Aboitiz Shipping vs.

General Accident Fire and Life FACTS: Petitioner is a corporation engaged in the business of maritime trade as a carrier. As such, it owned and operated the M/V P/ ABOITIZ, a common carrier that sank on voyage from Hong Kong to Manila. Private respondent GAFLAC is a foreign insurance company pursuing its remedy as a subrogee of several cargo consignees whose respective cargo sank with the said vessel and for which it has priory paid. The sinking of vessel gave rise to filling of suit to recover the lost cargo either by shippers, their successors-ininterest, or the cargo insurers like GAFLAC as subrogees. The sinking was initially investigated by the Board of Marine Inquiry, which found that such sinking was due to fortuitous event. ISSUE: Whether or not the doctrine of limited liability is applicable to the case? HELD: The real an hypothecary nature of maritime law simple means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as the guaranty for their settlement. It has its origin by reason of the conditions and risks attending maritime trade in its earliest years when such trade was replete with innumerable and unknown hazards since vessels had to go through largely uncharted waters to ply their trade. Thus, the liability of the vessel owner and agent arising form the operation of such vessel were confined to the vessel itself, its equipment, freight and insurance, if any, which limitation served to induce capitalist into effectively wagering their resources against consideration of the large attainable in the trade. Inter-Orient Maritme vs. NLRC FACTS: Captain Rizalino Tayong, a licensed Master Mariner with experience in commanding ocean-going vessels, was employed on 1989 by petitioners for 1 yr as stated in his employment contract. He assumed command of petitioners vessel at the port of Hongkong. His instructions were to replenish bunker and diesel fuel, to sail to South Africa and there to load 120,000 metric tons of coal. However, while in HK and unwarding cargo, he received a weather report that a storm would hit HK, so precautionary measures were taken to secure the safety of the vessel and its crew, considering that the vessels turbo-charger was leaking and the vessel was 14 yrs old. He also followed-up the requisition by the former captain for supplies of oxygen and acetylene necessary for the welding-repair of the turbo-charger and the

economizer. The vessel then sailed from HK for Singapore. Captain Tayong reported a water leak from M.E. Turbo Chapter No. 2 Exhaust gas casing so he was instructed to black off the cooling water and maintain reduced RPM unless authorized by the owners. However, the vessel stopped in mid-ocean for 6 hrs and 45 minutes due to a leaking economizer. He was instructed to shut down the economizer and use the auxiliary boiler instead. The Chief Engineer reminded Captain Tayong that the oxygen and acetylene supplies had not been delivered. He then informed the shipowner that the departure of the vessel for South Africa may be affected because of the delay in the delivery of the supplies. The shipowner advised Captain Tayong to contact its technical director who would provide a solution for the supply of said oxygen and acetylene. The technical director recommended to Captain Tayong that by shutting off the water to the turbo charger and using the auxiliary boiler, there should be no further problem. Captain Tayong agreed to the recommendation of the technical director, but communicated his reservations regarding proceeding to South Africa without the requested supplies. So the shipowner advised him to wait for the supplies. Finally, the vessel arrived at South Africa. However, Captain Tayong was instructed to turn-over his post to the new captain, and was repatriated to the Philippines after serving petitioners for around 2 wks. He was not informed of the charges against him, and was just sent a letter after arriving in the Philippines. He therefore instituted a complaint for illegal dismissal before the POEA, claiming his unpaid salary for the unexpired portion of the written employment contract, plus attorneys fees. POEA: dismissed complaint, there was valid cause for his untimely repatriation (the company alleged that due to Captain Tayongs refusal to sail immediately to South Africa, the vessel was placed off-hire by the charterers, and the charterers refused to pay the charter hire or compensation corresponding to 12 hours, amounting to US $15,500.00.They fired Captain Tayong for lost of confidence; POEA believed that the Captains concern for the oxygen and acetylene was not legitimate as these supplies were not necessary or indispensable for running the vessel.) NLRC: reversed and set aside POEA decision because Captain Tayong had not been afforded an 1

opportunity to be heard and that no substantial evidenced was adduced to establish the basis for petitioners loss of trust or confidence. Captain had acted in accordance with his duties to maintain the seaworthiness of the vessel and to insure the safety of the ship and crew. ISSUE: Whether or not Captain Tayong was arbitrarily dismissed and without cause as reasonably established in an appropriate investigation (whether or not Captain Tayong had reasonable grounds to believe that the safety of the vessel and the crew under his command or the possibility of substantial delay at sea required him to wait for the delivery of the supplies needed for the repair of the turbo-charger and the economizer before embarking on the long voyage from Singapore to South Africa) HELD: Yes. It is well settled in this jurisdiction that confidential and managerial employees cannot be arbitrarily dismissed at any time, and without cause as reasonably established in an appropriate investigation. Such employees, too, are entitled to security of tenure, fair standards of employment and the protection of labor laws. 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 against him, and much less giving him a chance to refute any such charge. In fact, it was only 2 months after his repatriation that Captain Tayong received a telegram dated 24 October 1989 from Inter-Orient requiring him to explain why he delayed sailing to South Africa. - NLRCs conclusion was supported by substantial evidence: The official report of the technical director, which stated that a disruption in the normal functioning of the vessels turbo charger and economizer had prevented the full or regular operation of the vessel and that he was the one who recommended the reduction of RPM during the voyage to South Africa instead of waiting in Singapore for the supplies that would permit shipboard repair of the malfunctioning machinery and equipment, supported NLRCs conclusion that Captain Tayong did not arbitrarily and maliciously delay the voyage to South Africa. - Captain Tayong's decision (arrived at after consultation with the vessel's Chief Engineer) to wait seven (7) hours in Singapore for the delivery on board

the Oceanic Mindoro of the requisitioned supplies needed for the welding-repair, on board the ship, of the turbo-charger and the economizer equipment of the vessel, did not constitute merely arbitrary, capricious or grossly insubordinate behavior on his part. In the view of the NLRC, that decision of Captain Tayong did not constitute a legal basis for the summary dismissal of Captain Tayong and for termination of his contract with petitioners prior to the expiration of the term thereof. Obiter - 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 command of a vessel. A captain commonly performs three (3) distinct roles: (1) he is a general agent of the shipowner; (2) he is also commander and technical director of the vessel; and (3) he is a representative of the country under whose flag he navigates. Of these roles, by far the most important is the role performed by the captain as commander of the vessel; for such role (which, to our mind, is analogous to that of "Chief Executive Officer" [CEO] of a present-day corporate enterprise) has to do with the operation and preservation of the vessel during its 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 decide whether to take cargo. The ship captain, as agent of the shipowner, has legal authority to 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 captain is vested with both management and fiduciary functions. - 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 their officers thousand of miles away) will result, in the very specific circumstances facing him, in imposing unacceptable risks of loss or serious danger to ship or crew, he cannot casually seek 2

absolution from his responsibility, if a marine casualty occurs, in such instructions. 23 - Compagnie de Commerce v. Hamburg: xxx where by the force of circumstances, a man has the duty cast upon him of taking some action for another, and under that obligation adopts a course which, to the judgment of a wise and prudent man, is apparently the best for the interest of the persons for whom he acts in a given emergency, it may properly be said of the course so taken that it was in a mercantile sense necessary to take it." - ON management prerogative: that prerogative is nevertheless not to be exercised, in the case at bar, at the cost of loss of Captain Tayong's rights under his contract with petitioner's and under Philippine law. Disposition petitioners having failed to show grave abuse of discretion amounting to loss or excess of jurisdiction on the part of the NLRC in rendering its assailed decision, the Petition for Certiorari is hereby DISMISSED, for lack of merit. Costs against petitioners National Development Company v. Court of Appeals FACTS: In accordance with a memorandum entered into between defendants National Development Company (NDC) and Maritime Company of the Philippines (MCP) on September 13, 1962, defendant NDC as the first preferred mortgagee of three oceangoing vessels including one the name Doa Nati appointed defendant MCP as its agent to manage and operate said vessels in its behalf.The E. Phillipp Corporation of the New York loaded on board the vessel Doa Nati at San Francisco, California, a total of 1,200 bales of American raw cotton consigned to Manila Banking Corporation, Manila and the Peoples Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation.The vessel figured in a collision at Ise Bay, Japan with a japanese vessel as a result of which 550 bales of aforesaid cargo were lost and/or destroyed The damage and lost cargo was worth P344,977.86 which amount, the plaintiff Development Insurance and Surety Corporation as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed.The insurer filed before the CFI of

Manila an action for the recovery of said amount from NDC and MCP. ISSUE: Whether or not the law of country or port of destination shall apply. HELD: In Easter Shipping Lines, Inc., v. IAC, 150 SCRA 469 (1987), we held under similar circumstances that the law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. Thus, the rule was specifically laid down that for cargoes transported from Japan to the Philippines, the liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by especial laws (Article 1766, Civil Code). Hence, the carriage of Goods by Sea Act, a special law, is merely suppletory to the provisions of the Civil Code. The goods in question were being transported from San Francisco, California and Tokyo, Japan to the Philippines and that they were lost or damaged due to a collision which was found to have been caused by negligence or fault of both captains of the colliding vessels.Under the above ruling, it is evident that laws of the Philippines will apply, and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan. It appears, however, that collision falls among matters not specifically regulated by the Civil Code, so that no reversible error can be found in respondent courts application to the case at bar of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels. Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a vessel, the owner of the vessel at fault shall indemnify the losses and damages incurred after an expert appraisal. But more in point to the instant case in is Article 827 of the same Code, which provides that if the collision is imputable to both vessels, each one shall suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by their cargoes.There is, therefore, no room for NDCs interpretation that the Code of Commerce should apply only to domestic trade and not to foreign trade.MCP next contends that it cannot be liable solidarily with NDC because it is merely the manager and operator of the vessel Doa Nati, nor a ship agent. As the general managing agent, according, to MCP, it can only be liable if it acted in excess of its 3

authority. The Memorandum Agreement of September 13, 1962 shows that NDC appointed MCP as agent, a term broad enough to include the concept of ship agent in Maritime Law. In fact, MCP was even conferred all the powers of the owner of the vessel, including the power to contract in the name of the NDC. Consequently, under the circumstances, MCP cannot escape liability. It is well-settled that both the owner and agent of the offending vessel are liable for the damage done where both are impleaded. Magsasay vs. Anastacio Agan FACTS: In 1949, SS San Antonio, owned by A. Magsaysay Inc. (AMInc), embarked on its voyage to Batanes via Aparri. It was carrying various cargoes, one of which was owned by Agan. One

was made to save the cargos, for the cargos were not in danger imminent danger.

fine weather day, it accidentally ran aground the mouth of the Cagayan River due to the sudden shifting of the sands below. SS San Antonio then needed the services of Luzon Stevedoring Co. to tow the ship and make it afloat so that it can continue its journey. Later, AMInc required the cargo owners to pay the

expenses incurred in making the ship afloat (P841.40 each). The expenses, AMInc claims, fall under the General Averages Rule under the Code of Commerce, which is to be shared by ship owner and cargo owners as well.

ISSUE: Whether or not general averages exist in the case at bar.

HELD: No. General averages contemplate that the stranding of the vessel is intentionally done in order to save the vessel itself from a certain and imminent danger. Here, the stranding was accidental and it was made afloat for the purpose of saving the voyage and not the vessel. Note that this happened on a fine weather day. Also, it cannot be said that the towing 4