Far Eastern Shipping Co. vs. Court of Appeals

A compulsory harbor pilot and the ship’s master may be held concurrently negligent and solidarily liable as joint tortfeasors for damage caused by an allision where the pilot fails to exercise the extraordinary care required under the circumstances and the master fails to intervene and countermand the pilot’s orders despite an apparent and avoidable danger. A pilots’ association is solidarily liable with its member-pilot under Customs Administrative Order No. 15-65 up to seventy-five percent of its prescribed reserve fund, without prejudice to the association’s right of reimbursement from the pilot at fault.

On June 20, 1980, the M/V PAVLODAR, a USSR-flagged vessel owned and operated by Far Eastern Shipping Company, arrived at the Port of Manila from Vancouver. The vessel was assigned Berth 4 of the Manila International Port. The Philippine Ports Authority tasked Capt. Roberto Abellana to supervise berthing; the Manila Pilots Association assigned Capt. Senen C. Gavino as compulsory harbor pilot. Capt. Gavino boarded at the quarantine anchorage and, with the master Capt. Viktor Kavankov beside him, conducted docking maneuvers. The anchor failed to claw into the seabed, the vessel’s momentum was not arrested, and the bow struck the pier apron, causing considerable damage to both vessel and pier. PPA sued for damages.

• Nature: Action for damages arising from an allision between a foreign vessel under compulsory pilotage and the apron of Berth No. 4, Manila International Port. Plaintiff Philippine Ports Authority (PPA) sought to hold the shipowner, the compulsory harbor pilot, and the pilots’ association solidarily liable.

• The Docking Manuever: On June 20, 1980, M/V PAVLODAR arrived at Manila from Vancouver. The vessel was assigned to berth at Berth No. 4. Compulsory pilotage being in force, Capt. Senen C. Gavino of the Manila Pilots Association boarded at the quarantine anchorage. He stationed himself on the bridge with shipmaster Capt. Viktor Kavankov beside him. After a briefing, the vessel proceeded to the Manila International Port; the sea was calm and the wind ideal.

• The Allision: At about one-half mile from the pier, Gavino ordered the engines stopped. At approximately 2,000 feet, he ordered the anchor dropped. The left anchor with two shackles was let go, but it did not take hold; the vessel’s speed did not slacken. A commotion among the Russian crew occurred, but Kavankov assured Gavino there was nothing to it. Gavino then ordered half-astern, and later full-astern. Before the right anchor and additional shackles could be dropped, the vessel’s bow rammed the pier apron, causing considerable damage. The vessel also sustained damage. Capt. Kavankov filed a sea protest; Capt. Gavino and Capt. Abellana each submitted reports.

• Damage: The pier rehabilitation cost PPA P1,126,132.25, as evidenced by contract documents. The trial court awarded P1,053,300.00 as actual damages after considering PPA’s redesign that replaced damaged piles and strengthened the structure.

• The Pilot’s Conduct: Capt. Gavino admitted he was unsure whether the anchor was dropped on time or what exactly caused the incident. The Court of Appeals found that he allowed four minutes to elapse after the anchor failed before ordering half-astern, that he did not immediately order the other anchor dropped, and that he miscalculated the vessel’s bulk and momentum. His claim that the anchor was dropped at 1,000 feet from the pier was treated as a belated attempt to escape liability.

• The Master’s Conduct: Capt. Kavankov testified that he stood beside the pilot throughout, heard all commands, saw the same instruments, and was alerted when the anchor did not hold, yet he believed there was no imminent danger. He did not intervene, countermand any order, or take over the vessel, stating he relied on the pilot’s experience and agreed with all his orders.

FESC (G.R. No. 130068): - Sole Liability of the Compulsory Pilot: FESC argued that because the vessel was under compulsory pilotage, Capt. Gavino superseded the master and had exclusive command and control of navigation; hence he alone should be responsible for damage to the pier. - Absence of Master’s Negligence: FESC maintained that the master committed no negligence in failing to countermand the pilot’s orders, because he observed no justifiable reason to do so. The master was entitled to rely absolutely on the pilot’s competence. - Excessive Damages: FESC contended that the amount of damages awarded was exorbitant and unreasonable, and that its counterclaim should have been granted. - Right of Reimbursement: In the event FESC were held liable, it insisted it should be granted reimbursement from Capt. Gavino and the MPA.

MPA (G.R. No. 130150): - No Employer-Employee Relationship: MPA stressed that Capt. Gavino was a member, not an employee, of the association; thus no vicarious liability under Article 2180 of the Civil Code could attach, and the association should not be solidarily liable. - Misapplication of Customs Administrative Order No. 15-65: MPA contended that the appellate court erred in using the administrative order and the association’s by-laws instead of the Civil Code on damages, a substantive law of higher category. The order did not expressly classify MPA’s liability as solidary. - Limitation of Liability to 75% of Reserve Fund: MPA asserted that its liability should be confined to seventy-five percent (75%) of its prescribed reserve fund and that it should not be held solidarily liable with the other defendants.

Philippine Ports Authority (both cases): - Concurrent Negligence: PPA maintained that the collision was the immediate and proximate result of the concurrent negligence of Capt. Gavino, who mishandled the docking maneuvers, and Capt. Kavankov, who failed to countermand the pilot’s orders despite the obvious peril and his own alertness to the situation. - Solidary Liability of Shipowner and Pilot: PPA argued that the vessel’s owner is responsible to third parties for damage caused by the negligence of a compulsory pilot where the master’s own fault concurs; both are joint tortfeasors solidarily liable under Article 2194 of the Civil Code. - Solidary Liability of MPA under CAO 15-65: PPA contended that the provisions of Customs Administrative Order No. 15-65, read with MPA’s constitution and by-laws, clearly and unambiguously impose solidary liability on the pilots’ association for the tortious acts of its members. The administrative order, having the force and effect of law, is a valid source of solidary liability.

FESC (in G.R. No. 130150 as respondent): - FESC expressed full accord with the Court of Appeals’ holding that all three defendants are solidarily liable and that the provisions of Customs Administrative Order No. 15-65 clearly established MPA’s solidary liability.

• Liability of the Compulsory Pilot vs. Shipowner: Whether the compulsory harbor pilot is solely liable for damage caused by the vessel to the pier during compulsory pilotage, to the exclusion of the shipowner.
• Master’s Negligence: Whether the shipmaster was negligent in failing to countermand the pilot’s orders and take over the vessel when the anchor did not hold and the momentum remained unchecked.
• Damages: Whether the amount of actual damages awarded to PPA was exorbitant and unreasonable.
• Solidary Liability of the Pilots’ Association: Whether the Manila Pilots Association may be held solidarily liable with its member-pilot for the damage caused, absent an employer-employee relationship.
• Interpretation of Customs Administrative Order No. 15-65: Whether the administrative order validly imposes solidary liability on the pilots’ association and what the extent of that liability is.

• Liability of the Compulsory Pilot vs. Shipowner: Under Philippine and well-settled American maritime jurisprudence, a compulsory pilot supersedes the master in the command and navigation of the ship and becomes master pro hac vice, but the master does not surrender his overall command. The master is duty-bound to intervene in cases of the pilot’s manifest incapacity, intoxication, or in situations of danger which the pilot does not foresee. Where the pilot’s negligence is not the sole cause of the injury—here, the master’s concurrent failure to act contributed—the shipowner remains liable. The presumption of fault against a moving vessel that strikes a stationary object placed the burden on FESC to show that it was without fault, a burden it failed to discharge.

• Master’s Negligence: Capt. Kavankov’s own testimony showed that he was alerted when the anchor did not hold, yet he did nothing because he perceived no imminent danger and merely relied on the pilot. This was a neglectful relinquishment of duty. The master must exercise vigilance commensurate with the circumstances; he may not rely blindly on the pilot. By standing idly while the vessel proceeded toward a foreseeable collision, Kavankov was concurrently negligent, rendering FESC liable.

• Damages: The award of P1,053,300.00 actual damages was found reasonable. The amount represented the proportional cost of repairing and rehabilitating the damaged pier section, including the necessary redesign that required eight piles instead of the original six. The lower courts’ factual findings on the cost were grounded on evidence and entitled to deference.

• Solidary Liability of the Pilots’ Association: No employer-employee relationship existed between MPA and Capt. Gavino; thus Article 2180 of the Civil Code on vicarious liability was inapplicable. Nevertheless, the association’s liability flowed directly from the unequivocal provisions of Customs Administrative Order No. 15-65. Read together, its Paragraphs XXVII, XXVIII, XXXI, and XXXIV create a system of solidary liability: the association maintains a reserve fund to answer for the torts of its members, is liable up to 75% of that fund, with any excess paid from the erring pilot’s personal funds, and the pilot must reimburse the association if found at fault. The appellate court’s modification, making MPA solidarily liable but entitling it to reimbursement from Capt. Gavino for amounts exceeding 75% of the reserve fund, was thus correct.

• Interpretation of Customs Administrative Order No. 15-65: The administrative order, having the force and effect of law, contains sufficient textual basis for solidary liability. Article 1207 of the Civil Code allows solidarity when the law or the nature of the obligation requires it; the administrative order is such a law. The association’s liability is not limited to an absurdly small amount but extends to the full reserve fund it is required to maintain, with the right to recoup excess from the responsible pilot.

• Presumption of fault against a moving vessel that strikes a stationary object — In admiralty, a moving vessel that allides with a fixed object is presumed at fault, and the burden shifts to the vessel to show it was without fault or that the incident was inevitable. The vessel must exhaust every reasonable possibility to avoid the accident. (Citing Bunge Corp. v. M.V. Furness Bridge, Canal Barge Co. v. Griffith, The Oregon.)

• Ultimate command of the master during compulsory pilotage — A compulsory pilot supersedes the master pro hac vice for navigation, but the master retains overall command and the duty to intervene when the pilot is incompetent, physically incapacitated, or when there is a danger the pilot does not foresee. The master may not rely blindly on the pilot. (Citing The China, The Oregon, Jure v. United Fruit Co.)

• Concurrent negligence of pilot and master as joint tortfeasors — Where the negligence of the compulsory pilot and the master concur to cause an allision, both are joint tortfeasors and the shipowner is liable in personam. The pilot’s negligence does not absolve the owner if the master could have prevented the damage through reasonable vigilance. (Citing Jure v. United Fruit Co., The Emma T. Grimes, Hinman v. Moran Towing)

• Solidary liability of pilots’ association under CAO 15-65 — In the Philippines, a pilots’ association is not immune from liability for its members’ torts. Customs Administrative Order No. 15-65 establishes a reserve fund and a direct statutory solidary liability of the association for damages caused by a member pilot acting in compulsory pilotage service, with a right of reimbursement from the erring pilot.

• Standard of care required of a harbor pilot — A harbor pilot is required to possess and exercise the ordinary skill and care demanded by the circumstances and usually shown by an expert in the profession. Under extraordinary circumstances, extraordinary care is required. The pilot must have superior knowledge of local navigation conditions and see to it that his orders are promptly and strictly followed.

• “The master is not wholly absolved from his duties while a pilot is on board his vessel, and may advise with or offer suggestions to him. He is still in command of the vessel, except so far as her navigation is concerned, and must cause the ordinary work of the vessel to be properly carried on and the usual precaution taken.”

• “While the pilot doubtless 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, … the master is not wholly absolved from his duties while the pilot is on board, … he himself is bound to keep a vigilant eye on the navigation of the vessel, and, when exceptional circumstances exist, not only to urge upon the pilot to use every precaution, but to insist upon such being taken.” (Quoting The Oregon, 158 U.S. 186)

• “A master of a vessel is not without fault in acquiescing in conduct of a pilot which involves apparent and avoidable danger, whether such danger is to the vessel upon which the pilot is, or to another vessel, or persons or property thereon or on shore.” (Quoting Jure v. United Fruit Co., 6 F.2d 7)

• “[I]f a situation arose where the master, exercising that reasonable vigilance which the master of a ship should exercise, observed, or should have observed, that the pilot was so navigating the vessel that she was going, or was likely to go, into danger, and there was in the exercise of reasonable care and vigilance an opportunity for the master to intervene so as to save the ship from danger, the master should have acted accordingly.” (Quoting Hinman v. Moran Towing & Transportation Co., 268 N.Y.S. 409)

• The Steamship China v. Walsh, 74 U.S. 67 (1869) — Established the master’s duty to interfere when the pilot is intoxicated, manifestly incapable, or when there is a danger the pilot does not foresee; followed.

• The Oregon, 158 U.S. 186 (1895) — Declared that the master’s duty to keep a vigilant eye on navigation persists even with a compulsory pilot on board; held the master and vessel liable for the pilot’s negligence when the master failed to intervene; followed and extensively quoted.

• Atlee v. The Northwestern Union Packet Co., 22 L. Ed. 619 — Defined the high degree of skill and knowledge required of a harbor or river pilot; followed.

• Jure v. United Fruit Co., 6 F.2d 7 (1925) — Held both compulsory pilot and master concurrently negligent where the master acquiesced in conduct involving apparent danger; applied to support joint liability.

• City of Manila v. Gambe, 6 Phil. 49 (1906) — Philippine precedent holding a compulsory pilot solely liable where the master was blameless; distinguished on the facts because the master was not concurrently negligent.

• China Navigation Co., Ltd. v. Vidal, 22 Phil. 121 (1912) — Philippine precedent where the pilot’s negligence was the sole proximate cause and the captain’s warnings were ignored; distinguished.

• Yap Tica & Co. v. Anderson, 34 Phil. 626 (1916) — Exonerated a pilot because the crew disobeyed his orders; cited to show that concurrent negligence can exist where the pilot is not solely at fault.

• Article 2194, Civil Code — The responsibility of two or more persons liable for a quasi-delict is solidary. Applied to hold the pilot, shipowner, and association solidarily liable.

• Article 2180, Civil Code — Employers’ vicarious liability for employees’ acts. Found inapplicable to MPA because no employer-employee relationship existed with Capt. Gavino.

• PPA Administrative Order No. 03-85, Sections 8 and 11 — Established compulsory pilotage in the Manila Pilotage District; provided that the harbor pilot is responsible for damage caused by his negligence but the master retains overall command and may countermand pilot’s orders. Applied in determining the respective duties and responsibilities.

• Customs Administrative Order No. 15-65, Chapter I, Par. XXVII, XXVIII, XXXI, XXXIV — Required pilots’ associations to maintain a reserve fund to pay claims for damages caused by members; limited the association’s liability to 75% of the reserve fund, with the excess payable from the pilot’s personal funds and subject to reimbursement. Interpreted as creating solidary liability of the association with the erring pilot.

• Customs Administrative Order No. 15-65, Chapter I, Par. XXXIX — A pilot is responsible for the direction of a vessel from the time he assumes control until he leaves it anchored safely, ceasing only when the master neglects or refuses to carry out his instructions. Applied in determining the pilot’s duty.

Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Panganiban, Martinez, Quisumbing, and Purisima, JJ., concurred. Narvasa, C.J., and Mendoza, J., were on official leave.