CASE DIGEST - Standard Oil Company of New York v. Castelo; G.R. L-13695 J. Street; 18 October 1921

 

GENERAL AVERAGE LOSS

Standard Oil Company of New York v. Castelo; G.R. L-13695

J. Street; 18 October 1921

DOCTRINE: 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.

FACTS:

Manuel Lopez Castelo let the small interisland streamer Batangueno to Jose Lim Chumbuque for use in conveying of a cargo between certain ports of the Philippines. Such contract of charterer is for a period of one (1) year. It was stipulated that the owner should supply the officers and crew of the Batangueno and that the charterer should have no control over the captain, pilot and engineers except 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. The Standard Oil Company delivered a quantity of petroleum to the agent of the boat in Manila to be conveyed to the port of Casiguran.

For this consignment a bill of lading was delivered with stipulation that the freight should be paid at the destination. However, such did not contain 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 its way to the mentioned port, a typhoon passed over the western coast of Sorsogon and while the storm was at its height, the captain was to jettison the entire consignment of two hundred cases of petroleum for the safety of all. Then, 13 cases of the petroleum were recovered and the rest was wholly lost.

Thus, the present action was instituted by Standard Oil Company against the ship owner to recover the value of the petroleum jettisoned and not recovered. CFI Manila rendered judgment in favor of the plaintiff.

Hence, the defendant appealed.

ISSUES:

1.     Whether the loss of the subject petroleum was a general average loss

2.     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?

RULING:

1.     Yes. The loss of the subject petroleum was a general average loss

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.

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.

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.

2.     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.

However, in this case, 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.

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.