4th set digests final

8/12/2019 4th Set Digests FINAL

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LLB 2-1. The Leftists. Magugulong Magaganda’t Pogi sa Left Side.

1 HOME INSURANCE COMPANY, plaintiff-appellee,vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORINGCORPORATION, defendants, AMERICAN STEAMSHIP AGENCIES, INC., defendant-appellant. – CAI

Characters:

Home Insurance Company – Insurer of the shipment of Peruvian fish meal American Steamship Agencies, Inc. - owner and operator of SS Crowborough

Luzon Stevedoring Corporation – arrastre

San Miguel Brewery Inc. – Consignee of the shipment of Peruvian fish meal fromChimbate, Peru

Facts:

Consorcio Pesquero del Peru of South America shipped freight prepaid jute bagsof Peruvian fish meal through SS Crowborough and was covered by bills of ladingnumber 1 and 2. The said cargo was consigned to San Miguel Brewery, Inc andwas insured with Home Insurance Co.

Upon arrival of the shipment in Manila it was discharged into the lighters of Luzon

Stevedoring Co. When it was delivered to the consignee, there were shortages amounting to

12,033.85, causing the latter to lay claims against Luzon Stevedoring, HomeInsurance and the American Steamship Agencies, owner and operator of thevessel.

Because the others denied liability, Home Insurance Company paid the consignee14,870.71, the insurance value of the loss as full settlement of the claim. Havingbeen refused reimbursement by the others, the insurer, as subrogee to theconsignee filed against them before CFI of Manila for recovery of the amount itpaid to San Miguel.

Luzon Stevedoring Defense:

It delivered with due diligence the goods in the same quantity and quality that it

had received the same from the carrier. It also claimed that plaintiff's claim hadprescribed under Article 366 of the Code of Commerce stating that the claim mustbe made within 24 hours from receipt of the cargo.

American Steamship Agencies’ Defense:

It denied liability by alleging that under the provisions of the charter party referredto in the bills of lading, the charterer, not the shipowner, was responsible for anyloss or damage of the cargo. Furthermore, it claimed to have exercised duediligence in stowing the goods and that as a mere forwarding agent, it was notresponsible for losses or damages to the cargo.

RTC Ruling:

Absolved Luzon Stevedoring Corporation.

Ordered American Steamship Agencies to pay plaintiff 14,870.71 with legal interestplus 1,000 attorney’s fee cited the following grounds:

(a) The non-liability of American Steamship Agencies under the charter partycontract is not tenable because Article 587 of the Code of Commerce makes the

ship agent also civilly liable for damages in favor of third persons due to theconduct of the captain of the carrier;

(b) The stipulation in the charter party contract exempting the owner from liability isagainst public policy under Article 1744 of the Civil Code;

(c) In case of loss, destruction or deterioration of goods, common carriers arepresumed at fault or negligent under Article 1735 of the Civil Code unless theyprove extraordinary diligence, and they cannot by contract exempt themselvesfrom liability resulting from their negligence or that of their servants; and

(d) When goods are delivered to the carrier in good order and the same are in badorder at the place of destination, the carrier is prima facie liable.

ISSUE: Is the stipulation in the charter party of the owner's non-liability valid so as toabsolve the American Steamship Agencies from liability for loss? YES

SC RULING:

The bills of lading covering the shipment provide at the back thereof that thebills of lading shall be governed by and subject to the terms and conditions of thecharter party, if any, otherwise, the bills of lading prevail over all the agreements.On the bills are stamped "Freight prepaid as per charter party. Subject to all terms,conditions and exceptions of charter party dated London, Dec. 13, 1962."

A perusal of the charter party referred to shows that while the possession andcontrol of the ship were not entirely transferred to the charterer,

the vessel was

chartered to its full and complete capacity. Accordingly, the charter party contract is oneof affreightment over the whole vessel rather than a demise. As such, the liability of theshipowner for acts or negligence of its captain and crew, would remain in the absenceof stipulation.

Section 2, paragraph 2 of the charter party, provides that the owner is liable forloss or damage to the goods caused by personal want of due diligence on its part or itsmanager to make the vessel in all respects seaworthy and to secure that she beproperly manned, equipped and supplied or by the personal act or default of the owneror its manager. Said paragraph, however, exempts the owner of the vessel from anyloss or damage or delay arising from any other source, even from the neglect or fault ofthe captain or crew or some other person employed by the owner on board, for whoseacts the owner would ordinarily be liable except for said paragraph..

Regarding the stipulation, the Court of First Instance declared the contract ascontrary to Article 587 of the Code of Commerce making the ship agent civilly liable forindemnities suffered by third persons arising from acts or omissions of the captain inthe care of the goods and Article 1744 of the Civil Code under which a stipulationbetween the common carrier and the shipper or owner limiting the liability of the formerfor loss or destruction of the goods to a degree less than extraordinary diligence is valid




provided it be reasonable, just and not contrary to public policy. The release fromliability in this case was held unreasonable and contrary to the public policy on commoncarriers.

A common carrier undertaking to carry a special cargo or chartered to aspecial person only, becomes a private carrier. As a private carrier, a stipulationexempting the owner from liability for the negligence of its agent is not against publicpolicy, and is deemed valid.

The Civil Code provisions on common carriers should not be applied wherethe carrier is not acting as such but as a private carrier. The stipulation in the charterparty absolving the owner from liability for loss due to the negligence of its agent wouldbe void only if the st rict public policy governing common carriers is applied. Such policyhas no force where the public at large is not involved, as in the case of a ship totallychartered for the use of a single party.

And furthermore, in a charter of the entire vessel, the bill of lading issued bythe master to the charterer, as shipper, is in fact and legal contemplation merely areceipt and a document of title not a contract, for the contract is the charter party. Theconsignee may not claim ignorance of said charter party because the bills of ladingexpressly referred to the same. Accordingly, the consignees under the bills of ladingmust likewise abide by the terms of the charter party. And as stated, recovery cannot

be had thereunder, for loss or damage to the cargo, against the shipowners, unless thesame is due to personal acts or negligence of said owner or its manager, asdistinguished from its other agents or employees. In this case, no such personal act ornegligence has been proved.

WHEREFORE, the judgment appealed from is hereby reversed and appellantis absolved.

2 LOADSTAR SHIPPING VS. COURT OF APPEALS – OFE

Characters:

Loadstar Shipping Co. > owner of vessel Cherokee

Manila Insurance Comp.> insurer of goods, plaintiff sa RTC

Prudential Guarantee and Assurance Inc> insurer of the vessel

FACTS:

Loadstar received on board its M/V "Cherokee" various goods for shipment

The goods were insured with MIC against various risks including "TOTAL LOSSBY TOTAL OF THE LOSS THE VESSEL."

The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc.

On its way to Manila the vessel, along with its cargo, sank off Limasawa Island

As a result of the total loss of its shipment, the consignee made a claim withLoadstar which, however, ignored the same

As the insurer, MIC paid the insured in full settlement of its claim, and the latterexecuted a subrogation receipt

MIC filed a complaint against Loadstar and Prudential, alleging that the sinking ofthe vessel was due to the fault and negligence of Loadstar and its employees

Loadstar contention: denied any liability for the loss of the shipper's goods and

claimed that sinking of its vessel was due to force majeure.

Loadstar Defense:

It is a private carrier because it was not issued a certificate of public convenience;it did not have a regular trip or schedule nor a fixed route, and there was only "oneshipper, one consignee for a special cargo.

As a private carrier, it cannot be presumed to have been negligent, and theburden of proving otherwise devolved upon MIC.

As a private carrier, any agreement limiting its liability, such as what transpired inthis case, is valid. (Cargo shipped at the owner’s risk.)

It is not liable because the sinking of the ship was due to force majeure. Itmaintained that its vessel was seaworthy.

PGAI Contention: averred that MIC had no cause of action against it, Loadstar beingthe party insured; was later dropped as a party defendant after it paid the insuranceproceeds to LOADSTAR

RTC: ruled in favor of MIC

On appeal CA: affirmed the RTC in toto

Loadstar cannot be considered a private carrier on the sole ground that there wasa single shipper on that fateful voyage. The court noted that the charter of thevessel was limited to the ship, but Loadstar retained control over its crew

Loadstar was not a private carrier. The charter of the vessel was limited to the ship,Loadstar maintaining control over its crew.

The vessel was not seaworthy.

There was a breach of contract when the goods failed to reach its destination andthe defense of diligence of a good father of a family is unavailing in culpacontractual.

ISSUES: W/N Is the limited liability rule applicable in the case.

HELD:

No. The doctrine of limited liability does not apply where there was negligence onthe part of the vessel owner or agent. LOADSTAR was at fault or negligent in notmaintaining a seaworthy vessel and in having allowed its vessel to sail despiteknowledge of an approaching typhoon. In any event, it did not sink because of anystorm that may be deemed as force majeure, inasmuch as the wind condition in theperformance of its duties, LOADSTAR cannot hide behind the "limited liability"doctrine to escape responsibility for the loss of the vessel and its cargo.




Three kinds of stipulations have often been made in a bill of lading. The first oneexempting the carrier from any and all liability for loss or damage occasioned by itsown negligence. The second is one providing for an unqualified limitation of suchliability to an agreed valuation. And the third is one limiting the liability of the carrierto an agreed valuation unless the shipper declares a higher value and pays ahigher rate of. freight. According to an almost uniform weight of authority, the first

and second kinds of stipulations are invalid as being contrary to public policy, butthe third is valid and enforceable. (Arts 1744-45; Arts 1749-50).

a stipulation reducing the one-year period is null and void; it must, accordingly, bestruck down

Reliance to Home Insurance Co. v. American Steamship Agencies, Inc

In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc ., where this Court held that a common carriertransporting special cargo or chartering the vessel to a special person becomes aprivate carrier that is not subject to the provisions of the Civil Code. Any stipulation inthe charter party absolving the owner from liability for loss due to the negligence of itsagent is void only if the strict policy governing common carriers is upheld. Such policy

has no force where the public at is not involved, as in the case of a ship totallychartered for the use of a single party. LOADSTAR also cited ValenzuelaHardwood and Industrial Supply, Inc. v. Court of Appeals and National Steel Corp. v.Court of Appeals, both of which upheld the Home Insurance doctrine.

These cases invoked by LOADSTAR are not applicable in the case at bar for the simplereason that the factual settings are different. The records do not disclose that the M/V"Cherokee," on the date in question, undertook to carry a special cargo or waschartered to a special person only. There was no charter party. The bills of lading failedto show any special arrangement, but only a general provision to the effect that theM/V"Cherokee" was a "general cargo carrier ." Further, the bare fact that the vessel wascarrying a particular type of cargo for one shipper, which appears to be purelycoincidental, is not reason enough to convert the vessel from a common to a private

carrier, especially where, as in this case, it was shown that the vessel was also carryingpassengers.

3 PHILIPPINE SHIPPING CO. VS. GARCIA – BRY

THE PHILIPPINE SHIPPING COMPANY, ET AL. vs. FRANCISCO GARCIAVERGARA

Characters:

a. Philippine Shipping Company – plaintiff, owner of the steamship Nuestra Sra. De

Lourdes.

b. Francisco Garcia Vergara – defendant, owner of the steamship Navarra, which

collided with the plaintiff’s vessel.

c. Ynchusti & Co. – owner of the cargo of hemp and copra that was lost during the

collision, claimant of the P24,705.64 indemnification for the loss

Facts: “Doctrine of Limited Liability”

This case is about the collision of steamships between Lourdes and Navarra.

The plaintiff filed a case for claim of damages amounting to P44,000 for the loss ofits ship, Lourdes.

The tr ail court ruled that Vergara’s Navarra was found to be at fault during thecollision at sea with the plaintiff’s ship Lourdes. (Lourdes was sailing in accordancew/ law and Navarra was not.)

The court also found as a fact that "both ships with their respective cargoes wereentirely lost." Construing article 837 of the Code Commerce, the court below held"that the defendant was not responsible to the plaintiff for the value of thesteamship Lourdes, with the costs against the latter."

The plaint i f f appealed to the Supreme Co urt .

Plaintiff’s contention:

a. That the defendant must pay P18,000, the value of Navarra at the time of the loss,that this is the sense in the provisions of Art. 837 of the Code of Commerce.

b. That the code has followed the principles of the English Law and not those of American law.

c. That it was immaterial whether Navarra had been entirely lost, provided her valueat the time she was lost could be ascertained, since the extent of the liability of theowner of the colliding vessel for the damages resulting from the collision is to bedetermined in accordance with such value.

ISSUE:

1. W/N the defendant (Vergara) should be held liable for the amount of the shipdespite the loss of such ship during collision.

Supreme Court HELD: NO.

The ship serves as security for those who have liens, either legal or tacit, in case ofloss or damages in the goods, or even as payment for the wages of the crew andcaptain. As provided in Art. 837 of the Code of Commerce, the liability of theshipowner or agent shall be limited to the value of ship.

Article 837 of the Code Commerce provides: "The civil liability contracted by theshipowners in the cases prescribed in this section shall be understood as limited tothe value of the vessel with all her equipment and all the freight money earnedduring the voyage."




There is no doubt that if the Navarra had not been entirely lost, the agent, havingheld liable for the negligence of the captain of the vessel, could have abandonedher with all her equipment and the freight money earned during the voyage, thusbringing himself within the provisions of the article 837 in so far as the subsidiarycivil liability is concerned. This abandonment which would have amounted to anoffer of the value of the vessel, of her equipment, and freight money earned could

not have been refused, and the agent could not have been personally compelled,under such circumstances, to pay the 18,000 pesos, the estimated value of thevessel at the time of the collision.

This is the difference which exists between the lawful acts and lawful obligation ofthe captain and the liability which he incurs on account of any unlawful actcommitted by him. In the first case, the lawful acts and obligations of the captainbeneficial to the vessel may be enforced as against the agent for the reason thatsuch obligations arise from the contract of agency (provided, however, that thecaptain does not exceed his authority), while as to any liability incurred by thecaptain through his unlawful acts, the ship agent is simply subsidiarily civilly liable.This liability of the agent is limited to the vessel and it does not extend further. Forthis reason the Code of Commerce makes agent liable to the extent of the value ofthe vessel, as to the codes of the principal maritime nations provided, with the

vessel , and not individually.

The characteristics of maritime law as compared with civil and mercantile law are that isboth REAL and HYPOTHECARY in nature.

Evidence of ―Real nature‖ of maritime law:

(1) the limitation of the liability of the agents to the actual value of the vessel and thefreight money, and

(2) the right to retain the cargo and the embargo and detention of the vessel evencases where the ordinary civil law would not allow more than a personal action againstthe debtor or person liable.

The reason for its REAL nature:

It will be observed that these rights are correlative, and naturally so, because if theagent can exempt himself from liability by abandoning the vessel and freight money,thus avoiding the possibility of risking his whole fortune in the business, it is also justthat his maritime creditor may for any reason attach the vessel itself to secure his claimwithout waiting for a settlement of his rights by a final judgment, even to the prejudice ofa third person.

There are two reasons why it is impossible to do away with these privileges, to wit:

(1) The risk to which the thing is exposed, and

(2) The "real" nature of maritime law, exclusively "real," according to which theliability of the parties is limited to a thing to which is at mercy of the waves.

If the agent is only liable with the vessel and freight money and both may be lostthrough the accidents of navigation it is only just that the maritime creditor have some

means of obviating this precarious nature of his rights by detaining the ship, his onlysecurity, before it is lost.

DISPOSITIVE: The Court affirmed the trial court’s decision that the defendant is liablefor the indemnification, to which the plaintiff is entitled by reason of the collision, but he

is NOT REQUIRED to pay such indemnification of the reason that the obligationincurred has been extinguished on account of loss of the thing bound for the paymentthereof.

4 YUENG SHENG EXCHANGE & TRADE CO. VS. URRUTIA & CO. – RYAN

Sorry guys, naguluhan ako sa case na to sa sobrang kalumaan na, iba pa ata angwriting styles ng justices nung 1909

Characters:

Y.B. Sontua - shipper, nag load ng rice sa Minas de Batan

Minas de Batan – damaged vessel with the damaged goods (rice)

Yueng Sheng Exchange & Trading Comp.- insurance company, insurer of the

rice, paid YB Sontua Hip On Insurance Comp. Limited – second insurance company, insurer of rice,

paid YB Sontua

Cebu – vessel na bumangga sa Minas de Batan

Smith Bell &Co. – as agents of the Cebu

G. Urrutia & Co. - defendant / appellee, charterer of the Cebu

FACTS:

Y.B. Sontua loaded rice on the Minas de Batan, which sailed from Saigon, andarrived in the port of Manila with the cargo of rice in good condition

while the said Minas de Batan lay in the inner harbor of Manila, thesteamer Cebu approached her, carrying her port anchor penetrated the starboard

side of the Minas de Batan

as a result the water entered the said steamer, and wet a portion of her cargo ofrice; 5,008 sacks, valued at P27,193.93, were completely ruined

Yueng Sheng Exchange and Trading Company, as insurance company, paid Y.B.Sontua the sum of P15,995.85, and the Hip On Insurance Company, Limited, paidthe said Sontua the sum of P11,198.08.

Yueng Sheng was subrogated by YB Sontua commenced the present suit againstG. Urrutia & Co. for the sum of P27,193.93, as damages, consideringsteamer Cebu and consequently responsible for the acts of the officers and thecrew of the same, who, on account of their recklessness and negligence, wherethe cause of the damages occasioned to the steamer Minas de Batan, to one ofthe shippers, and to the company which insured the damaged cargo




More facts as related to the above were reached in an agreement by lawyers of thetwo parties:

That G. Urrutia & Co. are not the owners of the Cebu, but they had chartered her. A copy of the contract was made an integral part of this agreement.

That the captain and engineer of the Cebu were engaged, on the date of the

execution of the contract, by Smith, Bell & Co., a partnership organized inaccordance with the laws in force in the Philippine Islands, and from this companyG. Urrutia & Co. chartered the steamer

That the captain and engineer in turn hired the crew, and were in the exercise oftheir duties at the time of the occurrence in question.

On the date in question, the second typhoon signal had been hoisted; this signalannounced a distant typhoon, and gave warning that certain precautions should betaken in case the typhoon should approach

It was at this time that the Cebu approached the Minas de Batan for the purpose oftaking on cargo from the latter.

Another vessel, the Buen Viaje approached the other side of the Minas de Batan,for the same purpose, causing no damage to the latter or to her cargo, in spite of

the condition of the sea and of the weather

Facts related to the contract between Smith Bell and G. Urrutia:

Smith, Bell & Co., as agents of the Cebu, on the one part, and Messrs. G. Urrutia &Co., as charterers, on the other

Smith, Bell & Co. will pay for ships stores required by the said steamer for her deckand engineering department

G. Urrutia & Co. will pay for the coal, salaries of the off icers and of the crew, water,pilotage, subsistence of the crew and of other expenses occasioned by loadingand unloading

Fines that may be imposed for defects of the steamer, such as lack of lifepreserves, boats, machinery, etc., shall be paid by the agents (Smith&Bell) of

the Cebu, and all those fines resulting from orders given by charterers shall be paidby the latter (G Urrutia)

Expenses for maintenance of the vessel, such as repairs, sails, calking, painting,etc., shall be paid by the agents of the ship

Both the captain and the crew of the ship shall be the orders of the charterers, whowill instruct them as to the trips to be made, the stopping places, provided theseare those mentioned in the previous article, the freight to be received on board,and they shall work at night in loading and unloading, should it be required by thecharterers

Urrutia and Co. shall not discharge the captain nor dismiss the engineer, butshould these officers commit any punishable fault, Urrutia shall inform the agents

of the vessel, in order that the latter may take such steps as they may deemnecessary in the case

CFI of Manila:

Absolved G. Urrutia

The question of whether the plaintiff company has, by virtue of such facts, a right of

action against the defendant company, for damages amounting to P27,193.93,caused through the fault, carelessness, or negligence, of the officers of the Cebu,resulting in damage to the Minas de Batan, on account of which a portion of thecargo of rice was spoiled decided the said question in the negative, saying "thatthe shipowner or the agent are responsible for the acts of the captain, althoughhave not, as in the present case, the power to appoint the captain nor to dischargehim," and therefore absolved the defendants G. Urrutia & Co.

Hence this petition

ISSUE: Whether the charterer of a vessel, under the conditions stipulated in the charterparty, is the owner pro hac vice of the ship and takes upon himself the responsibilitiesof the owner.

HELD:

SC said no.

Granted that the cause of the damages was the fault, negligence, or incompetenceof the captain or the crew of the Cebu, and that the damage was caused by thecollision of the latter with the Minas de Batan, the law applicable to the case, sinceit occurred the inner waters of Manila Bay, is the Code of Commerce of thePhilippines:

Article 826 of this Code provides:

If a vessel should collide with another through the fault, negligence, or lack of skill ofthe captain, sailing master, or any other member of the complement, the owner of thevessel at fault shall indemnify the loss and damage suffered, after an expert appraisal.

But G. Urrutia & Co. could not in any way exercise the powers of rights of an agent.They could not represent the ownership of the vessel, nor could they, in their ownname and in such capacity, take judicial or extrajudicial steps in all that relates tocommerce (art. 595, par. 2); thus of the Cebu were attached, they would have nolegal capacity to proceed to secure its release; speaking generally, not even thefines could or ought to be paid by them, unless such fines were occasioned by theirorders.

The contract executed by Smith, Bell & Co., as agents for the Cebu, and G. Urrutia& Co. as charterers of the vessel, did not put the latter in the place of the former,nor make them agents of the owner or owners of the vessel. With relation to thoseagents, they retained opposing rights derived from the charter party of the vessel,and at no time could they be regarded by the third parties, or by the authorities, or




by the courts, as being in the place of the owners or the agents in matter relating tothe responsibility pertaining to the ownership and possession of the vessel.

neither had they the powers of such owners or agents with respect to themanagement and navigation of the ship, and still less regard to the ownership andtrue possession of the vessel.

The contract simply granted G. Urrutia & Co. the lease of the Cebu for the voyagesexpressed in the sixth clause, namely, from Manila to certain ports, "and they couldnot arrange for the vessel to make voyages to other ports not mentioned, withoutthe express authority of Messrs. Smith, Bell & Co." Their possession was,therefore, the uncertain title of lease, not a possession representing the true andreal possession of the owner, such as is that of the agent, who is fully subrogatedto the place of the owner in regard to the dominion, possession, freeadministration, and navigation of the vessel.

G. Urrutia & Co. had only the use of the Cebu for the voyages stipulated in thecontract, the right to transport their own cargo, and to profits accruing from carriageof extra freight belonging to other persons

The material possession or the possession in fact was held by the captain, and heheld in the name of Messrs. Smith, Bell & Co.; he was their subordinate andrepresented them in regard to the rights of possession and ownership and to thesubstance of the vessel, the preservation and management of which wereentrusted to his care and vigilance without contemplation of any right in favor ofother persons to whom the use of enjoyment of the ship might have been granted.Only in regard to this uses of employment was he placed under the orders of thelessees with the terms and limits of the contract

The responsibility involved in the present action is that derived from themanagement of the vessel, which was defective on account of lack of skill,negligence, or fault, either, of the captain or of the crew, for which the captain isresponsible to the agent, who is in turn is responsible to the third party prejudicedor damaged. (Art. 618, Code of Commerce.)

DISPOSITIVE: affirmed the judgment appealed from

5 STANDARD OIL CO. VS. LOPEZ CASTELO – WIJ

G.R. No. L-13695 October 18, 1921

STANDARD OIL COMPANY OF NEW YORK, plaintiff-appellee,

vs. MANUEL LOPEZ CASTELO, defendant-appellant.

Characters:

1. Manuel Lopez Castelo – owner of the small interisland steamer Batangueñowhich he let to Jose Lim Chumbuque

2. Jose Lim Chumbuque – the charterer of Batangueno 3. Standard Oil company – the shipper of petroleum products jettisoned during a

storm

Facts: A charter contract was entered into by herein ship owner, Manuel LopezCastelo and charterer Jose Lim Chumbuque for the term of one year to Jose LimChumbuque for use in the conveying of cargo between certain ports of the PhilippineIslands. In this contract it was stipulated that the officers and crew of the Batangueñoshould be supplied by the owner, and that the charterer should have no other controlover 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 casethey 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 ofpetroleum to be conveyed to the port of Casiguran, in the Province of Sorsogon. Forthis consignment a bill of lading of the usual form was delivered but contained noprovision with respect to the storage of the petroleum, but it was in fact placed upon thedeck of the ship and not in the hold.

During the journey, the ship faced a violent storm thus the captain wascompelled for the safety of all to jettison the entire consignment of petroleum consistingof two hundred cases. When the storm abated the ship made port, and thirteen casesof the petroleum were recovered, but the remainder was wholly lost.

To recover the value of the petroleum thus jettisoned but not recovered, thepresent action was instituted by the Standard Oil Company against the owner of theship in the Court of First Instance of Manila

CFI Ruling: The CFI decided in favor of Standard Oil for the recovery of the value ofthe petroleum thus jettisoned but was not recovered.

Issue: Whether the loss of this petroleum was a general average loss or aparticular less to be borne solely by the owner of the cargo.

Castelo’s Defense: The liquidation of the general average is, under article 852 andrelated provisions, a condition precedent to the liability of the defendant, and that at anyrate the defendant, as owner of the ship, should only be held liable for his proportion ofthe general average. It is also suggested that if the plaintiff has any right of action at allupon the state of facts here presented, it is against the captain, who has beendelinquent in performing the duty which the law imposes on him.

SC Ruling: Yes, it is a general average loss and the loss shall be distributed orborne by the shipowner and consignees of the cargoes on board.

Upon this point it will be observed that the cargo was carried upon deck; and itis a general rule, both under the Spanish Commercial Code and under the doctrinesprevailing 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 generalaverage loss. But this rule, denying deck cargo the right to contribution by way ofgeneral average in case of jettison, was first made in the days of sailing vessels; andwith 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 tocoastwise 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 inlandwaters, are entitled to contribution as a general average loss.

The Marine Regulations now in force in these Islands contain provisionsrecognizing 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 andprotected from the elements (Phil. Mar. Reg. [1913], par 23). Indeed, there is onecommodity, namely, gasoline, which from its inflammable nature is not permitted to becarried in the hold of any passenger vessel, though it may be carried on the deck ifcertain precautions are taken. There is no express provision declaring that petroleumshall be carried on deck in any case; but having regard to its inflammable nature andthe known practices of the interisland boats, it cannot be denied that this commodityalso, as well as gasoline, may be lawfully carried on deck in our coastwise trade.

It is true that if the captain does not comply with the article relating to theadjustment, liquidation, and distribution of the general average, the next article (852)gives to those concerned — whether shipowner (naviero) or shipper — the right tomaintain an action against the captain for indemnification for the loss; but therecognition 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 theowner of the ship ordinarily has vastly more capital embarked upon a voyage than hasany individual shipper of cargo. Moreover, the owner of the ship, in the person of thecaptain, has complete and exclusive control of the crew and of the navigation of theship, as well as of the disposition of the cargo at the end of the voyage. It is thereforeproper that any person whose property may have been cast overboard by order of thecaptain should have a right of action directly against the ship's owner for the breach ofany duty which the law may have imposed on the captain with respect to such cargo.The evident intention of the Code, taken in all of its provisions, is to place the primaryliability 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 toobtain recourse, as it is very easy to do, from other individuals who have been drawninto the venture as shippers.

It results that the plaintiff is entitled to recover in this action.

6 MONARCH INSURANCE V CA –MONETTE

Background: 3 consolidated petitions in which all cases arose from the loss of cargoesof various shippers when Aboitiz’ vessel sunkening (joke lang SANK dapat ha, walangmagsasabi ng sunkening!) on her voyage from Hong Kong to Manila on October 31,1980. All claimants are seeking indemnification for the loss of their cargoes.

(Magulo ang kasong ‘to kasi nga 3 consolidated petitions sya so yung FACTS idi -discuss ko per petition. Ang importante dito kung applicable ba yung Doctrine of

Limited Liability kay Aboitiz. Tandaan, lahat ng cargoes nasa vessel ni Aboitiz, kaya isalang ang defense ni Aboitiz –force majeure- pero madaming claimants. Lalagyan ko ngsummary facts para may overview pero ide-detail ko din for purposes of recit)

SUMMARY FACTS:

Cargoes were shipped on board Aboitiz’ vessel (from Hong Kong to Manila). The vessel

sank. The insurance companies (Monarch, Tabacalera, Allied & Equitable) paid thevalue of the cargoes to their respective consignees and thereafter, as insurer-subrogees, separately filed complaints against Aboitiz. The trial courts all ruled in favorof the insurers and ordered Aboitiz to pay insurers the amount representing the value ofthe lost cargoes. However, on petition to CA by Aboitiz, the appellate courts stayed theexecution of judgment (ordering Aboitiz to pay) because the liability of Aboitiz is limitedto the value of the vessel w/c is insufficient to satisfy all the claims.

In another case decided by the Supreme Court, Aboitiz Shipping Corporation v.General Accident Fire and Life Assurance Corporation, the SC ordered Aboitiz to filethe appropriate action to consolidate all claims. No claim can be given precedence overothers. But Aboitiz, instead, defied order of the SC , and it (Aboitiz) preferred to litigatethe claims singly rather than exert effort towards the consolidation of all claims. SCsaid, ―It was obvious that from among the many cases filed against it over the years, Aboitiz was waiting for a judgment that might prove favorable to it, in blatant violation ofthe basic provisions of the Civil Code on abuse of rights.‖

1st

PETITION: Monarch and Tabacalera v Aboitiz

Characters:

Monarch Insurance and Tabacalera Insurance Company – petitioners; insurancecarriers of lost cargoes

Aboitiz – respondent; common carrier

Cargoes:

Monarch: glass tubing and motor vehicle parts

Tabacalera: Renault spare parts, door closers and plastic spangle

FACTS:

Aboitiz’s vessel sank on her voyage from Hong Kong to Manila.

Monarch and Tabacalera indemnified the shippers and were consequentlysubrogated to their rights, interests and actions against Aboitiz.

Aboitiz refused to compensate Monarch so Monarch filed complaints against Aboitiz.

Tabacalera also filed complaints against Aboitiz.

Aboitiz’s Defense: The sinking of the vessel was due to force majeure or an act ofGod.

Monarch and Tabacalera proffered in evidence the survey of Perfect Lambert, asurveyor commissioned to investigate the possible cause of the sinking of thecargo vessel.




The survey established that on her voyage to Manila from Hong Kong, the vesseldid not encounter weather so inclement that Aboitiz would be exculpated fromliability for losses. In his note of protest, the master of M/V P. Aboitiz described theweather condition classified as typical and moderate in the South China Sea at thatparticular time of the year.

The survey added that the seaworthiness of the vessel was in question especiallybecause the breaches of the hull and the serious flooding of two (2) cargo holdsoccurred simultaneously in "seasonal weather."

The trial court rendered judgment against Aboitiz

Aboitiz appealed to the Court of Appeals but the appeal was dismissed for itsfailure to file appellant's brief. MR similarly denied by the CA.

Aboitiz then filed petition for review before the SC but was denied for being filedout of time. Entry of judgment was made in the case.

Monarch and Tabacalera moved for execution of judgment.

Trial court granted the motion and issued separate writs of execution.

Aboitiz filed motion to quash writs of execution, invoking the real and hypothecary

nature of liability in maritime law. According to Aboitiz, since its liability is limited to the value of the vessel which

was insufficient to satisfy the aggregate claims of all 110 claimants, toindemnify Monarch and Tabacalera ahead of the other claimants would beprejudicial to the latter. (Ang sinasabi ng Aboitiz, bawal pa i-execute ang judgment kasi yung value ng vessel hindi kayang i-satisfy lahat ng claims atmagiging prejudicial sa ibang claimants kung mauunang bayaran angMonarch & Tabaccalera. Oo Tinagalog ko lang. Sa Limited Liability cheverkasi di ba limited lang ang liability ng ship owner sa value ng vessel na idi-discuss laterss.)

Monarch and Tabacalera opposed the motion to quash.

Before the motion to quash could be heard, the sheriff levied upon five (5) heavy

equipment owned by Aboitiz for the public auction sale. Monarch and Tabacalera were the highest bidders of said equipment. Certificates

of sale issued.

Judge Purisima issued an order denying the motion to quash but freezingexecution proceedings for ten (10) days to give Aboitiz time to secure a restrainingorder from a higher court.

Execution was scheduled to resume to fully satisfy the judgment when the graceperiod shall have lapsed without such restraining order having been obtained by Aboitiz.

On petition to CA by Aboitiz, the CA annulled writs of execution, auction sale,certificates of sale, and the assailed orders of Judge Purisima. (insofar as themoney value of those properties of Aboitiz, levied on execution and sold at public

auction, has exceeded the pro-rata shares of Monarch and Tabacalera in theinsurance proceeds of Aboitiz in relation to the pro-rata shares of the 106 otherclaimants).CA held that the unseaworthiness of the vessel was not a fault directlyattributable to Aboitiz but to the captain, and that Aboitiz is entitled to the benefit ofthe limited liability rule for having abandoned its ship.

Hence, the instant petition (eto na yung first petition).

2nd

and 3rd

PETITIONS:

Characters:

ALLIED GUARANTEE INSURANCE COMPANY – petitioner (2nd

petition); insurer-subrogee of consignee Peak Plastic and Metal Products Limited(hindi importantesi Peak Plastic dito)

EQUITABLE INSURANCE CORPORATION – petitioner(3rd

petition); insurer-subrogee of consignee-assured Axel Manufacturing Corporation(hindi dinimportante si Axel dito)

Aboitiz – respondent; common carrier

Cargoes:

Allied – bags of PVC compound and ABS plastic Equitable - drums of synthetic organic tanning substances and optical bleaching

agents

FACTS:

Allied and Equitable filed complaints against Aboitiz for the recovery of the amountrepresenting the value of lost goods.

Aboitiz Defense: Force majeure. The vessel was seaworthy. It exercised duediligence in the carriage of goods. In support of its position, Aboitiz presented thetestimonies of Capt. Gerry N. Racines, master mariner of the vessel, and Justo C.Iglesias, a PAGASA meteorologist, as follows:

Aboitiz’s vessel left Hong Kong for Manila at about 7:30pm after securing adeparture clearance from the Hong Kong Port Authority. The departure was

delayed for two hours because he (Capt. Racines) was observing the directionof the storm that crossed the Bicol Region. He proceeded with the voyage onlyafter being informed that the storm had abated. At about 8am the followingday, after more than twelve (12) hours of navigation, the vessel suddenlyencountered rough seas with waves about fifteen to twenty-five feet high. Heordered his chief engineer to check the cargo holds. The latter found that seawater had entered cargo hold Nos. 1 and 2. He immediately directed thatwater be pumped out by means of the vessel's bilge pump, a device capableof ejecting 180 gallons of water per minute. They were initially successful inpumping out the water.

At 6am the next day, however, Capt. Racines received a report from his chiefengineer that the water level in the cargo holds was rapidly rising. He alteredthe vessel's course and veered towards the northern tip of Luzon to prevent




the vessel from being continuously pummeled by the waves. Despite diligentefforts of the officers and crew, however, the vessel, which was approximately250 miles away from the eye of the storm, began to list on starboard side at 27degrees. Capt. Racines and his crew were not able to make as much headwayas they wanted because by 12:00 noon of the same day, the cargo holds werealready flooded with sea water that rose from three to twelve feet, disabling

the bilge pump from containing the water. The vessel sank at about 7:00 p.m. of October 31, in the South China Sea in

between Hong Kong, the Philippines and Taiwan with the nearest land beingthe northern tip of Luzon.

Responding to the captain's distress call, the M/V Kapuas (Capuas) mannedby Capt. Virgilio Gonzales rescued the officers and crew of the ill-fated vesseland brought them to Waileen, Taiwan where Capt. Racines lodged his marineprotest dated November 3, 1980.

Justo Iglesias and another witness of Aboitiz, testified in both cases thatduring the inclusive dates of October 28-31, 1980, a stormy weather conditionprevailed within the Philippine area of responsibility, particularly along the searoute from Hong Kong to Manila, because of tropical depression "Yoning."

PAGASA issued weather bulletins from October 28-30, 1980 while the stormwas still within Philippine territory. No domestic bulletins were issued thefollowing day when the storm which hit Eastern Samar, Southern Quezon andSouthern Tagalog provinces, had made its exit to the South China Seathrough Bataan.

Allied and Equitable refuted the allegation of Aboitiz stating that the loss was notdue to force majeure because the wind velocity at that time described the seacondition as ―moderate breeze‖.

2nd

Petition: Allied v Aboitiz

Trial court ruled in favor of Allied. CA affirmed.

Allied prayed for the issuance of a writ of execution in the lower court which wasgranted by the latter.

Aboitiz filed petition to CA to stay execution of judgment.

CA ruled in favor of Aboitiz and stayed execution of judgment judgment insofar asit impairs the rights of the 100 other claimants to the insurance proceeds includingthe rights of the petitioner to pay more than the value of the vessel or the insuranceproceeds and to desist from executing the judgment insofar as it prejudices thepro-rata share of all claimants to the insurance proceeds. The CA brushed asidethe issue of Aboitiz' negligence and/or fault and proceeded to allow the applicationof the limited liability rule "to accomplish the aims of justice."

3rd

Petition: Equitable v Aboitiz

Trial court ruled in favor of Equitable. CA affirmed but held that the amount andpayment of those awards shall be subject to a determination of the pro-rata shareof said appellee (Equitable) in relation to the pro-rata shares of the 109 other

claimants, which determination shall be made by the trial court. This case istherefore hereby ordered remanded to the trial court which shall reopen the caseand receive evidence to determine appellee's pro-rata share as aforesaid

Trend:So mapapansin nyo kaya nag-petition to SC ang mga insurance companies(Monarch, Tabacalera, Allied & Equitable) ay dahil laging ang decision ng CA ay i-stayang execution ng judgment kasi nga may iba pang claimants. Or hatiin yung value ng

vessel sa lahat ng claimants, ito yung sinasabing pro-rata share shit. Ok, gets?

ISSUE #1:The threshold issue in these consolidated petitions is the applicability ofthe limited liability rule in maritime law in favor of Aboitiz in order to stay theexecution of the judgments for full indemnification of the losses suffered by thepetitioners as a result of the sinking of the M/V P. Aboitiz. (in other words “Is Aboi t iz

ent i t led to the benef i t of the l im i ted l iabi l i t y rule? ” )

The petitioners assert in common that the Aboitiz’vessel did not sink by reason of forcemajeure but because of its unseaworthiness and the concurrent fault and/or negligenceof Aboitiz, the captain and its crew, thereby barring Aboitiz from availing of the benefitof the limited liability rule.

HELD: Yes. (In all CA decisions, CA allowed the applicability of the limited liability rule.)

The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/ornegligence in the sinking of its vessel in the face of the foregoing expert testimonyconstrains us to hold that Aboitiz was concurrently at fault and/or negligent with the shipcaptain and crew of the Aboitiz’ vessel. This is in accordance with the rule that in casesinvolving the limited liability of shipowners, the initial burden of proof of negligence orunseaworthiness rests on the claimants. However, once the vessel owner or any partyasserts the right to limit its liability, the burden of proof as to lack of privity or knowledgeon its part with respect to the matter of negligence or unseaworthiness is shifted to it.This burden, Aboitiz had unfortunately failed to discharge. That Aboitiz failed todischarge the burden of proving that the unseaworthiness of its vessel was not due toits fault and/or negligence should not however mean that the limited liability rule will notbe applied to the present cases. The peculiar circumstances here demand that thereshould be no strict adherence to procedural rules on evidence lest the just claims ofshippers/insurers be frustrated. The rule on limited liability should be applied inaccordance with the latest ruling in Aboitiz Shipping Corporation v. General AccidentFire and Life Assurance Corporation, Ltd., promulgated on January 21, 1993, thatclaimants be treated as "creditors in an insolvent corporation whose assets are notenough to satisfy the totality of claims against it." (mababasa nyo uli ito)

RULES:

The principle of limited liability is enunciated in the following provisions of the Code ofCommerce:

Art. 587. The shipagent shall also be civilly liable for the indemnities in favor ofthird persons which may arise from the conduct of the captain in the care of goods




which he loaded on the vessel; but he may exempt himself therefrom byabandoning the vessel with all the equipments and the freight it may have earnedduring the voyage.

Art. 590. The co-owners of a vessel shall be civilly liable in the proportion of theirinterests in the common fund for the results of the acts of the captain referred to in Art. 587.

Each co-owner may exempt himself from his liability by the abandonment, before anotary, of the part of the vessel belonging to him.

Art. 837. The civil liability incurred by shipowners in the case prescribed in thissection, shall be understood as limited to the value of the vessel with all itsappurtenances and the freightage served during the voyage.

Art. 837 appeals the principle of limited liability in cases of collision hence, Arts. 587and 590 embody the universal principle of limited liability in all cases.

"No vessel, no liability," expresses in a nutshell the limited liability rule. Theshipowner's or agent's liability is merely co-extensive with his interest in the vesselsuch that a total loss thereof results in its extinction. The total destruction of thevessel extinguishes maritime liens because there is no longer any res to which itcan attach. This doctrine is based on the real and hypothecary nature of maritimelaw which has its origin in the prevailing conditions of the maritime trade and seavoyages during the medieval ages, attended by innumerable hazards and perils.To offset against these adverse conditions and to encourage shipbuilding andmaritime commerce, it was deemed necessary to confine the liability of the owneror agent arising from the operation of a ship to the vessel, equipment, and freight,or insurance, if any.

EXCEPTIONS TO THE LIMITED LIABILITY RULE:

(1) where the injury or death to a passenger is due either to the fault of the shipowner,or to the concurring negligence of the shipowner and the captain;

(2) where the vessel is insured; and

(3) in workmen's compensation claims.

Article 587 speaks only of situations where the fault or negligence is committedsolely by the captain. In cases where the ship owner is likewise to be blamed,Article 587 does not apply. Such a situation will be covered by the provisions ofthe Civil Code on common carriers.

A finding that a fortuitous event was the sole cause of the loss of the M/V P. Aboitizwould absolve Aboitiz from any and all liability pursuant to Article 1734(1) of theCivil Code which provides in part that common carriers are responsible for the loss,destruction, or deterioration of the goods they carry, unless the same is due toflood, storm, earthquake, lightning, or other natural disaster or calamity. On theother hand, a finding that the M/V P. Aboitiz sank by reason of fault and/ornegligence of Aboitiz, the ship captain and crew of the M/V P. Aboitiz would renderinapplicable the rule on limited liability. These issues are therefore ultimatelyquestions of fact which have been subject of conflicting determinations by the trialcourts, the Court of Appeals and even this Court.

ISSUE #2: W/N force majeure had indeed caused the vessel to sink.

HELD: No. Aboitiz’ vessel did not go under water because of the storm "Yoning."

It is true that as testified by Justo Iglesias, meteorologist of Pag-Asa, during theinclusive dates of October 28-31, 1980, a stormy weather condition prevailed within

the Philippine area of responsibility, particularly along the sea route from HongKong to Manila, because of tropical depression "Yoning". But even Aboitiz' ownevidence in the form of the marine protest filed by Captain Racines affirmed thatthe wind force when the M/V P. Aboitiz foundered on October 31, 1980 was onlyten (10) to fifteen (15) knots which, under the Beaufort Scale or Wind, falls withinscale No. 4 that describes the wind velocity as "moderate breeze," andcharacterizes the waves as "small . . . becoming longer, fairly frequent whitehorses." Captain Racines also testified in open court that the ill-fated M/V P. Aboitiz was two hundred (200) miles away from storm "Yoning" when it sank

ISSUE #3:W/N it was the concurrent fault and/or negligence of Aboitiz and thecaptain and crew of the ill-fated vessel that had caused it to go under water.

HELD: Yes. Aboitiz had failed to prove that it observed the extraordinary diligencerequired of it as a common carrier.

The failure of Aboitiz to present sufficient evidence to exculpate itself from faultand/or negligence in the sinking of its vessel in the face of the foregoing experttestimony constrains us to hold that Aboitiz was concurrently at fault and/ornegligent with the ship captain and crew of the M/V P. Aboitiz.

This is in accordance with the rule that in cases involving the limited liability ofshipowners, the initial burden of proof of negligence or unseaworthiness rests onthe claimants. However, once the vessel owner or any party asserts the right tolimit its liability, the burden of proof as to lack of privity or knowledge on its part withrespect to the matter of negligence or unseaworthiness is shifted to it. This burden, Aboitiz had unfortunately failed to discharge.

That Aboitiz failed to discharge the burden of proving that the unseaworthiness of

its vessel was not due to its fault and/or negligence should not however mean thatthe limited liability rule will not be applied to the present cases. The peculiarcircumstances here demand that there should be no strict adherence to proceduralrules on evidence lest the just claims of shippers/insurers be frustrated.

The rule on limited liability should be applied in accordance with the latest ruling in Aboitiz Shipping Corporation v. General Accident Fire and Life AssuranceCorporation, Ltd ., that claimants be treated as "creditors in an insolvent corporationwhose assets are not enough to satisfy the totality of claims against it." To do so,the Court set out in that case the procedural guidelines:

In the instant case, there is, therefore, a need to collate all claims preparatory totheir satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and itspending freightage at the time of its loss. No claimant can be given precedence




over the others by the simple expedience of having completed its action earlierthan the rest. Thus, execution of judgment in earlier completed cases, eventhese already final and executory must be stayed pending completion of allcases occasioned by the subject sinking. Then and only then can all such claimsbe simultaneously settled, either completely or pro-rata should the insuranceproceeds and freightage be not enough to satisfy all claims.

However, Aboitiz defied such order of the SC to file appropriate action toconsolidate all claims for settlement.

Aboitiz held liable for moral damages for defying the order of the court and onaccount of Aboitiz' refusal to satisfy petitioners' claims in accordance with thedirective of the Court in Aboitiz Shipping Corporation v. General Accident Fire andLife Assurance Corporation, Ltd ., it acted in gross and evident bad faith. Accordingly, pursuant to Article 2208 of the Civil Code, petitioners should begranted attorney's fees.

DISPOSITIVE PORTION: WHEREFORE, the petitions in G.R. Nos. 92735, 94867, and95578 are DENIED. The decisions of the Court of Appeals in CA-G.R. No. SP-17427dated March 29, 1990, CA-G.R. SP No. 20844 dated August 15, 1990, and CA-G.R.

CV No. 15071 dated August 24, 1990 are AFFIRMED with the MODIFICATION thatrespondent Aboitiz Shipping Corporation is ordered to pay each of the respectivepetitioners the amounts of P100,000.00 as moral damages and P50,000.00 asattorney's fees, and treble the cost of suit.

Respondent Aboitiz Shipping Corporation is further directed to comply with the Orderpromulgated by this Court on January 21, 1993 in Aboitiz Shipping Corporation v.General Accident Fire and Life Assurance Corporation, Ltd., G.R. No. 100446, January21, 1993, to (a) institute the necessary limitation and distribution action before theproper Regional Trial Court, acting as admiralty court, within fifteen (15) days from thefinality of this decision, and (b) thereafter to deposit with the said court the insuranceproceeds from the loss of the vessel, M/V P. Aboitiz, and the freightage earned in orderto safeguard the same pending final resolution of all incidents relative to the final pro-rating thereof and to the settlement of all claims.

7 LUZON STEVEDORING VS. CA – PAUL

CHARACTERS:

Petitioner: Luzon Stevedoring Corp – owner of the vessel LCSO "CAVITE", the vesselat fault.

Respondent:

Hijos de escano – owner of the passenger vesselDomestic Insurance Co. of the Phils – insurer of the passenger vessel

Facts: A maritime collision occurred between the tanker LSCO "CAVITE" owned bypetitioner and a passenger ship owned by respondent HIJOS. As a result of it, the

passenger ship sunk. An action in admiralty was filed by the respondent Hijos againstthe petitioner before CFI Cebu. In the course of the trial the court appointedcommissioners to determine the value of the vessel LSCO "CAVITE". Thecommissioners found that the value thereof is P180 000. After trial on the merits, adecision was rendered that LSCO "CAVITE" was solely to blame for the collision,therefore was ordered to pay the respondents. Petitioner appealed to the CA and the

latter affirmed the decision. Hence, this appeal.

Issue: Whether or not under Art. 837 of the Code of Commerce abandonment of vesselat fault is necessary in order that the liability of owner of said vessel shall be limitedonly to the extent of the value thereof, its appurtenances and freightage earned in thevoyage.

Ruling: Yes.

The rule is that in case of collision there should be abandonment of the vessel bythe shipowner or agent in order to enjoy the limited liability provided for under said Article 837.

The exception to this rule is when the vessel is totally lost in which case there isno vessel to abandon so abandonment is not required. Because of such total lossthe liability of the shipowner or agent for damages is extinguished. Nevertheless,the shipowner or agent is personally liable for claims under the Workmen'sCompensation Act and for repairs of the vessel before its loss.

In case of illegal or tortious acts of the captain the liability of the shipowner andagent is subsidiary. In such instance the shipowner or agent may avail of theprovisions of Article 837 of the Code by abandoning the vessel.

However, if the injury or damage is caused by the shipowner's fault as where heengages the services of an inexperienced and unlicensed captain or engineer, hecannot avail of the provisions of Article 837 of the Code by abandoning the vessel.He is personally liable for the damages arising thereby.

In the case now before the Court there is no question that the action arose from acollision and the fault is laid at the doorstep of LSCO "Cavite" of petitioner.

Undeniably petitioner has not abandoned the vessel. Hence petitioner cannotinvoke the benefit of the provisions of Article 837 of the Code of Commerce to limitits liability to the value of the vessel, all the appurtenances and freightage earnedduring the voyage.

8 PHILAMGEN VS. CA – LEI

Parties:

Coca-Cola Bottlers Philippines – nagpaship ng 7,500 cases of 1-liter Coca-Colasoftdrink bottles from Zamboanga to Cebu

Coca-Cola Bottlers-Cebu – consignee, nagkaso

Felman Shipping Lines – may-ari ng M/V Asilda na nagtransport ng mga coke




Philamgen – insurer of the goods

Elite Adjuster, Inc. – nagsubmit ng report regarding the sinking of the vessel (walalang to)

FACTS:

1. July 6, 8pm, MV Asilda in fine weather. July 7, 8.45am, the vessel sank with its entirecargo in the waters of Zamboanga del Norte.

2. The ship captain narrated that around 4am, he was awakened by the officer on dutyto inform him that the vessel had hit a floating log. At that time he noticed strongsoutheast winds inducing big waves. The vessel was listing slightly to starboard andwould not correct itself despite the heavy rolling and pitching. He then ordered his crewto shift the cargo from starboard to portside until the vessel was balanced. Aftermagpalipat-lipat ng cargo, the vessel suddenly listed to portside, some of the cargo ondeck were thrown overboard and seawater entered the engine room and cargo holds ofthe vessel. At that instance, the master of the vessel ordered his crew to abandon ship.

3. Coca-cola Cebu filed a claim with Felman: denied. Philamgen paid 775,250.

4. As subrogation, Philamgen filed a claim against Felman who disclaimed liability;thus, kaso.

Felman: 1. No subrogation exists;

2. Not liable because of Art. 587 of the Code of Commerce: FELMAN had abandonedall its rights, interests and ownership over "MV Asilda" together with her freight andappurtenances for the purpose of limiting and extinguishing its liability.

RTC: Dismissed.

CA: Reversed and remanded to RTC.

RTC: In favor of Felman:

1. MV Asilda was seaworthy evidenced by a certificate issued by Phil. Coast Guard.

2. The loss of the vessel and its entire shipment could only be attributed to either afortuitous event, in which case, no liability should attach unless there was a stipulationto the contrary, or to the negligence of the captain and his crew, in which case, Art. 587of the Code of Commerce should apply.

3. Assuming "MV Asilda" was unseaworthy, still PHILAMGEN could not recover fromFELMAN since the assured (Coca-Cola) had breached its implied warranty on thevessel's seaworthiness.

CA: Modified RTC decision.

1. MV Asilda" unseaworthy for being top-heavy as 2,500 cases of Coca-Cola softdrinkbottles were improperly stowed on deck.

2. While the vessel possessed the necessary Coast Guard certification indicating itsseaworthiness with respect to the structure of the ship itself, it was not seaworthy withrespect to the cargo.

3. Denied Philamgen’s claim; the filing of notice of abandonment had absolved theshipowner/agent from liability under the limited liability rule.

ISSUES:

(a) whether "MV Asilda" was seaworthy when it left the port of Zamboanga; NO

(b) whether the limited liability under Art. 587 of the Code of Commerce should apply;NO

(c) whether PHILAMGEN was properly subrogated to the rights and legal actions whichthe shipper had against FELMAN, the shipowner. YES

RULING:

1. No. A reasonable explanation for the series of lists experienced by the vessel thateventually led to her capsizing and sinking, was that the vessel was top-heavy which isto say that while the vessel may not have been overloaded, yet the distribution or

stowage of the cargo on board was done in such a manner that the vessel was in top-heavy condition at the time of her departure and which condition rendered her unstableand unseaworthy for that particular voyage.

- This vessel was designed as a fishing vessel . . . and it was not designed to carry asubstantial amount or quantity of cargo on deck . (under deck lang ok)

- The strong winds and waves encountered by the vessel are but the ordinaryvicissitudes of a sea voyage and as such merely contributed to its already unstable andunseaworthy condition.

2. No. Simply put, the ship agent is liable for the negligent acts of the captain in thecare of goods loaded on the vessel. This liability however can be limited throughabandonment of the vessel, its equipment and freightage as provided in Art. 587.

Nonetheless, there are exceptional circumstances wherein the ship agent could still beheld answerable despite the abandonment, as where the loss or injury was due to thefault of the shipowner and the captain. The international rule is to the effect that theright of abandonment of vessels, as a legal limitation of a shipowner's liability, does notapply to cases where the injury or average was occasioned by the shipowner's ownfault. It must be stressed at this point that Art. 587 speaks only of situations where thefault or negligence is committed solely by the captain. Where the shipowner is likewiseto be blamed, Art. 587 will not apply, and such situation will be covered by theprovisions of the Civil Code on common carrier.

- Extraordinary diligence; Felman failed to rebut; vessel’s unseaworthiness

3. Yes. Relying on 2207 of the NCC. Payment by the assurer to the assured operatesas an equitable assignment to the assurer of all the remedies which the assured may




have against the third party whose negligence or wrongful act caused the loss. Theright of subrogation is not dependent upon, nor does it grow out of any privity ofcontract or upon payment by the insurance company of the insurance claim. It accruessimply upon payment by the insurance company of the insurance claim. The doctrine ofsubrogation has its roots in equity. It is designed to promote and to accomplish justiceand is the mode which equity adopts to compel the ultimate payment of a debt by one

who in justice, equity and good conscience ought to pay. Therefore, the payment madeby PHILAMGEN to Coca-Cola Bottlers Philippines, Inc., gave the former the right tobring an action as subrogee against FELMAN. Having failed to rebut the presumption offault, the liability of FELMAN for the loss of the 7,500 cases of 1-liter Coca-Colasoftdrink bottles is inevitable.

SC: Ordered Felman to pay Philamgen.

9 NEGROS NAVIGATION CO. INC. VS. CA – ADRIAN

Characters:

Negros Navigation – petitioner; owner of vessel ―Don Juan‖

RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE LA VICTORIA – privaterespondents whose families were passengers who perished on board Don Juan asa result of the accident

Phil National Oil Company (PNOC) – owner of oil tanker (M/T Tacloban City) thatcollided w/ vessel Don Juan

FACTS:

Respondent Atty. Miranda purchased 4 special cabin tickets from petitioner NegrosNavigation for his wife, daughter, son and niece who were going to Bacolod City toattend a family reunion.

The ship sailed from the port of Manila on schedule.

Don Juan collided off the Tablas Strait in Mindoro, with the PNOC’s M/T TaclobanCity.

Several of her passengers perished in the sea tragedy. The bodies of some of thevictims were found and brought to shore, but the four members of privaterespondents' families were never found.

Private respondents filed a complaint with Manila RTC against the NegrosNavigation, PNOC, and the PNOC Shipping and Transport Corporation, seekingdamages for the death of Ardita de la Victoria Miranda, 48, Rosario V. Miranda, 19,Ramon V. Miranda, Jr., 16, and Elfreda de la Victoria, 26.

Petitioner’s Defense:

Admitted that Miranda purchased tickets but denied that the family (who died)never actually boarded the vessel because their bodies were never recovered

asserting that it was common that passengers purchase tickets in advance but donot actually use them. Private respondent failed to prove the presence of thevictims on the ship.

Don Juan was seaworthy and manned by a full and competent crew.

The collision was entirely due to the fault of the crew of the M/T Tacloban City.

**On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. enteredinto a compromise agreement whereby petitioner assumed full responsibility for thepayment and satisfaction of all claims arising out of or in connection with the collisionand releasing the PNOC and the PNOC/STC from any liability to it. The agreement wassubsequently held by the trial court to be binding upon petitioner, PNOC andPNOC/STC. Private respondents did not join in the agreement.

Trial Court ruled in favor of plaintiffs (private respondents), ordering all defendants topay jointly and severally to the plaintiffs damages.

CA affirmed trial court with modification as to the amount of damages.

ISSUE#1: Whether the members of private respondents' families were actuallypassengers of the Don Juan – YES

HELD:

SC relied on the testimony of Miranda that he purchased tickets, w/c wascorroborated by the passenger manifest on which the numbers of the tickets andthe names of Ardita Miranda and her children and Elfreda de la Victoria appear.

Miranda’s testimony was also corroborated by Edgardo Ramirez, a seminarian andone of the survivors of the collision. Ramirez testified that he saw Mrs Miranda andElfreda de la Victoria on the ship and actually talked to them. (Mrs Miranda wasRamirez’ grade school teacher and Elfreda was his childhood friend so hepersonally knew them.)

Petitioner also points out that it took Ramirez three (3) days before he finallycontacted private respondent Ramon Miranda to tell him about the fate of hisfamily. But it is not improbable that it took Ramirez three days before calling onprivate respondent Miranda to tell him about the last hours of Mrs. Miranda and herchildren and niece, in view of the confusion in the days following the collision asrescue teams and relatives searched for survivors.

SC said: Indeed, given the facts of this case, it is improper for petitioner to evensuggest that private respondents' relatives did not board the ill-fated vessel andperish in the accident simply because their bodies were not recovered.

ISSUE #2: Whether the ruling in Mecenas v . Court of Appeals, finding the crew

members of petitioner to be grossly negligent in the performance of their duties, isbinding in this case. – YES (SC said, stare decisis et non quieta movere)




Background of Mecenas Case: Same case/same set of facts ito against NegrosNavigation pero filed sya by other passengers.

In Mecenas it was held that:

Although the proximate cause of the mishap was the negligence of the crew of theM/T Tacloban City , the crew of the Don Juan was equally negligent as it found that

the latter's master, Capt. Rogelio Santisteban, was playing mahjong at the time ofcollision, and the officer on watch, Senior Third Mate Rogelio De Vera, admittedthat he failed to call the attention of Santisteban to the imminent danger facingthem. This Court found that Capt. Santisteban and the crew of the M/V DonJuan failed to take steps to prevent the collision or at least delay the sinking of theship and supervise the abandoning of the ship.

Petitioner Negros Navigation was found equally negligent in tolerating the playingof mahjong by the ship captain and other crew members while on board the shipand failing to keep the M/V Don Juan seaworthy so much so that the ship sankwithin 10 to 15 minutes of its impact with the M/T Tacloban City.

In addition, the Court found that the Don Juan was overloaded by virtue of theCertificate of Inspection issued by the Philippine Coast Guard Commander at I loiloCity stating that the total number of persons allowed on the ship was 864, of whom

810 are passengers, but there were actually 1,004 on board the vessel when itsank, 140 persons more than the maximum number that could be safely carried byit.

Taking these circumstances together, and the fact that the M/VDon Juan , asthe faster and better-equipped vessel, could have avoided a collision with thePNOC tanker, this Court held that even if theTacloban City had been at faultfor failing to observe an internationally-recognized rule of navigation,the Don Juan was guilty of contributory negligence.

Nor is it true that the trial court merely based its decision on the Mecenas case.The trial court made its own independent findings on the basis of the testimonies ofwitnesses, such as Senior Third Mate Rogelio de Vera, who incidentally gavesubstantially the same testimony on petitioner's behalf before the Board of MarineInquiry. The trial court agreed with the conclusions of the then Minister of NationalDefense finding both vessels to be negligent.

ISSUE #3: Whether petitioner is liable to pay damages notwithstanding the totalloss of its ship – YES

HELD:

The rule is well-entrenched in our jurisprudence that a shipowner may be heldliable for injuries to passengers notwithstanding the exclusively real andhypothecary nature of maritime law if fault can be attributed to the shipowner.

In Mecenas, this Court found petitioner guilty of negligence in (1) allowing ortolerating the ship captain and crew members in playing mahjong during thevoyage, (2) in failing to maintain the vessel seaworthy and (3) in allowing the ship

to carry more passengers than it was allowed to carry. Petitioner is, therefore,clearly liable for damages to the full extent.

DISPOSITIVE:

CA decision affirmed w/ modification as to amount of damages and petitioner

ordered to pay private respondents damages. In the event the Philippine National Oil Company and/or the PNOC Shipping and

Transport Corporation pay or are required to pay all or a portion of the amountsadjudged, petitioner Negros Navigation Co., Inc. shall reimburse either of themsuch amount or amounts as either may have paid, and in the event of failure ofNegros Navigation Co., Inc., to make the necessary reimbursement, PNOC and/orPNOC/STC shall be entitled to a writ of execution without need of filing anotheraction.

10 Vasquez vs. CA – OFE

Characters:

Spouses Alfonso Vasquez and Filipinas Bagaipo and a four-year old boy,

Mario Marlon Vasquez- deceased passengers

Vasquez and Soledad Ortega-parents of Alfonso Vasquez

Cleto Bagaipo and Agustina Virtudes-parents of Filipinas Bagaipo

Romeo Vasquez and Maxima Cainay-parents of the child, Mario Marlon

Vasquez

MV "Pioneer Cebu"- inter-island vessel

FILIPINAS PIONEER LINES, INC.-owner of the vessel

Typhoon- Klaring

Sunk at- southern part of Malapascua Island, located somewhere north of the island ofCebu

Scheduled to leave the Port of Manila -9:00 p.m. on May 14, 1966, it actually left port at5:00 a.m

Passenger capacity-(322) including the crew

NO emergency electrical power system

Special permit authorized the vessel to carry only (260) passengers due to the saiddeficiency and for lack of safety devices for 322 passengers

FACTS:

When the vessel left Manila, its officers were already aware of the typhoon Klaringbuilding up somewhere in Mindanao.




There being no typhoon signals on the route from Manila to Cebu, and the vesselhaving been cleared by the Customs authorities, the MV "Pioneer Cebu" left on itsvoyage to Cebu despite the typhoon

When it reached Romblon Island, it was decided not to seek shelter thereat,inasmuch as the weather condition was still good.

After passing Romblon and while near Jintotolo island, the barometer stillindicated the existence of good weather condition continued until the vesselapproached Tanguingui island.

Upon passing the latter island, however, the weather suddenly changed and heavyrains felt Fearing that due to zero visibility, the vessel might hit Chocolate islandgroup, the captain ordered a reversal of the course so that the vessel could'weather out' the typhoon by facing the winds and the waves in the open.

Unfortunately, the vessel struck a reef near Malapascua island, sustained leaksand eventually sunk, bringing with her Captain Floro Yap who was in command ofthe vessel.

Due to the loss of their children, petitioners sued for damages before the Court ofFirst Instance of Manila

Respondent’s Defense: 1. the sinking of the vessel was caused by force majeure

2. the defendant's liability had been extinguished by the total loss of the vessel.

RTC- In favor of the petitioners

1. Before the vessel left on its last voyage, its officers and crew were already awareof the typhoon brewing somewhere in the same general direction to which thevessel was going

2. The crew of the vessel took a calculated risk when it proceeded despite thetyphoon advisory

3. The crew assumed a greater risk when, instead of seeking shelter in Romblon andother islands the vessel passed en route, they decided to take a change on theexpected continuation of the good weather the vessel was encountering, and thepossibility that the typhoon would veer to some other directions

CA- Reversed and absolved private respondent from any and all liability.

1. the calamity was caused solely and proximately by fortuitous event which not evenextraordinary diligence of the highest degree could have guarded against

2. there was no negligence on the part of the common carrier in the discharge of itsduties

ISSUES:

1. WON the respondent shall not be held liable due to the total loss of the vessel

2. WON the respondent shall not be held liable due to fortuitous event

HELD:

1. NO

With respect to private respondent's submission that the total loss of the vesselextinguished its liability pursuant to Article 587 of the Code of Commerce

as

construed in Yangco vs. Laserna, 73 Phil. 330 [1941], suffice it to state that even inthe cited case, it was held that the liability of a shipowner is limited to the value ofthe vessel or to the insurance thereon. Despite the total loss of the vesseltherefore, its insurance answers for the damages that a shipowner or agent may beheld liable for by reason of the death of its passengers.

ARTICLE 587. The ship agent shall also be civilly liable for the indemnities in favorof third persons which may arise from the conduct of the captain in the care of thegoods which he loaded on the vessel; but he may exempt himself therefrom byabandoning the vessel with all her equipments and the freight it may have earnedduring the voyage.

2. NO To constitute a caso fortuito that would exempt a person from responsibility, it is

necessary that (1) the event must be independent of the human will; (2) theoccurrence must render it impossible for the debtor to fulfill the obligation in anormal manner; and that (3) the obligor must be free of participation in, oraggravation of, the injury to the creditor."

1 In the language of the law, the event

must have been impossible to foresee, or if it could be foreseen, must have beenimpossible to avoid. There must be an entire exclusion of human agency from thecause of injury or loss before they sailed from the port of Manila, the officers andcrew were aware of typhoon "Klaring" that was reported building up at 260 kms.east of Surigao

Under the circumstances, while, indeed, the typhoon was an inevitable occurrence,yet, having been kept posted on the course of the typhoon by weather bulletins at

intervals of six hours, the captain and crew were well aware of the risk they weretaking as they hopped from island to island from Romblon up to Tanguingui. Theyheld frequent conferences, and oblivious of the utmost diligence required of verycautious persons, they decided to take a calculated risk. In so doing, they failed toobserve that extraordinary diligence required of them explicitly by law for the safetyof the passengers transported by them with due regard for an circumstances andunnecessarily exposed the vessel and passengers to the tragic mishap. They failedto overcome that presumption of fault or negligence that arises in cases of death orinjuries to passengers.

4th set digests final

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