Professional Documents
Culture Documents
DECISION
BELLOSILLO, J : p
Article 1734 of the New Civil Code provides that common carriers are not
responsible for the loss, destruction or deterioration of the goods if
caused by the character of the goods or defects in the packaging or in the
containers. The Code of Commerce also provides that all losses and
deteriorations which the goods may suffer during the transportation by
reason of fortuitous event, force majeure, or the inherent defect of the
goods, shall be for the account and risk of the shipper, and that proof of
these accidents is incumbent upon the carrier. 37 The carrier,
nonetheless, shall be liable for the loss and damage resulting from the
preceding causes if it is proved, as against him, that they arose through
his negligence or by reason of his having failed to take the precautions
which usage has established among careful persons. 38
Respondent carrier presented a witness who testified on the
characteristics of the fertilizer shipped and the expected risks of bulk
shipping. Mr. Estanislao Chupungco, a chemical engineer working with
Atlas Fertilizer, described Urea as a chemical compound consisting
mostly of ammonia and carbon monoxide compounds which are used as
fertilizer. Urea also contains 46% nitrogen and is highly soluble in water.
However, during storage, nitrogen and ammonia do not normally
evaporate even on a long voyage, provided that the temperature inside
the hull does not exceed eighty (80) degrees centigrade. Mr. Chupungco
further added that in unloading fertilizer in bulk with the use of a clamped
shell, losses due to spillage during such operation amounting to one
percent (1%) against the bill of lading is deemed "normal" or "tolerable."
The primary cause of these spillages is the clamped shell which does not
seal very tightly. Also, the wind tends to blow away some of the materials
during the unloading process.
The dissipation of quantities of fertilizer, or its deterioration in value, is
caused either by an extremely high temperature in its place of storage, or
when it comes in contact with water. When Urea is drenched in water,
either fresh or saline, some of its particles dissolve. But the salvaged
portion which is in liquid form still remains potent and usable although no
longer saleable in its original market value.
The probability of the cargo being damaged or getting mixed or
contaminated with foreign particles was made greater by the fact that the
fertilizer was transported in "bulk," thereby exposing it to the inimical
effects of the elements and the grimy condition of the various pieces of
equipment used in transporting and hauling it.
The evidence of respondent carrier also showed that it was highly
improbable for sea water to seep into the vessel's holds during the
voyage since the hull of the vessel was in good condition and her hatches
were tightly closed and firmly sealed, making the M/V "Sun Plum" in all
respects seaworthy to carry the cargo she was chartered for. If there was
loss or contamination of the cargo, it was more likely to have occurred
while the same was being transported from the ship to the dump trucks
and finally to the consignee's warehouse. This may be gleaned from the
testimony of the marine and cargo surveyor of CSCI who supervised the
unloading. He explained that the 18 M/T of alleged "bad order cargo" as
contained in their report to PPI was just an approximation or estimate
made by them after the fertilizer was discharged from the vessel and
segregated from the rest of the cargo.
The Court notes that it was in the month of July when the vessel arrived
port and unloaded her cargo. It rained from time to time at the harbor area
while the cargo was being discharged according to the supply officer of
PPI, who also testified that it was windy at the waterfront and along the
shoreline where the dump trucks passed enroute to the consignee's
warehouse.
Indeed, we agree with respondent carrier that bulk shipment of highly
soluble goods like fertilizer carries with it the risk of loss or damage. More
so, with a variable weather condition prevalent during its unloading, as
was the case at bar. This is a risk the shipper or the owner of the goods
has to face. Clearly, respondent carrier has sufficiently proved the
inherent character of the goods which makes it highly vulnerable to
deterioration; as well as the inadequacy of its packaging which further
contributed to the loss. On the other hand, no proof was adduced by the
petitioner showing that the carrier was remiss in the exercise of due
diligence in order to minimize the loss or damage to the goods it carried.
WHEREFORE, the petition is DISMISSED. The assailed decision of the
Court of Appeals, which reversed the trial court, is AFFIRMED.
Consequently, Civil Case No. 98623 of the then Court of the First
Instance, now Regional Trial Court, of Manila should be, as it is hereby,
DISMISSED.
Costs against petitioner.
SO ORDERED.
Davide, Jr. and Quiason, JJ ., concur.
COASTWISE LIGHTERAGE
CORPORATION, petitioner, vs. COURT OF APPEALS
and the PHILIPPINE GENERAL INSURANCE
COMPANY, respondents.
SYLLABUS
1. CIVIL LAW; SPECIAL CONTRACTS; COMMON CARRIER; KINDS
OF CHARTER PARTIES; CONTRACT OF AFFREIGHTMENT;
DISTINGUISHED FROM BAREBOAT OR DEMISE. — The distinction
between the two kinds of charter parties (i.e. bareboat or demise and
contract of affreightment) is more clearly set out in the case ofPuromines,
Inc. vs. Court of Appeals, wherein we ruled: "Under the demise or
bareboat charter of the vessel, the charterer will generally be regarded as
the owner for the voyage or service stipulated. The charterer mans the
vessel with his own people and becomes the owner pro hac vice, subject
to liability to others for damages caused by negligence. To create a
demise, the owner of a vessel must completely and exclusively relinquish
possession, command and navigation thereof to the charterer, anything
short of such a complete transfer is a contract of affreightment (time or
voyage charter party) or not a charter party at all. On the other hand a
contract of affreightment is one in which the owner of the vessel leases
part or all of its space to haul goods for others. It is a contract for special
service to be rendered by the owner of the vessel and under such
contract the general owner retains the possession, command and
navigation of the ship, the charterer or freighter merely having use of the
space in the vessel in return for his payment of the charter hire. . . . An
owner who retains possession of the ship though the hold is the property
of the charterer, remains liable as carrier and must answer for any breach
of duty as to the care, loading and unloading of the cargo. . . ." Although a
charter party may transform a common carrier into a private one, the
same however is not true in a contract of affreightment on account of the
aforementioned distinctions between the two.
2. ID.; ID.; ID.; ID.; ID.; LIABLE AS A COMMON CARRIER. — Petitioner
admits that the contract it entered into with the consignee was one of
affreightment. We agree. Pag-asa Sales, Inc. only leased three of
petitioner's vessels, in order to carry cargo from one point to another, but
the possession, command and navigation of the vessels remained with
petitioner Coastwise Lighterage. Pursuant therefore to the ruling in the
aforecited Puromines case, Coastwise Lighterage, by the contract of
affreightment, was not converted into a private carrier, but remained a
common carrier and was still liable as such. The law and jurisprudence
on common carriers both hold that the mere proof of delivery of goods in
good order to a carrier and the subsequent arrival of the same goods at
the place of destination in bad order makes for a prima facie case against
the carrier. It follows then that the presumption of negligence that
attaches to common carriers, once the goods it transports are lost,
destroyed or deteriorated, applies to the petitioner. This presumption,
which is overcome only by proof of the exercise of extraordinary diligence,
remained unrebutted in this case.
3. ID.; ID.; ID.; ID.; ID.; MUST ALSO EXERCISE EXTRAORDINARY
DILIGENCE BY PLACING A PERSON WITH NAVIGATIONAL SKILLS.
— Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted
that he was not licensed. The Code of Commerce, which subsidiarily
governs common carriers (which are primarily governed by the provisions
of the Civil Code). Clearly, petitioner Coastwise Lighterage's embarking
on a voyage with an unlicensed patron violates this rule. It cannot safely
claim to have exercised extraordinary diligence, by placing a person
whose navigational skills are questionable, at the helm of the vessel
which eventually met the fateful accident. It may also logically, follow that
a person without license to navigate, lacks not just the skill to do so, but
also the utmost familiarity with the usual and safe routes taken by
seasoned and legally authorized ones. Had the patron been licensed, he
could be presumed to have both the skill and the knowledge that would
have prevented the vessel's hitting the sunken derelict ship that lay on
their way to Pier 18. As a common carrier, petitioner is liable for breach of
the contract of carriage, having failed to overcome the presumption of
negligence with the loss and destruction of goods it transported, by proof
of its exercise of extraordinary diligence.
4. ID.; DAMAGES; INSURANCE COMPANY SHALL BE SUBROGATED
TO THE RIGHTS OF THE INSURED AGAINST THE WRONGDOER. —
On the issue of subrogation, which petitioner contends as inapplicable in
this case, we once more rule against the petitioner. We have already
found petitioner liable for breach of the contract of carriage it entered into
with Pag-asa Sales, Inc. However, for the damage sustained by the loss
of the cargo which petitioner-carrier was transporting, it was not the
carrier which paid the value thereof to Pag-asa Sales, Inc. but the latter's
insurer, herein private respondent PhilGen. Article 2207 of the Civil Code
is explicit on this point. Containing the equitable principle of subrogation
has been applied in a long line of cases including Compania Maritima
v. Insurance Company of North America;Fireman's Fund Insurance
Company v. Jamilla & Company, Inc., and Pan Malayan Insurance
Corporation v. Court of Appeals, wherein this Court explained: "Article
2207 of the Civil Code is founded on the well-settled principle of
subrogation. If the insured property is destroyed or damaged through the
fault or negligence of a party other than the assured, then the insurer,
upon payment to the assured will be subrogated to the rights of the
assured to recover from the wrongdoer to the extent that the insurer has
been obligated to pay. Payment by the insurer to the assured operated
as an equitable assignment to the former of all remedies which the latter
may have against the third party whose negligence or wrongful act
caused the loss. The right of subrogation is not dependent upon, nor
does it grow out of, any privity of contract or upon written assignment of
claim. It accrues simply upon payment of the insurance claim by the
insurer."
RESOLUTION
FRANCISCO, J : p
SO ORDERED.
SYNOPSIS
SYLLABUS
DECISION
PARDO, J : p
Is the charterer of a sea vessel liable for damages resulting from a
collision between the chartered vessel and a passenger ship? Cdpr
PEDRO
DE GUZMAN, petitioner, vs. COURT OF APPEALS and
ERNESTO CENDAÑA, respondents.
SYLLABUS
DECISION
FELICIANO, J : p
We, therefore, agree with the result reached by the Court of Appeals that
private respondent Cendaña is not liable for the value of the undelivered
merchandise which was lost because of an event entirely beyond private
respondent's control.
ACCORDINGLY, the Petition for Review on Certiorari is hereby DENIED
and the Decision of the Court of Appeals dated 3 August 1977 is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
[G.R. No. 91228. March 22, 1993.]
SYLLABUS
DECISION
NOCON, J : p
This is a special civil action for certiorari and prohibition to annul and set
aside the Decision of the respondent Court of Appeals dated November
16, 1989 1 reversing the order of the trial court and dismissing petitioner's
compliant in Civil Case No. 89-47403, entitled Puromines, Inc. v.
Maritime Factors, Inc. and Philipp Brothers Oceanic, Inc.
Culled from the records of this case, the facts show that petitioner,
Puromines, Inc. (Puromines for brevity) and Makati Agro Trading, Inc.
(not a party in this case) entered into a contract with private respondents
Philipp Brothers Oceanic, Inc. for the sale of prilled Urea in bulk. The
Sales Contract No. S151.8.01018 provided, among others an arbitration
clause which states, thus:
"9.Arbitration
"Any disputes arising under this contract shall be settled by
arbitration in London in accordance with the Arbitration Act
1950 and any statutory amendment or modification thereof.
Each party is to appoint an Arbitrator, and should they be
unable to agree, the decision of an Umpire appointed by them to
be final. The Arbitrators and Umpire are all to be commercial
men and resident in London. This submission may be made a
rule of the High Court of Justice in England by either party." 2
On or about May 22, 1988, the vessel M/V "Liliana Dimitrova" loaded on
board at Yuzhny, USSR a shipment of 15,500 metric tons prilled Urea in
bulk complete and in good order and condition for transport to Iloilo and
Manila, to be delivered to petitioner. Three bills of lading were issued by
the ship-agent in the Philippines, Maritime Factors Inc., namely: Bill of
Lading No. dated May 12, 1988 covering 10,000 metric tons for
discharge Manila; Bill of Lading No. 2 of even date covering 4,000 metric
tons for unloading in Iloilo City; and Bill of Lading No. 3, also dated May
12, 1988, covering 1,500 metric tons likewise for discharged in Manila
The shipment covered by Bill of Lading No. 2 was discharged in Iloilo City
complete and in good order and condition. However, the shipments
covered by Bill of Lading Nos. 1 and 3 were discharged in Manila in bad
order and condition, caked, hardened and lumpy, discolored and
contaminated with rust and dirt. Damages were valued at P683, 056. 29
including additional discharging expenses.
Consequently, petitioner filed a complaint 3 with the trial court 4 for
breach of contract of carriage against Maritime Factors Inc. (which was
not included as respondent in this petition) as ship-agent in the
Philippines for the owners of the vessel MV "Liliana Dimitrova," while
private respondent, Philipp Brothers Oceanic Inc., was impleaded as
charterer of the said vessel and proper party to accord petitioner
complete relief. Maritime Factors, Inc. filed its Answer 5 to the complaint,
while private respondent filed a motion to dismiss, dated February 9,
1989, on the grounds that the complaint states no cause of action; that it
was prematurely filed; and that petitioner should comply with the
arbitration clause in the sales contract. 6
The motion to dismiss was opposed by petitioner contending the
inapplicability of the arbitration clause inasmuch as the cause of action
did not arise from a violation of the terms of the sales contract but rather
for claims of cargo damages where there is no arbitration agreement. On
April 26, 1989, the trial court denied respondent's motion to dismiss in
this wise:
"The sales contract in question states in part:
'Any disputes arising under this contract shall be
settled by arbitration . . .(emphasis supplied)
"A perusal of the facts alleged in the complaint upon which the
question of sufficiency of the cause of action of the complaint
arose from a breach of contract of carriage by the vessel
chartered by the defendant Philipp Brothers Oceanic, Inc. Thus,
the aforementioned arbitration clause cannot apply to the
dispute in the present action which concerns plaintiff's claim for
cargo loss/damage arising from breach of contract of carriage.
"That the defendant is not the ship owner or common carrier
and therefore plaintiff does not have legal right against it since
every action must be brought against the real party in interest
has no merit either for by the allegations in the complaint the
defendant herein has been impleaded as charterer of the vessel,
hence, a proper party." 7
SYLLABUS
DECISION
STREET, J :p
Separate Opinions
ARAULLO, J., with whom concurs AVANCEÑA, J.,
dissenting:
DECISION
ANTONIO, J : p
Petition for review of the decision, dated February 24, 1978 of the Court
of First Instance of Manila in Civil Case No. 100704, entitled "Switzerland
General Insurance Co., Ltd. v. Oyama Lines and Citadel Lines, and/or
Mabuhay Brokerage Co., Inc."
On December 24, 1975, petitioner, a foreign insurance company
authorized to do business in the Philippines thru its agent, F. E:. Zuellig,
Inc., filed an admiralty case (Civil Case No. 100704) against private
respondents Oyama Shipping Co., Ltd. (referred to as Oyama Lines), a
foreign firm doing business in the Philippines, and Citadel Lines, Inc.
which is the local agent of private respondent Oyama Shipping Co., Inc.
and/or Mabuhay Brokerage Co., Inc. LLpr
The complaint alleged that on December 21, 1974, 60,000 bags of Urea
Nitrogen were shipped from Niihama, Japan, on board the S/S "St
Lourdes", claimed to be owned and operated by defendant Citadel Lines,
Inc. The goods were consigned to Borden International Phils., Inc., and
insured by petitioner for the sum of P9,319,105.00 against all risks.
The shipment was discharged from the vessel S/S "St. Lourdes" shipside
into lighters owned by Mabuhay Brokerage Company, Inc., but when the
same was subsequently delivered to and received by the consignee, it
was found to have sustained losses and/or damage amounting to
P38.698.94. This amount was paid by petitioner insurance company to
the consignee/assured, by virtue of which payment it became subrogated
to the rights of the latter.
Petitioner made repeated demands against herein private respondents
for payment of the aforesaid losses or damaged but no payment was
made and, uncertain in whose custody the goods were damaged,
impleaded the private respondents as alternative defendants to
determine their respective liability.
Defendant Citadel Lines, Inc. filed an Answer with Compulsory
Counterclaim and Cross-claim, interposing special and affirmative
defenses and alleging that defendant Citadel Lines was merely the civil
agent in the Philippines for the Japanese firm Oyama Shipping Co., Ltd.,
which was the charterer of the vessel S/S "St. Lourdes", said vessel
being owned by Companie Maritime de Brios, Sociedad Anonima, a
Panamanian corporation. It was further alleged that the principal agency
relationship between the said Oyama Shipping Co., Ltd. and defendant
Citadel Lines, Inc. was terminated on August 21, 1975 when the Tokyo
District Court declared and decreed the insolvency of the said Oyama
Shipping Co., Ltd.
It was argued that defendant Citadel Lines "has always acted as an agent
of a disclosed principal and, therefore, the herein defendant is without
any liability at all" in connection with the plaintiff's claim.
By way of cross-claim, defendant Citadel Lines alleged that the
loss/damaged to the cargo took place while the latter was being delivered
to the consignee thereof by the Mabuhay Brokerage, Inc. and said
corporation should be held liable therefor, as well as for all damages
suffered and expenses incurred by defendant Citadel Lines as a result of
the filing of the suit. Defendant likewise interposed a counterclaim for
damages against plaintiff Switzerland General Insurance Company, Ltd.
(herein petitioner).
Defendant Oyama Shipping Co. Ltd. likewise filed its Answer, denying
the material averments of the complaint, alleging that it ceased to be
represented in the Philippines upon the declaration of its insolvency by
the Tokyo Court; that it was a mere charterer of the S/S "St. Lourdes"
which is owned by Companie Maritime de Brios, Sociedad Anonima, a
Panamanian corporation; that due to the insolvency of Oyama Shipping
Co. Ltd., the case as against it should be dismissed, the remedy for the
plaintiff being to file its claim before the insolvency court in Tokyo, Japan.
Further, it imputed the loss or damage to the shipment to the shipper,
Sumitomo Shoji Kaisha, Ltd. for failing to provide seaworthy packages for
the goods, and/or the Mabuhay Brokerage for failure to exercise utmost
diligence after it took possession of the cargo from the vessel S/S "St.
Lourdes". Finally, it was averred that plaintiff's reinsurer had already paid
the plaintiff's claim and, hence, said reinsurer is the real party to the
action, and that assuming defendant Oyama Shipping Co., Ltd. to be
liable, its liability is limited to the amount of the loss in relation to the total
amount of the freight of the goods, which if computed, would be a much
lower amount. It was prayed that the complaint be dismissed as against
this defendant. cdrep
The main issue raised in the instant petition is whether or not 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.
Petitioner contends that respondent Citadel Lines, Inc., being the ship
agent for the vessel S/S "St. Lourdes", is liable under the pertinent
provisions of the Code of Commerce and applicable jurisprudence.
Respondent Citadel Lines, Inc., in its Comment to the petition, alleges
that the lower court had made a finding that it is a mere agent of Oyama
Shipping Co., Ltd., and not a ship agent, and this, being a finding of fact,
can no longer be questioned in the instant proceedings. Further, it argues
that the provisions of the Code of Commerce relied upon by petitioner are
applicable to a ship agent, but not to a mere agent like private respondent,
and that granting that it is a ship agent, it contends that it should not be
held liable because the principal, Oyama Shipping Co., Ltd. has been
declared insolvent. It is claimed that petitioner, upon being informed of
the insolvency of the Oyama Shipping Co., Ltd., should have filed its
claim before the Trustee of the Oyama Shipping Co., Ltd. in Japan.
In fine, private respondents do not dispute that a ship agent is liable to
third persons under certain circumstances as provided in the Code of
Commerce, but insists that it is not a ship agent but a mere agent and
hence, not liable.
We find the instant petition meritorious. The error of the lower court lies in
its application of the general rule on agency to the case a quo, when the
applicable law is contained in the pertinent provisions of the Code of
Commerce as applied in relevant decisions of this Court. Its finding,
therefore, that respondent Citadel Lines, Inc. was a mere agent of Oyama
Shipping Co., Ltd. was a result of its erroneous application of the law on
agency to the instant case. Considering the peculiar relationship of the
parties, respondent Citadel Lines, Inc. cannot be considered as a "mere
agent" under the civil law on agency as distinguished from a ship agent,
within the context of the Code of Commerce. In Yu Biao Sontua &
Co. v. Ossorio 1 for example, it was held that the doctrines having
reference to the relations between principal and agent cannot be applied
in the case of ship agents and ship owners. For this reason, respondent
cannot validly claim that the court a quo made a finding of fact which is
conclusive upon this Court. A ship agent, according to Article 586 of the
Code of Commerce, is "the person entrusted with the provisioning of a
vessel, or who represents her in the port in which she happens to be."
(Emphasis supplied.)
It is not disputed by the private respondent that it is the local
representative in the Philippines of the Oyama Shipping Co., Ltd. and, as
alleged by petitioner, upon arrival of the vessel S/S "St. Lourdes" in
Manila, it took charge of the unloading of the cargo and issued cargo
receipts (or tally sheets) in its own name, for the purpose of evidencing
discharge of cargoes and the conditions thereof from the vessel to the
arrastre operators and/or unto barges/lighters, and that claims against
the vessel S/S "St. Lourdes" for losses/damages sustained by shipments
were in fact filed and processed by respondent Citadel Lines, Inc. These
facts point to the inevitable conclusion that private respondent is the
entity that represents the vessel in the port of Manila and hence is a ship
agent within the meaning and context of Article 586 of the Code of
Commerce.
The Code of Commerce provides, among others, 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
carried; but he may exempt himself therefrom by abandoning the vessel
with all her equipments and the freightage he may have earned during
the voyage. (Article 587).
In addition, Article 618 of the same Code states:
"Art. 618. The captain shall be civilly liable to the ship agent and
the latter to the third persons who may have made contracts
with the former —
"1. For all the damages suffered by the vessel and its cargo by
reason of want of skill or negligence on his part. If a
misdemeanor or crime has been committed he shall be liable in
accordance with the Penal Code.
"2. For all the thefts and robberies committed by the crew,
reserving his right of action against the guilty parties.
"3. For the losses, fines, and confiscations imposed on account
of violation of the laws and regulations of customs, police,
health, and navigation.
"4. For the losses and damages caused by mutinies on board
the vessel, or by reason of faults committed by the crew in the
service and defense of the same, if he does not prove that he
made full use of his authority to prevent or avoid them.
"5. For those arising by reason of a misuse of powers and
non-fulfillment of the duties which pertain to him in accordance
with Articles 610 and 612.
"6. For those arising by reason of his going out of his course or
taking a course which, in the opinion of the officers of the vessel
at a meeting attended by the shippers or supercargoes who
may be on board, he should not have taken without sufficient
cause.
"No exception whatsoever shall exempt him from his obligation.
"7. For those arising by reason of his voluntarily entering a port
other than his destination, with the exception of the cases or
without the formalities referred to in Article 612.
"8. For those arising by reason of the non-observance of the
provisions contained in the regulations for lights and maneuvers
for the purpose of preventing collisions."
The foregoing provisions have been repeatedly applied by this Court in
various cases, among them: Pons y Compañia v. La Compañia
Maritima; 2 Behn, Meyer & Co. v.McMicking, et al. 3 Yu Biao Sontua &
Co. v. Ossorio; 4 Wing Kee Compradoring
Co. v. Bark "Monongahela", 5 and The American Insurance Co.,
Inc. v. Macondray & Co., Inc. 6
In Pons v. La Compania Maritima, supra, it was held that for damages
resulting to merchandize in transit due to negligence of the officers of the
ship, a cause of action arises against the owners or agents of the vessels
which may be prosecuted by the shipper or consignor of the damaged
goods. LexLib
At any rate, the liabilities of the ship agent are not disputed by private
respondent. It appearing 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,
amounting to P38,698.94, which was likewise the amount paid by
petitioner, as insurer, to the insured/consignee. As found by the court a
quo, there has been no proof presented to show that the officers of the
vessel, in whose custody the goods were lost or damaged, are exempt
from liability therefrom and that the damage was caused by factors and
circumstances exempting them from liability.
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.
WHEREFORE, the decision appealed from is modified, and private
respondent Citadel Lines, Inc. is hereby ordered to pay, solidarily with its
principal, Oyama Lines (Oyama Shipping Co., LTD.), the amount of
P38,698.94, with interest thereon at the legal rate from the date of the
filing of the complaint on December 24, 1975 until fully paid, P5,000.00 as
attorney's fees and the costs of suit. The rest of the decision is affirmed.
No pronouncement as to costs.
SO ORDERED.
||| [G.R. No. 4602. October 4, 1909. ]
SYLLABUS
1. IMMIGRATION LAWS; CHINESE IMMIGRANTS. — Held,
That the Chinese immigration laws are enforced in these
Islands by the customs officials, and their decision that a
person seeking to enter these Islands is not a citizen is final
when no abuse of authority by such officials is shown.
DECISION
MORELAND, J. :
Balgos & Perez Law Office for private respondent in both cases.
SYLLABUS
2. 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.
DECISION
PARAS, J.:
II
III
IV
VI
SO ORDERED.
DECISION
ARAULLO, J : p
SYNOPSIS
All three cases herein arose from the loss of cargoes of various
shippers when the M/V P. Aboitiz, a common carrier owned and operated
by Aboitiz, sank on her voyage from Hong Kong to Manila in 1980.
Seeking indemnification for the loss of their cargoes, the shippers, their
successors-in-interest, and the cargo insurers such as the petitioners
herein filed separate suits against Aboitiz before the Regional Trial
Courts. The claims numbered one hundred and ten (110) for the total
amount of P41,230,115.00 plus earned freight of P500,000.00 according
to Aboitiz. Some of these claims, including those of herein petitioners,
had not been settled. A Court Resolution consolidated these three
petitions in 1991 on the ground that the petitioners had identical causes
of action against the same respondent and similar reliefs were prayed for.
The threshold issue in these consolidated petitions is the applicability of
the limited liability rule in maritime law in favor of Aboitiz in order to stay
the execution of judgments for full indemnification of the losses suffered
by the petitioners as a result of the sinking of the M/V P. Aboitiz.
According to the Supreme Court, the failure of Aboitiz to present
sufficient evidence to exculpate itself from the fault and/or negligence in
the sinking of its vessel constrained the Court to hold that Aboitiz was
concurrently at fault with the ship captain and crew of the vessel.
However, the failure of Aboitiz to discharge the burden of proving that the
unseaworthiness of its vessel was not due to its fault and/or negligence
should not mean that the limited liability rule would not be applied to the
present cases. The latest ruling should be applied in these cases wherein
the claimants should be treated as creditors in an insolvent corporation
whose assets are not enough to satisfy the totality of claims against it.
Hence, the Court affirmed the decisions of the Court of Appeals. However,
because Aboitiz showed bad faith in not seeking the consolidation of all
the claims against it, the Court ordered the payment of petitioners herein
of moral damages, attorney's fees and treble costs. CAIaDT
SYLLABUS
DECISION
DE LEON, JR., J : p
SYLLABUS
DECISION
MEDIALDEA, J : p
This petition for review on certiorari seeks to set aside the decision of the
Court of Appeals in CA-G.R. No. 58118-R affirming the decision in Civil
Case No. 74593 of the then Court of First Instance (now Regional Trial
Court), Branch XI, Manila which dismissed the petitioners' claim for
damages against Compania Maritima for the injury to and death of the
victims as a result of the sinking of M/V Mindoro on November 4, 1967.
The trial court found the antecedent facts to be as follows:
"This is a complaint originally filed on October 21, 1968 (p. 1,
rec.) and amended on October 24, 1968 (p. 16 rec.) by the heirs
of Delos Santos and others as pauper litigants against the
Compania Maritima, for damages due to the death of several
passengers as a result of the sinking of the vessel of defendant,
the M/V 'Mindoro', on November 4, 1967.
"There is no dispute in the record that the M/V 'Mindoro' sailed
from pier 8 North Harbor, Manila, on November 2, 1967 at about
2:00 (should have been 6:00 p.m.) in the afternoon bound for
New Washington, Aklan, with many passengers aboard. It
appears that said vessel met typhoon 'Welming' on the Sibuyan
Sea, Aklan, at about 5:00 in the morning of November 4, 1967
causing the death of many of its passengers, although about
136 survived.
"Mauricio delos Santos declared that on November 2, 1967 he
accompanied his common-law wife, Amparo delos Santos, and
children, namely: Romeo, Josie, Hernani, who was 10 years old,
Abella, 7 years old, Maria Lemia, 5 years old and Melany, 5
months old, to pier 8, North Harbor, Manila, to board the M/V
'Mindoro' bound for Aklan. It appears that Amparo delos Santos
and the aforesaid children brought all their belongings, including
household utensils valued at P1,000.00, with the intention of
living in Aklan permanently.
"As already stated, the boat met typhoon 'Welming' and due to
the strong waves it sank causing the drowning of many
passengers among whom were Amparo delos Santos and all
the aforesaid children. It appears also that Teresa Pamatian
and Diego Salim, who were also passengers also drowned.
Plaintiff Ruben Reyes was one of the survivors.
"The plaintiffs presented the birth and death certificates of
Amparo delos Santos and the children (Exhs. I, I-1, J, J-1, K,
K-1, L, L-1, O to S, pp. 180 to 194 rec.). They also presented
copies of the manifest of passengers of the M/V 'Mindoro' on
November 2, 1967 (Exhs. B & C, pp. 163 to 161 rec.).
"Eliadora Crisostomo de Justo, one of the survivors,
corroborated the testimony of Mauricio delos Santos that he
accompanied Amparo delos Santos and her children to the port
to board the M/V Mindoro. She is a cousin of Amparo delos
Santos' husband. According to her, when she boarded the
second deck of the vessel, she saw about 200 persons therein.
She tried to see whether she could be accommodated in the
third deck or first deck because the second deck was very
crowded. She admitted that she was not included in the
manifest because she boarded the boat without a ticket, but she
purchased one in the vessel. She testified further that the boat
was not able to reach its destination due to its sinking. During
the typhoon before the vessel sunk, she was able to board a
'balsa.'
"Ruben Reyes, the other survivor, declared that he paid for his
ticket before boarding the M/V Mindoro. At that time he had with
him personal belongings and cash all in the amount of
P2,900.00. It appears that Felix Reyes Jakusalem, Teresa
Pamatian and Amparo delos Santos drowned during the sinking
of the vessel. He was able to swim on (sic) an island and was
with the others, rescued later on and brought to the hospital.
The survivors were then taken ashore (Exh. M, p. 188, rec.).
"Dominador Salim declared that Teresa Pamatian, his aunt and
Diego Salim, his father, drowned along with the sinking of the
M/V Mindoro. This witness declared that he accompanied both
his father and his aunt to the pier to board the boat and at the
time Teresa Pamatian was bringing cash and personal
belongings of about P250.00 worth. His father brought with him
P200.00 in cash plus some belongings. He admitted that when
his father boarded the vessel he did not have yet a ticket.
"The plaintiffs further submitted in evidence a copy of a
Radio-gram stating among other things that the M/V Mindoro
was loaded also with 3,000 cases of beer, one dump truck and
292 various goods (Exhs. D and D-1, p. 162 rec).
SO ORDERED.
||| [CA-No. 773 . December 17, 1946.]
MARCIANA DE SALVACION, ET
AL., plaintiffs-appellees, vs.
BARTOLOME SAN DIEGO, defendant-appellant.
SYLLABUS
DECISION
PADILLA, J : p
SYLLABUS
DECISION
KAPUNAN, J : p
SYLLABUS
DECISION
REYES, A., J :p
LUZON STEVEDORING
CORPORATION, petitioner, vs. COURT OF APPEALS,
HIJOS DE F. ESCANO, INC., and DOMESTIC
INSURANCE COMPANY OF THE
PHILIPPINES, respondents.
DECISION
GANCAYCO, J : p
This is the difference which exists between the lawful acts and
lawful obligations of the captain and the liability which he incurs
on account of any unlawful act committed by him. In the first
case, the lawful acts and obligations of the captain beneficial to
the vessel may be enforced as against the agent for the reason
that such obligations arise from the contract of agency
(provided, however, that the captain does not exceed his
authority), while as to any liability incurred by the captain
through his unlawful acts, the ship agent is simply subsidiarily
civilly liable. This liability of the agent is limited to the vessel and
it does not extend further. For this reason the Code of
Commerce makes the agent liable to the extent of the value of
the vessel, as the codes of the principal maritime nations
provide, with the vessel, and not individually. Such is also the
spirit of our code.
The spirit of our code is accurately set forth in a treatise on
maritime law, from which we deem proper to quote the following
as the basis of this decision:
'That which distinguishes the maritime from the civil law and
even from the mercantile law in general is the real and
hypothecary nature of the former, and the many securities of a
real nature that maritime customs from time immemorial the
laws, the codes, and the later jurisprudence, have provided for
the protection of the various and conflicting interests which are
ventured and risked in maritime expeditions, such as the
interests of the vessel and of the agent, those of the owners of
the cargo and consignees, those who salvage the ship, those
who make loans upon the cargo, those of the sailors and
members of the crew as to their wages, and those of a
constructor as to repairs made to the vessel.
'As evidence of this "real" nature of the maritime law we have (1)
the limitation of the liability of the agents to the actual value of
the vessel and the freight money, and (2) the right to retain the
cargo and the embargo and detention of the vessel even in
cases where the ordinary civil law would not allow more than a
personal action against the debtor or person liable. It will be
observed that these rights are correlative, and naturally so,
because if the agent can exempt himself from liability by
abandoning the vessel and freight money, thus avoiding the
possibility of risking his whole fortune in the business, it is also
just that his maritime creditor may for any reason attach the
vessel itself to secure his claim without waiting for a settlement
of his rights by a final judgment even to the prejudice of a third
person.
'This repeals the civil law to such an extent that, in certain cases,
where the mortgaged property is lost no personal action lies
against the owner or agent of the vessel. For instance, where
the vessel is lost the sailors and members of the crew can not
recover their wages; in case of collision, the liability of the agent
is limited as aforesaid, and in case of shipwreck, those who loan
their money on the vessel and cargo lose all their rights and can
not claim reimbursement under the law.
'There are two reasons why it is impossible to do away with
these privileges, to wit: (1) The risk to which the thing is
exposed, and (2) the "real" nature of the maritime law,
exclusively "real," according to which the liability of the parties is
limited to a thing which is at the mercy of the waves. If the agent
is only liable with the vessel and freight money and both may be
lost through the accidents of navigation it is only just that the
maritime creditor have some means of obviating this precarious
nature of his rights by detaining the ship, his only security,
before it is lost.
'The liens, tacit or legal, which may exist upon the vessel and
which a purchaser of the same would be obliged to respect and
recognize are — in addition to those existing in favor of the
State by virtue of the privileges which are granted to it by all the
laws — pilot, tonnage, and port dues and other similar charges,
the wages of the crew earned during the last voyage as
provided in article 646 of the Code of Commerce, salvage dues
under article 842, the indemnification due to the captain of the
vessel in case his contract is terminated on account of the
voluntary sale of the ship and the insolvency of the owner as
provided in article 608, and all other liabilities arising from
collisions under Articles 837 and 838.' (Madariaga, pp. 60, 62,
63, 85.)
We accordingly hold that the defendant is liable for the
indemnification to which the plaintiff is entitled by reason of the
collision, but he is 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, and in this respect the judgment of the court
below is affirmed except in so far as it requires the plaintiff to
pay the costs of this action, which is not exactly proper. No
special order is made as to costs of this appeal. After the
expiration of twenty days let judgment be entered in accordance
herewith and ten days thereafter the record be remanded to the
Court of First Instance for execution. So ordered." 7
From the foregoing the rule is that in the case of collision, abandonment
of the vessel is necessary in order to limit the liability of the shipowner or
the agent to the value of the vessel, its appurtenances and freightage
earned in the voyage in accordance with Article 837 of the Code of
Commerce. The only instance where such abandonment is dispensed
with is when the vessel was entirely lost. In such case, the obligation is
thereby extinguished.
In the case of Government of the Philippines vs. Maritime this Court
citing Philippine Shipping stated the exception thereto in that while "the
total destruction of the vessel extinguishes a maritime lien, as there is no
longer any risk to which it can attach, but the total destruction of the
vessel does not affect the liability of the owner for repairs of the vessel
completed before its loss, 8 interpreting the provision of Article 591 of the
Code of Commerce in relation with the other Articles of the same Code.
In Ohta Development Company vs. Steamship "Pompey" 9 it appears
that at the pier sunk and the merchandise was lost due to the fault of the
steamship "Pompey" that was then docked at said pier. This Court ruled
that the liability of the owner of "Pompey" may not be limited to its value
under Article 587 of the Code of Commerce as there was no
abandonment of the ship. We also held that Article 837 cannot apply as it
refers to collisions which is not the case here. 10
In the case of Guison vs. Philippine Shipping Company 11 involving the
collision at the mouth of the Pasig river between the motor launches
Martha and Manila H in which the latter was found to be at fault, this Court,
applying Article 837 of the Code of Commerce limited the liability of the
agent to its value.
In the case of Yangco vs. Laserna 12 which involved the steamers SS
"Negros" belonging to Yangco which after two hours of sailing from
Romblon to Manila encountered rough seas as a result of which it
capsized such that many of its passengers died in the mishap, several
actions for damages were filed against Yangco for the death of the
passengers in the Court of First Instance of Capiz. After rendition of the
judgment for damages against Yangco, by a verified pleading, he sought
to abandon the vessel to the plaintiffs in the three cases together with all
the equipment without prejudice to the right to appeal. This Court in
resolving the issue held as follows: cdll
The exception to this rule is when the vessel is totally lost in which case
there is no vessel to abandon so abandonment is not required. Because
of such total loss the liability of the shipowner or agent for damages is
extinguished. Nevertheless, the shipowner or agent is personally liable
for claims under the Workmen's Compensation Act and for repairs of the
vessel before its loss. 23
In case of illegal or tortious acts of the captain the liability of the
shipowner and agent is subsidiary. In such instance the shipowner or
agent may avail of the provisions of Article 837 of the Code by
abandoning the vessel. 24
However, if the injury or damage is caused by the shipowner's fault as
where he engages the services of an inexperienced and unlicensed
captain or engineer, he cannot avail of the provisions of Article 837 of the
Code by abandoning the vessel. 25 He is personally liable for the
damages arising thereby.
In the case now before the Court there is no question that the action
arose from a collision and the fault is laid at the doorstep of LSCO
"Cavite" of petitioner. Undeniably petitioner has not abandoned the
vessel. Hence petitioner can not invoke the benefit of the provisions of
Article 837 of the Code of Commerce to limit its liability to the value of the
vessel, all the appurtenances and freightage earned during the voyage.
In the light of the foregoing conclusion, the issue as to when
abandonment should be made need not be resolved. LexLib
SYLLABUS
DECISION
FELICIANO, J : p
Civil Cases Nos. 82567 (Judge Fernandez) and 82556 (Judge Cuevas)
were tried under the same issues and evidence relating to the collision
between the "Don Carlos" and the "Yotai Maru" the parties in both cases
having agreed that the evidence on the collision presented in one case
would be simply adopted in the other. In both cases, the Manila Court of
First Instance held that 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. Judge Fernandez awarded the
insurance companies P19,889.79 with legal interest plus P3,000.00 as
attorney's fees; while Judge Cuevas awarded the plaintiff insurance
companies on two (2) claims US$68,640.00 or its equivalent in Philippine
currency plus attorney's fees of P30,000.00, and P19,163.02 plus
P5,000.00 as attorney's fees, respectively.
The decision of Judge Fernandez in Civil Case No. 82567 was appealed
by respondent Go Thong to the Court of Appeals, and the appeal was
there docketed as C.A.-G.R. No. 61320-R. The decision of Judge Cuevas
in Civil Case No. 82556 was also appealed by Go Thong to the Court of
Appeals, the appeal being docketed as C.A.-G.R. No. 61206-R.
Substantially identical assignments of errors were made by Go Thong in
the two (2) appealed cases before the Court of Appeals.
In C.A.-G.R. No. 61320-R, the Court of Appeals through Reyes,
L.B., J., rendered a Decision on 8 August 1978 affirming the Decision of
Judge Fernandez. Private respondent Go Thong moved for
reconsideration, without success. Go Thong then went to the Supreme
Court on Petition for Review, the Petition being docketed as G.R. No.
L-48839 ("Carlos A. Go Thong and Company v. Smith Bell and Company
[Philippines], Inc., et al."). In its Resolution dated 6 December 1978, this
Court, having considered "the allegations, issues and arguments
adduced in the Petition for Review on Certiorari, of the Decision of the
Court of Appeals as well as respondent's comment", denied the Petition
for lack of merit. Go Thong filed a Motion for Reconsideration; the Motion
was denied by this Court on 24 January 1979.
In the other (Cuevas) case, C.A.-G.R. No. 61206-R, the Court of Appeals,
on 26 November 1980 (or almost two [2] years after the Decision of
Reyes, L.B., J., in C.A.-G.R. No. 61320-R, had been affirmed by the
Supreme Court on Petition for Review) through Sison, P.V., J., reversed
the Cuevas Decision and held the officers of the "Yotai Maru" at fault in
the collision with the "Don Carlos," and dismissed the insurance
companies' complaint. Herein petitioners asked for reconsideration, to no
avail.
The insurance companies are now before us on Petition for Review on
Certiorari, assailing the Decision of Sison, P.V., J., in C.A.-G.R. No.
61206-R. Petitioners' principal contentions are:
a. that the Sison Decision had disregarded the rule of res
judicata;
b. that Sison P.V., J., was in serious and reversible error in
accepting Go Thong's defense that the question of fault on the
part of the "Yotai Maru" had been settled by the compromise
agreement between the owner of the "Yotai Maru" and Go
Thong as owner of the "Don Carlos;" and
c. that Sison, P.V., J., was in serious and reversible error in
holding that the "Yotai Maru" had been negligent and at fault in
the collision with the "Don Carlos."
I
The first contention of petitioners is that Sison, P.V., J. in rendering his
questioned Decision, failed to apply the rule of res judicata. Petitioners
maintain that the Resolution of the Supreme Court dated 6 December
1978 in G.R. No. 48839 which dismissed Go Thong's Petition for Review
of the Decision of Reyes, L.B., J., in C.A.-G.R. No. 61320-R, had
effectively settled the question of liability on the part of the "Don Carlos."
Under the doctrine of res judicata, petitioners contend, Sison,
P.V., J. should have followed the Reyes, L.B., J. Decision since the latter
had been affirmed by the Supreme Court and had become final and
executory long before the Sison Decision was rendered.
Private respondent Go Thong, upon the other hand, argues that the
Supreme Court, in rendering its minute Resolution in G.R. No. L-48839,
had merely dismissed Go Thong's Petition for Review of the Reyes,
L.B., J. Decision for lack of merit but had not affirmed in toto that
Decision. Private respondent, in other words, purports to distinguish
between denial of a Petition for Review for lack of merit and affirmance of
the Court of Appeals' Decision. Thus, Go Thong concludes, this Court did
not hold that the "Don Carlos" had been negligent in the collision.
Private respondent's argument must be rejected. That this Court denied
Go Thong's 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. 1 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 on Certiorari
constitutes an adjudication on the merits of the controversy or subject
matter of the Petition.2 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 Court's
denial. For one thing, the facts and law are already mentioned in the
Court of Appeals' opinion." 3 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. 4
Private respondent Go Thong argues also that the rule of res
judicata cannot be invoked in the instant case whether in respect of the
Decision of Reyes, L.B., J. or in respect of the Resolution of the Supreme
Court in G.R. No. L-48839, for the reason that there was no identity of
parties and no identity of cause of action between C.A.-G.R. No. 61206-R
and C.A.-G.R. No. 61320-R.
The parties in C.A.-G.R. No. 61320-R where the decision of Judge
Fernandez was affirmed, involved Smith Bell and Company (Philippines),
Inc., and Sumitomo Marine and Fire Insurance Co., Ltd. while the
petitioners in the instant case (plaintiffs below) are Smith Bell and Co.
(Philippines), Inc. and Tokyo Marine and Fire Insurance Co., Ltd. In other
words, there was a common petitioner in the two (2) cases, although the
co-petitioner in one was an insurance company different from the
insurance company co-petitioner in the other case. It should be noted,
moreover, that the co-petitioner in both cases was an insurance company
and that both petitioners in the two (2) cases represented the same
interest, i.e., the cargo owner's interest as against the hull interest or the
interest of the shipowner. More importantly, both cases had been brought
against the same defendant, private respondent Go Thong, the owner of
the vessel "Don Carlos." In sum, C.A.-G.R. No. 61320-R and C.A.-G.R.
No. 61206-R exhibited substantial identity of parties. LLpr
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. 5
In Tingson v. Court of Appeals, 6 the Court distinguished one from the
other the two (2) concepts embraced in the principle of res judicata, i.e.,
"bar by former judgment" and "conclusiveness of judgment:"
"There is no question that where as between the first case
where the judgment is rendered and the second case where
such judgment is invoked, there is identity of parties,
subject-matter and cause of action, the judgment on the merits
in the first case constitutes an absolute bar to the subsequent
action not only as to every matter which was offered and
received to sustain or defeat the claim or demand, but also as to
any other admissible matter which might have been offered for
that purpose and to all matters that could have been adjudged
in that case. This is designated as 'bar by former judgment.'
But where the second action between the same parties is upon
a different claim or demand, the judgment in the prior action
operates as an estoppel only as to those matters in issue or
points controverted, upon the determination of which the finding
or judgment was rendered. In fine, the previous judgment is
conclusive in the second case, only as those matters actually
and directly controverted and determined and not as to matters
merely involved therein. This is the rule on 'conclusiveness of
judgment' embodied in subdivision (c) of Section 49 of Rule 39
of the Revised Rules of Court." 7 (Citations omitted) (Emphases
supplied)
In Lopez v. Reyes, 8 the Court elaborated further the distinction between
bar by former judgment which bars the prosecution of a second action
upon the same claim, demand or cause of action, and conclusiveness of
judgment which bars the relitigation of particular facts or issues in another
litigation between the same parties on a different claim or cause of action:
"The doctrine of res judicata has two aspects. The first is the
effect of a judgment as a bar to the prosecution of a second
action upon the same claim, demand or cause of action. The
second aspect is that it precludes the relitigation of a particular
fact or issues in another action between the same parties on a
different claim or cause of action.
The general rule precluding the relitigation of material facts or
questions which were in issue and adjudicated in former
action are commonly applied to all matters essentially
connected with the subject matter of the litigation. Thus, it
extends to questions 'necessarily involved in an issue, and
necessarily adjudicated, or necessarily implied in the final
judgment, although no specific finding may have been made in
reference thereto, and although such matters were directly
referred to in the pleadings and were not actually or formally
presented. Under this rule, if the record of the former trial shows
that the judgment could not have been rendered without
deciding the particular matter, it will be considered as having
settled that matter as to all future actions between the parties,
and if a judgment necessarily presupposes certain premises,
they are as conclusive as the judgment itself. Reasons for the
rule are that a judgment is an adjudication on all the matters
which are essential to support it, and that every proposition
assumed or decided by the court leading up to the final
conclusion and upon which such conclusion is based is as
effectually passed upon as the ultimate question which is finally
solved.'" 9 (citations omitted) (Emphases supplied)
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 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. 10
Private respondent Go Thong also argues that a compromise agreement
entered into between Sanyo Shipping Company as owner of the "Yotai
Maru" and Go Thong as owner of the "Don Carlos," under which the
former paid P268,000.00 to the latter effectively settled that the "Yotai
Maru" had been at fault. This argument is wanting in both factual basis
and legal substance. True it is that by virtue of the compromise
agreement, the owner of the "Yotai Maru" paid a sum of money to the
owner of the "Don Carlos." Nowhere, however, in the compromise
agreement did the owner of the "Yotai Maru" admit or concede that the
"Yotai Maru" had been at fault in the collision. 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." 11 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 everyone of them prefers to the
hope of gaining more, balanced by the danger of losing more. 12 An offer
to compromise does not, in legal contemplation, involve an admission on
the part of a defendant that he is legally liable, nor 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. 13 It is of the very
nature of an offer of compromise that it is made tentatively, hypothetically
and in contemplation of mutual concessions. 14 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.
The collision between the "Yotai Maru" and the "Don Carlos" spawned
not only sets of litigations but also administrative proceedings before the
Board of Marine Inquiry ("BMI"). The collision was the subject matter of
an investigation by the BMI in BMI Case No. 228. On 12 July 1971, the
BMI, through Commodore Leovegildo L. Gantioki, found both vessels to
have been negligent in the collision.
Both parties moved for reconsideration of the BMI's decision. The
Motions for Reconsideration were resolved by the Philippine Coast
Guard ("PCG") nine (9) years later, in an order dated 19 May 1980 issued
by PCG Commandant, Commodore Simeon M. Alejandro. The
dispositive portion of the PCG decision read as follows:
"Premises considered, the Decision dated July 12, 1971 is
hereby reconsidered and amended absolving the officers of
YOTAI MARU' from responsibility for the collision. This
Headquarters finds no reason to modify the penalties imposed
upon the officers of 'Don Carlos'. (Annex 'C', Reply, September
5, 1981)." 15
Go Thong filed a second Motion for Reconsideration; this was denied
by the PCG in an order dated September 1980.
Go Thong sought to appeal to the then Ministry of National Defense from
the orders of the PCG by filing with the PCG on 6 January 1981 a motion
for a 30-day extension from 7 January 1981 within which to submit its
record on appeal. On 4 February 1981, Go Thong filed a second urgent
motion for another extension of thirty (30) days from 7 February 1981. On
12 March 1981, Go Thong filed a motion for a final extension of time and
filed its record on appeal on 17 March 1981. The PCG noted that Go
Thong's record on appeal was filed late, that is, seven (7) days after the
last extension granted by the PCG had expired. Nevertheless, on 1 July
1981 (after the Petition for Review on Certiorari in the case at bar had
been filed with this Court), the Ministry of Defense rendered a decision
reversing and setting aside the 19 May 1980 decision of the PCG.
The owners of the "Yotai Maru" then filed with the Office of the President
a Motion for Reconsideration of the Defense Ministry's decision. The
Office of the President rendered a decision dated 17 April 1986 denying
the Motion for Reconsideration. The decision of the Office of the
President correctly recognized that Go Thong had failed to appeal in a
seasonable manner:
"MV 'DON CARLOS' filed her Notice of Appeal on January 5,
1981. However, the records also show beyond peradventure of
doubt that the PCG Commandant's decision of May 19, 1980,
had already become final and executory when MV 'DON
CARLOS' filed her Record on Appeal on March 17, 1981, and
when the motion for third extension was filed after the expiry
date.
Under Paragraphs (c), (d), (e) and (f), Chapter XVI, of the
Philippine Merchant Marine Rules and Regulations, decisions
of the PCG Commandant shall be final unless, within thirty (30)
days after receipt of a copy thereof, an appeal to the Minister of
National Defense is filed and perfected by the filing of a notice
of appeal and a record on appeal. Such administrative
regulation has the force and effect of law, and the failure of MV
'DON CARLOS' to comply therewith rendered the PCG
Commandant's decision on May 19, 1980, as final and
executory, (Antique Sawmills, Inc. vs. Zayco, 17 SCRA 316;
Deslata vs. Executive Secretary, 19 SCRA 487; Macailing vs.
Andrada, 31 SCRA 126.) (Annex 'A', Go Thongs Manifestation
and Motion for Early Resolution, November 24,
1986)." 16 (Emphases supplied)
Nonetheless, acting under the misapprehension that certain
"supervening" events had taken place, the Office of the President held
that the Minister of National Defense could validly modify or alter the
PCG Commandant's decision:
"However, the records likewise show that, on November 26,
1980, the Court of Appeals rendered a decision in CA-G.R. No.
61206-R (Smith Bell & Co., Inc., et al. vs. Carlos A. Go Thong &
Co.) holding that the proximate cause of the collision between
MV 'DON CARLOS' AND MS 'YOTAI MARU' was the
negligence, failure and error of judgment of the officers of MS
'YOTAI MARU'. Earlier, or on February 27, 1976, the Court of
First Instance of Cebu rendered a decision in Civil Case No.
R-11973 (Carlos A. Go Thong vs. San-yo Marine Co.) holding
that MS 'YOTAI MARU' was solely responsible for the collision,
which decision was upheld by the Court of Appeals.
The foregoing judicial pronouncements rendered after the
finality of the PCG Commandant's decision of May 19, 1980,
were supervening causes or reasons that rendered the PCG
Commandant's decision as no longer enforceable and entitled
MV 'DON CARLOS' to request the Minister of National Defense
to modify or alter the questioned decision to harmonize the
same with justice and the facts. (De la Costa vs. Cleofas, 67
Phil. 686; City of Bututan vs. Ortiz, 3 SCRA 659; Candelario vs.
Canizarez, 4 SCRA 738; Abellana vs. Dosdos, 13 SCRA
244). Under such precise circumstances, the Minister of
National Defense may validly modify or alter the PCG
commandant's decision. (Sec. 37, Act 4007; Secs. 79(c) and
550, Revised Administrative Code; Province of Pangasinan vs.
Secretary of Public Works and Communications, 30 SCRA 134;
Estrella vs. Orendain, 37 SCRA 640)." 17 (Emphases supplied)
The multiple misapprehensions under which the Office of the President
labored, were the following:
It thus appears that the decision of the Office of the President upholding
the belated reversal by the Ministry of National Defense of the PCG'S
decision holding the "Don Carlos" solely liable for the collision, is so
deeply flawed as not to warrant any further examination. Upon the other
hand, the basic decision of the PCG holding the "Don Carlos" solely
negligent in the collision remains in effect.
II
In their Petition for Review, petitioners assail the finding and conclusion
of the Sison Decision, that the "Yotai Maru" was negligent and at fault in
the collision, rather than the "Don Carlos." In view of the conclusions
reached in Part I above, it may not be strictly necessary to deal with the
issue of the correctness of the Sison Decision in this respect. The Court
considers, nonetheless, that in view of the conflicting conclusions
reached by Reyes, L.B., J., on the one hand, and Sison, P.V., J., on the
other, and since in affirming the Reyes Decision, the Court did not
engage in a detailed written examination of the question of which vessel
had been negligent, and in view of the importance of the issues of
admiralty law involved, the Court should undertake a careful review of the
record of the case at bar and discuss those issues in extenso.
The decision of Judge Cuevas in Civil Case No. 82556 is marked by
careful analysis of the evidence concerning the collision. It is worth
underscoring that the findings of fact of Judge Fernandez in Civil Case
No. 82567 (which was affirmed by the Court of Appeals in the Reyes
Decision and by this Court in G.R. No. L-48839) are just about identical
with the findings of Judge Cuevas. Examining the facts as found by
Judge Cuevas, 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"), 18 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. This Rule only applies to cases where vessels are
meeting end on or nearly end on, in such a manner as to involve
risk of collision, and does not apply to two vessels which must, if
both keep on their respective course, pass clear of each other.
The only cases to which it does apply are when each of two
vessels is end on, or nearly end on, to the other; in other words,
to cases in which, by day, each vessel sees the masts of the
other in a line or nearly in a line with her own; and by night to
cases in which each vessel is in such a position as to see both
the sidelights of the other. It does not apply, by day, to cases in
which a vessel sees another ahead crossing her own course; or,
by night, to cases where the red light of one vessel is opposed
to the red light of the other or where the green light of one vessel
is opposed to the green light of the other or where a red light
without a green light or a green light without a red light is seen
ahead, or where both green and red lights are seen anywhere
but ahead." (Emphasis supplied)
The evidence on this factor was summarized by Judge Cuevas in the
following manner:
"Plaintiffs and defendant's evidence seem to agree that each
vessel made a visual sighting of each other ten minutes before
the collision which occurred at 0350. German's version of the
incident that followed, was that 'Don Carlos' was proceeding
directly to [a] meeting [on an] 'end-on or nearly end-on situation'
(Exh. S, page 8). He also testified that 'Yotai Maru's' headlights
were 'nearly in line at 0340 A.M.' (t.s.n, June 6, 1974) clearly
indicating that both vessels were sailing on exactly opposite
paths (t.s.n. June 6, 1974, page 56). Rule 18 (a) of the
International Rules of the Road provides as follows:
xxx xxx xxx
And yet German altered 'Don Carlos' course by five degrees to
the left at 0343 hours instead of to the right (t.s.n. June 6, 1974,
pages 44-45) which maneuver was the error that caused the
collision in question. Why German did so is likewise explained
by the evidence on record. 'Don Carlos' was overtaking another
vessel, the 'Don Francisco' and was then at the starboard (right
side) of the aforesaid vessel at 3.40 a.m. It was in the process of
overtaking 'Don Francisco' that 'Don Carlos' was finally brought
into a situation where he was meeting end-on or nearly end -on
'Yotai Maru' thus involving risk of collision. Hence, German in
his testimony before the Board of Marine Inquiry stated:
'Atty. Chung:
You said in answer to the cross-examination that you took a
change of course to the left. Why did you not take a
course to the right instead?
German:
I did not take any course to the right because the other vessel
was in my mind at the starboard side following me.
Besides, I don't want to get risk of the Caballo Island
(Exh. 2, pages 209 and 210).'" 19 (Emphasis supplied).
For her part, the "Yotai Maru" did comply with its obligations under Rule
18 (a). As the "Yotai Maru" found herself on an "end-on" or a "nearly
end-on" situation vis-a-vis the "Don Carlos," and as the distance between
them was rapidly shrinking, the "Yotai Maru" turned starboard (to its right)
and at the same time gave the required signal consisting of one short
horn blast. The "Don Carlos" turned to portside (to its left), instead of
turning to starboard as demanded by Rule 18 (a). 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." 20 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). 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 borne by the "Don Carlos." Judge
Cuevas' summary of the evidence said:
"The evidence on record likewise discloses very convincingly
that 'Don Carlos' did not have a 'look-out' whose sole and only
duty is only to act as such . . ." 21
A "proper look-out" is one who has been trained as such and who is
given no other duty save to act as a look-out and who is stationed
where he can see and hear best and maintain good communication
with the officer in charge of the vessel, and who must, of course, be
vigilant. Judge Cuevas wrote:
"The 'look-out' should have no other duty to perform.
(Chamberlain v. Ward, 21, N.O.W. 62, U.S. 548, 571). He has
only one duty, that which its name implies — to keep a 'look-out'.
So a deckhand who has other duties, is not a proper
'look-out' (Brooklyn Perry Co. v. U.S., 122, Fed. 696). The
navigating officer is not a sufficient 'look-out'(Larcen B. Myrtle,
44 Fed. 779) — Griffin on Collision, pages 277-278). Neither the
captain nor the [helmsman] in the pilothouse can be considered
to be a 'look-out' within the meaning of the maritime law. Nor
should he be stationed in the bridge. He should be as near as
practicable to the surface of the water so as to be able to see
low-lying lights (Griffin on Collision, page 273).
On the strength of the foregoing authorities, which do not
appear to be disputed even by the defendant, it is hardly
probable that neither German or Leo Enriquez may qualify as
'look-out' in the real sense of the word." 22 (Emphases
supplied).
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." Judge
Cuevas summed up the evidence on this point in the following manner:
"The evidence on record clearly discloses that 'Don Carlos' was,
at the time of the collision and immediately prior thereto, under
the command of Benito German, a second mate although its
captain, Captain Rivera, was very much in the said vessel at the
time. The defendant's evidence appears bereft of any
explanation as to why second mate German was at the helm of
the aforesaid vessel when Captain Rivera did not appear to be
under any disability at the time. In this connection, Article [633]
of the Code of Commerce provides:
DECISION
FELICIANO, J : p
At 6:20 o'clock in the morning of 22 April 1980, the M/T "Tacloban City," a
barge-type oil tanker of Philippine registry, with a gross tonnage of
1,241.68 tons, owned by the Philippine National Oil Company (PNOC)
and operated by the PNOC Shipping and Transport Corporation (PNOC
Shipping), having unloaded its cargo of petroleum products, left Amlan,
Negros Occidental, and headed towards Bataan. At about 1:00 o'clock in
the afternoon of that same day, the M/V "Don Juan," an inter-island
vessel, also of Philippine registry, of 2,391.31 tons gross weight, owned
and operated by the Negros Navigation Co., Inc. (Negros Navigation) left
Manila bound for Bacolod with seven hundred fifty (750) passengers
listed in its manifest, and a complete set of officers and crew members. LLjur
On the evening of that same day, 22 April 1980, at about 10:30 o'clock,
the "Tacloban City" and the "Don Juan" collided at the Talbas Strait near
Maestra de Ocampo Island in the vicinity of the island of Mindoro. When
the collision occurred, the sea was calm, the weather fair and visibility
good. As a result of this collision, the M/V "Don Juan" sank and hundreds
of its passengers perished. Among the ill-fated passengers were the
parents of petitioners, the spouses Perfecto Mecenas and Sofia
Mecenas, whose bodies were never found despite intensive search by
petitioners.LLjur
Another complaint, docketed as Civil Case No. Q-33932, was filed in the
same court by Lilia Ciocon claiming damages against Negros Navigation,
PNOC and PNOC Shipping for the death of her husband Manuel Ciocon,
another of the luckless passengers of the "Don Juan." Manuel Ciocon's
body, too, was never found.
The two (2) cases were consolidated and heard jointly by the Regional
Trial Court of Quezon City, Branch 82. On 17 July 1986, after trial, the
trial court rendered a decision, the dispositive part of which read as
follows:
"WHEREFORE, the Court hereby renders judgment ordering:
a) The defendant Negros Navigation Co., Inc. and Capt. Roger
Santisteban jointly and severally liable to pay plaintiffs in Civil
Case No. Q-31525, the sum of P400,000.00 for the death of
plaintiffs' parents, Perfecto A. Mecenas and Sofia P. Mecenas;
to pay said plaintiffs the sum of P15,000.00 as and for attorney's
fees; plus costs of the suit.
b) Each of the defendants Negros Navigation Co, Inc. and
Philippine National Oil Company/PNOC Shipping and
Transportation Company, to pay the plaintiff in Civil Case No.
Q-33932, the sum of P100,000.00 for the death of Manuel
Ciocon, to pay said plaintiff jointly and severally, the sum of
P15,000.00 as and for attorney's fees, plus costs of the suit." 1
Negros Navigation, Capt. Santisteban, PNOC and PNOC Shipping
appealed the trial court's decision to the Court of Appeals. Later, PNOC
and PNOC Shipping withdrew their appeal citing a compromise
agreement reached by them with Negros Navigation; the Court of
Appeals granted the motion by a resolution dated 5 September 1988,
subject to the reservation made by Lilia Ciocon that she could not be
bound by the compromise agreement and would enforce the award
granted her by the trial court.
In time, the Court of Appeals rendered a decision dated 26 January 1989
which decreed the following:
"WHEREFORE, in view of the foregoing, the decision of the
court a quo is hereby affirmed as modified with respect to Civil
Case No. 31525, wherein defendant appellant Negros
Navigation Co. Inc. and Capt. Roger Santisteban are held jointly
and severally liable to pay the plaintiffs the amount of
P100,000.00 as actual and compensatory damages and
P15,000.00 as attorney's fees and the cost of the suit." 2
The issue to be resolved in this Petition for Review is whether or not the
Court of Appeals had erred in reducing the amount of the damages
awarded by the trial court to the petitioners from P400,000.00 to
P100,000.00.
We note that the trial court had granted petitioners the sum of
P400,000.00" for the death of [their parents]" plus P15,000.00 as
attorney's fees, while the Court of Appeals awarded them P100,000.00
"as actual and compensatory damages" and P15,000.00 as attorney's
fees. To determine whether such reduction of the damages awarded was
proper, we must first determine whether petitioners were entitled to an
award of damages other than actual or compensatory damages, that is,
whether they were entitled to award of moral and exemplary damages. prcd
We begin by noting that both the trial court and the Court of Appeals
considered the action (Civil Case No. Q-31525) brought by the sons and
daughters of the deceased Mecenas spouses against Negros Navigation
as based on quasi-delict. We believed that action is more appropriately
regarded as grounded on contract, the contract of carriage between the
Mecenas spouses as regular passengers who paid for their boat tickets
and Negros Navigation; the surviving children while not themselves
passengers are in effect suing the carrier in representation of their
deceased parents. 3 Thus, the suit (Civil Case No. Q-33932) filed by the
widow Lilia Ciocon was correctly treated by the trial and appellate courts
as based on contract (vis-a-vis Negros Navigation) and as well on
quasi-delict (vis-a-vis PNOC and PNOC Shipping). In an action based
upon a breach of the contract of carriage, the carrier under our civil law is
liable for the death of passengers arising from the negligence or wilful act
of the carrier's employees although such employees may have acted
beyond the scope of their authority or even in violation of the instructions
of the carrier, 4 which liability may include liability for moral damages. 5 It
follows that petitioners would be entitled to moral damages so long as the
collision with the "Tacloban City" and the sinking of the "Don Juan" were
caused or attended by negligence on the part of private respondents. LLpr
"When Tacloban City altered its course the second time, from
300 degrees to 285 degrees, Don Juan was about 4.5 miles
away (TSN, May 9, 1985, p. 7).
"Despite executing a hardport maneuver, the collision
nonetheless occurred. Don Juan rammed the Tacloban City
near the starboard bow (p. 7, ibid)."
NENACO's [Negros Navigation] version.
"Don Juan first sighted Tacloban City 4 miles away, as shown
by radar (p. 13, May 24, 1983). Tacloban City showed its red
and green lights twice; it proceeded to, and will cross, the path
of Don Juan. Tacloban was on the left side of Don Juan (TSN,
April 20, 1983, p. 4).
"Upon seeing Tacloban's red and green lights, Don Juan
executed hard starboard (TSN, p. 4, ibid.) This maneuver is in
conformity with the rule that 'when both vessels are head on or
nearly head on, each vessel must turn to the right in order to
avoid each other.' (p. 5, ibid). Nonetheless, Tacloban appeared
to be heading towards Don Juan (p. 6, ibid).
"When Don Juan executed hard starboard, Tacloban was about
1,500 feet away (TSN, May 24, 1983, p. 6). Don Juan, after
execution of hard starboard, will move forward 200 meters
before the vessel will respond to such maneuver (p. 7, ibid). The
speed of Don Juan at that time was 17 knots; Tacloban City 6.3
knots.
"Between 9 to 15 seconds from execution of hard starboard,
collision occurred (p. 8, ibid). (pp. 3-4 Decision)." 10
The trial court concluded:
"M/V Don Juan and Tacloban City became aware of each
other's presence in the area by visual contact at a distance of
something like 6 miles from each other. They were fully aware
that if they continued on their course, they will meet head on.
Don Juan steered to the right; Tacloban City continued its
course to the left. There can be no excuse for them not to
realize that, with such maneuvers, they will collide. They
executed maneuvers inadequate, and too late, to avoid
collision.
"The Court is of the considered view that the defendants are
equally negligent and are liable for damages. (p. 4, decision). 11
The Court of Appeals, for its part, reached the same
conclusion. 12
There is, therefore, no question that the "Don Juan" was at
least as negligent as the M/T "Tacloban City" in the events leading
up to the collision and the sinking of the "Don Juan." The remaining
question is whether the negligence on the part of the "Don Juan"
reached that level of recklessness or gross negligence that our
Civil Code requires for the imposition of exemplary damages. Our
own review of the record in the case at bar requires us to answer
this in the affirmative.LibLex
In the petition at bar, the "Don Juan" having sighted the "Tacloban City"
when it was still a long way off was negligent in failing to take early
preventive action and in allowing the two (2) vessels to come to such
close quarters as to render the collision inevitable when there was no
necessity for passing so near to the "Tacloban City" as to create that
hazard or inevitability, for the "Don Juan" could choose its own
distance. 26 It is noteworthy that the "Tacloban City," upon turning hard to
port shortly before the moment of collision, signaled its intention to do so
by giving two (2) short blasts with its horn. 26 The "Don Juan" gave no
answering horn blast to signal its own intention and proceeded to turn
hard to starboard. 26
We conclude that Capt. Santisteban and Negros Navigation are properly
held liable for gross negligence in connection with the collision of the
"Don Juan" and "Tacloban City" and the sinking of the "Don Juan" leading
to the death of hundreds of passengers. We find no necessity for passing
upon the degree of negligence or culpability properly attributable to
PNOC and PNOC Shipping or the master of the "Tacloban City," since
they were never impleaded here.
It will be recalled that the trial court had rendered a lump sum of
P400,000.00 to petitioners for the death of their parents in the "Don Juan"
tragedy. Clearly, the trial court should have included a breakdown of the
lump sum award into its component parts: compensatory damages,
moral damages and exemplary damages. On appeal, the Court of
Appeals could have and should have itself broken down the lump sum
award of the trial court into its constituent parts; perhaps, it did, in its own
mind. In any case, the Court of Appeals apparently relying
upon Manchester Development Corporation v. Court of
Appeals 27 reduced the P400,000.00 lump sum award into a
P100,000.00 for actual and compensatory damages only.
We believe that the Court of Appeals erred in doing so. It is true that the
petitioners' complaint before the trial court had in the body indicated that
the petitioner-plaintiffs believed that moral damages in the amount of at
least P1,400,000.00 were properly due to them (not P12,000,000.00 as
the Court of Appeals erroneously stated) as well as exemplary damages
in the sum of P100,000.00 and that in the prayer of their complaint, they
did not specify the amount of moral and exemplary damages sought from
the trial court. We do not believe, however, that the Manchester doctrine,
which has been modified and clarified in subsequent decision by the
Court in Sun Insurance Office, Ltd. (SIOL), et al. v. Asuncion, et al. 28 can
be applied in the instant case so as to work a striking out of that portion of
the trial court's award which could be deemed notionally to constitute an
award of moral and exemplary damages. Manchester was promulgated
by the Court on 7 May 1987. Circular No. 7 of this Court, which embodied
the doctrine in Manchester, is dated 24 March 1988. Upon the other hand,
the complaint in the case at bar was filed on 29 December 1980,that is,
long before either Manchester or Circular No. 7 of 24 March 1988
emerged. The decision of the trial court was itself promulgated on 17 July
1986, again, beforeManchester and Circular No. 7 were promulgated.
We do not believe that Manchester should have been applied
retroactively to this case where a decision on the merits had already been
rendered by the trial court, even though such decision was then under
appeal and had not yet reached finality. There is no indication at all that
petitioners here sought simply to evade payment of the court's filing fees
or to mislead the court in the assessment of the filing fees. In any event,
we apply Manchesteras clarified and amplified by Sun Insurance Office
Ltd. (SIOL), by holding that the petitioners shall pay the additional filing
fee that is properly payable given the award specified below, and that
such additional filing fee shall constitute a lien upon the judgment.
We consider, finally, the amount of damages — compensatory, moral
and exemplary — properly imposable upon private respondents in this
case. The original award of the trial court of P400,000.00 could well have
been disaggregated by the trial court and the Court of Appeals in the
following manner:
(1) actual or compensatory damages proved in the course of
trial consisting of actual expenses incurred by petitioners in their
search for their parents' bodies — P126,000.00
(2) actual or compensatory damages in case of wrongful death
(P30,000.00 x 2) — P 60,000.00 29
(3) moral damages — P107,000.00
(4) exemplary damages — P107,000.00
——————
Total — P400,000.00
Considering that petitioners, legitimate children of the deceased spouses
Mecenas, are seven (7) in number and that they lost both father and
mother in one fell blow of fate, and considering the pain and anxiety they
doubtless experienced while searching for their parents among the
survivors and the corpses recovered from the sea or washed ashore, we
believe that an additional amount of P200,000.00 for moral damages,
making a total of P307,000.00 as moral damages, would be quite
reasonable. LLjur
Exemplary damages are designed by our civil law to permit the courts to
reshape behaviour that is socially deleterious in its consequence by
creating negative incentives or deterrents against such behaviour. In
requiring compliance with the standard of extraordinary diligence, a
standard which is in fact that of the highest possible degree of diligence,
from common carriers and in creating a presumption of negligence
against them, the law seeks to compel them to control their employees, to
tame their reckless instincts and to force them to take adequate care of
human beings and their property. The Court will take judicial notice of the
dreadful regularity with which grievous maritime disasters occur in our
waters with massive loss of life. The bulk of our population is too poor to
afford domestic air transportation. So it is that notwithstanding the
frequent sinking of passenger vessels in our waters, crowds of people
continue to travel by sea. This Court is prepared to use the instruments
given to it by the law for securing the ends of law and public policy. One of
those instruments is the institution of exemplary damages; one of those
ends, of special importance in an archipelagic state like the Philippines, is
the safe and reliable carriage of people and goods by sea. Considering
the foregoing, we believe that an additional award in the amount of
P200,000.00 as exemplary damages, making a total award of
P307,000.00 as exemplary damages, is quite modest. Cdpr
The Court is aware that petitioners here merely asked for the restoration
of the P400,000.00 award of the trial court. We underscore once more,
however, the firmly settled doctrine that this Court may consider and
resolve all issues which must be decided in order to render substantial
justice to the parties, including issues not explicitly raised by the party
affected. In the case at bar, as in Kapalaran Bus Line v. Coronado, et
al., 30 both the demands of substantial justice and the imperious
requirements of public policy compel us to the conclusion that the trial
court's implicit award of moral and exemplary damages was erroneously
deleted and must be restored and augmented and brought more nearly to
the level required by public policy and substantial justice. cdrep
SYNOPSIS
SYLLABUS
DECISION
PANGANIBAN, J : p
In reversing the trial court, the CA ruled that petitioners were liable
for the loss or the damage of the goods shipped, because they had failed
to overcome the presumption of negligence imposed on common
carriers.ICTcDA
Second Issue:
Notice of Loss
Third Issue:
Package Limitation
Assuming arguendo they are liable for respondent's claims,
petitioners contend that their liability should be limited to US$500 per
package as provided in the Bill of Lading and by Section
4(5) 52 of COGSA. 53
On the other hand, respondent argues that Section 4(5)
of COGSA is inapplicable, because the value of the subject shipment
was declared by petitioners beforehand, as evidenced by the reference
to and the insertion of the Letter of Credit or "L/C No. 90/02447" in the
said Bill of Lading. 54
A bill of lading serves two functions. First, it is a receipt for the
goods shipped. 55 Second, it is a contract by which three parties —
namely, the shipper, the carrier, and the consignee — undertake specific
responsibilities and assume stipulated obligations. 56 In a nutshell, the
acceptance of the bill of lading by the shipper and the consignee, with full
knowledge of its contents, gives rise to the presumption that it constituted
a perfected and binding contract. 57
Further, a stipulation in the bill of lading limiting to a certain sum the
common carrier's liability for loss or destruction of a cargo — unless the
shipper or owner declares a greater value 58 — is sanctioned by
law. 59 There are, however, two conditions to be satisfied: (1) the contract
is reasonable and just under the circumstances, and (2) it has been fairly
and freely agreed upon by the parties. 60 The rationale for this rule is to
bind the shippers by their agreement to the value (maximum valuation) of
their goods. 61
It is to be noted, however, that the Civil Code does not limit the
liability of the common carrier to a fixed amount per package. 62 In all
matters not regulated by the Civil Code, the right and the obligations of
common carriers shall be governed by the Code of Commerce and
special laws. 63 Thus, the COGSA, which is suppletory to the provisions
of the Civil Code, supplements the latter by establishing a statutory
provision limiting the carrier's liability in the absence of a shipper's
declaration of a higher value in the bill of lading. 64 The provisions on
limited liability are as much a part of the bill of lading as though physically
in it and as though placed there by agreement of the parties. 65
In the case before us, there was no stipulation in the Bill of
Lading 66 limiting the carrier's liability. Neither did the shipper declare a
higher valuation of the goods to be shipped. This fact notwithstanding,
the insertion of the words "L/C No. 90/02447 cannot be the basis for
petitioners' liability.
First, a notation in the Bill of Lading which indicated the amount of
the Letter of Credit obtained by the shipper for the importation of steel
sheets did not effect a declaration of the value of the goods as required
by the bill. 67 That notation was made only for the convenience of the
shipper and the bank processing the Letter of Credit. 68
Second, in Keng Hua Paper Products v. Court of Appeals, 69 we
held that a bill of lading was separate from the Other Letter of Credit
arrangements. We ruled, thus:
"(T)he contract of carriage, as stipulated in the bill of
lading in the present case, must be treated independently of the
contract of sale between the seller and the buyer, and the
contract of issuance of a letter of credit between the amount of
goods described in the commercial invoice in the contract of
sale and the amount allowed in the letter of credit will not affect
the validity and enforceability of the contract of carriage as
embodied in the bill of lading. As the bank cannot be expected
to look beyond the documents presented to it by the seller
pursuant to the letter of credit, neither can the carrier be
expected to go beyond the representations of the shipper in the
bill of lading and to verify their accuracy vis-à-vis the
commercial invoice and the letter of credit. Thus, the
discrepancy between the amount of goods indicated in the
invoice and the amount in the bill of lading cannot negate
petitioner's obligation to private respondent arising from the
contract of transportation." 70
In the light of the foregoing, petitioners' liability should be
computed based on US$500 per package and not on the per metric ton
price declared in the Letter of Credit. 71 In Eastern Shipping
Lines, Inc. v. Intermediate Appellate Court, 72 we explained the meaning
of package:
"When what would ordinarily be considered packages
are shipped in a container supplied by the carrier and the
number of such units is disclosed in the shipping documents,
each of those units and not the container constitutes the
'package' referred to in the liability limitation provision
of Carriage of Goods by Sea Act."
Considering, therefore, the ruling in Eastern Shipping Lines and
the fact that the Bill of Lading clearly disclosed the contents of the
containers, the number of units, as well as the nature of the steel sheets,
the four damaged coils should be considered as the shipping unit subject
to the US$500 limitation.
WHEREFORE, the Petition is partly granted and the assailed
Decision MODIFIED. Petitioners' liability is reduced to US$2,000 plus
interest at the legal rate of six percent from the time of the filing of the
Complaint on July 25, 1991 until the finality of this Decision, and 12
percent thereafter until fully paid. No pronouncement as to costs.
SO ORDERED.
G.R. No. 161849. July 7, 2010.]
|||
DECISION
PERALTA, J : p
SYLLABUS
DECISION
TORRES, J : p
SYLLABUS
DECISION
NARVASA, J : p
This appeal, which was certified to the Court by the Court of Appeals as
involving only questions of law, 1 relates to a claim for loss and/or
damage to a shipment of machine parts sought to be enforced by the
consignee, appellant Dole Philippines, Inc. (hereinafter called Dole)
against the carrier, Maritime Company of the Philippines (hereinafter
called Maritime), under the provisions of the Carriage of Goods by Sea
Act. 2
The basic facts are succinctly stated in the order of the Trial Court 3 dated
March 16, 1977, the relevant portion of which read: cdrep
Rose, Selph, Salcedo, Del Rosario, Bito and Mesa for defendant-appellee Barber
Steamship Lines, Inc.
AQUINO, J.:
Aetna Insurance Company appealed on a legal question from the order of the Court of
First Instance of Manila, dismissing its amended complaint against Barber Line Far East
Service on the ground of prescription.
On February 22, 1965 Aetna Insurance Company, as insurer, filed a complaint against
Barber Steamship Lines, Inc., Luzon Stevedoring Corporation and Luzon Brokerage
Corporation.
It sought to recover from the defendants the sum of P12,100.06 as the amount of the
damages which were caused to a cargo of truck parts shipped on the SS Turandot. The
insurer paid the damages to Manila Trading & Supply Company, the consignee.
In a manifestation dated March 31, 1965, Barber Steamship Lines, Inc., without submitting
to the court's jurisdiction, alleged that it was a foreign corporation not licensed to do
business in the Philippines, that it was not engaged in business here, that it had no
Philippine agent and that it did not own nor operate the SS Turandot.
On April 5, 1965 Barber Steamship Lines, Inc., again with the caveat that it was not
submitting to the court's jurisdiction, filed a motion to dismiss on the grounds of (a) lack of
jurisdiction over the person and (b) that it was not the real party in interest.
Barber Steamship Lines, Inc. alleged that the service of summons was not effected upon
it in accordance with section 14, Rule 14 of the Rules of Court. It clarified that the
summons intended for it was served upon Macondray & Co., Inc. which was not its agent.
It asserted that it was not the real party in interest because according to the bill of lading
annexed to the complaint the owner of the SS Turandot, the carrying vessel, was the Wilh,
Wilhemsen Group. (Note, however, that the same bill of lading indicated that Barber
Steamship Lines, Inc. was the vessel's agent).
Two days later, or on April 7, 1965 plaintiff Aetna Insurance Company filed a
manifestation stating that the name of defendant Barber Steamship Lines, Inc. was
incorrect and that the correct name was Barber Line Far East Service. Attached to the
manifestation was an amended complaint containing the correction. Aetna Insurance
Company manifested that copies of the amended complaint would be served on the
parties by means of alias summons.
On April 20, 1965 Aetna Insurance Company filed a motion for the admission of its
amended complaint. Barber Steamship Lines, Inc. opposed the motion. It contended that
its pending motion to dismiss the original complaint should first be resolved before the
amended complaint may be admitted.
Judge Ramon O. Nolasco in an order dated April 19, 1965 dismissed the complaint
against Barber Steamship Lines, Inc. and directed that alias summonses be issued to the
defendants named in the amended complaint.
On May 19, 1965 Barber Line Far East Service, supposedly without admitting to the
court's jurisdiction, moved for the dismissal of the amended complaint on the grounds (1)
that it is not a juridical person and, hence, it could not be sued; (2) that the court had no
jurisdiction over its person; (3) that it was not the real party in interest and (4) that the
action had prescribed according to the bill of lading and the Carriage of Goods by Sea Act.
Aetna Insurance Company opposed the motion.
Judge Nolasco in his order of July 7, 1965 ruled that inasmuch as according to the
complaint the shipment arrived in Manila on February 22, 1964 and the amended
complaint, impleading Barber Line Far East Service, was filed on April 7, 1965, or beyond
the one-year period fixed in the Carriage of Goods by Sea Act, the action had already
prescribed. The case was dismissed as to Barber Line Far East Service.
The legal question under the above facts is whether the action of Aetna Insurance
Company against Barber Line Far East Service, as ventilated in its amended complaint,
which was filed on April 7, 1965, had prescribed.
As previously stated, the action was for the recovery of damages to a cargo of truck parts
which was insured by Aetna Insurance Company and which arrived in Manila on the
SS Turandot and were delivered in bad order to the consignee on February 25, 1968 (4
Record on Appeal).
19. In any event the Carrier and the ship shall be discharged from all liability in respect of
loss or damage unless suit is brought within one year after the delivery of the goods or the
dates when the goods should have been delivered. Suit shall not be deemed brought until
jurisdiction shall have been obtained over the Carrier and/or the ship by service of process
or by an agreement to appear.
On the other hand, the Carriage of Goods by Sea Act, Commonwealth Act No. 65 (Public
Act No. 521 of the 74th Congress of the United States) provides:
In any event the carrier and the ship shall be discharged from all liability in respect of loss
or damage unless suit is brought within one year after delivery of the goods or the date
when the goods should have been delivered: Provided, That, if a notice of loss or damage,
either apparent or concealed, is not given as provided for in this section, that fact shall not
affect or prejudice the right of the shipper to bring suit within one year after the delivery of
the goods or the date when the goods should have been delivered.
Aetna Insurance Company contends in this appeal that the trial court erred (1) in holding
that the Barber Line Far East Service was substituted for Barber Steamship Lines, Inc.
and (2) in dismissing the action on the ground of prescription.
There is no merit in the appeal. The trial court correctly held that the one-year statutory
and contractual prescriptive period had already expired when appellant company filed on
April 7, 1965 its action against Barber Line Far East Service. The one year period
commenced on February 25, 1964 when the damaged cargo was delivered to the
consignee. (See Chua Kuy vs. Everrett Steamship Corporation, 93 Phil. 207; Yek Tong
Fire & Marine Insurance Co., Ltd. vs. American President Lines, Inc., 103 Phil. 1125).
Appellant company invokes the rule that where the original complaint states a cause of
action but does it imperfectly, and afterwards an amended complaint is filed, correcting
the defect, the plea of prescription will relate to the time of the filing of the original
complaint (Pangasinan Transportation Co. vs. Phil. Farming Co., Ltd., 81 Phil. 273). It
contends that inasmuch as the original complaint was filed within the one year period, the
action had not prescribed.
That ruling would apply to defendants Luzon Stevedoring Corporation and Luzon
Brokerage Corporation. But it would not apply to Barber Line Far East Service which was
impleaded for the first time in the amended complaint.
It should be recalled that the original complaint was dismissed as to Barber Steamship
Lines, Inc. in the lower court's order of April 19, 1965. New summons had to be issued to
Barber Line Far East Service which had replaced Barber Steamship Lines, Inc. as a
defendant.
The filing of the original complaint interrupted the prescriptive period as to Barber
Steamship Lines, Inc. but not as to Barber Line Far East Service, an entity supposedly
distinct from the former. Appellant's contention that there was merely a correction in the
name of a party-defendant is untenable. *
In view of the foregoing considerations, the lower court's order of dismissal is affirmed. Costs against the plaintiff-appellant.
SO ORDERED.
DECISION
GUTIERREZ, JR., J : p
In the case at bar, the petitioner's action has prescribed under the
provisions of the Carriage of Goods by Sea Act. Hence, whether it files a
third-party complaint or chooses to maintain an independent action
against herein respondents is of no moment. Had the plaintiffs in the civil
cases below filed an action against the petitioner after the one-year
prescriptive period, then the latter could have successfully denied liability
on the ground that by their own doing, the plaintiffs had prevented the
petitioner from being subrogated to their respective rights against the
herein respondents by filing a suit after the one-year prescriptive period.
The situation, however, does not obtain in the present case. The plaintiffs
in the civil cases below gave extra-judicial notice to their respective
carriers and filed suit against the petitioner well within one year from their
receipt of the goods. The petitioner had plenty of time within which to act.
In Civil Case No. 109911, the petitioner had more than four months to file
a third-party complaint while in Civil Case No. 110061, it had more than
five months to do so. In both instances, however, the petitioner failed to
file the appropriate action.
WHEREFORE, IN VIEW OF THE FOREGOING, the petitions in G. R.
No. 54140 and G. R. No. 62001 are hereby DISMISSED for lack of merit.
Costs against the petitioner.
SO ORDERED.
Feria, Fernan, Alampay and Paras, JJ ., concur.
||| [G.R. No. 124050. June 19, 1997.]
SYLLABUS
DECISION
PUNO, J : p
This is a petition for review on certiorari to annul and set aside the
Decision of respondent Court of Appeals dated December 14, 1995 1 and
its Resolution dated February 22, 1996 2 in CA-G.R. CV No. 45805
entitled Mayer Steel Pipe Corporation and Hongkong Government
Supplies Department v. South Sea Surety Insurance Co., Inc. and The
Charter Insurance Corporation. 3
In 1983, petitioner Hongkong Government Supplies Department
(Hongkong) contracted petitioner Mayer Steel Pipe Corporation (Mayer)
to manufacture and supply various steel pipes and fittings. From August
to October, 1983, Mayer shipped the pipes and fittings to Hongkong as
evidenced by Invoice Nos. MSPC-1014, MSPC-1015, MSPC-1025,
MSPC-1020, MSPC-1017 and MSPC-1022. 4
Prior to the shipping, petitioner Mayer insured the pipes and fittings
against all risks with private respondents South Sea Surety and
Insurance Co., Inc. (South Sea) and Charter Insurance Corp. (Charter).
The pipes and fittings covered by Invoice Nos. MSPC-1014, 1015 and
1025 with a total amount of US$212,772.09 were insured with
respondent South Sea, while those covered by Invoice Nos. 1020, 1017
and 1022 with a total amount of US$149,470.00 were insured with
respondent Charter.
Petitioners Mayer and Hongkong jointly appointed Industrial
Inspection (International) Inc. as third-party inspector to examine whether
the pipes and fittings are manufactured in accordance with the
specifications in the contract. Industrial Inspection certified all the pipes
and fittings to be in good order condition before they were loaded in the
vessel. Nonetheless, when the goods reached Hongkong, it was
discovered that a substantial portion thereof was damaged.
Petitioners filed a claim against private respondents for indemnity
under the insurance contract. Respondent Charter paid petitioner
Hongkong the amount of HK$64,904.75. Petitioners demanded payment
of the balance of HK$299,345.30 representing the cost of repair of the
damaged pipes. Private respondents refused to pay because the
insurance surveyor's report allegedly showed that the damage is a
factory defect.
On April 17, 1986, petitioners filed an action against private
respondents to recover the sum of HK$299,345.30. For their defense,
private respondents averred that they have no obligation to pay the
amount claimed by petitioners because the damage to the goods is due
to factory defects which are not covered by the insurance policies.
The trial court ruled in favor of petitioners. It found that the damage
to the goods is not due to manufacturing defects. It also noted that the
insurance contracts executed by petitioner Mayer and private
respondents are "all risks" policies which insure against all causes of
conceivable loss or damage. The only exceptions are those excluded in
the policy, or those sustained due to fraud or intentional misconduct on
the part of the insured. The dispositive portion of the decision states:
WHEREFORE, judgment is hereby rendered ordering
the defendants jointly and severally, to pay the plaintiffs the
following:
1. the sum equivalent in Philippine currency of
HK$299,345.30 with legal rate of interest as of the filing of the
complaint;
2. P100,000.00 as and for attorney's fees; and
3. costs of suit.
SO ORDERED. 5
Private respondents elevated the case to respondent Court of
Appeals.
Respondent court affirmed the finding of the trial court that the
damage is not due to factory defect and that it was covered by the "all
risks" insurance policies issued by private respondents to petitioner
Mayer. However, it set aside the decision of the trial court and dismissed
the complaint on the ground of prescription. It held that the action is
barred under Section 3(6) of the Carriage of Goods by Sea Act since it
was filed only on April 17, 1986, more than two years from the time the
goods were unloaded from the vessel. Section 3(6) of the Carriage of
Goods by Sea Act provides that "the carrier and the ship shall be
discharged from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date when the
goods should have been delivered." Respondent court ruled that this
provision applies not only to the carrier but also to the insurer,
citing Filipino Merchants Insurance Co., Inc. v. Alejandro. 6
Hence this petition with the following assignments of error:
1. The respondent Court of Appeals erred in holding that
petitioners' cause of action had already prescribed on
the mistaken application of the Carriage of Goods by Sea
Act and the doctrine of Filipino Merchants Co.,
Inc. v. Alejandro (145 SCRA 42); and
2. The respondent Court of Appeals committed an error in
dismissing the complaint. 7
The petition is impressed with merit. Respondent court erred in
applying Section 3(6) of the Carriage of Goods by Sea Act.
Section 3(6) of the Carriage of Goods by Sea Act states that the
carrier and the ship shall be discharged from all liability for loss or
damage to the goods if no suit is filed within one year after delivery of the
goods or the date when they should have been delivered. Under this
provision, only the carrier's liability is extinguished if no suit is brought
within one year. But the liability of the insurer is not extinguished because
the insurer's liability is based not on the contract of carriage but on the
contract of insurance. A close reading of the law reveals that the Carriage
of Goods by Sea Act governs the relationship between the carrier on the
one hand and the shipper, the consignee and/or the insurer on the other
hand. It defines the obligations of the carrier under the contract of
carriage. It does not, however, affect the relationship between the
shipper and the insurer. The latter case is governed by the Insurance
Code.
Our ruling in Filipino Merchants Insurance Co.,
Inc. v. Alejandro 8 and the other cases 9 cited therein does not support
respondent court's view that the insurer's liability prescribes after one
year if no action for indemnity is filed against the carrier or the insurer. In
that case, the shipper filed a complaint against the insurer for recovery of
a sum of money as indemnity for the loss and damage sustained by the
insured goods. The insurer, in turn, filed a third-party complaint against
the carrier for reimbursement of the amount it paid to the shipper. The
insurer filed the third-party complaint on January 9, 1978, more than one
year after delivery of the goods on December 17, 1977. The court held
that the Insurer was already barred from filing a claim against the carrier
because under the Carriage of Goods by Sea Act, the suit against the
carrier must be filed within one year after delivery of the goods or the date
when the goods should have been delivered. The court said that "the
coverage of the Act includes the insurer of the goods." 10
The Filipino Merchants case is different from the case at bar. In
Filipino Merchants, it was the insurer which filed a claim against the
carrier for reimbursement of the amount it paid to the shipper. In the case
at bar, it was the shipper which filed a claim against the insurer. The basis
of the shipper's claim is the "all risks" insurance policies issued by private
respondents to petitioner Mayer.
The ruling in Filipino Merchants should apply only to suits against
the carrier filed either by the shipper, the consignee or the insurer. When
the court said in Filipino Merchants that Section 3(6) of the Carriage of
Goods by Sea Act applies to the insurer, it meant that the insurer, like the
shipper, may no longer file a claim against the carrier beyond the
one-year period provided in the law. But it does not mean that the shipper
may no longer file a claim against the insurer because the basis of the
insurer's liability is the insurance contract. An insurance contract is a
contract whereby one party, for a consideration known as the premium,
agrees to indemnify another for loss or damage which he may suffer from
a specified peril 11 An "all risks" insurance policy covers all kinds of loss
other than those due to willful and fraudulent act of the insured. 12 Thus,
when private respondents issued the "all risks" policies to petitioner
Mayer, they bound themselves to indemnify the latter in case of loss or
damage to the goods insured. Such obligation prescribes in ten years, in
accordance with Article 1144 of the New Civil Code. 13 cdasia
Poblador, De los Reyes & Dacayo, Jr. for National Steel Corp.
De Rosario & Del Rosario for Vlasons Shipping, Inc.
SYNOPSIS
SYLLABUS
DECISION
PANGANIBAN, J : p
The Case
Before us are two separate petitions for review filed by National
Steel Corporation (NSC) and Vlasons Shipping, Inc. (VSI), both of
which assail the August 12, 1993 Decision of the Court of
Appeals. 1 The Court of Appeals modified the decision of the Regional
Trial Court of Pasig, Metro Manila, Branch 163 in Civil Case No.
23317. The RTC disposed as follows:
"WHEREFORE, judgment is hereby rendered in favor
of defendant and against the plaintiff dismissing the complaint
with cost against plaintiff, and ordering plaintiff to pay the
defendant on the counterclaim as follows:
1. The sum of P75,000.00 as unpaid freight and
P88,000.00 as demurrage with interest at the legal rate on
both amounts from April 7, 1976 until the same shall have
been fully paid;
2. Attorney's fees and expenses of litigation in the sum
of P100,000.00; and
3. Cost of suit.
SO ORDERED." 2
On the other hand, the Court of Appeals ruled:
"WHEREFORE, premises considered, the decision
appealed from is modified by reducing the award for
demurrage to P44,000.00 and deleting the award for
attorney's fees and expenses of litigation. Except as thus
modified, the decision is AFFIRMED. There is no
pronouncement as to costs.
SO ORDERED." 3
The Facts
The MV Vlasons I is a vessel which renders tramping service
and, as such, does not transport cargo or shipment for the general
public. Its services are available only to specific persons who enter
into a special contract of charter party with its owner. It is undisputed
that the ship is a private carrier. And it is in this capacity that its owner,
Vlasons Shipping, Inc., entered into a contract of affreightment or
contract of voyage charter hire with National Steel Corporation.
The facts as found by Respondent Court of Appeals are as
follows:
"(1) On July 17, 1974, plaintiff National Steel
Corporation (NSC) as Charterer and defendant Vlasons
Shipping, Inc. (VSI) as Owner, entered into a Contract of
Voyage Charter Hire (Exhibit 'B'; also Exhibit '1') whereby
NSC hired VSI's vessel, the MV 'VLASONS I' to make one (1)
voyage to load steel products at Iligan City and discharge
them at North Harbor, Manila, under the following terms and
conditions, viz:
'1. . . .
2. Cargo: Full cargo of steel products of not less than
2,500 MT, 10% more or less at Master's option.
3. . . .
4. Freight/Payment: P30.00/metric ton, FIOST basis.
Payment upon presentation of Bill of Lading within
fifteen (15) days.
5. Laydays/Cancelling: July 26, 1974/Aug. 5, 1974
6. Loading/Discharging Rate: 750 tons per WWDSHINC.
(Weather Working Day of 24 consecutive hours,
Sundays and Holidays Included).
7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day.
8. . . .
9. Cargo Insurance: Charterer's and/or Shipper's must
insure the cargoes. Shipowners not responsible
for losses/damages except on proven willful
negligence of the officers of the vessel.
10. Other terms: (a) All terms/conditions of NONYAZAI
C/P [sic] or other internationally recognized
Charter Party Agreement shall form part of this
Contract.
xxx xxx xxx'
The terms 'F.I.O.S.T.' which is used in the shipping
business is a standard provision in the NANYOZAI Charter
Party which stands for 'Freight In and Out including
Stevedoring and Trading', which means that the handling,
loading and unloading of the cargoes are the responsibility of
the Charterer. Under Paragraph 5 of the NANYOZAI Charter
Party, it states, 'Charterers to load, stow and discharge the
cargo free of risk and expenses to owners. . . .' (Emphasis
supplied).
Under paragraph 10 thereof, it is provided that
'(o)wners shall, before and at the beginning of the voyage,
exercise due diligence to make the vessel seaworthy and
properly manned, equipped and supplied and to make the
holds and all other parts of the vessel in which cargo is carried,
fit and safe for its reception, carriage and preservation.
Owners shall not be liable for loss of or damage of the cargo
arising or resulting from: unseaworthiness unless caused by
want of due diligence on the part of the owners to make the
vessel seaworthy, and to secure that the vessel is properly
manned, equipped and supplied and to make the holds and all
other parts of the vessel in which cargo is carried, fit and safe
for its reception, carriage and preservation; . . ; perils, dangers
and accidents of the sea or other navigable waters; . . ;
wastage in bulk or weight or any other loss or damage arising
from inherent defect, quality or vice of the cargo; insufficiency
of packing; . . .; latent defects not discoverable by due
diligence; any other cause arising without the actual fault or
privity of Owners or without the fault of the agents or servants
of owners.'
Paragraph 12 of said NANYOZAI Charter Party also
provides that '(o)wners shall not be responsible for split,
chafing and/or any damage unless caused by the negligence
or default of the master and crew.'
(2) On August 6, 7 and 8, 1974, in accordance with the
Contract of Voyage Charter Hire, the MV 'VLASONS I' loaded
at plaintiffs pier at Iligan City, the NSC's shipment of 1,677
skids of tinplates and 92 packages of hot rolled sheets or a
total of 1,769 packages with a total weight of about 2,481.19
metric tons for carriage to Manila. The shipment was placed in
the three (3) hatches of the ship. Chief Mate Gonzalo
Sabando, acting as agent of the vessel[,] acknowledged
receipt of the cargo on board and signed the corresponding
bill of lading, B.L.P.P. No. 0233 (Exhibit 'D') on August 8,
1974.
(3) The vessel arrived with the cargo at Pier 12, North
Harbor, Manila, on August 12, 1974. The following day,
August 13, 1974, when the vessel's three (3) hatches
containing the shipment were opened by plaintiff's agents,
nearly all the skids of tinplates and hot rolled sheets were
allegedly found to be wet and rusty. The cargo was
discharged and unloaded by stevedores hired by the
Charterer. Unloading was completed only on August 24, 1974
after incurring a delay of eleven (11) days due to the heavy
rain which interrupted the unloading operations. (Exhibit 'E')
(4) To determine the nature and extent of the wetting
and rusting, NSC called for a survey of the shipment by the
Manila Adjusters and Surveyors Company (MASCO). In a
letter to the NSC dated March 17, 1975 (Exhibit 'G'), MASCO
made a report of its ocular inspection conducted on the cargo,
both while it was still on board the vessel and later at the NDC
warehouse in Pureza St., Sta. Mesa, Manila where the cargo
was taken and stored. MASCO reported that it found wetting
and rusting of the packages of hot rolled sheets and metal
covers of the tinplates; that tarpaulin hatch covers were noted
torn at various extents; that container/metal casings of the
skids were rusting all over. MASCO ventured the opinion that
'rusting of the tinplates was caused by contact with SEA
WATER sustained while still on board the vessel as a
consequence of the heavy weather and rough seas
encountered while en route to destination (Exhibit 'F'). It was
also reported that MASCO's surveyors drew at random
samples of bad order packing materials of the tinplates and
delivered the same to the M.I.T. Testing Laboratories for
analysis. On August 31, 1974, the M.I.T. Testing Laboratories
issued Report No. 1770 (Exhibit 'I') which in part, states, 'The
analysis of bad order samples of packing materials . . . shows
that wetting was caused by contact with SEA WATER'.
(5) On September 6, 1974, on the basis of the
aforesaid Report No. 1770, plaintiff filed with the defendant its
claim for damages suffered due to the downgrading of the
damaged tinplates in the amount of P941,145.18. Then on
October 3, 1974, plaintiff formally demanded payment of said
claim but defendant VSI refused and failed to pay. Plaintiff
filed its complaint against defendant on April 21, 1976 which
was docketed as Civil Case No. 23317, CFI, Rizal.
(6) In its complaint, plaintiff claimed that it sustained
losses in the aforesaid amount of P941,145.18 as a result of
the act, neglect and default of the master and crew in the
management of the vessel as well as the want of due
diligence on the part of the defendant to make the vessel
seaworthy and to make the holds and all other parts of the
vessel in which the cargo was carried, fit and safe for its
reception, carriage and preservation — all in violation of
defendant's undertaking under their Contract of Voyage
Charter Hire.
(7) In its answer, defendant denied liability for the
alleged damage claiming that the MV 'VLASONS I' was
seaworthy in all respects for the carriage of plaintiff's cargo;
that said vessel was not a 'common carrier' inasmuch as she
was under voyage charter contract with the plaintiff as
charterer under the charter party; that in the course of the
voyage from Iligan City to Manila, the MV 'VLASONS I'
encountered very rough seas, strong winds and adverse
weather condition, causing strong winds and big waves to
continuously pound against the vessel and seawater to
overflow on its deck and hatch covers; that under the Contract
of Voyage Charter Hire, defendant shall not be responsible for
losses/damages except on proven willful negligence of the
officers of the vessel, that the officers of said MV 'VLASONS I'
exercised due diligence and proper seamanship and were not
willfully negligent; that furthermore the Voyage Charter Party
provides that loading and discharging of the cargo was on
FIOST terms which means that the vessel was free of risk and
expense in connection with the loading and discharging of the
cargo; that the damage, if any, was due to the inherent defect,
quality or vice of the cargo or to the insufficient packing
thereof or to latent defect of the cargo not discoverable by due
diligence or to any other cause arising without the actual fault
or privity of defendant and without the fault of the agents or
servants of defendant; consequently, defendant is not liable;
that the stevedores of plaintiff who discharged the cargo in
Manila were negligent and did not exercise due care in the
discharge of the cargo; and that the cargo was exposed to rain
and seawater spray while on the pier or in transit from the pier
to plaintiff's warehouse after discharge from the vessel; and
that plaintiff's claim was highly speculative and grossly
exaggerated and that the small stain marks or sweat marks on
the edges of the tinplates were magnified and considered total
loss of the cargo. Finally, defendant claimed that it had
complied with all its duties and obligations under the Voyage
Charter Hire Contract and had no responsibility whatsoever to
plaintiff. In turn, it alleged the following counterclaim:
(a) That despite the full and proper performance
by defendant of its obligations under the Voyage Charter
Hire Contract, plaintiff failed and refused to pay the
agreed charter hire of P75,000.00 despite demands
made by defendant;
(b) That under their Voyage Charter Hire Contract,
plaintiff had agreed to pay defendant the sum of
P8,000.00 per day for demurrage. The vessel was on
demurrage for eleven (11) days in Manila waiting for
plaintiff to discharge its cargo from the vessel. Thus,
plaintiff was liable to pay defendant demurrage in the
total amount of P88,000.00. cdasia
Attorney's Fees
VSI assigns as error of law the Court of Appeals' deletion of the
award of attorney's fees. We disagree. While VSI was compelled to
litigate to protect its rights, such fact by itself will not justify an award of
attorney's fees under Article 2208 of the Civil Code when" . . . no
sufficient showing of bad faith would be reflected in a party's
persistence in a case other than an erroneous conviction of the
righteousness of his cause . . ." 44 Moreover, attorney's fees may not
be awarded to a party for the reason alone that the judgment rendered
was favorable to the latter, as this is tantamount to imposing a
premium on one's right to litigate or seek judicial redress of legitimate
grievances. 45
Epilogue
At bottom, this appeal really hinges on a factual issue: when,
how and who caused the damage to the cargo? Ranged against NSC
are two formidable truths. First, both lower courts found that such
damage was brought about during the unloading process when rain
and seawater seeped through the cargo due to the fault or negligence
of the stevedores employed by it. Basic is the rule that factual findings
of the trial court, when affirmed by the Court of Appeals, are binding
on the Supreme Court. Although there are settled exceptions, NSC
has not satisfactorily shown that this case is one of them. Second, the
agreement between the parties — the Contract of Voyage Charter
Hire — placed the burden of proof for such loss or damage upon the
shipper, not upon the shipowner. Such stipulation, while
disadvantageous to NSC, is valid because the parties entered into a
contract of private charter, not one of common carriage. Basic too is
the doctrine that courts cannot relieve a party from the effects of a
private contract freely entered into, on the ground that it is allegedly
one-sided or unfair to the plaintiff. The charter party is a normal
commercial contract and its stipulations are agreed upon in
consideration of many factors, not the least of which is the transport
price which is determined not only by the actual costs but also by the
risks and burdens assumed by the shipper in regard to possible loss
or damage to the cargo. In recognition of such factors, the parties
even stipulated that the shipper should insure the cargo to protect
itself from the risks it undertook under the charter party. That NSC
failed or neglected to protect itself with such insurance should not
adversely affect VSI, which had nothing to do with such failure or
neglect.
WHEREFORE, premises considered, the instant consolidated
petitions are hereby DENIED. The questioned Decision of the Court of
Appeals is AFFIRMED with the MODIFICATION that the demurrage
awarded to VSI is deleted. No pronouncement as to costs.
SO ORDERED.
BARRERA, J.:
This is an appeal by the Commissioner of Internal Revenue from the decision of the Court
of Tax Appeals (in CTA Case No. 556) holding the U.S. Lines Company liable for payment
of common carrier's tax deficiency and surcharges in the total sum of only P502.75
instead of P25,769.41 as originally assessed and demanded by appellant Commissioner.
As found and stated in the decision of the Court of Tax Appeals, the U.S. Lines Company,
a foreign corporation duly licensed to do business in the Philippines, under the trade name
"American Pioneer Lines" (for short hereinafter referred to as the Company), is the
operator of ocean-going vessels transporting passengers and freight to and from the
Philippines. It is also the sole agent and representative of the Pacific Far East Line, Inc.,
another shipping company engaged in business in the Philippines as a common carrier by
water.
In the examination of its books of accounts and other records to determine its tax liabilities
for the period from January 1, 1950 to September 30, 1955, it was found that the
Company also acted in behalf of the West Coast Trans-Oceanic Steamship Lines Co., Inc.,
a non-resident foreign corporation, in connection with the transportation, on board the "SS
Portland Trader" belonging to the latter, on November 27, 1951 and April 29, 1952, of
chrome ores from Masinloc, Zambales to the United States, from which carriage or
transportation freight revenue in the total sum of $272,470.00 was realized by the vessel's
owner, and for which the 2% common carrier's percentage tax imposed by Section 192 of
the National Internal Revenue Code was never paid.
At the instance of the Company, a reinvestigation of the case was conducted and a
hearing thereon held before the Appellate Division of the Bureau of Internal Revenue.
These, notwithstanding, the Commissioner maintained his demand. Thus, the Company
filed a petition with the Court of Tax Appeals contesting the correctness of (1) the
conversion of "collect" revenues or those freight and passage receipts, commissions, and
agency fees for services in the Philippines, but payable in the United States, at the rate of
P2.00375 to $1.00 and (2) the demand on the Company of the 2% carrier's percentage
tax on the gross receipts of the West Coast Trans-Oceanic Steamship Lines from the
chrome ore shipments of November 27, 1951 and April 29, 1952.
The Court of Tax Appeals, in its decision, ruled for the Company on the first issue, thus —
We wish to make it clear that from the records of the case, it appears that all the "collect"
revenues, or those freight charges, passage fares, commissions and agency fees,
collected in the United States in United States currency belong to petitioner's home office
in the United States and were not remitted to petitioner's local office in the Philippines. In
short, the United States dollars collected abroad were not actually converted to and
received in Philippine pesos, and therefore there is no occasion nor reason to use a
conversion rate aside from the legal rate of exchange, i.e., $1.00 to P2.00. If we have
placed the judicial stamp of approval on the agreed conversion rates of $1.00 to P2.015
and $1.00 to P2.02 with regard to the "prepaid" freight and passage revenues,
respectively, we did so in order to arrive at the actual amounts collected by the petitioner
in Philippine pesos — the correct taxable gross receipts. (Emphasis supplied.)
As to the second issue, it ruled that the 2% percentage tax under Section 192 of the Tax
Code is imposable only on owners or operators of the common carrier, and as there is no
law constituting the shipping agent the withholding agent of the taxes due from the
principal, said shipping agent is not personally liable for the tax obligations of the latter,
unless the agent voluntarily assumes such obligation which, in this case, the agent
Company did not. Consequently, the petitioning taxpayer was ordered to pay only a tax
deficiency and surcharge in the sum of P502.75. Hence, the institution of this appeal.
The ruling by the lower court that the conversion of the "collect" freight fees (or those
earned in the Philippines but actually paid in the United States in dollars) should be at the
rate of P2.00 to $1.00 as established by law (Sec. 48, Rep. Act No. 265), and not the rate
or exchange of P2.00375 to $1.00, as fixed by the Monetary Board, must be upheld. No
evidence was presented rebutting the positive allegation of respondent taxpayer, which
was sustained by the Tax Court, that the "collect" freightage fees were not remitted to the
local office of the U.S. Lines Company (in the Philippines) nor actually converted to and
received in Philippine pesos. In other words, no foreign exchange operations were
involved here. The statement made in the Commissioner's brief (p. 20) that "it is
uncontroverted that the respondent's (Company's) dollar earnings here representing its
so-called "collect" revenues were accounted for thru its bank, the National City Bank of
New York at P2.00375 to a dollar", is not borne out by the records. What appears is that
the Company received certain amounts from its home office in the United States to meet
its local expenses, and these were withdrawn from a letter of credit in the First City Bank
of New York in Manila at the rate of P2.00375 to a dollar. But the Company asserts — and
there is no evidence to the contrary — that there is no relationship whatsoever between
these funds and the freight fees collected in the United States.
The other issue is whether on the facts of the case, the Company, as agent of the vessel
"SS Portland Trader" in behalf of its owner, the West Coast Trans-Oceanic Steamship
Lines Company, can be compelled to pay the 2% percentage tax on the freight revenue
earned from the shipment of chrome ores transported from the Philippines to the United
States. As stated earlier, the Court of Tax Appeals ruled in the negative, citing and
adopting a unanimous decision of the defunct Board of Tax Appeals rendered on July 30,
1953, purporting to interpret Section 192 of the National Internal Revenue Code, in which
it held that a shipping agent is not personally responsible for the payment of the tax
obligations of its principal, reasoning that there is no law constituting a shipping agent as a
withholding agent of the taxes due from its principal. It further stated that a shipping agent
can only be held liable for the payment of the common carrier's percentage tax if such
obligation is stipulated in the agency agreement, or if the agent voluntarily assumes the
tax liability.
We can not agree to this view as applied to the present case, because it adopts a very
restrictive interpretation of Section 192 of the Tax Code.1 What the legal provision
purports to tax is the business of transportation, so much so that the tax is based on the
gross receipts. The person liable is of course the owner or operator, but this does not
mean that he and he alone can be made actually to pay the tax. In other words, whoever
acts on his behalf and for his benefit may be held liable to pay, for and on behalf of the
carrier or operator, such percentage tax on the business.
It is claimed for the Company that it merely acted as a "husbanding agent" of the vessel
with limited powers. This appears not to be so. A "husbanding agent" is the general agent
of the owner in relation to the ship, with powers, among others, to engage the vessel for
general freight and the usual conditions, and settle for freight and adjust averages with the
merchant.2 But whatever may be the technical functions of a "ship's husband", the
Company, in the case at bar, was considered and acted more as a general agent. The
agency contract is not extant in the records. Still, from the correspondence between the
principal West Coast Trans-Oceanic Steamship Lines and the Company itself, and with
other entities regarding the shipment in question, the real nature of the agency may be
gleaned. Thus, in the letter of West Coast Trans-Oceanic Steamship Lines, dated October
20, 1951 (Exh. 30), giving instructions to the master of its vessel "SS Portland Trader", it
referred to respondent Company as the "Owner's agents" at the loading point (Masinloc)
to which the vessel had to be consigned. In line with its designation as the "Owner's
agent" and the vessel's consignee, respondent Company wrote the master of the vessel
(Exh. 23) advising him that it had secured Customs authority for the vessel to proceed to
Masinloc, as well as the Export Entry covering the loading of ore, giving instructions how
to proceed with the loading and to keep it closely advised of all movements and daily
tonnages laden. It also undertook to and did in fact prepare all the cargo documents. The
corresponding bill of lading for the cargo was prepared and signed by the respondent
Company "As Agent for West Coast Trans-Oceanic Steamship Lines" wherein it
acknowledged the receipt of 9,900 long tons of chrome, a prerogative act of a common
carrier itself. (p. 114, BIR record). Again, signing "As Agents for West Coast
Trans-Oceanic Steamship Lines", respondent Company transmitted the shipping
documents covering the shipment of ore to Castle Cooke, Ltd., the vessel's agent at
Honolulu (Exh. 20). All these were in respect to the first shipment on November 27, 1951.
Concerning the second shipment, we have first the letter of West Coast Trans-Oceanic
Steamship Lines, dated February 21, 1952 addressed to respondent Company, advising it
of the second trip of "SS Portland Trader" and stating: "We trust that you will handle the
vessel at Manila and that your usual fee will apply", and requesting respondent Company
to act also as supervisory agent at Saigon and Haiphong (p. 57, BIR records). The
steamship company, likewise, advised the master of its vessel that "its agents for
Masinloc" will be the respondent Company from which "full assistance and information"
could be obtained (Exh. 18, dated March 12, 1952). Evidently accepting the designation,
respondent Company, representing itself as "the local agents" of the vessel (Exh. 21,
dated March 26, 1952), secured the entry and clearance of the vessel at the customs.
After the loading of ore at Masinloc, again respondent Company prepared the shipping
documents and signed the bill of lading "As Agent for the West Coast Trans-Oceanic
Steamship Lines" (p. 114, BIR record).
All these documents show that respondent Company clearly acted — as it held itself to the
public and to the Government (specifically the Bureau of Customs) — as the shipowner's
local agent or the ship agent representing the ownership of the vessel. To adopt the view
of the trial court would be to sanction the doing of business in the Philippines by
non-resident corporations over which we have no jurisdiction, without subjecting the same
to the operation of our revenue and tax laws, to the detriment and discrimination of local
business enterprises. We, therefore, hold that in the circumstances, said respondent is
under obligation to pay, for and in behalf of its principal, the tax due from the latter. And,
this is but logical, because, as provided in Article 595 of the Code of Commerce, "the ship
agent shall represent the ownership of the vessel, and may, in his own name and in such
capacity, take judicial and extrajudicial steps in matters relating to commerce". If the
shipping agent represents the ownership of the vessel in matters relating to commerce,
then any liability arising in connection therewith may be enforced against the agent who is,
as a consequence thereof, authorized to take judicial or extrajudicial steps, either in the
prosecution or defense of the owner's rights or interests. As a matter of fact, if a foreign
shipping company has a claim against the Government in relation to commerce, its local
shipping agent, by virtue of Article 595 of the Code of Commerce, can file such a claim in
his own name. Conversely, and logically, it must be admitted, the Government can hold
the local shipping agent liable for the taxes due from his, principal. This is, of course,
without prejudice to the right of the agent to seek reimbursement from his principal.
The contention that the agreement between the principal and agent solely determines the
liability of the agent, is not tenable. Any agreement or contract to be enforceable in this
jurisdiction is understood to incorporate therein the provision or provisions of law
specifying the obligations of the parties under such contract. The contract between herein
respondent Company and its principal consequently imposed upon the parties not only
the rights and duties delineated therein, but also the provisions of law such as that of the
Code of Commerce aforecited.
As to the third assigned error, i.e., the amount of taxable receipts, the records are not
clear. Petitioner Commissioner of Internal Revenue claims that there are contradictions in
and among the three sets of summaries submitted by the respondent Company and they
should not have been considered by the trial court. On the other hand, we find also that
the assessments issued by the Commissioner are, likewise, conflicting. In his present
petition, the prayer sets the tax delinquency of the respondent Company at P26,436.17,
which is the amount demanded in his letter of June 6, 1952, (Exh. E, also marked as Exh.
34). In his brief, the Commissioner prays that respondent Company be ordered to pay the
sum of P25,769.41, the amount demanded in his letter of June 28, 1956 (Exh. A, also
marked as Exh. 26). In view of these discrepancies, a re-examination and verification of
the records is necessary to determine the exact taxable amount on which the 2% common
carrier's percentage tax is to be computed in accordance with the terms of this decision.
WHEREFORE, the decision of the Court of Tax Appeals in this case is modified at
above-indicated, and the records remanded to the court a quo for the purpose herein
directed. No costs. So ordered.
Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes Dizon and Regala, JJ
SYLLABUS
DECISION
BARRERA, J : p
From the decision of the Court of First Instance of Manila (in
Civil Case No. 37219) dismissing with costs his ease against
defendant Carlos A. Go Thong & Co., plaintiff Honorio M. Barrios,
interposed the present appeal.
The facts of the case, as found by the trial court, are briefly
stated in its decision, to wit:
"The plaintiff Honorio M. Barrios was, on May 1 and 2,
1958, captain and/or master of the MV Henry I of the William
Lines Incorporated, of Cebu City, plying between and to and
from Cebu City and other southern cities and ports, among
which are Dumaguete City, Zamboanga City, and Davao City.
At about 8:00 o'clock on the evening of May 1, 1958, plaintiff in
his capacity as such captain and/or master of the aforesaid MV
Henry I, received or otherwise intercepted an S.O.S. distress
signal by blinkers from the MV Alfredo, owned and/or operated
by the defendant Carlos A. Go Thong & Company. Acting on
and/or answering the S.O.S. call, the plaintiff Honorio M. Barrios,
also in his capacity as captain and/or master of the MV Henry I,
which was then sailing or navigating from Dumaguete City,
altered the course of said vessel, and steered and headed
towards the beckoning MV Don Alfredo, which plaintiff found to
be in trouble, due to engine failure and the loss of her propeller,
for which reason, it was drifting slowly southward from Negros
Island towards Borneo in the open China Sea, at the mercy of a
moderate easterly wind. At about 8:25 p.m. on the same day,
May 1, 1958, the MV Henry, under the command of the plaintiff,
succeeded in getting near the MV Don Alfredo — in fact as near
as about seven meters from the latter ship — and with the
consent and knowledge of the captain and/or master of the MV
Don Alfredo, the plaintiff caused the latter vessel to be tied to, or
well-secured and connected with tow lines from the MV Henry I;
and in that manner, position and situation, the latter had the MV
Don Alfredo in tow and proceeded towards the direction of
Dumaguete City, as evidenced by a written certificate to this
effect executed and accomplished by the Master, the Chief
Engineer, the Chief Officer, and the Second Engineer of the MV
Don Alfredo, who were then on board the latter ship at the time
of the occurrence stated above (Exh. A). At about 5:10 o'clock
the following morning, May 2, 1958, or after almost nine hours
during the night, with the MV Don Alfredo still in tow by the MV
Henry I, and while both vessels were approaching the vicinity of
Apo Island off Zamboanga town, Negros Oriental, the MV Lux, a
sister ship of the MV Don Alfredo, was sighted heading towards
the direction of the aforesaid two vessels, reaching then fifteen
minutes later, or at about 5:25 o'clock on that same morning.
Thereupon, at the request and instance of the captain and/or
master of the MV Don Alfredo, the plaintiff caused the tow lines
to be released, thereby also releasing the MV Don Alfredo.
"These are the main facts of the present case as to which
plaintiff and defendant quite agree with each other. As was
manifested in its memorandum presented in this case on
August 22, 198, defendant thru counsel said that there is,
indeed, between the parties, no dispute as to the factual
circumstances, but counsel adds that where plaintiff concludes
that they establish an impending sea peril from which salvage of
a ship worth more than P100 000.00, plus life and cargo was
done, the defendant insists that the facts made out no such
case, but that what merely happened was only mere towage
from which plaintiff cannot claim any compensation or
remuneration independently of the shipping company that
owned the vessel commanded by him."
On the basis of these facts, the trial court (on April 5, 1960)
dismissed the case, stating:
"Plaintiff basis his claim upon the provisions of the
Salvage Law, Act No. 2616, . . .
"In accordance with the Salvage Law, a ship which is lost
or abandoned at sea is considered a derelict and, therefore,
proper subject of salvage. A ship in a desperate condition,
where persons on board are incapable, by reason of their
mental and physical condition, of doing anything for their own
safety, is a quasi-derelict and may, likewise, be the proper
subject of salvage. Was the MV Don Alfredo, on May 1, 1958,
when her engine failed and, for that reason, was left drifting
without power on the high seas, a derelict or a quasi- derelict?
In other words, was it a ship that was lost or abandoned, or in a
desperate condition, which could not be saved by reason of
incapacity or incapacity of its crew or the persons on board
thereof? From all appearances and from the evidence extant in
the records, there can be no doubt, for it seems clear enough,
that the MV Don Alfredo was not a lost ship, nor was it
abandoned. Can it be said that the said ship was in a desperate
condition, simply, because of S.O.S. signals were sent from it?
"From the testimony of the captain of the MV Don Alfredo,
the engine failed and the ship already lost power as early as
8:00 o'clock on the morning of May 1, 1958; although it was
helpless, in the sense that it could not move, it did not drift too
far from the place where it was, at the time it had an engine
failure. The weather was fair — in fact, as described by
witnesses, the weather was clear and good. The waves were
small, too slight — there were only ripples on the sea, and the
sea was quite smooth. And, during the night, while towing was
going on, there was a moonlight. Inasmuch as the MV Don
Alfredo was drifting towards the open sea, there was no danger
of floundering. As testified to by one of the witnesses, it would
take days or even weeks before the ship could as much as
approach an island. And, even then, upon the least indication,
the anchor could always be weighed down, in order to prevent
the ship from striking against the rocks.
"There was no danger of the vessel capsizing, in view of
the fairness of the sea, and the condition of the weather, as
described above. As a matter of fact, although the MV Don
Alfredo had a motor launch, and two lifeboats, there was no
attempt, much less, was there occasion or necessity, to lower
anyone or all of them, in order to evacuate the persons on board;
nor did the conditions then obtaining require an order to jettison
the cargo.
"But, it is insisted for the plaintiff that an S.O.S. or a
distress signal was sent from aboard the MV Don Alfredo, which
was enough to establish the fact that it was exposed to
imminent peril at sea. It is admitted by the defendant that such
S.O.S. signal was, in fact, sent by blinkers. However,
defendant's evidence shows that Captain Loresto of the MV
Don Alfredo, did not authorize the radio operator of the
aforesaid ship to send an S.O.S. or distress signal, for the ship
was never in distress, nor was it exposed to a great imminent
peril of the sea. What the aforesaid Captain told the radio
operator to transmit was a general call; for, at any rate, a
message had been sent to defendant's office at Cebu City,
which the latter acknowledged by sending back a reply stating
that help was on the way. However, as explained by the said
radio operator, in spite of his efforts to send a general call by
radio, he did not receive any response. For this reason, the
Captain instructed him to send the general call by blinkers from
the deck of the ship; but the call by blinkers, which follows the
dots and dashes method of sending messages, could not be
easily understood by deck officers who ordinarily are not radio
operators. Hence, the only way by which the attention of
general officers on deck could be called, was to send an S.O.S.
signal which can be understood by all and sundry.
"Be it as it may, the evidence further shows that when the
two ships were already within hearing distance (barely seven
meters) of each other, there was a sustained conversation
between Masters and complement of the two vessels, by
means of loud speakers and the radio; and, the plaintiff must
have learned of the exact nature and extent of the disability from
which the MV Don Alfredo had suffered — that is, that the only
trouble that the said vessel had developed was an engine
failure, due to the loss of its propellers.
"It can thus be said that the MV Don Alfredo was not in a
perilous condition wherein the members of its crew would be
incapable of doing anything to save passengers and cargo, and,
for this reason, it cannot be duly considered as a quasi-derelict;
hence, it was not the proper subject of salvage, and the Salvage
Law, Act No. 2616, is not applicable.
"Plaintiff, likewise, predicates his action upon the
provision of Article 2142 of the New Civil Code, which reads as
follows:
'Certain lawful, voluntary and unilateral acts give rise to
the juridical relation of quasi-contract to the end that no one
shall be unjustly enriched or benefited at the expense of
another.'
This does not find clear application to the case at bar, for
the reason that it is not the William Lines, Inc., owners of the MV
Henry I which is claiming for damages or remuneration,
because it has waived all such claims, but the plaintiff herein is
the Captain of the salvaging ship, who has not shown that, in his
voluntary act done towards and which benefited the MV Don
Alfredo, he had been unduly prejudiced by his employers, the
said William Lines, Incorporated.
"What about equity? Does not equity permit plaintiff to
recover for his services rendered and sacrifices made? In this
jurisdiction, equity may only be taken into account when the
circumstances warrant its application, and in the absence of any
provision of law governing the matter under litigation. That is not
so in the present case.
"In view of the foregoing, judgment is hereby rendered
dismissing the case with costs against the plaintiff; and
inasmuch as the plaintiff has not been found to have brought the
case maliciously, the counterclaim of the defendant is, likewise,
dismissed, without pronouncement as to costs.
"SO ORDERED."
The main issue to be resolved in this appeal is, whether under
the facts of the case, the service rendered by plaintiff to defendant
constituted "salvage" or "towage", and if so, whether plaintiff may
recover from defendant compensation for such service.
The pertinent provision of the Salvage Law (Act No. 2616),
provides:
"SECTION 1. When in case of shipwreck, the vessel or
its cargo shall be beyond the control of the crew, or shall have
been abandoned by them, and picked up and conveyed to a
safe place by other persons, the latter shall be entitled to a
reward for the salvage.
"Those who, not being included in the above paragraph,
assist in saving a vessel or its cargo from shipwreck, shall be
entitled to a like reward."
According to this provision, those who assist in saving a vessel
or its cargo from shipwreck, shall be entitled to a reward (salvage).
"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."
(Blackwall vs. Saucelito Tug Company, 10 Wall. 1, 12, cited in
Erlanger & Galinger vs. Swedish East Asiatic Co., Ltd., 34 Phil. 178.)
In the Erlanger & Galinger case, it was held that 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. 1
Was there a marine peril, in the instant case, to justify a valid
salvage claim by plaintiff against defendant? Like the trial court, we do
not think there was. It appears that although the defendant's vessel in
question was, on the night of May 1, 1958, in a helpless condition due
to engine failure, it did not drift too far from the place where it was. As
found by the court a quo the weather was fair, clear, and good. The
waves were small and too slight, so much so, that there were only
ripples on the sea, which was quite smooth. During the towing of the
vessel on the same night, there was moonlight. Although said vessel
was drifting towards the open sea, there was no danger of its
foundering or being stranded, as it was far from any island or rocks. In
case of danger of stranding, its anchor could be released, to prevent
such occurrence. There was no danger that defendant's vessel would
sink in view of the smoothness of the sea and the fairness of the
weather. That there was absence of danger is shown by the fact that
said vessel or its crew did not even find it necessary to lower its launch
and two motor boats, in order 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, considering that even before the appellant extended
the help to the distress ship, a sister vessel was known to be on its
way to succor it.
If plaintiff's service to defendant does not constitute "salvage"
within the purview of the Salvage Law, can it be considered as a
quasi-contract of "towage" created in the spirit of the new Civil Code?
The answer seems to incline in the affirmative, for in consenting to
plaintiff's offer to tow the vessel, defendant (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 plaintiff, the William Lines, Incorporated.
"Tug which put line aboard liberty ship which was not in
danger or peril but which had reduced its engine speed because
of hot grounds, and assisted ship over bar and, thereafter,
dropped towline and stood by while ship proceeded to dock
under own power, was entitled, in absence of written agreement
as to amount to be paid for services, to payment for towage
services, and not for salvage services." (Sauce, et al. vs. United
States, et al., 107 F. Supp. 489).
If the contract thus created, in this case, 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.
"It often becomes material too, for courts to draw a
distinct line between salvage and towage; for the reason that a
reward ought sometimes to be given to the crew of the salvage
vessel and to other participants in salvage services, and such
reward should not be given if the services were held to be
merely towage." (The Rebecca Shepherd, 148 F. 731.)
"The master and members of the crew of a tug were not
entitled to participate in payment by liberty ship for services
rendered by tug which were towageservices and
not salvage services." (Sause, et al. vs. United States, et
al., supra).
"The distinction between salvage and towage is of
importance to the crew of the salvaging ship, for the following
reasons: If the contract for towage is in fact towage, then the
crew does not have any interest or rights in the remuneration
pursuant to the contract. But if the owners of the respective
vessels are of a salvage nature, the crew of the salvaging ship
is entitled to salvage, and can look to the salved vessel for its
share." (I Norris, The Law of Seamen, Sec. 222).
And, as the vessel-owner, William Lines, Incorporated, had expressly
waived its claim for compensation for the towage service rendered to
defendant, it is clear that plaintiff, whose right if at all depends upon
and not separate from the interest of his employer, is not entitled to
payment for such towage service.
Neither may plaintiff invoke equity in support of his claim for
compensation against defendant. There being an express provision of
law (Art. 2142, Civil Code) applicable to the relationship created in this
case, that is, that of a quasi-contract of towage where the crew is not
entitled to compensation separate from that of the vessel, there is no
occasion to resort to equitable considerations.
WHEREFORE, finding no reversible error in the decision of the
court a quo appealed from, the same is hereby affirmed in all respects,
with costs against the plaintiff-appellant. So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,
Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal, JJ., concur.
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