Case Digest: The Government of the Philippine Islands vs. The Insular Maritime Co., G.R. No. L-21495

 

The Government of the Philippine Islands vs. The Insular Maritime Co., G.R. No. L-21495, March 18, 1924

Subject: Transportation Law

FACTS

The Government of the Philippine Islands seeks by this action to recover from The Insular Maritime Company the sum of P30,437.91 for repairs made by the Bureau of Commerce and Industry on the motor ship Insular.

The Insular Maritime Company became the owner of one vessel only, the Insular, valued at P150,000. On October 29, 1919, The Insular Maritime Company asked the Bureau of Commerce and Industry to perform certain repairs on the Insular.

The Government consented and terminated said repairs on November 29 of the same year. Subsequent thereto, on April 15, 1920, the Insular suffered a total loss by fire. The bill prepared by the chief accountant of the Bureau of Commerce and Industry for work done on the motor ship Insular in the amount of P30,437.91, was dated July 31, 1920. Collection of the claim was attempted pursuant to formal demand made by the Acting Insular Auditor of date April 30, 1921.

It will thus be noted, as was emphasized by the defense and by His Honor, the trial judge, that no steps were taken by the Government to secure payment for the repairs until after the loss of the vessel Insular. The trial judge further found in effect, as a legal conclusion, that the loss of the vessel Insular extinguished the obligation. The Attorney-General challenges the correctness of this view.

ISSUE

Whether or not the obligation of Insular Maritime Company to pay the Bureau of Commerce and Industry for the repairs done has been extinguished.

RULING

No. The obligation to pay on the part of Insular Maritime Company still exists.

As a general rule, the owners of a vessel and the vessel itself are liable for necessary repairs. Naturally, the t destruction of the vessel extinguishes a maritime lien, as there is no longer any res to which it can attach. But the total destruction of the vessel does not affect the liability of the owners for repairs on the vessel completed before its loss.

In this case, the trial court was accordingly right in its exposition of the fact but not in its application of the law. In Article 591 of the Code of Commerce, there is nothing in the language to denote that the liability of the owners of a vessel is wiped out by the loss of that vessel. While the decision in the case of Philippine Shipping Co. vs. Garcia Vergara, supra, the facts are not the same. There, the owners and agents of a vessel causing the loss of another vessel by collision were held "not liable beyond the vessel itself causing the collision," but were "not required to pay such indemnification for the reason that the obligation thus incurred has been extinguished on account of the loss of the thing bound for the payment thereof." In this case, there is a contractual relation that remains unaffected by the loss of the thing concerned in the contract and which is governed principally by the provisions of the Civil Code. The rights and liabilities of owners of ships are in many respects essentially the same as in the case of other owners of things.

Case Digest: Manila Steamship Co., Inc. vs. Abdulhaman, 100 Phil 32, G.R. No. L-9534

 

Manila Steamship Co., Inc. vs. Abdulhaman, 100 Phil 32, G.R. No. L-9534, September 29, 1956

Subject: Transportation Law

FACTS

This case was begun in the Court of First Instance of Zamboanga (Civil Case No. 170) by Insa Abdulhaman 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 (plaintiff's) 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.

ISSUE

Whether or not shipowner and agents have liability.

RULING

Yes.

Under the law, 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.

In 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); so 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 

Case Digest: Chua Yek Hong v. IAC, G.R. No. 74811

 

Chua Yek Hong v. IAC, G.R. No. 74811, September 30, 1988

Subject: Transportation Law

FACTS

Petitioner is a duly licensed copra dealer based at Puerta Galera, Oriental Mindoro, while private respondents are the owners of the vessel, "M/V Luzviminda I," a common carrier engaged in coastwise trade from the different ports of Oriental Mindoro to the Port of Manila.

In October 1977, petitioner loaded 1,000 sacks of copra, on board the vessel "M/V Luzviminda I" for shipment from Puerta Galera, Oriental Mindoro, to Manila. Said cargo, however, did not reach Manila because somewhere between Cape Santiago and Calatagan, Batangas, the vessel capsized and sank with all its cargo.

On 30 March 1979, petitioner instituted before the then Court of First Instance of Oriental Mindoro, a Complaint for damages based on breach of contract of carriage against private respondents.

In their Answer, private respondents averred that even assuming that the alleged cargo was truly loaded aboard their vessel, their liability had been extinguished by reason of the total loss of said vessel.

The Trial Court rendered its Decision in favor of the petitioner and ordered private respondents jointly and severally, to pay the petitioner.

On appeal, respondent Appellate Court reversed the lower court decision and ruled that private respondents' liability, as ship owners, for the loss of the cargo is merely co-extensive with their interest in the vessel such that a total loss thereof results in its extinction.

ISSUE

Whether or not the private respondents as common carrier can invoke doctrine of limited liability under Article 587 of the Code of Commerce.

RULING

Yes, common carrier can invoke doctrine of limited liability under Article 587 of the Code of Commerce.

Art. 587 of the code of commerce provides 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 the equipment and the freight it may have earned during the voyage.

In this case, respondents' liability, as ship owners, for the loss of the cargo is merely co-extensive with their interest in the vessel such that a total loss thereof results in its extinction and none of the exceptions to the rule on limited liability being present, the liability of private respondents for the loss of the cargo of copra must be deemed to have been extinguished.

Case Digest: Yangco vs. Laserna, 73 Phil. 330, G.R. No. L-47447-47449

 

Yangco vs. Laserna, 73 Phil. 330, G.R. No. L-47447-47449, October 29, 1941

Subject: Transportation Law

FACTS

The steamer S.S. Negros, belonging to petitioner, Teodoro R. Yangco, left the port of Romblon on its return trip to Manila. Typhoon signal No. 2 was up, of which the captain was duly advised, however, the vessel proceeded to set sail.

The boat encountered strong winds and rough seas. As the sea became increasingly violent, the captain ordered the vessel to turn left, evidently to return to port, but in the maneuver, the vessel was caught sidewise by a big wave which caused it to capsize and sink.

The respondents instituted in CFI of Capiz separate civil actions against the petitioner to recover damages for the death of their loved ones. The court awarded the heirs of Antolin and Victorioso Aldana the sum of P2,000; the heirs of Casiana Laserna, P590; and those of Genaro Basana, also P590.

After the rendition of the judgment to this effect, the petitioner by a verified pleading, sought to abandon the vessel to the plaintiffs in the three cases, together with all its equipment, without prejudice to his right to appeal. The abandonment having been denied, an appeal was taken to the Court of Appeals, wherein all the judgments were affirmed except that which sums were increased to P4,000.

Petitioner, now deceased, appealed and is here represented by his legal representative.

ISSUE

Whether or not the shipowner or agent, notwithstanding the total loss of the vessel as a result of the negligence of its captain, be properly held liable in damages for the consequent death of its passengers.

RULING

No, the shipowner cannot be properly held liable.

Under the law, the agent shall be civilly 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 carried; but he may exempt himself therefrom by abandoning the vessel with all her equipment and the freight he may have earned during the voyage.

In this case, it is a fact that the ill-fated steamship Negros, as a vessel engaged in interisland trade, is a common carrier and that the relationship between the petitioner and the passengers who died in the mishap rests on a contract of carriage. Assuming that the petitioner is liable for a breach of contract of carriage, the exclusively "real and hypothecary nature" of maritime law operates to limit such liability to the value of the vessel, or the insurance thereon, if any. However, it does not appear that the vessel was insured. The abandonment of the vessel sought by the petitioner is immaterial. The vessel having perished, any act of abandonment would be an idle ceremony. Therefore, the petitioner cannot be properly held liable in damages for the consequent death of its passengers. 

Case Digest: Philippine National Bank vs. CA, 337 SCRA 381, G.R. No. 128661

 

Philippine National Bank vs. CA, 337 SCRA 381, G.R. No. 128661, August 8, 2000

Subject: Transportation Law

FACTS

To finance the acquisition of 7 shipping vessels, the Philippine International Shipping Corporation (PISC) applied for and was granted by National Investment Development Corporation (NIDC) guaranty accommodations. As security for these guaranty accommodations, PISC executed chattel mortgages on the vessels to be acquired by it.

Meanwhile, PISC entered into a contract with Hong Kong United Dockyards, Ltd. for the repair and conversion of one of the vessels, M/V Asean Liberty. The Central Bank of the Philippines authorized PISC to open with China Banking Corporation (CBC) a standby letter of credit for US$545,000 in favor of Citibank, N.A. to cover the repair and partial conversion of the vessel M/V Asean Liberty.

PISC executed an Application and Agreement for Commercial Letter of Credit for US$545,000 with CBC in favor of Citibank. CBC then issued its Irrevocable Standby Letter of Credit forUS$545,000 in favor of Citibank for the account of PISC. PISC executed a promissory note for US$545,000 in favor of Citibank pursuant to the Loan Agreement between PISC and Citibank.

Upon failure of PISC to fulfill its obligations, Citibank sent CBC a letter drawing on the Letter of Credit. CBC then instructed its correspondent Irving Trust Co. to pay to Citibank the amount of US$242,225. Subsequently, for failure of PISC to settle its obligations under the guaranty accommodations, the Philippine National Bank (PNB) conducted an auction sale of the mortgaged vessels. NIDC emerged as the highest bidder in these auctions. PISC, claiming that the foreclosure sale of its mortgaged vessels was illegal and irregular, instituted a civil case for the annulment of the foreclosure and auction sale. CBC filed a complaint in intervention for recovery upon a maritime lien against the proceeds of the sale of the foreclosed vessels.

ISSUE

Whether or not CBC’s claim as evidenced by its Irrevocable Letter of Credit is in the nature of a maritime lien under the provisions of P.D. No. 1521.

RULING

Yes, CBC’s claim as evidenced by its Irrevocable Letter of Credit is a maritime lien under the provisions of P.D. No. 1521.

Under the provisions of P.D. No. 1521, any person furnishing repairs, supplies, or other necessities to a vessel on credit will have a maritime lien. Such maritime lien, if it arose prior to the recording of a preferred mortgage lien, shall have priority over the said mortgage lien.

In this case, it was Hong Kong United Dockyards, Ltd. Which originally possessed a maritime lien over the vessel M/V Asean Liberty by virtue of its repair of the said vessel on credit. CBC, however, stands as guarantor of the loan extended by Citibank to PISC. It was Citibank which advanced the money to PISC. It was only upon the failure of PISC to fulfill its obligations under its promissory note to Citibank that CBC was called upon by Citibank to exercise its duties under the Stand by Letter of Credit.

Case Digest: Barrios vs. Go Thing, 7 SCRA 535, G.R. No. L17192

Barrios vs. Go Thing, 7 SCRA 535, G.R. No. L17192, March 30, 1963

Subject: Transportation Law

FACTS

Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received or otherwise intercepted an S.O.S. distress signal by blinkers from the MV Alfredo, owned and/or operated by respondent Carlos Go Thong & Company. Thereafter, he altered the course of said vessel, and steered and headed towards the beckoning MV Don Alfredo, which Barrios found to be in trouble, due to engine failure and the loss of her propeller. Upon getting close to the MV Don Alfreco, with the consent and knowledge of the captain and/or master of the MV Don Alfredo, Barrios caused the latter vessel to be tied to, or well-secured and connected with tow lines from the MV Henry, and proceeded moving until such time that a sister ship of MV Don Alfredo was sighted so that the tow lines were also released. Brought to the CFI of Manila, the court therein dismissed the case; with cost against Barrios. Barrios interposed an appeal.

ISSUE

Whether or not the service rendered by plaintiff to the defendant constituted "salvage" or "towage", and if so, whether the plaintiff may recover from the defendant compensation for such service.

RULING

No, it is not a salvage service.

Salvage defined “Salvage” has been defined as “the compensation allowed to persons by whose assistance a ship or her cargo has been saved, in whole or in part, from impending peril on the sea, or in recovering such property from actual loss, as in case of shipwreck, derelict, or recapture.”  Three elements are necessary to a valid salvage claim, namely, (1) a marine peril, (2) service voluntarily rendered when not required as an existing duty or from a special contract, and (3) success in whole or in part, or that the service rendered contributed to such success.

In this case, no marine peril to justify valid salvage claim by Barrios against Go Thong. In case of danger of stranding, its anchor could be released, to prevent such occurrence. There was no danger that Go Thong’s vessel would sink given the smoothness of the sea and the fairness of the weather. That danger was absent shown by the fact that said vessel or its crew did not even find it necessary to lower its launch and two motor boats, to evacuate its passengers aboard. Neither did they find occasion to jettison the vessel’s cargo as a safety measure. Neither the passengers nor the cargo were in danger of perishing. All that the vessel’s crew members could not do was to move the vessel on its own power. That did not make the vessel a quasi-derelict. Contract of towage perfected even without written agreement

In consenting to Barrios’ offer to tow the vessel, Go Thong (through the captain of its vessel MV Don Alfredo) thereby impliedly entered into a juridical relation of “towage” with the owner of the vessel MV Henry I, captained by Barrios, the William Lines. Only the owner is entitled to remuneration in towage If the contract thus created is one for towage, then only the owner of the towing vessel, to the exclusion of the crew of the said vessel, may be entitled to remuneration.

Case Digest: Compania vs. Allied Workers, 77 SCRA 24, G.R. No. 107653

 

Compania vs. Allied Workers, 77 SCRA 24, G.R. No. 107653, February 05, 1996

Subject: Transportation Law

FACTS

In 1952, the Compañia Maritima and the Allied Free Workers Union entered into a written contract whereby the union agreed to perform arrastre and stevedoring work for the consignees. vessels at Iligan City. The union agreed to the stipulation that the company would not be liable for the payment of the services of the union "for the loading, unloading and deliveries of cargoes" and that the compensation for such services would be paid "by the owners and consignees of the cargoes" as "has been the practice in the port of Iligan City" of which the union found out later to be oppressive.

The shippers and consignees paid the union for the arrastre work only. They claimed that the shipowner was the one obligated to pay for the stevedoring service because the bill of lading provided that the unloading of the cargo was at the shipowner's expense.

The union filed in the Court of Industrial Relations (CIR) a petition praying that it be certified as the sole collective bargaining unit. Despite the case, the company served a written notice on the union that in accordance with payment of the 1952 contract, the same would be terminated. Because of that notice, the union later on filed in the CIR charges of unfair labor practices against the company.

The company entered into a new stevedoring and arrastre contract with the Iligan Stevedoring Association. On the following day, the union members picketed the wharf and prevented the Iligan Stevedoring Association from performing arrastre and stevedoring work.

The company sued the union and its officers in the CFI of Lanao for the rescission of the 1952 contract, to enjoin the union from interfering with the loading and unloading of the cargo, and for the recovery of damages.

After trial, the lower court rendered a decision in favor of the company and awarded CM 450K as damages; it held that the officers of the union are solidarily liable for this amount. Union appealed.

ISSUE

Whether or not the evidence presented by Compania Maritima warrants the award of damages in its favor.

RULING

No, it does not warrant.

In this case, the company argues that the accountants' reports are admissible in evidence because of the rule that "when the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole", the original writings need not be produced (Sec. 2[e], Rule 130, Rules of Court).

Sc held that the rule cannot be applied in this case because the voluminous character of the records, on which the accountants' reports were based, was not duly established. It is also a requisite for the application of the rule that the records and accounts should be made accessible to the adverse party so that the correctness of the summary may be tested on cross-examination. What applies to this case is the general rule "that an audit made by, or the testimony of, a private auditor, is inadmissible in evidence as proof of the original records, books of accounts, reports or the like". That general rule cannot be relaxed in this case because the company failed to make a preliminary showing as to the difficulty or impossibility attending the production of the records in court and their examination and analysis as evidence by the court.