Case Digest: National Development Co. vs. CA, G.R. No. L-49407

 

National Development Co. vs. CA and Development Insurance & Surety Corp., G.R. No. L-49407 August 19, 1988

Subject: Transportation Law

FACTS

On September 13, 1962, defendant NDC as the first preferred mortgagee of three ocean going vessels including one with the name 'Dona Nati' appointed defendant MCP as its agent to manage and operate said vessel for and in its behalf and account.

On February 28, 1964 the E. Philipp Corporation of New York loaded on board the vessel "Dona Nati" at San Francisco, California, a total of 1,200 bales of American raw cotton consigned to the order of Manila Banking Corporation, Manila and the People's Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation. Also loaded on the same vessel at Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 10 cases of aluminum foil.

En route to Manila the vessel Dofia Nati figured in a collision at Ise Bay, Japan with a Japanese vessel 'SS Yasushima Maru'. The plaintiff had paid as insurer the total amount of P364,915.86 to the consignees or their successors-in-interest, for the said lost or damaged cargoes.

Hence, the plaintiff filed this complaint to recover said amount from the defendants-NDC and MCP as owner and ship agent respectively, of the said 'Dofia Nati' vessel. 

ISSUE

Whether or not the ship-owner is liable for damages.

RULING

Yes, the ship-owner is liable for damages.

Under the law 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.

In this case, 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. 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.

Case Digest: Macondray vs. Provident, 445 SCRA 644, G.R. No. 154305

 

Macondray vs. Provident, 445 SCRA 644, G.R. No. 154305, December 09, 2004

Subject: Transportation Law

FACTS

On February 16, 1991, at Vancouver, B.C. Canada, CANPOTEX SHIPPING SERVICES LIMITED INC., of Saskatoon, Saskatchewan, (hereinafter the SHIPPER), shipped and loaded on board the vessel M/V 'Trade Carrier', 5000 metric tons of Standard Grade Muriate of Potash in bulk for transportation to and delivery at the port of Sangi, Toledo City, Cebu, in favor of ATLAS FERTILIZER CORPORATION, consignee.

When the shipment arrived, it was found to have sustained losses/shortage of 476.140 metric tons. Provident paid losses. Formal claims were then filed with Trade & Transport and Macondray but the same refused and failed to settle the same.

Summons was UNSERVED to defendant TRADE AND TRANSPORT at the given address for reason that TRADE AND TRANSPORT is no longer connected with Macondray & Co. Inc. and is not holding office at said address as alleged by Ms. Guadalupe Tan. For failure to effect service of summons the case against TRADE & TRANSPORT was considered dismissed without prejudice.

Defendant MACONDRAY filed ANSWER, denying liability over the losses alleging that it have NO absolute relation with defendant TRADE AND TRANSPORT.

The trial court ruled in favor of the petitioner. On appeal, the CA affirmed the trial court's finding that petitioner was not the agent of Trade and Transport. The appellate court ruled, however, that petitioner is liable for the shortages of the shipment, because the latter was the ship agent of Canpotex Shipping Services Ltd. - - the shipper and charterer of the vessel M/V Trade Carrier.

ISSUE

Whether or not Macondray is liable for loss which was allegedly sustained by the plaintiff.

RULING

Yes, it is liable as the ship’s agent.

Article 586 of the Code of Commerce states that a ship agent is "the person entrusted with provisioning or representing the vessel in the port in which it may be found." Article 587 of the Code of Commerce states that the ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel, but he may exempt himself therefrom by abandoning the vessel with all her equipment and the freight it may have earned during the voyage.

In this case, petitioner "was appointed as local agent of the vessel, which duty includes arrangement for the entrance and clearance of the vessel." Hence, pursuant to Article 586 of the Code of Commerce, whether acting as agent of the owner of the vessel or as agent of the charterer, petitioner will be considered as the ship agent, it is liable as such, as long as the latter is the one that provisions or represents the vessel.

Case Digest: Switzerland vs. Ramirez, 96 SCRA 297, G.R. No. L48264

 

Switzerland vs. Ramirez, 96 SCRA 297, G.R. No. L48264, February 21, 1980

Subject: Transportation Law

FACTS

Switzerland insured a shipment of 60,000 bags of Urea Nitrogen from Japan to the Philippines. The shipment was discharged from the vessel into lighters owned by Mabuhay Brokerage Co., Inc.

When the shipment was delivered to the consignee, it was found to have sustained losses and damages. Switzerland, as the insurer, paid the consignee for the damages and became subrogated to their rights.

Switzerland filed an admiralty case against the carrier (Oyama Lines), the local agent of the carrier (Citadel Lines), and the lighterage company (Mabuhay Brokerage Co., Inc.). After trial, the trial court rendered decision in favor of petitioner as against therein defendant Oyama Shipping Co., Ltd., but absolving Citadel Lines, Inc. and Mabuhay Brokerage Co., Inc. from liability. 

ISSUE

Whether or not the respondent Citadel Lines, Inc., the local agent of a foreign ocean-going vessel, the S/S "St. Lourdes", may be held primarily liable for the loss/damage found to have been sustained by subject shipment while on board and/or still in the custody of the said vessel.

RULING

Yes, the respondent Citadel Lines, Inc. may be held primarily liable for the loss/damage.

Under the Code of Commerce, it provides that the ship agent shall also be liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carrier.

In this case, it appears that the Citadel Lines is the ship agent for the vessel S/S "St. Lourdes" at the port of Manila, it is, therefore, liable to the petitioner, solidarily with its principal, Oyama Shipping Co., Ltd., in an amount representing the value of the goods lost and or damaged. The insolvency of Oyama Lines has no bearing on the instant case insofar as the liability of Citadel Lines, Inc. is concerned. The law does not make the liability of the ship agent dependent upon the solvency or insolvency of the ship owner.

Case Digest: Caltex vs. Sulpicio Lines, G.R. No. 131166

 

Caltex vs. Sulpicio Lines, 315 SCRA 709, G.R. No. 131166, September 30, 1999

Subject: Transportation Law

FACTS

MT Vector, a tramping motor tanker owned and operated by Vector Shipping Corporation, left the port of Limay, Bataan carrying petroleum products of Caltex Philippines, Inc. (petitioner) en route to Masbate by a charter contract. While MV Doña Paz, a passenger and cargo vessel owned and operated by Sulpicio Lines, left the port of Tacloban headed for Manila.

On December 20, 1987, the two vessels collided in the open sea. Among those who perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old), both unmanifested passengers but proved to be on board the vessel.

After investigation, it was found that the MT Vector was at fault and responsible for its collision with MV Doña Paz.

Sebastian Cañezal's wife and mother filed a complaint for "Damages Arising from Breach of Contract of Carriage" against Sulpicio Lines, Inc. with the RTC of Manila. Sulpicio, in turn, filed a third-party complaint against Francisco Soriano, Vector Shipping Corporation, and Caltex (Philippines), Inc.

The trial court rendered a decision dismissing the third-party complaint against the petitioner. On appeal, CA modified the trial court's ruling and included petitioner Caltex as one of those liable for damages. Hence this petition.

ISSUE

Whether or not Caltex, the charterer of a sea vessel, is liable for damages resulting from a collision between the chartered vessel and a passenger ship.

RULING

No, Caltex, the charterer of a sea vessel, is not liable for damages.

Under the law, a charter party or 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. 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.

In this case, Caltex and Vector entered into a voyage charter, which retains the character of the vessel (MT Vector) as a common carrier. The charterer of a vessel has no obligation before transporting its cargo to ensure that the chartered vessel complies with all legal requirements. The duty rests upon the common carrier simply for being engaged in "public service”. The nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargo.

Case Digest: Western Shipping vs. NLRC, G.R. No. 109717

 

Western Shipping vs. NLRC, 253 SCRA 405, G.R. No. 109717, February 9, 1996

Subject: Transportation Law

FACTS

Petitioner Western Shipping Agency, Inc. and its principal Yeh Shipping Co., Ltd., owners of M/V Sea Wealth, faced a legal challenge initiated by the private respondent, the vessel's master. Discharged on January 14, 1989, the master was accused of misconduct, particularly failing to notify the company about the vessel's arrival in Manila and allowing unauthorized passengers on board. The dismissal led to a complaint filed on March 1, 1989, alleging illegal termination, underpayment of salary, fixed overtime pay, and non-payment of wages.

Western Shipping justified the dismissal citing the master's failure to communicate and alleged safety violations. The Philippine Overseas Employment Administration (POEA) found in favor of the master, declaring his dismissal illegal. The POEA ordered petitioners to pay a total of US$45,643.00 representing salary for the unexpired contract, salary differentials, underpayment of family allotment, and conversion differences, plus attorney's fees.

Petitioners appealed to the National Labor Relations Commission (NLRC), which modified the POEA decision on March 20, 1992. The NLRC set aside the award for alleged salary differentials but affirmed the US$5,643.00 for the unexpired portion of the contract. It held Western Shipping and Yeh Shipping jointly and severally liable, with the bonding company, Philippine British Assurance Company, Inc., also held accountable.

ISSUE

Whether or not, Alexander Bao was rightfully dismissed for his failure to notify the petitioner of the vessel’s arrival in Manila and to provide life-saving equipment for the passengers he had allowed to board, as required by Section 1019 of the Philippine Merchant Marine Rules and Regulation.

RULING

No, Alexander Bao was illegally dismissed.

Under the law, Loss of confidence is a valid ground for the dismissal of managerial employees like petitioner herein, who was the master of a vessel. The loss of confidence must be substantiated by evidence. The burden of proof is on the employer to show grounds justifying the loss of confidence.

In this case, petitioners failed to discharge this burden, as the POEA and the NLRC found that: (1) the private respondent had taken on board the vessel the fifteen passengers with the knowledge of Noimi Zabala, the president of Western Shipping; (2) the clearance to sail issued by the Coast Guard, an agency of the government charged with the seaworthiness of vessels, establishes approval of the application for the boarding of the additional passengers and the safety of the vessel was not endangered by the presence of the additional passengers; (3) the vessel had adequate life-saving equipment; and (4) additional passengers were not ordinary passengers but the wives and children of the vessel’s complement, including private respondent’s wife. The private respondent, who had 15 years of maritime experience behind him, would unlikely allow unsafe passage. Therefore, the dismissal was illegal. 

Case Digest: Aboitiz vs. New India, G.R. No. 156978

 

Aboitiz vs. New India, 488 SCRA 563, G.R. No. 156978, May 02, 2006

Subject: Transportation Law

FACTS

Societe Francaise Des Colloides loaded a cargo of textiles and auxiliary chemicals from France on board a vessel owned by Franco-Belgian Services, Inc. The cargo was consigned to General Textile, Inc., in Manila and insured by respondent New India Assurance Company, Ltd. While in Hongkong, the cargo was transferred to M/V P. Aboitiz for transshipment to Manila.

While at sea, the vessel received a report of a typhoon moving within its general path. To avoid the typhoon, the vessel changed its course. However, it was still at the fringe of the typhoon when its hull leaked. On October 31, 1980, the vessel sank.

General Textile lodged a claim with New India for the amount of its loss. Respondent paid General Textile and was subrogated to the rights of the latter. Then the respondent filed a complaint for damages against petitioner Aboitiz, Franco-Belgian Services, and the latter’s local agent, F.E. Zuellig, Inc.

The trial court, citing the Court of Appeals decision in General Accident Fire and Life Assurance Corporation v. Aboitiz Shipping Corporation involving the same incident, ruled in favor of the respondent. On appeal, the appellate court affirmed in toto the trial court’s decision. Hence, this petition for review.

Petitioner contends that respondent’s claim for damages should only be against the insurance proceeds and limited to its pro-rata share in view of the doctrine of limited liability.

ISSUE

Whether or not the limited liability doctrine, which limits the respondent’s award of damages to its pro-rata share in the insurance proceeds, applies in this case.

RULING

No, the limited liability doctrine does not apply on this case.

Under the law, in the event of loss, destruction or deterioration of the insured goods, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence. Moreover, where the vessel is found unseaworthy, the shipowner is also presumed to be negligent since it is tasked with the maintenance of its vessel. Though this duty can be delegated, still, the shipowner must exercise close supervision over its men.

In this case, the petitioner has the burden of showing that it exercised extraordinary diligence in the transport of the goods it had on board to invoke the limited liability doctrine. Considering the evidence presented and the circumstances obtained in this case, the petitioner failed to discharge this burden. Both the trial and the appellate courts found that the sinking was not due to the typhoon but to its unseaworthiness. Evidence on record showed that the weather was moderate when the vessel sank. Where the shipowner fails to overcome the presumption of negligence, the doctrine of limited liability cannot be applied. Therefore, the petitioner is liable for the total value of the lost cargo.

Case Digest: Santiago Lighterage vs. Court of Appeals, G.R. No. 139629

 

Santiago Lighterage vs. Court of Appeals, G.R. No. 139629, June 21, 2004 

Subject: Transportation Law

FACTS

Square filed a complaint against Pelaez, claiming damages for a failed voyage to South Korea on MV Christine Gay. Pelaez, in turn, filed a third-party complaint against petitioner, alleging damages and attaching a preliminary writ. The trial court summarized the case, stating that Pelaez offered MV Christine Gay to C-Square, representing it as seaworthy. A Voyage Charter Agreement was signed, with a provision for rescission if the vessel was unfit. Pelaez, having signed a Bareboat Charter Agreement with petitioner, received the vessel in Manila but encountered engine issues on the way to Zambales. Repairs proved inadequate, and the vessel, loaded with chromite ores, had to return to Manila due to seaworthiness concerns. The plaintiff rescinded the Charter Agreement, citing damages. Pelaez sought payment from third parties, and MARINA later declared MV Christine Gay "dead." Consequently, plaintiff had to contract with other companies to transport its chromite ores to South Korea and this entailed additional expenses. The trial court held that MV Christine Gay was not seaworthy, which was thereby affirmed by the appellate courts. Hence this instant petition.

ISSUE

Whether or not MV Christine Gay is seaworthy.

RULING

No, MV Christine Gay is not seaworthy.

According to Maritime Law, to be seaworthy, a vessel “must have that degree of fitness which an ordinary, careful and prudent owner would require his vessel to have at the commencement of her voyage, having regard to all the probable circumstances of it.” Thus, the degree of seaworthiness varies in relation to the contemplated voyage.

In this case, petitioner asserts that MV Christine Gay is “sufficient in materials, construction, equipment and outfit” as shown by the documents the Philippine Coast Guard (“Coast Guard”) and the Maritime Industry Authority (“MARINA”) issued to petitioners. However, the trial court relied on the testimonies of Engineer Panaguiton and Captain Sorongon, who found numerous defects during a survey of the hull and superstructures. The petitioner's claim of seaworthiness is challenged, especially considering that the voyage across the Atlantic requires stronger equipment than sailing across the Visayan Sea. The obligation of seaworthiness is absolute, and even if the shipowner takes precautions, failure to ensure actual seaworthiness is not excusable. MV Christine Gay was deemed unseaworthy for the intended purpose in the bare-boat charter agreement, and the charterer's right to inspect the vessel before loading doesn't absolve the shipowner of the obligation to provide a cargoworthy ship.