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Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-11515
July 29, 1918
INTERNATIONAL HARVESTER COMPANY IN RUSSIA, plaintiff-appellee,
vs.
HAMBURG-AMERICAN LINE, defendant-appellant.
Crossfield & O'Brien for appellant.
Lawrence & Ross for appellee.
STREET, J.:
In the spring of 1914, the plaintiff, the International Harvester Company in Russia, an American corporation,
organized under the laws of the State of Maine, delivered to the defendant, the Hamburg-American Line, at
Baltimore, Maryland, to be laden on its steamer the Bulgaria, bound from that port to Hamburg, Germany, a
large consignment of agricultural machinery, consisting of 852 boxes, crates, and parcels, all of which were to
be delivered to the order of the consignor at Vladivostock, Russia. The freight charges were then and there
prepaid to the ultimate destination.
The bill of lading which was issued to the plaintiff at Baltimore provided, among other things, that the goods
should be forwarded by the defendant company from Hamburg to Vladivostock at the ship's expense but at the
risk of the owner of the goods. It was also provided that goods thus destined for points beyond Hamburg should
be subject to the terms expressed in the customary form of bill of lading in use at the time of shipment by the
carrier completing the transit.
When the shipment arrived at Hamburg the carrier company transferred the cargo to the Suevia, a ship of its
own line, and issued to itself therefor, as forwarding agent, another bill of lading in the customary form then in
use in the port of Hamburg, covering the transportation from Hamburg to Vladivostock.
While the ship carrying said cargo was in the China Sea en route to Vladivostock war broke out in Europe; and
as the Suevia was a German vessel, the master considered it necessary to take refuge in the nearest neutral
port, which happened to be Manila. Accordingly he put into this harbor on August 6, 1914, and at the date of the
trial in the court below the ship still remained in refuge in this port.
After it became apparent that the Suevia would be detained indefinitely in the port of Manila, the plaintiff
company, as owner of the cargo above described, in January, 1915, made demand upon the agent of the
defendant company in Manila to the effect that it should forward the cargo to Vladivostock, if not by
the Suevia then by some other steamer. This the defendant company refused to do except upon the condition
that the plaintiff would agree to subject said cargo to liability upon general average to satisfy the costs and
expenses of the Suevia incident to its stay in the port of Manila. To this condition the plaintiff did not assent and
on the contrary thereupon demanded the immediate delivery of the cargo to it in Manila. The defendant
company replied with an offer to deliver the cargo provided the owner would deposit with the defendant
company a sum of money equivalent to 20 per cent of the value of said cargo, as security for the aforesaid costs
and expenses to be adjusted as general average. In this connection it may be stated that the costs and
expenses incurred by the Suevia from the date the ship entered the port of Manila until March 30, 1915,
amounted to the sum of P63,024.50, which included port charges, repairs, and wages and maintenance of
officers and crew.
Having thus far failed in its efforts to obtain possession of its property, the plaintiff company instituted the
present action in the Court of First Instance of the city of Manila upon February 13, 1915. The purpose of the
proceeding is to recover the possession of the cargo, together with damages for breach of contract and unlawful
detention of the property. At the time the action was instituted, or soon thereafter, the plaintiff obtained the
delivery of the property from the Suevia by means of a writ of replevin and forwarded it to Vladivostock by
another steamer. In its answer the defendant company denies liability for damages and asserts that it has a lien
on the property for general average, as already indicated. In the court below judgment was given in favor of the
plaintiff, recognizing its right to the possession of the goods and awarding damages to it in the sum of
P5,421.28, the amount shown to have been expended in forwarding the goods to Vladivostock. From this
judgment the defendant appealed.
The two main questions raised by the appeal are, first whether the cargo belonging to the plaintiff is liable to be
made to contribute, by way of general average, to the costs and expenses incurred by reason of the internment
of the Suevia in the port of Manila, and, secondly, whether the defendant is liable for the expenses of
transferring the cargo to another ship and transporting it to the port of destination.
Upon the first question it is clear that the cargo in question is not liable to a general average. It is not claimed
that this agricultural machinery was contraband of war; and being neutral goods, it was not liable to forfeiture in
the event of capture by the enemies of the ship's flag. It follows that when the master of the Suevia decided to
take refuge in the port of Manila, he acted exclusively with a view to the protection of his vessel. There was
no common danger to the ship and cargo; and therefore it was not a case for a general average. The point here
in dispute has already been determined by this court unfavorably to the contention of the appellant. (Compagnie
de Commerce et de Navigation D'Extreme Orient vs. Hamburg Amerika Packetfacht Actien Gesselschaft, 36
Phil., 590.) The following provision contained in the York-Antwerp Rules, as we interpret it, is conclusive against
the appellant's contention:
When a ship shall have entered a port of refuge . . . in consequence of accident, sacrifice, or other extraordinary
circumstance which renders that necessary for the common safety, the expense of entering such port shall be
admitted as general average. (York-Antwerp Rules, section 10.)
Upon the question of the liability of the defendant company for the expenses incident to the transhipment and
conveyance of the cargo to Vladivostock, it is noteworthy that the original bill of lading issued to the shipper in
Baltimore contained the provision that the goods should be forwarded from Hamburn to Vladivostock at the
steamer's expense and this term appeared not only in the paragraph numbered 17 in the body of the bill of
lading but also conspicuously printed in the shipping direction on the face of the instrument.
In the tenth paragraph of the General Rules contained in the bill of lading which was issued at Hamburn upon
account of the Suevia, for the forwarding of the cargo to Vladivostock, there is found the following provision:
X. If on account of quarantine, threatening quarantine, ice blockade, war disturbances, strike, lockout, boycott,
or reason of a similar nature, the master is in doubt as to whether he can safely reach the port of destination,
there discharge in the usual manner, or proceed thence on his voyage unmolested he is at liberty to discharge
the goods at another place or harbour which he may consider safe, whereby his obligations are fulfilled. . . . If
the goods for any reason whatsoever cannot be discharged . . . at the port of destination, the ship is at liberty
to . . . forward them by some other means to the port of destination, for ship's account but not at ship's risk.
Further on in the same bill of lading under the head "Special Clauses" is found an addendum to rule ten to the
following effect:
Special — Condition to rule X. — The forwarding of through goods to be effected as soon a possible, but the
shipowner not to be responsible for delay in the conveyance. The shipowner to have the liberty to store the
goods at the expense and risk of the owner, shipper or consignee. The shipowner further to be entitled to
forward the goods by rail from the port of discharge to the final place of destination, at his expense, but at the
risk of the owner, shipper or consignee.
It is now insisted for the appellant that inasmuch a war had broken out between Germany and Russia and the
mater had brought the cargo into a neutral harbor, all the obligations of the company have been fulfilled. We
think that this contention is untenable. The outbreak of the war between Germany and Russia undoubtedly
absolved the defendant company from so much of the contract of affreightment as required the defendant
company to convey the goods to Vladivostock upon the ship on which it was embarked; and no damages could
be recovered by the plaintiff of the defendant for its failure to convey the goods to the port of destination on that
ship. But by the terms of the contract of affreightment the defendant company was bound to forward the cargo
to Vladivostock at the steamer's expense, not necessarily by a steamer belonging to the defendant company;
and it does not by any means follow that it is not liable for the expense incurred by the owner in completing the
unfinished portion of the voyage in another ship.
It will be noted that under paragraph X of the bill of lading, quoted above, the master is given the election to
discharge at another port, if war should interfere with the completion of the voyage to the port of destination. No
such election has been made by the master. On the contrary, after arrival in Manila, he refused to discharge the
goods, and must be held to have elected to retain them, leaving the obligations of the contract intact, except in
so far as they were modified, under the general principle of international law, by the fact that war existed. So far
was the master from electing to discharge the goods in the port of Manila even on the demand of the owner,
that he proposed to hold the cargo until such time as the Suevia might continue her voyage without fear of
molestation from her enemies.
Furthermore, in the special condition to rule X, the defendant company recognizes its responsibility with respect
to the forwarding of goods; and where it is said in paragraph X that the master's obligation will be fulfilled by
discharge in another port, it must be understood that reference is had to the obligations incident to the carriage
of the goods on the instant voyage.
It should be remembered that stipulations, in a bill of lading exempting a shipowner from the liability which
would ordinarily attach to him under the law are to be strictly construed against him. (Cia. de Navigacion La
Flecha vs. Brauer, 168 u. Ss., 104.) This rule should be unhesitatingly applied in a case such as this where the
bill of lading under which the exemption is claimed was issued by the defendant company to itself.
We find it stated in a well known treatise that where cargo has been taken aboard a ship at a foreign port and
war breaks out between the country to which the vessel belongs and the country of the port of discharge, the
neutral owner of the goods cannot complain of her not going to her destination. (Carver, Carriage of Goods by
Sea, sec: 239.) The same learned author adds:
Where goods have been loaded and partly carried on the agreed voyage, though the exact performance of the
contract may become legally impossible, it will not be regarded as completely at an end, if it can by any
reasonable construction be treated as still capable of being performed in substance. Thus, where a Prussian
vessel, carrying goods under charter, had been ordered to discharge at Dunkirk, and it became impossible for
her to do so, because war broke out between France and Germany, it was held in the Privy Council, that the
contract was not dissolved, and that the shipowner might till hold the goods at Dover, where he had taken the
ship, for the freight which would have been payable under the charter-party had she been ordered to that part.
(The Teutonia (1872), L. R., 4 P. C., 171.)
In the case now before u we see no reason for holding that the defendant company has been absolved by the
outbreak of war from its contractual obligation to bear the expenses of forwarding the goods to Vladivostock,
even thought it is immediately absolved from the duty to convey them on its own ship.
It must not be forgotten that the outbreak of the war between Germany and Russia did not make the contract of
affreightment absolutely illegal ass between the German company and the American shipper. If war had broken
out between Germany and the United States, and refuge had been taken in some port in a neutral country, it
might be said that this contract was dissolved on both sides, and a different question would thus have been
presented; but even in that case, it could not be successfully maintained that the German company was wholly
absolved from every duty to the shipper.
There is another aspect of the case which is highly pertinent to the matter now under consideration. The freight
was prepaid by the shipper from Baltimore to destination, but has been only in part earned. The defendant
company has broken the voyage by stopping at the intermediate port of Manila. Admitting that the defendant
company is absolved from the obligation to convey the cargo further on its course, it is nevertheless clear that
upon principles of equity the company should be bound to restore so much of the freight a represents the
unaccomplished portion of the voyage. If the freight had not been paid, the most that could be claimed by the
defendant would be an amount pro rata itineris peracti, as was conceded in the case of the Teutonia, to which
reference has been already made; and now that the freight has been prepaid, there is a clear obligation on the
part of the company to refund the excess, as money paid upon a consideration that has partially failed.
But it will be said that the contract to convey the cargo to Hamburg and to forward it from there to Vladivostock
was an entirety, and that inasmuch as the defendant company is absolved from its obligation to proceed further
with performance, there can be no apportionment as between the voyage which has been accomplished and
that which was yet to be performed. The reply to this is that the break in the continuity of the voyage was a
result of the voluntary act of the master of the Suevia, adopted with a view to the preservation of the ship; and it
can not be permitted that the defendant company should escape the consequences of that act, so far as
necessary to effect an equitable adjustment of the rights of the owner of the cargo. There being no evidence
before us with respect to the amount of freight which was prepaid, nor with respect to the proportion earned and
unearned, but only the fact that the owner paid out a certain amount for transhipment to Vladivostock, it can be
assumed that this amount approximately represents the unearned portion of the freight.
We have not overlooked the provision in the original bill of lading which provides that freight paid in advance will
not be returned, goods lost or not lost. There is also a somewhat similar provision in the second bill of lading
issued at Hamburg. These provisions contemplate the special cae of the loss of the goods and can not be
extended to the situation which arises when the ship for purposes of its own protection abandons the enterprise.
From what has been said it is apparent that the Court of First Instance was correct not only in adjudging
possession of the cargo to the plaintiff but also in imposing upon the defendant company liability with respect to
the amount expended by the plaintiff in forwarding the goods to their destination.
The only other point raised by the bill of exceptions, which we deem it necessary to notice, is based on a
provision in the bill of lading to the effect that all disputes arising under the contract are, at the option of the
defendant company, to be decided according to German law and exclusively by the Hamburg courts. From this
it is argued that the Court of First Instance erred in assuming jurisdiction of the action and that the case should
have been decided in accordance with the principles of German law.
It can not be admitted that a provision of this character has the effect of ousting the jurisdiction of the court of
the Philippine Islands in the matter now before it. An express agreement tending to deprive a court of
jurisdiction conferred on it by law is of no effect. (Molina vs. De la Riva, 6 Phil., 12.) Besides, whatever the effect
of this provision, the benefit of it was waived when the defendant company appeared and answered generally
without objecting to the jurisdiction of the court.
As regards the contention that the rights of the parties should be determined in accordance with the law of
Germany, it is sufficient to say that when it is proposed to invoke the law of a foreign country as supplying the
proper rules for the solution of a case, the existence of such law must be pleaded and proved. Defendant has
done neither. In such a case it is to be presumed that the law prevailing in the foreign country is the same as
that which prevails in our own.
The judgment appealed from is affirmed, with costs against the appellant. So ordered.
Torres, Johnson, Malcolm, Avanceña and Fisher, JJ., concur.
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Constitution
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Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-13695
October 18, 1921
STANDARD OIL COMPANY OF NEW YORK, plaintiff-appellee,
vs.
MANUEL LOPEZ CASTELO, defendant-appellant.
Gabriel La O for appellant.
Lawrence and Ross for appellee.
STREET, J.:
By contract of character dated February 8, 1915, Manuel Lopez Castelo, as owner, let the small interisland
steamer Batangueño for the term of one year to Jose Lim Chumbuque for use in the conveying of cargo
between certain ports of the Philippine Islands. In this contract it was stipulated that the officers and crew of
the Batangueño should be supplied by the owner, and that the charterer should have no other control over the
captain, pilot, and engineers than to specify the voyages that they should make and to require the owner to
discipline or relieve them as soon as possible in case they should fail to perform the duties respectively
assigned to them.
While the boat was being thus used by the charterer in the interisland trade, the standard Oil Company
delivered to the agent of the boat in Manila a quantity of petroleum to be conveyed to the port of Casiguran, in
the Province of Sorsogon. For this consignment a bill of lading of the usual form was delivered, with the
stipulation that freight should be paid at the destination. Said bill of lading contained no provision with respect to
the storage of the petroleum, but it was in fact placed upon the deck of the ship and not in the hold.
While the boat was on her way to the port mentioned, and off the western coast of Sorsogon, a violent typhoon
passed over that region, and while the storm was at its height the captain was compelled for the safety of all to
jettison the entire consignment of petroleum consisting of two hundred cases. When the storm abated the ship
made port, and thirteen cases of the petroleum were recovered, but the remainder was wholly lost.
To recover the value of the petroleum thus jettisoned but not recovered, the present action was instituted by the
Standard Oil Company against the owner of the ship in the Court of First Instance of Manila, where judgment
was rendered in favor of the plaintiff. From this judgment the defendant appealed.
No question is made upon the point that the captain exercised proper discretion in casting this petroleum
overboard, as a step necessary to the salvation of the ship; and in fact it appears that even after the vessel was
thus eased, she was with difficulty prevented from capsizing, so great was the intensity of the storm.
The first question for discussion is whether the loss of this petroleum was a general average loss or a particular
less to be borne solely by the owner of the cargo. Upon this point it will be observed that the cargo was carried
upon deck; and it is a general rule, both under the Spanish Commercial Code and under the doctrines prevailing
in the courts of admiralty of England America, as well as in other countries, that ordinarily the loss of cargo
carried on deck shall not be considered a general average loss. This is clearly expressed in Rule I of the
York-Antwerp Rules, as follows: "No jettison of deck cargo shall be made good as general average." The
reason for this rule is found in the fact that deck cargo is in an extra-hazardous position and, if on a sailing
vessel, its presence is likely to obstruct the free action of the crew in managing the ship. Moreover, especially in
the case of small vessels, it renders the boat top-heavy and thus may have to be cast overboard sooner than
would be necessary if it were in the hold; and naturally it is always the first cargo to go over in case of
emergency. Indeed, in subsection 1 of article 815 of the Code of Commerce, it is expressly declared that deck
cargo shall be cast overboard before cargo stowed in the hold.
But this rule, denying deck cargo the right to contribution by way of general average in case of jettison, was first
mad in the days of sailing vessels; and with the advent of the steamship as the principal conveyer of cargo by
sea, it has been felt that the reason for the rule has become less weighty, especially with reference to coastwise
trade; and it is now generally held that jettisoned goods carried on deck, according to the custom of trade, by
steam vessels navigating coastwise and inland waters, are entitled to contribution as a general average loss (24
R. C. L., 1419).
Recognition is given to this idea in two different articles in the Spanish Code of Commerce. In the first it is in
effect declared that, if the marine ordinances allow cargo to the laden on deck in coastwise navigation, the
damages suffered by such merchandise shall not be dealt with as particular average (art. 809 [3], Comm.
Code); and in the other it is stated that merchandise laden on the upper deck of the vessel shall contribute in the
general average if it should be saved; but that there shall be no right to indemnity if it should be lost by reason of
being jettisoned for the general safety, except when the marine ordinances allow its shipment in this manner in
coastwise navigation (art. 855, Comm. Code).
The Marine Regulations now in force in these Islands contain provisions recognizing the right of vessels
engaged in the interisland trade to carry deck cargo; and express provision is made as to the manner in which it
shall be bestowed and protected from the elements (Phil. Mar. Reg. [1913], par 23). Indeed, there is one
commodity, namely, gasoline, which from its inflammable nature is not permitted to be carried in the hold of any
passenger vessel, though it may be carried on the deck if certain precautions are taken. There is no express
provision declaring that petroleum shall be carried on deck in any case; but having regard to its inflammable
nature and the known practices of the interisland boats, it cannot be denied that this commodity also, as well as
gasoline, may be lawfully carried on deck in our coatwise trade.
The reason for adopting a more liberal rule with respect to deck cargo on vessels used in the coastwise trade
than upon those used for ordinary ocean borne traffic is to be found of course in the circumstance that in the
coastwise trade the boats are small and voyages are short, with the result that the coasting vessel can use
more circumspection about the condition of the weather at the time of departure; and if threatening weather
arises, she can often reach a port of safety before disaster overtakes her. Another consideration is that the
coastwise trade must as a matter of public policy be encouraged, and domestic traffic must be permitted under
such conditions as are practically possible, even if not altogether ideal.
From what has been said it is evident that the loss of this petroleum is a general and not a special average, with
the result that the plaintiff is entitled to recover in some way and from somebody an amount bearing such
proportion to its total loss as the value of both the ship and the saved cargo bears to the value of the ship and
entire cargo before the jettison was effected. Who is the person, or persons, who are liable to make good this
loss, and what are the conditions under which the action can be maintained?
That the owner of the ship is a person to whom the plaintiff in this case may immediately look for reimbursement
to the extent above stated is deducible not only from the general doctrines of admiralty jurisprudence but from
the provisions of the Code of Commerce applicable to the case. It is universally recognized that the captain is
primarily the representative of the owner; and article 586 of the Code of Commerce expressly declares that both
the owner of the vessel and the naviero, or charterer, shall be civil liable for the acts of the master. In this
connection, it may be noted that there is a discrepancy between the meaning of naviero, in articles 586 of the
Code of Commerce, where the word is used in contradistinction to the term "owner of the vessel" ( propietario),
and in article 587 where it is used alone, and apparently in a sense broad enough to include the owner.
Fundamentally the word "naviero" must be understood to refer to the person undertaking the voyage, who in
one case may be the owner and in another the charterer. But this is not vital to the present discussion. The real
point to which we direct attention is that, by the express provision of the Code, the owner of the vessel is civilly
liable for the acts of the captain; and he can only escape from this civil liability by abandoning his property in the
ship and any freight that he may have earned on the voyage (arts. 587, 588, Code of Comm.).
Now, by article 852 of the Code of Commerce the captain is required to initiate the proceedings for the
adjustment, liquidation, and distribution of any gross average to which the circumstances of the voyage may
have given origin; and it is therefore his duty to take the proper steps to protect any shipper whose goods may
have been jettisoned for the general safety. In ordinary practice this, we supposed, would be primarily
accomplished by requiring the consignees of other cargo, as a condition precedent to the delivery of their goods
to them, to give a sufficient bond to respond for their proportion of the general average. But it is not necessary
here to inquire into details. It is sufficient to say that the captain is required to take the necessary steps to effect
the adjustment, liquidation, and distribution of the general average. In the case before us the captain of the
vessel did not take those steps; and we are of the opinion that the failure of the captain to take those steps gave
rise to a liability for which the owner of the ship must answer.
But it is said — and the entire defense seems to be planted upon this proposition — that the liquidation of the
general average is, under article 852 and related provisions, a condition precedent to the liability of the
defendant, and that at any rate the defendant, as owner of the ship, should only be held liable for his proportion
of the general average. It is also suggested that if the plaintiff has any right of action at all upon the state of facts
here presented, it is against the captain, who has been delinquent in performing the duty which the law imposes
on him.
This argument involves, we think, a misconception of the true import of the provisions relating to the adjustment
and liquidation of general average. Clearly, for one thing, those provisions are intended to supply the
shipowner, acting of cause in the person of the captain, with a means whereby he may escape bearing the
entire burden of the loss and may distribute it among all the persons who ought to participate in sharing it; but
the making of the liquidation is not a condition precedent to the liability of the shipowner of the shipper whose
property has been jettisoned.
It is true that if the captain does not comply with the article relating to the adjustment, liquidation, and
distribution of the general average, the next article (852) gives to those concerned — whether shipowner
(naviero) or shipper — the right to maintain an action against the captain for indemnification for the loss; but the
recognition of this right of action does not by any means involve the suppression of the right of action which is
elsewhere recognized in the shipper against the ship's owner. The shipper may in our opinion go at once upon
the owner and the latter, if so minded, may have his recourse for indemnization against his captain.
In considering the question now before us it is important to remember that the owner of the ship ordinarily has
vastly more capital embarked upon a voyage than has any individual shipper of cargo. Moreover, the owner of
the ship, in the person of the captain, has complete and exclusive control of the crew and of the navigation of
the ship, as well as of the disposition of the cargo at the end of the voyage. It is therefore proper that any person
whose property may have been cast overboard by order of the captain should have a right of action directly
against the ship's owner for the breach of any duty which the law may have imposed on the captain with respect
to such cargo. To adopt the interpretation of the law for which the appellant contends would place the shipowner
in a position to escape all responsibility for a general average of this character by means of the delinquency of
his own captain. This cannot be permitted. The evident intention of the Code, taken in all of its provisions, is to
place the primary liability upon the person who has actual control over the conduct of the voyage and who has
most capital embarked in the venture, namely, the owner of the ship, leaving him to obtain recourse, as it is very
easy to do, from other individuals who have been drawn into the venture as shippers.
It results that the plaintiff is entitled to recover in this action; and the only additional point to be inquired into is
the amount that should be awarded. In this connection it appears that the total value of the jettisoned cargo,
belonging partly to the plaintiff to another shipper, was P880.35, of which P719.95 represented the value of the
plaintiff's petroleum. Upon the apportionment of this total loss among the different interests involved, to wit,
value of ship, value of cargo, and the earned but lost freight, it appears that the amount of the loss
apportionable to the plaintiff is P11.28. Deducting this from the value of the petroleum, we have as a result, the
amount of P708.67, which is the amount for which judgment should be given.
Accordingly, modifying the judgment appealed from to this extent, we affirm the same, with costs. So ordered.
Johnson and Villamor, JJ., concur.
Mapa, C.J., concurs in the result.
Separate Opinions
ARAULLO, J., dissenting:
As the loss of the petroleum shipped by the plaintiff company on board the vessel Batangueño, which belongs
to the defendant, constitutes gross average and, as the latter, being, according to the law, an agent, all of which
is admitted in the foregoing decision, the provisions applicable to the case and which should be taken into
consideration in deciding the appeal before this court are those of various articles in sections 1 of title 4 and
sections 1, 2, and 3, of title 5, of Book 3 of the Code of Commerce.
Article 811 defines gross or general averages as damages and expenses which are deliberately caused in order
to save the vessel, her cargo, or both at the same time, from a real and known risk, and particularly, such as
goods jettisoned to lighten the vessel, whether they belong to the vessel, to the cargo, or to the crew, and the
damage suffered through said act by the goods or board; the damage caused to the vessel by scuttling or
entering her hold in order to save the cargo; and the expenses of the liquidation of the average. Article 812
provides that in order to satisfy the amount of the gross or general average, all persons having an interests in
the vessel and cargo at the time of the occurrence of the average shall contribute. Article 846 provides that the
persons interested in the proof and liquidation of averages may mutually agree and bind themselves at any time
with regard to the liability, liquidation and payment thereof, and that, in the absence of agreements, the proof of
the average shall take place in the port where the repairs are made, should any be necessary, or in the port of
unloading; that the liquidation shall take place in the port of unloading should it be a Spanish port (now Filipino);
that should the average have occurred outside of the jurisdictional waters of the Philippines or should the cargo
have been sold in a foreign port by reason of the arrival of the vessel under stress in said port, liquidation shall
be made in the port of arrival; and, finally, if the average should have occurred near the port of destination, and
that port is made, the proceedings for the proof and liquidation above-mentioned shall he had there.
Article 847 provides that when the liquidation of the averages is made privately by virtue of agreement, as well
as when a judicial authority takes part therein at the request of any of the parties interested who do not agree
thereto, all of them shall be cited and heard, should they not have renounced this right; that should they not be
present or not have a legitimate representative, the liquidation shall be made by the consul in said port, and
where there is none, by the judge or court of competent jurisdiction, accordance to the laws of the country, and
for the account of the proper person; and, finally, desiring to furnish all possible means to effect the liquidation,
legislator provides in the last part of said article that, when the representative is a person well-known in the
place where the liquidation takes place, his intervention shall be admitted and will produce legal effect, even
though he be authorized only by a letter of the shipowner, freighter, or underwriter; and as to general or gross
averages, he lays down concrete and conclusive rules in articles 853, 854, and 858, with respect to the form
and mode in which the experts appointed by the interested parties or by the court shall fulfill their duties, as to
the examination of the vessel, the repairs and the appraisement of their cost, as well as to the appraisement of
the goods which are to contribute to the gross average and those which constitute the average, likewise
providing in article 857 that, after the appraisement by the experts of the goods saved, lost, and those which
constitute the gross average, and after the repairs have been made to the vessel, should any be necessary, and
in such case, after the approval of the accounts by the persons interested or by the court, the entire record shall
be turned over to the liquidator appointed, in order that he may proceed with the pro rata distribution of the
average among the contributing values, after fixing the amount mentioned in said article of the contributing
capital: (1) By the value of the cargo, according to the rules established in article 854; (2) by the value of the
vessel in her actual condition, according to a statement of experts; (3) by 50 per cent of the amount of the
freight, deducting the remaining 50 per cent for wages and maintenance of the crew.
1awph! l.net
Lastly, in relation to said provisions, article 851 authorizes the captain to proceed privately, upon the agreement
of the parties interested, in the adjustment, liquidation, and distribution of the gross average, and for this
purpose, it is his duty to call, within forty hours following the arrival of the vessel at the port, the persons
interested in order that they may decide whether the adjustment or liquidation of the gross average is to be
made by experts and liquidators appointed by themselves, in which case this shall be done should the persons
interested agree, and said article also provides that should an agreement not be possible, the captain shall
apply to the judge or court of competent jurisdiction, who shall be the one of the port where the proceedings are
to be held in accordance with the provisions of the Code of Commerce, to the consul of Spain (now of the
United States), should there be one, or otherwise to the local authority when the proceedings are to be held in a
foreign port. And finally, the next article, 852, says: "If the captain should not comply with the provisions
contained in the foregoing article, the shipowner or agent or the freighters shall demand the liquidation, without
prejudice to the action they may bring to demand indemnity from him."
It is therefore beyond question that the action of the plaintiff to recover indemnity for the damage which it claims
to have suffered by reason of the failure of the captain of the vessel Batangueño to proceed with the liquidation
and distribution of the gross average in which it was a contributor, and by reason of his act in delivering to the
other shippers their respective goods, without first requiring them to give bond, should have been brought not
against the shipowner or agent, who is the defendant in this case, but against the captain himself of the
vessel Batangueño.
Although in the preceding decision it is clearly recognized that the captain should have begun the proceedings
for the adjustment, liquidation, and distribution of the gross average in question, and that it was his duty to take
the proper steps to protect any ship whose goods may have been jettisoned for the common security, it is also
stated that in ordinary practice this is supposed to be complied with by requiring the consignees of the other
cargoes, as a condition precedent to the delivery thereof, to give a sufficient bond to answer proportionally for
the gross average, and, lastly, that the failure of the captain to take the necessary steps to effect the
adjustment, liquidation, and distribution of said average gave rise to the responsibility which should be enforced
against the defendant shipowner, against whom the shipper may immediately institute his action, the former
having in turn, if he so desires, the right to bring suit against the captain. The majority opinion attempts to
support the last proposition and invokes articles 586, 587, and 588.
First of all, according to articles 866, 867, and 888 of the same Code, a bond should be required of the shippers
by the captain after the liquidation is already approved, if the contributors should fail to pay the amount of the
quota by the third day after having been required to do so, and before delivering to them the goods saved. —
the captain having the right, upon failure to give the bond, to delay the delivery of the goods until the shippers
pay their part of the gross average corresponding to each of them — and not before proceeding with the
liquidation, for the simple reason that the amount of the bond may only be fixed after the determination of the
amount which each of the shippers may be obliged to contribute to the payment of the average, and this is so
clear and evident that in article 867 the captain is authorized to attach the goods saved until the shippers should
pay the amount, if they should fail to do so by the third day after demand upon them. And since the captain may
require bond, he may delay the delivery of the goods saved to the shippers until they make the payment. In the
case at bar, no step having as yet been taken for the adjustment and liquidation of the gross average in
question, the fact that the captain of the Batangueño delivered the respective cargoes of the other shippers
without previously requiring a bond, can not constitute the basis for making the captain responsible, much less
the owner of the vessel, as the trial court has erroneously held in the judgment appealed from and as this court
is given to understand in referring to said filing of the bond as a prerequisite to the delivery of the cargo. This is
because the time was not opportune when the captain should and could exact the bond and the law neither
requires such bond to be filed before proceeding with the liquidation, inasmuch as the shipowner or agent, as
well as the shippers, being interested in proceeding with the liquidation, the Code authorizes them, first, to
demand it from the captain and later to institute the action corresponding to them against him to recover
indemnity if he should not comply with the provisions upon the subject, that is, if he should fail to effect the
liquidation, or if, in lieu thereof, he should deliver the respective cargoes to the shippers or permit them to
dispose of the same, in which case the responsibility may be fixed upon the captain and not upon the agent
upon this ground, and for not requiring the shippers to give said bond.
In the second place, although it is true that the captain is, as stated in the decision, primarily the representative
of the shipowner or agent, it cannot in all cases, as the decision gives us to understand, be deduced that the
shipowner must be civilly responsible for all the acts of the captain.
The Code of Commerce clearly and positively specifies the cases in which such responsibility in demandable
from the agent or shipowner, and the cases in which he is not responsible, the responsible attaching only to the
captain. These cases can not be confused in view of the clear and positive provisions of said Code, in relation to
the method adopted in the exposition thereof and following the order of the subjects contained in this law.
Articles 586, 587, and 588, invoked in the decision in question in order to maintain that theory, are found in title
2 of Book 3 of said Code which treats of the persons who intervene in maritime commerce, that is, as may be
seen in sections 1, 2, and 3 thereof, the shipowners and agents, the captains and masters of vessels and the
officers and crew thereof, respectively. Articles 806 to 818 and 846 to 849, and consequently, article 852,
invoked in said decision and which refer to the gross or general average and to the simple or particular average,
are found in titles 4 and 5 of the same Book 3 which, respectively, deal with the risks, damages, and accidents
of maritime commerce and with the proof and liquidation of the averages; and they contain all the provisions of
the law relative to said subjects and to the rights and obligations which arise from the averages.
There is no relation whatever between said articles 586, 587, and 588, invoked in the decision, and those which
treat of averages. The first of said articles establishes the civil responsibility of the shipowner and agent for the
acts of the captain and the obligations incurred by the latter for the repair, equipment, and provisioning of the
vessel. The second, that is, article 587, establishes the same responsibility of the agent for indemnities, in favor
of third persons, which may arise from the conduct of the captain in the care of the goods which the vessel may
carry, from which he may exempt himself by abandoning the vessel with all her equipment and the freight he
may have earned during the voyage. In the present case it is not the conduct of the captain in the care of the
goods which has given rise to the right to exact the corresponding civil responsibility, but, according to article
862, the failure of the captain to comply with the provisions of article 851, with respect to the adjustment,
liquidation, and distribution of the gross average and the failure to attend to the claims which the agent or the
shippers may or should have made, inasmuch as said article 852 clearly so declares, in referring to the agent or
the shippers in the following words: "Without prejudice to the action they may bring to demand indemnity from
him." The care of the goods to which article 857 refers consists in the placing of the goods in the proper and
adequate place for their transportation and due preservation during the voyage, in such manner that they may
not suffer damages or deterioration nor be taken away, for, according to article 618, which bears some relation
to said article 587, the captain is civilly responsible to the agent and the latter to third persons, who may have
occurred to the vessel and the cargoes due to lack of skill or to negligence on his part and for the subtraction of
theft committed by the crew, reserving this right to proceed against the guilty parties; and, according to article
619, he shall be liable for the cargo from the time it is turned over to him at the deck or afloat alongside the
vessel at the port of loading until he delivers it on the shore or on the discharging wharp of the port of unloading,
unless the contrary has been expressly agreed upon; and, finally, according to No. 5 of the same article 618, he
shall be liable for those damages arising from an undue use of the powers and nonfulfillment of the obligations
which are his in accordance with the articles 610 and 612, one of which, the fifth mentioned in the last article, is
to remain constantly on board the vessel during the time the freight is taken on board and carefully watch the
stowage thereof, which acts, as is well-known, constitute the means for the effective custody of the goods which
may be shipped on board.
In the present case, if the consignees or owners of the cargo on board the vessel Batangueño took away with
them their respective cargoes or disposed of them upon arriving at port, after part thereof, which included the
petroleum boxes belonging to the plaintiff, had been jettisoned, it was not because the captain of said vessel
had not fulfilled his duty with respect to the care of the cargo, but because he did not proceed in accordance
with the provision of article 851 already cited, in the adjustment, liquidation, and distribution of the gross
average caused by that accident. and did not, as he should have done, according to article 852, require the
liquidation either of the agent or the shippers. Therefore to them alone, including the plaintiff, and not to the
conduct of the captain in the custody of the cargo, is the fact attributable that the shippers were able to carry
away the dispose of the cargo saved upon the arrival of the vessel at port.
The third or said articles, that is, 588, cited also in the same decision, far from making the shipowner or the
agent responsible for the obligations incurred by the captain, exempts them from all responsibility, if the captain
should have exceeded the powers and privileges which are his by reason of his position or have been conferred
upon him by the former, excepting the case, which bears no relation whatever to that in question, in which the
amounts claimed were made use of for the benefit of the vessel.
Lastly, although this point has not been touched at all in the decision now under discussion, according to article
618. No. 5, the captain shall be civilly liable to the agent, and the latter to third persons with whom he may have
contracted, for the damages arising from an undue use of his powers and the nonfulfillment of his obligations,
but it adds that such liability shall be "in accordance with articles 610 and 612." These articles, as may be seen,
refer to the powers and obligations inherent in the position of captain with respect to the appointment, contract,
and command of the crew, direction of the vessel to the port of destination, the imposition of punishments for
crimes committed on board, contracts for the charter of the vessel, its preservation and repair, the supplying of
books of navigation, and others, which are mentioned in said last article, the equipping of the vessel and the
receiving of the cargo, etc., among which obligations there is none which bears the slightest relation to those
which the same Code imposes upon the captain with respect to the adjustment, liquidation, and distribution of
the gross average.
On the other hand, in the various sections of title 4 of Book 3, and in section 1 of title 5, the Code, in treating of
the risks, damages, and accidents of maritime commerce, specifically indicates the cases in which the
responsibility of the captain is enforcible, those in which that of the agent or shipowner is demandable and those
in which that responsibility is joint among them, as well as those cases in which no responsibility may be
demanded of the agent or shipowner but only of the captain.
In effect, article 841 of section 3 of said title 4 provides that if the wreck or stranding should arise through the
malice, or lack or skill of the captain, or because the vessel put to sea insufficiently repaired and prepared, the
captain shall be responsible for the indemnification of damages caused to the vessel or the cargo by the
accident, which liability may be demanded by the agent or the shippers; but there is in said section no provision
whatever by which the agent or shipowner is made responsible.
In article 826 of section 3 of the same title, which deals with collisions, it is provided that the agent of the vessel
at fault shall indemnify the losses and damages suffered, after an expert appraisal, if a vessel should collide
with another through the fault, negligence, or lack of skill of the captain, sailing mate, or any other member of
the complement, and, according to article 831, if a vessel should be forced to collide with another by a third
vessel, the agent of the third vessel shall indemnify for the losses and damages caused, the captain being civilly
liable to said agent, this liability being understood to be limited to the value of the vessel with all equipment and
freight earned.
In treating of arrivals under stress, section 2 of the same title, in article 821, declares that when such arrival is
not legitimate, the agent and the captain shall be jointly liable for the expense incurred.
In treating averages, article 809, No. 8, in section 1 of the same title, which includes, in simple averages, the
damage suffered by the vessel or cargo by reason of an impact or collision with another, declares that if the
accident occurred through the fault or negligence of the captain, he shall be responsible for all the damages
caused, and in No. 9 of the same article, that the owner of the cargo who is injured as a result of the fault,
negligence, or barratry of the captain or the crew may demand indemnity from the captain or the crew may
demand indemnity from the captain, the vessel and freight, a rule which is based upon No. 1 of article 618 ,
already mentioned, according to which the captain shall be civilly responsible to the agent and the latter to the
third persons, for all damages suffered by the vessel and its cargo by reason of the want of skill or negligence
on his part, a provision which, as is well known, cannot refer to the case in which the owners of the cargo,
having the right to demand the adjustment, liquidation, and distribution of the gross average, upon the arrival of
the vessel at port, should dispose of the cargo saved. Such case, as already stated, is the subject of the
express and positive provisions of articles 851 and 852, in relation to articles 866, 867, and 868, included in
section 2 of the same title, as is shown by the fact that the first of said articles declares that the captain is
responsible to the owners of the goods averaged for the losses they may have suffered through his delay or
negligence in collecting the amount of the contribution after the liquidation is approved, and by the fact that the
last of said articles, that is, 868, declares that the captain may exact from the shippers a bond sufficient to
answer for the amount of corresponding to the gross average for the purpose of delaying the delivery to them of
the goods saved until they pay said amount.
It is by these special provisions and not by the general provisions contained in sections 1, 2, and 3, of title 2, of
Book 3 of said Code, that we must be governed when dealing with the risks, damages, and accidents the
maritime commerce; and gross average being among them, then, for the failure of the captain of the
vessel Batangueño to comply with the provisions relating to the adjustment, liquidation, and distribution, the
defendant owner of the vessel can not and should not be made liable, but only the captain, for article 852,
already cited, is clear and positive to the effect that in said case the agent or the shippers shall demand of the
captain the liquidation and may exercise against him the action to recover the proper indemnity, a provision
which excludes in such case all responsibility of the agent or owner of the vessel, for the reason that, the latter
being, according to the same article, one of those who, jointly with the shippers, may ask the captain for the
liquidation and institute against him the corresponding action for indemnification, it would be absurb to pretend
and maintain that the shippers may also institute the same action against the agent or owner of the vessel, in
this manner converting him from plaintiff into defendant.
But, as if it is still possible to put under discussion and interpret so clear and positive a provision as that of said
article 852, and those related to it which, as has already been mentioned, are also of the same character, it is
argued in the decision of this court that as "the owner of the ship ordinarily has vastly more capital embarked
upon a voyage than has any individual shipper of cargo, and moreover, as the owner of the ship, in the person
of the captain, has complete and exclusive control of the crew and of the navigation of the ship, as well as of the
disposition of the cargo at the end of the voyage, the evident intention of the Code, taken in all of its provisions,
is to place the primary liability upon . . . the owner of the ship, leaving him to obtain recourse, as it is very easy
to do, from other individuals who have been drawn into the venture as shippers, for, to adopt another
interpretation of the law would place the shipowner in a position to escape all responsibility for a general
average of this character by means of the delinquency of his own captain. And it is therefore proper that any
person whose property may have been cast overboard by order of the captain should have a right of action
directly against the ship's owner for the breach of any duty which the law may have imposed on the captain with
respect to such cargo."
Such reasoning, however, is not convincing. In the first place, it is not true that the average in question was
occasioned by the fault of the captain of the vessel Batangueño, for on this point there is no evidence in the
record, but because of the necessity of throwing overboard part of the cargo of said vessel to save it from the
danger then threatening it; secondly, the purpose of the adjustment and liquidation of the gross average is to
secure contribution from the parties interested in the vessel and cargo existing at the time of the occurrence
thereof in order to pay the amount of such average (art. 812, Code of Commerce), for which purpose article 858
defines the procedure for the distribution of the value of the average, stating that there must be taken into
consideration, as already stated by us, when we were discussing this article, the contributing capital determined
by the value of the cargo, that of the vessel in her actual condition and the percentage of the amount of the
freight reduced by 50 per cent for wages and maintenance of the crew, and further declaring that after the
determination of the amount of the average, it shall be distributed pro rata among the contributing values and
then paid to the proper parties, after the persons interested therein, that is, the agent or owner of the vessel and
the shippers have consented thereto, or in default thereof, after the liquidation is duly approved; and, lastly, as
repeatedly stated by us, accordingly to the same articles, the owner of the vessel, or the agent, is also one of
the interested parties and coparticipants in the adjudication of the average and its pro rata distribution among
the contributing values. From what has just been said it results that no purpose is served by considering
whether or not he has put in the voyage or undertaking a capital greater than that of any individual shipper for
the purpose of making him principally liable, that is compelling him to pay to the shippers what each of the latter
as well as he himself has the right to be paid for in proportion to the amount of the respective capital fixed
according to the rules already stated in the distribution of the average. This is because, however great the value
of the vessel may be, there cannot be conceded to the shippers in the adjudication a greater value than that
corresponding to them in the adjudication and distribution of the average, according to the capital determined by
the value of the cargo at each, in conformity with the rules established in article 854 for the assessment of the
same cargo and of the goods which have to contribute to said average, nor can there be conceded to the owner
of the vessel a value greater than that which may correspond to him in said adjudication and distribution, based
upon the value of the vessel in its actual condition, according to a statement of experts and the rules for
assessment thereof found in Nos. 6 and 7 of said article 854, from which it is necessarily inferred that it is
notoriously unjust, — because the law does not authorize it and it would be a violation of its positive provisions
— to compel the owner of the vessel, by the mere fact of having put a greater capital in the undertaking, to pay
to the shippers the quota which corresponds to each of them which, in this case, according to the majority
opinion, is that which should correspond, without a previous liquidation, to the plaintiff, Standard Oil Company,
saving to him, however, the right afterwards to bring action or proceed against the other shippers, as expressed
in the same decision. In short, it would amount to absolutely ignoring the provisions of the law, which are so
clear, express, and positive with respect not only to the adjustment, liquidation, and distribution of the gross
average, but also to the procedure for effecting the same and the rights and obligations of those who should
contribute to the average. And it is very clear that error has been committed, because in the same decision, two
paragraphs before that in which the theory already discussed is made, it is stated that there has been "a
misconception of the true import of the provisions relating to the adjustment and liquidation of general average,"
in arguing that the right of action should be "against the captain, who has been delinquent in performing the duty
which the law imposes on him," for "clearly," says the same decision, "those provisions are intended to supply
the shipowner, acting to court in the person of the captain, with a means whereby he may escape bearing the
entire burden of the loss and may distribute it among all the persons who ought to participate in sharing it; but
the making of the liquidation is not a condition precedent to the liability of the shipowner to the shipper whose
property has been jettisoned."
As is clearly seen, what has just been stated gives us to understand that the owner of the vessel must suffer all
the loss in case of gross average, and that the provisions relating to the adjustment, liquidation, and distribution
thereof are for the purpose of furnishing him the means for evading and enabling himself to distribute it between
the persons who should participate in the average. This is erroneous, because these provisions, which
intentionally are extensively mentioned in this opinion, do not have that object, for the reason that the shipowner
is not the person who should suffer all the loss in case of gross average, but it should be partitioned and
distributed between the shipowner or agent and the shippers, in proportion to their interests and the respective
value of the cargo and vessel, which should be fixed according to article 850 and the rules for their assessment,
stated in article 854 previously cited, after the liquidation and approval thereof, and after hearing the interested
parties or their representatives; and all of these proceedings would surely be useless and unnecessary if the
shipowner or the agent should have to suffer all loss but may afterwards distribute it among those participants
therein, or, what is the same thing, if he should be compelled by law to pay the total value of the average and
then partition it among the shippers or owners of the cargo, as is maintained in said decision. And there is no
doubt that this is what is maintained in the decision, as the basis of the pronouncements made therein,
because, as already stated, in the paragraph now under discussion, it is clearly stated that the liquidation is not
a condition precedent to the enforcement of the liability of the shipowner to the shipper, whose goods may have
been jettisoned. And this is not what the law says just as it does not say that the shipowner shall be liable to the
shipper or owner of the goods, but that, on the contrary, it says that the shipowner or agent as well as the
shippers may demand liquidation from the captain and institute against him the corresponding action to recover
indemnity, that is, that he has the same right as the shippers to demand liquidation from the captain and, in
default thereof, to recover indemnification, from which it is clearly inferred that the liquidation is a condition
precedent, not to the liability of the shipowner to the shipper whose goods may have been jettisoned, as stated
in the decision in question, but to the partition which must be made between the agent or shipowner and the
shippers of the respective amount of the average. This partition, and not that the shipowner should suffer all
loss but may afterwards evade and distribute it among all persons who should share in the average, is the real
interpretation of the provisions to which reference is made in the same decision.
Neither is it true that, as stated in said decision, the shipowner has, through the captain, the complete and
exclusive control of the crew and the sailing of the vessels, as well as of the destination of the cargo at the end
of the voyage, and that, for this reason, the principal liability for the payment of the gross average must fall upon
the shipowner.
That he does not have the complete and exclusive control of the crew is shown, among other provisions of the
same Code of Commerce, by the following articles: First, article 610, according to which, among others, it is an
inherent power in the captain to appoint or make contracts with the crew in the absence of the agent and to
propose said crew if said agent be present, but without any right on the part of the latter to employ any individual
against the captain's express refusal. This provision necessarily implies the absolute power of the captain to
take on the contract the crew, and article 634 confirms it, according to which the captain may make up his crew
with the number he may consider advisable, taking on resident foreigners, in the absence of nationals, their
number not to exceed one-fifth of the total crew, and may even, with the consent of the consul or marine
authorities, complete his crew with foreigners in foreign ports if he should not find sufficient number of nationals,
the captain being obliged to execute the contract with said members of the crew and others who compose the
complement of the vessel; and finally, article 637 which empowers the captain, for sufficient cause, to discharge
a sailor during the time of his contract and to refuse, before setting out on a voyage without giving any reason
whatever, to permit a sailor he may have engaged from going on board, in which case he will be obliged to pay
him his wages as if he had rendered services, this indemnity to be paid from the funds of the vessel only if the
captain had acted for reasons of prudence and in the interests of safety and good service of the vessel; but,
should this not be the case, says said article, it shall be paid by the captain personally. And, if in all that has just
been stated the captain may act independently, it is obvious that the owner of the vessel or the agent does not
have, through the captain, complete and exclusive control of the crew. In short, the captain directly exercises
exclusively personal powers with respect to the crew and, for this reason, he is personally and particularly
responsible for his acts, except in the only case already mentioned, in which he may have acted for the benefit
of the vessel.
Another power inherent in the position of captain, according to article 610, is that of directing the vessel to the
port of its destination, according to the instructions he may have received from the agent, but from this is cannot
be inferred that the shipowner or agent has, through the captain, complete and exclusive control of the
navigation of the vessel, for the simple reason that the captain may not obey said instructions and may act
freely adjusting his decisions according to the circumstances of each case, as would occur in the case of risks,
damages, and accidents which we have previously discussed, cases in which the law imposes upon the captain
the obligations to which titles 4 and 5 of Book 3 refers and indicates those cases which we have heretofore
minutely discussed, in some of which he is personally responsible, in orders the agent or shipowner, or the
latter jointly with the captain, and still in others, in which the agent is not responsible but only the captain.
Nor is it true that the shipowner, through the captain, has the complete and exclusive control of the destination
of the cargo at the end of the voyage, for article 619 says textually that the captain shall be liable for the cargo
from the time it is turned over to him at the dock, or afloat alongside the ship, at the port of loading, until he
delivers it on the shore or on the discharging wharf, of the port of unloading, unless the contrary has been
expressly agreed upon, and that, according to article 620, he is not liable for the damages caused to the vessel
or to the cargo by reason of force majeure, and article 625 adds that the captain, under his personal liability, as
soon as he arrives at the port of destination, upon obtaining the necessary permission from the health and
customs officers and fulfilling the other formalities required by the regulations of the administration, shall turn
over the cargo, without any defalcation, to the consignees and, in a proper case, the vessel, rigging, and
freights to the agent. And if the captain is personally responsible, according to the clear and positive text of said
article, for the delivery of the cargo to the consignees and, of the vessel, rigging, and freight, to the agent or
shipowner, it is clear that the latter does not have complete and exclusive control of the destination of the cargo
at the end of the voyage, because the obligation to deliver is a personal obligation of the captain, and the agent
or shipowner, just as any of the consignees, may demand said liability with respect to the vessel, rigging, and
freight from the captain. And that responsibility of the captain cannot be confused with the provision contained
in article 618 of the same Code in favor of the agent, and that of the latter in favor of third persons who may
have contracted with him, because in said article 618 are specifically mentioned the cases of responsibility to
which the same article refers, and the responsibility of the captain from the moment the cargo is delivered to
him until its unloading is specially declared in article 619 and even more particularly in article 625 which says
that said responsibility is a personal responsibility of the captain.
It cannot, therefore, be inferred from all the provisions of the Code, that the evident intention thereof is to
impose the principal responsibility upon the shipowner, as stated in the decision of the majority; and, if the law is
to be complied with, it is useless effort to show its truth, by invoking the general provisions of the Code of
Commerce, which govern the relations between the captain and the shipowner or the agent and those of one or
the other or both with third persons who may have contracted with either of them, or by invoking those which
deal with gross averages, as one of the damages and accidents and maritime commerce, because, in the first,
there is no declaration expressly made upon the subject, and, in the second, what is established and declared is
precisely the contrary, for the shipowner or agent has, just as the shippers, the right of action against the
captain to enforce his responsibility and to be indemnified by him for the damages occasioned to them by
reason of the failure of the captain to comply with the obligations imposed upon him by law with respect to the
adjustment, liquidation, and distribution of the average, and with respect to the disposition and delivery of the
goods saved to the shippers, before the payment by the latter of their aliquot part in the partition of the average,
or without their having filed a sufficient bond to answer for the cargo, for the reason that, according to article
619, he is responsible for the cargo from the moment he takes charge thereof at the port of loading until its
delivery at the port of unloading and, according to article 625, he is, under his personal liability, obliged to
deliver the cargo, without defalcation, to the consignees or shippers and, in the proper case, the vessel, rigging,
and freight to the agent upon the arrival at the port of destination. This shows, in relation to the provisions of
articles 866 and 868, already cited, that the captain of the vessel should be personally liable to the owners of
the goods averaged for the damages which were incurred by them, by reason of his delay or negligence in
requiring a goods of the shippers before delivery to them of the goods saved, — this supposing that they are
obliged to do so, — instead of proceeding to the adjustment, liquidation, and distribution of the gross average,
inasmuch as the purpose of the law is to exact said personal responsibility for the due delivery to the
consignees or shippers of the cargo.
The plaintiff, therefore, should have brought said action, if he had any, for the recovery of the amount claimed in
the complaint, not against the defendant, owner of the vessel Batangueño, but against the captain thereof, and
said defendant cannot and should not be sentenced to pay to the plaintiff the sum stated in the decision of this
court which, with some modification as to the amount thereof, affirms the judgment of the trial court; and there is
more reason for this assertion because that sum is, according to said decision, what the plaintiff should receive
in the partition and distribution of the gross average in question and, yet, it does not appear that the
corresponding liquidation, and, consequently, the division and distribution of said average, has already been
made, as required by the provisions of the Code of Commerce in the articles mentioned at the beginning.
Regretting that I have to dissent from the respectable opinion of the majority, I am of the opinion, for the reasons
above stated, that the judgment appealed from should be reversed and the defendant should be absolved from
the complaint.
Avanceña, J., concurs.
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EN BANC
G.R. No. L-6393
January 31, 1955
A. MAGSAYSAY INC., plaintiff-appellee,
vs.
ANASTACIO AGAN, defendant-appellant.
Custodio A. Villava for appellant.
Quijano, Alidio and Azores for appellee.
REYES, A. J.:
The S S "San Antonio", vessel owned and operated by plaintiff, left Manila on October 6, 1949, bound for
Basco, Batanes, vis Aparri, Cagayan, with general cargo belonging to different shippers, among them the
defendant. The vessel reached Aparri on the 10th of that month, and after a day's stopover in that port, weighed
anchor to proceed to Basco. But while still in port, it ran aground at the mouth of the Cagayan river, and,
attempts to refloat it under its own power having failed, plaintiff have it refloated by the Luzon Stevedoring Co.
at an agreed compensation. Once afloat the vessel returned to Manila to refuel and then proceeded to Basco,
the port of destination. There 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.
On the theory that the expenses incurred in floating the vessel constitute general average to which both ship
and cargo should contribute, plaintiff brought the present action in the Court of First Instance of Manila to make
defendant pay his contribution, which, as determined by the average adjuster, amounts to P841.40. Defendant,
in his answer, denies liability to his amount, alleging, among other things, that the stranding of the vessel was
due to the fault, negligence and lack of skill of its master, that the expenses incurred in putting it afloat did not
constitute general average, and that the liquidation of the average was not made in accordance with law. After
trial, the lower court found for plaintiff and rendered judgment against the defendant for the amount of the claim,
with legal interests. From this judgment defendant had appealed directly to this Court.
Although appellant assigns various errors, under our view of the case only the following need be considered:
The trial court erred in allowing the general average for floating a vessel unintentionally stranded inside a port
and at the mouth of a river during a fine weather.
For the purposes of this assignment of error we may well accept the finding below that the stranding of plaintiff's
vessel was due to the sudden shifting of the sandbars at the mouth of the river which the port pilot did not
anticipate. The standing may, therefore, be regarded as accidental, and the question is whether the expenses
incurred in floating a vessel so stranded should be considered general average and shared by the cargo
owners.
The law on averages is contained in the Code of Commerce. Under that law, averages are classified into simple
or particular and general or gross. Generally speaking, simple or particular averages include all expenses and
damages caused to the vessel or cargo which have not inured to the common benefit (Art. 809), and are,
therefore, to be borne only by the owner of the property gave rise to same (Art. 810); while general or gross
averages include "all the damages and expenses which are deliberately caused in order to save the vessel, its
cargo, or both at the same time, from a real and known risk" (Art. 811). Being for the common benefit, gross
averages are to be borne by the owners of the articles saved (Art. 812).
In classifying averages into simple o particular and general or gross and defining each class, the Code (Art. 809
and 811) at the same time enumerates certain specific cases as coming specially under one or the other
denomination. Going over the specific cases enumerated we find that, while the expenses incurred in putting
plaintiff's vessel afloat may well come under number 2 of article 809-which refers to expenses suffered by the
vessel "by reason of an accident of the sea of the force majuere" — and should therefore be classified as
particular 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" and would have no application where, as in
the present case, the stranding was not intentional.
Let us now see whether the expenses here in question could come within the legal concept of the general
average. Tolentino, in his commentaries on the Code of Commerce, gives the following requisites for general
average:
First, there must be a common danger. This means, that both the ship and the cargo, after has been loaded, are
subject to the same danger, whether during the voyage, or in the port of loading or unloading; that the danger
arises from the accidents of the sea, dispositions of the authority, or faults of men, provided that the
circumstances producing the peril should be ascertained and imminent or may rationally be said to be certain
and imminent. This last requirement exclude measures undertaken against a distant peril.
Second, that for the common safety part of the vessel or of the cargo or both is sacrificed deliberately.
Third, that from the expenses or damages caused follows the successful saving of the vessel and cargo.
Fourth, that the expenses or damages should have been incurred or inflicted after taking proper legal steps and
authority. (Vol. 1, 7th ed., p. 155.)
With respect to the first requisite, the evidence does not disclose that the expenses sought to be recovered from
defendant were 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". It would thus appear that
vessel and cargo were at the time in no imminent danger or a danger which might "rationally be sought to be
certain and imminent." 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." It is the deliverance from an immediate, impending peril, by a
common sacrifice, that constitutes the essence of general average. (The Columbian Insurance Company of
Alexandria vs. Ashby & Stribling et al., 13 Peters 331; 10 L. Ed., 186). In the present case there is no proof that
the vessel had to be put afloat to save it from imminent danger. 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.
As to the second requisite, we need only repeat that the expenses in question were not incurred for the
common safety of vessel and cargo, since they, or at least the cargo, were not in imminent peril. The cargo
could, without need of expensive salvage operation, have been unloaded by the owners if they had been
required to do so.
With respect to the third requisite, the salvage operation, it is true, was a success. But as the sacrifice was for
the benefit of the vessel — to enable it to proceed to destination — and not for the purpose of saving the cargo,
the cargo owners are not in law bound to contribute to the expenses.
The final requisite has not been proved, for it does not appear that the expenses here in question were incurred
after following the procedure laid down in article 813 et seq.
In conclusion we found that plaintiff not made out a case for general average, with the result that its claim for
contribution against the defendant cannot be granted.
Wherefore, the decision appealed from is reversed and plaintiff's complaint ordered dismissed with costs.
Paras, C.J., Bengzon, Padilla, Montemayor, Jugo, Bautista Angelo, and Reyes, J.B.L., JJ., concur.
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FIRST DIVISION
G.R. No. 106999 June 20, 1996
PHILIPPINE HOME ASSURANCE CORPORATION, petitioner,
vs.
COURT OF APPEALS and EASTERN SHIPPING LINES, INC., respondents.
KAPUNAN, J.:p
Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan, the following
shipment for carriage to Manila and Cebu, freight pre-paid and in good order and condition, viz: (a) two (2)
boxes internal combustion engine parts, consigned to William Lines, Inc. under Bill of Lading No. 042283; (b)
ten (l0) metric ton. (334 bags) ammonium chloride, consigned to Orca's Company under Bill of Lading No.
KCE-I2; (c) two hundred (200) bags Glue 300, consigned to Pan Oriental Match Company under Bill of Lading
No. KCE-8; and (d) garments, consigned to Ding Velayo under Bills of Lading Nos. KMA-73 and KMA-74.
While the vessel was off Okinawa, Japan, a small flame was detected on the acetylene cylinder located in the
accommodation area near the engine room on the main deck level. As the crew was trying to extinguish the fire,
the acetylene cylinder suddenly exploded sending a flash of flame throughout the accommodation area, thus
causing death and severe injuries to the crew and instantly setting fire to the whole superstructure of the vessel.
The incident forced the master and the crew to abandon the ship.
Thereafter, SS Eastern Explorer was found to be a constructive total loss and its voyage was declared
abandoned.
Several hours later, a tugboat under the control of Fukuda Salvage Co. arrived near the vessel and commenced
to tow the vessel for the port of Naha, Japan.
Fire fighting operations were again conducted at the said port. After the fire was extinguished, the cargoes
which were saved were loaded to another vessel for delivery to their original ports of destination. ESLI charged
the consignees several amounts corresponding to additional freight and salvage charges, as follows: (a) for the
goods covered by Bill of Lading No. 042283, ESLI charged the consignee the sum of P1,927.65, representing
salvage charges assessed against the goods; (b) for the goods covered by Bill of Lading No. KCE-12, ESLI
charged the consignee the sum of P2,980.64 for additional freight and P826.14 for salvage charges against the
goods; (c) for the goods covered by Bill of Lading No. KCE-8, ESLI charged the consignee the sum of
P3,292.26 for additional freight and P4,130.68 for salvage charges against the goods; and
(d) for the goods under Bills of Lading Nos. KMA-73 and KMA-74, ESLI charged the consignee the sum of
P8,337.06 for salvage charges against the goods.
The charges were all paid by Philippine Home Assurance Corporation (PHAC) under protest for and in behalf of
the consignees.
PHAC, as subrogee of the consignees, thereafter filed a complaint before the Regional Trial Court of Manila,
Branch 39, against ESLI to recover the sum paid under protest on the ground that the same were actually
damages directly brought about by the fault, negligence, illegal act and/or breach of contract of ESLI.
In its answer, ESLI contended that it exercised the diligence required by law in the handling, custody and
carriage of the shipment; that the fire was caused by an unforeseen event; that the additional freight charges
and that salvage charges
are properly collectible under Act No. 2616, known as the
Salvage Law.
are due and demandable pursuant to the Bill of Lading;
1
The trial court dismissed PHAC's complaint and ruled in favor of ESLI ratiocinating thus:
The question to be resolved is whether or not the fire on the vessel which was caused by the explosion of an
acetylene cylinder loaded on the same was the fault or negligence of the defendant.
Evidence has been presented that the SS "Eastern Explorer" was a seaworthy vessel (Deposition of Jumpei
Maeda, October 23, 1980, p. 3) and before the ship loaded the Acetylene Cylinder No. NCW 875, the same has
been tested, checked and examined and was certified to have complied with the required safety measures and
standards (Deposition of Senjei Hayashi, October 23, 1980, pp. 2-3). When the fire was detected by the crew,
fire fighting operations was immediately conducted but due to the explosion of the acetylene cylinder, the crew
were unable to contain the fire and had to abandon the ship to save their lives and were saved from drowning
by passing vessels in the vicinity. The burning of the vessel rendering it a constructive total loss and incapable
of pursuing its voyage to the Philippines was, therefore, not the fault or negligence of defendant but a natural
disaster or calamity which nobody would like to happen. The salvage operations conducted by Fukuda Salvage
Company (Exhibits "4-A" and "6-A") was perfectly a legal operation and charges made on the goods recovered
were legitimate charges.
Act No. 2616, otherwise known as the Salvage Law, is thus applicable to the case at bar. Section 1 of Act No.
2616 states:
Sec 1. When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew, or shall have
been abandoned by them, and picked up and conveyed to a safe place by other persons, the latter shall be
entitled to a reward for the salvage.
Those who, not being included in the above paragraph, assist in saving a vessel or its cargo from shipwreck,
shall be entitled to like reward.
In relation to the above provision, the Supreme Court has ruled in Erlanger & Galinger v. Swedish East Asiatic
Co., Ltd., 34 Phil. 178, that three elements are necessary to a valid salvage claim, namely (a)a marine peril (b)
service voluntarily rendered when not required as an existing duty or from a special contract and (c) success in
whole or in part, or that the service rendered contributed to such success.
The above elements are all present in the instant case. Salvage charges may thus be assessed on the cargoes
saved from the vessel. As provided for in Section 13 of the Salvage Law, "The expenses of salvage, as well as
the reward for salvage or assistance, shall be a charge on the things salvaged or their value." In Manila Railroad
Co. v. Macondray Co., 37 Phil. 583, it was also held that "when a ship and its cargo are saved together, the
salvage allowance should be charged against the ship and cargo in the proportion of their respective values, the
same as in a case of general average . . ." Thus, the "compensation to be paid by the owner of the cargo is in
proportion to the value of the vessel and the value of the cargo saved." (Atlantic Gulf and Pacific Co. v. Uchida
Kisen Kaisha, 42 Phil. 321). (Memorandum for Defendant, Records, pp. 212-213).
With respect to the additional freight charged by defendant from the consignees of the goods, the same are also
validly demandable.
As provided by the Civil Code:
Art. 1174. Except in cases expressly specified by law, or when it is otherwise declared by stipulation, or when
the nature of the obligation require the assumption of risk, no person shall be responsible for those events
which could not be foreseen, or which though foreseen, were inevitable.
Art 1266. The debtor in obligations to do shall also be released when the prestation becomes legally or
physically impossible without the fault of the obligor."
The burning of "EASTERN EXPLORER" while off Okinawa rendered it physically impossible for defendant to
comply with its obligation of delivering the goods to their port of destination pursuant to the contract of carriage.
Under Article 1266 of the Civil Code, the physical impossibility of the prestation extinguished defendant's
obligation..
It is but legal and equitable for the defendant therefore, to demand additional freight from the consignees for
forwarding the goods from Naha, Japan to Manila and Cebu City on board another vessel, the "EASTERN
MARS." This finds support under Article 844 of the Code of Commerce which provides as follows:
Art. 844. A captain who may have taken on board the goods saved from the wreck shall continue his course to
the port of destination; and on arrival should deposit the same, with judicial intervention at the disposal of their
legitimate owners. . . .
The owners of the cargo shall defray all the expenses of this arrival as well as the payment of the freight which,
after taking into consideration the circumstances of the case, may be fixed by agreement or by a judicial
decision.
Furthermore, the terms and conditions of the Bill of Lading authorize the imposition of additional freight charges
in case of forced interruption or abandonment of the voyage. At the dorsal portion of the Bills of Lading issued to
the consignees is this stipulation:
12. All storage, transshipment, forwarding or other disposition of cargo at or from a port of distress or other
place where there has been a forced interruption or abandonment of the voyage shall be at the expense of the
owner, shipper, consignee of the goods or the holder of this bill of lading who shall be jointly and severally liable
for all freight charges and expenses of every kind whatsoever, whether payable in advance or not that may be
incurred by the cargo in addition to the ordinary freight, whether the service be performed by the named
carrying vessel or by carrier's other vessels or by strangers. All such expenses and charges shall be due and
payable day by day immediately when they are incurred.
The bill of lading is a contract and the parties are bound by its terms (Gov't of the Philippine Islands vs.
Ynchausti and Co., 40 Phil. 219). The provision quoted is binding upon the consignee.
Defendant therefore, can validly require payment of additional freight from the consignee. Plaintiff can not thus
recover the additional freight paid by the consignee to defendant. (Memorandum for Defendant, Record, pp.
215-216).2
On appeal to the Court of Appeals, respondent court affirmed the trial court's findings and
hence, the present petition for review before this
Court on the following errors:
conclusions,
3
I. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH APPROVAL THE TRIAL COURT'S
FINDINGS THAT THE BURNING OF THE SS "EASTERN EXPLORER", RENDERING ET A CONSTRUCTIVE
TOTAL LOSS, IS A NATURAL DISASTER OR CALAMITY WHICH NOBODY WOULD LIKE TO HAPPEN,
DESPITE EXISTING JURISPRUDENCE TO THE CONTRARY.
II. THE RESPONDENT COURT ARBITRARILY RULED THAT THE BURNING OF THE SS "EASTERN
EXPLORER" WAS NOT THE FAULT AND NEGLIGENCE OF RESPONDENT EASTERN SHIPPING LINES.
III. THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT
DEFENDANT HAD EXERCISED THE EXTRAORDINARY DILIGENCE IN THE VIGILANCE OVER THE
GOODS AS REQUIRED BY LAW.
IV. THE RESPONDENT COURT ARBITRARILY RULED THAT THE MARINE NOTE OF PROTEST AND
STATEMENT OF FACTS ISSUED BY THE VESSEL'S MASTER ARE NOT HEARSAY DESPITE THE FACT
THAT THE VESSEL'S MASTER, CAPT. LICAYLICAY WAS NOT PRESENTED COURT, WITHOUT
EXPLANATION WHATSOEVER FOR HIS NON-PRESENTATION, THUS, PETITIONER WAS DEPRIVED OF
ITS RIGHT TO CROSS- EXAMINE THE AUTHOR THEREOF.
V. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH APPROVAL THE TRIAL COURT'S
CONCLUSION THAT THE EXPENSES OR AVERAGES INCURRED IN SAVING THE CARGO CONSTITUTE
GENERAL AVERAGE.
VI. THE RESPONDENT COURT ERRONEOUSLY ADOPTED THE TRIAL COURT'S RULING THAT
PETITIONER WAS LIABLE TO RESPONDENT CARRIER FOR ADDITIONAL FREIGHT AND SALVAGE
CHARGES. 4
It is quite evident that the foregoing assignment of errors challenges the findings of fact and the appreciation of
evidence made by the trial court and later affirmed by respondent court. While it is a well-settled rule that only
questions of law may be raised in a petition for review under Rule 45 of the Rules of Court, it is equally
well-settled that the same admits of the following exceptions, namely: (a) when the conclusion is a finding
grounded entirely on speculation, surmises or conjectures; (b) when the inference made is manifestly mistaken,
absurd or impossible; (c) where there is a grave abuse of discretion; (d) when the judgment is based on a
misapprehension of facts; (e) when the findings of fact are conflicting; (f) when the Court of Appeals, in making
its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant
and appellee; (g) when the findings of the Court of Appeals are contrary to those of the trial court; (h) when the
findings of fact are conclusions without citation of specific evidence on which they are based;
(i) when the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by
the respondents; and (j) when the finding of fact of the Court of Appeals is premised on the supposed absence
Thus, if there is a
showing, as in the instant case, that the findings
complained of are totally devoid of support in the records,
or that they are so glaringly erroneous as to constitute
of evidence and is contradicted by the evidence on record.
5
grave abuse of discretion, the same may be properly
reviewed and evaluated by this Court.
It is worthy to note at the outset that the goods subject of the present controversy were neither lost nor damaged
in transit by the fire that razed the carrier. In fact, the said goods were all delivered to the consignees, even if the
transshipment took longer than necessary. What is at issue therefore is not whether or not the carrier is liable
for the loss, damage, or deterioration of the goods transported by them but who, among the carrier, consignee
or insurer of the goods, is liable for the additional charges or expenses incurred by the owner of the ship in the
salvage operations and in the transshipment of the goods via a different carrier.
In absolving respondent carrier of any liability, respondent Court of Appeals sustained the trial court's finding
that the fire that gutted the ship was a natural disaster or calamity. Petitioner takes exception to this conclusion
and we agree.
In our jurisprudence, fire may not be considered a natural disaster or calamity since it almost always arises from
some act of man or by human means.
It cannot be an act of God unless caused by lightning or a natural disaster or casualty not attributable to human
agency. 6
In the case at bar, it is not disputed that a small flame was detected on the acetylene cylinder and that by
reason thereof, the same exploded despite efforts to extinguish the fire. Neither is there any doubt that the
acetylene cylinder, obviously fully loaded, was stored in the accommodation area near the engine room and not
in a storage area considerably far, and in a safe distance, from the engine room. Moreover, there was no
showing, and none was alleged by the parties, that the fire was caused by a natural disaster or calamity not
attributable to human agency. On the contrary, there is strong evidence indicating that the acetylene cylinder
caught fire because of the fault and negligence of respondent ESLI, its captain and its crew.
First, the acetylene cylinder which was fully loaded should not have been stored in the accommodation area
near the engine room where the heat generated therefrom could cause the acetylene cylinder to explode by
reason of spontaneous combustion. Respondent ESLI should have easily foreseen that the acetylene cylinder,
containing highly inflammable material was in real danger of exploding because it was stored in close proximity
to the engine room.
Second, respondent ESLI should have known that by storing the acetylene cylinder in the accommodation area
supposed to be reserved for passengers, it unnecessarily exposed its passengers to grave danger and injury.
Curious passengers, ignorant of the danger the tank might have on humans and property, could have handled
the same or could have lighted and smoked cigarettes while repairing in the accommodation area.
Third, the fact that the acetylene cylinder was checked, tested and examined and subsequently certified as
before it was
loaded in the vessel only shows to a great extent that
negligence was present in the handling of the acetylene
cylinder after it was loaded and while it was on board the
ship. Indeed, had the respondent and its agents not been
negligent in storing the acetylene cylinder near the engine
room, then the same would not have leaked and
exploded during the voyage.
having complied with the safety measures and standards by qualified experts
7
Verily, there is no merit in the finding of the trial court to which respondent court erroneously agreed that the fire
was not the fault or negligence of respondent but a natural disaster or calamity. The records are simply wanting
in this regard.
Anent petitioner's objection to the admissibility of Exhibits "4'' and ''5", the Statement of Facts and the Marine
Note of Protest issued by Captain Tiburcio A. Licaylicay, we find the same impressed with merit because said
documents are hearsay evidence. Capt. Licaylicay, Master of S.S. Eastern Explorer who issued the said
documents, was not presented in court to testify to the truth of the facts he stated therein; instead, respondent
ESLI presented Junpei Maeda, its Branch Manager in Tokyo and Yokohama, Japan, who evidently had no
personal knowledge of the facts stated in the documents at issue. It is clear from Section 36, Rule 130 of the
Rules of Court that any evidence, whether oral or documentary, is hearsay if its probative value is not based on
the personal knowledge of the witness but on the knowledge of some other person not on the witness stand.
Consequently, hearsay evidence, whether objected to or not, has no probative value unless the proponent can
It is excluded
because the party against whom it is presented is
deprived of his right and opportunity to cross-examine the
persons to whom the statements or writings are
show that the evidence falls within the exceptions to the hearsay evidence rule.
8
attributed.
On the issue of whether or not respondent court committed an error in concluding that the expenses incurred in
saving the cargo are considered general average, we rule in the affirmative. As a rule, general or gross
averages include all damages and expenses which are deliberately caused in order to save the vessel, its
While the instant case
may technically fall within the purview of the said
provision, the formalities prescribed under Articles
813 and 814 of the Code of Commerce in order to incur
the expenses and cause the damage corresponding to
gross average were not complied with. Consequently,
respondent ESLI's claim for contribution from the
consignees of the cargo at the time of the occurrence of
the average turns to naught.
cargo, or both at the same time, from a real and known risk
10
9
11
Prescinding from the foregoing premises, it indubitably follows that the cargo consignees cannot be made liable
to respondent carrier for additional freight and salvage charges. Consequently, respondent carrier must refund
to herein petitioner the amount it paid under protest for additional freight and salvage charges in behalf of the
consignees.
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE. Respondent Eastern
Shipping Lines, Inc. is ORDERED to return to petitioner Philippine Home Assurance Corporation the amount it
paid under protest in behalf of the consignees herein.
SO ORDERED.
Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.
Footnotes
1 Sec 12. All storage, transshipment forwarding or other disposition of cargo at or from port of distress or other
place where there has been a forced interruption or abandonment of the voyage shall be at the expense of the
owner, shipper, consignee of the goods or the holder of this bill of lading who shall be jointly and severally liable
for all freight charges and expenses of every kind whatsoever, whether payable in advance or not that may be
incurred by the cargo in addition to the ordinary freight, whether payable in advance or not that may be incurred
by the cargo in addition to the ordinary freight, whether the service be performed by the named carrying vessel
or by carrier's other vessels or by strangers such expenses and charges shall be due and payable day by day
immediately when they are incurred.
2 Original Records, pp. 240-243.
3 Rollo, pp. 29-39.
4 Id., at 12-13.
5 Geronimo v. Court of Appeals, 224 SCRA 494, 498-499 (1993]; BPI Credit Corporation v. Court of Appeals,
204 SCRA 601, 608-609 [1991]; Medina v. Asistio, Jr., 191 SCRA 218, 223-224 [1990].
6 Eastern Shipping Lines, Inc. v. Intermediate Appellate Court 150 SCRA 463 [1987]; Africa v. Caltex, 16 SCRA
448 [1966]; See also 4 Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the
Philippines, 1993 Edition, p. 44.
7 Original Records, p. 171.
8 Baguio v. Court of Appeals, 226 SCRA 366, 370 [1993].
9 Art 811, Code of Commerce.
10 Art 813. In order to incur the expenses and cause the damages corresponding to gross average, there must
be a resolution of the captain, adopted after deliberation with the sailing mate and other officers of the vessel,
and after hearing the persons interested in the cargo who may be present.
If the latter shall object, and the captain and officers or a majority of them, or the captain, if opposed to the
majority, should consider certain measures necessary they may be executed under his responsibility, without
prejudice to the right of the shippers to proceed against the captain before the competent judge or court, if they
can prove that he acted with malice, lack of skill, or negligence.
If the persons interested in the cargo, being on board the vessel, have not been heard, they shall not contribute
to the gross average, their share being chargeable against the captain, unless the urgency of the case should
be such that the time necessary for previous deliberations was wanting.
11 Art 814. The resolution adopted to cause the damages which constitute general average must necessarily
be entered in the log book, stating the motives and reasons for the dissent, should there be any, and the
irresistible and urgent causes which impelled the captain if he acted of his own accord.
In the first case the minutes shall be signed by all the persons present who could do so before taking action, if
possible; and if not, at the first opportunity. In the second case, it shall be signed by the captain and by the
officers of the vessel.
In the minutes, and after the resolution, shall be stated in detail all the goods jettisoned, and mention shall be
made of the injuries caused to those kept on board. The captain shall be obliged to deliver one copy of these
minutes to the maritime judicial authority of the first port he may make, within twenty-four hours after his arrival,
and to ratify it immediately under oath.
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