TRANSPO Q & A

CHAPTER 17
PP. 655-661
PROBLEMS:
1. Two vessels coming from the opposite directions collided with each other due to fault imputable to
both. What are the liabilities of the two vessels with respect to the damage caused to them and their
cargoes? Explain
A: Each vessel must bear its own damage. Article 827 of the Code of Commerce provides that if the
collision is imputable to both vessels, each one shall suffer its own damages, and both shall be solidarily
responsible for the losses and damages occasioned to their cargoes. (1995)

2. Vessels "U" and "V"collided with each other causing damage to both vessels. Vessel "U" had the last
clear chance to avoid collision but failed to do so. Is the doctrine of last clear chance in tort applicable to
collisions of vessels at sea under the Code of Commerce? Which vessel should shoulder the liability for
the damage suffered by both vessels and by the cargo?
A: The doctrine of last clear chance in tort is not applicable to collisions of vessels at sea under the Code
of Commerce, and the case is deemed as if the collision is imputable to both vessels; thus, each one of the
vessels shall suffer her own damage, and both shall be solidarily liable for the damages occasioned to
their cargoes. (See Articles 827 and 829 of the Code of Commerce) (1980)

3. Vessels "U" and "V" collided with each other causing damage to both vessels. Vessel U had the last
clear chance of avoiding the collision but failed to do so. Assume that the negligence of the captain of
vessel "U" was the proximate cause of the collision, while the negligence of the captain of vessel "V" was
merely contributory. To which vessel should the collision be deemed imputable?
A: The collision should be deemed imputable also to both vessels. Since the doctrine of "contributory
negligence" in tort is not also applicable to collisions of vessel at sea under the Code of Commerce, the
case is deemed as if the collision is imputable to both vessels. (Articles 827 and 828 of the Code of
Commerce) (1980)

4. If it cannot be determined which of the two vessels was at fault resulting in the collision, which party
should bear the damage caused to the vessels and the cargoes? Explain.
A: Each of them should bear their respective damages. Since it cannot be determined as to which vessel is
at fault. This is under the doctrine of "inscrutable fault." (1995)

5. There was a severe typhoon when the vessel M/V Fortuna collided with M/V Suerte. It is conceded that
the typhoon was a major cause of the collision, although there was a strong possibility that it could have
been avoided if the captain of the M/V Fortuna was not drunk and the captain of M/V Suerte was not
asleep at the time of the collision. Who should bear the damages to the vessels and their cargoes?
 TRANSPO Q & A

A: Under the doctrine of inscrutable fault, neither of the carriers may go after the other. The shipper may
claim damages against the ship owners and the captains of both vessels, having been both negligent. Their
liability is solidary.
The ship owners have the right to recover damages from the masters of the vessels who were both
guilty of negligence. The presence of typhoon in the area in fact warranted a greater degree of alertness on
their part. (1987)

6. In a collision between M/T Manila, a Tanker Don Claro, an inter-island vessel, M/V Dom Claro sank
and many of its passengers drowned and died. All its cargoes were lost. The collision occurred at night
time but the sea was calm, the weather fair and visibility was good. Prior to the collision and while still
four nautical miles apart, M/V Don Claro sighted M/T Manila on its radar screen. M/T Manila had no
radar equipment. As for speed, M/V Don Claro was twice as fast as M/T Manila.
At the time of the collision, M/T Manila failed to follow Rule 19 of the International Rules of the
road which requires two vessels meeting head on to change their course by each vessel steering to star
board (right) so that each vessel may pass on the port side (left) of the other, M/T Manila signified that it
would turn to port side and steered accordingly, thus resulting in the collision. M/T Claro's captain was
off-duty and was having a drink at the ship's bar at the time of the collision. Who would you hold liable
for the collision?
A: I can hold the two vessels liable. In the problem given, whether on the basis of the factual settings or
under the doctrine of inscrutable fault, both vessels can be said to have been guilty of negligence. The
liability of the two carriers for the death or injury of passengers and for the loss of or damage to the goods
arising from the collision is solidary. Neither carrier may make the doctrine of last clear chance which can
only be relevant, if at all, between the two vessels but not on the claims made by passengers or shippers.
(​Litonjuu Shipping v. National Seamen Board, G.R. No. 51910, 10 August 1989​) (1991)

7. In the morning of April 2, 1977, the southbound FS-190 belonging to William Lines, Inc. reached the
waters of the Verde Island Passage. About the same time, the M.S. General del Pilar, another inter-island
vessel owned by the General Shipping, was likewise in the same waters, steaming northward to Manila.
The vessels, coming from opposite directions and towards each other, suddenly collided at a certain point
of the passage which resulted in the sinking of FS-190, together with all its cargoes, part of which
belonged to Tanya, who was a paying passenger and Rafael, who was a shipper. Tanya and Rafael
brought action in court to recover for their losses and for damages arising from the collision. Were they
under obligation to file a maritime protest for a successful maintenance of the action? Why?
A: No. Tanya and Rafael are not under obligation to file a maritime protest. Article 835 of the Code of
Commerce states that “the action for recovery of damages and losses arising from collisions cannot be
admitted without a previous protest or declaration presented by the captain within twenty-four hours
before the competent authority of the point where the collision took place, or of the first port of arrival."
Therefore, a maritime protest is required to be made by the master of the vessel not by the passenger or
shipper.
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8. On September 13, 1962, defendant NDC as the first preferred mortgagee of three ocean going vessels
including one with the name 'Dona Nati' appointed defendant MCP as its agent to manage and operate
said vessel for and in its behalf and account. Thus, on February 28, 1964 the E. Philipp Corporation of
New York loaded on board the vessel “Dona Nati" at San Francisco, California, a total of 1,200 bales of
American raw cotton consigned to the order of Manila Banking Corporation, Manila and the People's
Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company, Inc., who
represents Riverside Mills Corporation. Also loaded on the same vessel at Tokyo, Japan, were the cargo
of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila Banking Corporation consisting of 200
cartons of sodium lauryl sulfate and 10 cases of aluminum foil.​ En route​ to Manila, the vessel Do​fia​ Nati
figured in a collision at 6:04 a.m. on April 15, 1964 at Ise Bay, Japan with a Japanese vessel 'SS
Yasushima Maru' as a result of which 550 bales of aforesaid cargo of American raw cotton were lost
and/or destroyed, of which 535 bales as damaged were landed and sold on the authority of the General
Average Surveyor for Yen 6,045,​-​500 and 15 bales were not landed and deemed lost. The damaged and
lost cargoes was worth P344,977.86 which amount, the plaintiff as insurer, paid to the Riverside Mills
Corporation as holder of the negotiable bills of lading duly endorsed. Also considered totally lost were the
aforesaid shipment of Kyokuto, Boekui Kaisa Ltd., consigned to the order of Manila Banking
Corporation, Manila, acting for Guilcon, Manila. The total loss was P19,938.00 which the plaintiff as
insurer paid to Guilcon as holder of the duly endorsed bill of lading. Thus, the plaintiff had paid as insurer
the total amount of P364,915.86 to the consignees or their successors-in-interest, for the said lost or
damaged cargoes. Hence, plaintiff filed this complaint to recover said amount from the defendants-NDC
and MCP as owner and ship agent respectively, of the said 'Do​fia​ Nati' vessel.

a. What laws apply to the given problem?

b. Is MCP liable?
c. MCP argues that the law on averages should be applied in determining their liability. Is
the argument tenable?

A: (a) The law of the country to which the goods are to be transported governs the liability of the common
carrier in case of their loss, destruction or deterioration. For cargoes transported from Japan to the
Philippines, the liability of the carrier is governed primarily by the Civil Code and in all matters not
regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of
Commerce and by laws. Since collision falls among matters not specifically regulated by the Civil Code,
Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of
vessels, apply. More in point to the instant case is Article 827 of the same Code, which provides that if the
collision is imputable to both vessels, each one shall suffer its own damages and both shall be solidarily
responsible for the losses and damages suffered by their cargoes.
(b) Yes. NDC appointed MCP as Agent, a term broad enough to include the concept of Ship-agent in
Maritime Law. In fact, MCP was even conferred all the powers of the owner of the vessel, including the
power to contract in the name of the NDC. It is well-settled that both the owner and agent of the offending
vessel are liable for the damage done where both are impleaded (​Philippine Shipping Co. v. Garcia
Vergara, 96 Phil. 281 [1906])​ ; that in case of collision, both the owner and the agent are civilly
responsible for the acts of the captain (​Yueng Sheng Exchange and Trading Co. v. Urrutia & Co., supra
citing Article 586 of the Code of Commerce; Standard Oil Co. of New York v. Lopez Castelo, 42 Phil.
 TRANSPO Q & A

256, 262 [1921])​; that while it is true that the liability of the ​naviero​ in the sense of charterer or agent, is
not expressly provided in Article 826 of the Code of Commerce, it is clearly deducible from the general
doctrine of jurisprudence under the Civil Code but more specially as regards contractual obligations in
Article 586 of the Code of Commerce. Moreover, the Court held that both the owner and agent (​Naviero)​
should be declared jointly and severally liable, since the obligation which is the subject of the action had
its origin in a tortious act and did not arise from contract (​Verzosa and Ruiz, Rementeria y Cia v. Lim, 45
Phil. 423 [1923]​). Consequently, the agent, even though he may not be the owner of the vessel, is liable
to the shippers and owners of the cargo transported by it, for losses and damages occasioned to such
cargo, without prejudice, however, to his rights against the owner of the ship, to the extent of the value of
the vessel, its equipment, and the freight (​Behn Meyer Y. Co. v. McMicking, et al., 11 Phil. 276 [1908])​ .
(c) MCP's contention is devoid of merit. The declared value of the goods was stated in the bills of lading
and corroborated no less by invoices offered as evidence during the trial. Besides, common carriers, in the
language of the court in ​Juan Ysmael & Co. Inc. v. Barrette et al.​ (51 Phil. 90 [1927]), "cannot limit its
liability for injury to a loss of goods where such injury or loss was caused by its own negligence."
Negligence of the captains of the colliding vessel being the cause of the collision, and the cargoes not
being jettisoned to save some of the cargoes and the vessel, the law on averages are therefore not
applicable.

9. The steamer Subic, owned by the defendant, collided with the launch Euclid owned by the plaintiff, in
the Bay of Manila at an early hour on the morning of January 9, 1911, and the Euclid sank five minutes
thereafter. The defendant filed an action to recover the value of the Euclid. The court below held from the
evidence submitted that the Euclid was worth at a fair valuation P10,000.00 and that both vessels were
responsible for the collision; and that the loss should be divided equally between the respective owners,
P5,000.00 to be paid to the plaintiff by the defendant, and P5,000.00 to be borne by the plaintiff himself.
Is the decision of the trial court?
A: No, the decision is not correct and the decision of the trial court should be reversed. It will be seen that
the trial judge was of opinion that the vessels were jointly responsible for the collision and should be held
jointly liable for the loss resulting from the sinking of the launch. But actions for damages resulting from
maritime collisions are governed in this jurisdiction by the provisions of Section 3, Title 4, Book III of the
Code of Commerce, and among these provisions we find the following: "ART. 827. If both vessels may
be blamed for the collision, each one shall be liable for its own damages, and both shall be jointly
responsible for the loss and damage suffered by their cargoes."
In disposing of this case the trial judge apparently had in mind that portion of the section which
treats of the joint liability of both vessels for loss or damage suffered by their cargoes. In the case at bar,
however, the only loss incurred was that of the launch Euclid itself, which went to the bottom soon after
the collision. Manifestly, under the plain terms of the statute, since the evidence of record clearly
discloses, as found by the trial judge, that "both vessels may be blamed for the collision," each one must
be held liable for its own damages, and the owner of neither one can recover from the other in an action
for damages to his vessel.
In cases of a disaster arising from mutual negligence of two parties, the party who has a last clear
opportunity of avoiding the accident, notwithstanding the negligence of his opponent, is considered
wholly responsible for it under the common-law rule of liability as applied in the courts of common law
in the United States. But this rule (which is not recognized in the courts of admiralty in the United States,
wherein the loss is divided in cases of mutual and concurring negligence, as also where the error of one
 TRANSPO Q & A

vessel has exposed her to danger of collision which was consummated by the negligence of the other), is
limited in its application by the further rule, that where the previous act of negligence of one vessel has
created a position of danger, the other vessel is not necessarily liable for the mere failure to recognize the
perilous situation; and it is only when in fact it does discover it in time to avoid the casualty by the use of
ordinary care, that it becomes liable for the failure to make use of this last clear opportunity to avoid the
accident (​See​ cases cited in Notes, 7 Cyc., pp. 311, 312, 313). So, under the English rule which conforms
very nearly to the common-law rule as applied in the American courts, it has been held that the fault of
the first vessel in failing to exhibit proper lights or to take the proper side of the channel will relieve from
liability one who negligently runs into such vessel before he sees it; although it will not be a defense to
one who, having timely warning of the danger of collision, fails to use proper care to avoid it (Pollock on
Torts, 374.). In the case at bar, the most that can be said in support of plaintiff's contention is that there
was negligence on the part of the officers on defendant's vessel in failing to recognize the perilous
situation created by the negligence of those in charge of plaintiff's launch, and that had they recognized it
in time, they might have avoided the accident. But since it does not appear from the evidence that they
did, in fact, discover the perilous situation of the launch in time to avoid the accident by the exercise of
ordinary care, it is very clear that under the above set out limitation to the rule, the plaintiff cannot escape
the legal consequences of the contributory negligence of his launch, even were we to hold that the
doctrine is applicable in this jurisdiction, upon which point we expressly reserve our decision at this time.

CHAPTER 19
PP. 671-673
CASE:
1. On the 26th day of September 1905, the sailing vessel Alta was wrecked and stranded upon the coast of
Cavite Province. The captain of the ship removed the cargo and after working ten or twelve days in
attempts to float the ship made a contract, in writing, with the plaintiffs, which is as follows:
MANILA, November 1, 1905.
Mr. CHARLES S. ROBINSON, Manila.
DEAR SIR: Referring to your offer of 31st ultimo, re the raising of the ship Alta - viz., to put her
into Cavite and in such condition that it will admit of her being sailed to Hong Kong or other port,
subject to being passed by Lloyds' surveyor — for the sum of fifteen thousand pesos (P15,000), Philippine
currency, I accept the same and shall esteem it a favor if you will commence the work with the least
possible delay. Should you not be successful, it is distinctly understood that no money whatever is to be
paid for any work done or appliances used.
Yours, faithfully, (Sgd.) W. T'HONAGEL.
P.S. — It is understood that by “other port" is meant Singapore.
(Sgd.) W. T.
The plaintiffs went to work immediately upon the vessel, raised it, and towed it to Cavite on the
10th day of December 1905. It was at once decided to put her into the dry dock or slip there for the
purpose of examining her hull and ascertaining the extent of the damages. This could not be done until the
18th day of January, owing to other demands upon the dock company. On that day she was put upon the
slip, was examined, and again taken off. The exact day on which she came off from the slip does not
appear, but it probably was the 19th day of January. On the 20th day of January plaintiffs removed all of
 TRANSPO Q & A

their machinery, tackle, and utensils from the ship and did no more work upon her.
The plaintiffs, on the 30th day of December, 1905, were paid by the defendants the sum of 3,000
pesos on account of the contract. They brought this action against the ship and her master on the 27th day
of February, 1906, claiming to recover the reasonable worth and value of the services performed by them,
which they fixed at 15,000 pesos.
(a) Is the contract binding on the salvor?
(b) Is the salvor entitled to full compensation?
A: (a) Yes, the salvor is bound by contracts which they have made. The contract appears to have been
entered into openly and fairly in all respects, and there is no principle or authority upon which the court
can disregard it, or make a new contract for the parties. It must, therefore, be enforced as it stands.
Where an agreement fixing the amount of the remuneration to be paid for salvage services has
been deliberately entered into, at the time of the commencement of the danger, between perfectly
competent parties, the court should not allow the agreement to be set aside merely because the execution
of it has turned out more difficult than was anticipated at the time of making the contract.
(b) No. The salvor is not entitled to the full amount of compensation agreed upon in the contract. That
part of the contract which required the plaintiffs to bring the ship to Cavite they performed, but that part
of it which required them to put her in condition to be sailed to Hong Kong they never performed. They
should have continued performing the contract even if it would have cost the plaintiffs 22,000 pesos to do
what they had agreed in the contract to do for 15,000 pesos. The case may be hard one for the plaintiffs
but when parties have voluntarily entered into a contract they can disregard it if it turns out to be
unprofitable to them, and can recover as if no contract had been made.

PP. 690-691
CASE:
On September 13, 1914, the British steamer ​Bengloe​ owned by W. Thompson & Co., while en
route from Manila to European ports, stranded on the Mayone shoal in the Sulu sea some 25 miles from
Brook's Point on the Island of Palawan. At this time, Jose Fernandez, O. N. Holmsen, and M. A. Macleod,
now plaintiffs, were residents of Palawan. On learning of the abandonment of the ​Bengloe​ by her crew,
these gentlemen formed a partnership, with a capital of P1,500.00, for the purpose of salving the vessel
and cargo. They hired the launch ​Florence​ of between thirty and forty tons capacity from the provincial
authorities of Puerto Princesa, and with a number of laborers proceeded to the wreck to ascertain its
condition, where they arrived on October 7. They immediately took possession of the vessel and removed
14.937 kilos of copra and certain furniture and effects, of the approximate value of P2,500.00. Holmes
and​ ​Fernandez proceeded with the launch to Brook's Point, the copra and other effects were stored in the
Government warehouse. The copra being perishable was later sold by an order of court and the proceeds
amounting to P2,051.63 deposited with the clerk of court. The other articles were left in the custody of the
provincial treasurer of Palawan. Holmsen and Fernandez began negotiations with various owners of
vessels in Manila, including the ​Neil Macleod​ and one of the Pujalte boats. Neither of these boats,
however, was ever chartered or placed at the disposition of the plaintiffs.
In the meantime, the London Salvage Association acting in the interest of the underwriters of the
ship and the cargo, and with the consent of the ship's agents, engaged Ker & Co. to take charge of the
salvage operations. The latter firm in its turn employed William Swan, an engineer and marine surveyor,
to conduct the work. Swan left Manila on the Coast Guard Cutter ​Polillo​ on October 6 for the scene of the
wreck. On the way there, the ​Polillo​ intercepted the ​Paglima​, which had the captain and members of the
 TRANSPO Q & A

crew of the ​Bengloe​ on board, and took them back to the wreck. Swan, the captain of the Bengloe, and
their assistants arrived at the wreck on October 9, that is, two days after the arrival of Fernandez,
Holmsen, and Macleod, and after the copra and other effects had been removed. Macleod and the two
laborers found on board were shown scant hospitality by the second party, and were pointedly given to
understand that their presence was not desired. Against his vigorous protest, ​MaCleod​ was finally forced
to leave the vessel by the captain of the ​Polillo​ and a lieutenant of the Constabulary sent to the wreck with
constabulary soldiers to protect it from plunder. When the other plaintiffs Holmsen and Fernandez,
returned on the launch, they were prevented from taking any further part in the salvage operations.
Were the first salvors (Fernandez, Holmsen and Macleod) properly compelled to leave the vessel?
Were the first salvors entitled to full salvage compensation?
A: Yes. The first set of salvors had no right to retain the derelict. The first set of salvors had no right to
exclude the second set from saving the merchandise in the vessel, the first set not having at the time the
means to save it. (The Concordia [1855], 6 Fed. Cases, 3092).
(b) No. The only equipment actually in the possession of the plaintiffs for salving the ​Bengloe​ and the
cargo was a small launch and some baskets and sacks. This was the best salvage equipment available in
Puerto Princesa on the Island of Palawan. The services rendered by the plaintiffs contributed immediately
to the preservation of a small amount of property on the stranded vessel, but as an actual fact, their further
exertions, however meritorious they were intended to be were not successful in any degree and cannot be
compensated in damages. (​Fernandez v. Thompson & Co., et al., G.R. No. 12475, March 21, 1918​)

P. 702
CASE:
On August 11, 1962, a certain cargo insured with plaintiff corporation was shipped in New York,
U.S.A. aboard "M/S TOREADOR," of which the general agent in the Philippines is appellee Macondray
& Co. Inc. (hereinafter referred to as Macondray). The cargo, with an invoice value of $3,539.61 CIF
Cebu, was consigned to the order of the importer Atlas Consolidated Mining and Development
Corporation. Inasmuch as the final port of call of the "M/S TOREADOR" was Manila, the carrier, in
accepting the cargo at the point of shipment, agreed to transship the same, after its discharge in Manila,
aboard an inter-island vessel to its destination in Cebu. On September 18, 1962 the "M/S TOREADOR"
arrived at the port of Manila and on the same date discharged the cargo in question. Pursuant to the
arrangement the cargo was subsequently loaded aboard the "SS SIQUIJOR, an inter-island vessel. The
shipment was finally discharged in Cebu on September 24, 1962. When the consignee took delivery of the
shipment it was found to be short of two pieces of tractor parts. When a case was filed against
Macondray, it moved to dismiss the amended complaint against it on the ground that plaintiff's action had
already prescribed under the provisions of the Carriage of Goods by Sea Act because the reckoning date
was allegedly the date of discharge in Manila. Is the contention tenable?
A: No. The contention is not tenable. The prescriptive period started when the good were discharged in
Cebu. The transshipment of the cargo from Manila to Cebu was not a separate transaction from that
originally entered into by Macondray, as general agent for the "M/S TOREADOR." It was part of
Macondray's obligation under the contract of carriage and the fact that the transshipment was made via an
inter-island vessel did not operate to remove the transaction from the operation of the Carriage of Goods
by Sea Act. (​See Go Chang & Co., Inc. v. Aboitiz & Co., Inc., 98 Phil. 197​)