STEVENS v NORDEUTSCHER

Plaintiff commenced this action in the Court of First Instance of Manila on

June 24, 1960. It alleged in the complaint that on March 28, 1959, it had
shipped from Hamburg to Manila, aboard the "MS SCHWABENSTEIN", a
vessel of defendant Norddeuscher Lloyd, 2,000 pieces of prismatical
thermometers valued at $650; that on May 15, 1959, said vessel arrived at
Manila; that on May 21, 1959, the master of said vessel notified the plaintiff,
thru its broker, of the delivery of said goods; that, upon examination of the
case containing the same, it turned out that 1,154 pieces of said
thermometers valued at $342.74, were missing and/or destroyed; that
plaintiff immediately filed the corresponding notice of loss and/or short
delivery, followed by the corresponding notice and formal claim for loss
and/or short delivery; that, despite several demands, defendant had
refused and failed to pay said sum of $342.74; that, as a consequence,
plaintiff had, also, incurred damages in the sums of P1,000, as attorney's
fees, and P664.70, as unrealized profits; and that an action instituted in the
Municipal Court of Manila on April 27, 1960 seemingly, for the recovery
of the value of said thermometers and the amount of said damages was
dismissed by said court on June 13, 1960, without any trial on the merits,
upon the ground of lack of jurisdiction over the subject-matter of the case,
inasmuch as the same involved the exercise of admiralty and maritime
jurisdiction. Plaintiff prayed for judgment for said sums of $342.74, P1,000
and P664.70, plus costs.
On July 8, 1960, defendant moved to dismiss the complaint upon the
ground that plaintiff's causes of action had prescribed, it having been filed
on June 24, 1960, or more than a year from May 21, 1959, when plaintiff
was notified of the delivery of the case containing the thermometers in
question. This motion having been granted and the complaint dismissed,
plaintiff interposed this appeal, maintaining that the period of one (1) year
prescribed in Commonwealth Act No. 65, in relation to Carriage of Goods
by Sea Act within which the liability of carriers, based upon a contract of
carriage goods by sea, may be enforced by suit was suspended by the
commencement of the first action in the municipal court, on April 27, 1960;
that the running of said period was resumed or continued on June 13,
1960, when said action was dismissed; and that, excluding said period from
April 27, 1960 to June 13, 1960, or forty-seven (47) days, less than one (1)
year has elapsed from May 21, 1959 to June 24, 1960, when this case was
filed in the court of first instance. In support of this pretense, plaintiff

invokes Article 1155 of the Civil Code of the Philipines, reading:

The prescription of actions is interrupted when they filed before the court,
when there is a written extrajudicial command by the creditors, and when
there is any written acknowledged judgment of the debt by the debtor.
Upon mature deliberation, we are of the opinion, and so hold, that the order
appealed from should be reversed, not only because of the operation of
said Article 1155 of our Civil Code, but, also, in view of the provisions
section 49 of Act No. 190, pursuant to which:
If, in an action commenced, in due time, a judgment for the plaintiff be
reversed, or if the plaintiff fail otherwise than upon the merits, and the time
limited for the commencement of such action has, at the date of such
reversal or failure, expired, the plaintiff, or, if he die and the cause of action
survive, his representatives may commence a new action within one year
after such date, and this provision shall apply to any claim asserted in any
pleading by a defendant.
The action commenced by the plaintiff in the Municipal Court of Manila, on
April 27, 1960, was dismissed June 13, 1960, or over twenty (20) days
after the expiration of the period of one (1) year, beginning from May 21,
1959, within which plaintiff's action could be brought pursuant to
Commonwealth Act No. 65, in relation to the Carriage of Goods by Sea Act.
Under said section of Act No. 190, the period within which plaintiff could
initiate the present case was renewed, therefore, for another year,
beginning from June 14, 1960 (Tolentino Vitug, 39 Phil., 126; Smith vs.
McNeal, 100 U.S. 426, 27 L. ed. 986). The case at bar was commenced on
June 24, 1960, or within the period last mentioned.
The cases of Oriental Commercial Co. vs. Jureidini (71 Phil., 25) and
Conspecto vs. Fruto (31 Phil., 144), in which it was held that:
. . . Cuando se entabia una accion dentro del plazo de prescripcion y se
desiste de ella despues, o se sobresee sin condiciones, por una razon u
otra, no hace que la accion que se entable mas tarde pero ya fuera del
periodo de prescripcion, se pueda considerar como presentada detro de
dicho periodo porque quiere contrase con la accion entablada con
anterioridad. La falta de gestion de la recurrente por cuya causa se
desestimaron sus demandas segunda y tercera, no puede interpretarse
sino como una renuncia de su parte y, al ejercitar su ultima accion no se ha

colocado en la misma situacion en que antes se hallaba al ejercitar sus

tres anteriores acciones. Este es el mismo criterio que expresamos cuando
se nos presents una cuestion aniloga en la causa de Conspecto contra
Fruto, 31 Jur. Fil 155. (Emphasis supplied.)1awphl.nt
are not in point, for the dismissal of the herein plaintiff's complaint in the
municipal court was not due to its desistance or voluntary abandonment.
Insofar as inconsistent with the conclusion we have thus reached, the view
adopted in Chua Kuy vs. Everett Steamship Corp., L-5534 (May 27, 1953)
and Yek Tong Lin Fire & Marine Insurance Co. vs. American President
Lines, Inc., L-11081 (April 30, 1958) should be, as it is hereby, modified
accordingly.
WHEREFORE, the order appealed from is reversed and this case
remanded to the lower court for further proceedings, with costs of this
instance against defendant Norddeuscher Lloyd. It is so ordered.

DOLE PH v MARITIME CO

The cargo subject of the instant case was discharged in Dadiangas unto
the custody of the consignee, Dole Philippines. The corresponding claim for
the damages sustained by the cargo was filed by the plaintiff with the
defendant, Maritime Company on May 4, 1972.
On June 11, 1973 the plaintiff filed a complaint in the CFI Manila
embodying 3 causes of action involving 3 separate and different shipments.
The third cause of action therein involved the cargo now subject of this
present litigation.
On December 11, 1974, Judge Serafin Cuevas issued an Order dismissing
the first two causes of action. The third cause of action which covered the
cargo subject of this case now was likewise dismissed but without prejudice
as it was not covered by the settlement. Because of the dismissal of the
complaint with respect to the third cause of action, DOLE instituted this
present complaint on January 6, 1975.

Maritime filed an answer pleading inter alia the affirmative defense of

prescription under the provisions of the Carriage of Goods by Sea Act. The
Trial Court granted the motion, scheduling the preliminary hearing on April
27, 1977. The record before the Court does not show whether or not that
hearing was held, but under date of May 6, 1977, Maritime filed a formal
motion to dismiss invoking once more the ground of prescription.
The Trial Court, after due consideration, resolved the matter in favor of
Maritime and dismissed the complaint.
Issue:
Whether or not Article 1155 of the Civil Code applies in lieu of the COGSA.
Held:
No. Article 1155 of the Civil Code provides that the prescription of actions is
interrupted by the making of an extrajudicial written demand by the creditor
Section 3, paragraph 6 of the COGSA provides that:
the carrier and the ship shall be discharged from all liability in respect of
loss or damage unless suit is brought within one year after delivery of the
goods or the date when the goods should have been delivered; Provided,
That, if a notice of loss or damage, either apparent or conceded, is not
given as provided for in this section, that fact shall not affect or prejudice
the right of the shipper to bring suit within one year after the delivery of the
goods or the date when.the goods should have been delivered.
1. Dole argues that since the provisions of the Civil Code are, by express
mandate of said Code, suppletory of deficiencies in the Code of Commerce
and special laws in matters governed by the latter and there being a patent
deficiency with respect to the tolling of the prescriptive period provided for
in the Carriage of Goods by Sea Act, prescription under said Act is subject
to the provisions of Article 1155 of the Civil Code on tolling. Since Dole's
claim for loss or damage was filed on May 4, 1972 amounted to a written
extrajudicial demand which would toll or interrupt prescription under Article
1155, it operated to toll prescription also in actions under the Carriage of
Goods by Sea Act.
These arguments might merit weightier consideration were it not for the fact
that the question has already received a definitive answer, adverse to the
position taken by Dole, in The Yek Tong Lin Fire & Marine Insurance Co.,

Ltd. vs. American President Lines, Inc.

2. Dole argues that it was error for the court not to have considered the
action of plaintiff-appellant suspended by the extrajudicial demand which
took place, according to defendant's own motion to dismiss on August 22,
1952.
Court noticed that while plaintiff avoids stating any date when the goods
arrived in Manila, it relies upon the allegation made in the motion to dismiss
that a protest was filed on August 22, 1952 which goes to show that
plaintiff-appellant's counsel has not been laying the facts squarely before
the court for the consideration of the merits of the case. We have already
decided that in a case governed by the Carriage of Goods by Sea Act, the
general provisions of the Code of Civil Procedure on prescription should
not be made to apply. (Chua Kuy vs. Everett Steamship Corp., G.R. No. L5554, May 27, 1953.) We hold that in such a case the general provisions of
the new Civil Code (Art. 1155) cannot be made to apply, as such
application would have the effect of extending the one-year period of
prescription fixed in the law. It is desirable that matters affecting
transportation of goods by sea be decided in as short a time as possible;
the application of the provisions of Article 1155 of the new Civil Code would
unnecessarily extend the period and permit delays in the settlement of
questions affecting transportation, contrary to the clear intent and purpose
of the law.
Under Dole's theory, when its claim was received by Maritime, the one-year
prescriptive period was interrupted and began to run anew from May 4,
1972, affording Dole another period of one year counted from that date
within which to institute action on its claim for damage. Unfortunately, Dole
let the new period lapse without filing action. It instituted Civil Case No.
91043 only on June 11, 1973, more than one month after that period has
expired and its right of action had prescribed.
ANG v AMERICAN STEAMSHIP
(check chrome)
YauYueCommercialBankLtd.ofHongkong,sell140packagesof
galvanizedsteeldurzincsheetstooneHerminioG.Teves,shipped
byTokyoBoekiLtd.ofTokyo,Japan.withAmerican
SteamshipAgencies,Inc.astheagentinthePhilippines,undera

shippingagreement.Thebillofladingwasindorsedtotheorder
ofanddeliveredtoYauYuebytheshipper.Uponreceipt
thereof,YauYuedrewademanddrafttogetherwiththebillof
ladingagainstHerminioG.Teves,throughtheHongkong&
ShanghaiBank.Uponarrival,Hongkong&ShanghaiBanknotified
Teves,the"notifyparty"underthebilloflading,ofthe
arrivalofthegoodsandrequestedpaymentofthedemanddraft
representingthepurchasepriceofthearticles.Teves,however,
didnotpaythedemanddraft,promptingthebanktomakethe
correspondingprotest.Thebanklikewisereturnedthebillof
ladinganddemanddrafttoYauYuewhichindorsedthesaidbill
ofladingtoDomingoAng.DespitenonpaymentTeveswasableto
securea"PermitToDeliverImportedArticles"whichhe
presentedtotheBureauofCustomswhichinturnreleasedtohim
thearticlescoveredbythebilloflading.Subsequently,
DomingoAngclaimedforthearticlesfromAmericanSteamship
Agencies,Inc.,bypresentingtheindorsedbilloflading,but
hewasinformedbythelatterthatithaddeliveredthearticles
toTeves.AcomplaintwasfiledbyAngagainstAmerican
Steamshipforhavingallegedlywrongfullydeliveredand/or
convertedthegoodscoveredbythebilloflading.Defendant
filedamotiontodismissuponthegroundthatplaintiff'scause
ofactionhasprescribedundertheCarriageofGoodsbySeaAct.
Lowercourtdismissedthecaseonthegroundofprescription.
Hence,anappealwasfiledtoSC.
Issue:
Hasplaintiffappellant'scauseofactionprescribedunder
Section3(6),paragraph4oftheCarriageofGoodsbySeaAct?
Whatistoberesolvedinordertodeterminetheapplicability
oftheprescriptiveperiodofoneyeartothecaseatbaris
whetherornottherewas"loss"ofthegoodssubjectmatterof
thecomplaint.
Ruling:
Fromtheallegationsofthecomplaint,therefore,thegoods
cannotbedeemed"lost".TheyweredeliveredtoHerminioG.
Teves,sothattherecanonlybeeitherdelivery,ifTeves
reallywasentitledtoreceivethem,ormisdelivery,ifhewas
notsoentitled.ItisnotforUsnowtoresolvewhetherornot

deliveryofthegoodstoTeveswasproper,thatis,whetheror
nottherewasrightfuldeliveryormisdelivery.Therebeingno
lossordamagetothegoods,theaforequotedprovisionofthe
CarriageofGoodbySeaActstatingthat"Inanyevent,the
carrierandtheshipshallbedischargedfromallliabilityin
respectoflossordamageunlesssuitisbroughtwithinoneyear
afterdeliveryofthegoodsorthedatewhenthegoodsshould
havebeendelivered,"doesnotapply.Itfollowsthatforsuits
predicatednotuponlossordamagebutonallegedmisdelivery
(orconversion)ofthegoods,theapplicableruleon
prescriptionsthatfoundintheCivilCode,namely,eitherten
yearsforbreachofawrittencontractorfouryearsforquasi
delict.Ineithercase,plaintiff'scauseofactionhasnotvet
prescribed,sincehisrightofactionwouldhaveaccruedatthe
earliestonMay9,1961whentheshiparrivedinManilaandhe
filedsuitonOctober30,1963.Wherefore,thedismissalorder
appealedfromisherebyreversedandsetasideandthiscaseis
remandedtothecourtaquoforfurtherproceedings
MITSUI v CA
PetitionerMitsuiO.S.K.LinesLtd.isaforeigncorporationrepresentedinthe
Philippines
byitsagent,MagsaysayAgencies.Itenteredintoacontractofcarriagethrough
Meister
Transport,Inc.,aninternationalfreightforwarder,withprivaterespondentLavine
Loungewear
ManufacturingCorporationtotransportgoodsofthelatterfromManilatoLe
Havre,France.
PetitionerundertooktodeliverthegoodstoFrance28daysfrominitialloading.
OnJuly24,
1991,petitioner'svesselloadedprivaterespondent'scontainervanforcarriageat
thesaidport
oforigin
However,inKaoshiung,Taiwanthegoodswerenottransshippedimmediately,
withtheresult
thattheshipmentarrivedinLeHavreonlyonNovember14,1991.Theconsignee

allegedlypaid
onlyhalfthevalueofthesaidgoodsonthegroundthattheydidnotarrivein
Franceuntilthe
"offseason"inthatcountry.Theremaininghalfwasallegedlychargedtothe
accountofprivate
respondentwhichinturndemandedpaymentfrompetitionerthroughitsagent.
Issue:
Whetherornotprivaterespondent'sactionisfor"lossordamage"togoods
shipped,withinthe
meaningoftheCarriageofGoodsbySeaAct(COGSA)
Ruling:
No.Thesuitisnotfor"lossordamage"togoodscontemplatedin3(6),the
questionof
prescriptionofactionisgovernednotbytheCOGSAbutbyArt.1144oftheCivil
Codewhich
providesforaprescriptiveperiodoftenyears.AsdefinedintheCivilCodeandas
appliedto
Section3(6),paragraph4oftheCarriageofGoodsbySeaAct,"loss"contemplates
merelya
situationwherenodeliveryatallwasmadebytheshipperofthegoodsbecausethe
samehad
perished,goneoutofcommerce,ordisappearedinsuchawaythattheirexistence
isunknown
ortheycannotberecovered.
Therewouldbesomemeritinappellant'sinsistencethatthedamagessufferedby
himasa
resultofthedelayintheshipmentofhiscargoarenotcoveredbytheprescriptive
provisionof
theCarriageofGoodsbySeaActabovereferredto,ifsuchdamagesweredue,not
tothe
deteriorationanddecayofthegoodswhileintransit,buttoothercauses
independentofthe
conditionofthecargouponarrival,likeadropintheirmarketvalue
MARITIMEAGENCIESvCA
Facts:TranscontinentalFertilizerCompanyofLondoncharteredfromHongkong
themotorvesselnamedHongkongIslandfortheshipmentof8073.35MT

(gross)baggedureafromNovorossisk,Odessa,USSR,tothePhilippines,the
partiessigningforthispurposeaUniformGeneralCharterdated9August1979.
Ofthetotalshipment,5,400.04MTwasfortheaccountofAtlasFertilizer
Companyasconsignee,3,400.04tobedischargedinManilaandtheremaining
2,000MTinCebu.ThegoodswereinsuredbytheconsigneewiththeUnion
InsuranceSocietyofCanton,Ltd.forP6,779,214.00againstallrisks.Maritime
Agencies&Services,Inc.wasappointedasthecharterersagentandMacondray
Company,Inc.astheownersagent.ThevesselarrivedinManilaon3October
1979,andunloadedpartoftheconsigneesgoods,thenproceededtoCebuon19
October1979,todischargetherestofthecargo.On31October1979,the
consigneefiledaformalclaimagainstMaritime,copyfurnishedMacondray,for
theamountofP87,163.54,representingC&Fvalueofthe1,383shortlandedbags.
On12January1980,theconsigneefiledanotherformalclaim,thistimeagainst
VivaCustomsBrokerage,fortheamountofP36,030.23,representingthevalueof
574bagsofnetunrecoveredspillage.Theseclaimshavingbeenrejected,the
consigneethenwenttoUnion,whichondemandpaidthetotalindemnityof
P113,123.86pursuanttotheinsurancecontract.
Assubrogeeoftheconsignee,Unionthenfiledon19September1980,acomplaint
forreimbursementofthisamount,withlegalinterestandattorneysfees,against
HongkongIslandCompany,Ltd.,MaritimeAgencies&Services,Inc.and/orViva
CustomsBrokerage.On20April1981,thecomplaintwasamendedtodropViva
andimpleadMacondrayCompany,Inc.asanewdefendant.On4January1984,
aftertrial,thetrialcourtrenderedjudgment,ordering(a)HongkongIslandCo.,
Ltd.,anditslocalagentMacondray&Co.,Inc.topayUnionthesumofP87,1
63.54plus12%interestfrom20April1981untilthewholeamountisfullypaid,
P1,000.00asattorneysfeesandtopayofthecosts;and(b)MaritimeAgencies
&Services,Inc.,topayUnionthesumofP36,030.23,plus12%interestfrom20
April1981untilthewholeamountisfullypaid,P600.00asattorneysfeesandto
payofthecosts.
MaritimeAgencies&ServicesappealedthedecisiontotheCourtofAppeals,
whichrenderedadecisionon28November1986,modifyingthedecisionappeal
from,findingthechartererTranscontinentalFertilizerCo.,Ltd.representedbyits
agentMaritimeAgencies&Services,Inc.liablefortheamountofP87,163.54plus
interestat12%plusattorneysfeesofP1,000.00.HongkongIslandCos.Ltd.
representedbyMacondrayCo.,Inc.wereaccordinglyexemptedfromanyliability.
MaritimeandUnionfiledseparatemotionsforreconsiderationwhichwereboth
denied.Hence,thepetitions.
Thesetwocaseswereconsolidatedandgivenduecourse,thepartiesbeingrequired

tosubmitsimultaneousmemoranda.Allcomplied,includingHongkongIsland
Company,Ltd.,andMacondrayCompany,Inc.,althoughtheypointedoutthatthey
werenotinvolvedinthepetitions.TheSupremeCourtsetasidethedecisionofthe
appellatecourt,andreinstatedthatofthetrialcourtasmodified;andfurther
holdingthatthepartiesshallbeartheirrespectivecosts.
FactualFindings
ofthetrialcourtInhisdecisiondated4January1984,JudgeArtemondeLunaof
theRegionalTrialCourtofManilaheldthattheCourt,onthebasisofthe
evidence,findsnothingtodisprovethefindingofthemarineandcargosurveyors
thatofthe66,390bagsofureafertilizer,65,547bagsweredischargedexvessel
andtherewereshortlanded1,383bags,valuedatP87,163.54.Thissumshould
betheprincipalandprimaryliabilityandresponsibilityofthecarryingvessel.
Underthecontractforthetransportationofgoods,thevesselsresponsibility
commenceupontheactualdeliveryto,andreceiptbythecarrieroritsauthorized
agent,untilitsfinaldischargeattheportofManila.
Categoriesofcharters
Therearethreegeneralcategoriesofcharters,towit,thedemiseorbareboat
charter,thetimecharterandthevoyagecharter.
3.Demisecharter
Ademiseinvolvesthetransferoffullpossessionandcontrolofthevesselforthe
periodcoveredbythecontract,thechartererobtainingtherighttousethevessel
andcarrywhatevercargoitchooses,whilemanningandsupplyingtheshipaswell.
4.Timecharter
Atimecharterisacontracttouseavesselforaparticularperiodoftime,the
chartererobtainingtherighttodirectthemovementsofthevesselduringthe
charteringperiod,althoughtheownerretainspossessionandcontrol
VoyagecharterAvoyagecharterisacontractforthehireofavesselforoneora
seriesofvoyagesusuallyforthepurposeoftransportingoodsforthecharterer.
Thevoyagecharterisacontractofaffreightmentandisconsideredaprivate
carriage.
6.ResponsibilityforcargolossincaseofavoyagecharterAvoyagecharterbeing
aprivatecarriage,thepartiesmayfreelycontractrespectingliabilityfordamageto
thegoodsandothermatters.Thebasicprincipleisthattheresponsibilityforcargo
lossfallsontheonewhoagreedtoperformthedutyinvolvedinaccordancewith
thetermsofmostvoyagecharters.Thisistrueinthepresentcaseswherethe
chartererwasresponsibleforloading,stowageanddischargingattheportsvisited,
whiletheownerwasresponsibleforthecareofthecargoduringthevoyage.
7.Paragraph2oftheUniformGeneralCharterParagraph2oftheUniform

GeneralCharterreadsOwnersaretoberesponsibleforlossofordamagetothe
goodsorfordelayindeliveryofthegoodsonlyincasetheloss,damageordelay
hasbeencausedbytheimproperornegligentstowageofthegoodsorbypersonal
wantofduediligenceonthepartoftheOwnersortheirManagertomakethe
vesselinallrespectsseaworthyandtosecurethatsheisproperlymanned,
equippedandsuppliedorbythepersonalactordefaultoftheOwnersortheir
Manager.AndtheOwnersareresponsiblefornolossordamageordelayarising
fromanyothercausewhatsoever,evenfromtheneglectordefaultoftheCaptain
orcreworsomeotherpersonemployedbytheOwnersonboardorashorefor
whoseactstheywould,butforthisclause,beresponsible,orfromunseaworthiness
ofthevesselonloadingorcommencementofthevoyageoratanytime
whatsoever.Damagecausedbycontactwithorleakage,smellorevaporationfrom
othergoodsorbytheinflammableorexplosivenatureorinsufficientpackageof
othergoodsnottobeconsideredascausedbyimproperornegligentstowage,even
ifinfactsocaused.
Clause17oftheAdditionalClausestoCharterpartyClause17ofAdditional
ClausestoCharterpartyprovidesthatThecargoshallbeloaded,stowedand
dischargedfreeofexpensetothevesselundertheMasterssupervision.However,
ifrequiredatloadinganddischargingportsthevesselistogivefreeuseofwinches
andpowertodrivethemgear,runnersandropes.Alsoslings,asonboard.Shore
winchmenaretobeemployedandtheyaretobeforCharterersorShippersor
Receiversaccountasthecasemaybe.Vesselisalsotogivefreeuseofsufficient
light,asonboard,ifrequiredfornightwork.Timelostthroughbreakdownof
winchesorderricksisnottocountaslaytime.
9.HomeInsurancevs.AmericanSteamshipAgencies;Stipulationsexempting
ownerfromliabilityinchartervalidInHomeInsuranceCo.v.American
SteamshipAgencies,Inc.,thetrialcourtrejectedsimilarstipulationsascontraryto
publicpolicyand,applyingtheprovisionsoftheCivilCodeoncommoncarriers
andoftheCodeofCommerceonthedutiesoftheshipcaptain,heldthevessel
liableindamagesforlossofpartofthecargoitwascarrying.TheSupremeCourt
reversed,therein,declaringthattheprovisionsofourCivilCodeoncommon
carriersweretakenfromAngloAmericanlaw.UnderAmericanjurisprudence,a
commoncarrierundertakingtocarryaspecialcargoorcharteredtoaspecial
persononly,becomesaprivatecarrier.Asaprivatecarrier,astipulationexempting
theownerfromliabilityforthenegligenceofitsagentisnotagainstpublicpolicy,
andisdeemedvalid.
10.CivilCodeprovisionsoncommoncarriershouldnotbeappliedifcarrieris
actingasprivatecarrier,publicnotinvolvedTheCivilCodeprovisionson

commoncarriersshouldnotbeappliedwherethecarrierisnotactingassuchbut
asaprivatecarrier.Thestipulationinthecharterpartyabsolvingtheownerfrom
liabilityforlossduetothenegligenceofitsagentwouldbevoidonlyifthestrict
publicpolicygoverningcommoncarriersisapplied.Suchpolicyhasnoforce
wherethepublicatlargeisnotinvolved,asinthecaseofashiptotallychartered
fortheuseofasingleparty.
11.RulingcannotbenefitHongkongduetoshortlandedbags;Presumptionoffault
indamagedgoodscoveredbycleanbillofladingThepresentrulingcannotbenefit
Hongkong,becausetherewasnoshowinginthatcasethatthevesselwasatfault.
Herein,thetrialcourtfoundthat1,383bagswereshortlanded,whichcouldonly
meanthattheyweredamagedorlostonboardthevesselbeforeunloadingofthe
shipment.ItisnotdeniedthattheentirecargoshippedbythechartererinOdessa
wascoveredbyacleanbilloflading.Asthebagswereingoodorderwhen
receivedinthevessel,thepresumptionisthattheyweredamagedorlostduringthe
voyageasaresultoftheirnegligentimproperstowage.Forthistheshipowner
shouldbeheldliable.
12.Prescriptionofaction;Filingofclaimwithin1year,inaccordancewith
COGSATheperiodforfilingtheclaimisoneyear,inaccordancewiththe
CarriageofGoodsbySeaAct.Thiswasadoptedandembodiedbyourlegislature
inCommonwealthAct65which,asaspeciallaw,prevailsoverthegeneral
provisionsoftheCivilCodeonprescriptionofactions.
13.Section3(6)ofCommonwealthAct65Section3(6)ofthatActprovidesthat
Inanyevent,thecarrierandtheshipshallbedischargedfromallliabilityin
respectoflossordamageunlesssuitisbroughtwithinoneyearafterdeliveryof
thegoodsorthedatewhenthegoodsshouldhavebeendelivered;Provided,thatif
anoticeoflossfordamage;eitherapparentorconcealed,isnotgivenasprovided
forinthissection,thatfactshallnoteffectorprejudicetherightoftheshipperto
bringsuitwithinoneyearafterthedeliveryofthegoodsorthedatewhenthe
goodsshouldhavebeendelivered.
14.Applicationoftheprescriptiveperiod;UnionCarbidevs.ManilaRailroadThe
periodwasappliedbytheCourtinthecaseofUnionCarbide,Philippines,Inc.v.
ManilaRailroadCo.,whereitwasheldUnderthefactsofthiscase,weheldthat
theoneyearperiodwascorrectlyreckonedbythetrialcourtfromDecember19,
1961,when,asagreeduponbythepartiesandasshowninthetallysheets,the
cargowasdischargedfromthecarryingvesselanddeliveredtotheManilaPort
Service.ThatoneyearperiodexpiredonDecember19,1962.Inasmuchasthe
actionwasfiledonDecember21,1962,itwasbarredbythestatuteoflimitations.
15.Applicationofprescriptiveperiod;PresentcasesTheoneyearperiodinthe

presentcasesshouldcommenceon20October1979,whenthelastitemwas
deliveredtotheconsignee.UnionscomplaintwasfiledagainstHongkongon19
September1980,buttardilyagainstMacondrayon20April1981.The
consequenceisthattheactionisconsideredprescribedasfarasMacondrayis
concernedbutnotagainstitsprincipal,whichiswhatmattersanyway.
FILMERCHANTS
In 1976, Choa Tiek Seng contracted Frota Oceanica Brasiliera for
the latter to deliver goods. Choa Tiek Seng insured the goods with
Filipino Merchants Insurnace Company. The goods left the port of
Manila on December 13, 1976 and reached its point of destination
on December 17, 1976. The goods were however damaged.
Choa Tiek Seng then filed an insurance claim. Filipino Merchants
refused to pay so in August 1977, it was sued by Choa Tiek Seng.
In January 1978, Filipino Merchants filed a third party complaint
against the carrier Frota Oceanica Brasiliera as it alleged that it is
the carrier who is liable to pay damages to Choa Tiek Seng. Judge
Jose Alejandro of the trial court ruled against Filipino Merchants.
The Court of Appeals affirmed the ruling of the judge. The lower
courts ruled that Filipino Merchants is already barred from filing a
claim because under the Carriage of Goods by Sea Act, the suit
against the carrier must be filed within one year after delivery of
the goods or the date when the goods should have been
delivered or one year from December 17, 1976. The insurance
company is already barred for it filed its third party complaint only
in January 1978.
ISSUE: Whether or not Filipino Merchants is precluded by the said
time-bar rule.
HELD: Yes. The pertinent provision of the Carriage of Goods by
Sea Act does not only apply to the shipper but also applies to the
insurer. The coverage of the Carriage of Goods by Sea Act
includes the insurer of the goods. Otherwise, what the Act intends
to prohibit after the lapse of the one year prescriptive period can
be done indirectly by the shipper or owner of the goods by simply
filing a claim against the insurer even after the lapse of one year.
This would be the result if the insurer can, at any time, proceed
against the carrier and the ship since it is not bound by the time-

bar provision. In this situation, the one year limitation will be

practically useless. This could not have been the intention of the
law which has also for its purpose the protection of the carrier and
the ship from fraudulent claims by having matters affecting
transportation of goods by sea be decided in as short a time as
possible and by avoiding incidents which would unnecessarily
extend the period and permit delays in the settlement of
questions affecting the transportation.
MAYER STEEL PIPE
FACTS: Hong Kong Government Supplies Department contracted Mayer
Steel Pipe Corporation to manufacture and supply various steel pipes and
fittings. Prior to the shipping, Mayer insured these pipes and fittings
against all risks with South Sea Surety and Insurance Co., Inc. and Charter
Insurance Corp., with Industrial Inspection Inc. appointed as third-party
inspector. After examining the pipes and fittings, Industrial Inspection
certified that they are in good order condition. However, when the goods
reached Hong Kong, it was discovered that a substantial portion thereof
was damaged.
The trial court found in favor of the insured. However, when the case was
elevated to the CA, it set aside the decision of the trial court and
dismissed the complaint on the ground of prescription. It held that the
action was barred under Sec. 3(6) of the Carriage of Goods by Sea Act
(COGSA) since it was filed only on April 17, 1986, more than two years
from the time the goods were unloaded from the vessel.
ISSUE: Whether or not the action is barred by prescription.
HELD: Sec. 3(6) of the Carriage of Goods by Sea Act states that the carrier
and the ship shall be discharged from all liability for loss or damage to
the goods if no suit is filed within one year after delivery of the goods or
the date when they should have been delivered. Under this provision,
only the carriers liability is extinguished if no suit is brought within one
year. But the liability of the insurer is not extinguished because the
insurers liability is based not on the contract of carriage but on the
contract of insurance.

An insurance contract is a contract whereby one party, for a

consideration known as the premium, agrees to indemnify another for
loss or damage which he may suffer from a specified peril. An all risks
insurance policy covers all kinds of loss other than those due to willful
and fraudulent act of the insured. Thus, when private respondents issued
the all risks policies to Mayer, they bound themselves to indemnify the
latter in case of loss or damage to the goods insured. Such obligation
prescribes in ten years, in accordance with Article 1144 of the New Civil
Code.
INTL HARVESTER
FACTS:
International Harvester Company of the Philippines is the
S/S Belle of the Sea
took on board at Los Angeles, California, U. S. A., goods
for shipment to Manila, and covered by Bill of Lading No. 105; When
S/S Belle of the Sea
arrived in Manila, the cargoes were
duscharged at the Government piers under the supervision and custody of
Manila Terminal Co., Inc.
Out of the goods covered by Bill of Lading No. 105, one carton of assorted
samples with a stipulated value of P200 was not delivered to
Yaras and Company which was lost through the negligence either of the
Manila Terminal Co., Inc., or of the International Harvester
Company of the Philippines. The complaint prayed for judgment either
against the defendant Manila Terminal Co., Inc., or the
International Harvester Company of the Philippines, agent of the vessel
Belle of the Sea for the amount of P200, with legal interest from
the date of the filing of the complaint.
*Before the trial in the Municipal Court of Manila could be proceeded with,
the International Harvester of the Philippines filed a motion to
dismiss, on the ground that the Municipal Court of Manila had no
jurisdiction to try case because the action involves admiralty or
maritime jurisdiction, which motion was overruled by the municipal court.
*The Court of First Instance of Manila rendered judgment favor of the
International Harveter Company of the Philippines, ordering the
judge of the municipal court to desist from taking cognizance of civil case
against the International Harvester Company of the

Philippines.
ISSUE(s):
WON the municipal court can take cognizance of civil case for recovery of
the undelivered goods against the International Harvester
Company of the Philippines.
RULING:
Wherefore, the judge of the municipal court is ordered to desist from taking
cognizance of civil case against the International Harvester
Company of the Philippines.
REASON(s):
In view of our conclusion that the cause of action of Yaras and Company
against International Harvester Company of the Philippines
involves admiralty over which the courts of first instance have original
jurisdiction and to which the jurisdiction of the justice of the peace
courts (including municipal courts) does not extend the respondent judge
was properly restrained from further proceeding with civil case
No. IV-262.
The liability of the International Harvester Company of the Philippines is
predicated on the contract of carriage by sea between the
International Harvester Company of the Philippines and Yaras and
Company as evidenced by Bill of Lading No. 105, independently of
the liability of the Manila Terminal Co., Inc, as operator of an arrastre
service.
Admiralty has jurisdiction over all maritime contracts, in whatever form,
wherever they were executed or are to be performed, but not
over non-maritime contracts. Whether or not a contract is maritime does
not depend upon the English rule which conceded jurisdiction
only to contracts made upon and the to be performed upon navigable
water, making the locality the test. It depends on the subjectmatter of the contract, making the true criterion a maritime service or a
maritime transaction.
Specifically, admiralty has jurisdiction of a proceeding
in rem
or in
personam
for the breach of a contract of affreightment, whether
evidenced by a bill of lading or a charter party. And typical of a controversy
over contracts of affreightment is a suit of one party against
the other for loss of or damage to the cargo.

PHIL SHIPPING v VERGARA

The Philippine Shipping Company, the owner of the steamship Nuestra
Sra. de Lourdes, claims an indemnification of 44,000 pesos for the loss of
the said ship as a result of a collision. Ynchusti & Co. also claimed
24,705.64 pesos as an indemnification for the loss of the cargo of hemp
and coprax carried by the said ship on her last trip. The defendant,
Francisco Garcia Vergara, was the owner of the steamship Navarra, which
collided with the Lourdes.
From the judgment of the trial court the Philippine Shipping Company and
the defendant Vergara appealed, but the latter has failed to prosecute his
appeal by a bill of exceptions or otherwise. The only appellant who has
prosecuted this appeal now reduced its claim to 18,000 pesos, the value of
the colliding vessel.
The court below found as a matter of fact that the steamship Lourdes was
sailing in accordance with law, but that the Navarra was not, and was
therefore responsible for the collision. (Bill of exceptions, p. 7.) The court
also found as a fact that "both ships with their respective cargoes were
entirely lost." Construing article 837 of the Code Commerce, the court
below held "that the defendant was not responsible to the plaintiff for the
value of the steamship Lourdes, with the costs against the latter." (Bill of
exceptions, p. 8.)
But the appellant, the Philippine Shipping Company, contends that the
defendant should pay to 18,000 pesos, the value of the Navarra at the time
of its loss; that this is the sense in which the provisions of article 837 of the
Code of Commerce should be understood; that said code has followed the
principles of the English law and not those of the American law, and that it
was immaterial whether the Navarra had been entirely lost, provided her
value at the time she was lost could be ascertained, since the extent of the
liability of the owner of the colliding vessel for the damages resulting from
the collision is to be determined in accordance with such value.
Article 837 of the Code Commerce provides: "The civil liability contracted
by the shipowners in the cases prescribed in this section shall be
understood as limited to the value of the vessel with all her equipment and
all the freight money earned during the voyage."

This section is a necessary consequence of the right to abandon the vessel

given to the shipowner in article 587 of the code, and it is one of the many
superfluities contained in the code. (Lorenzo Benito, "Lecciones," 352.)
Art. 587. The agent shall also the civilly liable 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 he may exempt himself therefrom by
abandoning the vessel with all her equipments and the freight he may have
earned during the trip.
ART. 590. The part owners of a vessel shall be civilly liable, in the
proportion of their contribution to the common fund, for the results of the
acts of the captain referred to in article 587. Each part owner may exempt
himself from this liability by the abandonment, before a notary, of the part of
the vessel belonging to him.
The "Exposicion de motivos" of the Code of Commerce contains the
following: "The present code (1829) does not determine the juridical status
of the agent where such agent is not himself the owner of the vessel. This
omission is supplied by the proposed code, which provides in accordance
with the principles of maritime law that by agent it is to be understood the
person intrusted with the provisioning of the vessel, or the one who
represents her in the port in which she happens to be. This person is the
only who represents the interest of the owner of the vessel. This provision
has therefore cleared the doubt which existed as to the extent of the
liability, both of the agent and for the owner of the vessel. Such liability is
limited by the proposed code to the value of the vessel and other things
appertaining thereto."
There is no doubt that if the Navarra had not been entirely lost, the agent,
having held liable for the negligence of the captain of the vessel, could
have abandoned her with all her equipment and the freight money earned
during the voyage, thus bringing himself within the provisions of the article
837 in so far as the subsidiary civil liability is concerned. This abandonment
which would have amounted to an offer of the value of the vessel, of her
equipment, and freight money earned could not have been refused, and the
agent could not have been personally compelled, under such
circumstances, to pay the 18,000 pesos, the estimated value of the vessel
at the time of the collision.

This is the difference which exist between the lawful acts and lawful
obligation of the captain and the liability which he incurs on account of any
unlawful act committed by him. In the first case, the lawful acts and
obligations of the captain beneficial to the vessel may be enforced as
against the agent for the reason that such obligations arise from the
contract of agency (provided, however, that the captain does not exceed
his authority), while as to any liability incurred by the captain through his
unlawful acts, the ship agent is simply subsidiarily civilly liable. This liability
of the agent is limited to the vessel and it does not extend further. For this
reason the Code of Commerce makes agent liable to the extent of the
value of the vessel, as to the codes of the principal maritime nations
provided, with the vessel, and not individually. Such is also the spirit of our
code.
The spirit of our code is accurately set forth in a treatise on maritime law,
from which we deem proper to quote the following as the basis of this
decision:
That which distinguishes the maritime from the civil law and even from the
mercantile law in general is thereal and hypothecary nature of the former,
and the many securities of a real nature that maritime customs from time
immemorial, the laws, the codes, and the later jurisprudence, have
provided for the protection of the various and conflicting interest which are
ventured and risked in maritime expeditions, such as the interests of the
vessel and of the agent, those of the owners of the cargo and consignees,
those who salvage the ship, those who make loans upon the cargo, those
of the sailors and members of the crew as to their wages, and those of a
constructor as to repairs made to the vessel.
As evidence of this "real" nature of the maritime law we have (1) the
limitation of the liability of the agents to the actual value of the vessel and
the freight money, and (2) the right to retain the cargo and the embargo and
detention of the vessel even cases where the ordinary civil law would not
allow more than a personal action against the debtor or person liable. It will
be observed that these rights are correlative, and naturally so, because if
the agent can exempt himself from liability by abandoning the vessel and
freight money, thus avoiding the possibility of risking his whole fortune in
the business, it is also just that his maritime creditor may for any reason
attach the vessel itself to secure his claim without waiting for a settlement
of his rights by a final judgment, even to the prejudice of a third person.

This repeals the civil law to such an extent that, in certain cases, where the
mortgaged property is lost no personal action lies against the owner or
agent of the vessel. For instance, where the vessel is lost the sailors and
members of the crew can not recover their wages; in case of collision, the
liability of the agent is limited as aforesaid, and in case of shipwrecks,
those who loan their money on the vessel and cargo lose all their rights and
can not claim reimbursement under the law.
There are two reasons why it is impossible to do away with these
privileges, to wit: (1) The risk to which the thing is exposed, and ( 2 ) the
"real" nature of maritime law, exclusively "real," according to which the
liability of the parties is limited to a thing to which is at mercy of the waves.
If the agent is only liable with the vessel and freight money and both may
be lost through the accidents of navigation it is only just that the maritime
creditor have some means of obviating this precarious nature of his rights
by detaining the ship, his only security, before it is lost.
The liens, tacit or legal, which may exist upon the vessel and which a
purchaser of the same would be obliged to respect and recognize in
addition to those existing in favor of the State by virtue of the privileges
which are granted to it by all the laws pilot, tonnage, and port dues and
other similar charges, the wages of the crew earned during the last voyage
as provided in article 646, of the Code of Commerce, salvage dues under
article 842, the indemnification due to the captain of the vessel in case his
contract is terminated on account of the voluntary sale of the ship and the
insolvency of the owner as provided in article 608, and other liabilities
arising from collisions under article 837 and 838. (Madariaga, pp. 60-62,
63, 85.)
We accordingly hold that the defendant is liable for the indemnification to
which the plaintiff is entitled by reason of the collision, but he is not required
to pay such indemnification of the reason that the obligation thus incurred
has been extinguished on account of the loss of the thing bound for the
payment thereof, and in this respect the judgment of the court below is
affirmed except in so far as it requires the plaintiff to pay the costs of this
action, which is not exactly proper. After the expiration of twenty days let
judgment be entered in accordance herewith and ten days thereafter the
record be remanded to the Court of First Instance for execution. So
ordered.

CHUA YEK v IAC

Facts:
RespondentisownerofM/VLuzviminda,acommoncarrierengagedincoastwise
trade
fromthedifferentportsofOrientalMindorotothePortofManila.InOctober
1977,petitioner
loaded1,000sacksofcopra,valuedatP101,227.40onboardM/VLuzvimindafor
shipmentto
Manila.Saidcargo,however,didnotreachManilabecausethevesselcapsized
andsankwithall
itscargo.
Petitionertheninstitutedacomplaintfordamagesonbreachofcontractofcarriage
againstprivaterespondent.Thetrialcourtrenderedadecisioninfavourofthe
petitioners.On
appeal,theappellatecourtruledinfavouroftherespondentsapplyingarticle587
oftheCodeof
Commerce.
Unsuccessfulinhismotionforreconsideration,petitionerfiledthispetition.
Issue:
Whetherornottherespondentcourterredinapplyingthedoctrineoflimited
liability
underArticle587oftheCodeofCommerce
Held:
Article587oftheCodeofCommerceprovides:Theshipagentsshallbecivilly
liablefor
theindemnitiesinfavourofthirdpersonswhichmayarisefromtheconductofthe
captaininthe
careofthegoodswhichheloadedonthevessel;buthemayexempthimself
therefromby
abandoningthevesselwithalltheequipmentandthefreightitmayhaveearned
duringthe
voyage.
Saidarticleisthesourceofthedoctrineoflimitedliability,whichgivestheship
agents

orownersrightofabandonmentofthevesselandearnedfreightandsuch
abandonment
providesthecessationoftheresponsibilityoftheshipagent/owner.Inother
words,theship
agent/ownersliabilityismerelycoextensivewithhisinterestinthevesselthata
totalloss
thereofresultsinitsextinction,novessel,noliability.
Thelimitedliabilityrule,howeverprovidesforexceptions:(1)wheretheinjuryor
death
toapassengerisdueeithertothefaultoftheshipowner,ortotheconcurring
negligenceofthe
shipownerandthecaptain(2)wherethevesselisinsured;and(3)inworkmen's
compensation
claims.Inthiscase,thereisnothingintherecordstoshowthatthelossofthe
cargowasdueto
thefaultoftheprivaterespondentasshipowners,ortotheirconcurrentnegligence
withthe
captainofthevesselandtherewasnoshowingthatthevesselwasinsured.
Also,theprovisionsoftheCivilCodeoncommoncarriersdonotapplyinthiscase
since
thecircumstancesofthecasearenotwithinthosethatcanberegulatedbysuch
provisionssothe
CodeofCommerceandotherspeciallawsshallapply.
Insum,itisheldthattherespondentsarefreedfromtheirliabilitiesapplyingthe
limited
liabilityruleforhavingtotallylostthevesselandnoneoftheexceptionsapplyto
them,the
liabilityforthelossofthecargoofthecopramustbedeemedextinguished
YANGCOvLASERNA
Facts: At about one o'clock in the afternoon of May 26, 1927, the steamer
S.S. Negros, belonging to petitioner here, Teodoro R. Yangco, left the port
of Romblon on its return trip to Manila. Typhoon signal No. 2 was then up,
of which fact the captain was duly advised and his attention thereto called
by the passengers themselves before the vessel set sail. The boat was
overloaded as indicated by the load line which was 6 to 7 inches below the
surface of the water. The passengers, numbering about 180, were
overcrowded, the vessel's capacity being limited to only 123 passengers.

As the sea became increasingly violent, the captain ordered the vessel to
turn left, evidently to return to port, but in the maneuver, the vessel was
caught sidewise by a big wave which caused it to capsize and sink. Many
of the passengers died in the mishap. Separate civil actionswere filed
against petitioner to recover damages for the death of the passengers.
Issue: May the shipowner or agent, notwithstanding the total loss of the
vessel as a result of the negligence of its captain, be properly held liable in
damages for the consequent death of its passengers?
Held: No. This question is controlled by the provisions of article 587 of the
Code of Commerce. Said article reads:
The agent shall also be civilly liable 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 he may exempt himself therefrom by
abandoning the vessel with all her equipments and the freight he may have
earned during the voyage.
The provisions 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 abandon "the vessel with all her equipment and the
freight it may have earned during the voyage."
Lawful acts and obligations of the captain beneficial to the vessel may be
enforced as against the agent for the reason that such obligations arise
from the contract of agency while as to any liability incurred by the captain
through his unlawful acts, the ship agent is simply subsidiarily civilly liable.
This liability of the agent is limited to the vessel and it does not extend
further. For this reason the Code of Commerce makes the agent liable to
the extent of the value of the vessel, as the codes of the principal maritime
nations provide with the vessel, and not individually.
If the shipowner or agent may in any way be held civilly liable at all for
injury to or death of passengers arising from the negligence of the captain
in cases of collisions or shipwrecks, his liability is merely co-extensive with
his interest in the vessel such that a total loss thereof results in its
extinction.
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 case it does not appear that the vessel was insured. 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, any act of abandonment would be an idle ceremony.
OHTA v STEAMSHIP POMPEY
From the year 1913, plaintiff was the owner of a pier situated in Talomo
Bay, Davao. On the western side of his pier were to groups of posts, three
to a group, about 20 feet apart and about 2 feet from the pier itself, which
served as a protection to the pier against the impact of vessels. Between
1921 and 1922, this pier was repaired, replacing such material as was not
in good condition, and driving about 150 piles of pagatpat and 60 of
molave. According to the witness Sixto Babao, the officer in charge of the
forest station of that province, pagatpat, when placed in salt water, last from
five to six years.
At about 7 o'clock in the morning of July 23, the steamship Pompey, in
command of Captain Alfredo Galvez and possessing a certificate of public
convenience issued by the Commissioner of Public Utility in he name of
"The National Coal Company," carrying cargo consisting principally of flour
and rice for the plaintiff, docked alongside the said pier. The ship docked
with her bow facing towards the land and fastened her ropes to the posts
on the pier. The evidence shows that, previously, other ships docking
alongside the said pier had the bow facing towards the land and fastened a
rope to a tree situated farther west on the beach a precaution taken to
avoid the ship from getting too close to the pier. When the Pompey docked,
at the time in question, she did not stretch a rope to the tree on the shore,
neither did she drop her bow anchors. After being thus docked they
proceeded to unload the flour and rice which was first deposited on the pier
and later transported to the plaintiff's warehouse on land, where it was
officially receipted for. The work of discharging and the hauling of the cargo
to the warehouse of the plaintiff was done without any inference on the part
of the plaintiff and exclusively by laborers and the crew of the ship. The
unloading of the cargo on to the pier was done in hurry and their being but
fifteen or twenty laborers engaged in the hauling of the same to the
plaintiff's warehouse, a large amount of cargo accumulated on the dock,
with the result that at ten minutes past eleven on the same morning the pier
sank with all the merchandise.

It appears that at the time the pier sank there was a current from west to
east. As to this point the evidence in the record is conflicting but, after
studying it, we believe there actually was a current at that time. According
to Captain Calvo, and judging by the condition of the sea as appears from
one of the photographs presented in evidence, there was a strong
undercurrent. The flour which floated after the sinking of the dock drifted
from west to east. The pier, when it sank, leaned towards the east, as well
as the posts, which did not collapse completely. After the sinking of the pier
the two groups of piles that served as a defense also leaned towards the
east, going beyond the western line formerly occupied by the pier; and the
hull of the ship came to a stop at a point beyond where the piles of defense
formerly stood, as will be noticed from the photograph, Exhibit B, taken
after the accident, and in which a man may be seen standing on the edge
of the sunken pier supporting himself on the hull of the ship. In view of all of
these circumstances it is evident that the current forced the ship towards
the pier, the impact of which caused it to sink.
The sinking could have not been caused, as the defense contends, by the
weight of the cargo and by the poor condition of the dock, because
according to the evidence it had been recently repaired and, further, that
the dock did not fall from its base but leaned towards the east, as did also
the posts and defense piles which facts indicate that the dock received the
impact of the ship from west to east. In support of its contention of the
defense presented, as its principal evidence, the testimony of Captain
Razon, who served as first mate of the Pompey on that trip, but we cannot
give much weight to the testimony of this witness. He affirmed that the
defense piles fell without coming in contact with the ship, which is
inconceivable since the piles were not attached to the pier but were 2 feet
away from it, so that it cannot be understood how the sinking of the dock
could have affected the defense piles. The subsequent contact of the ship
with the pier, as shown in the photographs presented as evidence, was
explained by this witness who states that, the vessel being tied to the posts
of the pier when the latter sank the ship was carried along on account of
the ropes; but neither can this explanation be accepted because the posts
to which the ropes were tied, except one, did not sink but only inclined.
Furthermore, the inclination of these posts, which did not fall, does not
explain the shifting of the ship of the space formerly occupied by the dock,
taking into account that, according to his testimony, the ship docked about
8 feet away from the pier and the inclination of the posts barely represents
a distance of 1 foot from the base. Finally, this witness testified that after

the ship had docked he noticed that the pier was in a rotten condition
notwithstanding which, and realizing the danger of unloading, he did not
take any precaution and proceeded to discharge the cargo, for the reason
that he considered it a matter for the owners of the pier and not for him to
take the necessary precautions.
Our conclusion is that the dock on account of the impact of the ship as a
result of the strong current at the time; that the ship was not fastened with
the rope to a tree on shore and that the bow anchors had not been
dropped.
Appellants challenged the personality of the plaintiff as a duly organized
corporation. But besides the fact that there is evidence of this personality,
appellants cannot challenge it after having acknowledged same when
entering into the contract with the plaintiff as such corporation for the
transportation of its merchandise.
Appellants urge that, according to the bills of lading of the lost
merchandise, the defendant National Coal Company's liability ceased when
the said merchandise was unloaded and placed on the dock. This
contention is without merit. There is nothing in the bills of lading to uphold
it. Article 619 of the Code of Commerce provides that the captain shall be
answerable for the cargo from the 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.)
Appellants also contend that, at any rate, the liability of the other defendant
is subsidiary and limited to what the steamship Pompey may answer for.
This argument 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 in order to answer for his
liability to third persons. 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 that is not the case here.
There may be other phases of the case which we have not decided
because they have been raised in the briefs. What we have said decides all
the errors assigned by the appellants.
The judgment appealed from is affirmed with costs against the appellants.
So ordered.

ABOITIZ V GENERAL FIRE AND LIFE ASSURANCE

Aboitiz Shipping is the owner of M/V P. Aboitiz, a vessel w/c sank on a

voyage from Hongkong to the Philippines. This
sinking of the vessel gave rise to the filing of several suits for recovery of
the lost cargo either by the shippers their
successors-in-interest, or the cargo insurers like General Accident
(GAFLAC).
Board of Marine Inquiry (BMI), on its initial investigation found that such
sinking was due to
force majeure
and that subject
vessel, at the time of the sinking was seaworthy. The trial court rules
against the carrier on the ground that the loss did
not occur as a result of
force majeure
. This was affirmed by the CA and ordered the immediate execution of the
full
judgment award.
However, other cases have resulted in the finding that vessel was
seaworthy at the time of the sinking, and that such
sinking was due to
force majeure
.
Due to these different rulings, Aboitiz seeks a pronouncement as to the
applicability of the doctrine of limited liability on
the totality of the claims

vis a vis
the losses brought about by the sinking of the vessel M/V P. ABOITIZ, as
based on the
real and hypothecary nature of maritime law.
Aboitiz argued that the Limited Liability Rule warrants immediate stay of
execution of judgment to prevent impairment of
other creditors' shares.
ISSUE: Whether the Limited Liability Rule arising out of the real and
hypothecary nature of maritime law should apply in
this and related cases.
RULING: The SC ruled in the affirmative.
The real and hypothecary nature of maritime law simply means that the
liability of the carrier in connection with losses
related to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the
guaranty for their settlement. 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. It was designed to offset such adverse
conditions and to encourage people and
entities to venture into maritime commerce despite the risks and the
prohibitive cost of shipbuilding. Thus, the liability of
the vessel owner and agent arising from the operation of such vessel were
confined to the vessel itself, its equipment,
freight, and insurance, if any, which limitation served to induce capitalists
into effectively wagering their resources against
the consideration of the large profits attainable in the trade.
The Limited Liability Rule in the Philippines is taken up in Book III of the
Code of Commerce, particularly in Articles 587,
590, and 837, hereunder quoted
in toto
:
Art. 587. The ship agent shall also be civilly liable for the 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 the vessel; but he may
exempt himself therefrom by abandoning the vessel with all her equipment
and the freight it may have
earned during the voyage.

Art. 590. The co-owners of a vessel shall be civilly liable in the proportion
of their interests in the common
fund for the results of the acts of the captain referred to in Art. 587.
Each co-owner may exempt himself from this liability by the abandonment,
before a notary, of the part of
the vessel belonging to him.
Art. 837. The civil liability incurred by shipowners in the case prescribed in
this section (on collisions),
shall be understood as
limited to the value of the vessel with all its appurtenances and freightage
served
during the voyage
.
The
only
time the Limited Liability Rule
does not apply
is when there is an actual finding of negligence on the part of the
vessel owner or agent.
ISSUE 2: Whether there is a finding of such negligence on the part of the
owner in this case.
RULING 2: The SC ruled in the negative.
In its Decision, the trial court merely held that:
. . . Considering the foregoing reasons, the Court holds that the vessel M/V
"Aboitiz" and its cargo were
not lost due to fortuitous event or force majeure.
Decisions in other cases affirmed the factual findings of the trial court,
adding that the cause of the sinking of the vessel
was because of unseaworthiness due to the failure of the crew and the
master to exercise extraordinary diligence. Indeed,
there appears to have been no evidence presented sufficient to form a
conclusion that Aboitiz the shipowner itself was
negligent, and no tribunal, including this Court will add or subtract to such
evidence to justify a conclusion to the contrary.
The findings of the trial court and the Court of Appeals, whose finding of
"unseaworthiness" clearly
did not pertain to the
structural condition of the vessel which is the basis of the BMI's findings,
but to the condition it was in at the time of the
sinking, which condition was a result of the acts of the captain and the crew

.
The rights of a vessel owner or agent under the Limited Liability Rule are
akin to those of the rights of shareholders to
limited liability under our corporation law. Both are privileges granted by
statute, and while not absolute, must be swept
aside only in the established existence of the most compelling of reasons.
In the absence of such reasons, this Court
chooses to exercise prudence and shall not sweep such rights aside on
mere whim or surmise, for even in the existence
of cause to do so, such incursion is definitely punitive in nature and must
never be taken lightly.
More to the point, the rights of parties to claim against an agent or owner of
a vessel may be compared to those of
creditors against an insolvent corporation whose assets are not enough to
satisfy the totality of claims as against it. While
each individual creditor may, and in fact shall, be allowed to prove the
actual amounts of their respective claims, this does
not mean that they shall all be allowed to recover fully thus favoring those
who filed and proved their claims sooner to the
prejudice of those who come later. In such an instance, such creditors too
would not also be able to gain access to the
assets of the individual shareholders, but must limit their recovery to what
is left in the name of the corporation.
In both insolvency of a corporation and the sinking of a vessel, the
claimants or creditors are limited in their recovery to
the remaining value of accessible assets. In the case of an insolvent
corporation, these are the residual assets of the
corporation left over from its operations. In the case of a lost vessel, these
are the insurance proceeds and pending
freightage for the particular voyage.
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. No claimant can be given
precedence over the others by the simple expedience of having filed or
completed its action earlier than the rest. Thus,
execution of judgment in earlier completed cases, even those already final
and executory, must be stayed pending
completion of all cases occasioned by the subject sinking. Then and only
then can all such claims be simultaneously

settled, either completely or pro-rata should the insurance proceeds and

freightage be not enough to satisfy all claims.