDC as the first preferred
mortgagee of 3 ocean vessels, including Dona Nati, appointed MCP asitsagent to
manageandoperatesaidvesselforandinitsbehalfandaccount.
E. Philipp Corporation of New York loaded on board "Dona Nati" (at San Francisco),
1,200 bales of American raw cotton consigned to the order of Manila Banking
CorporationandthePeople'sBankandTrustCompany.
At Tokyo, Japan, the cargoof Kyokuto Boekui, Kaisa, Ltd., consignedto the order of
Manila Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 10
casesofaluminumfoilwerealsoloadedonboardthevessel.
En route to Manila Dona Nati figured in a collision with a Japanese vessel SS
YasushimaMaruonJapanesewaters.
550 bales of American raw cotton were lost and/or destroyed, of which 535
bales as damaged were landed and sold and 15 bales were not landed and
deemedlost.
TheshipmentofKyokuto,BoekuiKaisaLtd.wereconsideredtotallylost.
DISC, as insurer, paid the total value ofthelosses/damagesto theconsignees
ortheirsuccessorsininterest.
DISC filed before CFI ofManila an action for the recovery of a sum ofmoneyagainst
NDCandMCPasownerandshipagent,respectively.
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CFI:orderedMCPandNDCtopayDISCjointlyandsolidarity
MCP'scrossclaimagainstNDCwasgranted.
CA:affirmedintotothedecisionoftheCFI.
NDCscontention:COGSAshouldapplyandnottheCCortheCoC

ISSUE:
Which law governs loss ordestruction of goods due to collision of vessels outside Philippine
waters.CODEOFCOMMERCE

HELD:

In Eastern Shipping Lines Inc. v. IAC it was held that "the law of the country to which the
goods are to be transported governs the liability of the common carrier in caseof their loss,
destruction or deterioration" (Article 1753, CivilCode).Asarule,for cargoestransportedfrom
Japan to the Philippines, the liability of the carrieris governedprimarilybytheCivilCodeand
in all matters not regulated by said Code, the rights and obligations of common carrier shall
be governed by the Code of Commerce. The COGSA, a special law, is merely suppletory to
theprovisionoftheCivilCode.
In the case at bar, it has been established that the goods are transported from San
Francisco and Tokyo to the Philippinesandthattheywerelostduetoacollisionfound
to have been caused by the negligence or fault of both captains of the colliding
vessels.
It is evident thatthe laws of the Philippines will apply, and it is immaterial that
thecollisionactuallyoccurredinforeignwaters.

Collision falls among matters not specificallyregulated by the Civil Code,hence,Articles826

to 839, Book III of the Code of Commerce, which deal exclusively with collision of vessels,
shallapply.
Article 826 of the Code of Commerceprovidesthat,where collisionisimputabletothe
personnel of a vessel, the owner of the vessel at fault shall indemnify the losses and
damagesincurredafteranexpertappraisal.
More in point to the case isArticle827whichprovidesthat,ifthe collisionisimputable
to both vessels, each one shall suffer its own damages and both shall be solidarily
responsibleforthelossesanddamagessufferedbytheircargoes.

There is no room for the interpretation that the Code of Commerce should apply only to
domestic trade and not to foreign trade. Aside from the fact that the COGSA does not
specifically provide for the subjectofcollision,itrestrictsitsapplication"toallcontractsforthe
carriageofgoodsbyseatoandfromPhilippineportsinforeigntrade."
Section 1: "nothing in this Actshallbeconstruedasrepealinganyexistingprovisionof
theCodeofCommercewhichisnowinforce,oraslimitingitsapplication."
The COGSA not only recognizes the existence of the Code of Commerce, but more
importantlydoesnotrepealnorlimititsapplication.

Under Articles 826 to839of the Code of Commerce, the shipowner or carrier is notexempt
fromliabilityfordamagesarisingfromcollisionduetothefaultornegligenceofthecaptain.
Primary liability is imposed on the shipownerorcarrierinrecognitionof theuniversally
accepted doctrine that the shipmaster or captain is merely the representative of the
ownerwhohastheactualorconstructivecontrolovertheconductofthevoyage.
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SC:affirmedtheCAdecision

h. Sarasola (plaintiffappelee) v. Sontua (defendantappellant), G.R. No.L22630,

January31,1925FRANCISCO
Note: This is a Motion for Reconsideration(onefromthedefendantandonefromtheplaintiff)
casefromthepreviousSCsdecisionofthesamecase.

Doctrine:
Where it appears that the negligence of vessel Swastheprimarycauseofacollision,
and it further appears that the negligence of vessel M was the secondary cause, the
provisions of article 827 of the Code of Commerce apply, and vessel M cannot recover
damagesfromvesselSforthecollision.
Art. 827. If both vessels may be blamed for the collision, each one shallbe
liable for his own damages, and both shall be jointly responsible for the
lossesanddamagessufferedbytheircargoes.

FirstMR:
OpiniononDefendantsMotiontoReconsider
OnDecember1924,SCrenderedanopinionfavoringplaintiffagainstthedefendant.
It was said in the opinion that "That as far as can be judicially determined,the
collision between the 2 vessels was caused by an improper maneuver bythe
captain of the Y. Sontua.The resulttherefore,mustbe toholdtheownerofthe
Y. Sontua responsible to the owner of the Mercedesforthedamagecausedto
theMercedesbythecollision."
Defendant filed MR contending that the collision "was caused by an improper
maneuver by the captain of the Y. Sontua, the plaintiff was guilty of contributory
negligence,andforsuchreason,heoughtnottorecover."

Facts(DefendantsMR):
Basisoftheformeropinion:Article826oftheCodeofCommerce,asfollows:
If a vessel should collide withanother through the fault, negligence, or lack of
skill of the captain, sailing mate, or any other member of the complement, the
owner of the vessel at faultshall indemnify the losses and damages suffered,
afteranexpertappraisal.
Thedefendantnowcitesandreliesuponarticle827,asfollows:
If both vessels may beblamed for the collision, each one shallbeliableforhis
own damages,andbothshallbejointlyresponsibleforthelossesanddamages
sufferedbytheircargoes.
The testimony is conclusive that the negligence of the Y. Sontua was the primary
cause of the collision. That if it had remained true to its course, it never would have
happened.
It is equally true thatevenaftertheY.Sontuachangeditscourse,iftheMercedeshad
remainedtruetoitscourse,therewouldnothavebeenanycollision.
It is vigorously contended that, through the actions and false maneuver of the Y.
Sontua, an emergency was thrust upon the Mercedes, and that what it did was done
under an emergency, and hence it was not negligent. However, if the collision had
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taken place after dark, there would be much force in plaintiff's contention that the
Mercedes actedon an emergency, and that it ought not to beresponsibleforanerror
of judgment.Butitappearsfromthephysicalfactsthatbytheaidofnaturallight,atthe
time of and prior to thecollision,eithervesselcouldbeclearlyanddistinctlyseenfora
considerabledistance.

Issue:
W/nbothvesselsinvolvedinthecollisioncanrecoverdamagesfromeachother.

Held:
NO. In the case, both vessels wereto blame for the collision as it was clear from the
facts of the lower court. Y. Sontua was the primary cause of the accident, and that the
Mercedes was guilty of contributory negligence in failing to maintain its course, and that the
casecomesundertheprovisionsofarticle827
Underarticle827oftheCodeofCommerce,asfollows:
If both vessels may be blamed for the collision, each one shall be liable for
his own damages, and both shall be jointly responsible for the losses and
damagessufferedbytheircargoes.
SC: Judgment reversed, and the complaint dismissed,neitherparty torecovercostsinthisor
thelowercourt.Soordered.

SecondMR:justincaseAtty.Angwillaskaboutthis
Opinion on Plaintiffs Motion to Reconsider This MR is contending thevisibility of theother
vessel at early evening because the collision happened at 6:43 PM. The Defendants MR is
moreappropriateinrelationtooursyllabus.
The plaintiff has filed petition contending that there is no evidence that "if the
Mercedes had remained true to its course, there would not have been any collision,"
andthatforsuchreasonarticle827oftheCodeofCommerceisnotinpoint.
An attack is also made as towhatthecourtsaidabout theconditionssurroundingand
existing at the timeof the accident, and it is claimed that the statements made in the
opinion are unwarranted and not sustained by the records. Upon that point, the
decision is founded upon volume 23, Corpus Juris, section 1990, page 164, which is
asfollows:

Time, Days, and Date a. In General. Thecourts take judicialnotice of thecalendarand of theperiods
within the calendar. They take judicial notice of the computation of time, the subdivision of the year into
months, weeks, and days, the days of the week, the order of succeeding days of the week,thenumber of
days in a month, the coincidence of days of the week with the days ofthemonth, ofthedaysof themonth
with those of the year, and of days of the month with days of a week in thatmonth. The subdivisionofthe
day into hours and their order of successionaresometimesjudicially noticed,but notinalljurisdictions,and
the general rule, subject to numerous exceptions, is against the recognition of fractions of days. The time
when the moon or the sun rises or sets on a particular day is judicially known, as well as the time of the
several changes of the moon, and the speed at which the sun sinks below the horizon, the duration of
twilight, and the presence or absence of daylight, the natural conditions of visibility, and the direction in
whichthesuncastsashadowatagiventimeofaparticularday.

The petition for a rehearing also points out that the question upon which the decision
of December 20,1924, isfoundedwasnotraised orpresentedinthelowercourt.That
is true, and that fact is recognized in the decision itself. But it is also true that the
decisionisfoundeduponfactsshowntoexistintherecord.
SC:Petitionforarehearingisdenied.

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C. MaritimeContracts
a. BillofLading
b. CharterParty
c. LoanonBottomryandRespondentia
i.
Articles719736CodeofCommerce

D. PersonsinMaritimeLaw
a. ShipownersandShipAgents
i.
Articles586608oftheCodeofCommerce
ii.
Switzerland v. Ramirez, G.R. No. L48264, February 21, 1980
GATCHALIAN

DOCTRINE:
A ship agent, according to Article 586 oftheCodeofCommerce,isthepersonentrustedwith
theprovisioningofavesselorwhorepresentsherintheportinwhichshehappenstobe."

Local representativeofaforeignchartererofvesselwhichistheentityitrepresentsthevessel
intheportofManilaisconsideredashipagent

FACTS:
Petitioner, a foreign insurance company filed an admiralty case against Private
Respondents Oyama Shipping Co., Ltd. and its local agent, Citadel Lines, Inc. (Note:
CitadelisalsothelocalagentofMabuhayBrokerageCo.,Inc.)
60,000 bags of Urea NitrogenwereshippedfromNiihamaJapan,onboardtheS/SSt.
Lourdes",claimedtobeownedandoperatedbydefendantCitadelLines,Inc.
The goods were consignedto Borden International Phils., Inc., and insured by
petitionerforthesumofP9,319,105.00againstallrisks.
The shipment was discharged from the vessel S/S "St. Lourdes" shipside intolighters
owned by Mabuhay Brokerage Company, Inc., but when the same wassubsequently
delivered to and received by the consignee, it was found to have sustained losses
and/ordamageamountingtoP38.698.94.
Petitioner paid theamountand became subrogated tothe rights ofconsignee.
Demandsweremadebutleftunheeded
Uncertain inwhosecustodythegoodsweredamaged,petitionerimpleadedtheprivate
respondents (Oyama, Citadel and Mabuhay) as alternative defendants to determine
theirrespectiveliability.
Defendant Citadel Lines, Inc. alleged that defendantCitadelLineswasmerelythecivil
agent in the Philippinesfor Oyama Shipping Co., Ltd., which wasthe charterer of the
vessel S/S "St. Lourdes". It was further alleged that the principal agency relationship
between the said Oyama Shipping Co., Ltd. and defendant Citadel Lines, Inc. was
terminated when theTokyo District Court declared and decreed theinsolvencyof the
said Oyama Shipping Co.,Ltd.Itwasarguedthat defendantCitadelLines"hasalways
acted as an agent of a disclosed principal and, therefore, the herein defendant is
withoutanyliabilityatall"inconnectionwiththeplaintiff'sclaim.
Defendant Oyama Shipping Co. Ltd. denied the materialavermentsof the complaint,
alleging that it ceasedto be represented in the Philippines upon the declaration of its
insolvency by the TokyoCourtthatduetotheinsolvencyofOyamaShippingCo.Ltd.,
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the case as against it should be dismissed, the remedy for the plaintiff beingtofileits
claimbeforetheinsolvencycourtinTokyo,Japan.
TC: in favor of petitioner as against therein defendant Oyama Shipping Co., Ltd., but
absolvingCitadelLines,Inc.andMabuhayBrokerageCo.,Inc.fromliability.
With regard to Citadel: AsamereagentinthePhilippinesofthedefendant
Oyama Line, the defendant Citadel Line cannot be held liable for the
damagesrecoverablefromitsprincipal.
MR filed by Oyama insofar as it absolves respondents Citadel Lines, Inc. and
MabuhayBrokerageCo.,Inc.fromliability.denied

Petitioner contends that respondent Citadel Lines, Inc., being the ship agent for the vessel
S/S "St. Lourdes", is liable under the pertinent provisions of the Code of Commerce and
applicablejurisprudence.

Respondent Citadel Lines, Inc., alleges that the lower court had made a finding that it is a
mere agent of Oyama Shipping Co., Ltd., and not a ship agent, and this, being a finding of
fact, can no longer be questioned in the instant proceedings. Further, it argues that the
provisions of the Code of Commercerelied upon by petitioner are applicabletoashipagent,
butnottoamereagentlikeprivaterespondent.

ISSUES:
1. WONCitadelLinesisashipagent?YES
2. WON Citadel Lines may be held primarily liable for the loss/damage found to have
been sustained by subject shipment while on board and/or still in the custody of the
saidvessel?SOLIDARILYLIABLEWITHOYAMA

HELD:
In fine, private respondents do not dispute that a ship agent isliable to third persons under
certain circumstances as provided in the Code of Commerce, but insists that it is not a ship
agentbutamereagentandhence,notliable.

The error of the lower court liesin its application of the general rule on agency tothecasea
quo, when the applicable law is contained in the pertinent provisions of the Code of
Commerce as applied in relevant decisions of this Court. Its finding, therefore, that
respondent Citadel Lines, Inc. was a mere agent of Oyama Shipping Co., Ltd. was a
resultofitserroneousapplicationofthelawofagencytotheinstantcase.

Considering the relationship of the parties, respondent Citadel Lines, Inc. cannot be
considered as a "mere agent" under the civil law on agency as distinguished from a
ship agent, within the context of the Code of Commerce. In Yu Biao Sontua & Co. v.
Ossorio, 1 for example, it was held that the doctrines having reference to the relations
between principal and agent cannot be applied in the case of ship agents and ship owners.
For this reason, respondent cannot validly claim that the court a quo made a finding of fact
which is conclusive uponthis Court. Aship agent,accordingtoArticle586oftheCodeof
Commerce, is thepersonentrustedwiththeprovisioningofavesselorwhorepresents
herintheportinwhichshehappenstobe."

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It is not disputed bythe private respondent that itisthelocalrepresentativeinthePhilippines

of the Oyama Shipping Co.,Ltd. and, as alleged by petitioner, upon arrival of the vesselS/S
"St. Lourdes" in Manila, ittookchargeoftheunloadingofthecargoandissuedcargoreceipts
(or tally sheets) in its own name, forthe purpose of evidencing discharge ofcargoesandthe
conditions thereof from the vessel to the arrastre operators and/orunto barges/lighters, and
that claims against the vessel S/S "St. Lourdes" for losses/damages sustained byshipments
were in fact filed and processed by respondent Citadel Lines, Inc. These facts point to the
inevitable conclusionthatprivaterespondentistheentitythatrepresentsthevesselintheport
of Manila and henceisashipagentwithinthemeaningandcontextofArticle586ofthe Code
ofCommerce.

The Code of Commerceprovides, amongothers,thattheshipagentshallalsobeliable

for the indemnities in favor of third persons which arise from the conduct of the
captain in the care of the goods which the vessel carried but hemayexempt himself
therefrom by abandoning the vessel withallherequipmentsandthefreightagehemay
haveearnedduringthevoyage.(Article587).

Inaddition,Article618ofthesameCodestates:
Art.618. The captain shallbecivillyliabletotheshipagentandthe lattertothethirdpersonswhomay have
madecontractswiththeformer

1. For all thedamages sufferred by the vessel and its cargo by reason of want of skill ornegligence
on his part. If a misdemeanor or crime has been committed he shall be liable in accordance with
thePenalCode.
2. For all the thefts and robberies committed by the crew, reserving his right of action against the
guiltyparties.
3. Forthelosses,fines,andconfiscationsimposedonaccountofviolation.ofthelawsandregulations
ofcustoms,police,health,andnavigation
4. For the losses and damages caused by mutinies on board the vessel or by reason of faults
committed by the crew intheserviceanddefenseofthesame,ifhe does notproveChat,hemade
fulluseofhisauthoritytopreventoravoidthem.
5. For those arising by reason ofamisuseofpowersandnonfulfillmentofthedutieswhich pertainto
himinaccordancewithArticles610and612.
6. For those arisingbyreasonofhisgoingoutofhiscourseortaking acoursewhich,in theopinionof
theofficers of the vessel, at a meeting attended by the shippers or supercargoes who maybe on
board,heshouldnothavetakenwithoutsufficientcause.
7. Noexceptionwhatsoevershallexempthimfromhisobligation.
8. For those arising by reason of his voluntarily entering a port other than his destination, with the
exceptionofthecasesorwithouttheformalitiesreferredtoinArticle612.
9. For thosearisingbyreasonofthenonobservanceofthe provisions contained inthe regulationsfor
lightsandmaneuversforthepurposeofpreventingcollisions.

In Pons v. La Compania Maritima, it was held that for damages resultingto merchandise in
transit due to negligence of the officers of the ship, a cause of action arises against the
owners or agents of the vessels which may be prosecuted by the shipper or consignor the
damagedgoods.

At any rate, the liabilities of the ship agent are not disputed by private respondent. It
appearing that the Citadel Lines is the ship agent for the vessel S/S "St. Lourdes" at
the port of Manila, it is, therefore, liable to the petitioner, solidarily with itsprincipal,
OyamaShippingCo., Ltd.,in anamountrepresentingthe valueofthe goods lostandor
damaged, amounting toP38,698.94 there being no proof presented to showthattheofficers
of the vessel, in whose custody the goods were lost or damaged, are exempt from liability
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therefrom and that the damage was caused by factors and circumstances exempting them
fromliability.

The insolvency of Oyama Lines has no bearing on the instant case insofar as the liability of
Citadel Lines, Inc. is concerned. The law does does not make the liability of the ship agent
dependentuponthesolvencyorinsolvencyoftheshipowner.

iii.
Macondray v. Provident, G.R. No. 154305, December 09, 2004
HAUTEA

Doctrine:

Article 586 of the Code of Commerce states that a ship agent is "the person entrusted with
provisioningorrepresentingthevesselintheportinwhichitmaybefound."

Facts:

CANPOTEX SHIPPING SERVICES LIMITED (Shipper), shipped and loaded on board MV

Trade Carrier 5000 metric tons of Standard Grade Muriate of Potash for transportation and
deliveryattheportofCebu,infavorofATLASFERTILIZER(Consignee)
TheshipmentofMuriateofPotashwereinsuredwithPROVIDENTINSURANCE
Uponarrivaloftheshipment,ATLASFERTILIZERdiscoveredthattheshipmentwasshortof
476.140metrictonsofMuriateofPotashworthP1,657,700.95
PROVIDENTINSURANCEpaidATLASforthelosses
Thereafter, PROVIDENT made formal claims against TRADE AND TRANSPORT (The
operatorofthevesselwhotransportedtheshipment)andMACONDRAY
The summons to TRADE AND TRANSPORT were unservedas itwasnolongerconnected
toMACONDRAY
For failure to effect service of summons the case against TRADE & TRANSPORT was
considereddismissedwithoutprejudice.
MACONDRAY deniesliabilityforthelossesasitallegesthatithasNOabsoluterelationwith
defendantTRADE&TRANSPORT
MACONDRAY further alleges that it is the local representative of the SHIPPER, the
charterer of MVTradeCarrier,andnotapartytothe.Moreover,ithas nocontroloftheactsof
the captain and crew of the carrier and cannot be heldliableforanydamagearisingfromthe
faultofthecaptainandcrew.
During trial, "Witness Ricardo de la Cruz testified as Supercargo of MACONDRAY, that
MACONDRAY was not an agent of defendant TRADE AND TRANSPORT that his functions
as Supercargo was to prepare a notice of readiness, statement of facts, sailing notice and
custom's clearance in order to attend to the formalities and the need of the vessel that
MACONDRAY is performing functions in behalf of CANPOTEX and was appointed as local
agent of the vessel, which duty includes arrangement of the entrance and clearance of the
vessel."

TC:MACONDRAYisnottheagentofTRADEANDTRANSPORT

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CA: The CA affirmed the trial court's finding that petitioner was not the agent of Trade and
Transport. The appellate court ruled, however, that petitioner could still be held liable for the
shortages of the shipment, because the latter was the ship agent of Canpotex Shipping
ServicesLtd.theshipperandchartererofthevesselM/VTradeCarrier.

Issues&Held:
1. Whether liability attached to MACONDRAY despite the factual findings that it is not aship
agent?

YES. Although it is notan agent of Trade and Transport, petitionercanstillbetheshipagent

ofthevesselM/VTradeCarrier.

Article 586 of the Code of Commerce states that a ship agent is "the person entrusted with
provisioningorrepresentingthevesselintheportinwhichitmaybefound."
Hence, whether acting as agent of the owner of the vessel or as agent of the charterer,
petitioner will be consideredas the ship agent andmaybeheldliableassuch,aslongas the
latteristheonethatprovisionsorrepresentsthevessel.

The trial court found that petitioner "was appointed as local agent of the vessel, which duty
includes arrangement for the entrance and clearance of the vessel." Further, the CA found
and the evidence shows thatpetitionerrepresentedthevessel.ThelatterpreparedtheNotice
of Readiness,theStatementofFacts,theCompletionNotice, theSailingNoticeandCustom's
Clearance. Petitioner's employees were present at Sangi, Toledo City, one day before the
arrival of the vessel, where they stayed until it departed. They were also present during the
actual discharging of the cargo. Moreover, Mr. de la Cruz, the representative of petitioner,
alsopreparedfortheneedsofthevessel,likemoney,provision,waterandfuel.

These acts all point to the conclusion that it was the entity that represented the vesselinthe
Port of Manila and was the ship agent within the meaning andcontext of Article 586 of the
CodeofCommerce.

As ship agent, it may be held civilly liable in certain instances. The Code of Commerce
provides:

"Article 586. The shipowner and the ship agent shall be civillyliablefortheactsofthe
captain and for the obligations contracted by the latterto repair,equip, and provision
the vessel, provided the creditor proves that the amount claimedwas invested forthe
benefitofthesame."

"Article 587. The ship agent shall also be civilly liable for the indemnities in favor of
third persons which may arise from theconductofthecaptainin thecareofthegoods
which he loaded on thevessel but he may exempt himself therefrom by abandoning
the vessel with all her equipments and the freight it may have earned during the
voyage."

Petitioner does not dispute the liabilities of the ship agent for the loss/shortage of 476.140
metric tons of standardgrade Muriate of Potash valued at P1,657,700.95. Hence, wefindno
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reason to delve furtherinto the matter ortodisturbthefindingoftheCAholdingpetitioner, as

shipagent,liabletorespondentforthelossessustainedbythesubjectshipment.

2. Optional Whether the CAs decision has attainedfinality dueto the negligence of
counsel?

Note: Previous counsel did not inform the CA of hischangeofaddress.Thus,MACONDRAY

contends that the assailed decision given to the previous counsel cannot be considered as
noticetopetitioner

YES. Hornbook is the doctrine that the negligence of counsel binds the client. Also settledis
the rule that clients should take the initiative of periodically checking the progress of their
cases,sothattheycouldtaketimelystepstoprotecttheirinterest.

iv.
NDCv.CourtofAppeals,G.R.No.L49407,August19,1988LESAVA

DOCTRINE: Both the owner and agent of the offending vessel are liable for the damage
done where both are impleaded that in case of collision, both the owner and the agent are
civilly responsible for the acts of the captain and that while it is true thatthe liability of the
naviero in the senseofchartereroragent,isnotexpresslyprovidedinArticle826oftheCode
of Commerce, it is clearly deduciblefromthegeneraldoctrineofjurisprudenceundertheCivil
Code but more specially as regards contractual obligations in Article 586 of the Code of
Commerce.

PARTIES:
Defendants:
NDC (National Devpt. Co.) first preferred mortgagee of three ocean going vessels
includingonewiththename'DonaNati'
MCP (Maritime Co.) agent of NDC to manage and operate said vessel for and inits
behalfandaccount
Consignees:
ManilaBankingCorporation
People's Bank and Trust Company acting for and in behalf of the Pan Asiatic
CommercialCompany,Inc.whorepresentsRiversideMillsCorporation
Plaintiff:
DevelopmentInsuranceandSuretyCorporationinsurer

FACTS:
E. Philipp Corporationof New York loaded on boardthevesselDonaNattiatCaliforniaa
total of 1,200 bales of American raw cotton consigned to the order of Manila Banking
Corporation
In Tokyo,Japan Riverside Mills loaded on the same vessel the cargo ofKyokuto Boekui,
Kaisa, Ltd.,consignedtotheorderofManilaBanking Corporationconsistingof200cartons
ofsodiumlaurylsulfateand10casesofaluminumfoil
En route to Manila, the vessel Dona Nati figured in acollision withaJapanesevessel'SS
YasushimaMaru'
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Result: 550 bales of aforesaid cargo of American raw cotton were lost and/or
destroyed,ofwhich535balesasdamagedwerelandedandsoldontheauthorityofthe
General Average Surveyor for Yen 6,045,500 and 15 bales were not landed and
deemedlost
Plaintiff as insurer paid all the damages and lost cargo to both RiversideMillsasholderof
the negotiable bills of lading duly endorsed andGuilcon asholderofthedulyendorsedbill
ofladingwhichcargowasconsignedtoManilaBankingCorp.
Plaintiff filed this complaint to recover said amount from the defendantsNDCandMCPas
ownerandshipagentrespectively,ofthesaid'DofiaNati'vessel.

TC: rendereda decisionorderingthedefendantsMCPandNDCtopayjointlyandsolidarityto

theinsurer
CA:affirmedintotodecisionofTC

MCP is contending that it can not be liable solidarity with NDC because it is merely the
manager and operator of the vessel Dona Nati not a ship agent. As the general managing
agent,accordingtoMCP,itcanonlybeliableifitactedinexcessofitsauthority.

ISSUE: WON under the codeof commerce, MCPis a ship agent of SS Dona Nati ownedby
NDC and that MCP is solidarily liable withsaidNDCforlossofordamages tocargo resulting
inthecollision

HELD: YES. As found by the trial court and by the Court of Appeals, the Memorandum
Agreement shows that NDC appointed MCP as Agent, a term broad enough to include the
concept of Shipagentin MaritimeLaw.Infact,MCPwasevenconferredallthepowersofthe
owner of the vessel, including the power to contract in the name of theNDC.Consequently,
underthecircumstances,MCPcannotescapeliability.

It is well settled that both the owner and agent of the offending vessel are liable for the
damage donewhere both are impleaded (PhilippineShipping Co. v. GarciaVergara,96Phil.
281 [1906]) that incase of collision, both the owner and the agent are civilly responsible for
the acts ofthecaptain(YuengShengExchangeandTradingCo.v.Urrutia&Co.,supraciting
Article 586 of the Code of Commerce Standard Oil Co. of New York v. Lopez Castelo, 42
Phil. 256, 262 [1921]) that while it is true that the liability of the naviero in the sense of
charterer or agent, is not expressly provided in Article 826 of the Code of Commerce, it is
clearly deducible from the general doctrine of jurisprudence under the Civil Code but more
specially as regards contractual obligations in Article 586 of the Code of Commerce.
Moreover, the Court held that both the owner and agent (Naviero)should be declared jointly
and severally liable, since the obligation which is the subject ofthe action had its origin in a
tortious act and did not arise fromcontract (Verzosa and Ruiz, Rementeria y Cia v. Lim, 45
Phil. 423 [1923]). Consequently, the agent, even though he may not be the owner of the
vessel, is liable to the shippers and owners of the cargo transported by it, for losses and
damages occasioned to such cargo, without prejudice, however, to his rights against the
owner of theship,totheextentofthevalueofthevessel,itsequipment,andthefreight(Behn
MeyerYCo.v.McMickingetal.11Phil.276[1908]).

SC:
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v.

ChuaYekHongv.IAC,G.R.No.L74811,September30,1988LIM

DOCTRINE:
The term "ship agent" as used in the foregoing provision is broad enough to include the ship owner.
Pursuant tosaidprovision,therefore,boththeshipownerandshipagentarecivilly anddirectlyliableforthe
indemnitiesinfavorofthirdpersons,which may arisefromtheconduct of the captain in the careofgoods
transported,aswellasforthesafetyofpassengerstransported.

FACTS:
Petitioner is a duly licensed copra dealer based at Puerta Galera, Oriental Mindoro, while private
respondents are the owners of the vessel, "M/V Luzviminda I," a common carrier engaged in coastwise
tradefromthedifferentportsofOrientalMindorotothePortofManila.

InOctober 1977,petitioner loaded 1,000sacksofcopra,valued at P101,227.40, onboard thevessel"M/V

Luzviminda I" for shipment from Puerta Galera,Oriental Mindoro,toManila.Saidcargo,however, didnot
reach Manilabecausesomewhere between Cape Santiagoand Calatagan, Batangas,thevesselcapsized
andsankwithallitscargo.

On 30 March 1979, petitioner instituted before the then Court of First Instance of Oriental Mindoro, a
Complaint fordamages based on breachofcontractofcarriageagainstprivaterespondents(CivilCaseNo.
R3205).

In their Answer, private respondents averred that even assuming that the allegedcargo was truly loaded
aboardtheirvessel,theirliabilityhadbeenextinguishedbyreasonofthetotallossofsaidvessel.

RTCruledinfavorofplaintiff.CAReversedonbasisoflimitedliabilityunderA587,CoC.MRDenied.

ISSUE: W/N the Appellate Court erred in applying the doctrine of limited liability underArticle587of the
CodeofCommerce.

HELD:No.Petitiondenied.

Art. 587.The ship agent shall also be civilly liable for the indemnities infavorofthirdpersons which may
arise from the conductofthecaptaininthecare ofthe goods whichhe loaded onthevessel but hemay
exempt himself therefrom by abandoning the vessel with all the equipments and the freight it may have
earnedduringthevoyage.

The term "ship agent" as used in the foregoing provision is broad enough to include the ship owner.
Pursuant tosaidprovision,therefore,boththeshipownerandshipagentarecivilly anddirectlyliableforthe
indemnitiesinfavorofthirdpersons,which may arisefromtheconduct of the captain in the careofgoods
transported,aswellasforthesafetyofpassengerstransported.

The ship owner's or agent's liability is merely coextensive with hisinterest in thevessel suchthatatotal
loss thereof resultsinitsextinction. "Novessel, noliability" expresses inanutshellthelimited liability rule.
The totaldestruction of the vessel extinguishes maritime liens asthere isno longer any res towhich itcan
attach.

If the ship owner or agent may in any way be held civilly liableatallforinjurytoor deathofpassengers
arising from the negligence of the captain in cases of collisions or shipwrecks, his liability is merely
coextensivewithhisinterestinthevesselsuchthatatotallossthereofresultsinitsextinction.

The real andhypothecary nature of the liability of theshipowner oragentembodiedintheprovisionsofthe

MaritimeLaw, BookIII, Code of Commerce, had its originin the prevailingconditions ofthemaritimetrade
andseavoyages during the medieval ages, attendedby innumerablehazards andperils. Tooffset against

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theseadverse conditions andtoencourage shipbuildingandmaritimecommerce,it wasdeemednecessary

to confine the liability of theowner oragent arising from theoperationofashipto thevessel, equipment,
and freight, or insurance, if any, so that if the ship owner or agent abandoned the ship, equipment, and
freight,hisliabilitywasextinguished.

Without theprinciple oflimitedliability, ashipownerandinvestorinmaritimecommercewouldruntheriskof

beingruinedbythebad faith or negligenceofhiscaptain,andtheapprehensionofthiswouldbefataltothe
interestofnavigation."

The limited liability rule, however, is not without exceptions, namely: (1) where the injury or death to a
passengeris dueeither to the faultoftheship owner, ortotheconcurringnegligenceofthe shipownerand
the captain (2)wherethevesselisinsuredand(3)inworkmen'scompensationclaims.Inthiscase,thereis
nothing in therecords to show that the loss of the cargowasdue to the faultoftheprivaterespondentas
shipowners,ortotheirconcurrentnegligencewiththecaptainofthevessel.

RegardingtheprovisionsoftheCivilCodeoncommoncarriers:
Considering the "real and hypothecary nature" of liability under maritime law, these provisions would not
haveanyeffectontheprincipleoflimitedliabilityforshipownersorshipagents

Moreover, Article1766 of the Civil Code provides thatIn all matters not regulatedby thisCode, therights
andobligationsofcommoncarriersshallbegovernedbytheCodeofCommerceandbyspeciallaws.

In other words, the primary law is the Civil Code (Arts. 17321766) and in default thereof, the Code of
Commerce andotherspeciallawsareapplied.SincetheCivilCodecontainsnoprovisionsregulatingliability
ofshipowners oragentsintheeventoftotal lossordestructionofthevessel,itistheprovisionsof theCode
ofCommerce,moreparticularlyArticle587,thatgoverninthiscase.

Since the ship agent'sor ship owner'sliabilityismerelycoextensivewithhisinterest inthevessel suchthat

a total loss thereof results initsextinction, and noneoftheexceptions totherule on limitedliabilitybeing
present,the liability ofprivaterespondents forthelossofthecargoofcopramustbedeemedtohavebeen
extinguished.Thereisnoshowingthatthevesselwasinsuredinthiscase.

vi.
Yangcov.Lacerna,G.R.No.47447,October29,1941MEJILLANO
Doctrine: In the light of all the foregoing, we therefore hold that if the shipowner or agent
may in any way beheld civilly liable atallforinjurytoordeathof passengersarisingfromthe
negligence of the captain in cases of collisions or shipwrecks, his liability is merely
coextensive with his interest in the vessel such that a total loss thereof results in its
extinction.
Agent it is to be understood the person entrusted with theprovisioningof the vessel, or the
one who represents her in the port in which she happens to be.This person is the only one
who represents the vessel that isto say, the only one who represents the interests of the
ownerofthevessel.
Facts:
At about one o'clock in the afternoon of May 26, 1927, the steamer S.S. Negros,
belonging toTeodoro R. Yangco (petitioner), left the port of Romblon onitsreturntrip
toManila.
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Typhoon signalNo. 2 was then up (of whichfactthecaptainwasdulyadvisedandhis

attentiontheretocalledbythepassengersthemselvesbeforethevesselsetsail).
The boat was overloaded. Baggage, trunks and other equipment were heaped onthe
upperdeck,theholdbeingpackedtocapacity.
The passengers,numberingabout180,wereovercrowded,thevessel'scapacitybeing
limitedtoonly123passengers.
After two hours of sailing, the boat encountered strong winds and rough seas. The
captain ordered the vessel to turn left, evidently to returntoport,butinthemaneuver,
thevesselwascaughtsidewisebyabigwave,whichcausedittocapsizeandsink.
Many of the passengers died in the mishap, among them are the relatives of the
respondents.
These respondents instituted in the Court of First Instance of Capiz separate civil
actions against petitioner here to recover damages for the death of the passengers
aforementioned.
CFI:Awardeddamagestorespondents.
Petitioner, by a verified pleading, sought to abandon the vessel together with all its
equipment,withoutprejudicetohisrighttoappeal.
CFI&CA:deniedtheabandonment.
Issue: May the shipowner or agent, notwithstanding thetotallossofthevesselasaresultof
the negligence of its captain, be properly held liable in damages forthe consequent deathof
itspassengers?
Held: Yes. (However, in this case the vessel sank. Thus, the no vesselno liability rule will
apply).
We are of the opinion and so hold that the provisions of article 587 of the Code of
Commercecontrolthisquestion.Saidarticlereads:
The agentshallalsobecivillyliablefortheindemnities infavor ofthirdpersons,
which arise from the conduct of thecaptain in the careofthegoods,whichthe
vessel carried but he may exempthimselftherefrombyabandoningthevessel
withallherequipmentandthefreighthemayhaveearnedduringthevoyage.
The provisions accords a shipowner or agent the right of abandonment and by
necessary implication, hisliabilityis confined to that which he is entitled as of right to
abandon "the vessel with all her equipment and the freight it may have earned
duringthevoyage."
It is true that the article appears todeal only with the limited liabilityofshipownersor
agentsfor damagesarisingfromthemisconductofthe captaininthecareofthegoods
which the vessel carries, but this is a mere deficiency of language and in no way
indicatesthetrueextentofsuchliability.
The consensus of authorities is tothe effect that notwithstanding the language of the
aforequoted provision, the benefit of limited liability therein provided for, appliesinall
cases wherein theshipowner or agentmayproperlybeheldliableforthenegligentor
illicitactsofthecaptain.
Agent itis tobeunderstoodtheperson entrustedwiththeprovisioningofthevessel,or
the one who represents her in the port in whichshe happenstobe.Thispersonisthe
only one who represents the vessel that is to say, theonly onewhorepresentsthe
interestsoftheownerofthevessel.
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LIABILITY OF OWNER NOT TO EXCEED INTEREST. The liability oftheownerof

any vessel, for any embezzlement, loss, or destruction, by any person, of any
property, goods, or merchandise, shipped or put on board of suchvessel, orfor any
loss, damage, or injury by collision, or for any act, matter or thing, loss, damage, or
forfeiture, done, occasioned, or incurred without the privity, or knowledge of such
owner or owners, shallin no caseexceed the amount or value ofthe interestof such
ownerinsuchvessel,andherfreightthenpending.
The policy, which the rule is designed to promote, is the encouragement of
shipbuildingandinvestmentinmaritimecommerce.
Many other writers on maritime law lay down thesame general doctrine. So that it is
evident that, by this law, the owner's liability was coextensive with his interest in the
vessel and its freight, and ceased by his abandonmentandsurrender of these to the
partiessustainingloss.
In the light ofalltheforegoing,wethereforehold thatiftheshipowneroragentmayin
any way be held civilly liable at all for injurytoordeathof passengersarisingfromthe
negligence of the captain in cases of collisions or shipwrecks, his liability is merely
coextensive with his interest in the vessel such that a total loss thereof results in its
extinction.
In arriving at this conclusion,we have not been unmindful of the fact that the illfated
steamship Negros, as a vesselengaged in interisland trade, is acommon carrier(De
Villata v. Stanely, 32 Phil., 541), and that theasavessel engagedininterislandtrade,
is a common carrier (De Villata v. Stanely, 32 Phil., 541), and that the relationship
between thepetitioner and the passengers who diedinthemishaprestsonacontract
of carriage. But assuming that petitioner is liable for a breach of contract of carriage,
the exclusively "real and hypothecary nature" of maritime law operates to limit such
liability to the value of the vessel, or to the insurance thereon, if any. In the instant
caseitdoesnotappearthatthevesselwasinsured.
Whether the abandonment of the vessel sought by the petitioner in the instant case
was in accordance with law of not, is immaterial. The vessel having totally perished,
anyactofabandonmentwouldbeanidleceremony.
Judgment is reversed and petitioner is hereby absolved of all the complaints, without
costs.

vii. MonarchInsurancev.CourtofAppeals,G.R.No.92735,June08,2000MORA

FACTS:
Petitioners in this case are Monarch, Tabacalera, Allied and Equitable All are
insurancesubrogeeof the lost cargoes that werebeingcarriedintheAboitizvesselthatsank
on its way from HongKong to Manila. They were seeking for the enforcement of the writ of
execution granted by the lower court, which is more than the amountof the insurance of the
vesselplusthefreightearningsofAboitizforitsvesselthatsank.

Aboitiz rejected responsibility forthe claims on the ground that the sinkingofitscargovessel
was due to force majeure or an act of God. Aboitiz also invokes the real and hypothecary
nature of liability in maritime law, according to Aboitiz, since its liability is limited to the value
of the vessel which was insufficient to satisfy the aggregate claims of all 110 claimants, to
indemnify Monarch and Tabacalera ahead of the other claimants would be prejudicial to the
latter.
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The threshold issue in these consolidated petitions is the applicability of the limited liability
rule in maritime law in favor of Aboitiz in order to stay the execution of the judgmentsfor full
indemnification ofthelossessufferedbythepetitionersasaresultofthesinkingoftheM/VP.
Aboitiz.

ISSUE:
W/Nthedoctrineoflimitedliabilityappliesinthiscase?YES

HELD:
The principle of limited liability is enunciated in the following provisions of the Code of
Commerce:
Art. 587. The ship agent shall also be civilly liablefortheindemnitiesinfavorofthirdpersons
which may arise from the conductof the captain in the careof goodswhichheloadedonthe
vessel but he may exempt himself therefrom by abandoning the vessel with all the
equipmentsandthefreightitmayhaveearnedduringthevoyage.

Art. 590. The coownersof a vessel shall be civilly liable in the proportionoftheirinterestsin
thecommonfundfortheresultsoftheactsofthecaptainreferredtoinArt.587.

Each coowner may exempt himself from his liability bytheabandonment,beforeanotary,of

thepartofthevesselbelongingtohim.

Art. 837. The civil liability incurredby shipowners in the case prescribed in thissection, shall
be understood as limited to the value of the vessel with all its appurtenances and the
freightageservedduringthevoyage.

Article 837 applies the principle of limited liability in cases of collision, hence, Arts.587and
590 embody the universal principle of limited liability in all cases. In Yangco v. Laserna, this
CourtelucidatedontheimportofArt.587asfollows:

"The provision accords a shipowner or agent the right of abandonment and by necessary
implication, his liability is confined to that which he is entitled as of right to abandonthe
vessel with all herequipmentsandthefreightitmayhaveearnedduringthevoyage.Itistrue
that the article appears to deal only with the limited liability of the shipownersor agents for
damages arising from the misconductofthecaptaininthecareofthegoodswhichthevessel
carries, but this is a mere deficiency of language and in no way indicates the true extent of
suchliability.Theconsensusofauthoritiesistotheeffectthatnotwithstandingthelanguageof
the aforequoted provision, the benefit of limited liability therein provided for, applies in all
cases wherein the shipowner or agent may properly be held liable for the negligent or illicit
actsofthecaptain."

"No vessel, no liability," expresses in a nutshell the limited liability rule. The
shipowners or agents liability is merely coextensive with his interest in the vessel
suchthat atotal loss thereofresultsinitsextinction.Thetotaldestructionofthevessel
extinguishes maritime liens because there is no longer any res to which it can attach.
This doctrine is based on the real and hypothecary nature of maritime law which has
its origin in the prevailing conditions of themaritimetrade andseavoyagesduringthe
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medieval ages, attended by innumerable hazards and perils. To offset against these
adverse conditions and to encourage shipbuilding and maritime commerce it was
deemed necessary to confine the liability of the owner or agent arising from the
operationofashiptothevessel,equipment,andfreight,orinsurance,ifany.

Contrary to the petitioners theory that the limited liability rule has beenrenderedobsoleteby
the advances in moderntechnology which considerably lessen the risks involved in maritime
trade, this Court continues to apply the said rule in appropriate cases. This is not to say,
however, that the limited liability rule is without exceptions, namely: (1) where the
injury or death to a passenger is due either to the fault of the shipowner, or to the
concurring negligence of the shipowner and the captain (2) where the vessel is
insuredand(3)inworkmenscompensationclaims.

We have categorically stated that Article 587 speaks only of situations where the fault or
negligenceis committedsolelybythecaptain.Incaseswheretheshipownerislikewisetobe
blamed, Article 587 doesnot apply. Such a situation will be covered bythe provisions of the
CivilCodeoncommoncarriers.

A finding that a fortuitous event was the sole cause of the loss ofthe M/V P. Aboitiz would
absolve Aboitiz from any and all liability pursuant to Article 1734(1) of theCivil Code which
provides inpartthatcommoncarriersareresponsibleforthe loss,destruction,ordeterioration
of the goodstheycarry,unlessthesameisduetoflood,storm,earthquake,lightning,orother
natural disaster or calamity. On the other hand, a finding that the M/V P. Aboitiz sank by
reason of fault and/or negligence of Aboitiz, the ship captain and crew of the M/V P. Aboitiz
would render inapplicable the rule on limited liability. These issues are therefore ultimately
questions of fact which have been subject of conflictingdeterminationsbythetrialcourts,the
CourtofAppealsandeventhisCourt.

Due to the conflicting decisions of this court regarding the negligence or lack thereof, of
Aboitiz it becomesincumbent upon this Court to answer with finality thenaggingquestionof
whether or not it was the concurrent fault and/or negligence of Aboitiz and the captain and
crewoftheillfatedvesselthathadcausedittogounderwater.

Guided by our previouspronouncements and illuminated by the evidence now onrecord,we

reiterate our findings in Aboitiz Shipping Corporation v. General Accident Fire and Life
Assurance Corporation, Ltd.,that the unseaworthiness of the M/V P. Aboitiz hadcauseditto
founder. We, however, take exception to the pronouncement therein that said
unseaworthinesscould not beattributed totheshipownerbutonlytothenegligentactsofthe
captain and crew oftheM/VP.Aboitiz.OnthematterofAboitiznegligence,weadheretoour
ruling in Aboitiz Shipping Corporation v. Court of Appeals, that foundAboitiz,andthecaptain
andcrewoftheM/VP.Aboitiztohavebeenconcurrentlynegligent.

During the trial of Civil Case Nos. 822767822770 (now G.R. No. 92735), petitioners
Monarch andTabacalerapresentedasurveyfromPerfectLambert,asurveyorbasedinHong
Kong that conducted an investigation on the possible cause of the sinking of thevessel.The
said survey establishedthatthe cause of the sinking of the vessel was the leakage of water
into theM/VP.Aboitizwhichprobablystartedintheforwardpartof theNo.1hull,althoughno
explanation was proffered as to why the No. 2 hull was likewise flooded. Perfect Lambert
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surmised that the flooding was due to a leakage in the shell plating or a defect in the water
tight bulk head between the Nos. 1 and 2 holdswhichallowedthewaterenteringhull No.1to
pass through hull No. 2. The surveyor concluded that whatever the cause of the leakage of
water into thesehulls,the seaworthiness of the vesselwasdefinitelyinquestionbecausethe
breaches of the hulls and serious flooding of the two cargo holds occurred simultaneously in
seasonalweather.

We agree with the uniform finding of the lower courts that Aboitiz had failedto prove that it
observed the extraordinary diligence required of it as a common carrier. We therefore
reiterate ourpronouncementinAboitizCorporationv.CourtofAppealsontheissueofAboitiz
liabilityinthesinkingofitsvessel,towit:

"In accordance with Article 1732 of the Civil Code, the defendant common carrier from the
nature of its business and for reasons of public policy, is bound to observe extraordinary
diligence in thevigilanceoverthegoodsandfor thesafetyofthepassengerstransportedbyit
according to all circumstances of the case. While the goods are in the possession of the
carrier, it is but fair that it exercise extraordinary diligence in protecting them from loss or
damage, and if loss occurs, the law presumes that it was due to the carriers fault or
negligence that isnecessary toprotecttheinterestoftheshipperwhichisatthemercyofthe
carrier x x x.Inthe caseatbar,thedefendantfailedto provethatthelossofthesubjectcargo
wasnotduetoitsfaultornegligence."

The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/or
negligencein the sinking of its vessel in thefaceoftheforegoingexperttestimonyconstrains
us to hold that Aboitiz was concurrently at fault and/or negligent with the ship captain and
crew of the M/V P. Aboitiz. This is in accordance with the rule that in cases involving the
limited liability of shipowners, the initial burden of proof of negligence or unseaworthiness
rests on the claimants.However, once the vessel owner or any party assertstherighttolimit
its liability, the burden of proof as tolackofprivityorknowledgeonitspartwithrespecttothe
matter ofnegligenceorunseaworthinessisshifted toit.Thisburden,Aboitizhadunfortunately
failed to discharge. That Aboitiz failed to discharge the burden of proving that the
unseaworthiness of its vesselwas not due to its fault and/or negligence should not however
mean that the limited liability rule will not be applied to the present cases. The peculiar
circumstances here demand that there should be no strict adherence to procedural rules on
evidence lest the just claims of shippers/insurers be frustrated. The rule on limited liability
should be applied in accordance with the latest ruling in Aboitiz Shipping Corporation v.
General Accident Fire and Life Assurance Corporation, Ltd., promulgated on January 21,
1993, thatclaimants betreated as"creditorsinaninsolvent corporationwhoseassetsarenot
enough tosatisfy the totality of claims against it." To do so, the Courtsetoutinthatcasethe
proceduralguidelines:

"In the instant case, there is, therefore, a need to collate all claims preparatory to their
satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending
freightage at the time of its loss. Noclaimantcanbegiven precedenceovertheothersbythe
simple expedience of having completed its action earlier than the rest. Thus, execution of
judgment in earlier completed cases, even those already finalandexecutorymust bestayed
pending completion ofallcasesoccasioned bythesubjectsinking.Thenandonlythen canall
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such claims be simultaneously settled, either completely or prorata should the insurance
proceedsandfreightagebenotenoughtosatisfyallclaims.
"xxx............xxx............xxx.
" In fairness to the claimants, and as a matter of equity, the total proceedsof the insurance
and pending freightage should now be depositedintrust.Moreover,petitionershouldinstitute
the necessary limitation and distribution action before the proper admiralty court within 15
days from finality of this decision, and thereafter deposit with it the proceeds from the
insurance company and pending freightage in order to safeguard the same pending final
resolutionofallincidents,forfinalproratingandsettlementthereof."

There is no record that Aboitiz has instituted such action or that it has deposited in trust the
insurance proceeds and freightage earned. The pendency of the instant cases before the
Court is not a reason for Aboitiz todisregard the aforementioned order of theCourt. In fact,
had Aboitiz complied therewith,eventhesecases couldhavebeenterminatedearlier.Weare
inclined to believe that instead of filing the suit as directed bythisCourt,Aboitiztoleratedthe
situation of several claimants waiting to get hold of its insurance proceeds, which,ifcorrectly
handled must have multiplied in amount by now. By its failure to abide by the order of this
Court, it had caused more damage to the claimants over and above that which they have
endured as adirectconsequenceofthe sinkingoftheM/VP.Aboitiz.Itwasobviousthatfrom
among the many casesfiled against it over the years,Aboitizwas waitingforajudgmentthat
might prove favorable to it, in blatant violation of the basic provisions of the Civil Code on
abuseofrights.

Well aware of the 110 claimants against it,Aboitizpreferredtolitigatetheclaimssinglyrather

than exert effort towards the consolidation of all claims. Consequently, courtshavearrivedat
conflicting decisions while claimants waitedovertheyearsforaresolutionofanyofthecases
that would leadto the eventual resolution of the rest. Aboitiz failed togivetheclaimantstheir
dueandtoobservehonestyandgoodfaithintheexerciseofitsrights.

Aboitiz blatant disregard of the order of this Court in Aboitiz ShippingCorporationv.General

Accident Fire and LifeAssurance Corporation, Ltd. cannot be anything but willful on its part.
An act is consideredwillful if it is done with knowledge of its injuriouseffectitisnotrequired
that the act be done purposely to produce the injury. Aboitiz is well aware that by not
instituting the said suit, it caused the delay in the resolution of all claims against it. Having
willfully caused loss or injury to the petitioners in a manner that is contrary to morals, good
customsorpublicpolicy,Aboitizisliablefordamagestothelatter.

Thus, foritscontumaciousactofdefyingtheorderofthisCourttofile theappropriateactionto

consolidateallclaimsforsettlement,Aboitizmustbeheldliableformoraldamageswhichmay
be awarded in appropriate cases under the Chapter on human relations of the Civil Code
(Articles19to36).

viii.

Ohta v. Steamship Pompey, G.R. No. L24658, March 41, 1926.

SUPAPO
Doctrines:

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1. When the merchandise was lost on account of the sinking of the

dock and was notyetbeendelivered,saidmerchandiseisstill under
the responsibility of the captain. And as such, the operator is
responsible for the indemnities arising from the lack of skill or
negligenceofthecaptain.
2. Article 587 is inapplicable in a case where there was no
abandonmentoftheship.

Parties:
OhtaDevelopmentCo.ownerofthecargoes
Capt.GalvezCaptofPompey
NationalCoalCo.ownerofsteamshipPompey

Facts:
1. Steamship Pompey docked at Talomo pier in Davao with its bow
facing towards the land and fastened its ropes to the posts on the
pier.
2. Previously, other shipsdocking alongside the said pier had thebow
facingtowards thelandandfastenedaropetoa treesituatedfarther
west on the beach aprecaution taken to avoid theshipfromgetting
tooclosetothepier.
3. Atthattime,therewasastrongundercurrent.
4. When thePompeydocked,itdidnotstretcharopetothetreeonthe
shore,neitherdiditdropitsbowanchors.
5. Thereafter, the flour and rice (Pompeys cargoes) were unloaded
and deposited on the pier and later to be transported to Ohtas
warehouse.
6. However, beforethecargoesweretransferredtothe warehouse,the
PIER sank and leaned towards the east,as wellastheposts,which
didnotcollapsecompletely.
7. OhtaisnowclaimingfordamagesagainstNationalCoalCompany.

Shipownerscontentions:
1. The cause of the sinking was the weight of the cargo and by the
poor condition of the dock as the pier was made of pagatpat and
molave.
2. Its liability ceased when the said merchandise was unloaded and
placedonthedock.
3. At any rate, the liability of the other defendant is subsidiary and
limitedtowhatthesteamshipPompeymayanswerfor.

Issue: Whether the steamship owner should be held liable to the

damagedcargoes?

Held:YES!
The Court concluded that the sinking was caused by the impact of the
ship as a result of the strong current at the time since the ship wasnot
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ix.

fastened with the rope toa tree on shoreandthatthebowanchorshad

notbeendropped.

Article 619 of the Code of Commerce provides that thecaptainshallbe

answerable for the cargofromthe moment that it is delivered to him at
the wharf or alongside the ship in the harbor of embarkation until
delivered this provision of the law it is the delivery of the cargo at the
port of discharge that terminates the captain's responsibility as to the
cargo. In the instant case, when the merchandise was lost on
account of the sinking of the dock it had not yet been delivered
and consequently it was under the responsibility of the captain.
The defendant National Coal Company, as the operator, is
responsible for the indemnities arising from the lack of skill or
negligence of the captain. (Articles 587 and 618 of the Code of
Commerce.)

The argument that the liability ofthe other defendant is subsidiary and
limited to what the steamship Pompey may answer for, seems to be
based upon article 587 of the Code of Commerce which authorizes the
shipowner to abandon the ship with all its tackle and freight earned
during the voyage inordertoanswerforhisliabilitytothirdpersons.But
this is inapplicable, for the reason that in this case there was no
abandonment of the ship. We do not believe that appellants based
their contention upon article 837 which refers to collisions, because
thatisnotthecasehere.

Heirs of Santos v. Court of Appeals, G.R. No. 51165, June 21, 1990
VELASCO

FACTS
M/V 'Mindoro' sailed on November 2,1967 bound for New Washington, Aklan, with
manypassengersaboard.
It appears thatsaid vesselmettyphoon 'Welming' on theSibuyan Sea, Aklan,
at about5:00inthemorningofNovember4,1967 causingthedeathofmanyof
itspassengers,althoughabout136survived.
Mauricio delos Santos declared that on November 2, 1967 he accompanied his
commonlaw wife, Amparo delos Santos, and children to the pier in Manila to board
M/VMindoro.
Due to the strongwaves, as caused bythetyphoon,theboatsankcausingthe
drowning ofmanypassengersamongwhomwereAmparo delosSantosandall
thechildren.
It appears also that Teresa Pamatian and Diego Salim, who were also
passengersalsodrowned.
PlaintiffRubenReyeswasoneofthesurvivors.
Eliadora Crisostomo de Justo, one of the survivors, corroborated the testimony of
Mauricio delos Santos that he accompanied Amparo delos Santosandherchildrento
theporttoboardtheM/VMindoro.
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RubenReyes,theothersurvivor,alsotestifiedthat:
It appears that Felix Reyes Jakusalem, Teresa Pamatian and Amparo delos
Santosdrownedduringthesinkingofthevessel.
He was able to swim on an island and was with the others, rescued later on
andbroughttothehospital.
Thesurvivorswerethentakenashore.
Dominador Salim declaredthatTeresaPamatian,hisauntandDiegoSalim,hisfather,
drownedalongwiththesinkingoftheM/VMindoro.
The plaintiffs furthersubmittedinevidenceacopyof aRadiogramstatingamongother
things that the MN Mindoro wasloadedalsowith3,000casesofbeer,onedumptruck
and292variousgoods.
It appears that in a decision of the Board of Marine Inquiry, it was found that the
captain and some officers of the crew were negligent in operating the vessel and
imposeduponthemasuspensionand/orrevocationoftheirlicensecertificates.

Defense:
The defendantallegesthatnonegligencewaseverestablishedand,infact,the
shipowners and their officers took all the necessary precautions in operating
thevessel.
The loss of lives as a result of thedrowningofsomepassengers,includingthe
relatives of the herein plaintiff,was due toforcemajeurebecauseofthestrong
typhoon'Welming.'
A certification of the shipyard stated among other thingsthattheM/V'Mindoro'
was drydockedfromAugust25toSeptember6,1967andwasfoundtobeina
seaworthy condition,andthat the saidM/V'Mindoro'wasdulyinspectedbythe
BureauofCustoms.
Another certification wasintroducedstatingamongotherthingsthattheBureau
ofCustomsgaveaclearancetotheM/V'Mindoro'afterinspection.

RTC:petitiondismissed,forlackofsufficientevidence
CA:affirmed
It found that there was concurring negligence on the part of the captain which
must be imputable to Compania Maritima (shipowner), but it cannot be held
liable in damages based on the principle of limited liability of the shipowner or
shipagentunderArticle587oftheCodeofCommerce.

ISSUE:WONCompaniaMaritima(shipowner)shouldbeheldliable

HELD:YES

The present controversy centers on the questions of Maritima's negligence and of the
applicationofArticle587oftheCodeofCommerce.Thesaidarticleprovides:
Art. 587. The ship agent shall also be civilly liable for indemnities in favor of third
persons which may arise from the conduct of the captain in the care of the goods
which he loaded on thevessel, but he may exempt himself therefrom by abandoning
the vessel with all her equipments and the freight it may have earned during the
voyage.
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Under this provision, a shipowner or agent has the right of abandonment and by
necessary implication, hisliabilityis confined to that which he is entitled as of right to
abandon"thevessel with all herequipmentsandthefreightitmayhaveearnedduring
thevoyage"
Contrary to the petitioners' supposition, the limited liability doctrineapplies not onlyto
the goods but also in all cases like death or injury to passengers wherein the
shipowner or agent may properly be held liable for the negligent or illicit acts of the
captain.
It must be stressed at this point that Article 587 speaks only of situations where the
faultornegligenceiscommittedsolelybythecaptain.
Incaseswheretheshipownerislikewisetobeblamed,Article587doesnotapply.
Such a situation will be covered by the provisions of the New Civil Code on
CommonCarriers.

Guided by the above legal provisions, Maritima is found to be negligent, which compels the
Courttoreversetheconclusionoftheappellatecourt.

Maritima claims that it did not have any information about typhoon 'Welming' until after the
boatwasalreadyatsea.Modemtechnologybeliesuchcontention.
The Weather Bureau is now equipped with modern apparatus which enables it to
detectanyincomingatmosphericdisturbances.
Significantly, the appellate court found that the ship's captain through his action
showedpriorknowledgeofthetyphoon.
He was apprised of the typhoon when the Weather report was transmittedto
himfromtheWeatherBureauatwhichtimeheplotteditsposition.
If the captainknewof the typhoon beforehand, it is inconceivablefor Maritima
tobetotallyinthedarkof'Welming.'
In allowingtheshiptodepartlatefromManiladespitethetyphoonadvisories,Maritima
displayed lack of foresight and minimum concern for the safety of its passengers
takingintoaccountthesurroundingcircumstancesofthecase.

While thecaptainwasnegligentforoverloadingtheship,Maritima,however,sharesequallyin
hisnegligence.
M/V Mindoro was already cleared by the Bureau of Customs andtheCoastGuardfor
departureat2:00p.m.theship'sdeparturewas,however,delayedforfourhours.
Maritima could not account for the delay because it neither checked from the captain
the reasons behind the delay nor sent its representative to inquire into the cause of
suchdelay.
Duringthisdelay,unmanifestedcargoandpassengerswereloadedintotheboat.
Wereitnotforthedelay,thevesselcouldhaveavoidedtheeffectsofthestorm.
M/V Mangaren, an interisland vessel, sailed on the same date, aheadof M/V
Mindoroandtookthesamerouteasthelatterbutitarrivedsafely.

Court also found that Maritima demonstrated lack of extraordinary diligence coupled with the
negligence of the captain, and as found by the appellate court, they were the proximate
causesofthesinkingofM/VMindoro.

Hence,Maritimaisliableforthedeathsandinjuryofthevictims.
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b. CaptainandMasterofVessel
i.
Articles609621oftheCodeofCommerce
ii.
InterOrient v. NLRC, G.R. No. 115286, August 11, 1994
BUENAVENTURA

DOCTRINE: The captain of a vessel is a confidential and managerial employee within the
meaning of the above doctrine. A master or captain, for purposes of maritime commerce, is
one who has commandof a vessel. A captain commonly performs three(3) distinctroles:(1)
he is a generalagentoftheshipowner(2)heisalsocommanderandtechnicaldirectorofthe
vessel and (3) he is a representative of the country under whose flag he navigates. 16 Of
these roles, by far themost importantis the role performed by the captain ascommander of
the vessel for such role has to dowiththeoperationandpreservationofthevesselduringits
voyage and the protection of the passengers (if any) and crew and cargo. In his role as
general agent of the shipowner, the captain has authority to sign bills of lading, carry goods
aboard and deal with the freight earned, agree upon rates and decidewhethertotakecargo.
The ship captain, as agent of the shipowner, has legal authorityto enter into contracts with
respect to the vessel and the trading of the vessel, subject to applicable limitations
established by statute, contract or instructions and regulations of the shipowner. To the
captain is committed the governance, care and management of the vessel. Clearly, the
captainisvestedwithbothmanagementandfiduciaryfunctions.

The applicable principle is that the captain has control of all departments of service in the
vessel, and reasonablediscretionastoitsnavigation. Itistherightanddutyofthecaptain, in
the exercise of sound discretion and in good faith, to do all things with respect to the vessel
and its equipment and conduct of the voyage which are reasonably necessary for the
protection and preservation of the interests under his charge, whether those be of the
shipowners,charterers,cargoownersorofunderwriters

FACTS:
Private respondent Captain Rizalino Tayong, a licensed Master Mariner with
experience in commanding oceangoing vessels, was employed on 6 July 1989 by
petitioners Trenda World Shipping (Manila), Inc. and Sea Horse Ship Management,
Inc. through petitioner InterOrient Maritime Enterprises, Inc. as Master of the vessel
M/VOceanicMindoro,foraperiodofone(1)year.
On 15 July 1989, CaptainTayong assumed commandofpetitioners'vesselattheport
ofHongkong.
His instructions were to replenish bunker and diesel fuel, to sail forthwith to
RichardBay,SouthAfrica,andtheretoload120,000metrictonsofcoal.
On 16 July 1989,whileatthePortofHongkongandintheprocessofunloading cargo,
Captain Tayong received a weather report that a storm codenamed"Gordon" would
shortlyhitHongkong.
Precautionary measures were takento secure the safety of the vessel,aswell
as its crew, considering that the vessel's turbocharger was leaking and the
vesselwasfourteen(14)yearsold.

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On 21 July 1989, CaptainTayong followedup the requisitionbytheformercaptainof

the Oceanic Mindoro for supplies of oxygen and acetylene, necessary for the
weldingrepairoftheturbochargerandtheeconomizer.
On 25 July 1989, the vessel sailed from Hong Kong for Singapore. In the Master's
sailing message,Captain Tayong reported a water leak from M.E. TurboChargerNo.
2Exhaustgascasing.
He was subsequently instructed to blank off the cooling water and maintain
reducedRPMunlessauthorizedbytheowners.
On 29 July 1989, while the vessel was en route to Singapore, Captain Tayong
reported that the vessel had stopped in midocean for six (6) hours andfortyfive(45)
minutesduetoaleakingeconomizer.
He was instructed to shut down the economizer and use the auxiliary boiler
instead.
On 31 July 1989 at 0607 hrs., the vessel arrived at the port of Singapore. The Chief
Engineer reminded Captain Tayong that the oxygen and acetylene supplies had not
been delivered. Captain Tayong inquired from the ship'sagentinSingaporeaboutthe
supplies. The ship agent stated that these could only be deliveredat 0800 hours on
August1,1989asthestoreshadclosed.
Captain Tayong called the shipowner, Sea Horse Ship Management, Ltd., in London
and informed them that the departure of the vessel for South Africa may be affected
becauseofthedelayinthedeliveryofthesupplies.
Sea Horse advised Captain TayongtocontactitsTechnicalDirector,Mr. Clark,
who was in Tokyo and who could provide a solution for the supply of said
oxygenandacetylene.
On the night of 31 July 1989, Mr. Clark received a call from Captain Tayong
informing him that the vessel cannot sail without the oxygen andacetylene for
safety reasons due totheproblemswiththeturbochargerandeconomizer.Mr.
Clark responded that by shutting off the water to the turbo chargers and using
theauxiliaryboiler,thereshouldbenofurtherproblems.AccordingtoMr.Clark,
Captain Tayong agreed with him that the vessel could sail as scheduled on
0100hourson1August1989forSouthAfrica.
According to Captain Tayong, however, he communicated to Sea Horse his
reservations regarding proceeding to South Africawithouttherequestedsupplies,and
was advised by Sea Horse to wait for the supplies at 0800 hrs. of 1 August 1989,
which Sea Horse had arranged to be delivered on board the Oceanic Mindoro. 12 At
0800 hours on1 August1989, the requisitioned supplies weredelivered and Captain
TayongimmediatelysailedforRichardBay.
When the vesselarrived at the portof Richard Bay, South Africa on 16 August 1989,
CaptainTayongwasinstructedtoturnoverhisposttothenewcaptain.
He was thereafter repatriated to the Philippines, after serving petitioners for a
littlemorethantwoweeks
Hewasnotinformedofthechargesagainsthim.

ISSUE: WON Capt. Tayong did acts inimical to the interest of petitioners as to warrant the
formersillegaldismissalNO

HELD: The captain ofa vessel isaconfidentialand managerialemployeewithinthemeaning

of the above doctrine. A master or captain, for purposes of maritime commerce, is one who
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has command of a vessel. A captain commonly performs three (3) distinct roles: (1) he is a
general agentoftheshipowner(2)heisalsocommanderandtechnicaldirectorofthevessel
and(3)heisarepresentativeofthecountryunderwhose flaghenavigates.Oftheseroles,by
far the most important is the role performed by the captain as commanderof the vesselfor
such role (which, to our mind, is analogous to that of "Chief Executive Officer" [CEO] of a
presentday corporateenterprise) has to do with the operationandpreservationofthevessel
during its voyage andtheprotectionofthepassengers(ifany)andcrewandcargo.Inhis role
asgeneralagentoftheshipowner,thecaptain hasauthoritytosignbillsoflading,carrygoods
aboard and deal with the freight earned, agree upon rates and decidewhethertotakecargo.
The ship captain, as agent of the shipowner, has legal authorityto enter into contracts with
respect to the vessel and the trading of the vessel, subject to applicable limitations
established by statute, contract or instructions and regulations of the shipowner. To the
captain is committed the governance, care and management of the vessel. Clearly, the
captainisvestedwithbothmanagementandfiduciaryfunctions.

It is plain from the records of the present petition that Captain Tayong was denied any
opportunity to defend himself. Petitioners curtly dismissed him from his command and
summarily ordered his repatriation to the Philippines without informing him of the charge or
charges levelled againsthim, and much less giving him a chance to refute any such charge.
In fact, it was only on 26 October 1989 that Captain Tayong received a telegram dated 24
October 1989 from InterOrient requiring him to explain why he delayed sailing to South
Africa.

Petitioners rely on selfserving affidavits of their own officers and employees predictably
tending to support petitioners' allegation that Captain Tayong had performed acts inimical to
petitioners' interests for which, supposedly, he was discharged. The official report of Mr.
Clark, petitioners' representative, in fact supports the NLRC's conclusion that private
respondent Captain did notarbitrarilyandmaliciouslydelay thevoyagetoSouthAfrica.There
hadbeen,Mr.Clarkstated,adisruptioninthenormalfunctioningofthevessel'sturbocharger
and economizerandthathad prevented the full or regular operation of the vessel. Thus, Mr.
Clark relayed to Captain Tayonginstructionsto"maintainreducedRPM"duringthevoyageto
South Africa, instead of waiting in Singapore for the supplies that would permit shipboard
repairofthemalfunctioningmachineryandequipment.

More importantly, a ship's captain must be accorded a reasonable measure of discretionary

authority to decide what the safety of the ship and of its crew and cargo specifically requires
on a stipulated ocean voyage. The captain is held responsible, and properly so, for such
safety. He is right there on the vessel, in command of it and (it must be presumed)
knowledgeable as to the specific requirements of seaworthiness and the particular risks and
perils of the voyage he is to embark upon. The applicable principle is that the captain has
control of all departments of service in the vessel, and reasonable discretion as to its
navigation. It is the right and duty of the captain, in theexercise of sound discretion and in
good faith, to do all things with respect to the vessel and its equipment and conduct of the
voyage which are reasonably necessary for the protection and preservation of the interests
under his charge, whether those be of the shipowners, charterers, cargo owners or of
underwriters. It is a basic principle of admiralty law that in navigating a merchantman, the
master must be left free to exercise his own best judgment. The requirements of safe
navigation compel usto reject any suggestion that thejudgmentanddiscretionofthecaptain
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of a vessel may be confined within a straitjacket, even in this age of electronic

communications. Indeed, if the ship captain is convinced, as a reasonably prudent and
competent mariner acting in good faith that the shipowner's or ship agent's instructions
(insisted upon by radio or telefax from theirofficesthousandsofmilesaway)willresult,inthe
very specific circumstances facing him, in imposing unacceptable risks of loss or serious
danger to ship or crew, hecannot casuallyseek absolutionfromhisresponsibility,ifamarine
casualtyoccurs,insuchinstructions.

iii.
Sweet Lines v. Court of Appeals, G.R. No. L46340, April 28, 1983
DORIA

PARTIES:
CommonCarrier/Defendant/Petitioner:SweetLinesInc.
Passengers/Plaintiff/PrivateRespondents:MicaelaB.Quintos,Fr.JoseBacatanSJ,Marciano
CabrasandAndreaVeloso

DOCTRINE:
Without a fortuitouseventorforcemajeure,therighttodamagesandindemnityexistsagainst
a captain who fails to fulfill hisundertaking or where the interruption has beencausedbythe
captainexclusively

FACTS:
PrivateRespondentspurchasedfirstclassticketsfromSweetLinesinCebuCity.
TheyweretoboardM/VSweetGrace,boundforCatbalogan,WesternSamar.
Instead of departing as scheduled at about midnight on July 8, 1972, the vessel set
sailat3amofJuly9onlytobetowedbacktoCebuduetoenginetrouble.
Repairsweredoneandthevesselliftedanchoragainat8amofJuly10.
Instead ofdockingatCatbalogan,whichwasthefirstportofcall,thevesselproceeded
directtoTaclobanat9pmofJuly10.
Private respondents hadnorecoursebuttodisembarkandboardaferryboatto
Catbalogan.
PrivateRespondentssuedfordamagesforbreachofcontractofcarriage
CFI:orderedSweetLinestopaymoralandexemplarydamages
CA:affirmedtheTC

ISSUE:
WONtherewasafortuitouseventorforcemajeure.NO
WONSweetLinesshouldbeliable.YES

HELD:
There was no fortuitous event or force majeure which prevented the vessel from fulfilling its
undertakingoftakingprivaterespondentstoCatbalogan.

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Without it, the right to damages and indemnity exists against a captain who fails to
fulfill his undertaking or where the interruption has been caused by the captain
exclusively.
The reason for bypassing the port of Catbalogan, as admitted by Sweet Line's
General Manager, was to enable the vessel to catch up with its schedule forthe next
week.
There were 50 passengers for Tacloban compared to 20 passengers for
Catbalogan the Catbalogan phase could be scrapped without too much loss
forthecompany.

Sweet Lines cannot rely on the conditions in small bold print atthe back ofthe ticket saying
that, the passenger's acceptance of the ticket shall be considered as an acceptance of the
followingconditions:
In case the vessel cannot continue or complete the trip for any cause, the carrier
reserves the right to bring the passenger to his/her destination or to cancelthe ticket
andrefundthepassenger
Thesailingscheduleofthevesselissubjecttochangewithoutpreviousnotice.
Even assuming that those conditions are squarely applicableto the case atbar,SweetLines
did not comply with the same. It did not cancel the ticket nor did it refund the value of the
tickets. Besides, the complaint is directed not at the delayed departurebutatthebypassing
ofCatbalogan.

The conditions relied upon by Sweet Lines cannot prevail over Articles 614 and 698 of the
CodeofCommerce.
The voyage to Catbalogan was "interrupted" by the captain upon instruction of
management. It was not due to a fortuitous event or forcemajeure,nortodisability
ofthevessel.
Having been caused by the captain upon instruction of management,thepassengers'
righttoindemnityisevident.
The owner of a vessel and the ship agent shall be civilly liable for the acts of the
captain.
GoverningProvisions:
ART. 614. A captain who, having agreed to make a voyage, fails tofulfillhis
undertaking,without beingprevented byfortuitouseventorforcemajeure,shall
indemnify all the losses which his failure may cause, without prejudice to
criminalpenaltieswhichmaybeproper.
ART. 698. In case of interruption of a voyage already begun, the passengers
shall only be obliged to pay the fare in proportion to the distance covered,
without right to recover damages if the interruption is duetofortuitouseventor
force majeure, butwitharighttoindemnity,iftheinterruptionshouldhavebeen
caused by the captain exclusively. If the interruption shouldbe causedby the
disability of the vessel,andthe passenger should agree towaitforherrepairs,
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he may not be required to pay any increased fare of passage, but his living
expensesduringthedelayshallbeforhisownaccount.

SC:reducedamountofmoraldamagesremovedawardforexemplarydamages

37