1) VDA. DE PAMAN vs.

SEÑERIS
G.R. No. L-37632 July 30, 1982
GUERRERO, J.:

Facts:

Teodoro De Los Santos was a driver of a cargo truck owned and operated by Western Mindanao
Lumber Co. Due to his imprudence and recklessness in driving, it cause Victoriano Pamana to
fall therefrom and sustained injuries which caused his death. Upon arraignment De Los Santos
entered a plea of guilty. Respondent judge, rendered a Decision sentencing De Los Santos to
suffer imprisonment and to indemnify the heirs of late Victoriano in the amount of 12,000.00.
Petitioner filed a motion for execution of the judgment to enforce the civil liability of the
P12,000.00 of De Los Santos. But, the sheriff found out that no properties were registered
under the name of De Los Santos. Thus, petitioners filed Supplemental Motion for Execution for
Subsidiary Liability of Employer under Art. 103 of the Penal Code, citing the case of Fernando
vs. Franco. Petitioner concluded that the tenor of the aforesaid decision implies that the
subsidiary liability of the employer may be enforced in the same proceeding. The respondent
judge denies the motion. He opined that the alleged employer not having been notified that its
driver was facing a criminal charge, a separate civil action must be filed. Hence, this petition for
mandamus.

Issue:

Whether or not the subsidiary liability established in Article 103 of the Revised Penal Code may
be enforced in the same criminal case where the award was made, or in a separate civil action.

Ruling:

Section 1, Rule 111 of the Rules of Court provides, however, that “when a criminal action is
instituted, the civil action for recovery of civil liability arising from the offense charged is
impliedly instituted with the criminal action, unless the offended party expressly waives the civil
action or reserves his right to institute it separately.” That means as if two actions are joined in
one as twins, each one complete with the same completeness as any of the two normal persons
composing the twins. It means that the civil action may be tried and prosecuted, with all the
ancillary processes provided by law. Said provision will be rendered meaningless if the
subsidiary civil liability is not allowed to be enforced in the same proceeding.

To remedy the situation and thereby afford due process to the alleged employer, the Supreme
Court directed the court a quo in Pajarito vs. Señeris to hear and decide in the same proceeding
the subsidiary liability of the alleged owner and operator of the passenger bus. It was explained
therein that the proceeding for the enforcement of the subsidiary liability may be considered as
part of the proceeding for the execution of the judgment. A case in which an execution has been
issued is regarded as still pending so that all proceedings on the execution are proceedings in the
suit. There is no question that the court which rendered the judgment has a general supervisory
control over its process of execution, and this power carries with it the right to determine every
question of fact and law which may be involved in the execution.

1|Page
Dispositive Portion:

WHEREFORE, the order dated September 8, 1973 of respondent Judge is hereby SET ASIDE.
The Court a quo is hereby directed to conduct further proceedings in the same case on whether
the requisite facts to impose subsidiary civil liability on the alleged employer of Teodoro de los
Santos are present. Costs against private respondents. So ordered..

2|Page
 2) AIR FRANCE vs. CARRASCOSO
G.R. No. L-21438 September 28, 1966
SANCHEZ, J.:

Facts:

On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air
Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome.
From Manila to Bangkok, plaintiff travelled in first class, but at Bangkok, the Manager of the
defendant airline forced plaintiff to vacate the first class seat that he was occupying because, in
the words of the witness Ernesto G. Cuento, there was a “white man", who, the Manager alleged,
had a "better right" to the seat. When asked to vacate his first class seat, the plaintiff refused.
After some commotion, plaintiff reluctantly gave his first class seat in the plane.

The Court of First Instance of Manila sentenced petitioner to' pay respondent Rafael Carrascoso
P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20
representing the difference in fare between first class and tourist class for the portion of the trip
Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing
of the complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.

On appeal, the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane
ticket from P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects'',
with costs against petitioner

Air France contends that respondent knew that he did not have confirmed reservations for first
class on any specific flight, although he had tourist class protection; that, accordingly, the
issuance of a first class ticket was no guarantee that he would have a first class ride, but that
such would depend upon the availability of first class seats.

Issue:

May Carrascoso file a case of culpa aquiliana or quasi-delict against the common carrier even if
there is pre-existing contractual relationship between them?

Ruling:

Yes. The injured passenger may opt also to file a quasi-delict case if the act breaks the contract
resulted from torts. For the willful malevolent act of petitioner's manager, petitioner, his
employer, must answer as provided by Article 21 of the Civil Code.

A contract to transport passengers is quite different in kind and degree from any other
contractual relation because of the relation which an air-carrier sustains with the public. Its
business is mainly with the travelling public. It invites people to avail of the comforts and
advantages it offers. The contract of air carriage, therefore, generates a relation attended with
public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for
an action for damages.

Passengers do not contract merely for transportation. They have a right to be treated by the
carrier’s employees with kindness, respect, courtesy and due consideration. They are entitled to
be protected against personal misconduct, injurious language, indignities and abuses from such

3|Page
employees. So it is that any rule or discourteous conduct on the part of employees towards a
passenger gives the latter an action for damages against the carrier.

Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's
action as we have said is placed upon his wrongful expulsion. This is a violation of public duty by
the petitioner air carrier—a case of quasi-delict.

As to the award of exemplary and moral damages are well awarded. The Civil Code gives the
court ample power to grant exemplary damages in contracts and quasi-contracts. The only
condition is that defendant should have "acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner". The manner of ejectment of respondent Carrascoso from his first class seat
fits into this legal precept.

Dispositive Portion:

On balance, we say that the judgment of the Court of Appeals does not suffer from reversible
error. We accordingly vote to affirm the same. Costs against petitioner. So ordered.

3) PEOPLE vs. JUGUETA

G.R. No. 202124 April 5, 2016
PERALTA, J.:

4|Page
Facts:

The appellant was charged with Double Murder, defined and penalized under Article 248 of the
Revised Penal Code for the death of the two minors, Mary Grace and Claudine; and Multiple
Attempted Murder in the life of Norberto Divina, his wife Maricel Divina and children Elizabeth
Divina and Judy Ann Divina.

The trial court found the accused guilty of the crime charged and is hereby sentenced to suffer
Reclusion Perpetua for the death of Mary Grace Divina and to indemnify her heirs in the
amount of Php50,000.00 and another to suffer Reclusion Perpetua for the death of Claudine
Divina and accused is further ordered to indemnify the heirs of Claudine Divina in the sum of
Php50,000.00. In addition, he is hereby ordered to pay the heirs of the victims actual damages
in the amount of Php16,150.00 and to pay for the costs.

On appeal, the CA rendered a Decision affirming appellant’s conviction for the crimes charged.
Dissatisfied with the CA Decision, appellant elevated the case to this Court.

Issue:

Whether the award of civil indemnity was correctly awarded?

Ruling:

Civil indemnity ex delicto is the indemnity authorized in our criminal law for the offended party,
in the amount authorized by the prevailing judicial policy and apart from other proven actual
damages, which itself is equivalent to actual or compensatory damages in civil law. This award
stems from Article 100 of the RPC which states, “Every person criminally liable for a felony is
also civilly liable.”

It is to be noted that civil indemnity is, technically, not a penalty or a fine; hence, it can be
increased by the Court when appropriate. Article 2206 of the Civil Code provides:

 Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least
three thousand pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed
and awarded by the court, unless the deceased on account of permanent physical disability not
caused by the defendant, had no earning capacity at the time of his death;

(2) If the deceased was obliged to give support according to the provisions of Article 291, the
recipient who is not an heir called to the decedent’s inheritance by the law of testate or intestate
succession, may demand support from the person causing the death, for a period not exceeding
five years, the exact duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.

In our jurisdiction, civil indemnity is awarded to the offended party as a kind of monetary
restitution or compensation to the victim for the damage or infraction that was done to the latter
by the accused, which in a sense only covers the civil aspect. Precisely, it is civil indemnity. Thus,
5|Page
in a crime where a person dies, in addition to the penalty of imprisonment imposed to the
offender, the accused is also ordered to pay the victim a sum of money as restitution. Also, it is
apparent from Article 2206 that the law only imposes a minimum amount for awards of civil
indemnity, which is P3,000.00. The law did not provide for a ceiling. Thus, although the
minimum amount for the award cannot be changed, increasing the amount awarded as civil
indemnity can be validly modified and increased when the present circumstance warrants it.

Dispositive Portion:

WHEREFORE, the instant appeal is DISMISSED. The Decision of the Court of Appeals dated
January 30, 2012 in C.A.-G.R. CR-H.C. No. 03252 is AFFIRMED with the following
MODIFICATIONS:

(1) In Criminal Case No. 7698-G, the Court finds accused-appellant Ireneo Jugueta GUILTY
beyond reasonable doubt of two (2) counts of the crime of murder defined under Article 248 of
the Revised Penal Code, attended by the aggravating circumstance of dwelling, and hereby
sentences him to suffer two (2) terms of reclusion perpetua without eligibility for parole under
RA No. 9346. He is ORDERED to PAY the heirs of Mary Grace Divina and Claudine Divina the
following amounts for each of the two victims: (a) P100,000.00 as civil indemnity; (b)
P100,000.00 as moral damages; (c) P100,000.00 as exemplary damages; and (d) P50,000.00
as temperate damages.

4) BARROIS vs. CARLOS A. GO THOMG & CO.

G.R. No. L-17192 March 30, 1963
BARRERA, J.:

Facts:

6|Page
On 1 May 1958, Barrios in his capacity as such captain and/or master of MV Henry I, received/
intercepted an S.O.S. distress signal by blinkers from the MV Alfredo, owned and/or operated by
Carlos A. Go Thong & Company. Acting on and/or answering the S.O.S. call, Barrios, which was
then sailing or navigating from Dumaguete City, altered the course of said vessel, and steered
and headed towards the beckoning MV Don Alfredo, which Barrios found to be in trouble, due
to engine failure and the loss other propeller.

MV Henry, under the command of Barrios, succeeded in getting near the MV Don Alfredo. Upon
getting close to the MV Don Alfredo, with the consent and knowledge of the captain and/or
master of the MV Don Alfredo, Barrios caused the latter vessel to be tied to, or well-secured and
connected with tow lines from the MV Henry, and proceeded moving until such time that a
sister ship of MV Don Alfredo was sighted so that the tow lines were also released

Barrios concludes that they establish an impending sea peril from which salvage of a ship worth
more than P100 000.00, plus life and cargo was done, while Go Thong insists that the facts
made out no such case, but that what merely happened was only mere towage from which
Barrios cannot claim any compensation or remuneration independently of the shipping
company that owned the vessel commanded by him. Brought to the CFI of Manila (Civil Case
37219), the court therein dismissed the case; with cost against Barrios. Barrios interposed an
appeal. The Supreme Court affirmed the decision of the lower court in all respects, with costs
against Barrios.

Issue:

Whether under the facts of the case, the service rendered by plaintiff to defendant constituted
"salvage" or "towage", and if so, whether plaintiff may recover from defendant compensation for
such service.

Ruling:

The Supreme Court held that the service rendered by plaintiff to defendant constitute towage.
“Salvage” as defined by Act No. 2616 is “the compensation allowed to persons by whose
assistance a ship or her cargo has been saved, in whole or in part, from impending peril on the
sea, or in recovering such property from actual loss, as in case of shipwreck, derelict, or
recapture.” Three elements are necessary to a valid salvage claim, namely (1) a marine peril, (2)
service voluntarily rendered when not required as an existing duty or from a special contract,
and (3) success in whole or in part or that the service rendered contributed to such success.

Here, although the defendant’s vessel was in a helpless condition due to engine failure, it did not
drift too far from the place where it was, that the weather was fair, clear, and good, that there
were only ripples on the sea which was quite smooth, that there was moonlight, that although
said vessel was drifting towards the open sea, there was no danger of its floundering or being
stranded as it was far from any island or rocks, and its anchor could be released to prevent such
occurrence, all show that there was no marine peril, and the vessel was not a quasi-derelict, as to
warrant a valid salvage claim for the towing of the vessel.

The plaintiff’s service is considered a quasi-contract of towage in consenting to plaintiff’s offer to

tow the vessel, defendant (through the captain of its vessel MV Don Alfredo) thereby impliedly
entered into a juridical relation of “towage” with the owner of the vessel MV Henry I, captained
by plaintiff, the William Lines, Incorporated. Then only the owner of the towing vessel, to the
exclusion of the crew of the said vessel, may be entitled to remuneration. Since the vessel-owner,
7|Page
William Lines, Incorporated, had expressly waived its claim for compensation for the towage
service rendered to defendant, it is clear that plaintiff, whose right if at all depends upon and not
separate from the interest of his employer, is not entitled to payment for such towage service.
Neither may plaintiff invoke equity in support of his claim for compensation against defendant.

Difference between Salvage and Towage

“It often becomes material too, for courts to draw a distinct line between salvage and towage, for
the reason that a reward ought sometimes to be given to the crew of the salvage vessel and to
other participants in salvage services; and such reward should not be given if the services were
held to be merely towage.

“The master and members of the crew of a tug were not entitled to participate in payment by
liberty ship for services rendered by tug which were towage services and not salvage services.”

“The distinction between salvage and towage is of importance to the crew of the salvaging ship,
for the following reasons: If the contract for towage is in fact towage, then the crew does not
have any interest or rights in the remuneration pursuant to the contract. But if the owners of the
respective vessels are of a salvage nature, the crew of the salvaging ship is entitled to salvage,
and can look to the salvaged vessel for its share.”

Dispositive Portion:

WHEREFORE, finding no reversible error in the decision of the court a quo appealed from, the
same is hereby affirmed in all respects, with costs against the plaintiff-appellant. So ordered.

5) DOLE PHILIPPINES, INC. vs. MARITIME CO. OF THE PHILS.

G.R. No. L-61352 February 27, 1987
NARVASA, J.:
Facts:

The cargo was discharged in Dadiangas unto the custody of the consignee on December 18,1971.
The correspondin claim for the damages sustained by the cargo was filed by the plaintiff with the
defendant vessel on May 4, 1972; On June 11,1973 the plaintiff filed a complaint in the Court of
First Instance of Manila embodying three (3) causes of action; On December 11, 1974, Judge
8|Page
Serafin Cuevas issued an Order dismissing the first two causes of action in the aforesaid case
with prejudice and without pronouncement as to costs because the parties had settled or
compromised the claims involved therein. The third cause of action which covered the cargo
subject of this case now was likewise dismissed but without prejudice as it was not covered by
the settlement. The dismissal of that complaint containing the three causes of action was upon a
joint motion to dismiss filed by the parties; Because of the dismissal of the complaint with
respect to the third cause of action without prejudice, plaintiff instituted this present complaint
on January 6,1975. Defendant filed an affirmative defense of prescription which was upheld by
the trial court. Dole concedes that its action is subject to the one-year period of limitation as
provided by the Civil Code, suppletory of deficiencies in the Code of Commerce and special laws
in matters governed by the latter.

Issue:

Whether or not Article 1155 of the Civil Code providing that the prescription of actions is
interrupted by the making of an extrajudicial written demand by the creditor is applicable to
actions brought under the Carriage of Goods by Sea Act?

Ruling:

No. In the case of The Yek Tong Lin Fire & Marine Insurance Co., Ltd. vs. American President
Lines, Inc. the court rejected the contention that an extrajudicial demand tolled the prescriptive
period provided for in the Carriage of Goods by Sea Act. In a case governed by the Carriage of
Goods by Sea Act, the general provisions of the Code of Civil Procedure on prescription should
not be made to apply. Similarly, in the case of general provisions of the new Civil Code (Art 1155)
cannot be made to apply, as such application would have the effect of extending the one-year
period of prescription fixed in the law. It is desirable that matters affecting transportation of
goods by sea be decided in as short a time as possible; the application of the provisions of Article
1155 of the new Civil Code would unnecessarily extend the period and permit delays in the
settlement of questions affecting transportation, contrary to the clear intent and purpose of the
law.

Thus, Dole's contention that the prescriptive period remained tolled as of May 4, 1972 the Civil
Case No. 96353 was filed on January 6, 1975 well within the one-year prescriptive period in Sec.
3(6) of the Carriage of Goods by Sea Act," equates tolling with indefinite suspension. It is clearly
fallacious and merits no consideration.

Dispositive Portion:

WHEREFORE, the order of dismissal appealed from is affirmed, with costs against the
appellant, Dole Philippines, Inc. SO ORDERED.
6) UNIVERSAL SHIPPING LINES, INC. vs. INTERMEDIATE APPELLATE
G.R. No. 74125 July 31, 1990
GRIÑO-AQUINO, J.:

Facts:

On March 22, 1974, SEVALCO, Limited, owned and operated by the petitioner, shipped from
Rotterdam, Netherlands, to Bangkok, Thailand, aboard its M/V "TAIWAN", two (2) cargoes of
50 palletized cartons consisting of 2,000 units of 25kilogram bags of Statex R Brand carton
black, with a declared gross weight of 53,000 kilos each.
9|Page
Despite the arrival of the vessel on June 28, 1974 at Bangkok, the cargo covered by Bill of Lading
No. RB-15 was neither unloaded nor delivered to the consignee, S. Lersen Company, Ltd. The
shipment under Bill of Lading No. RB-16 was delivered to Muang Ngarm Retreads, Ltd. with a
total weight shortage of 11,070 kilos because the cargoes had been either totally or partially
dissolved in saltwater which flooded Hatch No. 2 of the vessel where they had been stored.

Upon arrival in Manila on July 4, 1974, Arturo C. Saavedra, master of M/V "TAIWAN," filed a
marine protest. On June 25, 1976, private respondent, as insurer-subrogee, filed an action in
the Court of First Instance of Manila to recover from the petitioner and its Manila agent, Carlos
Go Thong $m Company, what it paid the consignees of the cargo.

The trial court rendered judgment ordering defendants Universal Shipping Lines, Inc. and
Carlos Go Thong Co., jointly and severally, to pay plaintiff Alliance Assurance Co. On appeal to
the Court of Appeals, the decision was affirmed after exculpating Go Thong from any liability on
the ground that it had no participation in the shipment of the cargo which had been loaded and
discharged in places other than Manila. Hence this petition.

Issue:

Whether the private respondent's cause of action has not yet prescribed?

Ruling:

Yes. Under Section 3(6), Title I, of the Carriage of Goods by Sea Act (Commonwealth Act No. 65)
which provides that: “the carrier and the ship shall be discharged from all liability in respect of
loss or damage unless suit is brought within one year after delivery of the goods or the date
when the goods should have been delivered." This provision of the law admits of an exception: if
the one-year period is suspended by express agreement of the parties for in such a case, their
agreement becomes the law for them.

The exchange of correspondence between the parties and/or their associates/representatives

shows that the parties had mutually agreed to extend the time within which the plaintiff or its
predecessors-in-interest may file suit until December 27, 1976. When the complaint was filed on
June 25, 1976, that deadline had not yet expired.

Dispositive Portion:

WHEREFORE, the petition for review is denied for lack of merit. Cost against the petitioner. So
ordered.

7) FILIPINO MERCHANTS INSURANCE CO., INC. vs. ALEJANDRO

G.R. No. L-54140, No. L-62001 October 14, 1986
GUTIERREZ, JR. J.:

Facts:

On August 3, 1977, plaintiff Choa Tiek Seng filed a complaint, against the petitioner before the
CFI of Manila for recovery of a sum of money under the marine insurance policy on cargo, for
the loss and damage sustained. The vessel SS Frotario which was owned and operated by private
respondent Frota, discharged the goods at the port of Manila on December 13, 1976. The said
10 | P a g e
goods were delivered to the arrastre operator E. Razon, Inc., on December 17, 1976 and on the
same date were received by the consignee-plaintiff.

On January 9, 1978, the petitioner filed a third-party complaint against the carrier, private
respondent Frota and the arrastre contractor, E. Razon, Inc. for indemnity, subrogation, or
reimbursement in the event that it is held liable to the plaintiff.

On August 10,1977, Joseph Benzon Chua filed a similar complaint against the petitioner, for
recovery under the marine insurance policy for cargo alleging that the goods insured with the
petitioner sustained loss and damage. The goods were delivered to the plaintiff-consignee on or
about January 25–28,1977.

On May 31, 1978, the petitioner filed its answer. On September 28, 1978, it filed an amended
third-party complaint against respondent carrier, the Australia-West.

In both cases, the private respondents filed their respective answers on their affirmative defense
of prescription alleging that the petitioner is already barred from filing a claim because under
the Carriage of Goods by Sea Act, the suit against the carrier must be filed’ within one year after
delivery of the goods or the date when the goods should have been delivered.”

The petitioner contended that the provision relied upon by the respondents applies only to the
shipper and not to the insurer of the goods. That the period for the filing of a third-party
complaint must be reckoned from the date when the principal action was filed, that is, from the
time the insured filed a suit against the petitioner, because the third-party complaint is merely
an incident of the main action.

Respondent judge on both cases dismissed the petitioner’s third party complaint on the ground
that the same was filed beyond the prescriptive period provided in Section 3 (6) of the Carriage
of Goods by Sea Act of 1936.

Issue:

Whether or not the one-year period within which to file a suit against the carrier and the ship, in
case of damage or loss as provided for in the Carriage of Goods by Sea Act applies to the insure?

Ruling:

Yes. Perusal of Section 3(b)(6) of the Carriage of Goods by Sea Act gives the impression that the
right to file suit within one year after delivery of the goods applies to the shipper alone, however,
reading the proviso in conjunction with the rest of section 3(6), it at once becomes apparent that
the conclusion drawn by petitioner is unwarranted. In the first place, said section provides that
the notice of loss or damage for which a claim for indemnity may be made should be given in
writing to the carrier at the port of discharge before or at the time of the removal of the goods,
and if the loss or damage is not apparent said notice should be given ‘within three days on
delivery.’ From the language of this section, it seems clear that the notice of loss or damage is
required to be filed not necessarily by the shipper but also by the consignee or any legal holder
of the bill of lading. In fact, said section requires that the notice be given at the port of discharge
and the most logical party to file the notice is either the consignee or the endorsee of the bill of
lading. In the second place, a study of the historical background of this particular provision will
show that although the word shipper is used in the proviso referred to by the petitioner, the
intention of the law was not to exclude the consignee or endorsee of the biU of lading from
11 | P a g e
bringing the action but merely to limit the filing of the same within one year after the delivery of
the goods at the port of discharge.

In the case at bar, the petitioner’s action has prescribed under the provisions of the Carriage of
Goods by Sea Act. Hence, whether it files a third-party complaint or chooses to maintain an
independent action against herein respondents is of no moment. Had the plaintiff in the civil
cases filed an action against the petitioner after the one-year prescriptive period, then the latter
could have successfully denied liability on the ground that by their own doing, the plaintiffs had
prevented the petitioner from being subrogated to their respective rights against the herein
respondents by filing a suit after the one year prescriptive period. The situation, however, does
not obtain in the present case. The plaintiffs in the civil cases below gave extrajudicial notice to
their respective carriers and filed suit against the petitioner well within one year from their
receipt of the goods. The petitioner had plenty of time within which to act. In Civil Case No.
109911, the petitioner had more than four months to file a third party complaint while in Civil
Case No. 110061, it had more than five months to do so. In both instances, however, the
petitioner failed to file the appropriate action.

Dispositive Portion:

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions in G.R. No. 54140 and G.R. No.
62001 are hereby DISMISSED for lack of merit. Costs against the petitioner. So ordered.

8) MAYER STEEL PIPE CORPORATION vs. COURT OF APPEALS

G.R. No. 124050 June 19, 1997
PUNO, J.:

Facts:

In 1983, petitioner Hongkong Government contracted petitioner Mayer to manufacture and

supply various steel pipes and fittings. From August to October, 1983, Mayer shipped the pipes
and fittings to Hongkong. Prior to the shipping, petitioner Mayer insured the pipes and fittings
against all risks with private respondents South Sea and Charter. When the goods reached
Hongkong, it was discovered that a substantial portion thereof was damaged.

12 | P a g e
Petitioner filed a claim against private respondents for indemnity under the insurance contract.
Respondent Charter paid petitioner Hongkong the amount of HK$64,904.75. Petitioners
demanded payment of the balance of HK$299,345.30 representing the cost of repair of the
damaged pipes. Private respondents refused to pay because the insurance surveyor’s report
allegedly showed that the damage is a factory defect. The trial court ruled in favor of petitioner
that the damage was not due to factory defect and it was affirmed by Court of Appeals. However
the case was dismissed on the ground of prescription. It held that the action is barred under
Section 3(6) of the Carriage of Goods by Sea Act since it was filed only on April 17, 1986, more
than two years from the time the goods were unloaded from the vessel.

Issue:

Whether respondent court erred in applying Section 3(6) of the Carriage of Goods by Sea Act the
doctrine of Filipino Merchants Co., Inc. v. Alejandro?

Ruling:

Yes. Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be
discharged from all liability for loss or damage to the goods if no suit is filed within one year
after delivery of the goods or the date when they should have been delivered. Under this
provision, only the carrier’s liability is extinguished if no suit is brought within one year. But the
liability of the insurer is not extinguished because the insurer’s liability is based not on the
contract of carriage but on the contract of insurance. A close reading of the law reveals that the
Carriage of Goods by Sea Act governs the relationship between the carrier on the one hand and
the shipper, the consignee and/or the insurer on the other hand. It defines the obligations of the
carrier under the contract of carriage. It does not, however, affect the relationship between the
shipper and the insurer. The latter case is governed by the Insurance Code.

The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was the
insurer which filed a claim against the carrier for reimbursement of the amount it paid to the
shipper. In the case at bar, it was the shipper which filed a claim against the insurer. The basis of
the shipper’s claim is the “all risks” insurance policies issued by private respondents to
petitioner Mayer.

The ruling in Filipino Merchants should apply only to suits against the carrier filed either by the
shipper, the consignee or the insurer. When the court said in Filipino Merchants that Section
3(6) of the Carriage of Goods by Sea Act applies to the insurer, it meant that the insurer, like the
shipper, may no longer file a claim against the carrier beyond the one-year period provided in
the law. But it does not mean that the shipper may no longer file a claim against the insurer
because the basis of the insurer’s liability is the insurance contract. An insurance contract is a
contract whereby one party, for a consideration known as the premium, agrees to indemnify
another for loss or damage which he may suffer from a specified peril.11 An “all risks” insurance
policy covers all kinds of loss other than those due to willful and fraudulent act of the insured.12
Thus, when private respondents issued the “all risks” policies to petitioner Mayer, they bound
themselves to indemnify the latter in case of loss or damage to the goods insured. Such
obligation prescribes in ten years, in accordance with Article 1144 of the New Civil Code.

Dispositive Portion:

13 | P a g e
IN VIEW WHEREOF, the petition is GRANTED. The Decision of respondent Court of Appeals
dated December 14, 1995 and its Resolution dated February 22, 1996 are hereby SET ASIDE and
the Decision of the Regional Trial Court is hereby REINSTATED. No costs. So ordered.

9) A. MAGSAYSAY, INC. vs. AGAN

G.R. No. L-6393 January 31, 1955
REYES, A. J.:

Facts:

The SS "San Antonio", a vessel owned and operated by plaintiff, left Manila on October 6, 1949,
bound for Basco, Batanes, via 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 had it refloated by the Luzon Stevedoring Co. at an agreed compensation.
14 | P a g e
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. Defendant, in his answer,
denies liability for this 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. The trial court ruled in favor of the plaintiff.

Issue:

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

Ruling:

No. The following are the requisites for general average:

1) There must be a common danger. This means, that both the ship and the cargo, after it 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 accidents of the sea, dispositions of the authority, or
faults of men, provided, that the circumstance producing the peril should be ascertained and
imminent or may rationally be said to be certain and imminent. This last requirement excludes
measures undertaken against a distant peril;
2) That for the common safety part of the vessel or of the cargo or both is sacrificed deliberately;
3) That from the expenses or damages caused follows the successful saving of the vessel and
cargo.
4) That the expenses or damages should have been incurred or inflicted after taking proper legal
steps and authority."

Applying in the case at bar, 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." 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." It is the safety of the
property, and not of the voyage, which constitutes the true foundation of 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 01 the vessel—to enable it to proceed to destination—and not f or the
purpose of saving the cargo, the cargo owners are not in law bound to contribute to the
expenses.

15 | P a g e
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 articles 813 et seq.

Thus, the court finds that plaintiff has not made out a case for general average, with the result
that its claim for contribution against the defendant cannot be granted.

Dispositive Portion:

Wherefore, the decision appealed from is reversed and plaintiff's complaint ordered dismissed
with costs.

10) PHILIPPINE HOME ASSURANCE CORP. VS. COURT OF APPEALS

G.R. No. 106999 June 20, 1996
KAPUNAN, J.:

Facts:

Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorerin Kobe, Japan, a
shipment for carriage to Manila and Cebu freight prepaid and in good order and condition.
While the vessel is off Okinawa, Japan, an incident happened, the acetylene cylinder
suddenly exploded causing death and severe injuries to the crew and instantly setting fire
to the whole superstructure of the vessel. The incident forces the master and the crew to
abandon the ship. Thereafter, SS Eastern Explorer was found to be constructive total loss
16 | P a g e
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.

After the fire was extinguished, the cargoes which were saved were loaded to another
vessel for delivery for their original of port of destination. ESLI charged the consignees
several amounts corresponding to additional freight and salvage charges. 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, 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 unforeseen event; that the additional freight charges are due
and demandable pursuant to the Bill of Lading, and that salvage charges are properly collectible
under the Salvage Law.

The trial court dismissed the PHAC’s complaint and ruled in favor of ESLI anchoring their
decision in Erlanger and Galinger vs. Swedish East Asiatic Co., Ltd., 34 Phil. 178, that three
elements are (1) a marine peril (2) service voluntary rendered when not required as an
existing duty or from a special contract and (3) success in whole or in part, or that the
service rendered contributed to such success. The court finds that the above elements are all
present. Salvage charges may thus be assessed on the cargoes saved from the vessel. As
provided for in Section 13 of the Salvage Law,

On appeal to the Court of Appeals, respondent court affirmed the trial court’s findings
and conclusion; hence, the present petition for review before this Court on the following
error, among others:

Issue:

Whether or not respondent court committed an error in concluding that the expenses incurred
in saving the cargo are considered general average?

Ruling:

Yes. As a rule, general or gross averages include all 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. While the instant case may technically fall within the purview of the said provision, the
formalities prescribed under Articles 81310 and 81411 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.

In view of 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.

Dispositive Portion:

17 | P a g e
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.

11) FAR EASTERN SHIPPING COMPANY vs. COURT OF APPEALS

G.R. No. 130068, G.R. No. 130150 October 1, 1998
REGALADO, J.:

Facts:

M/V PAVLODAR, owned and operated by the Far Eastern Shipping Company (FESC), arrived at
the Port of Manila. Gavino, who was assigned by the Appellant Manila Pilots’ Association to
conduct the docking maneuvers for the safe berthing, boarded the vessel at the quarantine
anchorage and stationed himself in the bridge, with the master of the vessel, Victor Kavankov,
beside him. After a briefing, the vessel lifted anchor from the quarantine anchorage and
proceeded to the Manila International Port. The sea was calm and the wind was ideal for
docking maneuvers. When the vessel reached the landmark, one-half mile from the pier, Gavino
ordered the engine stopped. When the vessel was already about 2,000 feet from the pier, Gavino
ordered the anchor dropped. Kavankov relayed the orders to the crew of the vessel on the bow.
The left anchor, with two (2) shackles, was dropped. However, the anchor did not take hold as
18 | P a g e
expected. The speed of the vessel did not slacken. A commotion ensued between the crew
members.

After Gavino noticed that the anchor did not take hold, he ordered the engines half-astern.
Abellana, noticed that the vessel was approaching the pier fast. Kavankov likewise noticed that
the anchor did not take hold. Gavino thereafter gave the “full astern” code. Before the right
anchor and additional shackles could be dropped, the bow of the vessel rammed into the apron
of the pier causing considerable damage to the pier as well as the vessel.

Issues:

(1) Is the pilot of a commercial vessel, under compulsory pilotage, solely liable for the damage
caused by the vessel to the pier, at the port of destination, for his negligence?

(2) Would the owner of the vessel be liable likewise if the damage is caused by the concurrent
negligence of the master of the vessel and the pilot under a compulsory pilotage?

Ruling:

(1) Generally speaking, the pilot supersedes the master for the time being in the command and
navigation of the ship, and his orders must be obeyed in all matters connected with her
navigation. He becomes the master pro hac vice and should give all directions as to speed,
course, stopping and reversing anchoring, towing and the like. And when a licensed pilot is
employed in a place where pilotage is compulsory, it is his duty to insist on having effective
control of the vessel or to decline to act as pilot.

Under certain systems of foreign law, the pilot does not take entire charge of the vessel but is
deemed merely the adviser of the master, who retains command and control of the navigation
even in localities where pilotage is compulsory. It is quite common for states and localities to
provide for compulsory pilotage, and safety laws have been enacted requiring vessels
approaching their ports, with certain exceptions, to take on board pilots duly licensed under
local law. The purpose of these laws is to create a body of seamen thoroughly acquainted with
the harbor, to pilot vessels seeking to enter or depart, and thus protect life and property from
the dangers of navigation.

Upon assuming such office as a compulsory pilot, Capt. Gavino is held to the universally
accepted high standards of care and diligence required of a pilot, whereby he assumes to have
skill and knowledge in respect to navigation in the particular waters over which his license
extends superior to and more to be trusted than that of the master. He is not held to the highest
possible degree of skill and care but must have and exercise the ordinary skill and care
demanded by the circumstances, and usually shown by an expert in his profession.

Under extraordinary circumstances, a pilot must exercise extraordinary care. In this case, Capt.
Gavino failed to measure up to such strict standard of care and diligence required of pilots in the
performance of their duties. As the pilot, he should have made sure that his directions were
promptly and strictly followed.

(2) The negligence on the part of Capt. Gavino is evident; but Capt. Kabancov is no less
responsible for the collision. The master is still in command of the vessel notwithstanding the
presence of a pilot. A perusal of Capt. Kabankov’s testimony makes it apparent that he was
remiss in the discharge of his duties as master of the ship, leaving the entire docking procedure
19 | P a g e
up to the pilot, instead of maintaining watchful vigilance over this risky maneuver. The owners
of a vessel are not personally liable for the negligent acts of a compulsory pilot, but by admiralty
law, the fault or negligence of a compulsory pilot is imputable to the vessel and it may be held
liable therefor in rem.

Where, however, by the provisions of the statute the pilot is compulsory only in the sense that
his fee must be paid, and is not in compulsory charge of the vessel, there is no exemption from
liability. Even though the pilot is compulsory, if his negligence was not the sole cause of the
injury, but the negligence of the master or crew contributed thereto, the owners are liable. But
the liability of the ship in rem does not release the pilot from the consequences of his own
negligence. The master is not entirely absolved of responsibility with respect to navigation when
a compulsory pilot is in charge. Except insofar as their liability is limited or exempted by statute,
the vessel or her owners are liable for all damages caused by the negligence or other wrongs of
the owners or those in charge of the vessel. As a general rule, the owners or those in possession
and control of a vessel and the vessel are liable for all natural and proximate damages caused to
persons or property by reason of her negligent management or navigation.

Dispositive Portion:

WHEREFORE, in view of all of the foregoing, the consolidated petitions for review are DENIED
and the assailed decision of the Court of Appeals is AFFIRMED in toto.

20 | P a g e