CAVIN KAY RIGOR TRANSPORTATION CASE DIGESTED1111 1. CALTEX (PHILIPPINES), INC. vs.SULPICIO LINES, INC., [G.R. No. 131166.September 30, 1999]Facts: The MV Doa Paz, a passenger ship owned by by Sulpicio Lines, Inc, bound for Manila from Tacloban colided with MT Vector, a motor tanker owned by Vector Shipping Corporation bound for Manila from Bataan. MT Vector carried on board oil products owned by Caltex by virtue of a contract of affreightment, also known as a voyage charter. Numerous people died in that accident including public school teacher Sebastian Caezal and his 11 year old daughter. In 1989, Caezals wife and mother filed a complaint for Damages arising from Breach of Contract of Carriage against Sulpicio Lines, Inc. Sulpicio Lines, in turn, filed a third party complaint against Vector Shipping, Inc. and Caltex Phils. The trial court rendered decision against Sulpicio Lines and dismissed the third-party complaint. On appeal, the Court of Appeals modified the trial courts ruling and held Vector Shipping Co. and Caltex Phils., Inc., equally liable. Hence, this petition.

Issue: Whether the charterer of a sea vessel, by virtue of voyage charter, liable for damages resulting from a collision between the chartered vessel and a passenger ship?Ruling: No. Caltex Phils. and Vector entered into a contract of affreightment also known as a voyage charter. In a voyage charter, the charter party provides for the hire of the vessel only, the ship owner to supply the ships store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship. If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The Charterer is free from liability to third persons in respect of the ship.The charterer of a vessel has no obligation before transporting all legal requirements. The duty rests upon the common carrier simply for being engaged in public service.Syllabus: COMMERCIAL LAW; TRANSPORTATION; CONTRACT OF CARRIAGE; RESPECTIVE RIGHTS AND DUTIES OF PARTIES, HOW DETERMINED.- The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but on whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand, or a charter party or similar contract on the other.ID.; ID.; ID.; CHARTER PARTY DIFFERENTIATED FROM CONTRACT OF AFFREIGHTMENT.- A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight.ID.; ID.; ID.; CONTRACT OF AFFREIGHTMENT; CATEGORIES.- A contract of affreightment may be eithertime charter,wherein the leased vessel is leased to the charterer for a fixed period of time, orvoyage charter,wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the Ship owner to supply the ships store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship.ID.; ID.; ID.; ID.; WHERE CHARTER IS ONE OF AFFREIGHTMENT, CHARTERER FREE FROM LIABILITY TO THIRD PERSONS.-If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.ID.; ID.; COMMON CARRIER; REMAINS AS SUCH NOTWITHSTANDING CHARTER OF WHOLE OR PORTION OF VESSEL.- In this case, the charter party agreement did not convert the common carrier into a private carrier. The parties entered into a voyager charter, which retains the character of the vessel as a common carrier. InPlanters Products, Inc. vs. Court of Appeals,we said: It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. Later, we ruled inCoastwise Lighterage Corporation vs. Court of Appeals.Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment xxxID.; ID.; ID.; SEAWORTHINESS, IMPLIEDLY WARRANTED.- A common carrier is a person or corporation whose regular business is to carry passenger or property for all persons who may choose to employ and to remunerate him. MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code. Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship.For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew.The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code. The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a special public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers, especially because with the modern development of science and invention, transportation has become more rapid, more complicated and somehow more hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness.ID.; ID.; ID.; NEGLIGENCE, CONSTRUED.- InSoutheastern College, Inc. vs. Court of Appeals,we said that negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree of care, precaution, and vigilance, which the circumstances justly demand, or the omission to do something which ordinarily regulate the conduct of human affairs, would do.ID.; ID.; ID.; ID.; CHARTERER WITH NO OBLIGATION TO ENSURE VESSEL COMPLIED WITH ALL LEGAL REQUIREMENTS.- The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all legal requirements. The duty rests upon the common carrier simply for being engaged in public service. The Civil Code demands diligence which is required by the nature of the obligation and that which corresponds with the circumstances of the persons, the time and the place. Hence, considering the nature of the obligation between Caltex and MT Vector, the liability as found by the Court of Appeals is without basis.ID.; ID.; ID.; ID.; ID.; CASE AT BAR.-The relationship between the parties in this case is governed by special laws. Because of the implied warranty of seaworthiness, shippers of goods, when transacting with common carriers, are not expected to inquire into the vessels seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is concerned. By the same token, we cannot expect passengers to inquire every time they board a common carrier, whether the carrier possesses the necessary papers or that all the carriers employees are qualified. Such a practice would be an absurdity in a business where time is always of the essence. Considering the nature of transportation business, passengers and shippers alike customarily presume that common carriers possess all the legal requisites in its operation. Thus, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes. 2. D.P. LUB OIL MARKETING CENTER, INC. v. RAUL NICOLAS, SOCORRO VALERIE GUTIERREZ, and THE HONORABLE PONCIANO C. INOPIQUEZ (In his official capacity as the Presiding Judge of Regional Trial Court of Manila, Branch XIV) [G.R. No. 76113. November 16, 1990.]Facts: A complaint was lodged by D.P. Lub Oil Marketing Center, Inc., against private respondents Raul Nicolas and Socorro Valerie Gutierrez Gutierrez for a sum of money and damages on the ground of non-payment of the purchase price of fuel oil used for the ten vessels of the private respondents-defendants. The said complaint contained a prayer the issuance of a writ of preliminary attachment pursuant to the provisions of the Code of Commerce, Article 584 in relation to Article 580, the said vessels may be attached with added averment that the private respondents were about to dispose of the said vessels in fraud of their creditors including the petitioner herein. A writ of preliminary attachment was issued upon posting of a bond by the petitioner. The following day, an order was issued judge lifting the attachment upon the posting of a counterbond upon motion by private respondents. Thereafter, the private respondents filed a "Motion to Withdraw Counter-bond and to Dissolve Writ of Attachment which was granted by the court on the ground that the provisions of Articles 580 and 584 of the Code of Commerce being expressly repealed by the provisions of Presidential Decree 214 so as to render the same abrogated and negated already. Petitioners motion for reconsideration was denied. Hence this petition wherein petitioner submitted that the conflicting provisions can co-exist together and that it was not the intention of PD 214 to render nugatory Articles 580 and 584 of the Code of Commerce since they are not inconsistent with the former. It concludes that the respondent judge had committed grave abuse of discretion tantamount to lack of jurisdiction in issuing the questioned orders. Issue: Whether the petitioner entitled to a writ of preliminary of attachment in the first place?Ruling: No. No interpretation is necessary. It is plain, as plain as ordinary and simple words can ever be, that Articles 580 and 584 of the Code of Commerce were expressly referred to and repealed by Section 2 of PD 214. Ita lex scripta est.Syllabus:

COMMERCIAL LAW; CODE OF COMMERCE; ARTICLES 580 AND 584 THEREOF, EXPRESSLY REPEALED BY SECTION 2 OF PD NO. 214. In resolving the first issue, we affirm the conclusion of the respondent judge that, indeed, Articles 580 and 584 of the Code of Commerce had been expressly repealed by the provisions of Presidential Decree (PD) No. 214 thereby rendering the former abrogated and of no more force and effect. Section 2 of PD No. 214, which is the repealing clause is crystal clear. No interpretation is necessary. It is plain, as plain as ordinary and simple words can ever be, that Articles 580 and 584 of the Code of Commerce were expressly referred to and repealed by Section 2 of PD 214. Ita lex scripta est.REMEDIAL LAW; PROVISIONAL REMEDIES; ATTACHMENT; NATURE THEREOF; GRANTED ONLY ON CONCRETE AND SPECIFIC GROUNDS. The issue as to whether or not the case of Salas v. Adil is applicable is not important. The respondent judge acted in accordance with the existing laws and prevailing jurisprudence. The rules on the issuance of a writ of attachment must be construed strictly against the applicants. This stringency is required because the remedy of attachment is harsh, extraordinary, and summary in nature. If all the requisites for the granting of the writ are not present, then the court which issues it acts in excess of its jurisdiction. (Gruenberg v. Court of Appeals, No. L- 45948, promulgated on September 10, 1985, 138 SCRA 471) The petitioners prayer for a preliminary attachment hinges on the allegations in paragraph 16 of the complaint and paragraph 4 of the affidavit of Daniel Pe which are couched in general terms devoid of particulars of time, persons, and places to support such a serious assertion that "defendants are disposing of their properties in fraud of the creditors." There is thus the necessity of giving to the private respondents an opportunity to ventilate their side in a hearing, in accordance with due process, in order to determine the truthfulness of the allegations. But no hearing was afforded to the private respondents the writ having been issued ex parte. A writ of attachment can only be granted on concrete and specific grounds and not on general averments merely quoting the words of the rules.ID.; ID.; ID.; NO NEED TO POST A COUNTERBOND IF THE WRIT WAS IMPROPERLY GRANTED. The respondent judge merely corrected himself by issuing the questioned orders, thereby making his actions conform with the applicable laws and his findings of fact. Since the writ of attachment was improperly granted, the respondent trial courts orders discharging it were compelling and justified to rectify the initial error. Hence, there was no need at all inceptively for the private respondents to post a counterbond. (Miranda v. Court of Appeals, Et Al., G.R. No. 80030, promulgated on October 26, 1989, 6)3 and 4. (consolidated case po) NATIONAL DEVELOPMENT COMPANY v. THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY CORPORATION [G.R. No. L-49407. August 19, 1988.]MARITIME COMPANY OF THE PHILIPPINES v. THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY CORPORATION [G.R. No. L-49469. August 19, 1988.]Facts: E. Philipp Corporation of New York consigned American Raw Cotton to the order of Riverside Mills Corporation and loaded on board the vessel Doa Nati at San Francisco, California. Kyokuto Boekui, Kaisa, LTD consigned Soduim Lauryl Sulfate and Cases of Aluminum Foil to the order of Guilcon, Manila and loaded on board the same vessel at Tokyo Japan. The said vessel is owned by National Development Company (NDC) Managed and operated by Maritime Company of the Philippines (MPC) as assigned agent by NDC. En route to Manila, the vessel figured in a collision at Ise Bay, Japan with a Japanese vessel SS Yasushima Maru. Development Insurance and Surety Corporation (DISC), insurer of the goods, paid the consignees for the lost and damaged cargoes. DISC filed a complaint against MPC and NDC for recovery of the sum paid for the lost or damaged cargoes. NDCs defense was Carriage of Goods by Sea Act should apply. Under Section 4 (2) of said Act, the carrier is not responsible for the loss or damage resulting from the "act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship." Thus, NDC insists that based on the findings of the trial court which were adopted by the Court of Appeals, both pilots of the colliding vessels were at fault and negligent, NDC would have been relieved of liability under the Carriage of Goods by Sea Act. MPCs defenses were (1) insurer had no cause of action because no records show that riverside mills corporation and guilcon were holders of the duly endorsed bills of lading covering the shipments in question and (2) it was not solidarily liable with NDC because it was merely the manager and operator of the vessel Doa Nati, not a ship agent.Issues and Rulings: (1) Whether Carriage of Goods by Sea Act should apply to the case at bar and not the Civil Code or the Code of Commence?No. This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC (150 SCRA 469-470 [1987]) where it was held under similar circumstances that "the law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration" (Article 1753, Civil Code). Thus, the rule was specifically laid down that for cargoes transported from Japan to the Philippines, the liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws (Article 1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely suppletory to the provisions of the Civil Code.It appears, however, that collision falls among matters not specifically regulated by the Civil Code, so that no reversible error can be found in respondent courts application to the case at bar of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels.Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839, the shipowner or carrier, is not exempt from liability for damages arising from collision due to the fault or negligence of the captain. Primary liability is imposed on the shipowner or carrier in recognition of the universally accepted doctrine that the shipmaster or captain is merely the representative of the owner who has the actual or constructive control over the conduct of the voyage (Yeung Sheng Exchange and Trading Co. v. Urrutia & Co., 12 Phil. 751 [1909]).(2) Whether Development Insurance and Surety Corporation, has no cause of action against MCP?No. The records show that the Riverside Mills Corporation and Guilcon, Manila are the holders of the duly endorsed bills of lading covering the shipments in question and an examination of the invoices in particular, shows that the actual consignees of the said goods are the aforementioned companies. Moreover, no less than MCP itself issued a certification attesting to this fact. Accordingly, as it is undisputed that the insurer, plaintiff-appellee paid the total amount of P364,915.86 to said consignees for the loss or damage of the insured cargo, it is evident that said plaintiff-appellee has a cause of action to recover (what it has paid) from defendant-appellant MCP (Decision, CA-G.R. No. 46513-R, p. 10; Rollo, p. 43).(3) Whether MCP is solidarily liable with MDC?Yes. As found by the trial court and by the Court of Appeals, the Memorandum Agreement of September 13, 1962 (Exhibit 6, Maritime) shows that NDC appointed MCP as Agent, a term broad enough to include the concept of Ship-agent in Maritime Law. In fact, MCP was even conferred all the powers of the owner of the vessel, including the power to contract in the name of the NDC (Decision, CA G.R. No. 46513, p. 12; Rollo, p. 40). Consequently, under the circumstances, MCP cannot escape liability.The Court held that both the owner and agent should be declared jointly and severally liable, since the obligation which is the subject of the action had its origin in a tortious act and did not arise from contract (Verzosa and Ruiz, Rementeria y Cia v. Lim, 45 Phil. 423 [1923]). Consequently, the agent, even though he may not be the owner of the vessel, is liable to the shippers and owners of the cargo transported by it, for losses and damages occasioned to such cargo, without prejudice, however, to his rights against the owner of the ship, to the extent of the value of the vessel, its equipment, and the freight (Behn, Meyer Y Co. v. McMicking Et. Al. 11 Phil. 276 [1908]).(4) Whether MPC is correct that thier liability should be limited to the amount stated in the bills of lading and that law on averages should be applied in determining their liability?No. MCPs contention is devoid of merit. The declared value of the goods was stated in the bills of lading and corroborated no less by invoices offered as evidence during the trial. Besides, common carriers, in the language of the court in Juan Ysmael & Co., Inc. v. Barretto Et. Al., (51 Phil. 90 [1927]) "cannot limit its liability for injury to a less of goods where such injury or loss was caused by its own negligence." Negligence of the captains of the colliding vessel being the cause of the collision, and the cargoes not being jettisoned to save some of the cargoes and the vessel, the trial court and the Court of Appeals acted correctly in not applying the law on averages (Articles 806 to 818, Code of Commerce).(5) Whether casue of action of DISC against MCP is barred by statue of limitation has already prescribed?No. Finally on the issue of prescription, the trial court correctly found that the bills of lading issued allow trans-shipment of the cargo, which simply means that the date of arrival of the ship Doa Nati on April 18, 1964 was merely tentative to give allowances for such contingencies that said vessel might not arrive on schedule at Manila and therefore, would necessitate the trans-shipment of cargo, resulting in consequent delay of their arrival. In fact, because of the collision, the cargo which was supposed to arrive in Manila on April 18, 1964 arrived only on June 12, 13, 18, 20 and July 10, 13 and 15, 1964. Hence, had the cargoes in question been saved, they could have arrived in Manila on the above-mentioned dates. Accordingly, the complaint in the instant case was filed on April 22, 1965, that is, long before the lapse of one (1) year from the date the lost or damaged cargo "should have been delivered" in the light of Section 3, sub-paragraph (6) of the Carriage of Goods by Sea Act.Syllabus: CIVIL LAW; COMMON CARRIERS; LIABILITY FOR GOODS; GOVERNING LAW; CASE OF EASTERN SHIPPING LINES INC. V. INTERMEDIATE APPELLATE COURT CITED. This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC (150 SCRA 469-470 [1987]) where it was held under similar circumstances that "the law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration" (Article 1753, Civil Code). Thus, the rule was specifically laid down that for cargoes transported from Japan to the Philippines, the liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws (Article 1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely suppletory to the provisions of the Civil Code.ID.; ID.; ID.; ID.; ID.; CASE AT BAR. In the case at bar, it has been established that the goods in question are transported from San Francisco, California and Tokyo, Japan to the Philippines and that they were lost or damaged due to a collision which was found to have been caused by the negligence or fault of both captains of the colliding vessels. Under the above ruling, it is evident that the laws of the Philippines will apply, and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.ID.; ID.; DUTY; EXTRAORDINARY DILIGENCE IN HANDLING GOODS; DEFENSE IN OVERCOMING PRESUMPTION OF NEGLIGENCE. Under Article 1733 of the Civil Code, common carriers from the nature of their business and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to all circumstances of each case. Accordingly, under Article 1735 of the same Code, in all cases other than those mentioned is Article 1734 thereof, the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law.ID.; ID.; COLLISION OF VESSELS; GOVERNED BY THE CODE OF COMMERCE. It appears, however, that collision falls among matters not specifically regulated by the Civil Code, so that no reversible error can be found in respondent courts application to the case at bar of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels.MERCANTILE LAW; CODE OF COMMERCE; COLLISION OF VESSELS; LIABILITY FOR DAMAGES SUFFERED. More specifically, Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a vessel, the owner of the vessel at fault, shall indemnify the losses and damages incurred after an expert appraisal. But more in point to the instant case is Article 827 of the same Code, which provides that if the collision is imputable to both vessels, each one shall suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by their cargoes.ID.; ID.; ID.; ID.; PRIMARY LIABILITY OF SHIPOWNER OF CARRIER. Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839, the shipowner or carrier, is not exempt from liability for damages arising from collision due to the fault or negligence of the captain. Primary liability is imposed on the shipowner or carrier in recognition of the universally accepted doctrine that the shipmaster or captain is merely the representative of the owner who has the actual or constructive control over the conduct of the voyage (Yeung Sheng Exchange and Trading Co. v. Urrutia & Co., 12 Phil. 751 [1909]).ID.; ID.; APPLICABILITY OF THE CODE OF COMMERCE; NOT REPEALED NOR LIMITED BY THE CARRIAGE OF GOODS BY SEA ACT. There is, therefore, no room for NDCs interpretation that the Code of Commerce should apply only to domestic trade and not to foreign trade. Aside from the fact that the Carriage of Goods by Sea Act (Com. Act No. 65) does not specifically provide for the subject of collision, said Act in no uncertain terms, restricts its application "to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade." Under Section 1 thereof, it is explicitly provided that "nothing in this Act shall be construed as repealing any existing provision of the Code of Commerce which is now in force, or as limiting its application." By such incorporation, it is obvious that said law not only recognizes the existence of the Code of Commerce, but more importantly does not repeal nor limit its application.CIVIL LAW; COMMON CARRIERS; LIABILITY FOR LOSS OF GOODS; SOLIDARY LIABILITY OF THE OWNER AND AGENT OF THE OFFENDING VESSEL. It is well settled that both the owner and agent of the offending vessel are liable for the damage done where both are impleaded; that in case of collision, both the owner and the agent are civilly responsible for the acts of the captain; that while it is true that the liability of the naviero in the sense of charterer or agent, is not expressly provided in Article 826 of the Code of Commerce, it is clearly deducible from the general doctrine of jurisprudence under the Civil Code but more specially as regards contractual obligations in Article 586 of the Code of Commerce. Moreover, the Court held that both the owner and agent (Naviero) should be declared jointly and severally liable, since the obligation which is the subject of the action had its origin in a tortious act and did not arise from contract. Consequently, the agent, even though he may not be the owner of the vessel, is liable to the shippers and owners of the cargo transported by it, for losses and damages occasioned to such cargo, without prejudice, however, to his rights against the owner of the ship, to the extent of the value of the vessel, its equipment, and the freight.ID.; ID.; ID.; WHERE LIABILITY FOR LOSS OF GOODS CANNOT BE LIMITED. MCPs contention is devoid of merit. The declared value of the goods was stated in the bills of lading and corroborated no less by invoices offered as evidence during the trial. Besides, common carriers, in the language of the court in Juan Ysmael & Co., Inc. v. Barretto Et. Al., (51 Phil. 90 [1927]) "cannot limit its liability for injury to a less of goods where such injury or loss was caused by its own negligence." Negligence of the captains of the colliding vessel being the cause of the collision, and the cargoes not being jettisoned to save some of the cargoes and the vessel, the trial court and the Court of Appeals acted correctly in not applying the law on averages (Articles 806 to 818, Code of Commerce).5. MARITIME AGENCIES & SERVICES, INC. v. COURT OF APPEALS, and UNION INSURANCE SOCIETY OF CANTON, LTD. [G.R. No. 77638. July 12, 1990.]UNION INSURANCE SOCIETY OF CANTON, LTD. v. COURT OF APPEALS, HONGKONG ISLAND CO., LTD., MARITIME AGENCIES & SERVICES, INC., and or VIVA CUSTOMS BROKERAGE [G.R. No. 77674. July 12, 1990.]Facts: Transcontinental Fertilizer Company of London chartered from Hongkong Island Co. Ltd the motor vessel named "Hongkong Island" for the shipment of 8073.35 MT (gross) bagged urea from Novorossisk, Odessa, USSR, to the Philippines, the parties signing for this purpose a Uniform General Charter. Of the total shipment, 5,400.04 MT was for the account of Atlas Fertilizer Company as consignee, 3,400.04 to be discharged in Manila and the remaining 2,000 MT in Cebu. The goods were insured by the consignee with the Union Insurance Society of Canton, Ltd. against all risks. Maritime Agencies & Services, Inc. was appointed as the charterers agent and Macondray Company, Inc. as the owners agent. The vessel arrived in Manila, and unloaded part of the consignees goods, then proceeded to Cebu to discharge the rest of the cargo. The consignee filed a formal claim against Maritime, copy furnished for the shortlanded bags and against Viva Customs Brokerage for bags of net unrecovered spillage. These claims having been rejected, the consignee then went to Union, which on demand paid the total indemnity of P113,123.86 pursuant to the insurance contract. Union then filed complaint for reimbursement of this amount against Hongkong Island Company, Ltd., Maritime Agencies & Services, Inc. and/or Viva Customs Brokerage. The complaint was amended to drop Viva and implead Macondray Company, Inc. as a new defendant.RTC held Macondray and Hongkong liable (half of the cost) as well as Martime liable (half of the cost). The CA exempted Hongkong and Macondray (owner and agent) whileTranscontinental and Maritime (Charterer and agent) were held liable. Maritime's defenses were: (1) it was not liable on the ground that it was only the charterers agent and should not answer for whatever responsibility might have attached to the principal and (2) respondent court erred in applying Articles 1734 and 1735 of the Civil Code in determining the charterers liability.Union averred that Maritime is solidarily and solely liable as principal was not impleaded and so not subject to the jurisdiction of the courts.Issue: Whether the owner or the charterer, as well as their corresponding agents, liable?Ruling:A voyage charter being a private carriage, the parties may freely contract respecting liability for damage to the goods and other matters. The basic principle is that "the responsibility for cargo loss falls on the one who agreed to perform the duty involved" in accordance with the terms of most voyage charters.

This is true in the present cases where the charterer was responsible for loading, stowage and discharging at the ports visited, while the owner was responsible for the care of the cargo during the voyage.In the cases at bar, the trial court found that 1,383 bags were shortlanded, which could only mean that they were damaged or lost on board the vessel before unloading of the shipment. It is not denied that the entire cargo shipped by the charterer in Odessa was covered by a clean bill of lading. As the bags were in good order when received in the vessel, the presumption is that they were damaged or lost during the voyage as a result of their negligent improper stowage. For this the ship owner should be held liable.The period for filing the claim is one year, in accordance with the Carriage of Goods by Sea Act.The one-year period in the cases at bar should commence on October 20, 1979, when the last item was delivered to the consignee. Unions complaint was filed against Hongkong on September 19, 1980, but tardily against Macondray on April 20, 1981.As regards the goods damaged or lost during unloading, the charterer is liable therefor, having assumed this activity under the charter party "free of expense to the vessel." The difficulty is that Transcontinental has not been impleaded in these cases and so is beyond our jurisdiction. The liability imposable upon it cannot be borne by Maritime which, as a mere agent, is not answerable for injury caused by its principal. It is a well-settled principle that the agent shall be liable for the act or omission of the principal only if the latter is undisclosed.The liability of Macondray can no longer be enforced because the claim against it has prescribed and as for Maritime it cannot be held liable for the acts of its know principal resulting in injury to Union Insurance. Definition: There are three general categories of charters, to wit, the demise or "bareboat charter," the time charter and the voyage charter.A demise involves the transfer of full possession and control of the vessel for the period covered by the contract, the charterer obtaining the right to use the vessel and carry whatever cargo it chooses, while manning and supplying the ship as well. A time charter is a contract to use a vessel for a particular period of time, the charterer obtaining the right to direct the movements of the vessel during the chartering period, although the owner retains possession and control. A voyage charter is a contract for the hire of a vessel for one or a series of voyages usually for the purpose of transport in goods for the charterer. The voyage charter is a contract of affreightment and is considered a private carriage.6. SMITH BELL AND COMPANY (PHILIPPINES), INC. and TOKYO MARINE AND FIRE INSURANCE CO., INC. v. THE COURT OF APPEALS and CARLOS A. GO THONG AND CO. [G.R. No. 56294. May 20, 1991.]Facts: On port of Manila near Caballo Island, a collision took place between the M/V "Don Carlos," an inter-island vessel owned and operated by private respondent Carlos A. Go Thong and Company ("Go Thong"), and the M/S "Yotai Maru," a merchant vessel of Japanese registry. The "Don Carlos" was then sailing south bound leaving the port of Manila for Cebu, while the "Yotai Maru" was approaching the port of Manila, coming in from Kobe, Japan. The bow of the "Don Carlos" rammed the portside (left side) of the "Yotai Maru" inflicting a three (3) cm. gaping hole on her portside near Hatch No. 3, through which seawater rushed in and flooded that hatch and her bottom tanks, damaging all the cargo stowed therein.ch The consignees of the damaged cargo got paid by the insurance companies. The insurance companies in turn, having been subrogated to the interests of the consignee of the damages cargo, commenced actions against Go Thong for damages sustained by the shipments.Issue: Whether the officers and crew of the "Don Carlos" had been negligent, that such negligence was the proximate cause of the collision and accordingly held respondent Go Thong liable for damages to the plaintiff insurance companies?Ruling: Yes. The Court believes that there are three (3) principal factors which are constitutive of negligence on the part of the "Don Carlos," which negligence was the proximate cause of the collision. The first of these factors was the failure of the "Don Carlos" to comply with the requirements of Rule 18 (a) of the International Rules of the Road ("Rules"), which provides as follows:" (a) When two power-driven vessels are meeting end on, or nearly end on, so as to involve risk of collision, each shall alter her course to starboard, so that each may pass on the port side of the other. The "Don Carlos" also violated Rule 28 (c) for it failed to give the required signal of two (2) short horn blasts meaning "I am altering my course to port." When the "Yotai Maru" saw that the "Don Carlos" was turning to port, the master of the "Yotai Maru" ordered the vessel turned "hard starboard" at 3:45 a.m. and stopped her engines; at about 3:46 a.m., the "Yotai Maru" went "full astern engine." The collision occurred at exactly 3:50 a.m.The second circumstance constitutive of negligence on the part of the "Don Carlos" was its failure to have on board that night a "proper look-out" as required by Rule I (B) of the International Rules of the Road. Under Rule 29 of the same set of Rules, all consequences arising from the failure of the "Don Carlos" to keep a "proper look-out" must be born by the "Don Carlos." In the case at bar, the failure of the "Don Carlos" to recognize in a timely manner the risk of collision with the "Yotai Maru" coming in from the opposite direction, was at least in part due to the failure of the "Don Carlos" to maintain a proper look-out.The third factor constitutive of negligence on the part of the "Don Carlos" relates to the fact that Second Mate Benito German was, immediately before and during the collision, in command of the "Don Carlos." Second Mate German simply did not have the level of experience, judgment and skill essential for recognizing and coping with the risk of collision as it presented itself that early morning when the "Don Carlos," running at maximum speed and having just overtaken the "Don Francisco" then approximately one mile behind to the starboard side of the "Don Carlos," found itself head-on or nearly head-on vis-a-vis the "Yotai Maru." It is essential to point out that this situation was created by the "Don Carlos" itself.Syllabus:REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; SUPREME COURT NOT COMPELLED TO ADOPT A DEFINITE AND STRINGENT RULE ON HOW ITS JUDGMENT SHALL BE FRAMED; EFFECT OF DISMISSAL OR GRANT OF A PETITION FOR REVIEW ON CERTIORARI BY A MINUTE RESOLUTION OF THE COURT. That this Court denied Go Thongs Petition for Review in a minute Resolution did not in any way diminish the legal significance of the denial so decreed by this Court. The Supreme Court is not compelled to adopt a definite and stringent rule on how its judgment shall be framed. It has long been settled that this Court has discretion to decide whether a "minute resolution" should be used in lieu of a full-blown decision in any particular case and that a minute Resolution of dismissal of a Petition for Review onCertiorariconstitutes an adjudication on the merits of the controversy or subject matter of the Petition. It has been stressed by the Court that the grant of due course to a Petition for Review is "not a matter of right, but of sound judicial discretion; and so there is no need to fully explain the Courts denial. For one thing, the facts and law are already mentioned in the Court of Appeals opinion." A minute Resolution denying a Petition for Review of a Decision of the Court of Appeals can only mean that the Supreme Court agrees with or adopts the findings and conclusions of the Court of Appeals, in other words, that the Decision sought to be reviewed and set aside is correct.ID.; ID.; ID.; RES JUDICATA; ABSENCE OF IDENTITY OF SUBJECT MATTER, THERE BEING SUBSTANTIAL IDENTITY OF PARTIES AND IDENTITY OF CAUSE OF ACTION, WILL NOT PRECLUDE APPLICATION THEREOF. It is conceded by petitioners that the subject matters of the two (2) suits were not identical, in the sense that the cargo which had been damaged in the one case and for which indemnity was sought, was not the very same cargo which had been damaged in the other case indemnity for which was also sought. The cause of action was, however, the same in the two (2) cases, i.e., the same right of the cargo owners to the safety and integrity of their cargo had been violated by the same casualty, the ramming of the "Yotai Maru" by the "Don Carlos." The judgments in both cases were final judgments on the merits rendered by the two (2) divisions of the Court of Appeals and by the Supreme Court, the jurisdiction of which has not been questioned. Under the circumstances, we believe that the absence of identity of subject matter, there being substantial identity of parties and identity of cause of action, will not preclude the application of res judicata.ID.; ID.; ID.; ID.; CASE AT BAR. In the case at bar, the issue of which vessel ("Don Carlos" or "Yotai Maru") had been negligent, or so negligent as to have proximately caused the collision between them, was an issue that was actually, directly and expressly raised, controverted and litigated in C.A.-G.R. No. 61320-R. Reyes, L.B., J. resolved that issue in his Decision and held the "Don Carlos" to have been negligent rather than the "Yotai Maru" and, as already noted, that Decision was affirmed by this Court in G.R. No. L-48839 in a Resolution dated 6 December 1978. The Reyes Decision thus became final and executory approximately two (2) years before the Sison Decision, which is assailed in the case at bar, was promulgated. Applying the rule of conclusiveness of judgment, the question of which vessel had been negligent in the collision between the two (2) vessels, had no long been settled by this Court and could no longer be relitigated in C.A.-G.R. No. 61206-R. Private respondent Go Thong was certainly bound by the ruling or judgment of Reyes, L.B., J. and that of this Court. The Court of Appeals fell into clear and reversible error when it disregarded the Decision of this Court affirming the Reyes Decision.ID.; EVIDENCE; ADMISSIONS; RULE ON COMPROMISES, EXPLAINED; RULE ANCHORED ON PUBLIC POLICY THAT INCIDENCE OF LITIGATION SHOULD BE REDUCED AND ITS DURATION SHORTENED TO THE MAXIMUM EXTENT FEASIBLE. The familiar rule is that "an offer of compromise is not an admission that anything is due, and is not admissible in evidence against the person making the offer." A compromise is an agreement between two (2) or more persons who, in order to forestall or put an end to a law suit, adjust their differences by mutual consent, an adjustment which every one of them prefers to the hope of gaining more, balanced by the danger of losing more. An offer to compromise does not, in legal contemplation, involve an admission on the part of a defendant that he is legally liable, not on the part of a plaintiff that his claim or demand is groundless or even doubtful, since the compromise is arrived at precisely with a view to avoiding further controversy and saving the expenses of litigation. It is of the very nature of an offer of compromise that it is made tentatively, hypothetically and in contemplation of mutual concessions. The above rule on compromises is anchored on public policy of the most insistent and basic kind: that the incidence of litigation should be reduced and its duration shortened to the maximum extent feasible.CIVIL LAW; QUASI-DELICT; NEGLIGENCE; FACTORS CONSTITUTIVE THEREOF WHICH NEGLIGENCE WAS THE PROXIMATE CAUSE OF THE COLLISION; FIRST FACTOR WAS FAILURE ON THE PART OF PRIVATE RESPONDENTS VESSEL TO COMPLY WITH RULES 18(a) AND 28 (c) OF THE INTERNATIONAL RULES OF THE ROAD. The Court believes that there are three (3) principal factors which are constitutive of negligence on the part of the "Don Carlos," which negligence was the proximate cause of the collision. The first of these factors was the failure of the "Don Carlos" to comply with the requirements of Rule 18 (a) of the International Rules of the Road ("Rules"), which provides as follows:" (a) When two power-driven vessels are meeting end on, or nearly end on, so as to involve risk of collision, each shall alter her course to starboard, so that each may pass on the port side of the other. The "Don Carlos" also violated Rule 28 (c) for it failed to give the required signal of two (2) short horn blasts meaning "I am altering my course to port." When the "Yotai Maru" saw that the "Don Carlos" was turning to port, the master of the "Yotai Maru" ordered the vessel turned "hard starboard" at 3:45 a.m. and stopped her engines; at about 3:46 a.m., the "Yotai Maru" went "full astern engine." The collision occurred at exactly 3:50 a.m.ID.; ID.; ID.; ID.; SECOND FACTOR WAS FAILURE ON THE PART OF PRIVATE RESPONDENTS VESSEL TO HAVE ON BOARD A "PROPER LOOK-OUT" ; CASE AT BAR. The second circumstance constitutive of negligence on the part of the "Don Carlos" was its failure to have on board that night a "proper look-out" as required by Rule I (B) of the International Rules of the Road. Under Rule 29 of the same set of Rules, all consequences arising from the failure of the "Don Carlos" to keep a "proper look-out" must be born by the "Don Carlos." In the case at bar, the failure of the "Don Carlos" to recognize in a timely manner the risk of collision with the "Yotai Maru" coming in from the opposite direction, was at least in part due to the failure of the "Don Carlos" to maintain a proper look-out.ID.; ID.; ID.; ID.; THIRD FACTOR RELATES TO THE FACT THAT THE SECOND MATE WAS, IMMEDIATELY BEFORE AND DURING THE COLLISION, IN COMMAND OF PRIVATE RESPONDENTS VESSEL. The third factor constitutive of negligence on the part of the "Don Carlos" relates to the fact that Second Mate Benito German was, immediately before and during the collision, in command of the "Don Carlos." Second Mate German simply did not have the level of experience, judgment and skill essential for recognizing and coping with the risk of collision as it presented itself that early morning when the "Don Carlos," running at maximum speed and having just overtaken the "Don Francisco" then approximately one mile behind to the starboard side of the "Don Carlos," found itself head-on or nearly head-on vis-a-vis the "Yotai Maru." It is essential to point out that this situation was created by the "Don Carlos" itself.7. MARIMPERIO COMPAIA NAVIERA, S.A. v. COURT OF APPEALS and UNION IMPORT & EXPORT CORPORATION and PHILIN TRADERS CORPORATION [G.R. No. L-40234. December 14, 1987.]L Facts: Philin Traders Corporation and Union Import and Export Corporation entered into a joint business venture for the purchase of copra from Indonesia for sale in Europe. A "Uniform Time Charter" for the hire of vessel "Paxoi" was entered into by the owner, Marimperio Compaia Naviera, S.A. through its agents N. & J. Vlassopulos, Ltd. and Matthews Wrightson, Burbridge, Ltd. to be referred to simply as Matthews, representing Interocean Shipping Corporation, which was made to appear as charterer, although it merely acted in behalf of the real charterers, private respondents herein. The Charterer was notified by letter by Vlassopulos through Matthews that the vessel "PAXOI" had sailed from Hsinkang and that it had left on hire at that time and date under the Uniform Time-Charter. The Charterer was however twice in default in its payments which were supposed to have been done in advance. Although the late payments for the charter of the vessel were received and acknowledged by Vlassopulos without comment or protest, said agent notified Matthews, by telex that the shipowners in accordance with Clause 6 of the Charter Party were withdrawing the vessel from Charterers service and holding said Charterer responsible for unpaid hirings and all legal claims. the shipowners entered into another charter agreement with another Charterer. The original Charterer again remittedhe amount corresponding to the 3rd 15-day hire of the vessel PAXOI, but this time the remittance was refused. Union Import and Export Corporation and Philin Traders Corporation filed a complaintfor specific performance with prayer for preliminary attachment.Issues and Ruling:(1) Whether respondents have the legal capacity to bring the suit for specific performance against petitioner based on the charter party?None. In the law of agency "with an undisclosed principal, the Civil Code in Article 1883 reads:"If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal.

In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal.The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent."While in the instant case, the true charterers of the vessel were the private respondents herein and they chartered the vessel through an intermediary which upon instructions from them did not disclose their names. Article 1883 cannot help the private respondents, because although they were the actual principals in the charter of the vessel, the law does not allow them to bring any action against the adverse party and vice-versa.

(2)Whether the default of Charterer in the payment of the charter hire within the time agreed upon gives petitioner a right to rescind the charter party extrajudicially?Unquestionably, as of April 23, 1965, when Vlassopulos notified Matthews of the withdrawal of the vessel from the Charterers service, the latter was already in default. Accordingly, under Clause 6 of the charter party the owners had the right to withdraw "SS PAXOI" from the service of charterers, which withdrawal they did.The question that now arises is whether or not petitioner can rescind the charter party extrajudicially. The answer is in the affirmative. A contract is the law between the contracting parties, and when there is nothing in it which is contrary to law, morals, good customs, public policy or public order, the validity of the contract must be sustained. A judicial action for the rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions.8. LITONJUA SHIPPING INC. v. NATIONAL SEAMEN BOARD and GREGORIO P. CANDONGO [G.R. No. 51910. August 10, 1989*]Facts: Petitioner Litonjua is the duly appointed local crewing Managing Office of the Fairwind Shipping Corporation ("Fairwind"). The M/V Dufton Bay is an ocean-going vessel of foreign registry owned by the R.D. Mullion Ship Broking Agency Ltd. ("Mullion"). While the Dufton Bay was in the port of Cebu and while under charter by Fairwind, the vessels master contracted the services of, among others, private respondent Gregorio Candongo to serve as Third Engineer for a period of twelve (12) months with a monthly wage of US$500.00. This agreement was executed before the Cebu Area Manning Unit of the NSB. Thereafter, private respondent boarded the vessel. On 28 December 1976, before expiration of his contract, private respondent was required to disembark at Port Kelang, Malaysia, and was returned to the Philippines on 5 January 1977. The cause of the discharge was described in his Seamans Book as "by owners arrange."

Shortly after returning to the Philippines, private respondent filed a complaint before public respondent NSB, for violation of contract, against Mullion as the shipping company and petitioner Litonjua as agent of the shipowner and of the charterer of the vessel.Issue: Whether the charterer Fairwind was properly regarded as the employer of private respondent Candongo, and for whose liability petitioner was made responsible?Rulings: Yes. A bareboat or demise charter is a demise of a vessel, much as a lease of an unfurnished house is a demise of real property. The shipowner turns over possession of his vessel to the charterer, who then undertakes to provide a crew and victuals and supplies and fuel for her during the term of the charter. The shipowner is not normally required by the terms of a demise charter to provide a crew, and so the charterer gets the "bare boat", i.e., without a crew. Sometimes, of course, the demise charter might provide that the shipowner is to furnish a master and crew to man the vessel under the charterers direction, such that the master and crew provided by the shipowner become the agents and servants or employees of the charterer, and the charterer (and not the owner) through the agency of the master, has possession and control of the vessel during the charter period.In a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, the charterer assuming in large measure the customary rights and liabilities of the shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the Master of the vessel is the agent of the charterer and not of the shipowner. The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for the expenses of the voyage including the wages of the seamen.It is important to note that petitioner Litonjua did not place into the record of this case a copy of the charter party covering the M/V Dufton Bay. We must assume that petitioner Litonjua was aware of the nature of a bareboat or demise charter and that if petitioner did not see fit to include in the record a copy of the charter party, which had been entered into by its principal, it was because the charter party and the provisions thereof were not supportive of the position adopted by petitioner Litonjua in the present case, position diametrically opposed to the legal consequence of a bareboat charter. Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it was not such, we believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held liable on the contract of employment between the ship captain and the privateRespondent.Syllabus: MERCANTILE LAW; MARITIME COMMERCE; CHARTER PARTY; TYPES. In modern maritime law and usage, there are three (3) distinguishable types of charter parties: (a) the "bareboat" or "demise" charter; (b) the "time" charter; and (c) the "voyage" or "trip" charter.ID.; ID.; ID.; BAREBOAT OR DEMISE CHARTER. A bareboat or demise charter is a demise of a vessel, much as a lease of an unfurnished house is a demise of real property. The shipowner turns over possession of his vessel to the charterer, who then undertakes to provide a crew and victuals and supplies and fuel for her during the term of the charter. The shipowner is not normally required by the terms of a demise charter to provide a crew, and so the charterer gets the "bare boat", i.e., without a crew. Sometimes, of course, the demise charter might provide that the shipowner is to furnish a master and crew to man the vessel under the charterers direction, such that the master and crew provided by the shipowner become the agents and servants or employees of the charterer, and the charterer (and not the owner) through the agency of the master, has possession and control of the vessel during the charter period.ID.; ID.; ID.; TIME CHARTER. A time charter, upon the other hand, like a demise charter, is a contract for the use of a vessel for a specified period of time or for the duration of one or more specified voyages. In this case, however, the owner of a time- chartered vessel (unlike the owner of a vessel under a demise or bare- boat charter), retains possession and control through the master and crew who remain his employees. What the time charterer acquires is the right to utilize the carrying capacity and facilities of the vessel and to designate her destinations during the term of the charter.ID.; ID.; ID.; VOYAGE CHARTER. A voyage charter, or trip charter, is simply a contract of affreightment, that is, a contract for the carriage of goods, from one or more ports of loading to one or more ports of unloading, on one or on a series of voyages. In a voyage charter, master and crew remain in the employ of the owner of the vessel.ID.; ID.; ID.; DEMISE OR BAREBOAT CHARTER; PERSONS LIABLE FOR EXPENSES OF THE VOYAGE INCLUDING THE WAGES OF THE SEAMEN. In a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, the charterer assuming in large measure the customary rights and liabilities of the shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the Master of the vessel is the agent of the charterer and not of the shipowner. The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for the expenses of the voyage including the wages of the seamen.ID.; ID.; ID.; ID.; ID.; AGENT OF THE CHARTERER HELD LIABLE ON THE CONTRACT FOR EMPLOYMENT BETWEEN THE SHIP CAPTAIN AND THE SEAMEN RECRUITED; CASE AT BAR. It is important to note that petitioner Litonjua did not place into the record of this case a copy of the charter party covering the M/V Dufton Bay. We must assume that petitioner Litonjua was aware of the nature of a bareboat or demise charter and that if petitioner did not see fit to include in the record a copy of the charter party, which had been entered into by its principal, it was because the charter party and the provisions thereof were not supportive of the position adopted by petitioner Litonjua in the present case, position diametrically opposed to the legal consequence of a bareboat charter. Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it was not such, we believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held liable on the contract of employment between the ship captain and the privateRespondent.9. MARKET DEVELOPERS, INC. (MADE) v. HON. INTERMEDIATE APPELLATE COURT and GAUDIOSO UY [G.R. No. 74978. September 8, 1989.]Facts: Petitioner Market Developers, Inc. (MADE) entered into a written barging and towage contract with private respondent Gaudioso Uy for the shipment of the formers cargo from Iligan City to Kalibo, Aklan. The petitioner was allowed 4 lay days and agreed to pay demurrage for every day of delay, or in excess of the stipulated allowance. Uy sent a barge and a tugboat to Iligan City and loading of the petitioners cargo began immediately. It is not clear who made the request, but upon completion of the loading the parties agreed to divert the barge to Culasi, Roxas City, with the cargo being consigned per bill of lading to Modern Hardware in that city. This new agreement was not reduced to writing. The shipment arrived in Roxas City and the cargo was unloaded and duly received by the consignee. There is some dispute as to the time consumed for such unloading. Wix months later, Uy demanded payment of demurrage charges for an alleged delay of eight days and 4/25 hours. MADE ignored this demand, and Uy filed suit. The trial court ruled in favor of Uy on the ground that diversion of the cargo to Roxas City was not covered by a new written agreement, the original agreement must prevail. CA affirmed the same.Issue: Whether the second contract invalid because it was not in writing?Ruling: No. It was erroneous for the respondent courts to affirm that the original contract concluded on June 20, 1978, continued to regulate the relations of the parties. What it should have held instead was that the first written contract had been cancelled and replaced by the second verbal contract because of the change in the destination of the cargo. To hold that the old agreement was still valid and subsisting notwithstanding this substantial change was to impose upon the petitioner a condition he had not, and would not have, accepted under the new agreement.A contract may be entered into in whatever form except where the law requires a document or other special form as in the contracts enumerated in Article 1388 of the Civil Code. The general rule, therefore, is that a contract may be oral or written.Charter party may be oral, in which case the terms thereof, not having been reduced to writing, shall be those embodied in the bill of lading. (Articles 652 and 653, Code of Commerce; Compaia Maritima v. Insurance Company of North America, 12 SCRA 213)

Syllabus: REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE APPELLATE COURT GENERALLY UPHELD; CASE AT BAR, AN EXCEPTION. It was erroneous for the respondent courts to affirm that the original contract concluded on June 20, 1978, continued to regulate the relations of the parties. What it should have held instead was that the first written contract had been cancelled and replaced by the second verbal contract because of the change in the destination of the cargo. To hold that the old agreement was still valid and subsisting notwithstanding this substantial change was to impose upon the petitioner a condition he had not, and would not have, accepted under the new agreement.CIVIL LAW; OBLIGATIONS AND CONTRACTS; A CONTRACT MAY BE ENTERED INTO IN WHATEVER FORM. "A contract may be entered into in whatever form except where the law requires a document or other special form as in the contracts enumerated in Article 1388 of the Civil Code. The general rule, therefore, is that a contract may be oral or written." (Tong v. Intermediate Appellate Court, 156 SCRA 726)MERCANTILE LAW; CARRIAGE OF GOODS BY SEA ACT; CONTRACT OF AFFREIGHTMENT, DEFINED. A contract of affreightment. As defined, a contract of affreightment is a contract with the shipowner to hire his ship or part of it, for the carriage of goods, and generally takes the form either of a charter party or a bill of lading.ID.; ID.; CHARTER PARTY; TERMS GOVERNED BY THE BILL OF LADING WHEN ENTERED INTO VERBALLY. Charter party may be oral, in which case the terms thereof, not having been reduced to writing, shall be those embodied in the bill of lading. (Articles 652 and 653, Code of Commerce; Compaia Maritima v. Insurance Company of North America, 12 SCRA 213)REMEDIAL LAW; PAROL EVIDENCE; INAPPLICABLE WHERE THE FIRST AGREEMENT WAS NOT MERELY MODIFIED BUT ACTUALLY REPLACED. The parol evidence rule is clearly inapplicable because that involves the verbal modification usually not allowed of a written agreement admittedly still valid and subsisting. In the case at bar, the first written agreement had not merely been modified but actually replaced by the second verbal agreement, which is perfectly valid even if not in writing like the first.MERCANTILE LAW; CODE OF COMMERCE; DEMURRAGE; NOT CARRIED OVER THE SECOND CONTRACT WHERE THERE IS NO STIPULATION THEREON IN THE FIRST CONTRACT. Regarding the bill of lading, an examination thereof will reveal that there is no condition or requirement therein for the payment of demurrage charges. Under the afore-quoted Article 653 of the Code of Commerce, therefore, there was no reason to read any stipulation for demurrage into the second contract.ID.; ID.; ID.; ABSENCE OF DELAY IN UNLOADING CARGO, NEGATES LIABILITY. Even assuming that the original agreement for demurrage had been carried over in the second contract, there is no acceptable evidence of the delay allegedly incurred by the petitioner in the unloading of its cargo in Roxas City. Uys testimony on this matter is self-serving, let alone the fact that he admittedly was not present at the unloading. His corroboration is hearsay. This consisted merely of Exhibits B and C, the so-called statement of facts regarding the unloading of the cargo from the barge, prepared by the barge patron, a certain Ding Julian. This person was not presented at the trial to testify on his report and could therefore not be subjected to cross examination.REMEDIAL LAW; SUPREME COURT; IT SHOULD NEVER BE ASSUMED THAT DECISIONS UNDER REVIEW WILL BE AUTOMATICALLY AFFIRMED. It should never be assumed that when this Court sits to review the decisions of the lower courts, it will merely and automatically affirm them without further inquiry on the convenient assumption that they are correct. That may be a presumption, and it is often valid, but it is never conclusive upon us. Such decisions are always examined carefully and thoroughly by this Court, in the light of the issues and arguments raised by the parties before it, and may be modified or even reversed whenever warranted to give the deserving suitor the appropriate relief. As in this case.10. G.R. No. 77638 July 12, 1990MARITIME AGENCIES & SERVICES, INC.,petitioner,vs.COURT OF APPEALS, and UNION INSURANCE SOCIETY OF CANTON, LTD.,respondents.G.R. No. 77674 July 12, 1990UNION INSURANCE SOCIETY OF CANTON, LTD.,petitioner,vs.COURT OF APPEALS, HONGKONG ISLAND CO., LTD., MARITIME AGENCIES & SERVICES, INC., and/or VIVA CUSTOMS BROKERAGE,respondents.FACTS: Transcontinental Fertilizer Company of London chartered from Hongkong Island Shipping Company of Hongkong the motor vessel named "Hongkong Island" for the shipment of 8073.35 MT bagged urea from Novorossisk, Odessa, USSR to the Philippines, the parties signing for this purpose a Uniform General Charter dated August 9, 1979. Of the total shipment, 5,400.04 MT was for the account of Atlas Fertilizer Company as consignee, 3,400.04 to be discharged in Manila and the remaining 2,000 MT in Cebu. The goods were insured by the consigneewith the Union Insurance Society of Canton, Ltd. for P6,779,214.00 against all risks. Maritime Agencies & Services, Inc. was appointed as the charterer's agent and Macondray Company, Inc. as the owner's agent. The vessel arrived in Manila and unloaded part of the consignee's goods, then proceeded to Cebu on to discharge the rest of the cargo. On October 31, 1979, the consignee filed a formal claim against Maritime, copy furnished Macondray, for the amount of P87,163.54, representing C & F value of the 1,383 shortlanded bags. On January 12, 1980, the consignee filed another formal claim, this time against Viva Customs Brokerage, for the amount of P36,030.23, representing the value of 574 bags of net unrecovered spillage. These claims having been rejected, the consignee then went to Union, which on demand paid the total indemnity of P113,123.86 pursuant to the insurance contract. As subrogee of the consignee, Union then filed on September 19, 1980, a complaint for reimbursement of this amount, with legal interest and attorney's fees, against Hongkong Island Company, Ltd., Maritime Agencies & Services, Inc. and/or Viva Customs Brokerage. On April 20, 1981, the complaint was amended to drop Viva and implead Macondray Company, Inc. as a new defendant. In G.R. No. 77638, Maritime pleads non-liability on the ground that it was only the charterer's agent and should not answer for whatever responsibility might have attached to the principal. It also argues that the respondent court erred in applying Articles 1734 and 1735 of the Civil Code in determining the charterer's liability.In G.R. No. 77674, Union asks for the modification of the decision of the respondent court so as to make Maritime solidarily and solely liable, its principal not having been impleaded and so not subject to the jurisdiction of our courts.ISSUES: 1.WON Maritime is liable?2.WON Macondaray be held liable?HELD: There are three general categories of charters, to wit, the demise or "bareboat charter," the time charter and the voyage charter.A demise involves the transfer of full possession and control of the vessel for the period covered by the contract, the charterer obtaining the right to use the vessel and carry whatever cargo it chooses, while manning and supplying the ship as well.11A time charter is a contract to use a vessel for a particular period of time, the charterer obtaining the right to direct the movements of the vessel during the chartering period, although the owner retains possession and control.12A voyage charter is a contract for the hire of a vessel for one or a series of voyages usually for the purpose of transporting goods for the charterer. The voyage charter is a contract of affreightment and is considered a private carriage.1. For Maritime, it cannot be held liable for the acts of its known principal resulting in injury to Union. The charterer did not represent itself as a carrier and indeed assumed responsibility ability only for the unloading of the cargo,i.e, after the goods were already outside the custody of the vessel. In supervising the unloading of the cargo and issuing Daily Operations Report and Statement of Facts indicating and describing the day-to-day discharge of the cargo, Maritime acted in representation of the charterer and not of the vessel. It thus cannot be considered a ship agent. As a mere charterer's agent, it cannot be held solidarily liable with Transcontinental for the losses/damages to the cargo outside the custody of the vessel. Notably, Transcontinental was disclosed as the charterer's principal and there is no question that Maritime acted within the scope of its authority.As regards the goods damaged or lost during unloading, the charterer is liable therefor, having assumed this activity under the charter party "free of expense to the vessel." The difficulty is that Transcontinental has not been impleaded in these cases and so is beyond our jurisdiction. The liability imposable upon it cannot be borne by Maritime which, as a mere agent, is not answerable for injury caused by its principal. It is a well-settled principle that the agent shall be liable for the act or omission of the principal only if the latter is undisclosed.2. The liability of Macondray can no longer be enforced because the claim against it has prescribed.The one-year period in the cases at bar should commence on October 20, 1979, when the last item was delivered to the consignee.18Union's complaint was filed against Hongkong on September 19, 1980, but tardily against Macondray on April 20, 1981. The consequence is that the action is considered prescribed as far as Macondray is concerned but not against its principal, which is what matters anyway.

11. G.R. No. L-6393 January 31, 1955A. MAGSAYSAY INC.,plaintiff-appellee,vs.ANASTACIO AGAN,defendant-appellant.FACTS: The S S "San Antonio", vessel owned and operated by plaintiff, left Manila on October 6, 1949, bound for Basco, Batanes, vis Aparri, Cagayan, with general cargo belonging to different shippers, among them the defendant. 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, plaintiff have it refloated by the Luzon Stevedoring Co. at an agreed compensation. 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 defendant, made a deposit or signed a bond to answer for their contribution to the average.On the theory that the expenses incurred in floating the vessel constitute general average to which both ship and cargo should contribute, plaintiff brought the present action in the Court of First Instance of Manila to make defendant pay his contribution, which, as determined by the average adjuster, amounts to P841.40. Defendant, in his answer, denies liability to his amount, alleging, among other things, that the stranding of the vessel was due to the fault, negligence and lack of skill of its master, that the expenses incurred in putting it afloat did not constitute general average, and that the liquidation of the average was not made in accordance with law. After trial, the lower court found for plaintiff and rendered judgment against the defendant for the amount of the claim, with legal interests. From this judgment defendant had appealed directly to this Court.ISSUE:WON the expenses incurred in floating a vessel so stranded should be considered general average and shared by the cargo owners.HELD: The expenses should not be considered as general average.The following requisites for general average:First, there must be a common danger. This means, that both the ship and the cargo, after has been loaded, are subject to the same danger, whether during the voyage, or in the port of loading or unloading; that the danger arises from the accidents of the sea, dispositions of the authority, or faults of men, provided that the circumstances producing the peril should be ascertained and imminent or may rationally be said to be certain and imminent. This last requirement exclude measures undertaken against a distant peril.

Second, that for the common safety part of the vessel or of the cargo or both is sacrificed deliberately.

Third, that from the expenses or damages caused follows the successful saving of the vessel and cargo.

Fourth, that the expenses or damages should have been incurred or inflicted after taking proper legal steps and authorityThe expenses also lack the requisites of general average. First, the expenses sought to be recovered from defendant were not incurred to save vessel and cargo from a common danger. The vessel ran aground in fine weather inside the port at the mouth of a river, a place described as very shallow. There was no imminent danger. It is, of course, conceivable that, if left indefinitely at the mercy of the elements, they would run the risk of being destroyed. But as stated at the above quotation, this last requirement excludes measures undertaken against a distant peril. What does appear from the testimony of plaintiffs manager is that the vessel had to be salvaged in order to enable it to proceed to its port of destination. But as was said in the case just cited it is the safety of the property, and not of the voyage, which constitutes the true foundation of the general average. Second, the cargo could, without need of expensive salvage operation, have been unloaded by the owners if they had been required to do so. Third, the sacrifice was for the benefit of the vessel and not for the purpose of saving the cargo, the cargo owners are not in law bound to contribute to the expenses. And fourth, the procedure was not followed.

12. Sweet Lines,Inc. vs. CA; 121 SCRA 769FACTS: Private respondents purchased first- class tickets from petitioner at the latter's office in Cebu City. They were to board petitioner's vessel, M/V Sweet Grace, bound for Catbalogan, Western Samar. Instead of departing at the scheduled hour of about midnight on July 8, 1972, the vessel set sail at 3:00 A.M. of July 9, 1972 only to be towed back to Cebu due to engine trouble, arriving there at about 4:00 P.M. on the same day. Repairs having been accomplished, the vessel lifted anchor again on July 10, 1972 at around 8:00 A.M.Instead of docking at Catbalogan, which was the first port of call, the vessel proceeded direct to Tacloban at around 9:00 P.M. of July 10, 1972. Private respondents had no recourse but to disembark and board a ferryboat to Catbalogan.Hence, this suit for damages for breach of contract of carriage.ISSUES:1. WON engine failure is a fortuitous event?2. WON private respondent is entitled to moral damages?HELD:1. No.Mechanical defects in the carrier are not considered a caso fortuito that exempts the carrier from responsibility. The governing provisions are found in the Code of Commerce and read as follows:ART. 614. A captain who, having agreed to make a voyage, fails to fulfill his undertaking, without being prevented by fortuitous event orforce majeure, shall indemnify all the losses which his failure may cause, without prejudice to criminal penalties which may be proper.andART. 698. In case of interruption of a voyage already begun, the passengers shall only be obliged to pay the fare in proportion to the distance covered, without right to recover damages if the interruption is due to fortuitous event orforce majeure, but with a right to indemnity, if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel, and the passenger should agree to wait for her repairs, he may not be required to pay any increased fare of passage, but his living expenses during the delay shall be for his own account.

The crucial factor then is the existence of a fortuitous event orforce majeure. Without it, the right to damages and indemnity exists against a captain who fails to fulfill his undertaking or where the interruption has been caused by the captain exclusively.2.YES. Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contract where the defendant acted fraudulently or in bad faith. Both the Trial Court and the Appellate Court found that there was bad faith on the part of petitioner in that:(1) Defendants-appellants did not give notice to plaintiffs- appellees as to the change of schedule of the vessel;(2) Knowing fully well that it would take no less than fifteen hours to effect the repairs of the damaged engine, defendants-appellants instead made announcement of assurance that the vessel would leave within a short period of time, and when plaintiffs-appellees wanted to leave the port and gave up the trip, defendants-appellants' employees would come and say, 'we are leaving, already.'(3) Defendants-appellants did not offer to refund plaintiffs-appellees' tickets nor provide them with transportation from Tacloban City to Catbalogan.Bad faith means a breach of a known duty through some motive or interest or illwill. Self-enrichment or fraternal interest, and not personal illwill may have been the motive, but it is malice nevertheless.Exemplary damages cannot be recovered as a matter of right.13. G.R. No. L-8325 March 10, 1914C. B. WILLIAMS,plaintiff-appellant,vs.TEODORO R. YANGCO,defendant-appellant.FACTS: The steamerSubic, owned by the defendant, collided with the lunchEuclidowned by the plaintiff, in the Bay of Manila at an early hour on the morning of January 9, 1911, and theEuclidsank five minutes thereafter. This action was brought to recover the value of the Euclid.The court below held from the evidence submitted that theEuclidwas worth at a fair valuation P10,000; that both vessels were responsible for the collision; and that the loss should be divided equally between the respective owners, P5,000 to be paid the plaintiff by the defendant, and P5,000 to be borne by the plaintiff himself. From this judgment both defendant and plaintiff appealed.After a careful review of all the evidence of record we are all agreed with the trial judge in his holding that the responsible officers on both vessels were negligent in the performance of their duties at the time when the accident occurred, and that both vessels were to blame for the collision.Counsel for the plaintiff, insisted that under he doctrine of "the last clear chance," the defendant should be held liable because, as he insists, even if the officers on board the plaintiff's launch were negligence in failing to exhibit proper lights and in failing to take the proper steps to keep out of the path of the defendant's vessel, nevertheless the officers on defendant's vessel, by the exercise of due precautions might have avoided the collision by a very simple manueverISSUE:WON Doctrine of Last clear chance will apply?HELD: NO. In the case at bar, the most that can be said in support of plaintiff's contention is that there was negligence on the part of the officers on defendant's vessel in failing to recognize the perilous situation created by the negligence of those in charge of plaintiff's launch, and that had they recognized it in time, they might have avoided the accident. But since it does not appear from the evidence that they did, in fact, discover the perilous situation of the launch in time to avoid the accident by the exercise of ordinary care, it is very clear that under the above set out limitation to the rule, the plaintiff cannot escape the legal consequences of the contributory negligence of his launch, even were we to hold that the doctrine is applicable in the jurisdiction, upon which point we expressly reserve our decision at this time.In cases of a disaster arising from the mutual negligence of two parties, the party who has a last clear opportunity of avoiding the accident, notwithstanding the negligence of his opponent, is considered wholly responsible for it under the common-law rule of liability as applied in the courts of common law of the United States. But this rule (which is not recognized in the courts of admiralty in the United States, wherein the loss is divided in cases of mutual and concurring negligence, as also where the error of one vessel has exposed her to danger of collision which was consummated by he further rule, that where the previous application by the further rule, that where the previous act of negligence of one vessel has created a position of danger, the other vessel is not necessarily liable for the mere failure to recognize the perilous situation; and it is only when in fact it does discover it in time to avoid the casualty by the use of ordinary care, that it becomes liable for the failure to make use of this last clear opportunity to avoid the accident. (See cases cited in Notes, 7 Cyc., pp. 311, 312, 313.) So, under the English rule which conforms very nearly to the common-law rule as applied in the American courts, it has been held that the fault of the first vessel in failing to exhibit proper lights or to take the proper side of the channel will relieve from liability one who negligently runs into such vessels before he sees it; although it will not be a defense to one who, having timely warning of the danger of collision, fails to use proper care to avoid it.Actions for damages resulting from maritime collisions are governed in this jurisdiction by the provisions of section 3, title 4, Book III of the Code of Commerce, and among these provisions we find the following:ART. 827. If both vessels may be blamed for the collision, each one shall be liable for its own damages, and both shall be jointly responsible for the loss and damages suffered by their cargoes.

14. G.R. No. L-7675 March 25, 1913G. URRUTIA & CO.,plaintiff-appellee,vs.BACO RIVER PLANTATION CO.,defendant-appellee.M. GARZA,intervener-appellant.FACTS: This action spring from a collision between the steamshipNuestra Seora del Pilar, owned by the plaintiff, and the schoonerMangyanowned by the defendant, which occurred in the early morning of the 8th of April, 1910, in Verde Island North Passage. The sail vessel was sailing with a fresh breeze dead astern, her sails wing and wing. The steamer was seen by those on board the sailing vessel some time before the actual collision, sailing erratically. The sail vessel kept her course steadily until just before the actual contact when her helmsman threw her hard to port in an effort to avoid the collision. The movement, however, was unsuccessful and the sail vessel rammed the steamer on the starboard quarter well aft. The steamer sank and eight lives were lost. The sail vessel was considerably injured.This action was brought by the owners of the steamship against the owner of the sail vessel, to recover the value of the destroyed steamer and the damages caused by reason of its destruction, alleging as a basis therefor the negligence of the said vessel. The defendant denied the material allegations of the complaint and set up a counterclaim for damages, alleging as grounds therefor that the injuries sustained by the said vessel were due to the gross negligence of those handling plaintiff's steamer.ISSUE: whether or not the sail vessel was negligent in continuing its course without variation up to the moment that it found itselfin extremis.HELD:NO. Article 20 of the International Rules for the Prevention of Collission at Sea is as follows: "If two ships, one of which is a sailing ship and the other a steam ship, are proceeding in such directions as to involve risk of collision, the steam ship shall keep out of the way, of the sailing ship."Article 21 is as follows: "where by any of these rules one of two vessels is to keep out of the way, the other shall keep her course and speed."Generally speaking, in collisions between vessels there exist three divisions of time, or zones; The first division covers all the time up to the moment when the risk of collision may be said to have begun. Within this zone no rule is applicable because none is necessary. Each vessel is free to direct its course as it deems best without reference to the movements of the other vessel. The second division covers the time between the moment when the risk of collision begins and the moment when it has become a practical certainty. The third division covers the time between the moment when collision has become a practical certainty and the moment of actual contact.It was during the time when the sail vessel was passing through the third zone that it changed its course to port in order to avoid, if possible, the collision. This act may be said to have been donein extremis, and, even if wrong, the sailing vessel is not responsible for the result.

15. [G.R. No. L-9534. September 29, 1956.]MANILA STEAMSHIP CO., INC., Petitioner, vs. INSA ABDULHAMAN (MORO) and LIM HONG TO, RespondentsFACTS: Insa Abdulhaman file a case against the Manila Steamship Co., owner of the M/S Bowline Knot, and Lim Hong To, owner of the M/L Consuelo V, to recover damages for the death of his (Plaintiffs) five children and loss of personal properties on board the M/L Consuelo V as a result of a maritime collision between said vessel and the M/S Bowline Knot on May 4, 1948, a few kilometers distant from San Ramon Beach, Zamboanga City.Court of Appeals affirmed the findings of the Board of Marine Inquiry, that the commanding officer of the colliding vessels had both been negligent in operating their respective vessels. Wherefore, the Court held the owners of both vessels solidarily liable toPlaintifffor the damages caused to him by the collision, under Article 827 of the Code of Commerce;chan roblesvirtualawlarybut exemptedDefendantLim Hong To from liability by reason of the sinking and total loss of his vessel, the M/L Consuelo V, while the otherDefendant, the Manila Steamship Co., owner of the M/S Bowline Knot, was ordered to pay all ofPlaintiffs damages in the amount of P20,784.00 plus one-half of the costs. It is from this judgment thatDefendantManila Steamship Co. had appealed to this Court.PetitionerManila Steamship Co. pleads that it is exempt from any liability toPlaintiffunder Article 1903 of the Civil Code because it had exercised the diligence of a good father of a family in the selection of its employees.ISSUES:1.WON Manila Steamship Co. is exempt from liability for the collision with the M/L Consuelo V due to absence of negligence on its parts in the selection and supervision of the officers and crew of the M/S Bowline Knot.2. WON RespondentLim Hong To, owner of the M/L Consuelo V, exempt from liability?

HELD: 1. NO. Under Article 827 of the Code of Commerce, in case of collision between two vessels imputable to both of them, each vessel shall suffer her own damage and both shall be solidarily liable for the damages occasioned to their cargoes. The characteristic language of the law in making the vessels solidarily liable for the damages due to the maritime collision emphasizes the direct nature of the responsibilities on account of the collision incurred by the shipowner under maritime law, as distinguished from the civil law and mercantile law in general. This direct responsibility is recognized in Article 618 of the Code of Commerce under which the captain shall be civilly liable to the ship agent, and the latter is the one liable to third persons, as pointed out in the collision case of Yueng Sheng Exchange & Trading Co. vs. Urrutia & Co., 12 Phil. 747, 753:chanroblesvirtuallawlibraryIn fact, it is a general principle, well established maritime law and custom, that shipowners and ship agents are civilly liable for the acts of the captain (Code of Commerce, Article 586) and for the indemnities due the third persons (Article 587);chan roblesvirtualawlibraryso that injured parties may immediately look for reimbursement to the owner of the ship, it being universally recognized that the ship master or captain is primarily the representative of the owner (Standard Oil Co. vs. Lopez Castelo, 42 Phil. 256, 260). This direct liability, moderated and limited by the owners right of abandonment of the vessel and earned freight (Article 587), has been declared to exist, not only in case of breached contracts, but also in cases of tortious negligence (Yu Biao Sontua vs. Osorio, 43 Phil. 511, 515):It is easy to see that to admit the defense of due diligence of a bonus paterfamilias (in the selection and vigilance of the officers and crew) as exempting the shipowner from any liability for their faults, would render nugatory the solidary liability established by Article 827 of the Code of Commerce for the greater protection of injured parties. Shipowners would be able to escape liability in practically every case, considering that the qualifications and licensing of ship masters and officers are determined by the State, and that vigilance is practically impossible to exercise over officers and crew of vessels at sea. To compel the parties prejudiced to look to the crew for indemnity and redress would be an illusory remedy for almost always its members are, from captains down, mere wage earners.

2.NO. The international rule is to the effect that the right of abandonment of vessels, as a legal limitation of a shipowners liability, does not apply to cases where the injury or the average is due to shipowners own fault. It is to be noted that both the master and the engineer of the motor launch Consuelo V were not du