CASES:
a. Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation, 217
SCRA 359;
b. Chua Yek Hong vs. IAC, Dec. 14, 1988;
c. Monarch Insurance vs. CA, 281 SCRA 534;
d. PhilAmGen vs. CA, 273 SCRA 262;
e. Vasquez vs. CA, 138 SCRA 553;
f. Abueg vs. San Diego, 77 Phil 730;
g. Luzon Stevedoring vs. CA, Dec. 3, 1987;
h. Yangco vs. Laserna, Oct. 29, 1941;
i. Yu Con vs. Ipil, G.R. No. L-10195, Dec. 29, 1916;
j. Inter-Orient Maritime Enterprises vs. CA, 235 SCRA 267; Far Eastern Shipping vs. CA, Oct. 1,
1998;
k. Caltex Phils. vs. Sulpicio Lines, Inc., 315 SCRA 709;
l. Planters Products vs. CA, 226 SCRA 478;
m. A. Magsaysay, Inc. vs. Agan, Jan. 31, 1955;
n. Macondray vs. Provident Insurance Corporation, GR No. 154305, December 9, 2004
______________
a. Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation,
217 SCRA 359;
Facts: Petitioner is a corporation engaged in the business of maritime trade as a carrier. As such,
it owned and operated the M/V P/ ABOITIZ, a common carrier that sank on voyage from Hong
Kong to Manila. Private respondent GAFLAC is a foreign insurance company pursuing its remedy
as a subrogee of several cargo consignees whose respective cargo sank with the said vessel and
for which it has priory paid. The sinking of vessel gave rise to filling of suit to recover the lost cargo
either by shippers, their successors-in-interest, or the cargo insurers like GAFLAC as subrogees.
The sinking was initially investigated by the Board of Marine Inquiry, which found that such sinking
was due to fortuitous event.
Issue: Whether or not the doctrine of limited liability is applicable to the case?
Held: The real an hypothecary nature of maritime law simple means that the liability of the carrier
in connection with losses related to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the guaranty for their settlement. It has its
origin by reason of the conditions and risks attending maritime trade in its earliest years when
such trade was replete with innumerable and unknown hazards since vessels had to go through
largely uncharted waters to ply their trade. Thus, the liability of the vessel owner and agent arising
form the operation of such vessel were confined to the vessel itself, its equipment, freight and
insurance, if any, which limitation served to induce capitalist into effectively wagering their
resources against consideration of the large attainable in the trade.
b. Chua Yek Hong vs. IAC, Dec. 14, 1988;
G.R. No. 74811 September 30, 1988
FACTS:
Petitioner contracted with the herein private respondent to deliver 1,000 sacks of copra, valued at
P101,227.40, on board the vessel M/V Luzviminda I owned by the latter. However it did not reach
its destination, the vessel capsized and sank with all its cargo.
Petitioner instituted a complaint against private respondent for breach of contract incurring
damages.
Private respondent’s defense is that even assuming that the alleged cargo was truly loaded aboard
their vessel, their liability had been extinguished by reason of the total loss of said vessel.
RTC rendered judgment in favor of Chua Yek Hong however CA reversed the decision by applying
Article 587 of the Code of Commerce and the doctrine in Yangco vs. Lasema (73 Phil. 330 [1941])
and held that private respondents' liability, as ship owners, for the loss of the cargo is merely co-
extensive with their interest in the vessel such that a total loss thereof results in its extinction.
ISSUE:
Whether or not respondent Appellate Court erred in applying the doctrine of limited liability under
Article 587 of the Code of Commerce as expounded in Yangco vs. Laserna, supra.
HELD:
As this Court held:
If the ship owner or agent may in any way be held civilly liable at all for injury to or death of
passengers arising from the negligence of the captain in cases of collisions or shipwrecks, his
liability is merely co-extensive with his interest in the vessel such that a total loss thereof results
in its extinction. (Yangco vs. Laserna, et al., supra).
The limited liability rule, however, is not without exceptions, namely: (1) where the injury or death
to a passenger is due either to the fault of the ship owner, or to the concurring negligence of the
ship owner and the captain (Manila Steamship Co., Inc. vs. Abdulhaman supra); (2) where the
vessel is insured; and (3) in workmen's compensation claims Abueg vs. San Diego, supra). In this
case, there is nothing in the records to show that the loss of the cargo was due to the fault of the
private respondent as shipowners, or to their concurrent negligence with the captain of the vessel.
The judgment sought to be reviewed is hereby AFFIRMED.
c. Monarch Insurance vs. CA, 281 SCRA 534;
G.R. No. 92735. June 8, 2000
FACTS:
Monarch and Tabacalera are insurance carriers of lost cargoes. They indemnified the shippers
and were consequently subrogated to their rights, interests and actions against Aboitiz, the cargo
carrier. Because Aboitiz refused to compensate Monarch, it filed two complaints against Aboitiz
which were consolidated and jointly tried.
Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was
due to force majeure or an act of God. Aboitiz was subsequently declared as in default and allowed
Monarch and Tabacalera to present evidence ex-parte.
ISSUE:
Whether or not the doctrine of limited liability applies in the instant case.
HELD:
Yes.
The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/or negligence
in the sinking of its vessel in the face of the foregoing expert testimony constrains us to hold that
Aboitiz was concurrently at fault and/or negligent with the ship captain and crew of the M/V P.
Aboitiz. [This is in accordance with the rule that in cases involving the limited liability of shipowners,
the initial burden of proof of negligence or unseaworthiness rests on the claimants. However, once
the vessel owner or any party asserts the right to limit its liability, the burden of proof as to lack of
privity or knowledge on its part with respect to the matter of negligence or unseaworthiness is
shifted to it. This burden, Aboitiz had unfortunately failed to discharge.] That Aboitiz failed to
discharge the burden of proving that the unseaworthiness of its vessel was not due to its fault
and/or negligence should not however mean that the limited liability rule will not be applied to the
present cases. The peculiar circumstances here demand that there should be no strict adherence
to procedural rules on evidence lest the just claims of shippers/insurers be frustrated. The rule on
limited liability should be applied in accordance with the latest ruling in Aboitiz Shipping
Corporation v. General Accident Fire and Life Assurance Corporation, Ltd.,] promulgated on
January 21, 1993, that claimants be treated as "creditors in an insolvent corporation whose assets
are not enough to satisfy the totality of claims against it.”

d. PhilAmGen vs. CA, 273 SCRA 262;

e. Vasquez vs. CA, 138 SCRA 553

Facts: MV Pioneer Cebu left the port of Manila and bounded for Cebu. Its officers were aware of
the upcoming typhoon Klaring that is already building up somewhere in Mindanao. There being
no typhoon signals on their route, they proceeded with their voyage. When they reached the island
of Romblon, the captain decided not to seek shelter since the weather was still good. They
continued their journey until the vessel reached the island of Tanguingui, while passing through
the island the weather suddenly changed and heavy rains fell. Fearing that they might hit
Chocolate island due to zero visibility, the captain ordered to reverse course the vessel so that
they could weather out the typhoon by facing the strong winds and waves. Unfortunately, the
vessel struck a reef near Malapascua Island, it sustained a leak and eventually sunk.

The parents of the passengers who were lost due to that incident filed an action against Filipinas
Pioneer Lines for damages. The defendant pleaded force majeure but the Trial Court ruled in favor
of the plaintiff. On appeal to the Court of Appeals, it reversed the decision of the lower stating that
the incident was a force majeure and absolved the defendants from liability.

Issue: Whether of not Filipinas Pioneer Lines is liable for damages and presumed to be at fault for
the death of its passenger?

Held: The Supreme Court held the Filipinas Pioneer Lines failed to observe that extraordinary
diligence required of them by law for the safety of the passengers transported by them with due
regard for all necessary circumstance and unnecessarily exposed the vessel to tragic mishap.
Despite knowledge of the fact that there was a typhoon, they still proceeded with their voyage
relying only on the forecast that the typhoon would weaken upon crossing the island of Samar.
The defense of caso fortuito is untenable. To constitute caso fortuito to exempt a person from
liability it necessary that the event must be independent from human will, the occurrence must
render it impossible for the debtor to fulfill his obligation in a normal manner, the obligor must be
free from any participation or aggravation to the injury of the creditor. Filipina Pioneer Lines failed
to overcome that presumption o fault or negligence that arises in cases of death or injuries to
passengers.

f. Abueg vs. San Diego, 77 Phil 730;

g. Luzon Stevedoring vs. CA, Dec. 3, 1987;
Facts: A maritime collision occurred between the tanker CAVITE owned by LSCO and MV
Fernando Escano (a passenger ship) owned by Escano, as a result the passenger ship sunk. An
action in admiralty was filed by Escano against Luzon. The trial court held that LSCO Cavite was
solely to blame for the collision and held that Luzon’s claim that its liability should be limited under
Article 837 of the Code of Commerce has not been established. The Court of Appeals affirmed
the trial court. The SC also affirmed the CA. Upon two motions for reconsideration, the Supreme
Court gave course to the petition.
vessels carried; BUT he may exempt himself therefrom by abandoning the vessel with all her
equipment and the freight he may have earned during the voyage.”
Whether the abandonment of the vessel sought by the petitioner in the case was in accordance
with the law or not, is immaterial. The vessel having totally perished, any act of abandonment
would be idle ceremony.
“NO VESSEL, NO LIABILITY.”

Issue: Whether or not in order to claim limited liability under Article 837 of the Code of Commerce, i. Yu Con vs. Ipil, G.R. No. L-10195, Dec. 29, 1916;
it is necessary that the owner abandon the vessel

Held: Yes, abandonment is necessary to claim the limited liability wherein it shall be limited to the
value of the vessel with all the appurtenances and freightage earned in the voyage. However, if
the injury was due to the ship owner’s fault, the ship owner may not avail of his right to avail of
limited liability by abandoning the vessel.

The real nature of the liability of the ship owner or agent is embodied in the Code of Commerce.
Articles 587, 590 and 837 are intended to limit the liability of the ship owner, provided that the
owner or agent abandons the vessel. Although Article 837 does not specifically provide that in
case of collision there should be abandonment, to enjoy such limited liability, said article is a mere
amplification of the provisions of Articles 587 and 590 which makes it a mere superfluity.

The exception to this rule in Article 837 is when the vessel is totally lost in which case there is no
vessel to abandon, thus abandonment is not required. Because of such loss, the liability of the
owner or agent is extinguished. However, they are still personally liable for claims under the
Workmen’s Compensation Act and for repairs on the vessel prior to its loss.

In case of illegal or tortious acts of the captain, the liability of the owner and agent is subsidiary.
In such cases, the owner or agent may avail of Article 837 by abandoning the vessel. But if the
injury is caused by the owner’s fault as where he engages the services of an inexperienced captain
or engineer, he cannot avail of the provisions of Article 837 by abandoning the vessel. He is
personally liable for such damages.

In this case, the Court held that the petitioner is a t fault and since he did not abandon the vessel,
he cannot invoke the benefit of Article 837 to limit his liability to the value of the vessel, all
appurtenances and freightage earned during the voyage.

h. Yangco vs. Laserna, Oct. 29, 1941;

Facts: On the afternoon of May 26, 1927, the steamer SS Negros left the port of Romblon on its
return trip to Manila. Typhoon signal no. 2 was then up and in fact, the passengers duly advised
the captain before sailing. The boat was overloaded. After 2 hours of sailing, the boat encountered
strong winds and rough seas between the islands of Banton and Simara. While in the act of
maneuvering, the vessel was caught sidewise by a big wave which caused it to capsize and sink.
Many of the passengers died on the mishap. Civil actions were instituted in the CFI of Capiz, the
petitioner sought to abandon the vessel to the plaintiffs in three cases.

Issue: Whether the shipowner or agent is liable for damages for the consequent death of its
passengers notwithstanding the total loss of the vessel?

Held: The petitioner is absolved from all complaints.

Under Article 587 – “the ship agent shall also be civilly liable for indemnities in favor of third
persons which arise from the conduct of the captain in the vigilance over the goods which the
j. Inter-Orient Maritime Enterprises vs. CA, 235 SCRA 267;
Private respondent Captain Rizalino Tayong, a licensed Master Mariner with experience in
commanding ocean-going vessels, was employed on 6 July 1989 by petitioners Trenda World
Shipping (Manila), Inc. and Sea Horse Ship Management, Inc. through petitioner Inter-Orient
Maritime Enterprises, Inc. as Master of the vessel M/V Oceanic Mindoro, for a period of one (1)
year, as evidenced by an employment contract. On 15 July 1989, Captain Tayong assumed
command of petitioners' vessel at the port of Hongkong. His instructions were to replenish bunker
and diesel fuel, to sail forthwith to Richard Bay, South Africa, and there to load 120,000 metric
tons of coal.
On 16 July 1989, while at the Port of Hongkong and in the process of unloading cargo, Captain
Tayong received a weather report that a storm code-named "Gordon" would shortly hit Hongkong.
Precautionary measures were taken to secure the safety of the vessel, as well as its crew,
considering that the vessel's turbo-charger was leaking and the vessel was fourteen (14) years
old.
On 21 July 1989, Captain Tayong followed-up the requisition by the former captain of the Oceanic
Mindoro for supplies of oxygen and acetylene, necessary for the welding-repair of the turbo-
charger and the economizer.1 This requisition had been made upon request of the Chief Engineer
of the vessel and had been approved by the shipowner.2
On 25 July 1989, the vessel sailed from Hong Kong for Singapore. In the Master's sailing message,
Captain Tayong reported a water leak from M.E. Turbo Charger No. 2 Exhaust gas casing. He
was subsequently instructed to blank off the cooling water and maintain reduced RPM unless
authorized by the owners.3
On 29 July 1989, while the vessel was en route to Singapore, Captain Tayong reported that the
vessel had stopped in mid-ocean for six (6) hours and forty-five (45) minutes due to a leaking
economizer. He was instructed to shut down the economizer and use the auxiliary boiler instead.4
On 31 July 1989 at 0607 hrs., the vessel arrived at the port of Singapore.5 The Chief Engineer
reminded Captain Tayong that the oxygen and acetylene supplies had not been delivered.6
Captain Tayong inquired from the ship's agent in Singapore about the supplies. The ship agent
stated that these could only be delivered at 0800 hours on August 1, 1989 as the stores had
closed.7
Captain Tayong called the shipowner, Sea Horse Ship Management, Ltd., in London and informed
them that the departure of the vessel for South Africa may be affected because of the delay in the
delivery of the supplies.8
Sea Horse advised Captain Tayong to contact its Technical Director, Mr. Clark, who was in Tokyo
and who could provide a solution for the supply of said oxygen and acetylene.9
On the night of 31 July 1989, Mr. Clark received a call from Captain Tayong informing him that the
vessel cannot sail without the oxygen and acetylene for safety reasons due to the problems with
the turbo charger and economizer. Mr. Clark responded that by shutting off the water to the turbo
chargers and using the auxiliary boiler, there should be no further problems. According to Mr.
Clark, Captain Tayong agreed with him that the vessel could sail as scheduled on 0100 hours on
1 August 1989 for South Africa.10
According to Captain Tayong, however, he communicated to Sea Horse his reservations regarding
proceeding to South Africa without the requested supplies,11 and was advised by Sea Horse to
wait for the supplies at 0800 hrs. of 1 August 1989, which Sea Horse had arranged to be delivered
on board the Oceanic Mindoro.12 At 0800 hours on 1 August 1989, the requisitioned supplies
were delivered and Captain Tayong immediately sailed for Richard Bay.
When the vessel arrived at the port of Richard Bay, South Africa on 16 August 1989, Captain
Tayong was instructed to turn-over his post to the new captain. He was thereafter repatriated to
the Philippines, after serving petitioners for a little more than two weeks.13 He was not informed
of the charges against him.14
On 5 October 1989, Captain Tayong instituted a complaint for illegal dismissal before the
Philippine Overseas Employment Administration ("POEA"), claiming his unpaid salary for the
unexpired portion of the written employment contract, plus attorney's fees.
Petitioners, in their answer to the complaint, denied that they had illegally dismissed Captain
Tayong. Petitioners alleged that he had refused to sail immediately to South Africa to the prejudice
and damage of petitioners. According to petitioners, as a direct result of Captain Tayong's delay,
petitioners' vessel was placed "off-hire" by the charterers for twelve (12) hours. This meant that
the charterers refused to pay the charter hire or compensation corresponding to twelve (12) hours,
amounting to US$15,500.00, due to time lost in the voyage. They stated that they had dismissed
private respondent for loss of trust and confidence.
The POEA dismissed Captain Tayong's complaint and held that there was valid cause for his
untimely repatriation. The decision of the POEA placed considerable weight on petitioners'
assertion that all the time lost as a result of the delay was caused by Captain Tayong and that his
concern for the oxygen and acetylene was not legitimate as these supplies were not necessary or
indispensable for running the vessel. The POEA believed that the Captain had unreasonably
refused to follow the instructions of petitioners and their representative, despite petitioners' firm
assurances that the vessel was seaworthy for the voyage to South Africa.
On appeal, the National Labor Relations Commission ("NLRC") reversed and set aside the
decision of the POEA. The NLRC found that Captain Tayong had not been afforded an opportunity
to be heard and that no substantial evidence was adduced to establish the basis for petitioners'
loss of trust or confidence in the Captain. The NLRC declared that he had only acted in accordance
with his duties to maintain the seaworthiness of the vessel and to insure the safety of the ship and
the crew. The NLRC directed petitioners to pay the Captain (a) his salary for the unexpired portion
of the contract at US$1,900.00 a month, plus one (1) month leave benefit; and (b) attorney's fees
equivalent to ten percent (10%) of the total award due.
Petitioners, before this Court, claim that the NLRC had acted with grave abuse of discretion.
Petitioners allege that they had adduced sufficient evidence to establish the basis for private
respondent's discharge, contrary to the conclusion reached by the NLRC. Petitioners insist that
Captain Tayong, who must protect the interest of petitioners, had caused them unnecessary
damage, and that they, as owners of the vessel, cannot be compelled to keep in their employ a
captain of a vessel in whom they have lost their trust and confidence. Petitioners finally contend
that the award to the Captain of his salary corresponding to the unexpired portion of the contract
and one (1) month leave pay, including attorney's fees, also constituted grave abuse of discretion.
The petition must fail.
We note preliminarily that petitioners failed to attach a clearly legible, properly certified, true copy
of the decision of the NLRC dated 23 April 1994, in violation of requirement no. 3 of Revised
Circular No. 1-88. On this ground alone, the petition could have been dismissed. But the Court
chose not to do so, in view of the nature of question here raised and instead required private
respondent to file a comment on the petition. Captain Tayong submitted his comment. The Office
of the Solicitor General asked for an extension of thirty (30) days to file its comment on behalf of
the NLRC. We consider that the Solicitor General's comment may be dispensed with in this case.
It is well settled in this jurisdiction that confidential and managerial employees cannot be arbitrarily
dismissed at any time, and without cause as reasonably established in an appropriate
investigation.15 Such employees, too, are entitled to security of tenure, fair standards of
employment and the protection of labor laws.
The captain of a vessel is a confidential and managerial employee within the meaning of the above
doctrine. A master or captain, for purposes of maritime commerce, is one who has command of a
vessel. A captain commonly performs three (3) distinct roles: (1) he is a general agent of the
shipowner; (2) he is also commander and technical director of the vessel; and (3) he is a
representative of the country under whose flag he navigates.16 Of these roles, by far the most
important is the role performed by the captain as commander of the vessel; for such role (which,
to our mind, is analogous to that of "Chief Executive Officer" [CEO] of a present-day corporate
enterprise) has to do with the operation and preservation of the vessel during its voyage and the
protection of the passengers (if any) and crew and cargo. In his role as general agent of the
shipowner, the captain has authority to sign bills of lading, carry goods aboard and deal with the
freight earned, agree upon rates and decide whether to take cargo. The ship captain, as agent of
the shipowner, has legal authority to enter into contracts with respect to the vessel and the trading
of the vessel, subject to applicable limitations established by statute, contract or instructions and
regulations of the shipowner.17 To the captain is committed the governance, care and
management of the vessel.18 Clearly, the captain is vested with both management and fiduciary
functions.
It is plain from the records of the present petition that Captain Tayong was denied any opportunity
to defend himself. Petitioners curtly dismissed him from his command and summarily ordered his
repatriation to the Philippines without informing him of the charge or charges levelled against him,
and much less giving him a chance to refute any such charge. In fact, it was only on 26 October
1989 that Captain Tayong received a telegram dated 24 October 1989 from Inter-Orient requiring
him to explain why he delayed sailing to South Africa.
We also find that the principal contention of petitioners against the decision of the NLRC pertains
to facts, that is, whether or not there was actual and sufficient basis for the alleged loss of trust or
confidence. We have consistently held that a question of "fact" is, as a general rule, the concern
solely of an administrative body, so long as there is substantial evidence of record to sustain its
action.
The record requires us to reject petitioners' claim that the NLRC's conclusions of fact were not
supported by substantial evidence. Petitioners rely on self-serving affidavits of their own officers
and employees predictably tending to support petitioners' allegation that Captain Tayong had
performed acts inimical to petitioners' interests for which, supposedly, he was discharged. The
official report of Mr. Clark, petitioners' representative, in fact supports the NLRC's conclusion that
private respondent Captain did not arbitrarily and maliciously delay the voyage to South Africa.
There had been, Mr. Clark stated, a disruption in the normal functioning of the vessel's turbo-
charger19 and economizer and that had prevented the full or regular operation of the vessel. Thus,
Mr. Clark relayed to Captain Tayong instructions to "maintain reduced RPM" during the voyage to
South Africa, instead of waiting in Singapore for the supplies that would permit shipboard repair
of the malfunctioning machinery and equipment.
More importantly, a ship's captain must be accorded a reasonable measure of discretionary
authority to decide what the safety of the ship and of its crew and cargo specifically requires on a
stipulated ocean voyage. The captain is held responsible, and properly so, for such safety. He is
right there on the vessel, in command of it and (it must be presumed) knowledgeable as to the
specific requirements of seaworthiness and the particular risks and perils of the voyage he is to
embark upon. The applicable principle is that the captain has control of all departments of service
in the vessel, and reasonable discretion as to its navigation.20 It is the right and duty of the captain,
in the exercise of sound discretion and in good faith, to do all things with respect to the vessel and
its equipment and conduct of the voyage which are reasonably necessary for the protection and
preservation of the interests under his charge, whether those be of the shipowners, charterers,
cargo owners or of underwriters.21 It is a basic principle of admiralty law that in navigating a
merchantman, the master must be left free to exercise his own best judgment. The requirements
of safe navigation compel us to reject any suggestion that the judgment and discretion of the
captain of a vessel may be confined within a straitjacket, even in this age of electronic
communications.22 Indeed, if the ship captain is convinced, as a reasonably prudent and
competent mariner acting in good faith that the shipowner's or ship agent's instructions (insisted
upon by radio or telefax from their offices thousands of miles away) will result, in the very specific
circumstances facing him, in imposing unacceptable risks of loss or serious danger to ship or crew,
he cannot casually seek absolution from his responsibility, if a marine casualty occurs, in such
instructions.23
Compagnie de Commerce v. Hamburg24 is instructive in this connection. There, this Court
recognized the discretionary authority of the master of a vessel and his right to exercise his best
judgment, with respect to navigating the vessel he commands. In Compagnie de Commerce, a
charter party was executed between Compagnie de Commerce and the owners of the vessel
Sambia, under which the former as charterer loaded on board the Sambia, at the port of Saigon,
certain cargo destined for the Ports of Dunkirk and Hamburg in Europe. The Sambia, flying the
German flag, could not, in the judgment of its master, reach its ports of destination because war
(World War I) had been declared between Germany and France. The master of the Sambia
decided to deviate from the stipulated voyage and sailed instead for the Port of Manila. Compagnie
de Commerce sued in the Philippines for damages arising from breach of the charter party and
unauthorized sale of the cargo. In affirming the decision of the trial court dismissing the complaint,
our Supreme Court held that the master of the Sambia had reasonable grounds to apprehend that
the vessel was in danger of seizure or capture by the French authorities in Saigon and was justified
by necessity to elect the course which he took — i.e., to flee Saigon for the Port of Manila — with
the result that the shipowner was relieved from liability for the deviation from the stipulated route
and from liability for damage to the cargo. The Court said:
The danger from which the master of the Sambia fled was a real and not merely an imaginary one
as counsel for shipper contends. Seizure at the hands of an "enemy of the King" though not
inevitable, was a possible outcome of a failure to leave the port of Saigon; and we cannot say that
under the conditions existing at the time when the master elected to flee from that port, there were
no grounds for a "reasonable apprehension of danger" from seizure by the French authorities, and
therefore no necessity for flight.
The word "necessity" when applied to mercantile affairs, where the judgment must in the nature
of things be exercised, cannot, of course, mean an irresistible compelling power. What is meant
by it in such cases is the force of circumstances which determine the course a man ought to take.
Thus, where by the force of circumstances, a man has the duty cast upon him of taking some
action for another, and under that obligation adopts a course which, to the judgment of a wise and
prudent man, is apparently the best for the interest of the persons for whom he acts in a given
emergency, it may properly be said of the course so taken that it was in a mercantile sense
necessary to take it.25 (Emphasis supplied)
Compagnie de Commerce contended that the shipowner should, at all events, be held responsible
for the deterioration in the value of the cargo incident to its long stay on board the vessel from the
date of its arrival in Manila until the cargo was sold. The Supreme Court, in rejecting this contention
also, declared that:
But it is clear that the master could not be required to act on the very day of his arrival; or before
he had a reasonable opportunity to ascertain whether he could hope to carry out his contract and
earn his freight; and that he should not be held responsible for a reasonable delay incident to an
effort to ascertain the wishes of the freighter, and upon failure to secure prompt advice, to decide
for himself as to the course which he should adopt to secure the interests of the absent owner of
the property aboard the vessel.
The master is entitled to delay for such a period as may be reasonable under the circumstances,
before deciding on the course he will adopt. He may claim a fair opportunity of carrying out a
contract, and earning the freight, whether by repairing or transhipping. Should the repair of the
ship be undertaken, it must be proceeded with diligently; and if so done, the freighter will have no
ground of complaint, although the consequent delay be a long one, unless, indeed, the cargo is
perishable, and likely to be injured by the delay. Where that is the case, it ought to be forwarded,
or sold, or given up, as the case may be, without waiting for repairs.
A shipowner or shipmaster (if communication with the shipowner is impossible), will be allowed a
reasonable time in which to decide what course he will adopt in such cases as those under
discussion; time must be allowed to him to ascertain the facts, and to balance the conflicting
interests involved, of shipowner, cargo owner, underwriter on ship and freight. But once the time
has elapsed, he is bound to act promptly according as he has elected either to repair, or abandon
the voyage, or tranship. If he delays, and owing to that delay a perishable cargo suffers damage,
the shipowner will be liable for that damage; he cannot escape that obligation by pleading the
absence of definite instructions from the owners of the cargo or their underwriters, since he has
control of the cargo and is entitled to elect.26 (Emphasis supplied)
The critical question, therefore, is whether or not Captain Tayong had reasonable grounds to
believe that the safety of the vessel and the crew under his command or the possibility of
substantial delay at sea required him to wait for the delivery of the supplies needed for the repair
of the turbo-charger and the economizer before embarking on the long voyage from Singapore to
South Africa.
In this connection, it is specially relevant to recall that, according to the report of Mr. Robert Clark,
Technical Director of petitioner Sea Horse Ship Management, Inc., the Oceanic Mindoro had
stopped in mid-ocean for six (6) hours and forty-five (45) minutes on its way to Singapore because
of its leaking economizer.27 Equally relevant is the telex dated 2 August 1989 sent by Captain
Tayong to Sea Horse after Oceanic Mindoro had left Singapore and was en route to South Africa.
In this telex, Captain Tayong explained his decision to Sea Horse in the following terms:
I CAPT. R.D. TAYONG RE: UR PROBLEM IN SPORE (SINGAPORE) I EXPLAIN AGN TO YOU
THAT WE ARE INSECURITY/DANGER TO SAIL IN SPORE W/OUT HAVING SUPPLY OF
OXY/ACET. PLS UNDERSTAND HV PLENTY TO BE DONE REPAIR FM MAIN ENGINE LIKE
TURBO CHARGER PIPELINE, ECONOMIZER LEAKAGE N ETC WE COULD NOT FIX IT
W/OUT OXY/ACET ONBOARD. I AND MR. CLARK WE CONTACTED EACH OTHER BY PHONE
IN PAPAN N HE ADVSED US TO SAIL TO RBAY N WILL SUPPLY OXY/ACET UPON ARRIVAL
RBAY HE ALSO EXPLAINED TO MY C/E HOW TO FIND THE REMEDY W/OUT OXY/ACET
BUT C/E HE DISAGREED MR. CLARK IDEA, THAT IS WHY WE URG REQUEST[ED] YR KIND
OFFICE TO ARRANGE SUPPLY OXY/ACET BEFORE SAILING TO AVOID RISK/DANGER OR
DELAY AT SEA N WE TOOK PRECAUTION UR TRIP FOR 16 DAYS FM SPORE TO RBAY.
PLS. UNDERSTAND UR SITUATION.28 (Emphasis partly in source and partly supplied)
Under all the circumstances of this case, we, along with the NLRC, are unable to hold that Captain
Tayong's decision (arrived at after consultation with the vessel's Chief Engineer) to wait seven (7)
hours in Singapore for the delivery on board the Oceanic Mindoro of the requisitioned supplies
needed for the welding-repair, on board the ship, of the turbo-charger and the economizer
equipment of the vessel, constituted merely arbitrary, capricious or grossly insubordinate behavior
on his part. In the view of the NLRC, that decision of Captain Tayong did not constitute a legal
basis for the summary dismissal of Captain Tayong and for termination of his contract with
petitioners prior to the expiration of the term thereof. We cannot hold this conclusion of the NLRC
to be a grave abuse of discretion amounting to an excess or loss of jurisdiction; indeed, we share
that conclusion and make it our own.
Clearly, petitioners were angered at Captain Tayong's decision to wait for delivery of the needed
supplies before sailing from Singapore, and may have changed their estimate of their ability to
work with him and of his capabilities as a ship captain. Assuming that to be petitioners'
management prerogative, that prerogative is nevertheless not to be exercised, in the case at bar,
at the cost of loss of Captain Tayong's rights under his contract with petitioners and under
Philippine law.
ACCORDINGLY, petitioners having failed to show grave abuse of discretion amounting to loss or
excess of jurisdiction on the part of the NLRC in rendering its assailed decision, the Petition for
Certiorari is hereby DISMISSED, for lack of merit. Costs against petitioners.
SO ORDERED.
Far Eastern Shipping vs. CA, Oct. 1, 1998;
FACTS:
M/V PAVLODAR, owned and operated by the Far Eastern Shipping Company (FESC), arrived at
the Port of Manila and was assigned Berth 4 of the Manila International Port, as its berthing space.
Gavino, who was assigned by the Appellant Manila Pilots’ Association to conduct the docking
maneuvers for the safe berthing, boarded the vessel at the quarantine anchorage and stationed
himself in the bridge, with the master of the vessel, Victor Kavankov, beside him. After a briefing
of Gavino by Kavankov of the particulars of the vessel and its cargo, the vessel lifted anchor from
the quarantine anchorage and proceeded to the Manila International Port. The sea was calm and
the wind was ideal for docking maneuvers. When the vessel reached the landmark, one-half mile
from the pier, Gavino ordered the engine stopped. When the vessel was already about 2,000 feet
from the pier, Gavino ordered the anchor dropped. Kavankov relayed the orders to the crew of the
vessel on the bow. The left anchor, with two (2) shackles, were dropped. However, the anchor did
not take hold as expected. The speed of the vessel did not slacken. A commotion ensued between
the crew members. After Gavino noticed that the anchor did not take hold, he ordered the engines
half-astern. Abellana, who was then on the pier apron, noticed that the vessel was approaching
the pier fast. Kavankov likewise noticed that the anchor did not take hold. Gavino thereafter gave
the “full-astern” code. Before the right anchor and additional shackles could be dropped, the bow
of the vessel rammed into the apron of the pier causing considerable damage to the pier as well
as the vessel.
ISSUES:
(1) Is the pilot of a commercial vessel, under compulsory pilotage, solely liable for the damage
caused by the vessel to the pier, at the port of destination, for his negligence?;
(2) Would the owner of the vessel be liable likewise if the damage is caused by the concurrent
negligence of the master of the vessel and the pilot under a compulsory pilotage?
HELD:
(1) Generally speaking, the pilot supersedes the master for the time being in the command and
navigation of the ship, and his orders must be obeyed in all matters connected with her navigation.
He becomes the master pro hac vice and should give all directions as to speed, course, stopping
and reversing anchoring, towing and the like. And when a licensed pilot is employed in a place
where pilotage is compulsory, it is his duty to insist on having effective control of the vessel or to
decline to act as pilot. Under certain systems of foreign law, the pilot does not take entire charge
of the vessel but is deemed merely the adviser of the master, who retains command and control
of the navigation even in localities where pilotage is compulsory. It is quite common for states and
localities to provide for compulsory pilotage, and safety laws have been enacted requiring vessels
approaching their ports, with certain exceptions, to take on board pilots duly licensed under local
law. The purpose of these laws is to create a body of seamen thoroughly acquainted with the
harbor, to pilot vessels seeking to enter or depart, and thus protect life and property from the
dangers of navigation. Upon assuming such office as a compulsory pilot, Capt. Gavino is held to
the universally accepted high standards of care and diligence required of a pilot, whereby he
assumes to have skill and knowledge in respect to navigation in the particular waters over which
his license extends superior to and more to be trusted than that of the master. He is not held to
the highest possible degree of skill and care but must have and exercise the ordinary skill and
care demanded by the circumstances, and usually shown by an expert in his profession. Under
extraordinary circumstances, a pilot must exercise extraordinary care. In this case, Capt. Gavino
failed to measure up to such strict standard of care and diligence required of pilots in the
performance of their duties. As the pilot, he should have made sure that his directions were
promptly and strictly followed.
(2) The negligence on the part of Capt. Gavino is evident; but Capt. Kabancov is no less
responsible for the allision. The master is still in command of the vessel notwithstanding the
presence of a pilot. A perusal of Capt. Kabankov’s testimony makes it apparent that he was remiss
in the discharge of his duties as master of the ship, leaving the entire docking procedure up to the
pilot, instead of maintaining watchful vigilance over this risky maneuver. The owners of a vessel
are not personally liable for the negligent acts of a compulsory pilot, but by admiralty law, the fault
or negligence of a compulsory pilot is imputable to the vessel and it may be held liable therefor in
rem. Where, however, by the provisions of the statute the pilot is compulsory only in the sense
that his fee must be paid, and is not in compulsory charge of the vessel, there is no exemption
from liability. Even though the pilot is compulsory, if his negligence was not the sole cause of the
injury, but the negligence of the master or crew contributed thereto, the owners are liable. But the
liability of the ship in rem does not release the pilot from the consequences of his own negligence.
The master is not entirely absolved of responsibility with respect to navigation when a compulsory
pilot is in charge. Except insofar as their liability is limited or exempted by statute, the vessel or
her owners are liable for all damages caused by the negligence or other wrongs of the owners or
those in charge of the vessel. As a general rule, the owners or those in possession and control of
a vessel and the vessel are liable for all natural and proximate damages caused to persons or
property by reason of her negligent management or navigation.
k. Caltex Phils. vs. Sulpicio Lines, Inc., 315 SCRA 709;
Lessons Applicable: Charter Party (Transportation)
Facts:
On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex, collided
in the open sea with passenger ship MV Doña Paz, causing the death of all but 25 of the latter’s
passengers. Among those who died were Sebastian Canezal and his daughter Corazon Canezal.
On March 22, 1988, the board of marine inquiry found that Vector Shipping Corporation was at
fault. On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal’s wife
and mother respectively, filed with the Regional Trial Court of Manila a complaint for damages
arising from breach of contract of carriage against Sulpicio Lines. Sulpicio filed a third-party
complaint against Vector and Caltex. The trial court dismissed the complaint against Caltex, but
the Court of Appeals included the same in the liability. Hence, Caltex filed this petition.
Issue:
Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered
vessel and a passenger ship?
Held:
First: The charterer has no liability for damages under Philippine Maritime laws.
Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter.
A charter party is a contract by which an entire ship, or some principal part thereof, is let by the
owner to another person for a specified time or use; a contract of affreightment is one by which
the owner of a ship or other vessel lets the whole or part of her to a merchant or other person for
the conveyance of goods, on a particular voyage, in consideration of the payment of freight. A
contract of affreightment may be either time charter, wherein the leased vessel is leased to the
charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single
voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a
determinate period of time or for a single or consecutive voyage, the ship owner to supply the
ship’s store, pay for the wages of the master of the crew, and defray the expenses for the
maintenance of the ship. If the charter is a contract of affreightment, which leaves the general
owner in possession of the ship as owner for the voyage, the rights and the responsibilities of
ownership rest on the owner. The charterer is free from liability to third persons in respect of the
ship.
Second: MT Vector is a common carrier
The charter party agreement did not convert the common carrier into a private carrier. The parties
entered into a voyage charter, which retains the character of the vessel as a common carrier. It is
imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or
portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in
the case of a time-charter or voyage charter. It is only when the charter includes both the vessel
and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar
as the particular voyage covering the charter-party is concerned. Indubitably, a ship-owner in a
time or voyage charter retains possession and control of the ship, although her holds may, for the
moment, be the property of the charterer. A common carrier is a person or corporation whose
regular business is to carry passengers or property for all persons who may choose to employ and
to remunerate him. 16 MT Vector fits the definition of a common carrier under Article 1732 of the
Civil Code.
The public must of necessity rely on the care and skill of common carriers in the vigilance over the
goods and safety of the passengers, especially because with the modern development of science
and invention, transportation has become more rapid, more complicated and somehow more
hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct
an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its
seaworthiness.
Third: Is Caltex liable for damages under the Civil Code?
The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel
it chartered complied with all legal requirements. The duty rests upon the common carrier simply
for being engaged in "public service." The relationship between the parties in this case is governed
by special laws. Because of the implied warranty of seaworthiness, shippers of goods, when
transacting with common carriers, are not expected to inquire into the vessel’s seaworthiness,
genuineness of its licenses and compliance with all maritime laws. To demand more from shippers
and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar
as the protection of the public in general is concerned. Such a practice would be an absurdity in a
business where time is always of the essence. Considering the nature of transportation business,
passengers and shippers alike customarily presume that common carriers possess all the legal
requisites in its operation.
l. Planters Products vs. CA, 226 SCRA 478;
Facts: Planters Product Inc. purchased from Mitsubishi international corporation metric tons of
Urea fertilizer, which the latter shipped aboard the cargo vessel M/V Sun Plum owned by private
respondent Kyosei Kisen Kabushiki Kaisha. Prior to its voyage, a time charter-party on the
vessel respondent entered into between Mitsubishi as shipper/charterer and KKKK as ship
owner, in Tokyo, Japan.
Before loading the fertilizer aboard the vessel, (4) of her holds were presumably inspected by
the charterer’s representative and found fit to take a load of urea in bulk. After the Urea fertilizer
was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel
hatches were closed with heavy iron lids. Upon arrival of vessel at port, the petitioner unloaded
the cargo pursuant to the terms and conditions of the charter-party. The hatches remained open
throughout the duration of the discharge.
Upon arrival at petitioner’s warehouse a survey conducted over the cargo revealed a shortage
and the most of the fertilizer was contaminated with dirt. As such, Planters filed an action for
damages. The defendant argued that the public policy governing common carriers do not apply
to them because they have become private carriers by reason of the provisions of the charter-
party.
Issue: Whether or not the charter-party contract between the ship owner and the charterer
transforms a common carrier into a private carrier?
Held: A charter party may either her be time charter wherein the vessel is leased to the
charterer, wherein the ship is leased to the charterer for a fixed period of time or voyage charter,
wherein the ship is leased for a single voyage. In both cases, the charter party provides for the
hire of the vessel only, either for a determinate time or for a single or consecutive voyage.
It is therefor imperative that such common carrier shall remain as such, notwithstanding the
charter of the whole or part of the vessel by one or more persons, provided the charter is limited
to the ship only, as in the case of a time-charter or voyage-charter. It is only when the charter
includes both ship and its crew as in bareboat or demise that it becomes a private carrier.
Undoubtedly, a shipowner in a time or voyage charter retains in possession and control of the
ship, although her holds may be the property of the charterer.
m. A. Magsaysay, Inc. vs. Agan, Jan. 31, 1955;

Facts: The S S “San Antonio” vessel (plaintiff) with general cargo for different ship owners left
Manila and was bound for Basco, Batanes, vis Aparri, Cagayan. It reached Aparri, had a stopover,
and as it would proceed to Basco but still in port, it accidentally ran aground at the mouth of the
Cagayan River. Plaintiff have it refloated by the Luzon Stevedoring Co.. The vessel returned to
Manila to refuel and then proceeded to Basco, where the cargoes were delivered to their
respective owners or consignees, who, with the exception of defendant, made a deposit or signed
a bond to answer for their contribution to the average. Thus, the plaintiff brought an action to make
defendant pay his contribution. Defendant denies liability. The lower court decided against the
defendant, thus the appeal.

Issue: Whether the expenses incurred in floating a vessel so stranded should be considered
general average and shared by the cargo owners.

Held: The expenses should not be considered as general average.

The said expenses do not fit into any of the specific cases of general average enumerated in article
811. No. 6 of this article does mention “expenses caused in order to float a vessel,” but it
specifically refers to “a vessel intentionally stranded for the purpose of saving it.” In the present
case, the stranding was not intentional.

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

n. Macondray vs. Provident Insurance Corporation, GR No. 154305, December 9, 2004