G.R. No.
L-773 December 17, 1946 Appellant, who was the owner of the motor ships San Diego II and
DIONISIA ABUEG, ET AL., plaintiffs-appellees,
vs.
BARTOLOME SAN DIEGO, defendant-appellant.
----------------------------
CA-No. L-774 December 17, 1946
MARCIANA DE SALVACION, ET AL., plaintiffs-appellees,
vs.
BARTOLOME SAN DIEGO, defendant-appellant.
----------------------------
CA-No. L-775 December 17, 1946
ROSARIO OCHING, ET AL., plaintiffs-appellees,
vs.
BARTOLOME SAN DIEGO, defendant-appellant.
Lichauco, Picazo and Mejia for appellant.
Cecilio I. Lim and Roberto P. Ancog for appellees.
PADILLA, J.:
This is appeal from a judgment rendered by the Court of First Instance of
Manila in the above-entitled cases awarding plaintiffs the compensation
provided for in the Workmen's Compensation Act.
The record of the cases was forwarded to the Court of Appeals for
review, but as there was no question of fact involved in the appeal, said
court forwarded the record to this Court. The appeal was pending when
the Pacific War broke up, and continued pending until after liberation,
because the record of the cases was destroyed as a result of the battle
waged by the forces of liberation against the enemy. As provided by law,
the record was reconstituted and we now proceed to dispose of the
appeal.
Bartolome S, states in his brief the following:
There is no dispute as to the facts involved in these cases and they may
be gathered from the pleadings and the decision of the trial Court. In
case CA-G.R. No. 773, Dionisia Abueg is the widow of the deceased,
Amado Nuñez, who was a machinist on board the M/S San Diego II
belonging to the defendant-appellant. In case CA-G.R. No. 774, plaintiff-
appellee, Marciana S. de Salvacion, is the widow of the deceased,
Victoriano Salvacion, who was a machinist on board the M/S Bartolome
S also belonging to the defendant-appellant. In case CA-G.R. No. 775, the
plaintiff-appellee, Rosario R. Oching is the widow of Francisco Oching
who was a captain or patron of the defendant-appellant's M/S
Bartolome S.
The M/S San Diego II and the M/S Bartolome, while engaged in fishing
operations around Mindoro Island on Oct. 1, 1941 were caught by a
typhoon as a consequence of which they were sunk and totally lost.
Amado Nuñez, Victoriano Salvacion and Francisco Oching while acting in
their capacities perished in the shipwreck (Appendix A, p. IV).
It is also undisputed that the above-named vessels were not covered by
any insurance. (Appendix A, p. IV.).
Counsel for the appellant cite article 587 of the Code of Commerce
which provides that if the vessel together with all her tackle and freight
money earned during the voyage are abandoned, the agent's liability to
third persons for tortious acts of the captain in the care of the goods
which the ship carried is extinguished (Yangco vs. Laserna, 73 Phil., 330);
article 837 of the same code which provides that in cases of collision, the
ship owners' liability is limited to the value of the vessel with all her
equipment and freight earned during the voyage (Philippine Shipping
company vs. Garcia, 6 Phil., 281), and article 643 of the same Code which
provides that if the vessel and freight are totally lost, the agent's liability
for wages of the crew is extinguished. From these premises counsel draw
the conclusion that appellant's liability, as owner of the two motor ships
lost or sunk as a result of the typhoon that lashed the island of Mindoro
on October 1, 1941, was extinguished.
The real and hypothecary nature of the liability of the shipowner or
agent embodied in the provisions of the Maritime Law, Book III, Code of
Commerce, had its origin in the prevailing continues of the maritime
trade and sea voyages during the medieval ages, attended by
innumerable hazards and perils. To offset against these adverse
conditions and encourage shipbuilding and maritime commerce, it was
deemed necessary to confine the liability of the owner or agent arising
from the operation of a ship to the vessel, equipment, and freight, or
insurance, if any, so that if the shipowner or agent abandoned the ship,
equipment, and freight, his liability was extinguished.
But the provisions of the Code of Commerce invoked by appellant have
no room in the application of the Workmen's Compensation Act which
seeks to improve, and aims at the amelioration of, the condition of
laborers and employees. It is not the liability for the damage or loss of
the cargo or injury to, or death of, a passenger by or through the
misconduct of the captain or master of the ship; nor the liability for the
loss of the ship as result of collision; nor the responsibility for wages of
the crew, but a liability created by a statute to compensate employees
and laborers in cases of injury received by or inflicted upon them, while
engaged in the performance of their work or employment, or the heirs
and dependents and laborers and employees in the event of death
caused by their employment. Such compensation has nothing to do with
the provisions of the Code of Commerce regarding maritime commerce.
It is an item in the cost of production which must be included in the
budget of any well-managed industry.lawphil.net
Appellant's assertion that in the case of Enciso vs. Dy-Liaco (57 Phil.,
446), and Murillo vs. Mendoza (66 Phil., 689), the question of the
extinction of the shipowner's liability due to abandonment of the ship by
him was not fully discussed, as in the case of Yangco vs. Laserma, supra,
is not entirely correct. In the last mentioned case, the limitation of the
shipowner's liability to the value of the ship, equipment, freight, and
insurance, if any, was the lis mota. In the case of Enciso vs. Dy-Liacco,
supra, the application of the Workmen's Compensation Act to a master
or patron who perished as a result of the sinking of the motorboat of
which he was the master, was the controversy submitted to the court for
decision. This Court held in that case that "It has been repeatedly stated
that the Workmen's Compensation Act was enacted to abrogate the
common law and our Civil Code upon culpable acts and omissions, and
that the employer need not be guilty of neglect or fault, in order that
responsibility may attach to him" (pp. 449-450); and that shipowner was
liable to pay compensation provided for in the Workmen's
Compensation Act, notwithstanding the fact that the motorboat was
totally lost. In the case of Murillo vs. Mendoza, supra, this Court held
that "The rights and responsibilities defined in said Act must be governed
by its own peculiar provisions in complete disregard of other similar
mercantile law. If an accident is compensable under the Workmen's
Compensation Act, it must be compensated even when the workman's
right is not recognized by or is in conflict with other provisions of the
Civil Code or the Code of Commerce. The reason behind this principle is
that the Workmen's Compensation Act was enacted by the Legislature in
abrogation of the other existing laws." This quoted part of the decision is
in answer to the contention that it was not the intention of the
Legislature to repeal articles 643 and 837 of the Code of Commerce with
the enactment of the Workmen's Compensation Act.
In the memorandum filed by counsel for the appellant, a new point not
relied upon in the court below is raised. They contend that the
motorboats engaged in fishing could not be deemed to be in the
coastwise and interisland trade, as contemplated in section 38 of the
Workmen's Compensation Act (No. 3428), as amended by Act no. 3812, Finding no merit in the appeal filed in these cases, we affirm the
inasmuch as, according to counsel, a craft engaged in the coastwise and judgment of the lower court, with costs against the appellant.
interisland trade is one that carries passengers and/or merchandise for
hire between ports and places in the Philippine Islands.lawphil.net

This new point raised by counsel for the appellant is inconsistent with
the first, for, if the motor ships in question, while engaged in fishing,
were to be considered as not engaged in interisland and coastwise trade,
the provisions of the Code of Commerce invoked by them regarding
limitation of the shipowner's liability or extinction thereof when the
shipowner abandons the ship, cannot be applied (Lopez vs. Duruelo, 52
Phil., 229). Granting however, that the motor ships run and operated by
the appellant were not engaged in the coastwise and interisland trade,
as contemplated in section 38 of the Workmen's Compensation Act, as
amended, still the deceased officers of the motor ships in question were
industrial employees within the purview of section 39, paragraph (d), as
amended, for industrial employment "includes all employment or work
at a trade, occupation or profession exercised by an employer for the
purpose of gain." The only exceptions recognized by the Act are
agriculture, charitable institutions and domestic service. Even employees
engaged in agriculture for the operation of mechanical implements, are
entitled to the benefits of the Workmen's Compensation Act (Francisco
vs. Consing, 63 Phil., 354). In Murillo vs. Mendoza, supra, this Court held
that "our Legislature has deemed it admissible to include in the
Workmen's Compensation Act all incidents that may occur to workmen
or employees in factories, shops and other industrial and agricultural
workplaces as well as in the interisland seas of the Archipelago." But we
do not believe that the term "coastwise and interisland trade" has such a
narrow meaning as to confine it to the carriage for hire of passengers
and/or merchandise on vessels between ports and places in the
Philippines, because while fishing is an industry, if the catch is brought to
a port for sale, it is at the same time a trade.
G.R. No. L-24658 March 31, 1926
OHTA DEVELOPMENT COMPANY, Plaintiff-Appellee, vs. STEAMSHIP
"POMPEY," ALFREDO GALVEZ and NATIONAL COAL COMPANY,
Defendants-Appellants.
Perfecto J. Salas Rodriguez for appellants.
Pablo Lorenzo for appellee.
AVANCE�A, C. J.: chanrobles virtual law library
The judgment appealed from sentences the defendants to pay the
plaintiff the sum of P8,557.06, as damages suffered by the latter by
reason of the destruction of its pier and the loss of its merchandise then
stored on said pier.chanroblesvirtualawlibrary chanrobles virtual law
library
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.chanroblesvirtualawlibrary
chanrobles virtual law library
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.chanroblesvirtualawlibrary chanrobles virtual law library
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.chanroblesvirtualawlibrary chanrobles virtual law
library
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.chanroblesvirtualawlibrary
chanrobles virtual law library
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.chanroblesvirtualawlibrary chanrobles virtual law library
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.chanroblesvirtualawlibrary chanrobles virtual law library
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.) chanrobles virtual law library
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.
G.R. No. L-17690 June 14, 1922
YU BIAO SONTUA & CO., plaintiff-appellee,
vs.
MIGUEL J. OSSORIO, defendant-appellant.
Antonio Sanz and Kincaid, Perkins and Kincaid for appellant.
M. H. de Joya for appellee.
ROMUALDEZ, J.:
On the evening of the 13th of March, 1920, a fire broke out on board the
motor boat Alfonso when this boat was in the Pasig River, city of Manila,
ready to weigh anchor. A short distance from the Alfonso the steamer Y.
Sontua was lying alongside moored to the wharf of said river.
The fire in the motor boat Alfonso spread to the steamer Y. Sontua,
causing damages to her deck, according to plaintiff, amounting to
P67,400.
The plaintiff, which is a regular partnership and the owner of the
steamer Y. Sontua, brought this action to recover from the defendant,
the owner and agent of said motor boat Alfonso, the aforementioned
sum as indemnity for the damages alleged by the plaintiff to have been
sustained by him through the negligence of the agents and employees of
the said defendant, which caused the fire in the aforesaid motor boat
Alfonso, wherefrom it spread, and caused said damages to the steamer
Y. Sontua. These damages are specified in the two causes of action set
forth in the complaint, in the first of which are mentioned the
appurtenances and parts of the aforesaid vessel that were destroyed and
damaged by the said fire, and for the repair of which the sum of P40,000
was expended. In the second cause of action it is alleged that the
plaintiff sustained damages to the amount of P27,400 for the demurrage
and delay in the ordinary voyages of the aforesaid vessel Y. Sontua. After
denying generally and specifically the allegations of the complaint, the
defendant alleges, as special defense, that he has taken no part either
directly or indirectly in the acts alleged in the complaint; that if the
plaintiff has sustained any damages, they are not the result of the act
said to have been committed by the agents and employees of the
defendant; and are not imputable to the negligence of the defendant, or
any of his agents, employees, or mandatories.
The case having been tried, the court sentenced the defendant to pay
the plaintiff the above-mentioned sum of P67,400, with legal interest
thereon from the date of the filing of the complaint, and the costs.
From the judgment the defendant appeals to this court assigning three
errors, to wit: (a) The finding that the explosion in question was due to
the negligence of the persons in charge of the motor boat Alfonso; (b)
the finding that the defendant is liable for the negligence of his agents
and employees; and (c) the awarding of an excessive sum as damages.
With regard to the first error, the following facts are proven: That during
the day and night of the 12th, and during the day of the 13th of March
1920, there were loaded in the said motor boat Alfonso 2,000 cases of
petroleum and 8,473 cases of gasoline, of which 5,000 cases of gasoline
and 2,000 of petroleum were placed in the hold of said motor boat, and
the balance on deck; that said loading was done without permission
from the customs authorities; that the said cases were loaded by means
of straps supporting 10 or 12 cases at a time; that the said cases of
gasoline and petroleum were placed in the hold about 14 feet from the
boiler of the main engine and about 4 feet from the boiler of the smaller
engine; that on the evening of the 13th of March, 1920, the smaller
engine was in operation preparatory to the departure of the motor boat
which, at that time, was getting ready to leave; that the fire in said
motor boat burst out with an explosion followed by a violent expulsion
of gasoline and petroleum; that owing to the proximity of the motor
boat to the steamer Y. Sontua, the magnitude of the fire and the
inflammability of the material that served as fuel, the fire spread to the
said steamer Y. Sontua, and so rapidly that it was impossible for the crew
of the Y. Sontua to check its progress,
Expert testimony was also introduced by the plaintiff to the effect that it
is but natural that, after several transhipments of more than 8,000 cases
of gasoline and 2,000 cases of petroleum there is bound to be a leakage,
on an average of 1 to 4 cases per hundred, due to the fact that the
loading is effected by means of straps supporting from 10 to 12 cases at
a time which, quite frequently, receive violent bumps resulting in
damage to the cans and the consequent leakage of either gasoline or
petroleum, as the case may be.
It was also shown by expert testimony that the gases formed by the
volatilization of the gasoline or petroleum leaking from the cases are apt
to accumulate in a compartment, such as the hold of a ship, without
sufficient ventilation causing the gases to ignite upon coming in contact
with a spark or upon the temperature being sufficiently raised.
Under these circumstances we are constrained to hold that the fire
which caused the damages for which the plaintiff seeks to be
indemnified was the inevitable effect of the explosion and fire which
occurred in the motor boat Alfonso; that this explosion and fire in the
said motor boat is, with good ground, imputable to the negligence of the
persons having charge at that time of said motor boat and under whose
direction the loading of the aforesaid cases of petroleum and gasoline
had been performed.
The trial court did not, therefore, commit the first error assigned by the
appellant.
In the second assignment of error, the appellant contends that the
defendant ought not to be held liable for the negligence of his agents
and employees.
It is proven that the agents and employees, through whose negligence
the explosion and fire in question occurred, were agents, employees,
and mandatories of the defendant. Where the vessel is one of freight, a
public concern or public utility, its owner or agent is liable for the
tortious acts of his agents (arts. 587, 613, and 618, Code of Commerce;
and arts. 1902, 1903, 1908, Civil Code). This principle has been
repeatedly upheld in various decisions of this court.
The doctrines cited by the appellant in support of his theory have
reference to the relations between principal and agent and his agents
and employees; for this reason they cannot be applied in the present
case.
In American law, principles similar to those in force in the Philippines and
contained in the Code of Commerce above cited, are prevailing:
Vessel owner's liability in general. — The general liability of a vessel
owner extends to losses by fire arising from other than a natural or other
excepted cause, whether occurring on the ship accidentally, or
communicated from another vessel, or from the shore; and the fact that
fire produces the motive power of a boat does not affect the case. Such
losses are not within the exceptions either of act of God, or peril of the
sea, except by local custom, unless proximately caused by one of these
events. In jurisdictions where the civil law obtains, however, it has been
held that if property on a steamboat is destroyed by fire, the owners of
the boat are not responsible, if it was being navigated with proper
diligence, although the accident occurred at night. The common law
liability extends even to loss by fires caused entirely by spontaneous
combustion of the cargo, without any negligence on the part of master
or crew. (R.C.L., vol. 24, pp. 1324-1325.)
With regard to the allegation that the obligations enumerated in article
612 of our Code of Commerce are inherent in the master such inherent
duties do not limit to the latter the civil liability arising from their
nonfulfillment, but while the master is responsible to the ship agent, the
ship agent, in turn, is responsible to third persons, as is clearly provided
in article 618 of said Code, in which express mention is made, is
subsections 5 and 7, of the duties enumerated in the said article 612.
Therefore there is also no ground for holding that the second error
assigned by the appellant has been committed.
The third error is concerned with the amount of the damages sustained
by the plaintiff.
It is sufficiently proven that the sum paid by the plaintiff to the Earnshaw
Shipyards for the repairs made to the steamer Y. Sontua, damage to
which was caused by the fire in question, amount to P27,968; that the
materials used in said repairs and paid for by the plaintiff are worth
P12,139.30. As to the damages sustained by the plaintiff on account of
the delay of the steamer Y. Sontua, the evidence shows that this steamer
was delayed ten days in the Pasig River, waiting for available space in the
shipyard before it was taken to the said repair-shop; that it was not
absolutely necessary that the repair of the damages caused by the fire
should be made in the shipyard; that said vessel was taken to the
shipyard for repair of some parts of it not damaged by the fire in
question.
As the evidence does not sufficiently show the time consumed in
repairing the actual damage caused by the said fire, nor the time
employed in making the other repairs, and as the damage, if any,
resulting from the ten days' delay in the Pasig River, is remote and,
therefore, not chargeable to the defendant since said delay is in no way
imputable to him, we think, in view of all of the circumstances of the
case and taking into consideration the importance of all the repairs,
whether by fire or otherwise, the delay of seventy days, according to the
evidence of the plaintiff, chargeable to the defendant, should be
reduced to one-half, or thirty-five days at the rate of P410.84 a day
which is the net profit that the aforesaid steamer Y. Sontua failed to
realize as a consequence of said delay. We find that the damages
sustained by the plaintiff by reason of this delay amount to P14,379.40.
The plaintiff further asks that he be awarded, by way of damages, the
sum of P4,400 covering maintenance and salary of the officers and crew
of his steamer during the delay aforementioned. We do not feel that he
is entitled to this item for the reason that such expenses have already
been taken into account in determining the net daily profit above
referred to. We find that the total sum which the plaintiff is entitled to
recover from the defendant as damages under the facts stated is fifty-
four thousand four hundred eighty-six pesos and seventy centavos
(P54,486.70).
The judgment appealed from is hereby modified and the defendant
sentenced to pay the plaintiff the sum of P54,486.70 with costs. So
ordered.
G.R. No. 131166 September 30, 1999
CALTEX (PHILIPPINES), INC., petitioner,
vs.
SULPICIO LINES, INC., GO SIOC SO, ENRIQUE S. GO, EUSEBIO S. GO,
CARLOS S. GO, VICTORIANO S. GO, DOMINADOR S. GO, RICARDO S. GO,
EDWARD S. GO, ARTURO S. GO, EDGAR S. GO, EDMUND S. GO,
FRANCISCO SORIANO, VECTOR SHIPPING CORPORATION, TERESITA G.
CAÑEZAL, AND SOTERA E. CAÑEZAL, respondents.
PARDO, J.:
Is the charterer of a sea vessel liable for damages resulting from a
collision between the chartered vessel and a passenger ship?
When MT Vector left the port of Limay, Bataan, on December 19, 1987
carrying petroleum products of Caltex (Philippines), Inc. (hereinafter
Caltex) no one could have guessed that it would collide with MV Doña
Paz, killing almost all the passengers and crew members of both ships,
and thus resulting in one of the country's worst maritime disasters.
The petition before us seeks to reverse the Court of Appeals decision 1
holding petitioner jointly liable with the operator of MT Vector for
damages when the latter collided with Sulpicio Lines, Inc.'s passenger
ship MV Doña Paz.
The facts are as follows:
On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at
about 8:00 p.m., enroute to Masbate, loaded with 8,800 barrels of
petroleum products shipped by petitioner Caltex. 2 MT Vector is a
tramping motor tanker owned and operated by Vector Shipping
Corporation, engaged in the business of transporting fuel products such
as gasoline, kerosene, diesel and crude oil. During that particular voyage,
the MT Vector carried on board gasoline and other oil products owned
by Caltex by virtue of a charter contract between
them. 3
On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doña
Paz left the port of Tacloban headed for Manila with a complement of 59
crew members including the master and his officers, and passengers
totaling 1,493 as indicated in the Coast Guard Clearance. 4 The MV Doña
Paz is a passenger and cargo vessel owned and operated by Sulpicio
Lines, Inc. plying the route of Manila/ Tacloban/ Catbalogan/ Manila/
Catbalogan/ Tacloban/ Manila, making trips twice a week.
At about 10:30 p.m. of December 20, 1987, the two vessels collided in
the open sea within the vicinity of Dumali Point between Marinduque
and Oriental Mindoro. All the crewmembers of MV Doña Paz died, while
the two survivors from MT Vector claimed that they were sleeping at the
time of the incident.1âwphi1.nêt
The MV Doña Paz carried an estimated 4,000 passengers; many indeed,
were not in the passenger manifest. Only 24 survived the tragedy after
having been rescued from the burning waters by vessels that responded
to distress calls. 5 Among those who perished were public school teacher
Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11
years old), both unmanifested passengers but proved to be on board the
vessel.
On March 22, 1988, the board of marine inquiry in BMI Case No. 659-87
after investigation found that the MT Vector, its registered operator
Francisco Soriano, and its owner and actual operator Vector Shipping
Corporation, were at fault and responsible for its collision with MV Doña
Paz. 6
On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian
Cañezal's wife and mother respectively, filed with the Regional Trial
Court, Branch 8, Manila, a complaint for "Damages Arising from Breach
of Contract of Carriage" against Sulpicio Lines, Inc. (hereafter Sulpicio).
Sulpicio, in turn, filed a third party complaint against Francisco Soriano,
Vector Shipping Corporation and Caltex (Philippines), Inc. Sulpicio
alleged that Caltex chartered MT Vector with gross and evident bad faith
knowing fully well that MT Vector was improperly manned, ill-equipped,
unseaworthy and a hazard to safe navigation; as a result, it rammed
against MV Doña Paz in the open sea setting MT Vector's highly
flammable cargo ablaze.
On September 15, 1992, the trial court rendered decision dismissing, the
third party complaint against petitioner. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and
against defendant-3rd party plaintiff Sulpicio Lines, Inc., to wit:
1. For the death of Sebastian E. Cañezal and his 11-year old
daughter Corazon G. Cañezal, including loss of future earnings of said
Sebastian, moral and exemplary damages, attorney's fees, in the total
amount of P 1,241,287.44 and finally;
2. The statutory costs of the proceedings.
Likewise, the 3rd party complaint is hereby DISMISSED for want of
substantiation and with costs against the 3rd party plaintiff.
IT IS SO ORDERED.
DONE IN MANILA, this 15th day of September 1992.
ARSENIO M. GONONG
Judge 7
On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc., on
April 15, 1997, the Court of Appeal modified the trial court's ruling and
included petitioner Caltex as one of the those liable for damages. Thus:
WHEREFORE, in view of all the foregoing, the judgment rendered by the
Regional Trial Court is hereby MODIFIED as follows:
WHEREFORE, defendant Sulpicio Lines, Inc., is ordered to pay the heirs of
Sebastian E. Cañezal and Corazon Cañezal:
1. Compensatory damages for the death of Sebastian E. Cañezal
and Corazon Cañezal the total amount of ONE HUNDRED THOUSAND
PESOS (P100,000);
2. Compensatory damages representing the unearned income of
Sebastian E. Cañezal, in the total amount of THREE HUNDRED SIX
THOUSAND FOUR HUNDRED EIGHTY (P306,480.00) PESOS;
3. Moral damages in the amount of THREE HUNDRED THOUSAND
PESOS (P300,000.00);
4. Attorney's fees in the concept of actual damages in the amount
of FIFTY THOUSAND PESOS (P50,000.00);
5. Costs of the suit.
Third party defendants Vector Shipping Co. and Caltex (Phils.), Inc. are
held equally liable under the third party complaint to
reimburse/indemnify defendant Sulpicio Lines, Inc. of the above-
mentioned damages, attorney's fees and costs which the latter is
adjudged to pay plaintiffs, the same to be shared half by Vector Shipping
Co. (being the vessel at fault for the collision) and the other half by
Caltex (Phils.), Inc. (being the charterer that negligently caused the
shipping of combustible cargo aboard an unseaworthy vessel).
SO ORDERED.
JORGE S. IMPERIAL
Associate Justice
WE CONCUR:
RAMON U. MABUTAS, JR. PORTIA ALIÑO HERMACHUELOS
Associate Justice Associate Justice. 8
Hence, this petition.
We find the petition meritorious.
First: The charterer has no liability for damages under Philippine
Maritime laws.
The respective rights and duties of a shipper and the carrier depends not
on whether the carrier is public or private, but on whether the contract
of carriage is a bill of lading or equivalent shipping documents on the
one hand, or a charter party or similar contract on the other. 9
Petitioner and Vector entered into a contract of affreightment, also
known as a voyage charter. 10
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. 11
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 ship's store, pay for the wages of the
master of the crew, and defray the expenses for the maintenance of the
ship. 12
Under a demise or bareboat charter on the other hand, the charterer
mans the vessel with his own people and becomes, in effect, the owner
for the voyage or service stipulated, subject to liability for damages
caused by negligence.
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. 13
Second: MT Vector is a common carrier
Charter parties fall into three main categories: (1) Demise or bareboat,
(2) time charter, (3) voyage charter. Does a charter party agreement turn
the common carrier into a private one? We need to answer this question
in order to shed light on the responsibilities of the parties.
In this case, 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.
In Planters Products, Inc. vs. Court of Appeals, 14 we said:
It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole portion of a vessel of one or
more persons, provided the charter is limited to the ship only, as in the
case of a time-charter or the 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.
Later, we ruled in Coastwise Lighterage Corporation vs. Court of Appeals:
15
Although a charter party may transform a common carrier into a private
one, the same however is not true in a contract of affreightment . . .
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. In Guzman vs. Court of
Appeals, 17 we ruled:
The Civil Code defines "common carriers" in the following terms:
Art. 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers for passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as "a
sideline"). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such services on an
occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services
or solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from
making such distinctions.
It appears to the Court that private respondent is properly characterized
as a common carrier even though he merely "back-hauled" goods for
other merchants from Manila to Pangasinan, although such backhauling
was done on a periodic, occasional rather than regular or scheduled
manner, and even though respondent's principal occupation was not the
carriage of goods for others. There is no dispute that private respondent
charged his customers a fee for hauling their goods; that the fee
frequently fell below commercial freight rates is not relevant here.
Under the Carriage of Goods by Sea Act :
Sec. 3. (1) The carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
xxx xxx xxx
Thus, the carriers are deemed to warrant impliedly the seaworthiness of
the ship. For a vessel to be seaworthy, it must be adequately equipped
for the voyage and manned with a sufficient number of competent
officers and crew. The failure of a common carrier to maintain in
seaworthy condition the vessel involved in its contract of carriage is a
clear breach of its duty prescribed in Article 1755 of the Civil Code. 18
The provisions owed their conception to the nature of the business of
common carriers. This business is impressed with a special public duty.
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. 19 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.
This aside, we now rule on whether Caltex is liable for damages under
the Civil Code.
Third: Is Caltex liable for damages under the Civil Code?
We rule that it is not.
Sulpicio argues that Caltex negligently shipped its highly combustible fuel
cargo aboard an unseaworthy vessel such as the MT Vector when Caltex:
1. Did not take steps to have M/T Vector's certificate of inspection
and coastwise license renewed;
2. Proceeded to ship its cargo despite defects found by Mr. Carlos
Tan of Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting fake documents and
certificates to the Philippine Coast Guard.
Sulpicio further argues that Caltex chose MT Vector transport its cargo
despite these deficiencies.
1. The master of M/T Vector did not posses the required Chief
Mate license to command and navigate the vessel;
2. The second mate, Ronaldo Tarife, had the license of a Minor
Patron, authorized to navigate only in bays and rivers when the subject
collision occurred in the open sea;
3. The Chief Engineer, Filoteo Aguas, had no license to operate the
engine of the vessel;
4. The vessel did not have a Third Mate, a radio operator and
lookout; and
5. The vessel had a defective main engine. 20
As basis for the liability of Caltex, the Court of Appeals relied on Articles
20 and 2176 of the Civil Code, which provide:
Art. 20. — Every person who contrary to law, willfully or negligently
causes damage to another, shall indemnify the latter for the same.

Art. 2176. — Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
And what is negligence?
The Civil Code provides:
Art. 1173. The fault or negligence of the obligor consists in the
omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions
of Article 1171 and 2201 paragraph 2, shall apply.
If the law does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be
required.
In Southeastern College, Inc. vs. Court of Appeals, 21 we said that
negligence, as commonly understood, is conduct which naturally or
reasonably creates undue risk or harm to others. It may be the failure to
observe that degree of care, precaution, and vigilance, which the
circumstances justly demand, or the omission to do something which
ordinarily regulate the conduct of human affairs, would do.
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." 22 The Civil Code demands diligence which is
required by the nature of the obligation and that which corresponds
with the circumstances of the persons, the time and the place. Hence,
considering the nature of the obligation between Caltex and MT Vector,
liability as found by the Court of Appeals is without basis.1âwphi1.nêt
The relationship between the parties in this case is governed by special
laws. Because of the implied warranty of seaworthiness, 23 shippers of
goods, when transacting with common carriers, are not expected to
inquire into the vessel's 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. By the same token, we cannot expect passengers to inquire
every time they board a common carrier, whether the carrier possesses
the necessary papers or that all the carrier's employees are qualified.
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.
Thus, the nature of the obligation of Caltex demands ordinary diligence
like any other shipper in shipping his cargoes.
A cursory reading of the records convinces us that Caltex had reasons to
believe that MT Vector could legally transport cargo that time of the
year.
Atty. Poblador: Mr. Witness, I direct your attention to this portion here
containing the entries here under "VESSEL'S DOCUMENTS
1. Certificate of Inspection No. 1290-85, issued December 21, 1986,
and Expires December 7, 1987", Mr. Witness, what steps did you take
regarding the impending expiry of the C.I. or the Certificate of Inspection
No. 1290-85 during the hiring of MT Vector?
Apolinario Ng: At the time when I extended the Contract, I did nothing
because the tanker has a valid C.I. which will expire on December 7, 1987
but on the last week of November, I called the attention of Mr. Abalos to
ensure that the C.I. be renewed and Mr. Abalos, in turn, assured me they
will renew the same.
Q: What happened after that?
A: On the first week of December, I again made a follow-up from
Mr. Abalos, and said they were going to send me a copy as soon as
possible, sir. 24
xxx xxx xxx
Q: What did you do with the C.I.?
A: We did not insist on getting a copy of the C.I. from Mr. Abalos on
the first place, because of our long business relation, we trust Mr. Abalos
and the fact that the vessel was able to sail indicates that the documents
are in order. . . . 25
On cross examination —
Atty. Sarenas: This being the case, and this being an admission by you,
this Certificate of Inspection has expired on December 7. Did it occur to
you not to let the vessel sail on that day because of the very approaching
date of expiration?
Apolinar Ng: No sir, because as I said before, the operation Manager
assured us that they were able to secure a renewal of the Certificate of
Inspection and that they will in time submit us a
copy. 26
Finally, on Mr. Ng's redirect examination:
Atty. Poblador: Mr. Witness, were you aware of the pending expiry of
the Certificate of Inspection in the coastwise license on December 7,
1987. What was your assurance for the record that this document was
renewed by the MT Vector?
Atty. Sarenas: . . .
Atty. Poblador: The certificate of Inspection?
A: As I said, firstly, we trusted Mr. Abalos as he is a long time
business partner; secondly, those three years; they were allowed to sail
by the Coast Guard. That are some that make me believe that they in
fact were able to secure the necessary renewal.
Q: If the Coast Guard clears a vessel to sail, what would that mean?
Atty. Sarenas: Objection.
Court: He already answered that in the cross examination to the effect
that if it was allowed, referring to MV Vector, to sail, where it is loaded
and that it was scheduled for a destination by the Coast Guard, it means
that it has Certificate of Inspection extended as assured to this witness
by Restituto Abalos. That in no case MV Vector will be allowed to sail if
the Certificate of inspection is, indeed, not to be extended. That was his
repeated explanation to the cross-examination. So, there is no need to
clarify the same in the re-direct examination. 27
Caltex and Vector Shipping Corporation had been doing business since
1985, or for about two years before the tragic incident occurred in 1987.
Past services rendered showed no reason for Caltex to observe a higher
degree of diligence.

Clearly, as a mere voyage charterer, Caltex had the right to presume that
the ship was seaworthy as even the Philippine Coast Guard itself was
convinced of its seaworthiness. All things considered, we find no legal
basis to hold petitioner liable for damages.

As Vector Shipping Corporation did not appeal from the Court of

Appeals' decision, we limit our ruling to the liability of Caltex alone.
However, we maintain the Court of Appeals' ruling insofar as Vector is
concerned.

WHEREFORE, the Court hereby GRANTS the petition and SETS ASIDE the
decision of the Court of Appeals in CA-G.R. CV No. 39626, promulgated
on April 15, 1997, insofar as it held Caltex liable under the third party
complaint to reimburse/indemnify defendant Sulpicio Lines, Inc. the
damages the latter is adjudged to pay plaintiffs-appellees. The Court
AFFIRMS the decision of the Court of Appeals insofar as it orders Sulpicio
Lines, Inc. to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal
damages as set forth therein. Third-party defendant-appellee Vector
Shipping Corporation and Francisco Soriano are held liable to
reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages,
attorneys' fees and costs the latter is adjudged to pay plaintiffs-appellees
in the case.1âwphi1.nêt

No costs in this instance.

SO ORDERED.

G.R. No. 114167 July 12, 1995
COASTWISE LIGHTERAGE CORPORATION, petitioner,
vs.
COURT OF APPEALS and the PHILIPPINE GENERAL INSURANCE
COMPANY, respondents.
RESOLUTION
FRANCISCO, R., J.:
This is a petition for review of a Decision rendered by the Court of
Appeals, dated December 17, 1993, affirming Branch 35 of the Regional
Trial Court, Manila 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.
The factual background of this case is as follows:
Pag-asa Sales, Inc. entered into a contract to transport molasses from
the province of Negros to Manila with Coastwise Lighterage Corporation
(Coastwise for brevity), 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,
"Coastwise 9", struck an unknown sunken object. The forward buoyancy
compartment was damaged, and water gushed in through a hole "two
inches wide and twenty-two inches long"1 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, for
short) 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 before
the Regional Trial Court of Manila, 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.
Hence, this petition.
There are two main issues to be resolved herein. First, 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? Second, whether or not the insurer was
subrogated into the rights of the consignee against the carrier, upon
payment by the insurer of the value of the consignee's goods lost while
on board one of the carrier's vessels.
On the first issue, petitioner contends that the RTC and the Court of
Appeals erred in finding that it was a common carrier. It stresses the fact
that it contracted with Pag-asa Sales, Inc. to transport the shipment of
molasses from Negros Oriental to Manila and refers to this contract as a
"charter agreement". It then proceeds to cite the case of Home
Insurance Company vs. American Steamship Agencies, Inc.2 wherein this
Court held: ". . . a common carrier undertaking to carry a special cargo or
chartered to a special person only becomes a private carrier."
Petitioner's reliance on the aforementioned case is misplaced. In its
entirety, the conclusions of the court are as follows:
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.3
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,4 wherein we ruled:
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.5 We agree. 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"6 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.
On the issue of subrogation, which petitioner contends as inapplicable in
this case, we once more rule against the petitioner. We have already
found petitioner liable for breach of the contract of carriage it entered
into with Pag-asa Sales, Inc. However, for the damage sustained by the
loss of the cargo which petitioner-carrier was transporting, it was not the
carrier which paid the value thereof to Pag-asa Sales, Inc. but the latter's
insurer, herein private respondent PhilGen.
Article 2207 of the Civil Code is explicit on this point:
Art. 2207. If the plaintiffs property has been insured, and he has
received indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of, the
insurance company shall be subrogated to the rights of the insured
against the wrongdoer or the person who violated the contract. . . .
This legal provision containing the equitable principle of subrogation has
been applied in a long line of cases including Compania Maritima v.
Insurance Company of North America;7 Fireman's Fund Insurance
Company v. Jamilla & Company, Inc.,8 and Pan Malayan Insurance
Corporation v. Court of Appeals,9 wherein this Court explained:

Article 2207 of the Civil Code is founded on the well-settled principle of

subrogation. If the insured property is destroyed or damaged through
the fault or negligence of a party other than the assured, then the
insurer, upon payment to the assured will be subrogated to the rights of
the assured to recover from the wrongdoer to the extent that the
insurer has been obligated to pay. Payment by the insurer to the assured
operated as an equitable assignment to the former of all remedies which
the latter may have against the third party whose negligence or wrongful
act caused the loss. The right of subrogation is not dependent upon, nor
does it grow out of, any privity of contract or upon written assignment of
claim. It accrues simply upon payment of the insurance claim by the
insurer.

Undoubtedly, upon payment by respondent insurer PhilGen of the

amount of P700,000.00 to Pag-asa Sales, Inc., the consignee of the cargo
of molasses totally damaged while being transported by petitioner
Coastwise Lighterage, the former was subrogated into all the rights
which Pag-asa Sales, Inc. may have had against the carrier, herein
petitioner Coastwise Lighterage.

WHEREFORE, premises considered, this petition is DENIED and the

appealed decision affirming the order of Branch 35 of the Regional Trial
Court of Manila for petitioner Coastwise Lighterage to pay respondent
Philippine General Insurance Company the "principal amount of
P700,000.00 plus interest thereon at the legal rate computed from
March 29, 1989, the date the complaint was filed until fully paid and
another sum of P100,000.00 as attorney's fees and costs"10 is likewise
hereby AFFIRMED

SO ORDERED.
G.R. No. 101503 September 15, 1993
PLANTERS PRODUCTS, INC., petitioner,
vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI
KISEN KABUSHIKI KAISHA, respondents.
Gonzales, Sinense, Jimenez & Associates for petitioner.
Siguion Reyna, Montecillo & Ongsiako Law Office for private
respondents.
BELLOSILLO, J.:
Does a charter-party1 between a shipowner and a charterer transform a
common carrier into a private one as to negate the civil law presumption
of negligence in case of loss or damage to its cargo?
Planters Products, Inc. (PPI), purchased from Mitsubishi International
Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons
(M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June
1974 aboard the cargo vessel M/V "Sun Plum" owned by private
respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska,
U.S.A., to Poro Point, San Fernando, La Union, Philippines, as evidenced
by Bill of Lading No. KP-1 signed by the master of the vessel and issued
on the date of departure.
On 17 May 1974, or prior to its voyage, a time charter-party on the
vessel M/V "Sun Plum" pursuant to the Uniform General Charter2 was
entered into between Mitsubishi as shipper/charterer and KKKK as
shipowner, in Tokyo, Japan.3 Riders to the aforesaid charter-party
starting from par. 16 to 40 were attached to the pre-printed agreement.
Addenda Nos. 1, 2, 3 and 4 to the charter-party were also subsequently
entered into on the 18th, 20th, 21st and 27th of May 1974, respectively.
Before loading the fertilizer aboard the vessel, four (4) of her holds4
were all presumably inspected by the charterer's representative and
found fit to take a load of urea in bulk pursuant to par. 16 of the charter-
party which reads:
16. . . . At loading port, notice of readiness to be accomplished by
certificate from National Cargo Bureau inspector or substitute appointed
by charterers for his account certifying the vessel's readiness to receive
cargo spaces. The vessel's hold to be properly swept, cleaned and dried
at the vessel's expense and the vessel to be presented clean for use in
bulk to the satisfaction of the inspector before daytime commences.
(emphasis supplied)
After the Urea fertilizer was loaded in bulk by stevedores hired by and
under the supervision of the shipper, the steel hatches were closed with
heavy iron lids, covered with three (3) layers of tarpaulin, then tied with
steel bonds. The hatches remained closed and tightly sealed throughout
the entire voyage.5
Upon arrival of the vessel at her port of call on 3 July 1974, the steel
pontoon hatches were opened with the use of the vessel's boom.
Petitioner unloaded the cargo from the holds into its steelbodied dump
trucks which were parked alongside the berth, using metal scoops
attached to the ship, pursuant to the terms and conditions of the
charter-partly (which provided for an F.I.O.S. clause).6 The hatches
remained open throughout the duration of the discharge.7
Each time a dump truck was filled up, its load of Urea was covered with
tarpaulin before it was transported to the consignee's warehouse
located some fifty (50) meters from the wharf. Midway to the
warehouse, the trucks were made to pass through a weighing scale
where they were individually weighed for the purpose of ascertaining
the net weight of the cargo. The port area was windy, certain portions of
the route to the warehouse were sandy and the weather was variable,
raining occasionally while the discharge was in progress.8 The
petitioner's warehouse was made of corrugated galvanized iron (GI)
sheets, with an opening at the front where the dump trucks entered and
unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets
were placed in-between and alongside the trucks to contain spillages of
the ferilizer.9
It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July
1974 (except July 12th, 14th and 18th).10 A private marine and cargo
surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI
to determine the "outturn" of the cargo shipped, by taking draft readings
of the vessel prior to and after discharge. 11 The survey report
submitted by CSCI to the consignee (PPI) dated 19 July 1974 revealed a
shortage in the cargo of 106.726 M/T and that a portion of the Urea
fertilizer approximating 18 M/T was contaminated with dirt. The same
results were contained in a Certificate of Shortage/Damaged Cargo
dated 18 July 1974 prepared by PPI which showed that the cargo
delivered was indeed short of 94.839 M/T and about 23 M/T were
rendered unfit for commerce, having been polluted with sand, rust and
dirt. 12
Consequently, PPI sent a claim letter dated 18 December 1974 to
Soriamont Steamship Agencies (SSA), the resident agent of the carrier,
KKKK, for P245,969.31 representing the cost of the alleged shortage in
the goods shipped and the diminution in value of that portion said to
have been contaminated with dirt. 13
Respondent SSA explained that they were not able to respond to the
consignee's claim for payment because, according to them, what they
received was just a request for shortlanded certificate and not a formal
claim, and that this "request" was denied by them because they "had
nothing to do with the discharge of the shipment." 14 Hence, on 18 July
1975, PPI filed an action for damages with the Court of First Instance of
Manila. The defendant carrier argued that the strict public policy
governing common carriers does not apply to them because they have
become private carriers by reason of the provisions of the charter-party.
The court a quo however sustained the claim of the plaintiff against the
defendant carrier for the value of the goods lost or damaged when it
ruled thus: 15
. . . Prescinding from the provision of the law that a common carrier is
presumed negligent in case of loss or damage of the goods it contracts to
transport, all that a shipper has to do in a suit to recover for loss or
damage is to show receipt by the carrier of the goods and to delivery by
it of less than what it received. After that, the burden of proving that the
loss or damage was due to any of the causes which exempt him from
liability is shipted to the carrier, common or private he may be. Even if
the provisions of the charter-party aforequoted are deemed valid, and
the defendants considered private carriers, it was still incumbent upon
them to prove that the shortage or contamination sustained by the
cargo is attributable to the fault or negligence on the part of the shipper
or consignee in the loading, stowing, trimming and discharge of the
cargo. This they failed to do. By this omission, coupled with their failure
to destroy the presumption of negligence against them, the defendants
are liable (emphasis supplied).
On appeal, respondent Court of Appeals reversed the lower court and
absolved the carrier from liability for the value of the cargo that was lost
or damaged. 16 Relying on the 1968 case of Home Insurance Co. v.
American Steamship Agencies, Inc.,17 the appellate court ruled that the
cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a
private carrier and not a common carrier by reason of the time
charterer-party. Accordingly, the Civil Code provisions on common
carriers which set forth a presumption of negligence do not find
application in the case at bar. Thus —
. . . In the absence of such presumption, it was incumbent upon the
plaintiff-appellee to adduce sufficient evidence to prove the negligence
of the defendant carrier as alleged in its complaint. It is an old and well
settled rule that if the plaintiff, upon whom rests the burden of proving
his cause of action, fails to show in a satisfactory manner the facts upon
which he bases his claim, the defendant is under no obligation to prove
his exception or defense (Moran, Commentaries on the Rules of Court,
Volume 6, p. 2, citing Belen v. Belen, 13 Phil. 202).
But, the record shows that the plaintiff-appellee dismally failed to prove
the basis of its cause of action, i.e. the alleged negligence of defendant
carrier. It appears that the plaintiff was under the impression that it did
not have to establish defendant's negligence. Be that as it may, contrary
to the trial court's finding, the record of the instant case discloses ample
evidence showing that defendant carrier was not negligent in performing
its obligation . . . 18 (emphasis supplied).
Petitioner PPI appeals to us by way of a petition for review assailing the
decision of the Court of Appeals. Petitioner theorizes that the Home
Insurance case has no bearing on the present controversy because the
issue raised therein is the validity of a stipulation in the charter-party
delimiting the liability of the shipowner for loss or damage to goods
cause by want of due deligence on its part or that of its manager to make
the vessel seaworthy in all respects, and not whether the presumption of
negligence provided under the Civil Code applies only to common
carriers and not to private carriers. 19 Petitioner further argues that
since the possession and control of the vessel remain with the
shipowner, absent any stipulation to the contrary, such shipowner
should made liable for the negligence of the captain and crew. In fine,
PPI faults the appellate court in not applying the presumption of
negligence against respondent carrier, and instead shifting the onus
probandi on the shipper to show want of due deligence on the part of
the carrier, when he was not even at hand to witness what transpired
during the entire voyage.
As earlier stated, the primordial issue here is whether a common carrier
becomes a private carrier by reason of a charter-party; in the negative,
whether the shipowner in the instant case was able to prove that he had
exercised that degree of diligence required of him under the law.
It is said that etymology is the basis of reliable judicial decisions in
commercial cases. This being so, we find it fitting to first define
important terms which are relevant to our discussion.
A "charter-party" is defined as 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; 20 a contract of affreightment by which the owner
of a ship or other vessel lets the whole or a 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; 21 Charter parties are of two
types: (a) contract of affreightment which involves the use of shipping
space on vessels leased by the owner in part or as a whole, to carry
goods for others; and, (b) charter by demise or bareboat charter, by the
terms of which the whole vessel is let to the charterer with a transfer to
him of its entire command and possession and consequent control over
its navigation, including the master and the crew, who are his servants.
Contract of affreightment may either be time charter, wherein the vessel
is leased to the charterer for a fixed period of time, or voyage charter,
wherein the ship is leased for a single voyage. 22 In both cases, the
charter-party provides for the hire of vessel only, either for a
determinate period of time or for a single or consecutive voyage, the
shipowner to supply the ship's stores, pay for the wages of the master
and the crew, and defray the expenses for the maintenance of the ship.
Upon the other hand, the term "common or public carrier" is defined in
Art. 1732 of the Civil Code. 23 The definition extends to carriers either by
land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation as a
public employment and not as a casual occupation. The distinction
between a "common or public carrier" and a "private or special carrier"
lies in the character of the business, such that if the undertaking is a
single transaction, not a part of the general business or occupation,
although involving the carriage of goods for a fee, the person or
corporation offering such service is a private carrier. 24
Article 1733 of the New Civil Code mandates that common carriers, by
reason of the nature of their business, should observe extraordinary
diligence in the vigilance over the goods they carry.25 In the case of
private carriers, however, the exercise of ordinary diligence in the
carriage of goods will suffice. Moreover, in the case of loss, destruction
or deterioration of the goods, common carriers are presumed to have
been at fault or to have acted negligently, and the burden of proving
otherwise rests on them.26 On the contrary, no such presumption
applies to private carriers, for whosoever alleges damage to or
deterioration of the goods carried has the onus of proving that the cause
was the negligence of the carrier.
It is not disputed that respondent carrier, in the ordinary course of
business, operates as a common carrier, transporting goods
indiscriminately for all persons. When petitioner chartered the vessel
M/V "Sun Plum", the ship captain, its officers and compliment were
under the employ of the shipowner and therefore continued to be under
its direct supervision and control. Hardly then can we charge the
charterer, a stranger to the crew and to the ship, with the duty of caring
for his cargo when the charterer did not have any control of the means
in doing so. This is evident in the present case considering that the
steering of the ship, the manning of the decks, the determination of the
course of the voyage and other technical incidents of maritime
navigation were all consigned to the officers and crew who were
screened, chosen and hired by the shipowner. 27
It is therefore 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 shipowner
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. 28
Respondent carrier's heavy reliance on the case of Home Insurance Co.
v. American Steamship Agencies, supra, is misplaced for the reason that
the meat of the controversy therein was the validity of a stipulation in
the charter-party exempting the shipowners from liability for loss due to
the negligence of its agent, and not the effects of a special charter on
common carriers. At any rate, the rule in the United States that a ship
chartered by a single shipper to carry special cargo is not a common
carrier, 29 does not find application in our jurisdiction, for we have
observed that the growing concern for safety in the transportation of
passengers and /or carriage of goods by sea requires a more exacting
interpretation of admiralty laws, more particularly, the rules governing
common carriers.
We quote with approval the observations of Raoul Colinvaux, the
learned barrister-at-law 30 —

As a matter of principle, it is difficult to find a valid distinction between
cases in which a ship is used to convey the goods of one and of several
persons. Where the ship herself is let to a charterer, so that he takes
over the charge and control of her, the case is different; the shipowner is
not then a carrier. But where her services only are let, the same grounds
for imposing a strict responsibility exist, whether he is employed by one
or many. The master and the crew are in each case his servants, the
freighter in each case is usually without any representative on board the
ship; the same opportunities for fraud or collusion occur; and the same
difficulty in discovering the truth as to what has taken place arises . . .
In an action for recovery of damages against a common carrier on the
goods shipped, the shipper or consignee should first prove the fact of
shipment and its consequent loss or damage while the same was in the
possession, actual or constructive, of the carrier. Thereafter, the burden
of proof shifts to respondent to prove that he has exercised
extraordinary diligence required by law or that the loss, damage or
deterioration of the cargo was due to fortuitous event, or some other
circumstances inconsistent with its liability. 31
To our mind, respondent carrier has sufficiently overcome, by clear and
convincing proof, the prima facie presumption of negligence.
The master of the carrying vessel, Captain Lee Tae Bo, in his deposition
taken on 19 April 1977 before the Philippine Consul and Legal Attache in
the Philippine Embassy in Tokyo, Japan, testified that before the fertilizer
was loaded, the four (4) hatches of the vessel were cleaned, dried and
fumigated. After completing the loading of the cargo in bulk in the ship's
holds, the steel pontoon hatches were closed and sealed with iron lids,
then covered with three (3) layers of serviceable tarpaulins which were
tied with steel bonds. The hatches remained close and tightly sealed
while the ship was in transit as the weight of the steel covers made it
impossible for a person to open without the use of the ship's boom. 32
It was also shown during the trial that the hull of the vessel was in good
condition, foreclosing the possibility of spillage of the cargo into the sea
or seepage of water inside the hull of the vessel. 33 When M/V "Sun
Plum" docked at its berthing place, representatives of the consignee
boarded, and in the presence of a representative of the shipowner, the
foreman, the stevedores, and a cargo surveyor representing CSCI,
opened the hatches and inspected the condition of the hull of the vessel.
The stevedores unloaded the cargo under the watchful eyes of the
shipmates who were overseeing the whole operation on rotation basis.
34
Verily, the presumption of negligence on the part of the respondent
carrier has been efficaciously overcome by the showing of extraordinary
zeal and assiduity exercised by the carrier in the care of the cargo. This
was confirmed by respondent appellate court thus —
. . . Be that as it may, contrary to the trial court's finding, the record of
the instant case discloses ample evidence showing that defendant carrier
was not negligent in performing its obligations. Particularly, the
following testimonies of plaintiff-appellee's own witnesses clearly show
absence of negligence by the defendant carrier; that the hull of the
vessel at the time of the discharge of the cargo was sealed and nobody
could open the same except in the presence of the owner of the cargo
and the representatives of the vessel (TSN, 20 July 1977, p. 14); that the
cover of the hatches was made of steel and it was overlaid with
tarpaulins, three layers of tarpaulins and therefore their contents were
protected from the weather (TSN, 5 April 1978, p. 24); and, that to open
these hatches, the seals would have to be broken, all the seals were
found to be intact (TSN, 20 July 1977, pp. 15-16) (emphasis supplied).
The period during which private respondent was to observe the degree
of diligence required of it as a public carrier began from the time the
cargo was unconditionally placed in its charge after the vessel's holds
were duly inspected and passed scrutiny by the shipper, up to and until
the vessel reached its destination and its hull was reexamined by the
consignee, but prior to unloading. This is clear from the limitation clause
agreed upon by the parties in the Addendum to the standard "GENCON"
time charter-party which provided for an F.I.O.S., meaning, that the
loading, stowing, trimming and discharge of the cargo was to be done by
the charterer, free from all risk and expense to the carrier. 35 Moreover,
a shipowner is liable for damage to the cargo resulting from improper
stowage only when the stowing is done by stevedores employed by him,
and therefore under his control and supervision, not when the same is
done by the consignee or stevedores under the employ of the latter. 36
Article 1734 of the New Civil Code provides that common carriers are not
responsible for the loss, destruction or deterioration of the goods if
caused by the charterer of the goods or defects in the packaging or in
the containers. The Code of Commerce also provides that all losses and
deterioration which the goods may suffer during the transportation by
reason of fortuitous event, force majeure, or the inherent defect of the
goods, shall be for the account and risk of the shipper, and that proof of
these accidents is incumbent upon the carrier. 37 The carrier,
nonetheless, shall be liable for the loss and damage resulting from the
preceding causes if it is proved, as against him, that they arose through
his negligence or by reason of his having failed to take the precautions
which usage has established among careful persons. 38
Respondent carrier presented a witness who testified on the
characteristics of the fertilizer shipped and the expected risks of bulk
shipping. Mr. Estanislao Chupungco, a chemical engineer working with
Atlas Fertilizer, described Urea as a chemical compound consisting
mostly of ammonia and carbon monoxide compounds which are used as
fertilizer. Urea also contains 46% nitrogen and is highly soluble in water.
However, during storage, nitrogen and ammonia do not normally
evaporate even on a long voyage, provided that the temperature inside
the hull does not exceed eighty (80) degrees centigrade. Mr. Chupungco
further added that in unloading fertilizer in bulk with the use of a
clamped shell, losses due to spillage during such operation amounting to
one percent (1%) against the bill of lading is deemed "normal" or
"tolerable." The primary cause of these spillages is the clamped shell
which does not seal very tightly. Also, the wind tends to blow away some
of the materials during the unloading process.
The dissipation of quantities of fertilizer, or its daterioration in value, is
caused either by an extremely high temperature in its place of storage,
or when it comes in contact with water. When Urea is drenched in
water, either fresh or saline, some of its particles dissolve. But the
salvaged portion which is in liquid form still remains potent and usable
although no longer saleable in its original market value.
The probability of the cargo being damaged or getting mixed or
contaminated with foreign particles was made greater by the fact that
the fertilizer was transported in "bulk," thereby exposing it to the
inimical effects of the elements and the grimy condition of the various
pieces of equipment used in transporting and hauling it.
The evidence of respondent carrier also showed that it was highly
improbable for sea water to seep into the vessel's holds during the
voyage since the hull of the vessel was in good condition and her hatches
were tightly closed and firmly sealed, making the M/V "Sun Plum" in all
respects seaworthy to carry the cargo she was chartered for. If there was
loss or contamination of the cargo, it was more likely to have occurred
while the same was being transported from the ship to the dump trucks
and finally to the consignee's warehouse. This may be gleaned from the
testimony of the marine and cargo surveyor of CSCI who supervised the
unloading. He explained that the 18 M/T of alleged "bar order cargo" as
contained in their report to PPI was just an approximation or estimate
made by them after the fertilizer was discharged from the vessel and
segregated from the rest of the cargo.

The Court notes that it was in the month of July when the vessel arrived
port and unloaded her cargo. It rained from time to time at the harbor
area while the cargo was being discharged according to the supply
officer of PPI, who also testified that it was windy at the waterfront and
along the shoreline where the dump trucks passed enroute to the
consignee's warehouse.

Indeed, we agree with respondent carrier that bulk shipment of highly

soluble goods like fertilizer carries with it the risk of loss or damage.
More so, with a variable weather condition prevalent during its
unloading, as was the case at bar. This is a risk the shipper or the owner
of the goods has to face. Clearly, respondent carrier has sufficiently
proved the inherent character of the goods which makes it highly
vulnerable to deterioration; as well as the inadequacy of its packaging
which further contributed to the loss. On the other hand, no proof was
adduced by the petitioner showing that the carrier was remise in the
exercise of due diligence in order to minimize the loss or damage to the
goods it carried.

WHEREFORE, the petition is DISMISSED. The assailed decision of the

Court of Appeals, which reversed the trial court, is AFFIRMED.
Consequently, Civil Case No. 98623 of the then Court of the First
Instance, now Regional Trial Court, of Manila should be, as it is hereby
DISMISSED.

Costs against petitioner.

SO ORDERED.
G.R. No. 115286 August 11, 1994
INTER-ORIENT MARITIME ENTERPRISES, INC., SEA HORSE SHIP, INC. and
TRENDA WORLD SHIPPING (MANILA), INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and RIZALINO D. TAYONG,
respondents.
Marilyn Cacho-Naoe for petitioners.
Wilfred L. Pascasio for private respondent.
FELICIANO, J.:
Private respondent Captain Rizalino Tayong, a licensed Master Mariner
with experience in commanding ocean-going vessels, was employed on 6
July 1989 by petitioners Trenda World Shipping (Manila), Inc. and Sea
Horse Ship Management, Inc. through petitioner Inter-Orient Maritime
Enterprises, Inc. as Master of the vessel M/V Oceanic Mindoro, for a
period of one (1) year, as evidenced by an employment contract. On 15
July 1989, Captain Tayong assumed command of petitioners' vessel at
the port of Hongkong. His instructions were to replenish bunker and
diesel fuel, to sail forthwith to Richard Bay, South Africa, and there to
load 120,000 metric tons of coal.
On 16 July 1989, while at the Port of Hongkong and in the process of
unloading cargo, Captain Tayong received a weather report that a storm
code-named "Gordon" would shortly hit Hongkong. Precautionary
measures were taken to secure the safety of the vessel, as well as its
crew, considering that the vessel's turbo-charger was leaking and the
vessel was fourteen (14) years old.
On 21 July 1989, Captain Tayong followed-up the requisition by the
former captain of the Oceanic Mindoro for supplies of oxygen and
acetylene, necessary for the welding-repair of the turbo-charger and the
economizer.1 This requisition had been made upon request of the Chief
Engineer of the vessel and had been approved by the shipowner.2
On 25 July 1989, the vessel sailed from Hong Kong for Singapore. In the
Master's sailing message, Captain Tayong reported a water leak from
M.E. Turbo Charger No. 2 Exhaust gas casing. He was subsequently
instructed to blank off the cooling water and maintain reduced RPM
unless authorized by the owners.3
On 29 July 1989, while the vessel was en route to Singapore, Captain
Tayong reported that the vessel had stopped in mid-ocean for six (6)
hours and forty-five (45) minutes due to a leaking economizer. He was
instructed to shut down the economizer and use the auxiliary boiler
instead.4
On 31 July 1989 at 0607 hrs., the vessel arrived at the port of
Singapore.5 The Chief Engineer reminded Captain Tayong that the
oxygen and acetylene supplies had not been delivered.6 Captain Tayong
inquired from the ship's agent in Singapore about the supplies. The ship
agent stated that these could only be delivered at 0800 hours on August
1, 1989 as the stores had closed.7
Captain Tayong called the shipowner, Sea Horse Ship Management, Ltd.,
in London and informed them that the departure of the vessel for South
Africa may be affected because of the delay in the delivery of the
supplies.8
Sea Horse advised Captain Tayong to contact its Technical Director, Mr.
Clark, who was in Tokyo and who could provide a solution for the supply
of said oxygen and acetylene.9

On the night of 31 July 1989, Mr. Clark received a call from Captain
Tayong informing him that the vessel cannot sail without the oxygen and
acetylene for safety reasons due to the problems with the turbo charger
and economizer. Mr. Clark responded that by shutting off the water to
the turbo chargers and using the auxiliary boiler, there should be no
further problems. According to Mr. Clark, Captain Tayong agreed with
him that the vessel could sail as scheduled on 0100 hours on 1 August
1989 for South Africa.10
According to Captain Tayong, however, he communicated to Sea Horse
his reservations regarding proceeding to South Africa without the
requested supplies,11 and was advised by Sea Horse to wait for the
supplies at 0800 hrs. of 1 August 1989, which Sea Horse had arranged to
be delivered on board the Oceanic Mindoro.12 At 0800 hours on 1
August 1989, the requisitioned supplies were delivered and Captain
Tayong immediately sailed for Richard Bay.
When the vessel arrived at the port of Richard Bay, South Africa on 16
August 1989, Captain Tayong was instructed to turn-over his post to the
new captain. He was thereafter repatriated to the Philippines, after
serving petitioners for a little more than two weeks.13 He was not
informed of the charges against him.14
On 5 October 1989, Captain Tayong instituted a complaint for illegal
dismissal before the Philippine Overseas Employment Administration
("POEA"), claiming his unpaid salary for the unexpired portion of the
written employment contract, plus attorney's fees.
Petitioners, in their answer to the complaint, denied that they had
illegally dismissed Captain Tayong. Petitioners alleged that he had
refused to sail immediately to South Africa to the prejudice and damage
of petitioners. According to petitioners, as a direct result of Captain
Tayong's delay, petitioners' vessel was placed "off-hire" by the
charterers for twelve (12) hours. This meant that the charterers refused
to pay the charter hire or compensation corresponding to twelve (12)
hours, amounting to US$15,500.00, due to time lost in the voyage. They
stated that they had dismissed private respondent for loss of trust and
confidence.
The POEA dismissed Captain Tayong's complaint and held that there was
valid cause for his untimely repatriation. The decision of the POEA placed
considerable weight on petitioners' assertion that all the time lost as a
result of the delay was caused by Captain Tayong and that his concern
for the oxygen and acetylene was not legitimate as these supplies were
not necessary or indispensable for running the vessel. The POEA believed
that the Captain had unreasonably refused to follow the instructions of
petitioners and their representative, despite petitioners' firm assurances
that the vessel was seaworthy for the voyage to South Africa.
On appeal, the National Labor Relations Commission ("NLRC") reversed
and set aside the decision of the POEA. The NLRC found that Captain
Tayong had not been afforded an opportunity to be heard and that no
substantial evidence was adduced to establish the basis for petitioners'
loss of trust or confidence in the Captain. The NLRC declared that he had
only acted in accordance with his duties to maintain the seaworthiness
of the vessel and to insure the safety of the ship and the crew. The NLRC
directed petitioners to pay the Captain (a) his salary for the unexpired
portion of the contract at US$1,900.00 a month, plus one (1) month
leave benefit; and (b) attorney's fees equivalent to ten percent (10%) of
the total award due.
Petitioners, before this Court, claim that the NLRC had acted with grave
abuse of discretion. Petitioners allege that they had adduced sufficient
evidence to establish the basis for private respondent's discharge,
contrary to the conclusion reached by the NLRC. Petitioners insist that
Captain Tayong, who must protect the interest of petitioners, had
caused them unnecessary damage, and that they, as owners of the
vessel, cannot be compelled to keep in their employ a captain of a vessel
in whom they have lost their trust and confidence. Petitioners finally
contend that the award to the Captain of his salary corresponding to the
unexpired portion of the contract and one (1) month leave pay, including
attorney's fees, also constituted grave abuse of discretion.
The petition must fail.
We note preliminarily that petitioners failed to attach a clearly legible,
properly certified, true copy of the decision of the NLRC dated 23 April
1994, in violation of requirement no. 3 of Revised Circular No. 1-88. On
this ground alone, the petition could have been dismissed. But the Court
chose not to do so, in view of the nature of question here raised and
instead required private respondent to file a comment on the petition.
Captain Tayong submitted his comment. The Office of the Solicitor
General asked for an extension of thirty (30) days to file its comment on
behalf of the NLRC. We consider that the Solicitor General's comment
may be dispensed with in this case.
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.15 Such
employees, too, are entitled to security of tenure, fair standards of
employment and the protection of labor laws.
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.16 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.17 To the captain is committed the governance, care and
management of the vessel.18 Clearly, the captain is vested with both
management and fiduciary functions.
It is plain from the records of the present petition that Captain Tayong
was denied any opportunity to defend himself. Petitioners curtly
dismissed him from his command and summarily ordered his
repatriation to the Philippines without informing him of the charge or
charges levelled against him, and much less giving him a chance to refute
any such charge. In fact, it was only on 26 October 1989 that Captain
Tayong received a telegram dated 24 October 1989 from Inter-Orient
requiring him to explain why he delayed sailing to South Africa.
We also find that the principal contention of petitioners against the
decision of the NLRC pertains to facts, that is, whether or not there was
actual and sufficient basis for the alleged loss of trust or confidence. We
have consistently held that a question of "fact" is, as a general rule, the
concern solely of an administrative body, so long as there is substantial
evidence of record to sustain its action.
The record requires us to reject petitioners' claim that the NLRC's
conclusions of fact were not supported by substantial evidence.
Petitioners rely on self-serving affidavits of their own officers and
employees predictably tending to support petitioners' allegation that
Captain Tayong had performed acts inimical to petitioners' interests for
which, supposedly, he was discharged. The official report of Mr. Clark,
petitioners' representative, in fact supports the NLRC's conclusion that
private respondent Captain did not arbitrarily and maliciously delay the
voyage to South Africa. There had been, Mr. Clark stated, a disruption in
the normal functioning of the vessel's turbo-charger19 and economizer
and that had prevented the full or regular operation of the vessel. Thus,
Mr. Clark relayed to Captain Tayong instructions to "maintain reduced
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.
More importantly, a ship's captain must be accorded a reasonable
measure of discretionary authority to decide what the safety of the ship
and of its crew and cargo specifically requires on a stipulated ocean
voyage. The captain is held responsible, and properly so, for such safety.
He is right there on the vessel, in command of it and (it must be
presumed) knowledgeable as to the specific requirements of
seaworthiness and the particular risks and perils of the voyage he is to
embark upon. The applicable principle is that the captain has control of
all departments of service in the vessel, and reasonable discretion as to
its navigation.20 It is the right and duty of the captain, in the exercise of
sound discretion and in good faith, to do all things with respect to the
vessel and its equipment and conduct of the voyage which are
reasonably necessary for the protection and preservation of the interests
under his charge, whether those be of the shipowners, charterers, cargo
owners or of underwriters.21 It is a basic principle of admiralty law that
in navigating a merchantman, the master must be left free to exercise
his own best judgment. The requirements of safe navigation compel us
to reject any suggestion that the judgment and discretion of the captain
of a vessel may be confined within a straitjacket, even in this age of
electronic communications.22 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 offices thousands 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 absolution
from his responsibility, if a marine casualty occurs, in such
instructions.23
Compagnie de Commerce v. Hamburg24 is instructive in this connection.
There, this Court recognized the discretionary authority of the master of
a vessel and his right to exercise his best judgment, with respect to
navigating the vessel he commands. In Compagnie de Commerce, a
charter party was executed between Compagnie de Commerce and the
owners of the vessel Sambia, under which the former as charterer
loaded on board the Sambia, at the port of Saigon, certain cargo
destined for the Ports of Dunkirk and Hamburg in Europe. The Sambia,
flying the German flag, could not, in the judgment of its master, reach its
ports of destination because war (World War I) had been declared
between Germany and France. The master of the Sambia decided to
deviate from the stipulated voyage and sailed instead for the Port of
Manila. Compagnie de Commerce sued in the Philippines for damages
arising from breach of the charter party and unauthorized sale of the
cargo. In affirming the decision of the trial court dismissing the
complaint, our Supreme Court held that the master of the Sambia had
reasonable grounds to apprehend that the vessel was in danger of
seizure or capture by the French authorities in Saigon and was justified
by necessity to elect the course which he took — i.e., to flee Saigon for
the Port of Manila — with the result that the shipowner was relieved
from liability for the deviation from the stipulated route and from
liability for damage to the cargo. The Court said:

The danger from which the master of the Sambia fled was a real and not
merely an imaginary one as counsel for shipper contends. Seizure at the
hands of an "enemy of the King" though not inevitable, was a possible
outcome of a failure to leave the port of Saigon; and we cannot say that
under the conditions existing at the time when the master elected to flee
from that port, there were no grounds for a "reasonable apprehension of
danger" from seizure by the French authorities, and therefore no
necessity for flight.
The word "necessity" when applied to mercantile affairs, where the
judgment must in the nature of things be exercised, cannot, of course,
mean an irresistible compelling power. What is meant by it in such cases
is the force of circumstances which determine the course a man ought to
take. Thus, 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.25 (Emphasis supplied)
Compagnie de Commerce contended that the shipowner should, at all
events, be held responsible for the deterioration in the value of the
cargo incident to its long stay on board the vessel from the date of its
arrival in Manila until the cargo was sold. The Supreme Court, in
rejecting this contention also, declared that:
But it is clear that the master could not be required to act on the very
day of his arrival; or before he had a reasonable opportunity to ascertain
whether he could hope to carry out his contract and earn his freight; and
that he should not be held responsible for a reasonable delay incident to
an effort to ascertain the wishes of the freighter, and upon failure to
secure prompt advice, to decide for himself as to the course which he
should adopt to secure the interests of the absent owner of the property
aboard the vessel.
The master is entitled to delay for such a period as may be reasonable
under the circumstances, before deciding on the course he will adopt. He
may claim a fair opportunity of carrying out a contract, and earning the
freight, whether by repairing or transhipping. Should the repair of the
ship be undertaken, it must be proceeded with diligently; and if so done,
the freighter will have no ground of complaint, although the consequent
delay be a long one, unless, indeed, the cargo is perishable, and likely to
be injured by the delay. Where that is the case, it ought to be forwarded,
or sold, or given up, as the case may be, without waiting for repairs.
A shipowner or shipmaster (if communication with the shipowner is
impossible), will be allowed a reasonable time in which to decide what
course he will adopt in such cases as those under discussion; time must
be allowed to him to ascertain the facts, and to balance the conflicting
interests involved, of shipowner, cargo owner, underwriter on ship and
freight. But once the time has elapsed, he is bound to act promptly
according as he has elected either to repair, or abandon the voyage, or
tranship. If he delays, and owing to that delay a perishable cargo suffers
damage, the shipowner will be liable for that damage; he cannot escape
that obligation by pleading the absence of definite instructions from the
owners of the cargo or their underwriters, since he has control of the
cargo and is entitled to elect.26 (Emphasis supplied)
The critical question, therefore, is 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.
In this connection, it is specially relevant to recall that, according to the
report of Mr. Robert Clark, Technical Director of petitioner Sea Horse
Ship Management, Inc., the Oceanic Mindoro had stopped in mid-ocean
for six (6) hours and forty-five (45) minutes on its way to Singapore
because of its leaking economizer.27 Equally relevant is the telex dated 2
August 1989 sent by Captain Tayong to Sea Horse after Oceanic Mindoro
had left Singapore and was en route to South Africa. In this telex, Captain
Tayong explained his decision to Sea Horse in the following terms:
I CAPT. R.D. TAYONG RE: UR PROBLEM IN SPORE (SINGAPORE) I EXPLAIN
AGN TO YOU THAT WE ARE INSECURITY/DANGER TO SAIL IN SPORE
W/OUT HAVING SUPPLY OF OXY/ACET. PLS UNDERSTAND HV PLENTY TO
BE DONE REPAIR FM MAIN ENGINE LIKE TURBO CHARGER PIPELINE,
ECONOMIZER LEAKAGE N ETC WE COULD NOT FIX IT W/OUT OXY/ACET
ONBOARD. I AND MR. CLARK WE CONTACTED EACH OTHER BY PHONE IN
PAPAN N HE ADVSED US TO SAIL TO RBAY N WILL SUPPLY OXY/ACET
UPON ARRIVAL RBAY HE ALSO EXPLAINED TO MY C/E HOW TO FIND THE
REMEDY W/OUT OXY/ACET BUT C/E HE DISAGREED MR. CLARK IDEA,
THAT IS WHY WE URG REQUEST[ED] YR KIND OFFICE TO ARRANGE
SUPPLY OXY/ACET BEFORE SAILING TO AVOID RISK/DANGER OR DELAY
AT SEA N WE TOOK PRECAUTION UR TRIP FOR 16 DAYS FM SPORE TO
RBAY. PLS. UNDERSTAND UR SITUATION.28 (Emphasis partly in source
and partly supplied)
Captain Tayong and for termination of his contract with petitioners prior
to the expiration of the term thereof. We cannot hold this conclusion of
the NLRC to be a grave abuse of discretion amounting to an excess or
loss of jurisdiction; indeed, we share that conclusion and make it our
own.
Clearly, petitioners were angered at Captain Tayong's decision to wait for
delivery of the needed supplies before sailing from Singapore, and may
have changed their estimate of their ability to work with him and of his
capabilities as a ship captain. Assuming that to be petitioners'
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 petitioners and under Philippine law.
ACCORDINGLY, 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.
SO ORDERED.

Under all the circumstances of this case, we, along with the NLRC, are
unable to hold that 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,
constituted 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
111 COMPAGNIE DE COMMERCE ET DE NAVIGATION D'EXTREME ORIENT
vs.
THE HAMBURG AMERIKA PACKETFACHT ACTIEN GESELLSCHAFT
By Kylie Dado
Topic: Freight (Disclaimer: Difficult case Tried my hardest to
understand it Included only those necessary to the topic)
PARTIES:
This is an action by the PLAINTIFF, corporation organized in France, with
a branch in Saigon, against DEFENDANT, organized in Germany, with a
principal office in Hamburg, Germany, and represented in Manila by
Behn, Meyer & Company.
FACTS:
Defendant chartered and hired unto the plaintiff the steamship or vessel
called the Sambia for the purpose of carrying a full cargo of rice, rice
bran and cargo meal from the port of Saigon to the port of Dunkirk and
Hamburg, via Suez Canal, upon the terms and conditions set forth and
contained in the written charter party made and executed between the
said parties. (Shipowner – Defendant; Cargo owner – Plaintiff)
There were rumors of impending war between Germany and France and
other nations of Europe. The master of the steamship was told to take
refuge at a neutral port (because Saigon was a French port). Plaintiff
asked for compulsory detention of its vessel to prevent its property from
leaving Saigon. However, the Governor of Saigon refused to issue an
order because he had not been officially notified of the declaration of
the war.
The steamship sailed from Saigon, and was bound for Manila, because it
was issued a bill of health by the US consul in Saigon. The steamship
stayed continuously in Manila and where it contends it will be compelled
to stay until the war ceases. No attempt was made on the part of the
defendants to transfer and deliver the cargo to the destinations as
stipulated in the charter party.
Behn, Meyer & Company offered to purchase the cargo from the
plaintiff, but the latter never received the cable messages so they never
answered. When a survey was done on the ship, it was found that the
cargo was infested with beetles, so Behn, Meyer & Company asked for
court authority to sell the cargo and the balance to be dumped at sea.
The proceeds of the sale were deposited in the court, waiting for orders
as to what to do with it. Behn, Meyer & Company wrote the plaintiff
again informing the latter of the disposition which it made upon the
cargo. Plaintiff answered that it was still waiting for orders as to what to
do. Now, the plaintiff wants all the proceeds of the sale to be given to
them (as damages for the defendants’ failure to deliver the cargo to the
destinations Dunkirk and Hamburg), while defendants contended that
they have a lien on the proceeds of the sale (amount due to them
because of the upkeep and maintenance of the ship crew and for
commissions for the sale of the cargo).
TC: In favor of the plaintiffs.
Defendants appealed, and made the following assignment of errors:
1. Court had no jurisdiction
2. Fear of capture was not force majeure
3. Defendant is liable for damages for non-delivery of cargo, and
the value of the award of damages)
On appeal, the plaintiffs also contended that the court erred in not giving
the full value of damages.
ISSUES:
1. W/N the master of Sambia, when he fled from the port of Saigon and
took refuge in the port of Manila, had reasonable grounds to apprehend
that his vessel was in danger of seizure or capture by the public enemies
of the flag under which he sailed
2. W/N defendant is entitled to freight ***
3. W/N the claim of the defendant for general average can be sustained
SC:
1. YES
If it was his duty to remain in the port of Saigon under the circumstances
existing at the time when he completed the loading of the vessel, in the
hope that he would be granted a laissez-passer or safe-conduct by the
French authorities, it is manifest that his flight subjected the ship and her
owners to liability for the resultant damages suffered by the cargo.
If, on the other hand, the master had reasonable ground to believe that
by remaining in the port of Saigon he would expose the vessel to a real,
and not a merely imaginary danger of seizure by the French authorities
from which he could secure her by taking refuge in the port of Manila,
his flight must be held to have been justified by the necessity under
which he was placed to elect that course which would secure the vessel
from danger of seizure by a public enemy of the country under whose
flag she sailed; and the ship-owner must be held to be relieved from
liability for the deviation from the route prescribed in the charter party
and the resultant damages to the cargo, under the general provisions of
maritime law
Petitioner’s Contention: having in mind accepted principles of public
international law, the established practice of nations, and the express
terms of the Sixth Hague Convention (1907), the master should have
confidently relied upon the French authorities at Saigon to permit him to
sail to his port of destination under a laissez-passer or safe-conduct,
which would have secured both the vessel and her cargo from all danger
of capture by any of the belligerents.
Defendant’s Defense: in the light of the developments of the present
war, the master was fully justified in declining to leave his vessel in a
situation in which it would be exposed to danger of seizure by the French
authorities, should they refuse to be bound by the alleged rule of
international law laid down by opposing counsel.
The Court concluded that under the circumstances surrounding the flight
of the Sambia from the port of Saigon, her master had no such
assurances, under any well-settled and universally accepted rule of
public international law, as to the immunity of his vessel from seizure by
the French authorities, as would justify us in holding that it was his duty
to remain in the port of Saigon in the hope that he would be allowed to
sail for the port of destination designated in the contract of
affreightment with a laissez-passer or safe-conduct which would secure
the safety of his vessel and cargo en route.
• It is true that soon after the outbreak of the war, the Republic of
France authorized and directed the grant of safe- conducts to enemy
merchant vessels in its harbors, under certain reasonable regulations
and restrictions; so that it would appear that had the master of the
Sambia awaited the issuance of such a safe-conduct, he might have been
enabled to comply with the terms of his contract of affreightment. But
until such action had been taken, the Sambia was exposed to the risk of
seizure in the event that the French government should decline to
conform to the practice; and in the absence of any assurance in that
regard upon which the master could confidently rely, his duty to his
owner and to his vessel's flag justified him in fleeing from the danger of
seizure in the port of an enemy to the absolute security of a neutral port.
• The danger from which the master of the Sambia fled was a real
and not merely an imaginary one as counsel for the shipper contends.
Seizure at the hands of an "enemy of the King," though not inevitable,
was a possible outcome of a failure to leave the port of Saigon; and we
cannot say that under the conditions existing at the time when the
master elected to flee from that port, there were no grounds for a
"reasonable apprehension of danger" from seizure by the French
authorities, and therefore no necessity for flight.
• There can be and there is no question as to the necessity, arising
out of the presence of enemy cruisers on the high seas which compelled
the Sambia, once she had left the port of Saigon, to take refuge in the
port of Manila and to stay there indefinitely pending the outcome of the
war. We conclude, therefore, that the deviation of the Sambia from the
route prescribed in her charter party, and the subsequent abandonment
by the master of the voyage contemplated in the contract of
affreightment, must be held to have been justified by the necessity
under which he was placed to elect that course which would remove and
preserve the vessel from danger of seizure by the public enemies of the
flag under which she sailed; and that neither the vessel nor her owners
are liable for the resultant damages suffered by the owner of the cargo.
2. NO
The claim advanced on behalf of the shipowner for freights is wholly
without merit. Under the terms of the contract of affreightment, the
amount of the freight was made payable on delivery of the cargo at the
designated port of destination. It is clear then, that under the terms of
that instrument freight never became payable. Carrying the cargo from
Saigon to Manila was not even a partial performance of a contract to
carry it from Saigon to Europe; and even it if could be treated as such,
the shipowner would have no claim for freight, in the absence of any
agreement, express or implied, to make payment for a partial
performance of the contract.
Should the master relinquish the attempt either to carry on the goods in
his own ship or to send them to their destination in another ship, he will
thereby wholly abandon any claim for freight in respect to them, unless
it has been made payable in advance, or irrespective of delivery. Where
freight is only payable on delivery, no part is earned until it is earned
completely. So that whether the abandonment of the voyage be due to
inability, or prevention of the ship, or to the necessity of selling the
goods, either to raise funds for the ship's repairs or their owner's
interest, the shipowner loses the whole freight.
On the other hand, if the cargo be accepted at the port of refuge under
an agreement that delivery there shall be treated as a performance by
the shipowner of his contract; or if the owner of the goods, by any act or
default, prevents the shipowner from carrying them on to their
destination, the whole of the freight becomes at once payable.
Also sometimes the shipowner becomes entitled, by agreement, on
delivery at a port of refuge, to freight in proportion to the part of the
voyage which has been accomplished. This subject will be discussed
more fully hereafter. Here it is enough to say that no agreement of this
kind can arise, by implication, unless the cargo owner has consented to
accept the goods under circumstances which left him an option to have
them carried on to their destination by the shipowner, in his own or
some other vessel.
Where the vessel has been abandoned at sea by the master and crew,
without any intention of returning to her, the freighter is entitled to
treat the contract as abandoned; so that if she be brought into port by
salvors, he may claim the goods without becoming liable to pay freight.
3. NO
The claim of the shipowner for general average cannot be sustained
under the provisions of the York-Antwerp Rules of 1890, by reference to
which, it was expressly stipulated in the charter party, all such questions
should be settled, Rules X and XI, which treat of "Expenses at Port of
Refuge, etc.," and "Wages and Maintenance of Crew in Port of Refuge,
etc.," provide for general average "When a ship shall have entered a port
or place of refuge, or shall have returned to her port or place of loading,
in consequence of accident, sacrifice, or other extraordinary
circumstances which render that necessary for the common safety . . .;"
and an examination of the entire body of these rules discloses that
general average is never allowed thereunder unless the loss or damage
sought to be made good as general average has been incurred for the
"common safety." It is very clear that in fleeing from the port of Saigon
and taking refuge in Manila Bay the master of the Sambia was not acting
for the common safety of the vessel and her cargo. The French cargo was
absolutely secure from danger of seizure or confiscation so long as it
remained in the port of Saigon, and there can be no question that the
flight of the Sambia was a measure of precaution adopted solely and
exclusively for the preservation of the vessel from danger of seizure or
capture.
claims for contribution in general average must be supported by proof
that sacrifices on account of which such claims are submitted were made
to avert a common imminent peril, and that extraordinary expenses for
which reimbursement is sought, were incurred for the joint benefit of
ship and cargo.
SC concluded that much of the judgment entered in the court below as
provides for the delivery to the plaintiff in this action of the sum of
P128,977.71, the net proceeds of the sale of the cargo of rice aboard the
Sambia, which has been deposited subject to the order of the court
below, less any commissions to which the clerk of that court may be
lawfully entitled at the date of payment, should be affirmed; but that so
much of the judgment as provides, for the recovery of damages in the
sum of P60,814.32, should be reversed

Rule 18 of the York-Antwerp Rules is as follows:

“Except as provided in the foregoing rules, the adjustment shall be

drawn up in accordance with the law and practice that would have
governed the adjustment had the contract of affreightment not
contained the clause to pay general average according to these rules.”

If then, any doubt could properly arise as to the meaning and effect of
the words "common safety" as used in this body of rules, we would be
justified in resolving it in accordance with settled principles of maritime
law; and an examination of the authorities discloses a substantial
unanimity of opinion as to the general doctrine which provides that