Marimperio Compania Naviera vs.

CA (GR done in
L-40234, 14 December 1987) advance. The first 15-day hire comprising the
First Division, Paras (J): 4 concur period from March 27 to April 11, 1965 was
paid despite
follow-ups only on 6 April 1965 and the second
Facts: In 1964 Philin Traders Corporation and
15-day hire for the period from April 12 to April
Union Import and Export Corporation entered
27, 1965 was paid also despite follow-ups only
into a joint
on 26 April 1965. On 14 April 1965 upon
business venture for the purchase of copra from
representation of Toeg, the Esso Standard Oil
Indonesia for sale in Europe. James Liu,
(Hongkong) Company supplied the vessel with
President and
400 tons of bunker oil at a cost of US $6,982.73.
General Manager of the Union took charge of
Although the late payments for the charter of the
the European market and the chartering of a
vessel were received and acknowledged by
vessel to take the copra to Europe. Peter Yap of
Vlassopulos without comment or protest, said
Philin on the other hand, found one P.T. Karkam
agent notified Matthews, by telex on 23 April
in Dumai, Sumatra who had around 4,000 tons
1965 that the shipowners in accordance with
of copra for sale. Exequiel Toeg of Interocean
Clause 6 of the Charter Party were withdrawing
was commissioned to look for a vessel and he
the vessel from Charterer’s service and holding
found the vessel “SS Paxoi” of Marimperio
said Charterer responsible for unpaid hirings and
Compañia Naviera, S.A. available. Philin and
all legal claims. On 29 April 1965, the
Union authorized Toeg to negotiate for its
shipowners entered into another charter
charter but with instructions to keep confidential
agreement with another Charterer, the
the fact that they are the real charterers.
Nederlansche Stoomvart of Amsterdam, the
Consequently on 21 March 1965, in London
delivery date of which was around 3 May 1965
England, a “Uniform Time Charter” for the hire
for a trip via Indonesia to Antwep/Hamburg at
of vessel “Paxoi” was entered into by the owner,
an increased charter cost. Meanwhile, the
Marimperio through its agents N. & J.
original Charterer again remitted on 30 April
Vlassopulos, Ltd. And Matthews Wrightson,
1965, the amount corresponding to the 3rd 15-
Burbridge, Ltd. (Matthews), representing
day hire of the vessel PAXOI, but this time the
Interocean Shipping Corporation, which was
remittance was refused.
made to appear as charterer, although it merely
On 3 May 1965, Union and Philin filed a
acted in behalf of the real charterers. In view of
complaint with the Court of First Instance of
the Charter, on 30 March 1965 plaintiff
Manila, Branch VIII, against the Unknown
Charterer cabled a firm offer to P.T. Karkam to
Owners of the Vessel “SS Paxoi”, for specific
buy the 4,000 tons of copra for U.S. $180.00 per
performance with prayer for preliminary
ton, the same to be loaded either in April or
attachment. Union and Philin obtained a writ of
May, 1965. The offer was accepted and
preliminary attachment of vessel “PAXOI”
plaintiffs opened two irrevocable letters of
which was anchored at Davao on 5 May 1969,
Credit in favor of P.T. Karkam. On March 29,
upon the filing of the corresponding bond of
1965, the Charterer was notified by letter by
P1,663,030.00. On 11 May 1965, the complaint
Vlassopulos through Matthews that the vessel
was amended to identify the defendant as
“PAXOI” had sailed from Hsinkang at noontime
Marimperio Compañia Naviera S.A. However,
on 27 March 1965 and that it had left on hire at
the attachment was lifted on 15 May 1969 upon
that time and date under the Uniform Time-
Marimperio’s motion and filing of a
Charter.
counterbond for P1,663,030. On 16 March 1966,
The Charterer was however twice in default in
Interocean Shipping Corporation filed a
its payments which were supposed to have been
complaint-in-intervention to collect what it
claims to be its loss of income by way of costs. The Court ordered the dismissal of the
commission and expenses in the amount of counterclaims filed by Marimperio against
P15,000.00 and the sum of P2,000.00 for Union, Philin and Interocean, as well as its
attorney’s fees. On 22 November 1969 the CFI motion for the award of damages in connection
of Manila rendered its decision in favor of with the issuance of the writ of preliminary
Marimperio, and against Union and Philin, attachment. Marimperio, filed a motion for
dismissing the amended complaint, and ordering reconsideration and/or new trial of the amended
the latter on the counterclaim to pay decision on 19 February 1970. Meanwhile a new
Marimperio, jointly and severally, the amount of Judge was assigned to the Trial Court. On 10
L8,011.38 or its equivalent in Philippine September 1970 the trial court issued its order of
currency of P76,303.40, at the exchange rate of 10 September 1970 denying Marimperio’s
P9.40 to 1 for the unearned charter hire due to motion for reconsideration.
the attachment of the vessel “PAXOI” in Davao, On Appeal, the Court of Appeals affirmed the
plus premiums paid on the counterbond as of 22 amended decision of the lower court except the
April 1968 plus the telex and cable charges and portion granting commission to Interocean,
the sum of P10,000.00 as attorney’s fees and which it reversed thereby dismissing the
costs. The trial court dismissed the complaint-in- complaint-in-intervention. Its two motions (1)
intervention, ordering Interocean to pay for reconsideration and/or new trial and (2) for
Marimperio the sum of P10,000.00 as attorney’s new trial having been denied by the Court of
fees, and the costs. Union and Philin filed a Appeals in its Resolution of 17 February 1975
Motion for Reconsideration and/or new trial of which, however, fixed the amount of attorney’s
the decision of the trial court on 23 December fees at P100,000.00 instead of $100,000.00,
1969. Interocean filed its motion for Marimperio filed with the Supreme Court its
reconsideration and/or new trial on 7 January petition for review on certiorari on 19 March
1970. Acting on the two motions for 1975.
reconsideration, the trial court reversed its stand The Supreme Court reversed and set aside the
in its amended decision dated 24 January 1978. decision of the Court of Appeals affirming the
The Court rendered judgment for Union, Philin amended
and Interocean, and ordered Marimperio to pay decision of the CFI of Manila; except for that
the former the sum of (1) US$22,500.00 portion of the decision dismissing the complaint-
representing the remittance of Union and Philin inintervention; and reinstated the original
to Marimperio for the first 15-day hire of the decision of the trial court.
vessel ‘SS PAXOI’, including overtime and an
overpayment of US$254.00; (2) US$16,000.00
corresponding to the remittance of Union and Caltex vs. Sulpicio Lines (GR 131166, 30
Philin to Marimperio for the second 15-day hire September 1999)
of the vessel; (3) US$6,982.72 representing the First Division, Pardo (J): 3 concur, 1 took no
cost of bunker oil, survey and watering of the part
said vessel; (4) US$220,000.00 representing the Facts: MT Vector is a tramping motor tanker
unrealized profits; and (5) P100,000.00, as and owned and operated by Vector Shipping
for attorney’s fees. The Court further ordered Corporation, which is engaged in the business of
Marimperio to pay Interocean the amount of transporting fuel products such as gasoline,
P15,450.44, representing the latter’s commission kerosene, diesel and crude oil. On the other
as broker, with interest thereon at 6% per annum hand, the MV Doña Paz is a passenger and cargo
from the date of the filing of the complaint-in- vessel owned and operated by Sulpicio Lines,
intervention, until fully paid, plus the sum of Inc. plying the route of Manila/ Tacloban/
P2,000.00 as attorney’s fees, and to pay the Catbalogan/ Manila/ Catbalogan/ Tacloban/
Manila, making trips twice a week. On 19 petition.
December 1987, motor tanker MT Vector left The Supreme Court granted the petition and set
Limay, Bataan, enroute to Masbate, loaded with aside the decision of the Court of Appeals,
8,800 barrels of petroleum products shipped by insofar as it held Caltex liable under the third
Caltex, by virtue of a charter contract between party complaint to reimburse/indemnify Sulpicio
Vector Shipping and Caltex. The next day, the Lines, Inc. the damages the latter is adjudged to
passenger ship MV Doña Paz left the port of pay plaintiffs-appellees. The Court affirmed the
Tacloban headed for Manila with a complement decision of the Court of Appeals insofar as it
of 59 crew members including the master and orders Sulpicio Lines, Inc. to pay the heirs of
his officers, and passengers totaling 1,493 as Sebastian E. Cañezal and Corazon Cañezal
indicated in the Coast Guard Clearance, but damages as set forth therein. Third-party
possibly carrying an estimated 4,000 passengers. defendant-appellee Vector Shipping Corporation
At about 10:30 p.m. of 20 December 1987, the and Francisco Soriano are held liable to
two vessels collided in the open sea within the reimburse/indemnify defendant Sulpicio Lines,
vicinity of Dumali Point between Marinduque Inc. whatever damages, attorneys’ fees and costs
and Oriental Mindoro. All the crewmembers of the latter is adjudged to pay plaintiffs-appellees
MV Doña Paz died, while the two survivors in the case.
from MT Vector claimed that they were sleeping
at the time of the incident. Only 24 survived the
tragedy after having been rescued from the Ouano vs. CA (GR 95900, 23 July 1992)
burning waters by vessels that responded to Second Division, Regalado (J): 3 concur
distress calls. Among those who perished were Facts: Julius C. Ouano is the registered owner
public school teacher Sebastian Cañezal (47 and operator of the motor vessel known as M/V
years old) and his daughter Corazon Cañezal (11 Don Julio Ouano. On 8 October 1980, Ouano
years old), both unmanifested passengers but leased the said vessel to Florentino Rafols Jr.
proved to be on board the vessel. On 22 March under a charter party. The consideration for the
1988, the board of marine inquiry after letting and hiring of said vessel was P60,000.00
investigation found that the MT Vector, its a month, with P30,000.00 as downpayment and
registered operator Francisco Soriano, and its the balance of P30,000.00 to be paid within 20
owner and actual operator Vector Shipping days after actual departure of the vessel from the
Corporation, were at fault and responsible for its port of call. It was also expressly stipulated that
collision with MV Doña Paz. the charterer should operate the vessel for his
On 13 February 1989, Teresita and Sotera own benefit and should not sublet or sub-charter
Cañezal, filed with the RTC Manila, a complaint the same without the knowledge and written
for “Damages Arising from Breach of Contract consent of the owner. On 11 October 1980,
of Carriage” against Sulpicio Lines, Inc. Rafols contracted with Market Developers, Inc.
Sulpicio, in turn, filed a third party complaint (MADE) through its group manager, Julian O.
against Francisco Soriano, Vector Shipping Chua, under an agreement denominated as a
Corporation and Caltex (Philippines), Inc. On 15 “Fixture Note” to transport 13,000 bags of
September 1992, the trial court rendered cement from Iligan City to General Santos City,
decision dismissing the third party complaint consigned to Supreme Merchant Construction
against Caltex. Supply, Inc. (SMCSI) for a freightage of
On appeal to the Court of Appeals interposed by P46,150.00. Said amount was agreed to be
Sulpicio Lines, Inc. (CA-GR CV 39626), on 15 payable to Rafols by MADE in two installments,
April 1997, the Court of Appeal modified the that
trial court’s ruling and included petitioner Caltex is, P23,075.00 upon loading of the cement at
as one of the those liable for damages. Hence the Iligan City and the balance of P23,075.00 upon
completion of loading and receipt of the cement damages in the sum of P150,000.00, attorney’s
cargo by the consignee. The fixture note did not fees and
have the written consent of Ouano. Rafols had expenses of litigation. On 10 March 1981,
on board the M/V Don Julio Ouano his sobre MADE filed its answer, while Ang and Chua
cargo (jefe de viaje) when it departed from filed theirs on 10
Iligan City until the cargo of cement was February 1982 and 31 May 1982, respectively.
unloaded in General Santos City, the port of Rafols was declared in default for failure to file
destination. On 13 his answer
October 1980, Ouano wrote a letter to MADE despite due service of summons. On 25 May
through its manager, Chua, “to strongly request, 1985, the trial court rendered a decision in favor
if not demand of Ouano, (1)
to hold momentarily any payment or partial ordering MADE, Chua, SMCSI, Ang (Chua Pek
payment whatsoever due M/V Don Julio Ouano Giok) and Rafols, jointly and severally, to pay to
until Mr. Ouano the
Florentino Rafols makes good his commitment” sum of P23,075.00 corresponding to the first
to petitioner. On 20 October 1980, MADE, as 50% freight installment on the latter’s vessel
shipper, paid ‘M/V Don Julio
Rafols the amount of P23,075.00 corresponding Ouano’ included as part of the purchase price
to the first installment of the freightage for the paid by SMCSI to MADE, plus legal interest
aforestated from 6 January
cargo of cement. The entire cargo was thereafter 1981 date of filing of the original complaint; (2)
unloaded at General Santos City Port and sentencing MADE, Chua and Rafols, jointly and
delivered to the solidarily,
consignee, SMCSI, without any attempt on the to pay Ouano P50,000.00 in concept, of moral
part of either the captain of M/V Don Julio and exemplary damages, and P5,000.00
Ouano or the said attorney’s fees; and (3)
sobre cargo of Rafols, or even of Ouano himself sentencing SMCSI and Ang, jointly and
who was then in General Santos City Port, to severally, to pay Ouano P200,000.00 attorney’s
hold and keep fees and expenses of
in deposit either the whole or part of the cement litigation, P4,000.00, including P1,000.00
cargo to answer for freightage. Neither was there incurred by Ouano for travel to General Santos
any demand City to coordinate
made on Rafols, et. al. for a bond to secure in serving an alias summons per sheriff’s return
payment of the freightage, nor to assert in any of service, with costs against Rafols, et.al.
manner the On appeal, and on 30 August 1990, the Court of
maritime lien for unpaid freight over the cargo Appeals reversed the decision, and absolved
by giving notice thereof to the consignee SMCI. MADE, et. al.
The cement from the complaint; but affirmed the decision
was sold in due course of trade by SMCSI to its with respect to Rafols. Ouano filed a motion for
customers in October and November 1980. reconsideration
On 6 January 1981, Ouano filed a complaint in which was denied by the Court of Appeals on 15
the RTC of Cebu against MADE, as shipper; October 1990. Hence, the petition for review on
SMCSI, as certiorari.
consignee; and Rafols, as charterer, seeking The Supreme Court denied the petition and
payment of P23,000.00 representing the freight affirmed the assailed judgment of the Court of
charges for the Appeals
cement cargo, aside from moral and exemplary
 hours and 22 minutes to discharge the 200, 000
bags of corn
NFA vs. CA (GR 96453, 4 August 1999)
grains. Unfortunately, unloading only
Third Division, Purisima (J): 4 concur
commenced on 15 March 1987 and was
Facts: National Food Authority (NFA), thru its
completed on 7 April 1987. It
officers then, Emil Ong, Roselinda Geraldez,
took a total period of 20 days, 14 hours and 33
Ramon Sargan
minutes to finish the unloading, due to the
and Adelina A. Yap, entered into a “Letter of
unavailability of a
Agreement for Vessel /Barge Hire” with Hongfil
berthing space for M/V CHARLIE/DIANE.
Shipping
After the discharging was completed, NFA paid
Corporation (Hongfil) for the shipment of
Hongfil the amount of P1,006,972.11 covering
200,000 bags of corn grains from Cagayan de
the shipment of corn grains. Thereafter, Hongfil
Oro City to Manila.
sent its billing to NFA,
NFA sent Hongfil a Letter of Advice that its
claiming payment for freight covering the shut-
(Hongfil) vessel should proceed to Cagayan de
out load or deadfreight as well as demurrage,
Oro City. On 6
allegedly
February 1987, M/V DIANE/CHARLIE of
sustained during the loading and unloading of
Hongfil arrived in Cagayan de Oro City. Hongfil
subject shipment of corn grains.
notified the
When NFA refused to pay the amount reflected
Provincial Manager of NFA in Cagayan de Oro,
in the billing, Hongfil brought an action against
Eduardo A. Mercado, of its said vessel’s
NFA and its
readiness to load and
officers for recovery of deadfreight and
the latter received the said notification on 9
demurrage, before the RTC in Pasig City (Civil
February 1987. A certification of charging rate
Case 55892, Branch
was then issued by
165). On 29 February 1989, after trial, the RTC
Gold City Integrated Port Services, Inc.
handed down its decision in favor of Hongfil
(INPORT), the arrastre firm in Cagayan de Oro
and against NFA
City, which certified
and its officers, ordering (1) the NFA to pay
that it would take them (INPORT) 7 days, 8
Hongfil (a) P242,367.30, in and as payment of
hours and 43 minutes to load the 200,000 bags
the deadfreight or
of NFA corn
unloaded cargo; and (b) P1,152,687.50, in and as
grains. On 10 February 1987, loading on the
payment as of demurrage claim; (2) the NFA
vessel commenced and was terminated on 4
and its officers
March 1987. As
to pay Hongfil, jointly and severally the amount
there was a strike staged by the arrastre workers
of P50,000.00, for and as attorney’s fees; and
and in view of the refusal of the striking
expenses of
stevedores to attend
litigation or the costs of the suit. The trial court
to their work, the loading of said corn grains
dismissed NFA’s counterclaim for lack of merit.
took 21 days, 15 and 18 minutes to finish. On 6
On appeal, and on 29 November 1990, the Court
March 1987, the
of Appeals affirmed with modification the
NFA Provincial Manager allowed MV
judgment by
CHARLIE/DIANE to depart for the Port of
deleting therefrom the award of attorney’s fees
Manila. On 11 March
(CA GR CV 21243). Hence, the petition for
1987, the vessel arrived at the Port of Manila
review on
and a certification of discharging rate was issued
certiorari.
at the instance
The Supreme Court affirmed the decision of the
of Hongfil, stating that it would take 12 days, 6
Court of Appeals with modification; ordered
NFA to pay day. xxx (9)
Hongfil Shipping Corporation the amount of Cargo Insurance: Charterer’s and/or Shipper’s
P242,367.30 for deadfreight; deleted the award must insure the cargoes. Shipowners not
of P1,152,687.50 responsible for
for demurrage for lack of proper basis; and losses/damages except on proven willful
absolved Roselinda Geraldez, Ramon Sargan negligence of the officers of the vessel. (10)
and Adelina A. Yap Other terms: (a) All
of any liability to Hongfil; without terms/conditions of NONYAZAI C/P [sic] or
pronouncement as to costs other internationally recognized Charter Party
Agreement shall
form part of this Contract. xxx” On August 6, 7
National Steel vs. CA (GR 112287, 12 and 8, 1974, in accordance with the Contract of
December 1997) Voyage
Vlasons Shipping vs. CA (GR 112350) Charter Hire, the MV ‘VLASONS I’ loaded at
Third Division, Panganiban (J): 4 concur NSC’s pier at Iligan City, the NSC’s shipment
Facts: The MV Vlasons I is a vessel which of 1,677 skids of
renders tramping service and, as such, does not tinplates and 92 packages of hot rolled sheets or
transport cargo or a total of 1,769 packages with a total weight of
shipment for the general public. Its services are about
available only to specific persons who enter into 2,481.19 metric tons for carriage to Manila. The
a special shipment was placed in the 3 hatches of the ship.
contract of charter party with its owner. The ship Chief Mate
is a private carrier, and it is in this capacity that Gonzalo Sabando, acting as agent of the vessel,
its owner, acknowledged receipt of the cargo on board and
Vlasons Shipping, Inc. (VSA), entered into a signed the
contract of affreightment or contract of voyage corresponding bill of lading, BLPP 0233 on 8
charter hire with August 1974. The vessel arrived with the cargo
National Steel Corporation (NSC) on 17 July at Pier 12,
1974, whereby NSC hired VSI’s vessel, the MV North Harbor, Manila, on 12 August 1974. The
‘VLASONS I’ following day, when the vessel’s 3 hatches
to make 1 voyage to load steel products at Iligan containing the
City and discharge them at North Harbor, shipment were opened by NSC’s agents, nearly
Manila, under the all the skids of tinplates and hot rolled sheets
following terms and conditions, viz: “xxx (2) were allegedly
Cargo: Full cargo of steel products of not less found to be wet and rusty. The cargo was
than 2,500 MT, discharged and unloaded by stevedores hired by
10% more or less at Master’s option. xxx (4) the Charterer.
Freight/Payment: P30.00/metric ton, FIOST Unloading was completed only on 24 August
basis. Payment 1974 after incurring a delay of 11 days due to
upon presentation of Bill of Lading within the heavy rain
fifteen (15) days. (5) Laydays/Cancelling: July which interrupted the unloading operations. To
26, 1974/Aug. 5, determine the nature and extent of the wetting
1974. (6) Loading/Discharging Rate: 750 tons and rusting,
per WWDSHINC. (Weather Working Day of 24 NSC called for a survey of the shipment by the
consecutive Manila Adjusters and Surveyors Company
hours, Sundays and Holidays Included). (7) (MASCO). In a
Demurrage/Dispatch: P8,000.00/P4,000.00 per letter to the NSC dated 17 March 1975, MASCO
made a report of its ocular inspection conducted On appeal, and on 12 August 1993, the Court of
on the Appeals modified the decision of the trial court
cargo, both while it was still on board the vessel by reducing
and later at the NDC warehouse in Pureza St., the demurrage from P88,000.00 to P44,000.00
Sta. Mesa, and deleting the award of attorneys fees and
Manila where the cargo was taken and stored. expenses of
MASCO reported that it found wetting and litigation. NSC and VSI filed separate motions
rusting of the for reconsideration. In a Resolution dated 20
packages of hot rolled sheets and metal covers October 1993,
of the tinplates; that tarpaulin hatch covers were the appellate court denied both motions.
noted torn at Undaunted, NSC and VSI filed their respective
various extents; that container/metal casings of petitions for review
the skids were rusting all over. MASCO’s before the Supreme Court. On motion of VSI,
surveyors drew at the Court ordered on 14 February 1994 the
random samples of bad order packing materials consolidation of the
of the tinplates and delivered the same to the petitions.
MIT Testing The Supreme Court denied the consolidated
Laboratories for analysis. On 31 August 1974, petitions; and affirmed the questioned Decision
the MIT Testing Laboratories issued Report of the Court of
1770 which in Appeals with the modification that the
part, states, “The analysis of bad order samples demurrage awarded to VSI is deleted. No
of packing materials . . . shows that wetting was pronouncement as to costs.
caused by
contact with sea water.” On 6 September 1974,
on the basis of Report 1770, NSC filed with VSI Planters Products vs. CA (GR 101503, 15
its claim for damages suffered due to the September 1993)
downgrading of the damaged tinplates in the First Division, Bellosillo (J): 2 concur, 1 on
amount of P941,145.18. Then on 3 leave, 1 took no part
October 1974, NSC formally demanded Facts: Planters Products, Inc. (PPI), purchased
payment of said claim but VSI refused and from Mitsubishi International Corporation of
failed to pay. New York, USA,
NSC filed its complaint against VSI on 21 April 9,329.7069 metric tons (M/T) of Urea 46%
1976 (Civil Case 23317) before the CFI of Rizal. fertilizer which the latter shipped in bulk on 16
The trial June 1974 aboard
court rendered judgment in favor of VSI and the cargo vessel M/V “Sun Plum” owned by
against NSC dismissing the complaint with costs Kyosei Kisen Kabushiki Kaisha (KKKK) from
against NSC, Kenai, Alaska,
and ordering NSC to pay VSI on the USA, to Poro Point, San Fernando, La Union,
counterclaim for the sum of P75,000.00 as Philippines, as evidenced by Bill of Lading KP-
unpaid freight and 1 signed by the
P88,000.00 as demurrage with interest at the master of the vessel and issued on the date of
legal rate on both amounts from April 7, 1976 departure. On 17 May 1974, or prior to its
until the same voyage, a time
shall have been fully paid; attorney’s fees and charter-party on the vessel M/V “Sun Plum”
expenses of litigation in the sum of pursuant to the Uniform General Charter was
P100,000.00; and cost of entered into
suit. between Mitsubishi as shipper/charterer and
KKKK as shipowner, in Tokyo, Japan. Riders to warehouse were sandy and the weather was
the aforesaid variable, raining occasionally while the
charter-party starting from paragraph 16 to 40 discharge was in
were attached to the pre-printed agreement. progress. PPI’s warehouse was made of
Addenda 1, 2, 3 corrugated galvanized iron (GI) sheets, with an
and 4 to the charter-party were also subsequently opening at the front
entered into on the 18th, 20th, 21st and 27th of where the dump trucks entered and unloaded the
May 1974, fertilizer on the warehouse floor. Tarpaulins and
respectively. Before loading the fertilizer aboard GI sheets
the vessel, 4 of her holds were all presumably were placed in-between and alongside the trucks
inspected by to contain spillages of the fertilizer. It took 11
the charterer’s representative and found fit to days for PPI
take a load of urea in bulk pursuant to paragraph to unload the cargo, from 5 July to 18 July 1974
16 of the (except July 12th, 14th and 18th). A private
charter-party. After the Urea fertilizer was marine and
loaded in bulk by stevedores hired by and under cargo surveyor, Cargo Superintendents
the supervision of Company Inc. (CSCI), was hired by PPI to
the shipper, the steel hatches were closed with determine the “outturn” of
heavy iron lids, covered with 3 layers of the cargo shipped, by taking draft readings of the
tarpaulin, then tied vessel prior to and after discharge. The survey
with steel bonds. The hatches remained closed report
and tightly sealed throughout the entire voyage. submitted by CSCI to the consignee (PPI) dated
Upon arrival 19 July 1974 revealed a shortage in the cargo of
of the vessel at her port of call on 3 July 1974, 106.726 M/T
the steel pontoon hatches were opened with the and that a portion of the Urea fertilizer
use of the approximating 18 M/T was contaminated with
vessel’s boom. PPI unloaded the cargo from the dirt. The same results
holds into its steel-bodied dump trucks which were contained in a Certificate of
were parked Shortage/Damaged Cargo dated 18 July 1974
alongside the berth, using metal scoops attached prepared by PPI which
to the ship, pursuant to the terms and conditions showed that the cargo delivered was indeed
of the short of 94.839 M/T and about 23 M/T were
charter-party (which provided for an FIOS rendered unfit for
clause). The hatches remained open throughout commerce, having been polluted with sand, rust
the duration of the and dirt. Consequently, PPI sent a claim letter
discharge. Each time a dump truck was filled up, dated 18
its load of Urea was covered with tarpaulin December 1974 to Soriamont Steamship
before it was Agencies (SSA), the resident agent of the
transported to the consignee’s warehouse located carrier, KKKK, for
some 50 meters from the wharf. Midway to the P245,969.31 representing the cost of the alleged
warehouse, shortage in the goods shipped and the
the trucks were made to pass through a weighing diminution in value of
scale where they were individually weighed for that portion said to have been contaminated with
the purpose dirt. SSA explained that they were not able to
of ascertaining the net weight of the cargo. The respond to the
port area was windy, certain portions of the consignee’s claim for payment because,
route to the according to them, what they received was just a
request for Sales, Inc. to reject the shipment of molasses as
shortlanded certificate and not a formal claim, a total loss.
and that this “request” was denied by them Thereafter, Pag-asa Sales, Inc. filed a formal
because they “had claim with the insurer of its lost cargo,
nothing to do with the discharge of the Philippine General
shipment.” Insurance Company (PhilGen) and against the
On 18 July 1975, PPI filed an action for carrier, Coastwise Lighterage. Coastwise
damages with the Court of First Instance of Lighterage denied the
Manila. The court a quo claim and it was PhilGen which. paid the
however sustained the claim of PPI against the consignee, Pag-asa Sales the amount of
carrier for the value of the goods lost or P700,000.00 representing
damaged. the value of the damaged cargo of molasses.
On appeal, the Court of Appeals reversed the In turn, PhilGen then filed an action against
lower court and absolved the carrier from Coastwise Lighterage before the RTC of Manila,
liability for the value seeking to
of the cargo that was lost or damaged. PPI recover the amount of P700,000.00 which it paid
appealed by way of petition for review. to Pag-asa Sales for the latter’s lost cargo
The Supreme Court dismissed the petition; PhilGen now
affirmed the assailed decision of the Court of claims to be subrogated to all the contractual
Appeals, which rights and claims which the consignee may have
reversed the trial court; and consequently, against the
dismissed Civil Case 98623 of the then CFI, carrier, which is presumed to have violated the
now RTC, of Manila; contract of carriage. The RTC (Branch 35)
with costs against PPI. awarded the
amount prayed for by PhilGen, i.e. the principal
Coastwise Lighterage Corp. vs. CA (GR amount of P700,000.00 plus interest thereon at
114167, 12 July 1995) the legal rate
Third Division, Francisco R. (J): 4 concur
computed from 29 March 1989, the date the
Facts: Pag-asa Sales Inc. entered into a contract
complaint was filed until fully paid and another
to transport molasses from the province of
sum of
Negros to Manila
P100,000.00 as attorney’s fees and costs.
with Coastwise Lighterage Corp., using the
On Coastwise Lighterage’s appeal to the Court
latter’s dumb barges. The barges were towed in
of Appeals, the award was affirmed on 17
tandem by the
December 1993.
tugboat MT Marica, which is likewise owned by
Hence, the petition for review.
Coastwise. Upon reaching Manila Bay, while
The Supreme Court denied the petition, and
approaching
affirmed the appealed decision.
Pier 18, one of the barges, “Coastwise 9”, struck
an unknown sunken object. The forward
buoyancy
compartment was damaged, and water gushed in Litonjua Shipping vs. National Seamen Board
through a hole “2 inches wide and 22 inches (GR 51910, 10 August 1989)
Third Division, Feliciano (J): 4 concur
long”. As a
Facts: Litonjua is the duly appointed local
consequence, the molasses at the cargo tanks
crewing Managing Office of the Fairwind
were contaminated and rendered unfit for the use
Shipping Corporation.
it was
The M/V Dufton Bay is an ocean-going vessel
intended. This prompted the consignee, Pag-asa
of foreign registry owned by the R.D. Mullion
Ship Broking Security Agency (NISA) clearance. Messrs.
Agency Ltd. On 11 September 1976, while the Cruz and Litonjua
Dufton Bay was in the port of Cebu and while were also present during Canfongo’s interview
under charter by by Captain Ho King Yiu of the Dufton Bay. On
Fairwind, the vessel’s master contracted the 17 February
services of, among others, Gregorio Candongo 1977, the hearing officer of the NSB rendered a
to serve as Third judgment by default, ordering R.D. Mullion
Engineer for a period of 12 months with a Shipbrokers Co.,
monthly wage of US$500.00. This agreement Ltd., and Litonjua Shipping Co., Inc., jointly and
was executed before solidarily to pay Candongo the sum of $4,657.63
the Cebu Area Manning Unit of the NSB. or its
Thereafter, Candongo boarded the vessel. On 28 equivalent in the Philippine currency within 10
December 1976, days from receipt of the copy of the Decision the
before expiration of his contract, Candongo was payment of
required to disembark at Port Kelang, Malaysia, which to be coursed through the then NSB.
and was returned to the Philippines on 5 January Litonjua filed a motion for reconsideration of the
1977. The cause of the discharge was described hearing officer’s
in his Seaman’s Book decision; the motion was denied.
as “by owner’s arrange.” Litonjua filed an “Appeal and/or Motion for
Shortly after returning to the Philippines, Reconsideration of the Default Judgment dated 9
Candongo filed a complaint before the National August 1977”
Seamen Board with the central office of the NSB. NSB then
(NSB; NSB-1331-77), for violation of contract, suspended its hearing officer’s decision and
against Mullion as the shipping company and lifted the order of
Litonjua as default against Litonjua, thereby allowing the
agent of the shipowner and of the charterer of latter to adduce evidence in its own behalf. On
the vessel. At the initial hearing, the NSB 26 April 1978,
hearing officer held a the NSB then lifted the suspension of the
conference with the parties, at which conference hearing officer’s 17 February 1977 decision.
Litonjua was represented by one of its Litonjua once more
supercargos, Edmond moved for reconsideration. On 31 May 1979,
Cruz. Edmond Cruz asked, in writing, that the NSB rendered a decision which affirmed its
hearing be postponed for a month upon the hearing officer’s
ground that the decision of 17 February 1977. Hence, the
employee of Litonjua in charge of the case was petition for certiorari.
out of town. The hearing officer denied this The Supreme Court dismissed the Petition for
request and then Certiorari and affirmed the Decision of the then
declared Litonjua in default. At the hearing, National
Candongo testified that when he was recruited Seamen Board dated 31 May 1979; without
by the Captain of pronouncement as to costs
the Dufton Bay, the latter was accompanied to
the NSB Cebu Area Manning Unit by 2
supercargos sent by National Development Co. vs. CA (GR L-
Litonjua to Cebu, and that the 2 supercargos 49407, 19 August 1988)
Edmond Cruz and Renato Litonjua assisted Maritime Co. of the Philippines vs. CA (GR L-
Candongo in the 49469)
procurement of his National Investigation and Second Division, Paras (J): 3 concur
Facts: In accordance with a memorandum endorsed. Also considered totally lost were the
agreement entered into between National aforesaid shipment of Kyokuto, Boekui, Kaisa
Development Ltd., consigned
Corporation (NDC) and Maritime Corporation to the order of Manila Banking Corporation,
of the Philippines Inc. (MCP) on 13 September Manila, acting for Guilcon, Manila. The total
1962, NDC as loss was
the first preferred mortgagee of three ocean P19,938.00 which DISC as insurer paid to
going vessels including one with the name Guilcon as holder of the duly endorsed bill of
‘Doña Nati’ appointed lading. Thus, DISC
MCP as its agent to manage and operate said had paid as insurer the total amount of
vessel for and in its behalf and account. Thus, on P364,915.86 to the consignees or their
28 February successors-in-interest, for the
1964 the E. Philipp Corporation of New York said lost or damaged cargoes.
loaded on board the vessel ‘Doña Nati’ at San On 22 April 1965, DISC filed before the then
Francisco, Court of First Instance of Manila an action for
California, a total of 1,200 bales of American the recovery of
raw cotton consigned to the order of Manila the sum of P364,915.86 plus attorney’s fees of
Banking P10,000.00 against NDC and MCP. On 12
Corporation, Manila and the People’s Bank and November 1969,
Trust Company acting for and in behalf of the after DISC and MCP presented their respective
Pan Asiatic evidence, the trial court rendered a decision
Commercial Company, Inc., who represents ordering MCP
Riverside Mills Corporation. Also loaded on the and NDC to pay jointly and solidarily to DISC
same vessel at the sum of P364,915.86 plus the legal rate of
Tokyo, Japan, were the cargo of Kyokuto interest to be
Boekui, Kaisa, Ltd., consigned to the order of computed from the filing of the complaint on 22
Manila Banking April 1965, until fully paid and attorney’s fees
Corporation consisting of 200 cartons of sodium of
lauryl sulfate and 10 cases of aluminum foil. En P10,000.00. Likewise, in said decision, the trial
route to court granted MCP’s cross-claim against NDC.
Manila the vessel Doña Nati figured in a MCP interposed its appeal on 20 December
collision at 6:04 a.m. on 15 April 1964 at Ise 1969, while NDC filed its appeal on 17 February
Bay, Japan with a 1970 after its
Japanese vessel ‘SS Yasushima Maru’ as a result motion to set aside the decision was denied by
of which 550 bales of aforesaid cargo of the trial court in its order dated 13 February
American raw cotton were lost and/or destroyed, 1970. On 17
of which 535 bales as damaged were landed and November 1978, the Court of Appeals
sold on the authority of promulgated its decision affirming in toto the
the General Average Surveyor for Y6,045,500 decision of the trial
and 15 bales were not landed and deemed lost. court. Hence, the appeals by certiorari. On 25
The damaged July 1979, the Supreme Court ordered the
and lost cargoes was worth P344,977.86 which consolidation of the
amount, the Development Insurance and Surety above cases.
Corporation The Supreme Court denied the subject petitions
(DISC) as insurer, paid to the Riverside Mills for lack of merit, and affirmed the assailed
Corporation as holder of the negotiable bills of decision of the
lading duly Appellate Court.
 be held solidarily liable with Transcontinental
for the
Switzerland General Insurance vs. Ramirez
losses/damages to the cargo outside the custody
not applicable of the vessel. Notably, Transcontinental was
The ruling in the case of Switzerland General
disclosed as the
Insurance Co., Ltd. v. Ramirez is not applicable.
charterer’s principal and there is no question that
In that
Maritime acted within the scope of its authority.
case, the charterer represented itself on the face
of the bill of lading as the carrier. The vessel
owner and the
COMMISSIONER OF INTERNAL
charterer did not stipulate in the Charterparty on REVENUE, Petitioner, vs. UNITED
their separate respective liabilities for the cargo. STATES LINES COMPANY, Respondent.
The
loss/damage to the cargo was sustained while it Office of the Solicitor General for petitioner.
was still on board or under the custody of the Ross, Selph and Carrascoso for respondent.
vessel. As the
charterer was itself the carrier, it was made BARRERA, J.: chanrobles vir tual law library

liable for the acts of the ship captain who was

responsible for the This is an appeal by the Commissioner of
cargo while under the custody of the vessel. As Internal Revenue from the decision of the
for the charterer’s agent, the evidence showed Court of Tax Appeals (in CTA Case No.
that it 556) holding the U.S. Lines Company liable
represented the vessel when it took charge of the for payment of common carrier's tax
unloading of the cargo and issued cargo receipts deficiency and surcharges in the total sum of
(or tally only P502.75 instead of P25,769.41 as
sheets) in its own name. Claims against the originally assessed and demanded by
vessel for the losses/damages sustained by that appellant Commissioner. chanroblesvirtualawlibrary chanrobles virtual law library

cargo were also

received and processed by it. As a result, the
As found and stated in the decision of the
charterer’s agent was also considered a ship
Court of Tax Appeals, the U.S. Lines
agent and so was
Company, a foreign corporation duly
held to be solidarily liable with its principal. The
licensed to do business in the Philippines,
facts in the cases at bar are different. The
under the trade name "American Pioneer
charterer did not
Lines" (for short hereinafter referred to as
represent itself as a carrier and indeed assumed
the Company), is the operator of ocean-
responsibility only for the unloading of the
going vessels transporting passengers and
cargo, i.e, after the
freight to and from the Philippines. It is also
goods were already outside the custody of the
the sole agent and representative of the
vessel. In supervising the unloading of the cargo
Pacific Far East Line, Inc., another shipping
and issuing
Daily Operations Report and Statement of Facts
company engaged in business in the
indicating and describing the day-to-day
Philippines as a common carrier by
discharge of the
water.chanroblesv irtualawlibrary chanrobles virtual law library

cargo, Maritime acted in representation of the

charterer and not of the vessel. It thus cannot be In the examination of its books of accounts
considered a and other records to determine its tax
ship agent. As a mere charterer’s agent, it cannot liabilities for the period from January 1,
1950 to September 30, 1955, it was found ore shipments of November 27, 1951 and
that the Company also acted in behalf of the April 29, 1952. chanroblesvirtualawlibrary chanrobles virtual law library

West Coast Trans-Oceanic Steamship Lines

Co., Inc., a non-resident foreign corporation, The Court of Tax Appeals, in its decision,
in connection with the transportation, on ruled for the Company on the first issue,
board the "SS Portland Trader" belonging to thus -
the latter, on November 27, 1951 and April
29, 1952, of chrome ores from Masinloc, We wish to make it clear that from the
Zambales to the United States, from which records of the case, it appears that all the
carriage or transportation freight revenue in "collect" revenues, or those freight charges,
the total sum of $272,470.00 was realized by passage fares, commissions and agency fees,
the vessel's owner, and for which the 2% collected in the United States in United
common carrier's percentage tax imposed by States currency belong to petitioner's home
Section 192 of the National Internal office in the United States and were not
Revenue Code was never paid. chanroblesvirtualawlibrary chanrobles virtual law library remitted to petitioner's local office in the
Philippines. In short, the United States
As a consequence, the Commissioner of dollars collected abroad were not actually
Internal Revenue assessed and demanded converted to and received in Philippine
from the Company, as deficiency tax, (a) the pesos, and therefore there is no occasion nor
sum of P6,691.36 for its own business under reason to use a conversion rate aside from
the name American Pioneer Lines; (b) the legal rate of exchange, i.e., $1.00 to
P5,429.00 as agent of Pacific Far East Line, P2.00. If we have placed the judicial stamp
Inc.; and (c) P13,649.05 on the freight of approval on the agreed conversion rates
revenue of the West Coast Trans-Oceanic of $1.00 to P2.015 and $1.00 to P2.02 with
Steamship Lines Co. from the carriage or regard to the "prepaid" freight and passage
transportation of the chrome ores, or a total revenues, respectively, we did so in order to
of P25,769.41. chanroblesvirtualawlibrary chanrobles virtual law library arrive at the actual amounts collected by the
petitioner in Philippine pesos - the correct
At the instance of the Company, a taxable gross receipts. (Emphasis supplied.)
reinvestigation of the case was conducted
and a hearing thereon held before the As to the second issue, it ruled that the 2%
Appellate Division of the Bureau of Internal percentage tax under Section 192 of the Tax
Revenue. These, notwithstanding, the Code is imposable only on owners or
Commissioner maintained his demand. operators of the common carrier, and as
Thus, the Company filed a petition with the there is no law constituting the shipping
Court of Tax Appeals contesting the agent the withholding agent of the taxes due
correctness of (1) the conversion of "collect" from the principal, said shipping agent is not
revenues or those freight and passage personally liable for the tax obligations of
receipts, commissions, and agency fees for the latter, unless the agent voluntarily
services in the Philippines, but payable in assumes such obligation which, in this case,
the United States, at the rate of P2.00375 to the agent Company did not. Consequently,
$1.00 and (2) the demand on the Company the petitioning taxpayer was ordered to pay
of the 2% carrier's percentage tax on the only a tax deficiency and surcharge in the
gross receipts of the West Coast Trans- sum of P502.75. Hence, the institution of
Oceanic Steamship Lines from the chrome this appeal.
chanroblesvirtualawlibrary chanrobles virtual law library
The ruling by the lower court that the Tax Appeals ruled in the negative, citing and
conversion of the "collect" freight fees (or adopting a unanimous decision of the
those earned in the Philippines but actually defunct Board of Tax Appeals rendered on
paid in the United States in dollars) should July 30, 1953, purporting to interpret
be at the rate of P2.00 to $1.00 as Section 192 of the National Internal
established by law (Sec. 48, Rep. Act No. Revenue Code, in which it held that a
265), and not the rate or exchange of shipping agent is not personally responsible
P2.00375 to $1.00, as fixed by the Monetary for the payment of the tax obligations of its
Board, must be upheld. No evidence was principal, reasoning that there is no law
presented rebutting the positive allegation of constituting a shipping agent as a
respondent taxpayer, which was sustained withholding agent of the taxes due from its
by the Tax Court, that the "collect" principal. It further stated that a shipping
freightage fees were not remitted to the local agent can only be held liable for the
office of the U.S. Lines Company (in the payment of the common carrier's percentage
Philippines) nor actually converted to and tax if such obligation is stipulated in the
received in Philippine pesos. In other words, agency agreement, or if the agent voluntarily
no foreign exchange operations were assumes the tax liability.
chanroble svirtualawlibrary chanrobles virtual law library

involved here. The statement made in the

Commissioner's brief (p. 20) that "it is We can not agree to this view as applied to
uncontroverted that the respondent's the present case, because it adopts a very
(Company's) dollar earnings here restrictive interpretation of Section 192 of
representing its so-called "collect" revenues the Tax Code.1 What the legal provision
were accounted for thru its bank, the purports to tax is the business of
National City Bank of New York at transportation, so much so that the tax is
P2.00375 to a dollar", is not borne out by the based on the gross receipts. The person
records. What appears is that the Company liable is of course the owner or operator, but
received certain amounts from its home this does not mean that he and he alone can
office in the United States to meet its local be made actually to pay the tax. In other
expenses, and these were withdrawn from a words, whoever acts on his behalf and for
letter of credit in the First City Bank of New his benefit may be held liable to pay, for and
York in Manila at the rate of P2.00375 to a on behalf of the carrier or operator, such
dollar. But the Company asserts - and there percentage tax on the business. chanroblesvirtualawlibrary chanrobles virtual law library

is no evidence to the contrary - that there is

no relationship whatsoever between these It is claimed for the Company that it merely
funds and the freight fees collected in the acted as a "husbanding agent" of the vessel
United States.chanroblesvirtualawlibrary chanrobles virtual law library with limited powers. This appears not to be
so. A "husbanding agent" is the general
The other issue is whether on the facts of the agent of the owner in relation to the ship,
case, the Company, as agent of the vessel with powers, among others, to engage the
"SS Portland Trader" in behalf of its owner, vessel for general freight and the usual
the West Coast Trans-Oceanic Steamship conditions, and settle for freight and adjust
Lines Company, can be compelled to pay averages with the merchant.2 But whatever
the 2% percentage tax on the freight revenue may be the technical functions of a "ship's
earned from the shipment of chrome ores husband", the Company, in the case at bar,
transported from the Philippines to the was considered and acted more as a general
United States. As stated earlier, the Court of agent. The agency contract is not extant in
the records. Still, from the correspondence the vessel at Manila and that your usual fee
between the principal West Coast Trans- will apply", and requesting respondent
Oceanic Steamship Lines and the Company Company to act also as supervisory agent at
itself, and with other entities regarding the Saigon and Haiphong (p. 57, BIR records).
shipment in question, the real nature of the The steamship company, likewise, advised
agency may be gleaned. Thus, in the letter of the master of its vessel that "its agents for
West Coast Trans-Oceanic Steamship Lines, Masinloc" will be the respondent Company
dated October 20, 1951 (Exh. 30), giving from which "full assistance and
instructions to the master of its vessel "SS information" could be obtained (Exh. 18,
Portland Trader", it referred to respondent dated March 12, 1952). Evidently accepting
Company as the "Owner's agents" at the the designation, respondent Company,
loading point (Masinloc) to which the vessel representing itself as "the local agents" of
had to be consigned. In line with its the vessel (Exh. 21, dated March 26, 1952),
designation as the "Owner's agent" and the secured the entry and clearance of the vessel
vessel's consignee, respondent Company at the customs. After the loading of ore at
wrote the master of the vessel (Exh. 23) Masinloc, again respondent Company
advising him that it had secured Customs prepared the shipping documents and signed
authority for the vessel to proceed to the bill of lading "As Agent for the West
Masinloc, as well as the Export Entry Coast Trans-Oceanic Steamship Lines" (p.
covering the loading of ore, giving 114, BIR record). chanrob lesvirtualawlibrary chanrobles virtual law library

instructions how to proceed with the loading

and to keep it closely advised of all All these documents show that respondent
movements and daily tonnages laden. It also Company clearly acted - as it held itself to
undertook to and did in fact prepare all the the public and to the Government
cargo documents. The corresponding bill of (specifically the Bureau of Customs) - as the
lading for the cargo was prepared and signed shipowner's local agent or the ship agent
by the respondent Company "As Agent for representing the ownership of the vessel. To
West Coast Trans-Oceanic Steamship adopt the view of the trial court would be to
Lines" wherein it acknowledged the receipt sanction the doing of business in the
of 9,900 long tons of chrome, a prerogative Philippines by non-resident corporations
act of a common carrier itself. (p. 114, BIR over which we have no jurisdiction, without
record). Again, signing "As Agents for West subjecting the same to the operation of our
Coast Trans-Oceanic Steamship Lines", revenue and tax laws, to the detriment and
respondent Company transmitted the discrimination of local business enterprises.
shipping documents covering the shipment We, therefore, hold that in the
of ore to Castle Cooke, Ltd., the vessel's circumstances, said respondent is under
agent at Honolulu (Exh. 20). All these were obligation to pay, for and in behalf of its
in respect to the first shipment on November principal, the tax due from the latter. And,
27, 1951.chanroblesvirtualawlibrary chanrobles virtual law library this is but logical, because, as provided in
Article 595 of the Code of Commerce, "the
Concerning the second shipment, we have ship agent shall represent the ownership of
first the letter of West Coast Trans-Oceanic the vessel, and may, in his own name and in
Steamship Lines, dated February 21, 1952 such capacity, take judicial and extrajudicial
addressed to respondent Company, advising steps in matters relating to commerce". If
it of the second trip of "SS Portland Trader" the shipping agent represents the ownership
and stating: "We trust that you will handle of the vessel in matters relating to
commerce, then any liability arising in is the amount demanded in his letter of June
connection therewith may be enforced 6, 1952, (Exh. E, also marked as Exh. 34).
against the agent who is, as a consequence In his brief, the Commissioner prays that
thereof, authorized to take judicial or respondent Company be ordered to pay the
extrajudicial steps, either in the prosecution sum of P25,769.41, the amount demanded in
or defense of the owner's rights or interests. his letter of June 28, 1956 (Exh. A, also
As a matter of fact, if a foreign shipping marked as Exh. 26). In view of these
company has a claim against the discrepancies, a re-examination and
Government in relation to commerce, its verification of the records is necessary to
local shipping agent, by virtue of Article 595 determine the exact taxable amount on
of the Code of Commerce, can file such a which the 2% common carrier's percentage
claim in his own name. Conversely, and tax is to be computed in accordance with the
logically, it must be admitted, the terms of this decision. chanroblesvirtualawlibrary chanrobles virtual law library

Government can hold the local shipping

agent liable for the taxes due from his, WHEREFORE, the decision of the Court of
principal. This is, of course, without Tax Appeals in this case is modified at
prejudice to the right of the agent to seek above-indicated, and the records remanded
reimbursement from his principal. chanroblesvirtualawlibrary chanrobles virtual law library to the court a quo for the purpose herein
directed. No costs. So ordered.
The contention that the agreement between
the principal and agent solely determines the
liability of the agent, is not tenable. Any
agreement or contract to be enforceable in
this jurisdiction is understood to incorporate INTERORIENT MARITIME ENTERPRISES, INC.,
therein the provision or provisions of law FIRCROFT SHIPPING CORPORATION and TIMES
specifying the obligations of the parties SURETY & INSURANCE CO., INC., petitioners,
under such contract. The contract between vs
herein respondent Company and its principal NATIONAL LABOR RELATIONS COMMISSION
consequently imposed upon the parties not and CONSTANCIA PINEDA, respondents.
only the rights and duties delineated therein,
but also the provisions of law such as that of
G.R. No. 115497
the Code of Commerce aforecited.
September 16, 1996
chanrob lesvirtualawlibrary chanrobles virtual law library

As to the third assigned error, i.e., the

amount of taxable receipts, the records are Facts:
not clear. Petitioner Commissioner of
Internal Revenue claims that there are The instant petition seeks the reversal and/or
contradictions in and among the three sets of modification of the Resolution dated March 30,
summaries submitted by the respondent 1994 of public respondent National Labor
Company and they should not have been Relations Commission dismissing the appeals of
considered by the trial court. On the other petitioners and affirming the decision dated
hand, we find also that the assessments November 16, 1992 of Philippine Overseas
issued by the Commissioner are, likewise, Employment Administration (POEA)
conflicting. In his present petition, the Administrator Felicisimo C. Joson, This is a claim
prayer sets the tax delinquency of the for death compensation benefits filed by
respondent Company at P26,436.17, which Constancia Pineda as heir of her deceased son,
seaman Jeremias Pineda, against Interorient public respondent. In a Decision dated March
Maritime Enterprises, Inc. and its foreign 30, 1994, public respondent upheld the POEA.
principal, Fircroft Shipping Corporation and the
Times Surety and Insurance Co., Inc. The Thus, this recourse to this Court by way of a
following facts were found by the POEA special civil action for certiorari per Rule 65 of
Administrator. the Rules of Court.

On September 28, 1989, he finished his contract Issue:

and was discharged from the port of Dubai for
repatriation to Manila; that his flight schedule Whether the petitioners can be held liable for
from Dubai to the Philippines necessitated a the death of seaman Jeremias Pineda?
stopover at Bangkok, Thailand, and during said
stopover he disembarked on his own free will Held:
and failed to join the connecting flight to
Hongkong with final destination to Manila; that The petitioners contention that the assailed
on October 5, 1990, it received a fax Resolution has no factual and legal bases is
transmission from the Department of Foreign belied by the adoption with approval by the
Affairs to the effect that Jeremias Pineda was public respondent of the findings of the POEA
shot by a Thai Officer on duty on October 2, Administrator, which recites at length the
1989 at around 4:00 P.M.; that the police report reasons for holding that the deceased Pineda
submitted to the Philippine Embassy in Bangkok was mentally sick prior to his death and
confirmed that it was Pineda who "approached concomitantly, was no longer in full control of
and tried to stab the police sergeant with a his mental faculties.
knife and that therefore he was forced to pull
out his gun and shot Pineda" In this instance, seaman Pineda, who was
discharged in Dubai, a foreign land, could not
Petitioner contends that they are not liable to reasonably be expected to immediately resort
pay any death/burial benefits pursuant to the to and avail of psychiatric examination,
provisions of Par. 6, Section C. Part II, POEA assuming that he was still capable of submitting
Standard Format of Employment which state(s) himself to such examination at that time, not to
that "no compensation shall be payable in mention the fact that when he disembarked in
respect of any injury, (in)capacity, disability or Dubai, he was already discharged and without
death resulting from a willful (sic) act on his employment — his contract having already run
own life by the seaman"; that the deceased its full term — and he had already been put on
seaman died due to his own willful (sic) act in a plane bound for the Philippines. Such mental
attacking a policeman in Bangkok who shot him disorder became evident when he failed to join
in self-defense. his connecting flight to Hongkong, having during
said stopover wandered out of the Bangkok
After the parties presented their respective airport's immigration area on his own. This
evidence, the POEA Administrator rendered his Court agrees with the POEA Administrator that
decision holding petitioners liable for death seaman Pineda was no longer acting sanely
compensation benefits and burial expenses. when he attacked the Thai policeman. The
report of the Philippine Embassy in Thailand
Petitioners appealed the POEA decision to the dated October 9, 1990 depicting the deceased's
strange behavior shortly before he was shot companion for a returning employee, but it
dead, after having wandered around Bangkok cannot deny that it was expressly tasked by its
for four days, clearly shows that the man was agreement to assure the safe return of said
not in full control of his own self. worker. The uncaring attitude displayed by
petitioners who, knowing fully well that its
The POEA Administrator ruled, and this Court employee had been suffering from some mental
agrees, that since Pineda attacked the Thai disorder, nevertheless still allowed him to travel
policeman when he was no longer in complete home alone, is appalling to say the least. Such
control of his mental faculties, the aforequoted attitude harks back to another time when the
provision of the Standard Format Contract of landed gentry practically owned the serfs, and
Employment exemption the employer from disposed of them when the latter had grown
liability should not apply in the instant case. old, sick or otherwise lost their usefulness.
Firstly, the fact that the deceased suffered from
mental disorder at the time of his repatriation WHEREFORE, premises considered, the petition
means that he must have been deprived of the is hereby DISMISSED and the Decision assailed
full use of his reason, and that thereby, his will in this petition is AFFIRMED. Costs against
must have been impaired, at the very least. petitioners.
Thus, his attack on the policeman can in no wise
be characterized as a deliberate, willful or SO ORDERED.
voluntary act on his part. Secondly, and apart
from that, we also agree that in light of the
deceased's mental condition, petitioners OVERSEAS FACTORS vs. SOUTHSEA
"should have observed some precautionary
measures and should not have allowed said Facts:
seaman to travel home alone", and their failure
to do so rendered them liable for the death of Overseas Factor (Seller), entered into a
Pineda. contract to supply 5,000 Metric tons of
Kangni rice with National Rice and Corn
Petitioners further argue that the cause of Corp(Purchaser). The two entered into an
Pineda's death "is not one of the occupational agreement that the shipment shall be
diseases listed by law", and that in the case of imported from Pakistan aboard a ship owned
De Jesus vs. Employee's Compensation by South Sea Shipping (Carrier). A
Commission, this Court held that ". . . for the cofinancier of Seller entered into a surety
sickness and the resulting disability or death to bond agreement with an Insurance company
be compensable, the sickness must be the owned by the carrier to guarantee the
result of an occupational disease listed under payment by the charterers from HK of the
Annex 'A' of the Rules (the Amended Rules on losses that may arise, in favor of the Carrier.
Employee's Compensation) with the conditions Upon arrival of the goods in Manila, the
set therein satisfied; otherwise, proof must be Carrier refused to unload the rice unless the
shown that the risk of contracting the disease is
balance of the freight and other charges
were paid. The Carrier was paid in rupees,
increased by the working conditions."
but it wanted to be paid in British sterling or
pesos. This resulted to a delay of 8 days, and
The foreign employer may not have been
demurrage. A complaint was filed against
obligated by its contract to provide a the Carrier to accept the payment and to
allow unloading of the cargo. The Carrier some repair work were being undertaken on the
lost and appealed. engine of the
vessel. The vessel departed at around 11:00 p.m.
with only 1 engine running. After an hour of
slow voyage,
Issue: Whether or not the Carrier the vessel stopped near Kawit Island and
had a right to hold the cargo? dropped its anchor thereat. After half an hour of
stillness, some
passengers demanded that they should be
allowed to return to Cebu City for they were no
longer willing to
Held: continue their voyage to Cagayan de Oro City.
The captain acceded [sic] to their request and
Carrier's lien exists if freight was not paid. thus the vessel
The fact that the freight was already headed back to Cebu City. At Cebu City,
included in the purchase price of the goods Arroyo, together with the other passengers who
paid by the purchaser to the requested to be
appellees(Seller), did not free the cargo from brought back to Cebu City, were allowed to
disembark. Thereafter, the vessel proceeded to
the carrier's lien as as provided for in Article
Cagayan de Oro
665 of the Code of Commerce, if the freight City. Arroyo, the next day, boarded the M/V
has not yet been fully paid by the Charter- Asia Japan for its voyage to Cagayan de Oro
Seller. Moreover, under clause No. 8 of the City, likewise a
charter party, provides: "Owners shall have vessel of Trans-Asia.
a lien on the cargo for freight, deadfreight, On account of the failure of Trans-Asia to
demurrage, and damages for detention. transport him to the place of destination on 12
Charterers shall remain responsible for November 1991,
deadfreight and demurrage(including Arroyo filed before the trial court a complaint
damages for detention), incurred at the port for damages against Trans-Asia. After due trial,
of loading. Charterers shall also remain the trial court
rendered its decision and ruled that the action
responsible for freight and
was only for breach of contract, with Articles
demurrage(including damages for detention) 1170, 1172, and
incurred at port of discharge, but to such 1173 of the Civil Code as applicable law — not
extent as the Owners have been unable to Article 2180 of the same Code. The Court
obtain payment thereof by exercising the dismissed the
lien on the cargo. complaint as it did not appear that Arroyo was
left in the Port of Cebu because of the fault,
Trans-Asia Shipping Lines vs. CA (GR negligence, malice
118126, 4 March 1996) or wanton attitude of Trans-Asia’s employees;
Third Division, Davide Jr. (J): 4 concur and likewise dismissed Trans-Asia’s
Facts: Atty. Renato Arroyo, a public attorney, counterclaim is likewise
bought a ticket Trans-Asia Shipping Lines Inc., dismissed it not appearing also that filing of the
a corporation case by Arroyo was motivated by malice or bad
engaged in inter-island shipping, for the voyage faith.
of M/V Asia Thailand vessel to Cagayan de Oro Unsatisfied, Arroyo appealed to the Court of
City from Appeals (CA-GR CV 39901). In its decision of
Cebu City on 12 November 1991. At around 23 November
5:30p.m of the said day, Arroyo boarded the 1994, the Court of Appeals reversed the trial
M/V Asia Thailand court’s decision by applying Article 1755 in
vessel. At that instance, Arroyo noticed that relation to Articles
2201, 2208, 2217, and 2232 of the Civil Code agent 'E. E. Elser Inc.' the amount involved,
and, accordingly, awarded (1) P20,000.00 as that is, P159.78."
moral damages;
(2) P10,000.00 as exemplary damages; (3) As may be noted, the Court of Appeals held
P5,000.00 as attorney’s fees; and (4) Cost of
that petitioners have |already lost their right
suit. Trans-Asia
instituted the petition for review on certiorari.
to press their claim against respondents
The Supreme Court denied the petition, and because of their failure to serve notice
affirmed the challenged decision of the Court of thereof upon the carrier within 30 days after
Appeals, subject receipt of the notice of loss or damage as
to the modification as to the award for attorney’s required by clause 18 of the bill of lading
fees which is set aside; with costs against Trans- which was issued concerning the shipment
Asia. of the merchandise which had allegedly
disappeared. In this respect, the court said
96 Phil. 264 that, "appellants unwittingly admitted that
they were late in claiming the indemnity for
ELSER CO the loss of the case of the vanishing cream
as their written claim was made on April 25,
This is a petition for review of a decision of 1946, or more than 30 days after they had
the Court of Appeals which affirms that of been fully aware of said loss," and because
the court of origin dismissing the complaint of this failure, the Court said, the action of
without pronouncement as to costs. petitioners should, and must, fall. Petitioners
now contend that this finding is erroneous
The facts, as found by the Court of Appeals, fin the light of the provisions of the Carriage
are: of Goods by Sea Act of 1936, which apply
to this case, the same having been made an
"It appears that in the month of December, integral part of the covenants agreed upon in
1945 the goods specified in the Bill of the bill of lading.
Lading marked as Annex A, were shipped
on the 'S.S. Sea Hydra1, of Isthmian There is merit in this contention. If this case
Steamship Company, from New York to were to be governed by clause 18 of the bill
Manila, and were received by the consignee of lading regardless of the provisions of the
'Udharam Bazar & Co.', except one case of Carriage of Goods by Sea Act of 1936, the
vanishing cream valued at P159.78. The conclusion reached by the Court of Appeals
goods were insured against damage or loss would indeed be correct, but in our opinion
by the 'Atlantic Mutual Insurance Co.' this Act cannot be ignored or disregarded in
'Udharam Bazar and Co.' successively filed determining the equities of the parties it
claim for the loss with the Manila Terminal appearing that the same was made an
Co. Inc., who denied having received the integral part of the bill of lading by express
goods for custody, and the 'International stipulation. It should be noted, in this
Harvester Co. of the Philippines', as agent connection, that the Carriage of Goods by
for the shipping company, who answered Sea Act of 1936 was accepted and adopted
that the goods were landed and delivered to by our government by the enactment of
the Customs authorities. Finally, 'Udharam Commonwealth Act No. 65 malting said
Bazar & Co.' claimed for indemnity of the Act:"applicable to all contracts for the
loss from the insurer, 'Atlantic Mutual carriage of goods by sea to and from
Insurance Co.', arid was paid by the latter's Philippine ports in foreign trade." And the
pertinent provisions of the Carriage of action to recover said loss or damage within
Goods by Sea Act of 1936 are: one year after the delivery of the goods, and,
as we have stated above, this is contrary to
"6. Unless notice of loss or damage and the the provisions of clause 18: of the bill of
general nature of such loss or damage be lading. The question that now rises is:
given in writing to the carrier or his agent at Which of these two provisions should
the port of discharge or at the time of the prevail? Is it that contained in clause 18 of
removal of the goods into the custody of the the bill of lading, or that appearing in the
person Entitled to delivery thereof under the Carriage of Goods by Sea Act?
contract of carriage, such removal shall be
prima facie evidence of the delivery by the The answer is not difficult to surmise. That
carrier of the goods as described in the bill clause 18 must of necessity yield to the
of lading. If the loss or damage is not provisions of the Carriage of Goods by Sea
apparent, the notice must be given within Act in view of the proviso contained in the
three the delivery same Act which says: "Any clause,
covenant, or agreement in a contract of
"* * * * * * * * * * * * * * * * * carriage relieving the carrier or the ship
from liability for loss or damage to or in
"In any event the carrier and the ship shall connection with the goods * * * * or
be discharged from all liability in respect of lessening such liability otherwise than as
loss or damage unless suit is brought within provided in this Act, shall be null and void
one year after delivery of the goods or the and of no effect." (section 3) This means
date when the goods should have been that a carrier cannot limit its liability in a
delivered: PROVIDED, That if a notice of manner contrary to what is provided for in
loss or damage, either apparent or said Act, and so clause 18 of the bill of
concealed? Is not given as 'provided for in lading must of necessity be null and void.
this section, that fact shall not affect or This interpretation finds support in a
prejudice the right of the shipper to bring 'number of cases recently decided by the
suit within one year after the delivery of the American courts. : Thus, in Balfour, Guthrie
goods or the date when the goods should & Co., Ltd., et al. vs. American-West
have been delivered." (Section 3; Italics African Line, Inc. and American-West
supplied) African Line, Inc. vs. Balfour, Guthrie &
Co., Ltd., et al., 136 F. 2d. 320, wherein the
It would therefore appear from the above bill of lading provided that the owner should
that a carrier can only be discharged from not be liable for loss of cargo unless written
liability in respect of loss or damage if the notice thereof was given within 30 days
suit is not brought within one year after the after the goods should (have been delivered
delivery of the goods or the date when the and unless written claim therefor was given
goods should have been delivered, and that, within six months after giving such written
even if a notice of loss or damage is not notice, the United States Circuit Court of
given as required, "that fact shall not affect Appeals, Second Circuit, in a decision
or prejudice the right of the shipper to bring promulgated on August 2, 1943 made the
suit within one year after the delivery of the following ruling:
goods." In other words, regardless of
whether the notice of loss or damage has "But the Act Sec. 3(6), 46 U.S.CA. Sec.
been given, the shipper can still bring an 1303 (6) provides that failure to give 'notice
of loss or damage' shall not prejudice the of goods I by sea to and from Philippine
right of the shipper to bring suit within one ports in foreign trade," and therefore, it does
year after the date when the goods should not apply to the shipment in question.
have been delivered. To enforce a bill of
lading provision conditioning a ship-owner's Granting arguendo that the Philippines was
liability upon the filing of written claim of a territory or possession of the United States
loss, which, in turn, requires and depends for the purposes of said Act and that the
upon the filing of a prior notice of loss, trade between the Philippines and the United
certainly would do violence to Sec.3(6). But States before the advent of independence
further, as a like provision was apparently was not foreign trade or can only be
quite customary in bills of lading prior to the considered in a domestic sense, still we are
act, the reasonable implication of Sec. 3(6) of the opinion that the Carriage of Goods by
is that failure to file written claim of loss in Sea Act of 1936 may have application to the
no event may prejudice right of suit within a present case it appearing that the parties
year of the scheduled date for cargo have expressly agreed to made and
delivery. This is also to be concluded from incorporate the provisions of said Act as
Sec. 3(8) 46 U.S.C.A Sec. 1303(8), that any integral part of their contract of carriage.
clause in a bill of lading lessening the This is an exception to the rule regarding the
liability of the carrier otherwise than as applicability of said Act. This is expressly
provided in the Act shall be null and void. A recognized by Section 13 of said Act which
similar provision in the British Carriage of contains the following proviso:
Goods by Sea Act, 14 & 15 Geo. vs. c. 22,
has been interpreted to nullify any "Nothing in this Act shall be held to apply to
requirement of written claim as a condition contracts for carriage of goods by sea
to suit at any time. CF. Australasian United between any port of the United States or its
Steam Navigation Co., Ltd. vs. Hunt, (1921) possessions, and any other port of the United
2 A.C, 351; Convent Sheppard & Co. vs. States or its possessions: Provided, however,
Larrinaga S.S. Co., 73 L1.L. Rep. 256."[1] that any bill of lading or similar document of
title which is evidence of a contract for the
But respondents contend that while the carriage of goods by sea between such ports,
United States Carriage of Goods by Sea Let containing an express statement that it shall
of 1936 was accepted and adopted by our be subject to the provisions of this Act shall
government by virtue of Commonwealth be subjected hereto as fully as if subject
Act No. 65, however, said Act does not have hereto by the express provisions of this Act;"
any application to the present case because (Italics supplied)
the shipment in question was made in
December, 1945, and arrived in Manila in This is also recognized by the very authority
February, 1946 and at that time the cited by counsel for respondents, who, on
Philippines was still a territory or possession this matter, has made the following
of the United States and, therefore, it may be comment:
said that the trade then between the
Philippines and the United States was not a "The Philippine Act of 1936 like the U.S.
"foreign trade." In other words, it is Act of 1936, sp plies propio vigore only to
contended that the Carriage of Goods by Sea foreign commerce to all contracts for the
Act as adopted by our government is only carriage of goods by sea to and from
applicable "to all contracts, for the carriage Philippine ports in foreign trade.
"Prior to Philippine Independence on July 4, interest thereon from the date of the filing of
I965 trade between the Philippines and other the complaint, plus the costs of action.
ports and places under the American Flag,
was not, by any ordinary definition, foreign SINGA SHIP MANAGEMENT PHILS.,
commerce. Hence, the U.S. and Philippine INC., petitioner, vs. NATIONAL LABOR
Acts did not apply to such trades, even RELATIONS COMMISSION and
though conducted under foreign bottoms and WINEFREDO Z. SUA, respondents.
under foreign flag, unless the carrier Topic: Overseas Trade
expressly exercised the option given by FACTS
Singa Ship Management Phils. is the local
Section 13 of the U.S. Act to carry under the
manning agent of Singa Ship Management Pte.,
provisions of that Act. The fact that the U.S. Ltd., a company based in Singapore. Winefredo
coast wise flag monopoly did not extend to Sua was employed by petitioner as radio officer
the Philippine trade did not alter the fact that on board the vessel M/V Singa Wilstream from
the U.S. Trade with the Islands is domestic." November 28, 1988 to September 1989 with a
(Knaught, Ocean Bills of Lading, 1947 Ed. monthly salary of U.S.$850.00.
p. 250) (Italics supplied)
Petitioner alleged that when the M/V Singa
Wilstream was anchored in Los Angeles, CA,
Having reached the foregoing conclusion, it private respondent and some members of the
would appear clear that the action of crew, went on shore leave. By the end of the day,
petitioners has not yet lapsed or prescribed, the group missed the last boat and hired a service
as erroneously held by the Court of Appeals, boat to take them to the ship. Hence, they arrived
it appearing that the present action was on the ship at 8:30 in the evening. The ship
brought within one year after the delivery of captain and master, together with some officers
were at the bridge. The captain reprimanded
the shipment in question.
them for returning late and admonished private
respondent in particular, being the highest-
As regards the contention of respondents ranking member in the group. Sua who was
that petitioners have the burden of showing drunk shouted: "Fuck your ass, captain! I don't
that the loss complained of did not take want to sail with you!" Bosun Rodolfo Sarmiento,
place after the goods left the possession or who was nearby, was ordered to take private
custody of the carrier because (they failed to respondent to his cabin. Sua, however, cried out:
"Fuck you two, two of you!" and hurled invectives
give notice of their loss or damage as
at the captain and the bosun. Eventually, the
required by law, which failure gives rise to other crew members pacified private respondent
the presumption that the goods were and brought him down to his cabin. Later, at
delivered as described in the bill of lading, about 1:00 in the morning, Chief Officer Rakesh
suffice it to state that, according to the Court Nanda went down to inspect the bunker. He saw
of Appeals, the required notice was given by private respondent lowering his bag to the bunker
the petitioners to the carrier or its agent on barge. The chief officer tried to dissuade private
respondent from leaving the ship. The latter
April 25, 1946. That notice is sufficient to
refused saying: "Sorry, but I don't want to sail
overcome the above presumption within the with the captain!" Private respondent boarded
meaning of the law. the barge and left the ship.

Wherefore, the decision appealed from is ISSUE WON Winefredo Z. Sua deserted the
reversed. Respondents, other than the Court vessel.
of Appeals, are hereby sentenced to pay to
the petitioners the sum of P159.78 with legal RULING
Desertion in maritime law, is defined as "the act
by which a seaman deserts and abandons a ship
or vessel, in which he had engaged to perform a Philippine Home Assurance vs. CA (GR
voyage, before the expiration of his time, and 106999, 20 June 1996)
without leave. By desertion, in maritime law, is First Division, Kapunan (J): 4 concur
meant, not a mere unauthorized absence from Facts: Eastern Shipping Lines, Inc. (ESLI)
the ship, without leave, but an unauthorized loaded on board SS Eastern Explorer in Kobe,
absence from the ship with an intention not to Japan, the
return to her service; or as it is often following shipment for carriage to Manila and
expressed, animo non revertendi, that is, with an Cebu, freight pre-paid and in good order and
intention to desert." condition, viz: (a)
Desertion has been defined as (1) a seaman's two (2) boxes internal combustion engine parts,
abandonment of duty by quitting ship, not only consigned to William Lines, Inc. under Bill of
without leave or permission, but without Lading
justifiable cause, before termination of 042283; (b) ten (10) metric tons (334 bags)
engagement; and (2) with the intent of not ammonium chloride, consigned to Orca’s
returning to the ship's duty. It is essential that Company under Bill of
there be an animo non revertendi, an intention Lading KCE-12; (c) two hundred (200) bags
not to return. Once the facts constituting the Glue 300, consigned to Pan Oriental Match
abandonment and intent not to return are Company under Bill
proven, the seaman may be dismissed by the of Lading KCE-8; and (d) garments, consigned
master, or he may be suspended by the POEA for to Ding Velayo under Bills of Lading Nos.
three years as minimum penalty or delisted from KMA-73 and
the POEA registry as maximum penalty.
KMA-74. While the vessel was off Okinawa,
In the case at bar, at the height of their Japan, a small flame was detected on the
argument, the captain ordered to disembark the acetylene cylinder
vessel. To the mind of private respondent, the located in the accommodation area near the
order to disembark was an order of dismissal engine room on the main deck level. As the crew
from his job especially after he had assaulted the was trying to
bosun. This explains why after the incident he did extinguish the fire, the acetylene cylinder
not report to petitioner's office in Manila nor did suddenly exploded sending a flash of flame
he file a complaint with the POEA. throughout the
Contrary to petitioner's allegations, the words accommodation area, thus causing death and
private respondent uttered do not indicate the severe injuries to the crew and instantly setting
firm intention to leave and not to return to his fire to the whole
job. At best, the words can be interpreted as superstructure of the vessel. The incident forced
expressing what private respondent felt towards the master and the crew to abandon the ship.
his master. They do not unequivocably establish Thereafter, SS
the intent to abandon his job, never to Eastern Explorer was found to be a constructive
return. Neither do his acts reinforce this intent to total loss and its voyage was declared
abandon. After hurling invectives at the master, abandoned. Several
private respondent calmed down and returned to hours later, a tugboat under the control of Faked
his cabin. The totality of the circumstances of the Salvage Co. arrived near the vessel and
case does not show animo non revertendi and commenced to tow
private respondent cannot be deemed to have the vessel for the port of Naha, Japan. Fire
deserted the vessel. Notably, Sua would not fighting operations were again conducted at the
intentionally get himself stranded in a foreign said port. After the
land without means of support if he was not fire was extinguished, the cargoes which were
dismissed. The fact that he did not voluntarily
saved were loaded to another vessel for delivery
resign but was dismissed from his employment is
to their
more in keeping with the ordinary experience of
original ports of destination. ESLI charged the
mankind.
consignees several amounts corresponding to
additional freight
and salvage charges, as follows: (a) for the American Home Assurance vs. CA
goods covered by Bill of Lading 042283, ESLI
charged the GR 94149, 5 May 1992 common
consignee the sum of P1,927.65, representing
salvage charges assessed against the goods; (b) carrier, insurance, Article 1733 of
for the goods the Civil Code
covered by Bill of Lading KCE-12, ESLI
charged the consignee the sum of P2,980.64 for October 6, 2017
additional freight
and P826.14 for salvage charges against the FACTS:
goods; (c) for the goods covered by Bill of
Lading KCE-8, ESLI American Home Assurance Co. and the
charged the consignee the sum of P3,292.26 for National Marine Corporation (NMC) are
additional freight and P4,130.68 for salvage foreign corporations licensed to do business
charges against
in the Philippines. On or about 19 June
the goods; and (d) for the goods under Bills of
Lading KMA-73 and KMA-74, ESLI charged
1988, Cheng Hwa Pulp Corporation shipped
the consignee the sum of P8,337.06 for salvage 5,000 bales (1,000 ADMT) of bleached kraft
charges against the goods. The charges were all pulp from Haulien, Taiwan on board “SS
paid Philippine Home Kaunlaran”, which is owned and operated
Assurance Corporation (PHAS) under protest for by NMC. The said shipment was consigned
and in behalf of the consignees. to Mayleen Paper, Inc. of Manila, which
PHAC, as subrogee of the consignees, thereafter insured the shipment with American Home
filed a complaint before the RTC of Manila, Assurance Co..
Branch 39,
against ESLI to recover the sum paid under On 22 June 1988, the shipment arrived in
protest on the ground that the same were
Manila and was discharged into the custody
actually damages
directly brought about by the fault, negligence, of the Marina Port Services, Inc., for
illegal act and/or breach of contract of ESLI. eventual delivery to the consignee-assured.
The trial court
dismissed PHAC’s complaint and ruled in favor However, upon delivery of the shipment to
of ESLI. Mayleen Paper, Inc., it was found that 122
On appeal to the Court of Appeals, the appellate bales had either been damaged or lost. The
court affirmed the trial court’s findings and loss was calculated to be 4,360 kilograms
conclusions. with an estimated value of P61,263.41.
Hence, the present petition for review. Mayleen Paper, Inc. then duly demanded
The Supreme Court reversed and set aside the indemnification from NMC for the damages
judgment appealed from, and order Eastern
and losses in the shipment but to no avail.
Shipping Lines,
Inc. to return to Philippine Home Assurance Mayleen Paper, Inc. sought recovery from
Corporation the amount it paid under protest in American Home Assurance Co.. Upon
behalf of the demand and submission of proper
consignees herein. documentation, American Home Assurance
paid Mayleen Paper, Inc. the adjusted
amount of P31, 506.75 for the
damages/losses suffered by the shipment,
hence, AHA was subrogated to the rights
and interests of Mayleen Paper, Inc.
AHA brought a suit against respondent determining liability where there is
NMC for the amount it paid Mayleen Paper, negligence.
Inc.
Under the foregoing principle and in line
The RTC rendered a decision dismissing the with the Civil Code’s mandatory
complaint, such decision was affirmed by requirement of extraordinary diligence on
the CA. common carriers in the care of goods placed
in their stead, it is but reasonable to
ISSUE: conclude that the issue of negligence must
first be addressed before the proper
Is American Home Assurance Company is provisions of the Code of Commerce on the
entitled to reimbursement from NMC of extent of liability may be applied.
what it paid to Mayleen Paper?
As resolved in National Development Co. v.
RULING: C.A. (164 SCRA 593 [1988]; citing Eastern
Shipping Lines, Inc. v. I.A.C., 150 SCRA
YES. 469, 470 [1987], “the law of the country to
which the goods are to be transported
The Supreme Court reversed the decisions governs the liability of the common carrier
of both the Court of Appeals and the in case of their loss, destruction or
Regional Trial Court of Manila, Branch 41, deterioration.” (Article 1753, Civil Code).
appealed from; and ordered NMC to Herein, thus, for cargoes transported to the
reimburse the subrogee, American Home Philippines, the liability of the carrier is
Assurance, the amount of P31,506.75. governed primarily by the Civil Code and in
all matters not regulated by said Code, the
Under Article 1733 of the Civil Code, rights and obligations of common carrier
common carriers from the nature of their shall be governed by the Code of Commerce
business and for reasons of public policy are and by special laws (Article 1766, Civil
bound to observe extraordinary diligence in Code).
the vigilance over the goods and for the
safety of passengers transported by them The filing of a motion to dismiss on the
according to all circumstances of each case. ground of lack of cause of action carries
Thus, under Article 1735 of the same Code, with it the admission of the material facts
in all cases other than those mentioned in pleaded in the complaint (Sunbeam
Article 1734 thereof, the common carrier Convenience Foods, Inc. v. C.A., 181 SCRA
shall be presumed to have been at fault or to 443 [1990]). Herein, upon delivery of the
have acted negligently, unless it proves that shipment in question at Mayleen’s
it has observed the extraordinary diligence warehouse in Manila, 122 bales were found
required by law. to be damaged/lost with straps cut or loose,
calculated by the so-called “percentage
Common carriers cannot limit their liability method” at 4,360 kilograms and amounting
for injury or loss of goods where such injury to P61,263.41. Instead of presenting proof of
or loss was caused by its own negligence. the exercise of extraordinary diligence as
Otherwise stated, the law on averages under required by law, NMC filed its Motion to
the Code of Commerce cannot be applied in Dismiss dated 7 August 1989, hypothetically
admitting the truth of the facts alleged in the
complaint to the effect that the loss or made a deposit or
damage to the 122 bales was due to the signed a bond to answer for their contribution to
negligence or fault of NMC. Such being the the average.
case, it is evident that the Code of On the theory that the expenses incurred in
Commerce provisions on averages cannot floating the vessel constitute general average to
which both ship
apply. and cargo should contribute, Magsaysay brought
the action in the CFI of Manila to make Agan
Article 1734 of the Civil Code provides that pay his
common carriers are responsible for loss, contribution, which, as determined by the
destruction or deterioration of the goods, average adjuster, amounts to P841.40. Agan, in
unless due to any of the causes enumerated his answer, denies
therein. Herein, it is obvious that the present liability for this amount, alleging, among other
case does not fall under any of the things, that the stranding of the vessel was due
exceptions. Thus, American Home to the fault,
Assurance Company is entitled to negligence and lack of skill of its master, that
the expenses incurred in putting it afloat did not
reimbursement of what it paid to Mayleen
constitute
Paper, Inc. as insurer. general average, and that the liquidation of the
average was not made in accordance with law.
A. Magsaysay Inc. vs. Agan (GR L-6393, 31 After trial, the
January 1955) lower court found for Magsaysay and rendered
En Banc, Reyes A. (J): 8 concur judgment against Agan for the amount of the
Facts: The S S “San Antonio”, a vessel owned claim, with legal
and operated by A. Magsaysay Inc., left Manila interests. From this judgment, Agan has
on 6 October appealed directly to the Supreme Court.
1949, bound for Basco, Batanes, via Aparri, The Supreme Court reversed the decision
Cagayan, with general cargo belonging to appealed from, and di
different shippers,
Transportation Law, 2004 ( 441 )
Haystacks (Berne Guerrero)
smissed Magsaysay’s complaint; with costs.
among them Anastacio Agan. The vessel
reached Aparri on the 10th of that month, and
after a day’s stopover
in that port, weighed anchor to proceed to
Basco. But while still in port, it ran aground at
the mouth of the
Cagayan river, and, attempts to refloat it under
its own power having failed, Magsaysay had it
refloated by the
Luzon Stevedoring Co. at an agreed
compensation. The stranding of Magsaysay’s
vessel was due to the
sudden shifting of the sandbars at the mouth of
the river which the port pilot did not anticipate.
Once afloat,
the vessel returned to Manila to refuel and then
proceeded to Basco, the port of destination.
There the cargoes
were delivered to their respective owners or
consignees, who, with the exception of Agan,
Urrutia vs. Baco River Plantation not
applicable
The case of G. Urrutia and Company v. Baco
River Plantation Company is simply
inappropriate and
inapplicable. For the collision in the Urrutia case
was between a sailing vessel, on the one hand,
and a powerdriven vessel, on the other; the
Rules, of course, imposed a special duty on the
power-driven vessel to watch
the movements of a sailing vessel, the latter
being necessarily much slower and much less
maneuverable than
the power-driven one. Herein, both the “Don
Carlos” and the “Yotai Maru” were power-
driven and both were
equipped with radar; the maximum speed of the
“Yotai Maru” was thirteen (13) knots while that
of the “Don
Carlos” was eleven (11) knots. Moreover, as
already noted, the “Yotai Maru” precisely took
last minute
measures to avert collision as it saw the “Don
Carlos” turning to portside: the “Yotai Maru”
turned “hard
starboard” and stopped its engines and then put which, to our minds, fully and satisfactorily
its engines “full astern.” disposes of the evidence are set forth in the
following language (translated):
C. B. WILLIAMS, plaintiff-appellant,
vs. In view of the negligence of which
TEODORO R. YANGCO, defendant- the patron Millonario (of defendant's
appellant. vessel) has been guilty as well as that
imputable to the patron of the launch
William A. Kincaid and Thomas L. Hartigan Euclid, both contributed in a decided
for plaintiff. manner and beyond all doubt to the
Haussermann, Cohn, & Fisher fro occurrence of the accident and the
defendant. consequent damages resulting
therefrom in the loss of the launch
CARSON, J.: Euclid.

The steamer Subic, owned by the defendant, With a little diligence which either of
collided with the lunch Euclid owned by the the two patrons might have practiced
plaintiff, in the Bay of Manila at an early under the circumstances existing at
hour on the morning of January 9, 1911, and the time of the collision, if both had
the Euclid sank five minutes thereafter. This not been so distracted and so
action was brought to recover the value of negligent in the fulfillment of their
the Euclid. respective duties, the disaster could
have been easily avoided, since the
The court below held from the evidence sea was free of obstacles and the
submitted that the Euclid was worth at a fair night one which permitted the patron
valuation P10,000; that both vessels were Millonario to distinguish the hull of
responsible for the collision; and that the the launch twenty minutes before the
loss should be divided equally between the latter entered upon his path . . .
respective owners, P5,000 to be paid the
plaintiff by the defendant, and P5,000 to be There is proven, therefore, the
borne by the plaintiff himself. From this negligence of which the patron of the
judgment both defendant and plaintiff Euclid has been guilty.
appealed.
If the negligence by which the patron
After a careful review of all the evidence of of the launch Euclid has contributed
record we are all agreed with the trial judge to the cause of the accident and to
in his holding that the responsible officers the resulting damages is patent, none
on both vessels were negligent in the the less so is the negligence of the
performance of their duties at the time when patron of the steamer Subic, Hilarion
the accident occurred, and that both vessels Millonario by name, as may be seen
were to blame for the collision. We do not from his own testimony which is
deem it necessary to review the conflicting here copied for the better
testimony of the witnesses called by both appreciation thereof.
parties, the trial also having inserted in his
opinion a careful and critical summary and It will be seen that the trial judge was of
analysis of the testimony submitted to him, opinion that the vessels were jointly liable
for the loss resulting from the sinking of the liability in this jurisdiction for maritime
launch. But actions for damages resulting accidents such as that now under
from maritime collisions are governed in consideration is clearly, definitely, and
this jurisdiction by the provisions of section unequivocally laid down in the above-cited
3, title 4, Book III of the Code of article 827 of the Code of Commerce; and
Commerce, and among these provisions we under that rule, the evidence disclosing that
find the following: both vessels were blameworthy, the owners
of either can successfully maintain an action
ART. 827. If both vessels may be against the other for the loss or injury of his
blamed for the collision, each one vessel.
shall be liable for its own damages,
and both shall be jointly responsible In cases of a disaster arising from the mutual
for the loss and damages suffered by negligence of two parties, the party who has
their cargoes. a last clear opportunity of avoiding the
accident, notwithstanding the negligence of
In disposing of this case the trial judge his opponent, is considered wholly
apparently had in mind that portion of the responsible for it under the common-law
section which treats of the joint liability of rule of liability as applied in the courts of
both vessels for loss or damages suffered by common law of the United States. But this
their cargoes. In the case at bar, however, rule (which is not recognized in the courts of
the only loss incurred was that of the launch admiralty in the United States, wherein the
Euclid itself, which went to the bottom soon loss is divided in cases of mutual and
after the collision. Manifestly, under the concurring negligence, as also where the
plain terms of the statute, since the evidence error of one vessel has exposed her to
of record clearly discloses, as found by the danger of collision which was consummated
trail judge, that "both vessels may be blamed by he further rule, that where the previous
for the collision," each one must be held application by the further rule, that where
may be blamed for it own damages, and the the previous act of negligence of one vessel
owner of neither one can recover from the has created a position of danger, the other
other in an action for damages to his vessel. vessel is not necessarily liable for the mere
failure to recognize the perilous situation;
Counsel for the plaintiff, basing his and it is only when in fact it does discover it
contention upon the theory of the facts as in time to avoid the casualty by the use of
contended for by him, insisted that under he ordinary care, that it becomes liable for the
doctrine of "the last clear chance," the failure to make use of this last clear
defendant should be held liable because, as opportunity to avoid the accident. (See cases
he insists, even if the officers on board the cited in Notes, 7 Cyc., pp. 311, 312, 313.)
plaintiff's launch were negligence in failing So, under the English rule which conforms
to exhibit proper lights and in failing to take very nearly to the common-law rule as
the proper steps to keep out of the path of applied in the American courts, it has been
the defendant's vessel, nevertheless the held that the fault of the first vessel in
officers on defendant's vessel, by the failing to exhibit proper lights or to take the
exercise of due precautions might have proper side of the channel will relieve from
avoided the collision by a very simple liability one who negligently runs into such
manuever. But it is sufficient answer to this vessels before he sees it; although it will not
contention to point out that the rule of be a defense to one who, having timely
warning of the danger of collision, fails to by 10 P.M. of the same day, the ship captain
use proper care to avoid it. (Pollock on ordered the vessel to proceed to Tacloban when
Torts, 374.) In the case at bar, the most that prudence dictated
can be said in support of plaintiff's that he should have taken it to the nearest port
contention is that there was negligence on for shelter, thus violating his duty to exercise
the part of the officers on defendant's vessel extraordinary
in failing to recognize the perilous situation diligence in the carrying of passengers safely to
created by the negligence of those in charge their destination. At about the same time,
of plaintiff's launch, and that had they Angelina
recognized it in time, they might have Tabuquilde, mother of Jennifer Anne, contacted
avoided the accident. But since it does not the Sulpicio Office to verify radio reports that
appear from the evidence that they did, in the vessel M/V
fact, discover the perilous situation of the Dona Marilyn was missing. Employees of said
launch in time to avoid the accident by the Sulpicio Lines assured her that the ship was
exercise of ordinary care, it is very clear that merely “hiding”
under the above set out limitation to the rule, thereby assuaging her anxiety. At around 2:00
the plaintiff cannot escape the legal P.M. of 24 October 1988, said vessel capsized,
consequences of the contributory negligence throwing Tito
of his launch, even were we to hold that the Transportation Law, 2004 ( 269 )
Haystacks (Berne Guerrero)
doctrine is applicable in the jurisdiction,
and Jennifer Anne, along with hundreds of
upon which point we expressly reserve our
passengers, into the tumultuous sea. Tito tried to
decision at this time.
keep himself and
his daughter afloat but to no avail as the waves
The judgment of the court below in favor of
got stronger and he was subsequently separated
the plaintiff and against the defendant
from his
should be reserved, and the plaintiff's
daughter despite his efforts. He found himself on
complaint should be dismissed without day,
Almagro Island in Samar the next day at around
without costs to either party in this instance.
11:00 A.M.
So ordered. and immediately searched for his daughter
among the survivors in the island, but the search
Sulpicio Lines vs. CA (GR 113578, 14 July
proved fruitless.
1995)
In the meantime, Angelina tried to seek the
First Division, Quiason (J): 3 concur, 1 on leave
assistance of the Sulpicio Lines in Manila to no
Facts: On 23 October 1988, Tito Duran
avail, the latter
Tabuquilde and his three-year old daughter
refusing to entertain her and hundreds of
Jennifer Anne boarded the
relatives of the other passengers who waited
M/V Dona Marilyn at North Harbor, Manila,
long hours outside the
bringing with them several pieces of luggage. In
Manila office. Angelina spent sleepless nights
the morning of
worrying about her husband Tito and daughter
24 October 1988, the M/V Dona Marilyn, while
Jennifer Anne in
in transit, encountered inclement weather which
view of the refusal of Sulpicio Lines to release a
caused huge
verification of the sinking of the ship. On 26
waves due to Typhoon Unsang. Notwithstanding
October 1988,
the fact that Storm Signal 2 had been raised by
Tito and other survivors in the Almagro Island
the PAGASA authorities over Leyte as early as
were fetched and were brought to Tacloban
5:30 P.M. of 23 October 1988 and which signal
Medical Center for
was raised to Signal 3
treatment. On 31 October 1988, Tito reported FAR EASTERN SHIPPING
the loss of his daughter, was informed that the COMPANY, petitioner, vs. COURT OF
corpse of a child APPELAS and PHILIPPINE PORTS
with his daughter’s description had been found. AUTHORITY, respondents.
Subsequently, Tito wrote a letter to his wife,
reporting the sad [G.R. No. 130150. October 1, 1998]
fact that Jennifer Anne was dead. Angelina MANILA PILOTS
ASSOCIATION, petitioner,
suffered from shock and severe grief upon
vs. PHILIPPINE PORTS AUTHORITY and
receipt of the news. On FAR EASTERN SHIPPING
3 November 1988, the coffin bearing the corpse COMPANY, respondents.
of Jennifer Anne was buried in Tanauan, Leyte.
On 24 November 1988, a claim for damages was FACTS:
filed by Tito with Sulpicio Lines before the RTC
of Quezon Sometime in 1980, M/V
City (Branch 85, Civil Case Q-89-3048) in PAVLODAR, owned and operated by the Far
connection with the death of Tito’s daughter and Eastern Shipping Company, arrived at the
the loss of Tito’s Port of Manila. When the vessel reached the
belongings worth P27,580.00. On 3 January landmark, Gavino ordered the engine
1991, the trial court rendered a decision in favor stopped and anchor dropped which was
of Tito Duran relayed by Kavankov to the crew. However,
the anchor did not take hold and the bow of
Tabuquilde and Angelina de Paz Tabuquilde and
the vessel rammed into the apron of the pier
against Sulpicio Lines,. Inc. ordering the latter to causing considerable damage to the pier and
pay the vessel.
P27,580.00 as actual damages, P30,000.00 for
the death of Jennifer Tabuquilde, P100,000.00 as The PPA, through the OSG, filed a
moral complaint for a sum of money against the
damages, P50,000.00 as exemplary damages, FESC, Capt. Senen C. Gavino and the
and P50,000.00 as attorney’s fees, and costs. Manila Pilots Association, praying that the
Sulpicio Lines appealed to the Court of Appeals defendants therein be held jointly and
which affirmed the decision of the trial court. severally liable to pay for damages plus costs
Sulpicio Lines of suit., which the trial court and the CA
then filed a motion for reconsideration which decided in the affirmative. Neither of the
defendants was happy with the decision and
was denied. Hence, the petition for review on
both of them elevated their respective plaints
certiorari.
to the SC via separate petitions for review on
The Supreme Court affirmed the decision of the certiorari.
Court of Appeals with the modification that the
award of However, on matters of compliance
P27,580.00 as actual damages for the loss of the with procedural requirements, the conduct of
contents of the pieces of baggage is deleted and the respective counsel for FESC, PPA and
that the OSG leaves much to be desired, to the
award of P30,000.00 under Article 2206 in displeasure and disappointment of the Court.
relation Article 1764 is increased to P50,000.00. The records showed that the counsels of
FESC filed several motion for extension of
time to file petition totaling to 210 days, and
180 days for the OSG before the comment
was filed to the court and copies where not
furnished to the parties involved; the
certification against forum shopping is also The OSG is reminded that just like
defective. other members of the Bar, the canons under
the Code of Professional Responsibility
ISSUE: apply with equal force on lawyers in
1. Whether or not the counsel government service in the discharge of their
violated the CPR. official tasks. These ethical duties are
rendered even more exacting as to them
2. Whether or not the canons under because, as government counsel, they have
the CPR applies to lawyers in the added duty to abide by the policy of the
government service. State to promote a high standard of ethics in
public service.
Ruling:
Wherefore, counsel for FESC, the law firm of
1. Yes. As between the lawyer and the Del Rosario and Del Rosario, specifically its
courts, a lawyer owes candor, associate, Atty. Herbert A. Tria, is
fairness and good faith to the court. REPRIMANDED and WARNED. The original
He is an officer of the court exercising members of the legal team of the OSG are
a privilege which is indispensable in ADMONISHED and WARNED.
the administration of justice.
Candidness, especially towards the
courts, is essential for the expeditious
administration of justice. A lawyer is Lopez vs. Duruelo (GR 29166, 22 October
obliged to observe the rules of 1928)
procedure and not to misuse them to En Banc, Street (J): 4 concur, 1 concur in result
defeat the ends of justice. A lawyer Facts: On 10 February 1927, Augusto Lopez,
should not only help attain these who is a resident of the municipality of Silay,
objectives but should likewise avoid Occidental
any unethical or improper practices Negros, was desirous of embarking upon the
that impede, obstruct or prevent their interisland steamer San Jacinto in order to go to
realization, charged as he is with the Iloilo. This boat
primary task of assisting in the
was at the time in the anchoring ground of the
speedy and efficient administration of
port of Silay, some half a mile distant from the
justice.
port. Lopez
Sad to say, the members of said law therefore embarked at the landing in the motor
firm sorely failed to observe their boat Jison, which was then engaged in
duties as responsible members of the conveying passengers
Bar. and luggage back and forth from the landing to
boats at anchor, and which was owned and
operated by Albino
2. Yes. the Court find a lackadaisical Jison, with Juan Duruelo as patron. The engineer
attitude and complacency on the part (maquinista) aboard on this trip was one Rodolin
of the OSG in the handling of its Duruelo, a
cases and an almost reflexive boy of only 16 years of age. He is alleged to
propensity to move for countless
have been a mere novice without experience in
extensions, as if to test the patience
of the Court, before favoring it with the running of
the timely submission of required motor boats; and the day of the occurrence now
pleadings. in contemplation is said to have been the third
day of his
apprenticeship in this capacity. It is alleged that
the Jison, upon this trip, was grossly overladen,
having
aboard 14 passengers, while its capacity was
only for 8 or 9. As the motor boat approached
the San Jacinto in
a perfectly quiet sea, it came too near to the stern
of the ship, and as the propeller of the ship had
not yet
ceased to turn, the blades of the propeller struck
the motor boat and sank it at once. As the Jison
sank, Lopez
was thrown into the water against the propeller,
and the revolving blades inflicted various
injuries upon him,
consisting of a bruise in the breast, two serious
fractures of the bones of the left leg, and a
compound fracture
of the left femur. As a consequence of these
injuries Lopez was kept in bed in a hospital in
the City of Manila
from 28 February until 19 October 1927, or
approximately 8 months.
Lopez instituted an action in the CFI of
Occidental Negros for the purpose of recovering
damages (P120,000)
for personal injuries inflicted upon him by
reason of the negligence of Duruelo and Jison.
Duruelo and Jison
demurred to the complaint, and the demurrer
having been sustained, Lopez elected to stand
upon his
complaint, which was accordingly dismissed.
Lopez appealed.
The Supreme Court reversed the judgment
appealed from, overruled the demurrer, and
required Jison to
answer the complaint within 5 days after
notification of the return of the decision to the
court of origin; with
costs against Jison.