LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.

1 HOME INSURANCE COMPANY, plaintiff-appellee,

vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING
CORPORATION, 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 from
Chimbate, Peru
Facts:
Consorcio Pesquero del Peru of South America shipped freight prepaid jute bags
of Peruvian fish meal through SS Crowborough and was covered by bills of lading
number 1 and 2. The said cargo was consigned to San Miguel Brewery, Inc and
was 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, Home
Insurance and the American Steamship Agencies, owner and operator of the
vessel.
Because the others denied liability, Home Insurance Company paid the consignee
14,870.71, the insurance value of the loss as full settlement of the claim. Having
been refused reimbursement by the others, the insurer, as subrogee to the
consignee filed against them before CFI of Manila for recovery of the amount it
paid 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 had
prescribed under Article 366 of the Code of Commerce stating that the claim must
be 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 referred
to in the bills of lading, the charterer, not the shipowner, was responsible for any
loss or damage of the cargo. Furthermore, it claimed to have exercised due
diligence in stowing the goods and that as a mere forwarding agent, it was not
responsible 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 interest
plus 1,000 attorneys fee cited the following grounds:
(a) The non-liability of American Steamship Agencies under the charter party
contract 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 the
conduct of the captain of the carrier;
(b) The stipulation in the charter party contract exempting the owner from liability is
against public policy under Article 1744 of the Civil Code;
(c) In case of loss, destruction or deterioration of goods, common carriers are
presumed at fault or negligent under Article 1735 of the Civil Code unless they
prove extraordinary diligence, and they cannot by contract exempt themselves
from 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 bad
order 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 to
absolve the American Steamship Agencies from liability for loss? YES
SC RULING:
The bills of lading covering the shipment provide at the back thereof that the
bills of lading shall be governed by and subject to the terms and conditions of the
charter 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 and
control 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 one
of affreightment over the whole vessel rather than a demise. As such, the liability of the
shipowner for acts or negligence of its captain and crew, would remain in the absence
of stipulation.
Section 2, paragraph 2 of the charter party, provides that the owner is liable for
loss or damage to the goods caused by personal want of due diligence on its part or its
manager to make the vessel in all respects seaworthy and to secure that she be
properly manned, equipped and supplied or by the personal act or default of the owner
or its manager. Said paragraph, however, exempts the owner of the vessel from any
loss or damage or delay arising from any other source, even from the neglect or fault of
the captain or crew or some other person employed by the owner on board, for whose
acts the owner would ordinarily be liable except for said paragraph..
Regarding the stipulation, the Court of First Instance declared the contract as
contrary to Article 587 of the Code of Commerce making the ship agent civilly liable for
indemnities suffered by third persons arising from acts or omissions of the captain in
the care of the goods and Article 1744 of the Civil Code under which a stipulation
between the common carrier and the shipper or owner limiting the liability of the former
for loss or destruction of the goods to a degree less than extraordinary diligence is valid

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
provided it be reasonable, just and not contrary to public policy. The release from
liability in this case was held unreasonable and contrary to the public policy on common
carriers.
A common carrier undertaking to carry a special cargo or chartered to a
special person only, becomes a private carrier. As a private carrier, a stipulation
exempting the owner from liability for the negligence of its agent is not against public
policy, and is deemed valid.
The Civil Code provisions on common carriers should not be applied where
the carrier is not acting as such but as a private carrier. The stipulation in the charter
party absolving the owner from liability for loss due to the negligence of its agent would
be void only if the strict public policy governing common carriers is applied. Such policy
has no force where the public at large is not involved, as in the case of a ship totally
chartered for the use of a single party.
And furthermore, in a charter of the entire vessel, the bill of lading issued by
the master to the charterer, as shipper, is in fact and legal contemplation merely a
receipt and a document of title not a contract, for the contract is the charter party. The
consignee may not claim ignorance of said charter party because the bills of lading
expressly referred to the same. Accordingly, the consignees under the bills of lading
must 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 the
same is due to personal acts or negligence of said owner or its manager, as
distinguished from its other agents or employees. In this case, no such personal act or
negligence has been proved.
WHEREFORE, the judgment appealed from is hereby reversed and appellant
is 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 LOSS
BY 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 with
Loadstar which, however, ignored the same
As the insurer, MIC paid the insured in full settlement of its claim, and the latter
executed a subrogation receipt
MIC filed a complaint against Loadstar and Prudential, alleging that the sinking of
the 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 "one
shipper, one consignee for a special cargo.
As a private carrier, it cannot be presumed to have been negligent, and the
burden of proving otherwise devolved upon MIC.
As a private carrier, any agreement limiting its liability, such as what transpired in
this case, is valid. (Cargo shipped at the owners risk.)
It is not liable because the sinking of the ship was due to force majeure. It
maintained that its vessel was seaworthy.
PGAI Contention: averred that MIC had no cause of action against it, Loadstar being
the party insured; was later dropped as a party defendant after it paid the insurance
proceeds 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 was
a single shipper on that fateful voyage. The court noted that the charter of the
vessel 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 and
the defense of diligence of a good father of a family is unavailing in culpa
contractual.
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 on
the part of the vessel owner or agent. 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. In any event, it did not sink because of any
storm that may be deemed as force majeure, inasmuch as the wind condition in the
performance of its duties, LOADSTAR cannot hide behind the "limited liability"
doctrine to escape responsibility for the loss of the vessel and its cargo.

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
Three kinds of stipulations have often been made in a bill of lading. The first one
exempting the carrier from any and all liability for loss or damage occasioned by its
own negligence. The second is one providing for an unqualified limitation of such
liability to an agreed valuation. And the third is one limiting the liability of the carrier
to an agreed valuation unless the shipper declares a higher value and pays a
higher 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, but
the 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, be
struck 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 carrier
transporting special cargo or chartering the vessel to a special person becomes a
private carrier that is not subject to the provisions of the Civil Code. Any stipulation in
the charter party absolving the owner from liability for loss due to the negligence of its
agent 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 totally
chartered for the use of a single party. LOADSTAR also cited Valenzuela
Hardwood 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 simple
reason 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 was
chartered to a special person only. There was no charter party. The bills of lading failed
to show any special arrangement, but only a general provision to the effect that the
M/V"Cherokee" was a "general cargo carrier." Further, the bare fact that the vessel was
carrying a particular type of cargo for one shipper, which appears to be purely
coincidental, 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 carrying
passengers.

3 PHILIPPINE SHIPPING CO. VS. GARCIA BRY
THE PHILIPPINE SHIPPING COMPANY, ET AL. vs. FRANCISCO GARCIA
VERGARA
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 plaintiffs 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 of
its ship, Lourdes.
The trail court ruled that Vergaras Navarra was found to be at fault during the
collision at sea with the plaintiffs ship Lourdes. (Lourdes was sailing in accordance
w/ law and Navarra was not.)
The court also found as a fact that "both ships with their respective cargoes were
entirely 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 the
steamship Lourdes, with the costs against the latter."

The plaintiff appealed to the Supreme Court.


Plaintiffs 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 value
at the time she was lost could be ascertained, 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.
ISSUE:
1. W/N the defendant (Vergara) should be held liable for the amount of the ship
despite 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 of
loss or damages in the goods, or even as payment for the wages of the crew and
captain. As provided in Art. 837 of the Code of Commerce, the liability of the
shipowner or agent shall be limited to the value of ship.
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."

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
There is no doubt that if the Navarra had not been entirely lost, the agent, having
held liable for the negligence of the captain of the vessel, could have abandoned
her with all her equipment and the freight money earned during the voyage, thus
bringing himself within the provisions of the article 837 in so far as the subsidiary
civil liability is concerned. This abandonment which would have amounted to an
offer 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 the
vessel at the time of the collision.
This is the difference which exists between the lawful acts and lawful obligation of
the captain and the liability which he incurs on account of any unlawful act
committed by him. In the first case, the lawful acts and obligations of the captain
beneficial to the vessel may be enforced as against the agent for the reason that
such obligations arise from the contract of agency (provided, however, that the
captain does not exceed his authority), while as to any liability incurred by the
captain 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. For
this reason the Code of Commerce makes agent liable to the extent of the value of
the 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 is
both 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 the
freight money, 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.
The reason for its REAL nature:
It will be observed that these rights are correlative, and naturally so, because if the
agent 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 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, even to the prejudice of
a 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 the
liability 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 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, his only
security, before it is lost.

DISPOSITIVE: The Court affirmed the trial courts decision that the defendant is liable
for 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 obligation
incurred has been extinguished on account of loss of the thing bound for the payment
thereof.

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 ang
writing 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, and
arrived 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, the
steamer 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 of
rice; 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, paid
the said Sontua the sum of P11,198.08.
Yueng Sheng was subrogated by YB Sontua commenced the present suit against
G. Urrutia & Co. for the sum of P27,193.93, as damages, considering
steamer Cebu and consequently responsible for the acts of the officers and the
crew of the same, who, on account of their recklessness and negligence, where
the cause of the damages occasioned to the steamer Minas de Batan, to one of
the shippers, and to the company which insured the damaged cargo

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
More facts as related to the above were reached in an agreement by lawyers of the
two 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 in
accordance with the laws in force in the Philippine Islands, and from this company
G. Urrutia & Co. chartered the steamer
That the captain and engineer in turn hired the crew, and were in the exercise of
their duties at the time of the occurrence in question.
On the date in question, the second typhoon signal had been hoisted; this signal
announced a distant typhoon, and gave warning that certain precautions should be
taken in case the typhoon should approach
It was at this time that the Cebu approached the Minas de Batan for the purpose of
taking 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 deck
and engineering department
G. Urrutia & Co. will pay for the coal, salaries of the officers and of the crew, water,
pilotage, subsistence of the crew and of other expenses occasioned by loading
and unloading
Fines that may be imposed for defects of the steamer, such as lack of life
preserves, 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 paid
by 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, who
will instruct them as to the trips to be made, the stopping places, provided these
are 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 the
charterers
Urrutia and Co. shall not discharge the captain nor dismiss the engineer, but
should 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 deem
necessary 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 the
cargo of rice was spoiled decided the said question in the negative, saying "that
the shipowner or the agent are responsible for the acts of the captain, although
have not, as in the present case, the power to appoint the captain nor to discharge
him," and therefore absolved the defendants G. Urrutia & Co.
Hence this petition
ISSUE: Whether the charterer of a vessel, under the conditions stipulated in the charter
party, is the owner pro hac vice of the ship and takes upon himself the responsibilities
of the owner.

HELD:
SC said no.
Granted that the cause of the damages was the fault, negligence, or incompetence
of the captain or the crew of the Cebu, and that the damage was caused by the
collision of the latter with the Minas de Batan, the law applicable to the case, since
it occurred the inner waters of Manila Bay, is the Code of Commerce of the
Philippines:
Article 826 of this Code provides:
If a vessel should collide with another through the fault, negligence, or lack of skill of
the captain, sailing master, or any other member of the complement, the owner of the
vessel 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 own
name and in such capacity, take judicial or extrajudicial steps in all that relates to
commerce (art. 595, par. 2); thus of the Cebu were attached, they would have no
legal capacity to proceed to secure its release; speaking generally, not even the
fines could or ought to be paid by them, unless such fines were occasioned by their
orders.
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 those
agents, 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

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
by the courts, as being in the place of the owners or the agents in matter relating to
the responsibility pertaining to the ownership and possession of the vessel.
neither had they the powers of such owners or agents with respect to the
management and navigation of the ship, and still less regard to the ownership and
true possession of the vessel.
The contract simply granted G. Urrutia & Co. the lease of the Cebu for the voyages
expressed in the sixth clause, namely, from Manila to certain ports, "and they could
not arrange for the vessel to make voyages to other ports not mentioned, without
the express authority of Messrs. Smith, Bell & Co." Their possession was,
therefore, the uncertain title of lease, not a possession representing the true and
real possession of the owner, such as is that of the agent, who is fully subrogated
to the place of the owner in regard to the dominion, possession, free
administration, and navigation of the vessel.
G. Urrutia & Co. had only the use of the Cebu for the voyages stipulated in the
contract, the right to transport their own cargo, and to profits accruing from carriage
of extra freight belonging to other persons
The material possession or the possession in fact was held by the captain, and he
held in the name of Messrs. Smith, Bell & Co.; he was their subordinate and
represented them in regard to the rights of possession and ownership and to the
substance of the vessel, the preservation and management of which were
entrusted to his care and vigilance without contemplation of any right in favor of
other 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 the
lessees with the terms and limits of the contract
The responsibility involved in the present action is that derived from the
management 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 is
responsible to the agent, who is in turn is responsible to the third party prejudiced
or 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 Batangueo
which 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 Lopez
Castelo and charterer Jose Lim Chumbuque for the term of one year to Jose Lim
Chumbuque for use in the conveying of cargo between certain ports of the Philippine
Islands. In this contract it was stipulated that the officers and crew of the Batangueo
should be supplied by the owner, and that the charterer should have no other control
over 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 case
they 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 of
petroleum to be conveyed to the port of Casiguran, in the Province of Sorsogon. For
this consignment a bill of lading of the usual form was delivered but contained no
provision with respect to the storage of the petroleum, but it was in fact placed upon the
deck of the ship and not in the hold.
During the journey, the ship faced a violent storm thus the captain was
compelled for the safety of all to jettison the entire consignment of petroleum consisting
of two hundred cases. When the storm abated the ship made port, and thirteen cases
of the petroleum were recovered, but the remainder was wholly lost.
To recover the value of the petroleum thus jettisoned but not recovered, the
present action was instituted by the Standard Oil Company against the owner of the
ship in the Court of First Instance of Manila
CFI Ruling: The CFI decided in favor of Standard Oil for the recovery of the value of
the petroleum thus jettisoned but was not recovered.

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

Castelos Defense: The liquidation of the general average is, under article 852 and
related provisions, a condition precedent to the liability of the defendant, and that at any
rate the defendant, as owner of the ship, should only be held liable for his proportion of
the general average. It is also suggested that if the plaintiff has any right of action at all
upon the state of facts here presented, it is against the captain, who has been
delinquent 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 or
borne 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 it
is a general rule, both under the Spanish Commercial Code and under the doctrines
prevailing 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 general
average loss. But this rule, denying deck cargo the right to contribution by way of
general average in case of jettison, was first made in the days of sailing vessels; and
with the advent of the steamship as the principal conveyer of cargo by sea, it has been

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
felt that the reason for the rule has become less weighty, especially with reference to
coastwise 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 inland
waters, are entitled to contribution as a general average loss.
The Marine Regulations now in force in these Islands contain provisions
recognizing the right of vessels engaged in the interisland trade to carry deck cargo;
and express provision is made as to the manner in which it shall be bestowed and
protected from the elements (Phil. Mar. Reg. [1913], par 23). Indeed, there is one
commodity, namely, gasoline, which from its inflammable nature is not permitted to be
carried in the hold of any passenger vessel, though it may be carried on the deck if
certain precautions are taken. There is no express provision declaring that petroleum
shall be carried on deck in any case; but having regard to its inflammable nature and
the known practices of the interisland boats, it cannot be denied that this commodity
also, as well as gasoline, may be lawfully carried on deck in our coastwise trade.
It is true that if the captain does not comply with the article relating to the
adjustment, liquidation, and distribution of the general average, the next article (852)
gives to those concerned whether shipowner (naviero) or shipper the right to
maintain an action against the captain for indemnification for the loss; but the
recognition 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 the
owner of the ship ordinarily has vastly more capital embarked upon a voyage than has
any individual shipper of cargo. Moreover, the owner of the ship, in the person of the
captain, has complete and exclusive control of the crew and of the navigation of the
ship, as well as of the disposition of the cargo at the end of the voyage. It is therefore
proper that any person whose property may have been cast overboard by order of the
captain should have a right of action directly against the ship's owner for the breach of
any 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 primary
liability upon the person who has actual control over the conduct of the voyage and who
has most capital embarked in the venture, namely, the owner of the ship, leaving him to
obtain recourse, as it is very easy to do, from other individuals who have been drawn
into the venture as shippers.
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 cargoes
of various shippers when Aboitiz vessel sunkening (joke lang SANK dapat ha, walang
magsasabi 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 isa
lang ang defense ni Aboitiz force majeure- pero madaming claimants. Lalagyan ko ng
summary 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 the
value of the cargoes to their respective consignees and thereafter, as insurer-
subrogees, separately filed complaints against Aboitiz. The trial courts all ruled in favor
of the insurers and ordered Aboitiz to pay insurers the amount representing the value of
the lost cargoes. However, on petition to CA by Aboitiz, the appellate courts stayed the
execution of judgment (ordering Aboitiz to pay) because the liability of Aboitiz is limited
to 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 file
the appropriate action to consolidate all claims. No claim can be given precedence over
others. But Aboitiz, instead, defied order of the SC , and it (Aboitiz) preferred to litigate
the claims singly rather than exert effort towards the consolidation of all claims. SC
said, 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 of
the basic provisions of the Civil Code on abuse of rights.
1
st
PETITION: Monarch and Tabacalera v Aboitiz
Characters:
Monarch Insurance and Tabacalera Insurance Company petitioners; insurance
carriers 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:
Aboitizs vessel sank on her voyage from Hong Kong to Manila.
Monarch and Tabacalera indemnified the shippers and were consequently
subrogated 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.
Aboitizs Defense: The sinking of the vessel was due to force majeure or an act of
God.
Monarch and Tabacalera proffered in evidence the survey of Perfect Lambert, a
surveyor commissioned to investigate the possible cause of the sinking of the
cargo vessel.

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
The survey established that on her voyage to Manila from Hong Kong, the vessel
did not encounter weather so inclement that Aboitiz would be exculpated from
liability for losses. In his note of protest, the master of M/V P. Aboitiz described the
weather condition classified as typical and moderate in the South China Sea at that
particular time of the year.
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."
The trial court rendered judgment against Aboitiz
Aboitiz appealed to the Court of Appeals but the appeal was dismissed for its
failure 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 filed
out 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, to
indemnify Monarch and Tabacalera ahead of the other claimants would be
prejudicial 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 at
magiging prejudicial sa ibang claimants kung mauunang bayaran ang
Monarch & Tabaccalera. Oo Tinagalog ko lang. Sa Limited Liability chever
kasi 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 freezing
execution proceedings for ten (10) days to give Aboitiz time to secure a restraining
order from a higher court.
Execution was scheduled to resume to fully satisfy the judgment when the grace
period 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 the
money 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 the
insurance proceeds of Aboitiz in relation to the pro-rata shares of the 106 other
claimants).CA held that the unseaworthiness of the vessel was not a fault directly
attributable to Aboitiz but to the captain, and that Aboitiz is entitled to the benefit of
the limited liability rule for having abandoned its ship.
Hence, the instant petition (eto na yung first petition).
2
nd
and 3
rd
PETITIONS:
Characters:
ALLIED GUARANTEE INSURANCE COMPANY petitioner (2
nd
petition); insurer-
subrogee of consignee Peak Plastic and Metal Products Limited(hindi importante
si Peak Plastic dito)
EQUITABLE INSURANCE CORPORATION petitioner(3
rd
petition); insurer-
subrogee of consignee-assured Axel Manufacturing Corporation(hindi din
importante 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 amount
representing the value of lost goods.
Aboitiz Defense: Force majeure. The vessel was seaworthy. It exercised due
diligence in the carriage of goods. In support of its position, Aboitiz presented the
testimonies of Capt. Gerry N. Racines, master mariner of the vessel, and Justo C.
Iglesias, a PAGASA meteorologist, as follows:
Aboitizs vessel left Hong Kong for Manila at about 7:30pm after securing a
departure clearance from the Hong Kong Port Authority. The departure was
delayed for two hours because he (Capt. Racines) was observing the direction
of the storm that crossed the Bicol Region. He proceeded with the voyage only
after being informed that the storm had abated. At about 8am the following
day, after more than twelve (12) hours of navigation, the vessel suddenly
encountered rough seas with waves about fifteen to twenty-five feet high. He
ordered his chief engineer to check the cargo holds. The latter found that sea
water had entered cargo hold Nos. 1 and 2. He immediately directed that
water be pumped out by means of the vessel's bilge pump, a device capable
of ejecting 180 gallons of water per minute. They were initially successful in
pumping out the water.
At 6am the next day, however, Capt. Racines received a report from his chief
engineer that the water level in the cargo holds was rapidly rising. He altered
the vessel's course and veered towards the northern tip of Luzon to prevent

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
the vessel from being continuously pummeled by the waves. Despite diligent
efforts of the officers and crew, however, the vessel, which was approximately
250 miles away from the eye of the storm, began to list on starboard side at 27
degrees. Capt. Racines and his crew were not able to make as much headway
as they wanted because by 12:00 noon of the same day, the cargo holds were
already 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 being
the northern tip of Luzon.
Responding to the captain's distress call, the M/V Kapuas (Capuas) manned
by Capt. Virgilio Gonzales rescued the officers and crew of the ill-fated vessel
and brought them to Waileen, Taiwan where Capt. Racines lodged his marine
protest dated November 3, 1980.
Justo Iglesias and another witness of Aboitiz, testified in both cases that
during the inclusive dates of October 28-31, 1980, a stormy weather condition
prevailed within the Philippine area of responsibility, particularly along the sea
route from Hong Kong to Manila, because of tropical depression "Yoning."
PAGASA issued weather bulletins from October 28-30, 1980 while the storm
was still within Philippine territory. No domestic bulletins were issued the
following day when the storm which hit Eastern Samar, Southern Quezon and
Southern Tagalog provinces, had made its exit to the South China Sea
through Bataan.
Allied and Equitable refuted the allegation of Aboitiz stating that the loss was not
due to force majeure because the wind velocity at that time described the sea
condition as moderate breeze.
2
nd
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 was
granted 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 as
it impairs the rights of the 100 other claimants to the insurance proceeds including
the rights of the petitioner to pay more than the value of the vessel or the insurance
proceeds and to desist from executing the judgment insofar as it prejudices the
pro-rata share of all claimants to the insurance proceeds. The CA brushed aside
the issue of Aboitiz' negligence and/or fault and proceeded to allow the application
of the limited liability rule "to accomplish the aims of justice."
3
rd
Petition: Equitable v Aboitiz
Trial court ruled in favor of Equitable. CA affirmed but held that the amount and
payment of those awards shall be subject to a determination of the pro-rata share
of 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 is
therefore hereby ordered remanded to the trial court which shall reopen the case
and 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-stay
ang 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 of
the limited liability rule in maritime law in favor of Aboitiz in order to stay the
execution of the judgments for full indemnification of the losses suffered by the
petitioners as a result of the sinking of the M/V P. Aboitiz.(in other words Is Aboitiz
entitled to the benefit of the limited liability rule?)

The petitioners assert in common that the Aboitizvessel did not sink by reason of force
majeure but because of its unseaworthiness and the concurrent fault and/or negligence
of Aboitiz, the captain and its crew, thereby barring Aboitiz from availing of the benefit
of 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/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 Aboitiz vessel. This is in accordance with the rule that in cases
involving the limited liability of shipowners, the initial burden of proof of negligence or
unseaworthiness rests on the claimants. However, once the vessel owner or any party
asserts the right to limit its liability, 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.
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 that the limited liability rule will not
be applied to the present cases. 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. The rule on limited liability should be applied in
accordance with the latest ruling in Aboitiz Shipping Corporation v. General Accident
Fire and Life Assurance Corporation, Ltd., promulgated on January 21, 1993, that
claimants be treated as "creditors in an insolvent corporation whose assets are not
enough 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 of
Commerce:
Art. 587. 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

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
which he loaded on the vessel; but he may exempt himself therefrom by
abandoning the vessel with all the equipments and the freight it may have earned
during the voyage.
Art. 590. 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. 587.
Each co-owner may exempt himself from his liability by the abandonment, before a
notary, of the part of the vessel belonging to him.
Art. 837. The civil liability incurred by shipowners in the case prescribed in this
section, shall be understood as limited to the value of the vessel with all its
appurtenances and the freightage served during the voyage.
Art. 837 appeals the principle of limited liability in cases of collision hence, Arts. 587
and 590 embody the universal principle of limited liability in all cases.
"No vessel, no liability," expresses in a nutshell the limited liability rule. 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. The total destruction of the
vessel extinguishes maritime liens because there is no longer any res to which it
can attach. 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, attended by innumerable hazards and perils.
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, 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 committed
solely 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 of
the Civil Code on common carriers.
A finding that a fortuitous event was the sole cause of the loss of the M/V P. 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 responsible for the loss,
destruction, or deterioration of the goods they carry, unless the same is due to
flood, storm, earthquake, lightning, or other natural disaster or calamity. On the
other hand, a finding that the M/V P. Aboitiz sank by reason of fault and/or
negligence of Aboitiz, the ship captain and crew of the M/V P. Aboitiz would render
inapplicable the rule on limited liability. These issues are therefore ultimately
questions of fact which have been subject of conflicting determinations by the trial
courts, 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 the
inclusive dates of October 28-31, 1980, a stormy weather condition prevailed within
the Philippine area of responsibility, particularly along the sea route from Hong
Kong to Manila, because of tropical depression "Yoning". 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. Aboitiz foundered on October 31, 1980 was only
ten (10) to fifteen (15) knots which, under the Beaufort Scale or Wind, falls within
scale No. 4 that describes the wind velocity as "moderate breeze," and
characterizes the waves as "small . . . becoming longer, fairly frequent white
horses." 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 the
captain 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 diligence
required of it as a common carrier.
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. Aboitiz.
This is in accordance with the rule that in cases involving the limited liability of
shipowners, the initial burden of proof of negligence or unseaworthiness rests on
the claimants. However, once the vessel owner or any party asserts the right to
limit its liability, 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. 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 that
the limited liability rule will not be applied to the present cases. 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.
The rule on limited liability should be applied in accordance with the latest ruling in
Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance
Corporation, Ltd., that claimants be treated as "creditors in an insolvent corporation
whose 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 to
their satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its
pending freightage at the time of its loss. No claimant can be given precedence

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
over the others by the simple expedience of having completed its action earlier
than the rest. Thus, execution of judgment in earlier completed cases, even
these already final and executory must be stayed pending completion of all
cases occasioned by the subject sinking. Then and only then can all such claims
be simultaneously settled, either completely or pro-rata should the insurance
proceeds and freightage be not enough to satisfy all claims.
However, Aboitiz defied such order of the SC to file appropriate action to
consolidate all claims for settlement.
Aboitiz held liable for moral damages for defying the order of the court and on
account of Aboitiz' refusal to satisfy petitioners' claims in accordance with the
directive of the Court in Aboitiz Shipping Corporation v. General Accident Fire and
Life Assurance Corporation, Ltd., it acted in gross and evident bad faith.
Accordingly, pursuant to Article 2208 of the Civil Code, petitioners should be
granted attorney's fees.

DISPOSITIVE PORTION: WHEREFORE, the petitions in G.R. Nos. 92735, 94867, and
95578 are DENIED. The decisions of the Court of Appeals in CA-G.R. No. SP-17427
dated 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 that
respondent Aboitiz Shipping Corporation is ordered to pay each of the respective
petitioners the amounts of P100,000.00 as moral damages and P50,000.00 as
attorney's fees, and treble the cost of suit.
Respondent Aboitiz Shipping Corporation is further directed to comply with the Order
promulgated by this Court on January 21, 1993 in Aboitiz Shipping Corporation v.
General Accident Fire and Life Assurance Corporation, Ltd., G.R. No. 100446, January
21, 1993, to (a) institute the necessary limitation and distribution action before the
proper Regional Trial Court, acting as admiralty court, within fifteen (15) days from the
finality of this decision, and (b) thereafter to deposit with the said court the insurance
proceeds from the loss of the vessel, M/V P. Aboitiz, and the freightage earned in order
to 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 vessel
at fault.
Respondent:
Hijos de escano owner of the passenger vessel
Domestic Insurance Co. of the Phils insurer of the passenger vessel

Facts: A maritime collision occurred between the tanker LSCO "CAVITE" owned by
petitioner 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 against
the petitioner before CFI Cebu. In the course of the trial the court appointed
commissioners to determine the value of the vessel LSCO "CAVITE". The
commissioners found that the value thereof is P180 000. After trial on the merits, a
decision 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 vessel
at fault is necessary in order that the liability of owner of said vessel shall be limited
only to the extent of the value thereof, its appurtenances and freightage earned in the
voyage.

Ruling: Yes.
The rule is that in case of collision there should be abandonment of the vessel by
the 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 is
no vessel to abandon so abandonment is not required. Because of such total loss
the liability of the shipowner or agent for damages is extinguished. Nevertheless,
the shipowner or agent is personally liable for claims under the Workmen's
Compensation 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 and
agent is subsidiary. In such instance the shipowner or agent may avail of the
provisions 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 he
engages the services of an inexperienced and unlicensed captain or engineer, he
cannot 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 a
collision and the fault is laid at the doorstep of LSCO "Cavite" of petitioner.
Undeniably petitioner has not abandoned the vessel. Hence petitioner cannot
invoke the benefit of the provisions of Article 837 of the Code of Commerce to limit
its liability to the value of the vessel, all the appurtenances and freightage earned
during the voyage.

8 PHILAMGEN VS. CA LEI
Parties:
Coca-Cola Bottlers Philippines nagpaship ng 7,500 cases of 1-liter Coca-Cola
softdrink 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

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
Philamgen insurer of the goods
Elite Adjuster, Inc. nagsubmit ng report regarding the sinking of the vessel (wala
lang to)

FACTS:
1. July 6, 8pm, MV Asilda in fine weather. July 7, 8.45am, the vessel sank with its entire
cargo in the waters of Zamboanga del Norte.
2. The ship captain narrated that around 4am, he was awakened by the officer on duty
to inform him that the vessel had hit a floating log. At that time he noticed strong
southeast winds inducing big waves. The vessel was listing slightly to starboard and
would not correct itself despite the heavy rolling and pitching. He then ordered his crew
to shift the cargo from starboard to portside until the vessel was balanced. After
magpalipat-lipat ng cargo, the vessel suddenly listed to portside, some of the cargo on
deck were thrown overboard and seawater entered the engine room and cargo holds of
the 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 abandoned
all its rights, interests and ownership over "MV Asilda" together with her freight and
appurtenances 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 a
fortuitous event, in which case, no liability should attach unless there was a stipulation
to the contrary, or to the negligence of the captain and his crew, in which case, Art. 587
of the Code of Commerce should apply.
3. Assuming "MV Asilda" was unseaworthy, still PHILAMGEN could not recover from
FELMAN since the assured (Coca-Cola) had breached its implied warranty on the
vessel's seaworthiness.

CA: Modified RTC decision.
1. MV Asilda" unseaworthy for being top-heavy as 2,500 cases of Coca-Cola softdrink
bottles were improperly stowed on deck.
2. While the vessel possessed the necessary Coast Guard certification indicating its
seaworthiness with respect to the structure of the ship itself, it was not seaworthy with
respect to the cargo.
3. Denied Philamgens claim; the filing of notice of abandonment had absolved the
shipowner/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 which
the shipper had against FELMAN, the shipowner. YES

RULING:
1. No. A reasonable explanation for the series of lists experienced by the vessel that
eventually led to her capsizing and sinking, was that the vessel was top-heavy which is
to 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 unstable
and unseaworthy for that particular voyage.
- This vessel was designed as a fishing vessel . . . and it was not designed to carry a
substantial amount or quantity of cargo on deck. (under deck lang ok)
- The strong winds and waves encountered by the vessel are but the ordinary
vicissitudes of a sea voyage and as such merely contributed to its already unstable and
unseaworthy condition.

2. No. Simply put, the ship agent is liable for the negligent acts of the captain in the
care of goods loaded on the vessel. This liability however can be limited through
abandonment of the vessel, its equipment and freightage as provided in Art. 587.
Nonetheless, there are exceptional circumstances wherein the ship agent could still be
held answerable despite the abandonment, as where the loss or injury was due to the
fault of the shipowner and the captain. The international rule is to the effect that the
right of abandonment of vessels, as a legal limitation of a shipowner's liability, does not
apply to cases where the injury or average was occasioned by the shipowner's own
fault. It must be stressed at this point that Art. 587 speaks only of situations where the
fault or negligence is committed solely by the captain. Where the shipowner is likewise
to be blamed, Art. 587 will not apply, and such situation will be covered by the
provisions of the Civil Code on common carrier.
- Extraordinary diligence; Felman failed to rebut; vessels unseaworthiness

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

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
have against the third party whose negligence or wrongful act caused the loss. The
right of subrogation is not dependent upon, nor does it grow out of any privity of
contract or upon payment by the insurance company of the insurance claim. It accrues
simply upon payment by the insurance company of the insurance claim. The doctrine of
subrogation has its roots in equity. It is designed to promote and to accomplish justice
and 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 made
by PHILAMGEN to Coca-Cola Bottlers Philippines, Inc., gave the former the right to
bring an action as subrogee against FELMAN. Having failed to rebut the presumption of
fault, the liability of FELMAN for the loss of the 7,500 cases of 1-liter Coca-Cola
softdrink 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 private
respondents whose families were passengers who perished on board Don Juan as
a result of the accident
Phil National Oil Company (PNOC) owner of oil tanker (M/T Tacloban City) that
collided w/ vessel Don Juan

FACTS:
Respondent Atty. Miranda purchased 4 special cabin tickets from petitioner Negros
Navigation for his wife, daughter, son and niece who were going to Bacolod City to
attend a family reunion.
The ship sailed from the port of Manila on schedule.
Don Juan collided off the Tablas Strait in Mindoro, with the PNOCs M/T Tacloban
City.
Several of her passengers perished in the sea tragedy. The bodies of some of the
victims were found and brought to shore, but the four members of private
respondents' families were never found.
Private respondents filed a complaint with Manila RTC against the Negros
Navigation, PNOC, and the PNOC Shipping and Transport Corporation, seeking
damages 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.
Petitioners 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 do
not actually use them. Private respondent failed to prove the presence of the
victims 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. entered
into a compromise agreement whereby petitioner assumed full responsibility for the
payment and satisfaction of all claims arising out of or in connection with the collision
and releasing the PNOC and the PNOC/STC from any liability to it. The agreement was
subsequently held by the trial court to be binding upon petitioner, PNOC and
PNOC/STC. Private respondents did not join in the agreement.

Trial Court ruled in favor of plaintiffs (private respondents), ordering all defendants to
pay 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 actually
passengers of the Don Juan YES
HELD:
SC relied on the testimony of Miranda that he purchased tickets, w/c was
corroborated by the passenger manifest on which the numbers of the tickets and
the names of Ardita Miranda and her children and Elfreda de la Victoria appear.
Mirandas testimony was also corroborated by Edgardo Ramirez, a seminarian and
one of the survivors of the collision. Ramirez testified that he saw Mrs Miranda and
Elfreda de la Victoria on the ship and actually talked to them. (Mrs Miranda was
Ramirez grade school teacher and Elfreda was his childhood friend so he
personally knew them.)
Petitioner also points out that it took Ramirez three (3) days before he finally
contacted private respondent Ramon Miranda to tell him about the fate of his
family. But it is not improbable that it took Ramirez three days before calling on
private respondent Miranda to tell him about the last hours of Mrs. Miranda and her
children and niece, in view of the confusion in the days following the collision as
rescue teams and relatives searched for survivors.
SC said: Indeed, given the facts of this case, it is improper for petitioner to even
suggest that private respondents' relatives did not board the ill-fated vessel and
perish 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, is
binding in this case. YES (SC said, stare decisis et non quieta movere)

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
Background of Mecenas Case: Same case/same set of facts ito against Negros
Navigation 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 the
M/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 of
collision, and the officer on watch, Senior Third Mate Rogelio De Vera, admitted
that he failed to call the attention of Santisteban to the imminent danger facing
them. This Court found that Capt. Santisteban and the crew of the M/V Don
Juan failed to take steps to prevent the collision or at least delay the sinking of the
ship and supervise the abandoning of the ship.
Petitioner Negros Navigation was found equally negligent in tolerating the playing
of mahjong by the ship captain and other crew members while on board the ship
and failing to keep the M/V Don Juan seaworthy so much so that the ship sank
within 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 the
Certificate of Inspection issued by the Philippine Coast Guard Commander at Iloilo
City 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 it
sank, 140 persons more than the maximum number that could be safely carried by
it.
Taking these circumstances together, and the fact that the M/V Don J uan, as
the faster and better-equipped vessel, could have avoided a collision with the
PNOC tanker, this Court held that even if the Tacloban City had been at fault
for failing to observe an internationally-recognized rule of navigation,
the Don J uan 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 of
witnesses, such as Senior Third Mate Rogelio de Vera, who incidentally gave
substantially the same testimony on petitioner's behalf before the Board of Marine
Inquiry. The trial court agreed with the conclusions of the then Minister of National
Defense finding both vessels to be negligent.
ISSUE #3: Whether petitioner is liable to pay damages notwithstanding the total
loss of its ship YES
HELD:
The rule is well-entrenched in our jurisprudence that a shipowner may be held
liable for injuries to passengers notwithstanding the exclusively real and
hypothecary nature of maritime law if fault can be attributed to the shipowner.
In Mecenas, this Court found petitioner guilty of negligence in (1) allowing or
tolerating the ship captain and crew members in playing mahjong during the
voyage, (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 amounts
adjudged, petitioner Negros Navigation Co., Inc. shall reimburse either of them
such amount or amounts as either may have paid, and in the event of failure of
Negros Navigation Co., Inc., to make the necessary reimbursement, PNOC and/or
PNOC/STC shall be entitled to a writ of execution without need of filing another
action.

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 of
Cebu
Scheduled to leave the Port of Manila -9:00 p.m. on May 14, 1966, it actually left port at
5:00 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 said
deficiency and for lack of safety devices for 322 passengers
FACTS:
When the vessel left Manila, its officers were already aware of the typhoon Klaring
building up somewhere in Mindanao.

LLB 2-1. The Leftists. Magugulong Magagandat Pogi sa Left Side.
There being no typhoon signals on the route from Manila to Cebu, and the vessel
having been cleared by the Customs authorities, the MV "Pioneer Cebu" left on its
voyage 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 still
indicated the existence of good weather condition continued until the vessel
approached Tanguingui island.
Upon passing the latter island, however, the weather suddenly changed and heavy
rains felt Fearing that due to zero visibility, the vessel might hit Chocolate island
group, 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 leaks
and eventually sunk, bringing with her Captain Floro Yap who was in command of
the vessel.
Due to the loss of their children, petitioners sued for damages before the Court of
First Instance of Manila
Respondents 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 aware
of the typhoon brewing somewhere in the same general direction to which the
vessel was going
2. The crew of the vessel took a calculated risk when it proceeded despite the
typhoon advisory
3. The crew assumed a greater risk when, instead of seeking shelter in Romblon and
other islands the vessel passed en route, they decided to take a change on the
expected continuation of the good weather the vessel was encountering, and the
possibility 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 even
extraordinary 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 its
duties

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 vessel
extinguished 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 in
the cited case, it was held that the liability of a shipowner is limited to the value of
the vessel or to the insurance thereon. Despite the total loss of the vessel
therefore, its insurance answers for the damages that a shipowner or agent may be
held liable for by reason of the death of its passengers.
ARTICLE 587. 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; but he may exempt himself therefrom by
abandoning the vessel with all her equipments and the freight it may have earned
during 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) the
occurrence must render it impossible for the debtor to fulfill the obligation in a
normal manner; and that (3) the obligor must be free of participation in, or
aggravation 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 been
impossible to avoid. There must be an entire exclusion of human agency from the
cause of injury or loss before they sailed from the port of Manila, the officers and
crew 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 were
taking as they hopped from island to island from Romblon up to Tanguingui. They
held frequent conferences, and oblivious of the utmost diligence required of very
cautious persons, they decided to take a calculated risk. In so doing, they failed to
observe that extraordinary diligence required of them explicitly by law for the safety
of the passengers transported by them with due regard for an circumstances and
unnecessarily exposed the vessel and passengers to the tragic mishap. They failed
to overcome that presumption of fault or negligence that arises in cases of death or
injuries to passengers.