CASENR CASE TITLE NAME Guevarra, Kim 15 International Harvester v. Aragon, G.R. No. L-2372 (26 August 1949) 16 Phil Shipping Co. v. Vergara, 6 Phil 281 (1906) Lee 17 Chua Yek Hong v. IAC, 166 SCRA 183 (1988) Lofranco 18 Guison v. Phil Shipping Co., 69 Phil 536 (1940) Manalo 19 Yangco v. Laserna, 73 Phil 330 (1941) Mateo 20 22 Ohta Dev’t Co. v. Steamship “Pompey”, 49 Phil 117 (1926) Aboitiz Shipping Corp. v. General Accident Fire and Life Insurance Corp., Ltd., 217 SCRA 359 (1993) Monarch Insurance Co., Inc. v. CA, 333 SCRA 71 (2000) 23 Manila Steamship v. Abdulhaman, 100 Phil 32 (1956) Pagalilauan 24 Abueg v. San Diego, 77 Phil 730 (1946) Palomique 25 PI v. Insular Maritime Co., 45 Phil 805 (1924) Tolentino 26 Phil Am Gen Insurance Co, Inc. v. CA, 273 SCRA 260 (1997) (previously assigned) Zerrudo 27 Loadstar Shipping, Co., Inc. v. CA, 315 SCRA 339 (1999) (previously assigned) Alfafara 21 Mauricio Meridores Padua INTERNATIONAL HARVESTER COMPANY OF THE PHILIPPINES, vs. CRISANTO ARAGON, Judge of Municipal Court of Manila, and YARAS and COMPANY, FAR EAST G.R. No. L-2372 | August 26, 1949 FACTS: International Harvester Company of the Philippines is the agent in the Philippines of the vessel S/S Belle of the Sea which took on board at Los Angeles, California, U. S. A., goods for shipment to Manila, and covered by Bill of Lading No. 105; When the S/S Belle of the Seaarrived in Manila, the cargoes were discharged at the Government piers under the supervision and custody of Manila Terminal Co., Inc. Out of the goods covered by Bill of Lading No. 105, one carton of assorted samples with a stipulated value of P200 was not delivered to Yaras and Company which was lost through the negligence either of the Manila Terminal Co., Inc., or of the International Harvester Company of the Philippines. The complaint prayed for judgment either against the defendant Manila Terminal Co., Inc., or the International Harvester Company of the Philippines, agent of the vessel Belle of the Sea for the amount of P200, with legal interest from the date of the filing of the complaint. *Before the trial in the Municipal Court of Manila could be proceeded with, the International Harvester of the Philippines filed a motion to dismiss, on the ground that the Municipal Court of Manila had no jurisdiction to try case because the action involves admiralty or maritime jurisdiction, which motion was overruled by the municipal court. *The Court of First Instance of Manila rendered judgment favor of the International Harveter Company of the Philippines, ordering the judge of the municipal court to desist from taking cognizance of civil case against the International Harvester Company of the Philippines. ISSUE: WON the municipal court can take cognizance of civil case for recovery of the undelivered goods against the International Harvester Company of the Philippines. HELD: In view of our conclusion that the cause of action of Yaras and Company against International Harvester Company of the Philippines involves admiralty over which the courts of first instance have original jurisdiction and to which the jurisdiction of the justice of the peace courts (including municipal courts) does not extend the respondent judge was properly restrained from further proceeding with civil case No. IV-262. The liability of the International Harvester Company of the Philippines is predicated on the contract of carriage by sea between the International Harvester Company of the Philippines and Yaras and Company as evidenced by Bill of Lading No. 105, independently of the liability of the Manila Terminal Co., Inc, as operator of an arrastre service. Admiralty has jurisdiction over all maritime contracts, in whatever form, wherever they were executed or are to be performed, but not over non-maritime contracts. Whether or not a contract is maritime does not depend upon the English rule which conceded jurisdiction only to contracts made upon and the to be performed upon navigable water, making the locality the test. It depends on the subject-matter of the contract, making the true criterion a maritime service or a maritime transaction. Specifically, admiralty has jurisdiction of a proceeding in rem or in personam for the breach of a contract of affreightment, whether evidenced by a bill of lading or a charter party. And typical of a controversy over contracts of affreightment is a suit of one party against the other for loss of or damage to the cargo. DIPOSITIVE: Wherefore, the judge of the municipal court is ordered to desist from taking cognizance of civil case against the International Harvester Company of the Philippines. ET AL. vs. since the extent of the liability of the owner of the colliding vessel for the damages resulting from the collision is to be determined in accordance with such value. As evidence of this "real" nature of the maritime law we have (1) the limitation of the liability of the agents to the . The court below found as a matter of fact that the steamship Lourdes was sailing in accordance with law. from which we deem proper to quote the following as the basis of this decision: That which distinguishes the maritime from the civil law and even from the mercantile law in general is the real and hypothecary nature of the former. was the owner of the steamship Navarra. Ratio : The spirit of our code is accurately set forth in a treatise on maritime law. Issues: WON Philippine Shipping should be indemnify for 18. thus bringing himself within the provisions of the article 837 in so far as the subsidiary civil liability is concerned. and was therefore responsible for the collision.64 pesos as an indemnification for the loss of the cargo of hemp and coprax carried by the said ship on her last trip. From the judgment of the trial court the Philippine Shipping Company and the defendant Vergara appealed. The defendant. but he is not required to pay such indemnification of the reason that the obligation thus incurred has been extinguished on account of the loss of the thing bound for the payment thereof. and the agent could not have been personally compelled. have provided for the protection of the various and conflicting interest which are ventured and risked in maritime expeditions.000 Held: No. which collided with the Lourdes. such as the interests of the vessel and of the agent. the value of the colliding vessel. and in this respect the judgment of the court below is affirmed except in so far as it requires the plaintiff to pay the costs of this action. also claimed 24. the defendant is liable for the indemnification to which the plaintiff is entitled by reason of the collision.000 pesos. Ynchusti & Co. the Philippine Shipping Company. L-1600 June 1. under such circumstances. could have abandoned her with all her equipment and the freight money earned during the voyage. the owner of the steamship Nuestra Sra. those of the owners of the cargo and consignees. 1906 Topic: Real and Hypothecary Quick Notes/Doctrine Facts: The Philippine Shipping Company. with the costs against the latter. having held liable for the negligence of the captain of the vessel. to pay the 18.R.. those who make loans upon the cargo.000 pesos. and the many securities of a real nature that maritime customs from time immemorial. the estimated value of the vessel at the time of the collision.Title: THE PHILIPPINE SHIPPING COMPANY. but the latter has failed to prosecute his appeal by a bill of exceptions or otherwise.000 pesos. The only appellant who has prosecuted this appeal now reduced its claim to 18. This abandonment which would have amounted to an offer of the value of the vessel. defendantappellee G. plaintiffs-appellants. the value of the Navarra at the time of its loss. that this is the sense in which the provisions of article 837 of the Code of Commerce should be understood. FRANCISCO GARCIA VERGARA." Construing article 837 of the Code Commerce.705. which is not exactly proper." But the appellant. of her equipment. but that the Navarra was not. contends that the defendant should pay to 18. de Lourdes. the agent. those of the sailors and members of the crew as to their wages. and the later jurisprudence. and that it was immaterial whether the Navarra had been entirely lost. the laws. those who salvage the ship. The court also found as a fact that "both ships with their respective cargoes were entirely lost. claims an indemnification of 44. Francisco Garcia Vergara. No. provided her value at the time she was lost could be ascertained. that said code has followed the principles of the English law and not those of the American law. the codes. and those of a constructor as to repairs made to the vessel. and freight money earned could not have been refused. the court below held "that the defendant was not responsible to the plaintiff for the value of the steamship Lourdes.000 pesos for the loss of the said ship as a result of a collision. There is no doubt that if the Navarra had not been entirely lost. and naturally so. This provision has therefore cleared the doubt which existed as to the extent of the liability. the wages of the crew earned during the last voyage as provided in article 646. 63. pp. This omission is supplied by the proposed code. It will be observed that these rights are correlative. "Lecciones. tonnage. and port dues and other similar charges. This person is the only who represents the interest of the owner of the vessel. exclusively "real. where the mortgaged property is lost no personal action lies against the owner or agent of the vessel. The agent shall also the civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried. If the agent is only liable with the vessel and freight money and both may be lost through 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. or the one who represents her in the port in which she happens to be. to wit: (1) The risk to which the thing is exposed. in the proportion of their contribution to the common fund. which provides in accordance with the principles of maritime law that by agent it is to be understood the person intrusted with the provisioning of the vessel. it is also just that his maritime creditor may for any reason attach the vessel itself to secure his claim without waiting for a settlement of his rights by a final judgment. This repeals the civil law to such an extent that. of the part of the vessel belonging to him. 590." . his only security. and it is one of the many superfluities contained in the code.) Dispositive Portion: Relation/Pertinent Law : Article 837 of the Code Commerce provides: "The civil liability contracted by the shipowners in the cases prescribed in this section shall be understood as limited to the value of the vessel with all her equipment and all the freight money earned during the voyage. in certain cases. The "Exposicion de motivos" of the Code of Commerce contains the following: "The present code (1829) does not determine the juridical status of the agent where such agent is not himself the owner of the vessel. where the vessel is lost the sailors and members of the crew can not recover their wages. salvage dues under article 842. 60-62. and ( 2 ) the "real" nature of maritime law. which may exist upon the vessel and which a purchaser of the same would be obliged to respect and recognize — in addition to those existing in favor of the State by virtue of the privileges which are granted to it by all the laws — pilot. ART. 85. because if the agent can exempt himself from liability by abandoning the vessel and freight money. (Lorenzo Benito." according to which the liability of the parties is limited to a thing to which is at mercy of the waves." This section is a necessary consequence of the right to abandon the vessel given to the shipowner in article 587 of the code. both of the agent and for the owner of the vessel. the liability of the agent is limited as aforesaid. The liens. of the Code of Commerce. and in case of shipwrecks. for the results of the acts of the captain referred to in article 587. tacit or legal. and (2) the right to retain the cargo and the embargo and detention of the vessel even cases where the ordinary civil law would not allow more than a personal action against the debtor or person liable." 352. in case of collision. thus avoiding the possibility of risking his whole fortune in the business. Each part owner may exempt himself from this liability by the abandonment. For instance. even to the prejudice of a third person. and other liabilities arising from collisions under article 837 and 838.actual value of the vessel and the freight money. There are two reasons why it is impossible to do away with these privileges. 587. The part owners of a vessel shall be civilly liable. but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freight he may have earned during the trip. before it is lost. those who loan their money on the vessel and cargo lose all their rights and can not claim reimbursement under the law. (Madariaga. before a notary. Such liability is limited by the proposed code to the value of the vessel and other things appertaining thereto.) Art. the indemnification due to the captain of the vessel in case his contract is terminated on account of the voluntary sale of the ship and the insolvency of the owner as provided in article 608. Doctrine of Limited Liability: "NO VESSEL. supra). Intermediate Appellate Court Melencio-Herrera. • Private respondents' liability. G. In all matters not regulated by this Code. J. Held: No.227. the Code of Commerce and other special laws are applied. more particularly Article 587. Oriental Mindoro. on board the vessel "M/V Luzviminda I" for shipment from Puerta Galera. the primary law is the Civil Code (Arts. There is no showing that the vessel was insured in this case. 1988 Nature: Petition for Review on Certiorari Quick Notes / Doctrine: The primary law is the Civil Code (Arts. • Absolved defendants-appellants from any and all liabilities arising from the loss of 1. Trial Court: • The preponderance of evidence militates in favor of the plaintiff and against the defendants. Appellate Court: • REVERSED. that govern in this case.00 representing miscellaneous expenses of plaintiff on said lost cargo. 1732-1766) and in default thereof.000 sacks of copra. to pay the plaintiff: o P101. Laserna. "M/V Luzviminda I. Issue: WoN respondent Appellate Court erred in applying the doctrine of limited liability under Article 587 of the Code of Commerce. the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. • In sum.R. • Petitioner instituted before the then CFI of Oriental Mindoro.227. the Code of Commerce and other special laws are applied. as ship owners. Lasema. Oriental Mindoro.40 representing the value of the cargo which was lost while in the custody of the defendants. • In other words. o P65.017 Chua Yek Hong v. Facts: Petitioner: Chua Yek Hong Respondents: Intermediate Appellate Court." a common carrier engaged in coastwise trade from the different ports of Oriental Mindoro to the Port of Manila. the vessel capsized and sank with all its cargo. Batangas. did not reach Manila because somewhere between Cape Santiago and Calatagan.550. 1766. jointly and severally. • Ordered the defendants. 74811 September 30.40. it is the provisions of the Code of Commerce. o Attorney's fees in the amount of P5. for the loss of the cargo is merely co-extensive with their interest in the vessel such that a total loss thereof results in its extinction. Applied Article 587 of the Code of Commerce and the doctrine in Yangco vs. • Private Respondents argued that even assuming that the alleged cargo was truly loaded aboard their vessel. • Petitioner loaded 1. however. a Complaint for Damages based on breach of contract of carriage against private respondents. Article 1766 of the Civil Code provides: Art. and Dominador Olit Background: • Petitioner is a duly licensed copra dealer based at Puerta Galera.000 sacks of copra belonging to plaintiff-appellee. valued at P101. NO LIABILITY". while private respondents are the owners of the vessel. Said cargo. their liability had been extinguished by reason of the total loss of said vessel.000. the liability of private respondents for the loss of the cargo of copra must be deemed to have been extinguished. . and none of the exceptions to the rule on limited liability being present. it will have to be held that since the ship agent's or ship owner's liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction (Yangco vs. 1732-1766) and in default thereof. Since the Civil Code contains no provisions regulating liability of ship owners or agents in the event of total loss or destruction of the vessel. No.00 o Costs of suit. Mariano Guno. to Manila. Manila Steamship Co. The most fundamental effect of abandonment is the cessation of the responsibility of the ship agent/owner (Switzerland General Insurance Co. • To avoid the risk of losing his whole fortune. Laserna. as well as for the safety of passengers transported (Yangco vs. supra). NO LIABILITY" expresses in a nutshell the limited liability rule. Both shipagent and shipowner are civilly and directly liable.. which may arise from the conduct of the captain in the care of goods transported. 45 Phil. (Abueg vs. Ratio: Art. Ramirez. February 21. 96 SCRA 297). To offset against these adverse conditions and to encourage ship building and maritime commerce. vs." and "to the insurance thereof if any" (Yangco vs. L-48264. attended by innumerable hazards and perils. but he may exempt himself therefrom by abandoning the vessel with all the equipments and the freight it may have earned during the voyage. This expresses the universal principle of limited liability under maritime law. Limited liability rule. 1980. Lopez Castelo. The term “ship agent” under Article 587 includes ship owner. "NO VESSEL. supra). In other words. • Art. It will be observed that these rights are correlative. Pursuant to said provision. It has thus been held that by necessary implication. (Yangco vs." (Yangco vs. 256 [1921]). a ship owner and investor in maritime commerce would run the risk of being ruined by the bad faith or negligence of his captain. Shipowner’s or agent’s liability merely cextensive with his interest in vessel. The total destruction of the vessel extinguishes maritime liens as there is no longer any res to which it can attach (Govt. vs. it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel. Book III. equipment. • As this Court held: If the ship owner or agent may in any way be held civilly liable at all for injury to or death of passengers arising from the negligence of the captain in cases of collisions or shipwrecks. San Diego. 587. equipment.. The real and hypothecary nature of the liability of the ship owner or agent embodied in the provisions of the Maritime Law. • The term "ship agent" as used in the foregoing provision (Article 587) is broad enough to include the ship owner (Standard Oil Co. 100 Phil. Lasema.. • However. 42 Phil. because if the agent can . The Insular Maritime. 805. the judgment sought to be reviewed is hereby AFFIRMED. Rationale: • To offset against hazards and perils of the sea and to encourage ship building. this direct liability is moderated and limited by the ship agent's or ship owner's right of abandonment of the vessel and earned freight. vs. and (2) the right to retain the cargo and the embargo and detention of the vessel even in cases where the ordinary civil law would not allow more than a personal action against the debtor or person liable. if any. and the apprehension of this would be fatal to the interest of navigation. supra). and naturally so. No costs. Ltd. had its origin in the prevailing conditions of the maritime trade and sea voyages during the medieval ages. vs. Abdulhaman et al. Insular Maritime Co. and freight. or insurance. under the same Article. therefore. so that if the ship owner or agent ABANDONED the ship. both the ship owner and ship agent are civilly and directly liable for the indemnities in favor of third persons. 587 of the Code of Commerce. HIS LIABILITY WAS EXTINGUISHED. total loss results in extinction of liability. 77 Phil. 807 [1924]).. As evidence of this real nature of the maritime law we have (1) the limitation of the liability of the agents to the actual value of the vessel and the freight money. and freight. the ship owner's or agent's liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction. the ship agent's or ship owner's liability is confined to that which he is entitled as of right to abandon the vessel with all her equipment and the freight it may have earned during the voyage. Without the principle of limited liability. 32 [1956]). The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel. et al. Laserna. 730 [1946]) • To protext the shipowner from the negligence of his captain. supra. Inc. his liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction. Code of Commerce. Lasema.WHEREFORE. 6 Phil. (Phil. where the vessel is insured. 587. • Considering the "real and hypothecary nature" of liability under maritime law. Laserila. In all matters not regulated by this Code. or to the insurance thereon.. namely: 1. In the instant case it does not appear that the vessel was insured. Negros. The provisions of Civil Code on common carriers have no effect. there is nothing in the records to show that the loss of the cargo was due to the fault of the private respondent as shipowners. vs. San Diego.. and 3. however. But assuming that petitioner is liable for a breach of contract of carriage. Shipping Co. 1766. where the injury or death to a passenger is due either to the fault of the ship owner.S. . • In this case. is a common carrier. supra). The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel. if any. Exceptions to the limited liability rule. is not without exceptions. the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. supra). et al. the exclusively 'real and hypothecary nature of maritime law operates to limit such liability to the value of the vessel. thus avoiding the possibility of risking his whole fortune in the business. in workmen's compensation claims Abueg vs. Pertinent Laws: [Civil Code] Art.exempt himself from liability by abandoning the vessel and freight money. these provisions would not have any effect on the principle of limited liability for ship owners or ship agents. (Yangco vs. Inc. • The limited liability rule. or to their concurrent negligence with the captain of the vessel. vs. Vergara. [Code of Commerce] Art. 2. as a vessel engaged in interisland trade. Abdulhaman supra). even to the prejudice of a third person. 284 [1906]). As was expounded by this Court: In arriving at this conclusion. it is also just that his maritime creditor may for any reason attach the vessel itself to secure his claim without waiting for a settlement of his rights by a final judgment. and that the relationship between the petitioner and the passengers who died in the mishap rests on a contract of carriage. but he may exempt himself therefrom by abandoning the vessel with all the equipments and the freight it may have earned during the voyage. the fact is not ignored that the ill-fated. or to the concurring negligence of the ship owner and the captain (Manila Steamship Co. S. had a collision which resulted in the boat the "Martha" sank. having unworthy of value as a result. being respectively maneuvering at the mouth of the Pasig River. Plaintiff presented this action against the defendant for the recovery of this amount of P10. which is a boat used to navigate freshwater or saltwater. 291). HELD: Yes RATIO: 1. 46846.197. February 3. This. 4. 2. No mention is made in the decision appealed circumstance that precludes this concept to launch "Manila X. 3. Lower Court: having come to the conclusion that the collision was due to recklessness and negligence of the employer of the boat "Manila X" without any contributory negligence by the pattern of "Marta" condemn the defendant to pay the claimed amount. in accordance with Article 837 of the Commercial Code. Article 837 of the Commercial Code declares it so strictly. The defendant asked for the reconsideration of this judgment for a declaration that responsibility. 1937. as collateral for your credit. No. 6. enters the general concept of the word vessel is used in Article 837 of the Commercial Code. Plaintiff." 3. On the morning of March 4.R.24 that matter the damage suffered by him. for receiving and transporting people or things. owns the steam launch "Martha" and the defendant Philippine Fish Company owns the motorboat "Manila X". It is said that this boat "Manila X" followed in the possession of the defendant for more than ten months after the collision to he had one with another vessel. however. For the rest. would have been avoided if the defendant had taken over the boat immediately after the collision.018 Guison v Phil. 2. . 1940] NOTE/S: TOPIC: Maritime LAw The original is in Spanish PONENTE: Avancena." The plaintiff presented except against the resolution of the Court by amending the original decision in the sense described ISSUE: Whether the liability of the defendant in the circumstances of this case is limited to the value of the boat. the judgment appealed from with costs to the appellant was confirmed. is limited to the value of your boat. Guison. 1936 both boats. causing the plaintiff damages in the amount of P10. agreeing to the request of the defendant. both in enrollment Port of Manila.24. stating that the maritime law is only true character and limits the liability of the shipowner to the value of the ship (6 Phil.. because of the collision. whose real character entitled him to it.. modified its decision in the sense that they understand the limited liability of the defendant to the value of the boat "Manila X. In this sense the Court applied this provision in the case against Garcia Philippine Shipping Co. J. FACTS: 1. Shipping Co AUTHOR: [G. the boat "Manila X". Appellate court: on January 22.197. 5. Rep. 019 (MATEO) . Plaintiff. neither did she drop her bow anchors. there was a current from west to east. the Steamship Pompey in command of Captain Alfredo Galvez. the pier sank with all of its merchandise. COURT FINDINGS: The current forced the ship towards the pier. Within 10 minutes past 11 on the same morning. 6. a large amount of cargo accumulated on the dock. is not applicable when no abandonment of the vessel is made. at around 7:00 AM. 7. After being docked. The unloading was done in a hurry and their being 15 or 20 laborers engaged in the hauling of the same to the plaintiff’s warehouse. 8. limiting the liability of the agent to the value of the ship. the first mate of Pompey on that trip – the sole witness presented by the defense. The Pompey docked with her bow (anchor) facing towards the land and fastened her ropes to the posts on the pier. when the merchandise was lost by the sinking of the pier. The hull of the ship came to a stop at a point where the piles of defense formerly stood. is the owner of a pier in Talomo Bay. 2. Captain Razon. The impact caused the pier to sink. C. STEAMSHIP “POMPEY”. Based on the photograph taken after the incident admitted by the court as Exhibit B. • When the pier sank. it had not yet been delivered. ALFREDO GALVEZ and NATIONAL COAL COMPANY. it is the delivery of the cargo at the port of discharge that determines the cessation of the liability of the captain for the cargo. plaintiffappellee vs. that the ship was not fastened with the rope to a tree on shore and that bow anchors had not been dropped. ISSUE(S): Whether the defendant National Coal Company’s liability ceased when the merchandise was unload and placed on the dock based on the bills of lading of the lost merchandise. DATE: March 31. HELD: No. RATIO: Under article 619 of the Code of Commerce. She did not stretch a rope to the tree to on the shore. The testimony of the Captain Razon is inconceivable because the piles were not attached to the pier but were 2 feet away from it. AUTHOR: Drei Mauricio NOTES: FACTS: (chronological order) 1. defendants-appellants [G. leaned towards the west. 2 feet away from the pier which served as a protection to the pier against the impact of the vessel. claims that the defense piles fell without coming into contact with the ship. J. CASE LAW/ DOCTRINE: DISSENTING/CONCURRING OPINION(S): . carrying cargo of flour and rice for the plaintiff. NUMBER L-24658. as agent. On the liability of ship agents – provision of the Article 587 of the Code of Commerce. 1926] TOPIC: Real and Hypothecary PONENTE: Avancena. 3. DEFENSE CONTENDS: the pier sank because of the weight of the cargo and the poor condition of the dock. • The pier when it sank. On the western side of the pier were groups of posts (3 to a group) about 20 feet apart. they proceeded to unload the flour and rice which as first deposited on the pier and later transported to the plaintiff’s warehouse on land where it was officially received. • Other ships docking at the pier has always observed that the bow facing towards the land and fastened a rope to a tree situated faster west on the beach as a precaution taken to avoid the ship from getting too close to the pier. going beyond the western line formerly occupied by the pier. In the instant case. • COURT RULED: The pier underwent repairs in 1921 and 1922 wherein materials not in good condition were replaced. docked along the side of the pier. 4. Ohta Development Company.020 OHTA DEVELOPMENT COMPANY. The defendant company. 5. Davao.R. is liable for the indemnities arising from the lack of skill or negligence of the captain. CONCLUSION OF THE COURT: dock on the account of the impact of the ship as a result of a strong current at the time. and therefore still under the responsibility of the captain. One morning of June 23. The sinking of the dock should not affect the defense piles. • The unloading of the cargo was done without any infererence of the part of the plaintiff and exclusively by laborers and the crew of the ship. The flour which floated after the sinking of the dock drifted from west to east. possessing a certificate of public convenience issued by the Commissioner of Public Utility in the name of “the National Coal Company”. its appurtenances and freight. The Limited Liability Rule in the Philippines is taken up in Book III of the Code of Commerce. 100446. NOTES: [G. was swept aside. 31. Ltd. 6. and 837. General Accident Fire and Life AUTHOR: Assurance Corp. 587.2 the vessel was seaworthy 4. The co-owners of a vessel shall be civilly liable in the proportion of their interests in the common fund for the results of the acts of the captain referred to in Art. January 21. before a notary. Despite the findings by the BMI. of the part of the vessel belonging to him. 3. 587. Thus. ISSUE/s: Whether or not the Doctrine of Limited Liability arising out of the real and hypothecary nature of maritime law is applicable to the case? HELD: Yes. 1980. the RTC nevertheless ruled that Aboitiz was liable. 2. 590. General Accident is a suborgee because it already indemnified the insured. It was designed to offset such adverse conditions and to encourage people and entities to venture into maritime commerce despite the risks and the prohibitive cost of shipbuilding.2 The primary contention of Aboitiz. freight. its equipment. if any. The sinking prompted the shippers and suborgees (such as General Accident) to file suits for recovery. hereunder quoted in toto: Art. M/V P. owner of M/V P. Aboitiz owned by Aboitiz Shipping sank on its way to Hong Kong on Oct. Art. (facts) 1. 5. 1993] TOPIC: Real and Hypothecary PONENTE: Melo FACTS: (parties) ! Aboitiz Shipping: common carrier. and insurance. Art. RTC granted the prayer of General Accident for execution for the full amount of the judgment award 4. 4. This is elevated to the CA however the CA dismissed the petition for certiorari filed by Aboitiz. The civil liability incurred by shipowners in the case prescribed in this section (on collisions). which limitation served to induce capitalists into effectively wagering their resources against the consideration of the large profits attainable in the trade. The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel. No.021 Aboitiz Shipping v. Board of Marine Inquiry (BMI) investigated the matter and found that: 3. which is hypothecated for such obligations or which stands as the guaranty for their settlement. Hence this petition.1 to state the obvious. shall be understood as limited to the value of the vessel with all its appurtenances and freightage served .1 Also. the liability of the vessel owner and agent arising from the operation of such vessel were confined to the vessel itself.1 the sinking was caused by force majeure 3. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel.R. The ruling of the RTC and CA are set aside. Each co-owner may exempt himself from this liability by the abandonment. Aboitiz ! General Accident Fire and Life Assurance Corp: insurer of several cargoes carrier by Aboitiz. which was grounded on the real and hypothecary nature of its liability. 590. but he may exempt himself therefrom by abandoning the vessel with all her equipment and the freight it may have earned during the voyage. It has its origin by reason of the conditions and risks attending maritime trade in its earliest years when such trade was replete with innumerable and unknown hazards since vessels had to go through largely uncharted waters to ply their trade. RATIO: 1. particularly in Articles 587. 837. 2. 2. suborgee to insured. we have been consistent in this jurisdiction in holding that the only time the Limited Liability Rule does not apply is when there is an actual finding of negligence on the part of the vessel owner or agent. 3. 144425 (pp.” . (Emphasis supplied) 3.during the voyage. In the few instances when the matter was considered by this Court. “A careful reading of the decision rendered by the trial court in Civil Case No. 27-33.1 Unfortunately for General Accident…. Rollo) as well as the entirety of the records in the instant case will show that there has been no actual finding of negligence on the part of petitioner. The claims numbered one hundred and ten (110) for the total amount of P41. sank on her voyage from Hong Kong to Manila on October 31. Consequently. Aboitiz sank at about 7:00 p. According to Aboitiz. All cases arose from the loss of cargoes of various shippers when the M/V P. Aboitiz and its cargo were lost due to force majeure.. CA dismissed for failure to file appellant's brief. FACTS: 1. Presiding Judge. Aboitiz. 3." Monarch and Tabacalera are insurance carriers of lost cargoes. and JESUS ELBINIAS and ABOITIZ SHIPPING CORPORATION. It was appealed to CA. Justices RODOLFO NOCON.R. EQUITABLE INSURANCE CORPORATION. petitioners. vs. respondents. Racines under scale No. [G. 5.500. 1980." In due course. June 8.. (Petitioners) Allied and Equitable refuted the allegation that the M/V P. Aboitiz left Hong Kong for Manila at about 7:30 in the evening of October 29. ISSUE(S): Whether or not the respondent Court of Appeals erred in finding. respondents." 2.00 plus earned freight of 500. respondents.00 according to Aboitiz. COURT OF APPEALS. filed an urgent motion to quash the writs of execution. particularly along the sea route from Hong Kong to Manila. [G. 4 that describes the sea condition as "moderate breeze. a commoncarrier owned and operated by Aboitiz. Monarch and Tabacalera moved for execution of judgment. RTC Manila.R. interests and actions against Aboitiz. the trial court rendered judgment against Aboitiz.000. They indemnified the shippers and were consequently subrogated to their rights. COURT OF APPEALS. 2000] AUTHOR: NOTES: three consolidated cases.Justo Iglesias. vs. since its liability is limited to the value of the vessel which was insufficient to satisfy the aggregate claims of all 110 claimants. vs. the vessel did not encounter weather so inclement that Aboitiz would be exculpated from liability for losses. He proceeded with the voyage only after being informed that the storm had abated.00 which is almost thrice the amount of the insurance proceeds of P14. upon review. 2000] TOPIC: REAL AND HYPOTHECARY PONENTE: De Leon. Racines) was observing the direction of the storm that crossed the Bicol Region. TC granted the motion and issued separate writs of execution. 24 and ABOITIZ SHIPPING CORPORATION.22 MONARCH INSURANCE CO..R. The M/V P. because of tropical depression "Yoning. Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was due to force majeure or an act of God. No. Because Aboitiz refused to compensate Monarch. The M/V P. petitioner. No. testified in both cases that during the inclusive dates of October 28-31. that Aboitiz is entitled to the benefit of the limited liability rule . invoking the real and hypothecary nature of liability in maritime law. fairly frequent white horses. 92735.. COURT OF APPEALS and ABOITIZ SHIPPING CORPORATION.230. 2000] ALLIED GUARANTEE INSURANCE COMPANY. PEDRO RAMIREZ. 95578. Aboitiz filed with the CA a petition for certiorari and prohibition with prayer for preliminary injunction and/or temporary restraining order. relying mainly on the marine protest filed by Capt. No. [G. Aboitiz had repeatedly failed to appear in court. 94867. it then allowed Monarch and Tabacalera to present evidence ex-parte 4. meteorologist of PAGASA. INC and Hon. Judge AMANTE PURISIMA.000. a stormy weather condition prevailed within the Philippine area of responsibility. and was granted. 1980. J." and "small waves becoming longer. TABACALERA INSURANCE CO. 1980 after securing a departure clearance from the Hong Kong Port Authority. INC. The survey established that on her voyage to Manila from Hong Kong. The survey added that the seaworthiness of the vessel was in question especially because the breaches of the hull and the serious flooding of two (2) cargo holds occurred simultaneously in "seasonal weather. of October 31. Br. it filed two complaints against Aboitiz. to indemnify Monarch and Tabacalera ahead of the other claimants would be prejudicial to the latter. petitioner. June 8. However. Aboitiz. The departure was delayed for two hours because he (Capt.115. In its answer with counterclaim. 6. June 8. Former First Division Composed of Hon. Jr.m. 1980 . General Accident Fire and Life Assurance Corporation. Art. or to the concurring negligence of the shipowner and the captain. On the matter of Aboitiz’ negligence. The shipagent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of goods which he loaded on the vessel. and freight. we reiterate our findings in Aboitiz Shipping Corporation v.. Ltd. RATIO: 1) The principle of limited liability is enunciated in the following provisions of the Code of Commerce: Art. this Court continues to apply the said rule in appropriate cases. 3) Contrary to the petitioners’ theory that the limited liability rule has been rendered obsolete by the advances in modern technology which considerably lessen the risks involved in maritime trade. the benefit of limited liability therein provided for. The shipowner’s or agent’s liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction. 837. The total destruction of the vessel extinguishes maritime liens because there is no longer any res to which it can attach. namely: (1) where the injury or death to a passenger is due either to the fault of the shipowner." expresses in a nutshell the limited liability rule. 587 and 590 embody the universal principle of limited liability in all cases. and the captain and crew of the M/V P. no liability. In Yangco v. This doctrine is based on the real and hypothecary nature of maritime law which has its origin in the prevailing conditions of the maritime trade and sea voyages during the medieval ages. take exception to the pronouncement therein that said unseaworthiness could not be attributed to the ship owner but only to the negligent acts of the captain and crew of the M/V P. applies in all cases wherein the shipowner or agent may properly be held liable for the negligent or illicit acts of the captain. Such a situation will be covered by the provisions of the Civil Code on common carriers. that the limited liability rule is without exceptions. if any. but this is a mere deficiency of language and in no way indicates the true extent of such liability. To offset against these adverse conditions and to encourage shipbuilding and maritime commerce it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel. before a notary. or insurance. hence. 2) Each co-owner may exempt himself from his liability by the abandonment. his liability is confined to that which he is entitled as of right to abandon-‘the vessel with all her equipments and the freight it may have earned during the voyage. Aboitiz would absolve Aboitiz from any and all liability pursuant to Article 1734(1) of the Civil Code which provides in part that common carriers are . Aboitiz had caused it to founder. Aboitiz. 5) A finding that a fortuitous event was the sole cause of the loss of the M/V P. In cases where the ship owner is likewise to be blamed. and (3) in workmen’s compensation claims.HELD: NO." "No vessel. 590. we adhere to our ruling in Aboitiz Shipping Corporation v. of the part of the vessel belonging to him. 587 as follows: "The provision accords a shipowner or agent the right of abandonment. that found Aboitiz. The co-owners of a vessel shall be civilly liable in the proportion of their interests in the common fund for the results of the acts of the captain referred to in Art. that the unseaworthiness of the M/V P. shall be understood as limited to the value of the vessel with all its appurtenances and the freightage served during the voyage. Art. however. and by necessary implication. 587. Court of Appeals. The consensus of authorities is to the effect that notwithstanding the language of the aforequoted provision.’ It is true that the article appears to deal only with the limited liability of the shipowners or agents for damages arising from the misconduct of the captain in the care of the goods which the vessel carries. this Court elucidated on the import of Art. Article 587 does not apply. We. Laserna. Article 837 applies the principle of limited liability in cases of collision. Arts. The civil liability incurred by shipowners in the case prescribed in this section. 587. equipment. 4) We have categorically stated that Article 587 speaks only of situations where the fault or negligence is committed solely by the captain. but he may exempt himself therefrom by abandoning the vessel with all the equipments and the freight it may have earned during the voyage. This is not to say. however. (2) where the vessel is insured. Aboitiz to have been concurrently negligent. attended by innumerable hazards and perils. particularly along the sea route from Hong Kong to Manila.responsible for the loss. Aboitiz was two hundred (200) miles away from storm "Yoning" when it sank. under the Beaufort Scale of Wind. This is in accordance with the rule that in cases involving the limited liability of shipowners. While the goods are in the possession of the carrier. Aboitiz. the law presumes that it was due to the carrier’s fault or negligence. Court of Appeals[77] on the issue of Aboitiz’ liability in the sinking of its vessel. Aboitiz would render inapplicable the rule on limited liability." 9) The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/or negligence in the sinking of its vessel in the face of the foregoing expert testimony constrains us to hold that Aboitiz was concurrently at fault and/or negligent with the ship captain and crew of the M/V P. earthquake. But even Aboitiz’ own evidence in the form of the marine protest filed by Captain Racines affirmed that the wind force when the M/V P. destruction.[79] This burden. These issues are therefore ultimately questions of fact which have been subject of conflicting determinations by the trial courts. once the vessel owner or any party asserts the right to limit its liability.. the initial burden of proof of negligence or unseaworthiness rests on the claimants. We. the Court of Appeals and even this Court. We therefore reiterate our pronouncement in Aboitiz Corporation v. we reiterate our findings in Aboitiz Shipping Corporation v. that is necessary to protect the interest of the shipper which is at the mercy of the carrier x x x. take exception to the pronouncement therein that said unseaworthiness could not be attributed to the ship owner but only to the negligent acts of the captain and crew of the M/V P."[68] Captain Racines also testified in open court that the ill-fated M/V P. that the unseaworthiness of the M/V P. 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 that the limited liability rule will not be applied to the present cases. to wit: "In accordance with Article 1732 of the Civil Code.[69] 7) It therefore becomes incumbent upon this Court to answer with finality the nagging question of whether or not it was the concurrent fault and/or negligence of Aboitiz and the captain and crew of the ill-fated vessel that had caused it to go under water.[80] promulgated on January 21. or deterioration of the goods they carry. meteorologist of Pag-Asa. Ltd. On the other hand. 1980 was only ten (10) to fifteen (15) knots which. General Accident Fire and Life Assurance Corporation. that claimants be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy the totality of claims against it. however. The rule on limited liability should be applied in accordance with the latest ruling in Aboitiz Shipping Corporation v. during the inclusive dates of October 28-31. Court of Appeals. fairly frequent white horses." and characterizes the waves as "small x x x becoming longer. falls within scale No. a need to collate all claims preparatory to their satisfaction from the . Aboitiz to have been concurrently negligent. Guided by our previous pronouncements and illuminated by the evidence now on record. and the captain and crew of the M/V P. the burden of proof as to lack of privity or knowledge on its part with respect to the matter of negligence or unseaworthiness is shifted to it. and if loss occurs. 1980. Aboitiz had caused it to founder. is bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by it according to all circumstances of the case. The peculiar circumstances here demand that there should be no strict adherence to procedural rules on evidence lest the just claims of shippers/insurers be frustrated. 6) It is true that as testified by Justo Iglesias. storm. Aboitiz foundered on October 31. 1993. Aboitiz. the Court set out in that case the procedural guidelines: 10) "In the instant case. the ship captain and crew of the M/V P. because of tropical depression "Yoning". In the case at bar. a finding that the M/V P. However."[81] To do so. Aboitiz sank by reason of fault and/or negligence of Aboitiz. the defendant common carrier from the nature of its business and for reasons of public policy. 8) We agree with the uniform finding of the lower courts that Aboitiz had failed to prove that it observed the extraordinary diligence required of it as a common carrier. 4 that describes the wind velocity as "moderate breeze. the defendant failed to prove that the loss of the subject cargo was not due to its fault or negligence. there is. it is but fair that it exercise extraordinary diligence in protecting them from loss or damage. lightning. Aboitiz had unfortunately failed to discharge. therefore. that found Aboitiz. a stormy weather condition prevailed within the Philippine area of responsibility. On the matter of Aboitiz’ negligence. we adhere to our ruling in Aboitiz Shipping Corporation v.. Ltd. unless the same is due to flood. General Accident Fire and Life Assurance Corporation. or other natural disaster or calamity. . it is not required that the act be done purposely to produce the injury. and thereafter deposit with it the proceeds from the insurance company and pending freightage in order to safeguard the same pending final resolution of all incidents. Ltd.. for final pro-rating and settlement thereof.... the total proceeds of the insurance and pending freightage should now be deposited in trust. Aboitiz must be held liable for moral damages which may be awarded in appropriate cases under the Chapter on human relations of the Civil Code (Articles 19 to 36) CASE LAW/ DOCTRINE: DISSENTING/CONCURRING OPINION(S): . "x x x. Thus.... An act is considered willful if it is done with knowledge of its injurious effect.. 12) Thus. General Accident Fire and Life Assurance Corporation. No claimant can be given precedence over the others by the simple expedience of having completed its action earlier than the rest." 11) There is no record that Aboitiz has instituted such action or that it has deposited in trust the insurance proceeds and freightage earned.insurance proceeds on the vessel M/V P.. Having willfully caused loss or injury to the petitioners in a manner that is contrary to morals.. Then and only then can all such claims be simultaneously settled... even those already final and executory must be stayed pending completion of all cases occasioned by the subject sinking. petitioner should institute the necessary limitation and distribution action before the proper admiralty court within 15 days from finality of this decision.. execution of judgment in earlier completed cases. cannot be anything but willful on its part. " In fairness to the claimants.. Aboitiz is well aware that by not instituting the said suit. Moreover.. Aboitiz’ blatant disregard of the order of this Court in Aboitiz Shipping Corporation v. either completely or pro-rata should the insurance proceeds and freightage be not enough to satisfy all claims.. for its contumacious act of defying the order of this Court to file the appropriate action to consolidate all claims for settlement...x x x.. Aboitiz is liable for damages to the latter..x x x.. good customs or public policy. it caused the delay in the resolution of all claims against it. and as a matter of equity. Aboitiz and its pending freightage at the time of its loss. and the latter is the one liable to third persons. the tort in question is not a civil tort under the Civil Code but a maritime tort resulting in a collision at sea. the M/L ―Consuelo V. & 618 Code of Commerce. 613. It is a general principle. Before the collision. as distinguished from the civil law and mercantile law in general. owner of M/LConsuelo V to recover damages for the death of his 5 children and loss of personal properties on board the M/L ―Consuelo V as a result of a maritime collision between the 2 vessels. a public concern or public utility. The Board of Marine Inquiry found that the commanding officer of the colliding vessels had both been negligent in operating their respective vessels. Abdulhaman. Manila Steamship appealed because it was the one who was ordered to pay damages. Where the vessel is one of freight. well established maritime law and custom. it being universally recognized that the ship master or captain is primarily the representative of the owner. INSA ABDULHAMAN (MORO) and LIM HONG TO Facts: Respondent Abdulhaman filed a case against Manila Steamship Co Inc. All those rescued at sea were brought by the M/V ―Bowline Knot to Zamboanga City.. but exempted Defendant Lim Hong To from liability by reason of the sinking and total loss of his vessel. It shouldn’t be liable for the actions of its agent (captain) and employees. Civil Code). Under Article 827 of the Code of Commerce. The defense of due diligence is untenable. his wife and 5 children had paid their fare beforehand. The weather was good and fair. the M/S―Bowline Knotǁ‖. M/L Consuelo V capsized quickly (before the passengers realized it. employees and mandatories of Manila Steamship.MANILA STEAMSHIP CO. not only in case of breached contracts. each vessel shall suffer her own damage and both shall be solidarily liable for the damages occasioned to their cargoes. so that injured parties may immediately look for reimbursement to the owner of the ship. and Lim Hong To. the officer in command of its vessels. none of the passengers were warned or informed of the impending danger as the collision was so sudden and unexpected. Issue: WON Manila Steamship is liable Held: YES Ratio: DUE DILIGENCE. at the time of the collision. The characteristic language of the law in making the vessels solidarily liable for the damages due to the maritime collision emphasizes the direct nature of the responsibilities on account of the collision incurred by the ship owner under maritime law. This weather lasted for an hour then it became fair although it was showering and the visibility was good enough. & Article 1902. 1903. Article 586) and for the indemnities due the third persons (Article 587). . they were already floating and swimming) 9 died and the cargo was lost. It held the owners of both vessels solidarily liable to Abdulhaman for the damages caused to him by the collision. its owner or agents is liable for the tortious acts of his agents (Articles 587. that ship owners and ship agents are civilly liable for the acts of the captain (Code of Commerce.CA affirmed. vs. Manila Steamship cites cases which are about principals and agents in general BUT this case is about the relations between ship agent and his agents and employees. but also in cases of tortious negligence ACT OF AGENT It is proven that the agents and employees. owner of MS Bowline Knot.has been declared to exist. This direct responsibility is recognized in Article 618 of the Code of Commerce under which the captain shall be civilly liable to the ship agent. 1908. The M/S Bowline Knot was heading toZamboanga City. were agents. governed by Articles 826-939 of the Code of Commerce . through whose negligence the explosion and fire in question occurred. particularly Third Mate Simplicio Ilagan. INC. In 1948. It began raining and there were strong winds for an hour. The two vessels collided while the passengers were sleeping. On the same night. the M/L Consuelo V left the port of Zamboanga City for Siokon. in case of collision between two vessels imputable to both of them. under Article 827of the Code of Commerce. While it is true that Plaintiff’s action is based on a tort or quasi delict. moderated and limited by the owner’s right of abandonment of the vessel and earned freight (Article 587). It is exempt from any liability under Article 1903 of the Civil Code because it had exercised the diligence of a good father of a family in the selection of its employees. This direct liability. I shallassume full risk and responsibility for all the consequences thereof His permit to operate. as a legal limitation of a ship owner’s liability. crew. from captains down. mere wage earners.HE IS LIABLE Both the master and the engineer of the motor launch ―Consuelo V were not duly licensed as such. Lim Hong To willfully augmented the dangers and hazards to his vessel’s unwarry passengers. The international rule is to the effect that the right of abandonment of vessels. In his desire to reap greater benefits in the maritime trade. would render nugatory the solidary liability established by Article 827 of the Code of Commerce for the greater protection of injured parties. and that said vessel shall be held answerable for any negligence. In applying for permission to operate. disregard or violations. Lim Hong To expressly assumed the full risk and responsibility of such a collision . disregard or violation of any of the conditions herein imposed and for any consequence arising from such negligence. CA held that his permit and letter didn’t contain waivers of his right to limit his liability to the value of his motor launch and that he did not lose the statutory right to limit his liability by abandonment of the vessel is a vague argument. does not apply to cases where the injury or the average is due to ship owner’s own fault. damage or loss. Ship owners would be able to escape liability in practically every case. the his liability cannot be the identical to that of a ship owner who bears in mind the safety of the passengers and cargo by employing duly licensed officers. By operating with an unlicensed master. in fact. Lim Hong To deliberately increased the risk to which the passengers and shippers of cargo aboard the ―Consuelo Vǁ‖ would be subjected. damage or loss. despite the lack of properly trained and experienced.It is easy to see that to admit the defense of due diligence of a bonus paterfamilias (in the selection and vigilance of the officers and crew) as exempting the ship owner from any liability for their faults. considering that the qualifications and licensing of ship masters and officers are determined by the State.To compel the parties prejudiced to look to the crew for indemnity and redress would be an illusory remedy for almost always its members are. stipulated―that in case of any accident. and that vigilance is practically impossible to exercise over officers and crew of vessels at sea. Liability of Lim Hong To. and expressly declared―That in case of any accident. Lim Hong To gave as a reason that the income derived from the vessel is insufficient to pay licensed officers who demand high salaries. the registered owner thereof shall assume full risk and responsibility for all the consequences thereof. who would normally assume that the launch officers possessed the necessary skill and experience to evade the perils of the sea. Hence. 3.024 DIONISIA ABUEG.. The Court of First Instance of Manila awarded plaintiffs the compensation provided for in the Workmen's Compensation Act. the ship owners' liability is limited to the value of the vessel with all her equipment and freight earned during the voyage (Philippine Shipping company vs. [G. 1946 ROSARIO OCHING.R. it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel. NOTE/S: 1946] CA-No. a passenger by or through the misconduct of the captain or master of the ship. or the heirs and dependents and laborers and employees in the event of death caused by their employment. It is not the liability for the damage or loss of the cargo or injury to. To offset against these adverse conditions and encourage shipbuilding and maritime commerce. The Workmen's Compensation Act was enacted to abrogate the common law and our Civil Code upon culpable acts and omissions. so that if the shipowner or agent abandoned the ship. ET AL. BARTOLOME AUTHOR: Ernest SAN DIEGO. and Rosario are widows of the deceased. the agent's liability for wages of the crew is extinguished. Article 837 of the same code which provides that in cases of collision. 6 Phil. San Diego’s arguments: 1. Such compensation has nothing to do with the provisions of the Code of Commerce regarding maritime commerce. ISSUE Whether or not San Diego. who were machinists on board the M/S San Diego II and M/S Bartolome belonging to the defendant-appellant. the provisions of the Code of Commerce do not apply in this case. equipment. 281) 3. plaintiffs-appellees. Laserna. San Diego for compensation. nor the liability for the loss of the ship as result of collision. Book III. Marciana. or insurance. Article 587 of the Code of Commerce which provides that if the vessel together with all her tackle and freight money earned during the voyage are abandoned. is liable for compensation YES. RATIO: The real and hypothecary nature of the liability of the shipowner or agent embodied in the provisions of the Maritime Law. L-774 December 17. Garcia.. vs. Code of Commerce. and . L-773 December 17. equipment. They filed against the owner. HOWEVER. CA forwarded the case to the Supreme Court as there were no questions of fact. ET AL. TOPIC: MARTIME LAW. the agent's liability to third persons for tortious acts of the captain in the care of the goods which the ship carried is extinguished (Yangco vs. and freight. It is an item in the cost of production which must be included in the budget of any well-managed industry.. defendant-appellant. Exceptions PONENTE: PADILLA.. Dionisia. vs. 1946 MARCIANA DE SALVACION. his liability was extinguished. 330) 2. 4. or death of. attended by innumerable hazards and perils. CA-No. plaintiffs-appellees. BARTOLOME SAN DIEGO. but a liability created by a statute to compensate employees and laborers in cases of injury received by or inflicted upon them. The boats sank as they were caught by a typhoon while engaged in fishing operations around Mindoro Island on Oct. San Diego appealed. if any. No. NATURE: This is appeal from a judgment rendered by the Court of First Instance of Manila in the above-entitled cases awarding plaintiffs the compensation provided for in the Workmen's Compensation Act.. nor the responsibility for wages of the crew. as owner of the ships which sank due to typhoon. defendant appellant. while engaged in the performance of their work or employment. Real and hypothecary . and freight. the condition of laborers and employees. 1941 ( boats were not covered by insurance) 2. J. and aims at the amelioration of. had its origin in the prevailing continues of the maritime trade and sea voyages during the medieval ages. (Records of the case were reconstituted as they were destroyed during WWII) FACTS: 1. 1. plaintiffs-appellees. The provisions of the Code of Commerce invoked by appellant have no room in the application of the Workmen's Compensation Act which seeks to improve. as discussed. BARTOLOME SAN DIEGO. defendant-appellant. Article 643 of the same Code which provides that if the vessel and freight are totally lost. ET AL. 73 Phil. L-775 December 17. vs. were to be considered as not engaged in interisland and coastwise trade. Even employees engaged in agriculture for the operation of mechanical implements. as contemplated in section 38 of the Workmen's Compensation Act. The reason behind this principle is that the Workmen's Compensation Act was enacted by the Legislature in abrogation of the other existing laws." OTHER ISSUES: San Diego contends that the motorboats engaged in fishing could not be deemed to be in the coastwise and interisland trade. paragraph (d). as amended. according to counsel. 3428). a craft engaged in the coastwise and interisland trade is one that carries passengers and/or merchandise for hire between ports and places in the Philippine Islands. the provisions of the Code of Commerce invoked by them regarding limitation of the shipowner's liability or extinction thereof when the shipowner abandons the ship. charitable institutions and domestic service. inasmuch as. still the deceased officers of the motor ships in question were industrial employees within the purview of section 39. for. notwithstanding the fact that the motorboat was totally lost. it must be compensated even when the workman's right is not recognized by or is in conflict with other provisions of the Civil Code or the Code of Commerce. occupation or profession exercised by an employer for the purpose of gain. are entitled to the benefits of the Workmen's Compensation Act DISPOSITIVE: Finding no merit in the appeal filed in these cases. with costs against the appellant. 3812.that the employer need not be guilty of neglect or fault." The only exceptions recognized by the Act are agriculture. while engaged in fishing. in order that responsibility may attach to him and that shipowner was liable to pay compensation provided for in the Workmen's Compensation Act. as contemplated in section 38 of the Workmen's Compensation Act (No. if the motor ships in question. SC: This new point raised by counsel for the appellant is inconsistent with the first. cannot be applied Granting however. If an accident is compensable under the Workmen's Compensation Act. as amended. as amended by Act no. for industrial employment "includes all employment or work at a trade. . that the motor ships run and operated by the appellant were not engaged in the coastwise and interisland trade. we affirm the judgment of the lower court. THE INSULAR MARITIME CO. the facts are not the same.R. • As to the applicability of article 591 of the Code of Commerce. MALCOLM. Garcia Vergara.: Facts: • The Government of the Philippine Islands seeks by this action to recover from The Insular Maritime Company the sum of P30. 1920. Collection of the claim was attempted pursuant to formal demand made by the Acting Insular Auditor of date April 30. was dated July 31. • The bill prepared by the chief accountant of the Bureau of Commerce and Industry for work done on the motor ship Insular in the amount of P30. • The Insular Maritime Company became the owner of one vessel only. • The trial court was accordingly right in its exposition of the fact but not in its application of the law. 1919. valued at P150. supra. 281). Without special findings as to costs in either instance. that no steps were taken by the Government to secure payment for the repairs until after the loss of the vessel Insular. • The rights and liabilities of owners of ships are in many respects essentially the same as in the case of other owners of things.. • On October 29. J. Held: No. as there is no longer any res to which it can attach. another shall be entered here in favor of the plaintiff and against the defendant for the sum of P30. there is nothing in the language to denote that the liability of the owners of a vessel is wiped out by the loss of that vessel.91 with legal interest from July 20. There. vs. as was emphasized by the defense and by His Honor.437. The obligation to pay on the part of Insular Maritime Company still exists. • The Government consented and terminated said repairs on November 29 of the same year. The Attorney-General challenges the correctness of this view. the Insular suffered a total loss by fire. . and with the decision of this court in the case of Philippine Shipping Co. No. Ratio: • The decision of the trial judge was predicated on his understanding of the provisions of article 591 of the Code of Commerce in relation with other articles of the same Code. • As to the applicability of the decision in the case of Philippine Shipping Co. the trial judge. that the loss of the vessel Insular extinguished the obligation. L-21495 March 18.025 G.91. until payment.. • Naturally the total destruction of the vessel extinguishes a maritime lien." Here. 6 Phil. it is so ordered. Issue: WON the obligation of Insular Maritime Company to pay the Bureau of Commerce and Industry for the repairs done has extinguished. Garcia Vergara ([1906]. the Insular. when the complaint was presented. the owners and agents of a vessel causing the loss of another vessel by collision were held "not liable beyond the vessel itself causing the collision. on April 15. and in lieu of the judgment appealed from. plaintiff-appellant. there is a contractual relation which remains unaffected by the loss of the thing concerned in the contract and which is governed principally by the provisions of the Civil Code. • Judgment must therefore be as it is hereby reversed. The Insular Maritime Company asked the Bureau of Commerce and Industry to perform certain repairs on the Insular. 1920.437.91 for repairs made by the Bureau of Commerce and Industry on the motor ship Insular. as a legal conclusion. 1921. defendant-appellee. vs. But the total destruction of the vessel does not affect the liability of the owners for repairs on the vessel completed before its loss. 1924 THE GOVERNMENT OF THE PHILIPPINE ISLANDS. • As a general rule. vs. 1921. • It will thus be noted. the owners of a vessel and the vessel itself are liable for necessary repairs.000. • The trial judge further found in effect." but were "not required to pay such indemnification for the reason that the obligation thus incurred has been extinguished on account of the loss of the thing bound for the payment thereof.437. • Subsequent thereto. no liability should attach unless there was a stipulation to the contrary. No. Issue: Whether the limited liability under Art. or to the negligence of the captain and his crew. vs. PHILAMGEN’s contentions: • The sinking and total loss of “MV Asilda” and its cargo were due to the vessel’s unseaworthiness since it was put to sea in an unstable condition. COURT OF APPEALS and FELMAN SHIPPING LINES.500 cases of Coca-Cola softdrink bottles. 5. (PHILAMGEN). In other words.The consignee Coca-Cola Bottlers Philippines. • The shipment was insured with petitioner Philippine American General Insurance Co. as where the loss or injury was due to the fault of the shipowner and the captain. 8.” a vessel owned and operated by respondent Felman Shipping Lines (FELMAN). 10.R. Exceptions Doctrine: The ship agent is liable for the negligent acts of the captain in the care of goods loaded on the vessel. 4. Inc. 587. 2. Respondent denied the claim so Coca-Cola filed an insurance claim with PHILAMGEN which paid its claim of P755.The vessel sank in the waters of Zamboanga del Norte together with its cargo.. Inc. 7 July 1983 . Inc.. 3. [G. RTC – Ruled in favor of FELMAN • It found that “MV Asilda” was seaworthy when it left the port of Zamboanga (as confirmed by certificates issued by the Philippine Coast Guard and the shipowner’s surveyor attesting to its seaworthiness). the appellate court denied the claim of PHILAMGEN on the ground that the assured’s implied warranty of seaworthiness was not complied with.500 cases of 1-liter Coca-Cola softdrink bottles to be transported from Zamboanga City to Cebu City for consignee CocaCola Bottlers Philippines. Cebu. loaded on board “MV Asilda. in which case. 7. while the vessel possessed the necessary Coast Guard certification indicating its seaworthiness with respect to the structure of the ship itself. its equipment and freightage as provided in Art. Consequently. Nonetheless..Coca-Cola Bottlers Philippines. 587 of the Code of Commerce should apply . FELMAN’s contentions: • No right of subrogation in favor of PHILAMGEN was transmitted by the shipper. 1997] Topic: Maritime Law – Real and Hypothecary. CA – Ruled in favor of FELMAN • “MV Asilda” was found to be unseaworthy for being top-heavy as 2.. Claiming its right of subrogation PHILAMGEN now seeks recourse againt respondent FELMAN. Thus the loss of the vessel and its entire shipment could only be attributed to either a fortuitous event. 587 of the Code of Commerce should apply. and • The vessel was improperly manned and that its officers were grossly negligent in failing to take appropriate measures to proceed to a nearby port or beach after the vessel started to list. respondents. filed a claim with respondent FELMAN for recovery of damages due to the loss of its softdrink bottles. petitioner. there are exceptional circumstances wherein the ship agent could still be held answerable despite the abandonment.250. it was not seaworthy with respect to the cargo. June 11. 6.. 587 of the Code of Commerce. 15 July 1983 . INC. Facts: 1.00. 7. on 29 November 1983. 116940. Cebu plant. Inc.500 cases of Coca-Cola softdrink bottles were improperly stowed on deck. in which case. 9. 6 July 1983 . Art.026 THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY. This liability however can be limited through abandonment of the vessel. Nonetheless. which includes the 7. and • FELMAN had abandoned all its rights. PHILAMGEN sued the shipowner for sum of money and damages. interests and ownership over “MV Asilda” together with her freight and appurtenances for the purpose of limiting and extinguishing its liability under Art. “MV Asilda” left the port of Zamboanga in fine weather at eight o’clock in the evening of the same day. This liability however can be limited through abandonment of the vessel. Simply put. Under Art 1733 of the Civil Code. As such. according to all the circumstances of each case…" In the event of loss of goods. 587 will not apply. and such situation will be covered by the provisions of the Civil Code on common carrier. . 587. The international rule is to the effect that the right of abandonment of vessels. 2. It must be stressed at this point that Art. It cannot therefore escape liability through the expedient of filing a notice of abandonment of the vessel by virtue of Art. as where the loss or injury was due to the fault of the shipowner and the captain. the ship agent is liable for the negligent acts of the captain in the care of goods loaded on the vessel. Nonetheless. common carriers are presumed to have acted negligently. It was top-heavy as an excessive amount of cargo was loaded on deck. Art.Held: No Ratio: 1. “(c)ommon carriers. Closer supervision on the part of the shipowner could have prevented this fatal miscalculation. Where the shipowner is likewise to be blamed. there are exceptional circumstances wherein the ship agent could still be held answerable despite the abandonment. It was already established at the outset that the sinking of “MV Asilda” was due to its unseaworthiness even at the time of its departure from the port of Zamboanga. from the nature of their business and for reasons of public policy. as a legal limitation of a shipowner’s liability. the shipowner. Art. FELMAN. does not apply to cases where the injury or average was occasioned by the shipowner’s own fault. was not able to rebut this presumption. its equipment and freightage as provided in Art. 587 of the Code of Commerce. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. 3. 587 of the Code of Commerce is not applicable to the case at bar. FELMAN was equally negligent. 587 speaks only of situations where the fault or negligence is committed solely by the captain. 4. PGAI averred that MIC had no cause of action against it. (b) 27 boxes and crates of tilewood assemblies. (3) Before the sail.) 10. the provisions of the Bill of Lading do not apply because it binds only the shipper/consignee and the carrier.) PONENTE: Davide. Pet.J. it is the Code of Commerce. MIC filed a complaint against LOADSTAR and PGAI. September 28. In its answer. (Alleged that the sinking of the vessel was due to the fault and negligence of LOADSTAR and its employees.) 11.. On 20 November 1984.] 12. 2. On 4 February 1985. it then devolves upon the shipowner to both allege and prove that the goods were damaged by reason of some fact which legally exempts him from liability. the vessel was dry docked at Keppel Philippines Shipyard and . making Loadstar liable to pay Manila Insurance Co. and there was only “one shipper. 1999] NOTES: TOPIC: Exceptions Pet. MIC paid to the insured in full settlement of the claim. one consignee for a special cargo. JR. Inc. (5) There was breach of the contract of carriage when the shipper’s goods never reached their destination. LOADSTAR received on board its M/V “Cherokee” the following goods for shipment: (a) 705 bales of lawanit hardwood. (2) The vessel was seaworthy. LOADSTAR denied any liability for the loss and claimed that the sinking was due to force majeure. (3) The vessel was not seaworthy because it was undermanned. v. on its way to Manila from the port of Nasipit. (In any event.178) were insured for the same amount with Manila Insurance Co. CA: Affirmed RTC.027 Loadstar Shipping. and (c) 49 bundles of mouldings R & W (3) Apitong Bolidenized.R. the vessel. Code of Commerce: “When goods are delivered on board a ship in good order and condition. (LOADSTAR ignored. (Private resp. The vessel was insured by Prudential Guarantee & Assurance. (2) As a common carrier. Co.) 6. along with its cargo. 7. PGAI was later dropped as a party defendant after it paid the insurance proceeds to LOADSTAR.’s allegation/s: (1) The vessel was a private carrier because it was not issued a certificate of public convenience. [CA Ratio: (1) LOADSTAR is not a private carrier – LOADSTAR retained control over its crew. 361. but not those caused by the presumed negligence or fault of the carrier. (MIC) against various risks including “TOTAL LOSS BY TOTAL LOSS OF THE VESSEL. the consignee made a claim with LOADSTAR. and the shipowner delivers them to the shipper in bad order and condition. MIC then executed a subrogation receipt. which should be applied in determining the rights and liabilities of the parties. The goods (w/c amounted to P 6. said amount to be deducted from MIC’s claim from LOADSTAR.”. and (6) Art. When MIC paid. Inc. 5. for review on certiorari under Rule 45 which seek to set aside the CA decision that affirmed the RTC. (4) Between MIC and LOADSTAR. No. 9. FACTS: 1. CA AUTHOR: RC [G. C. Agusan del Norte.” 3. it did not have a regular trip or schedule nor a fixed route. unless otherwise proved. force majeure. not the Civil Code. sank off Limasawa Island. it was subrogated to the latter’s rights as against LOADSTAR.” Transportation of the merchandise at the risk and venture of the shipper means that the latter bears the risk of loss or deterioration of his goods arising from fortuitous events. It could have withstood the “natural and inevitable action of the sea” when the condition of the sea was moderate – there was negligence. (PGAI) for P 4 million. That PGAI be ordered to pay the insurance proceeds from the loss of the vessel directly to MIC. LOADSTAR being the party insured. or the inherent nature and defects of the goods. 131621. As a result of the total loss of its shipment. (Loadstar liable. As the insurer.) 8. On 19 November 1984.067. RTC: In favor of MIC. is not reason enough to convert the vessel from a common to a private carrier.” i. Since the cargo was being shipped at “owner’s risk. When the vessel left. offering their services to the public. LOADSTAR exercised the diligence of a good father of a family in ensuring the vessel’s seaworthiness. it was shown that the vessel was also carrying passengers. YES (CA Affirmed.” LOADSTAR was not liable for any loss or damage. 1732. but only a general provision to the effect that the M/V “Cherokee” was a “general cargo carrier. It is not necessary that the carrier be issued a certificate of public convenience and this is not altered by the fact that the carriage of the goods in question was periodic. who certified that the ship was fit to undertake a voyage. episodic. by land. LOADSTAR fits the definition of a common carrier under Art.” Further. and (6) MIC’s claim had prescribed. 2. (3) Did not raise the issue of prescription – deemed waived.” on the date in question. the bare fact that the vessel was carrying a particular type of cargo (wood products) for one shipper.e. and one who offers . or air for compensation. The records do not disclose that the M/V “Cherokee. With all these precautions. as in this case. and (4) the “limited liability” theory is not applicable because LOADSTAR was at fault or negligent – failed to maintain a seaworthy vessel. undertook to carry a special cargo or was chartered to a special person only. yet. The vessel sank on 20 November 1984. the case for recovery was filed only on 4 February 1985. CC. (2) Loadstar was at fault or negligent in not maintaining a seaworthy vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. Article 1732. Its crew was experienced. or unscheduled. (2) Assuming it was due to force majeure. CA: The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both. firms or associations engaged in the business of carrying or transporting passengers or goods or both. 4. licensed and competent. RATIO: 1. Resp. the weather was fine until the next day when the vessel sank due to strong waves.was duly inspected by the maritime safety engineers of the Philippine Coast Guard.] 13. the case having been instituted beyond the period stated in the bills of lading which shall be within 60 days from the accrual of the right of action. and one who does such carrying only as an ancillary activity. >> WON Loadstar is liable. the singular fact that the vessel was carrying a particular type of cargo for one shipper is not sufficient to convert the vessel into a private carrier. which appears to be purely coincidental. Neither does Article 1732 distinguish between a carrier offering its services to the “general public. any agreement limiting its liability is valid. LOADSTAR was guilty of contributory negligence. (4) The loss was due to force majeure.) HELD: (1) Common Carrier. The bills of lading failed to show any special arrangement. (2) Whether or not it had exercised due and/or ordinary diligence in the case. especially where.’s contention/s: (1) the issue as to the classification of the M/V “Cherokee” was not timely raised – barred by estoppel. Under the facts & circumstances in the case. ISSUE/s: (1) Whether Loadstar is a private or common carrier. episodic or unscheduled basis. Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional. There was no charter party. water.. LOADSTAR is a common carrier. De Guzman v. occasional. (5) Being a private carrier. the general community or population. corporations. Common carriers are persons. 3. “For a vessel to be seaworthy. the carrier is not liable for any loss or damage to shipments made at “owner’s risk. 10. It must be struck down. 8. 5. the Carriage of Goods by Sea Act (COGSA) –provides for a 1-year period of limitation on claims for loss of. The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code. Since it was remiss in the performance of its duties. To exempt private respondent from the liabilities of a common carrier because he has not secured the certificate of public convenience. The stipulation in the case at bar which effectively reduces the common carrier’s liability for the loss or destruction of the goods to a degree less than extraordinary (Articles 1744 and 1745). The law imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their services. Moreover.” Such stipulation is obviously null and void for being contrary to public policy. . The doctrine of limited liability does not apply where there was negligence on the part of the vessel owner or agent.services or solicits business only from a narrow segment of the general population. for failing to comply with applicable statutory requirements. it did not sink because of any storm that may be deemed as force majeure. The law cannot allow a common carrier to render such duties and liabilities merely facultative by simply failing to obtain the necessary permits and authorizations. and (3) Limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight. Inasmuch as neither the Civil Code nor the Code of Commerce states a specific prescriptive period. LOADSTAR cannot hide behind the “limited liability” doctrine to escape responsibility. that is. A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code governing common carriers. it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. M/V “Cherokee” was not seaworthy when it embarked on its voyage. The vessel was not even sufficiently manned at the time. or damage to. it was subrogated to all the rights which the latter has against LOADSTAR. a stipulation reducing the 1-year period is null and void. In any event. 12. LOADSTAR was at fault or negligent in not maintaining a seaworthy vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. that would be to reward private resp. 7. 9. (2) Providing for an unqualified limitation of such liability to an agreed valuation (Invalid). without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations and has been granted a certificate of public convenience or other franchise. it follows that when MIC paid the shipper. would be offensive to sound public policy. the wind condition in the area where it sank was determined to be moderate. The business of a common carrier impinges directly intimately upon the safety and well being and property of those members of the general community who happen to deal with such carrier. Three kinds of stipulations often made in a bill of lading: (1) Exempting the carrier from any and all liability for loss or damage occasioned by its own negligence (Invalid). (Valid) 11. That liability arises the moment a person or firm acts as a common carrier. Since the stipulation is null and void. cargoes sustained during transit – may be applied suppletorily to the case. 6. Re: Prescription: MIC’s cause of action had not yet prescribed.