HONORIO M. BARRIOS vs. CARLOS A.

GO THONG & COMPANY

G.R. No. L-17192. March 30, 1963

FACTS:

The plaintiff Honorio M. Barrios, captain and/or master of the MV Henry I of the William Lines Incorporated,
received or otherwise intercepted an S.O.S. distress signal by blinkers from the MV Alfredo, owned and/or
operated by the defendant Carlos A. Go Thong & Company. Barrios headed towards the beckoning MV Don
Alfredo, which was in trouble due to engine failure and the loss of its propeller. The MV Henry, under the
command of the plaintiff, succeeded in getting near the MV Don Alfredo, and with the consent and knowledge
of the captain and/or master of the MV Don Alfredo, the plaintiff caused the latter vessel to be well-secured and
connected with tow lines from the MV Henry I. MV Lux, a sister ship of the MV Don Alfredo, was sighted
heading towards the direction of the aforesaid two vessels. At the request and instance of the captain and/or
master of the MV Don Alfredo, Barrios caused the tow lines to be released.

Plaintiff concludes that they establish an impending sea peril from which salvage of a ship worth more than
P100 000.00, plus life and cargo was done. On the other hand, the defendant insists that what merely
happened was only towage from which plaintiff cannot claim any compensation or remuneration independently
of the shipping company that owned the vessel commanded by him.

The CFI of Manila dismissed the case. Plaintiff interposed an appeal.

ISSUE:

Whether or not the service rendered by plaintiff to defendant constituted salvage.

HELD:

NO. The Court held that the service rendered by plaintiff to defendant did not constitute salvage but towage,
affirming the decision of the CFI of Manila.

Plaintiff based his claim upon the Salvage Law (Act No. 2616) providing that a ship which is lost or abandoned
at sea is considered a derelict and, therefore, proper subject of salvage. A ship in a desperate condition, where
persons on board are incapable, by reason of their mental and physical condition, of doing anything for their
own safety, is a quasi-derelict and may, likewise, be the proper subject of salvage.

The MV Don Alfredo was not a lost ship, nor was it abandoned. There was no danger that defendant's vessel
would sink in view of the smoothness of the sea and the fairness of the weather. That there was absence of
danger is shown by the fact that said vessel or its crew did not even nd it necessary to lower its launch and
two motor boats, in order to evacuate its passengers aboard. Neither did they nd occasion to jettison the
vessel's cargo as a safety measure. Neither the passengers nor the cargo were in danger of perishing. All that
the vessel's crew members could not do was to move the vessel on its own power. That did not make the
vessel a quasi-derelict, considering that even before the appellant extended the help to the distress ship, a
sister vessel was known to be on its way to succor it. Hence, it was not the proper subject of salvage.

According to the Salvage Law, those who assist in saving a vessel or its cargo from shipwreck, shall be entitled
to a reward (salvage). Salvage has been dened as the compensation allowed to persons by whose
assistance a ship or her cargo has been saved, in whole or in part, from impending peril on the sea, or in
recovering such property from actual loss, as in case of shipwreck, derelict, or recapture. Three elements are
necessary to a valid salvage claim, namely, (1) a marine peril, (2) service voluntarily rendered when not
required as an existing duty or from a special contract, and (3) success in whole or in part, or that the service
rendered contributed to such success. In this case, there was no marine peril.

However, it can be considered as a quasi-contract of towage created in the spirit of the new Civil Code for in
consenting to plaintiff's offer to tow the vessel, defendant impliedly entered into a juridical relation of towage
with the owner of the vessel MV Henry I. Only the owner of the towing vessel, to the exclusion of the crew of
the said vessel, may be entitled to remuneration.

William Lines, Incorporated, had expressly waived its claim for compensation for the towage service rendered
to defendant, it is clear that plaintiff, whose right if at all depends upon and not separate from the interest of his
employer, is not entitled to payment for such towage service.

COASTWISE LIGHTERAGE CORPORATION vs COURT OF APPEALS and the PHILIPPINE GENERAL INSURANCE
COMPANY

This is a petition for review of a Decision rendered by the Court of Appeals affirming the Regional Trial Court in
holding that herein petitioner is liable to pay herein private respondent the amount of P700,000.00, plus legal
interest thereon, another sum of P100,000.00 as attorney's fees and the cost of the suit.

FACTS:
Pag-asa Sales, Inc. entered into a contract to transport molasses from the province of Negros to Manila with
Coastwise Lighterage Corporation (Coastwise), using the latter's dumb barges. The barges were towed in tandem
by the tugboat MT Marica, which is likewise owned by Coastwise.

Upon reaching Manila Bay, while approaching Pier 18, one of the barges, struck an unknown sunken object. The
forward buoyancy compartment was damaged, and water gushed in through a hole. As a consequence, the
molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. This prompted the
consignee, Pag-asa Sales, Inc. to reject the shipment of molasses as a total loss. Thereafter, Pag-asa Sales, Inc. filed a
formal claim with the insurer of its lost cargo, herein private respondent, Philippine General Insurance Company
(PhilGen) and against the carrier, herein petitioner, Coastwise Lighterage. Coastwise Lighterage denied the claim
and it was PhilGen which paid the consignee, Pag-asa Sales, Inc., the amount of P700,000.00, representing the value
of the damaged cargo of molasses.

In turn, PhilGen then filed an action against Coastwise Lighterage seeking to recover the amount of P700,000.00
which it paid to Pag-asa Sales, Inc. for the latter's lost cargo. PhilGen now claims to be subrogated to all the
contractual rights and claims which the consignee may have against the carrier, which is presumed to have
violated the contract of carriage.

The RTC awarded the amount prayed for by PhilGen. On Coastwise Lighterage's appeal to the Court of Appeals, the
award was affirmed.

ISSUES:
Whether or not petitioner Coastwise Lighterage was transformed into a private carrier, by virtue of the contract of
affreightment which it entered into with the consignee, Pag-asa Sales, Inc. Corollarily, if it were in fact transformed
into a private carrier, did it exercise the ordinary diligence to which a private carrier is in turn bound?

RULING:
Accordingly, the charter party contract is one of affreightment over the whole vessel, rather than a demise. As
such, the liability of the shipowner for acts or negligence of its captain and crew, would remain in the absence of
stipulation

The distinction between the two kinds of charter parties (i.e. bareboat or demise and contract of affreightment) is
more clearly set out in the case of Puromines, Inc. vs. Court of Appeals

Under the demise or bareboat charter of the vessel, the charterer will generally be regarded as the owner for the
voyage or service stipulated. The charterer mans the vessel with his own people and becomes the owner pro hac
vice, subject to liability to others for damages caused by negligence. To create a demise, the owner of a vessel must
completely and exclusively relinquish possession, command and navigation thereof to the charterer, anything short
of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all.
On the other hand a contract of affreightment is one in which the owner of the vessel leases part or all of its space
to haul goods for others. It is a contract for special service to be rendered by the owner of the vessel and under
such contract the general owner retains the possession, command and navigation of the ship, the charterer or
freighter merely having use of the space in the vessel in return for his payment of the charter hire. An owner who
retains possession of the ship though the hold is the property of the charterer, remains liable as carrier and must
answer for any breach of duty as to the care, loading and unloading of the cargo. . . .
Although a charter party may transform a common carrier into a private one, the same however is not true in a
contract of affreightment on account of the aforementioned distinctions between the two.
Petitioner admits that the contract it entered into with the consignee was one of affreightment. Pag-asa Sales, Inc.
only leased three of petitioner's vessels, in order to carry cargo from one point to another, but the possession,
command and navigation of the vessels remained with petitioner Coastwise Lighterage.
Pursuant therefore to the ruling in the aforecited Puromines case, Coastwise Lighterage, by the contract of
affreightment, was not converted into a private carrier, but remained a common carrier and was still liable as such.

The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to
a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima
facie case against the carrier.

It follows then that the presumption of negligence that attaches to common carriers, once the goods it transports
are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of
the exercise of extraordinary diligence, remained unrebutted in this case.

The records show that the damage to the barge which carried the cargo of molasses was caused by its hitting an
unknown sunken object as it was heading for Pier 18. The object turned out to be a submerged derelict vessel.

Petitioner contends that this navigational hazard was the efficient cause of the accident. Further it asserts that the
fact that the Philippine Coastguard "has not exerted any effort to prepare a chart to indicate the location of sunken
derelicts within Manila North Harbor to avoid navigational accidents" effectively contributed to the happening of
this mishap. Thus, being unaware of the hidden danger that lies in its path, it became impossible for the petitioner
to avoid the same. Nothing could have prevented the event, making it beyond the pale of even the exercise of
extraordinary diligence.

However, petitioner's assertion is belied by the evidence on record where it appeared that far from having
rendered service with the greatest skill and utmost foresight, and being free from fault, the carrier was culpably
remiss in the observance of its duties.

Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. The Code of
Commerce, which subsidiarily governs common carriers (which are primarily governed by the provisions of the
Civil Code) provides:

Art. 609. Captains, masters, or patrons of vessels must be Filipinos, have legal capacity to contract in
accordance with this code, and prove the skill capacity and qualifications necessary to command and direct
the vessel, as established by marine and navigation laws, ordinances or regulations, and must not be
disqualified according to the same for the discharge of the duties of the position. . . .

Clearly, petitioner Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates this rule. It
cannot safely claim to have exercised extraordinary diligence, by placing a person whose navigational skills are
questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a
person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual
and safe routes taken by seasoned and legally authorized ones. Had the patron been licensed, he could be
presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken
derelict ship that lay on their way to Pier 18.
As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the
presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of
extraordinary diligence.

WHEREFORE, premises considered, this petition is DENIED and the appealed decision is likewise AFFIRMED

Caltex [Philippines], Inc. vs. Sulpicio Lines, Inc.

Facts:

On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex, collided in the open sea with passenger ship
MV Doa Paz, causing the death of all but 25 of the latters passengers. Among those who died were Sebastian Canezal and his daughter
Corazon Canezal. On March 22, 1988, the board of marine inquiry found that Vector Shipping Corporation was at fault. On February 13,
1989, Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife and mother respectively, filed with the Regional Trial Court of
Manila a complaint for damages arising from breach of contract of carriage against Sulpicio Lines. Sulpicio filed a third-party complaint
against Vector and Caltex. The trial court dismissed the complaint against Caltex, but the Court of Appeals included the same in the
liability. Hence, Caltex filed this petition.

Issue:

Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel and a passenger ship?

Held:

First: The charterer has no liability for damages under Philippine Maritime laws.

Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter.

A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified
time or use; a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or part of her to a merchant or
other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. A contract of affreightment
may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the
ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period
of time or for a single or consecutive voyage, the ship owner to supply the ships store, pay for the wages of the master of the crew, and
defray the expenses for the maintenance of the ship. If the charter is a contract of affreightment, which leaves the general owner in
possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free
from liability to third persons in respect of the ship.

Second: MT Vector is a common carrier

The charter party agreement did not convert the common carrier into a private carrier. The parties entered into a voyage charter, which
retains the character of the vessel as a common carrier. It is imperative that a public carrier shall remain as such, notwithstanding the
charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a
time-charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a
common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a ship-
owner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of
the charterer. A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who
may choose to employ and to remunerate him. 16 MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code.

The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers,
especially because with the modern development of science and invention, transportation has become more rapid, more complicated
and somehow more hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of
the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness.

Third: Is Caltex liable for damages under the Civil Code?

The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all legal
requirements. The duty rests upon the common carrier simply for being engaged in "public service." The relationship between the
parties in this case is governed by special laws. Because of the implied warranty of seaworthiness, shippers of goods, when transacting
with common carriers, are not expected to inquire into the vessels seaworthiness, genuineness of its licenses and compliance with all
maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of our maritime
laws insofar as the protection of the public in general is concerned. Such a practice would be an absurdity in a business where time is
always of the essence. Considering the nature of transportation business, passengers and shippers alike customarily presume that
common carriers possess all the legal requisites in its operation.

MAGELLAN MANUFACTURING MARKETING CORPORATION

vs. CA, ORIENT OVERSEAS CONTAINER LINES and F.E. ZUELLIG, INC.
G.R. No. 95529
August 22, 1991

Doctrine:

The holding in most jurisdictions has been that a shipper who receives a bill of lading without objection after an opportunity to inspect it, and
permits the carrier to act on it by proceeding with the shipment is presumed to have accepted it as correctly stating the contract and to have
assented to its terms

Facts:

Plaintiff-appellant Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract with Choju Co. of Yokohama, Japan, on May 20, 1980,
to export 136,000 anahaw fans for and in consideration of $23,220.00. A letter of credit was issued to plaintiff MMMC by the buyer as payment.
James Cu, the president of MMMC then contracted F.E. Zuellig, a shipping agent, through its solicitor, one Mr. King, to ship the anahaw fans
through the other appellee, Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an on-board bill of lading and that
transhipment is not allowed under the letter of credit. Appellant MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of lading
which was presented to Allied Bank on June 30, 1980. The bank then credited the amount of US$23,220.00 covered by the letter of credit to
appellant's account.

When appellant's president James Cu, went back to the bank later, he was informed that the payment was refused by the buyer because there was
no on-board bill of lading, and there was a transhipment of goods. The anahaw fans were shipped back to Manila by appellees, for which the latter
demanded from appellant payment of P246,043.43 as a result of the refusal of the buyer to accept, and upon appellants request. Appellant
abandoned the whole cargo and asked appellees for damages.

The petitioner filed the complaint praying that private respondents be ordered to pay whatever petitioner was not able to earn from Choju Co., Ltd.
The lower court decided the case in favor of private respondents. It dismissed the complaint on the ground that petitioner had given its consent to
the contents of the bill of lading where it is clearly indicated that there will be transshipment. On appeal to the respondent court, the finding of the
lower (court) that petitioner agreed to a transhipment of the goods was affirmed.

Issues:

1. Whether or not there was transshipment YES

2. Whether or not the bill of lading which reflected the transshipment against the letter of credit is consented by MMMC YES

Ratio:

1.Transhipment, in maritime law, is defined as "the act of taking cargo out of one ship and loading it in another," or "the transfer of goods
from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been
reached," or "the transfer for further transportation from one ship or conveyance to another." Clearly, either in its ordinary or its strictly
legal acceptation, there is transhipment whether or not the same person, firm or entity owns the vessels. In other words, the fact of
transhipment is not dependent upon the ownership of the transporting ships or conveyances or in the change of carriers, as the petitioner
seems to suggest, but rather on the fact of actual physical transfer of cargo from one vessel to another.

It appears on the face of the bill of lading the entry "Hong Kong" in the blank space labeled "Transhipment," which can only mean that
transhipment actually took place. This fact is further bolstered by the certification issued by private respondent F.E. Zuellig, Inc. dated July
19, 1980, although it carefully used the term "transfer" instead of transhipment. No amount of semantic juggling can mask the fact that
transhipment in truth occurred in this case.
2. It is a long standing jurisprudential rule that a bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and a
contract to transport and deliver the same as therein stipulated.

As a contract, it names the parties, which includes the consignee, fixes the route, destination, and freight rates or charges, and stipulates the rights
and obligations assumed by the parties. Being a contract, it is the law between the parties who are bound by its terms and conditions provided that
these are not contrary to law, morals, good customs, public order and public policy. A bill of lading usually becomes effective upon its delivery to
and acceptance by the shipper. It is presumed that the stipulations of the bill were, in the absence of fraud, concealment or improper conduct,
known to the shipper, and he is generally bound by his acceptance whether he reads the bill or not.

The petitioner had full knowledge of, and actually consented to, the terms and conditions of the bill of lading thereby making the same
conclusive as to it, and it cannot now be heard to deny having assented thereto. Based from the records, James Cu himself, in his capacity as
president of MMMC, personally received and signed the bill of lading. There is no better way to signify consent than by voluntary signing the
document which embodies the agreement.

An on board bill of lading is one in which it is stated that the goods have been received on board the vessel which is to carry the
goods, whereas a received for shipment bill of lading is one in which it is stated that the goods have been received for shipment with
or without specifying the vessel by which the goods are to be shipped. Received for shipment bills of lading are issued whenever
conditions are not normal and there is insufficiency of shipping space.

An on board bill of lading is issued when the goods have been actually placed aboard the ship with every reasonable expectation
that the shipment is as good as on its way. It is, therefore, understandable that a party to a maritime contract would require an on
board bill of lading because of its apparent guaranty of certainty of shipping as well as the seaworthiness of the vessel which is to
carry the goods.

The certification of F.E. Zuellig, Inc. can qualify the bill of lading, as originally issued, into an on board bill of lading as required by the terms of the
letter of credit issued in favor of petitioner. The certification was issued only on July 19, 1980, way beyond the expiry date of June 30, 1980
specified in the letter of credit for the presentation of an on board bill of lading. Thus, even assuming that by a liberal treatment of the certification
it could have the effect of converting the received for shipment bill of lading into an on board of bill of lading, as petitioner would have us believe,
such an effect may be achieved only as of the date of its issuance, that is, on July 19, 1980 and onwards.

The fact remains, though, that on the crucial date of June 30, 1980 no on board bill of lading was presented by petitioner in compliance with the
terms of the letter of credit and this default consequently negates its entitlement to the proceeds thereof. Said certification, if allowed to operate
retroactively, would render illusory the guaranty afforded by an on board bill of lading, that is, reasonable certainty of shipping the loaded cargo
aboard the vessel specified, not to mention that it would indubitably be stretching the concept of substantial compliance too far.