TRANSPO Q & A

CHAPTER 17

PROBLEMS:
1. Two vessels coming from the opposite directions collided with 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?
A: Under the doctrine of inscrutable fault, neither of the carriers may go after the other. The
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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 interisland 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.

8. On September 13, 1962, defendant NDC as the first preferred mortgagee of three ocean going
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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 Dofia 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 'Dofia 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
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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. 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 iniury 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
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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 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.

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.
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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 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 compctent 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.

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
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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 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)

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
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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)