10 Transpo Digests (26 Feb) PDF

10#Transpo#Compiled#Digests.#Week#12.#Atty.#Ampil.
# 1#
#
#
CONTENTS#
XII.! 12th#week#(overland#transportationl#vessels;#real#and#hypothecary#nature#of#
maritime#law)#.................................................................................................................................................#2!
1#Lita#Enterprises,#Inc.#v.#IAC,#129#SCRA#79#NJaypee#Ortiz#....................................................#2!
2#Lim#v.#CA,#373#SCRA#394#NJaypee#Ortiz#.....................................................................................#4!
3#Tamayo#v.#Aquino,#105#Phil#949#NJaypee#Ortiz#.......................................................................#7!
4#Perez#v.#Gutierrez,#53#SCRA#149#NJaypee#Ortiz#.......................................................................#9!
5#Juaniza#v.#Jose,#89#SCRA#306#–Geraldez#.................................................................................#11!
6#MYC#AgroNIndustrial#v.#Vda.#De#Caldo,#132#SCRA#10#–King#...........................................#12!
7#Jereos#v.#CA,#117#SCRA#395#–Lagos#..........................................................................................#14!
8#Yu#Con#v.#Ipil,#41#Phil#770#–Lopa#...............................................................................................#15!
9#Lopez#v.#Duruelo,#52#Phil#229#–Lucenario#............................................................................#18!
10#Standard#Vacuum#Oil#Co.#v.#Luzon#Stevedoring,#98#Phil#817#–Magtagnob#..........#21!
11#Yu#Biao#Sontua#v.#Ossorio,#43#Phil#511#–Muti#...................................................................#23!
12#Rubiso#v.#Rivera,#37#Phil#72#–Narvasa#.................................................................................#24!
13#Luzon#Stevedoring#v.#CA,#156#SCRA#169*#NPerez#de#Tagle#..........................................#26!
14#Chua#Yek#Hong#v.#IAC,#166#SCRA#183*#NRazon#.................................................................#29!
15#Aboitiz#Shipping#v.#General#Accident#Fire,#217#SCRA#359*#NSantos#........................#30!
16#Monarch#Insurance#v.#CA,#333#SCRA#71#–Superable#......................................................#34!
17#PhilNAm#General#Insurance#v.#CA,#273#SCRA#262#–Tandoc#.........................................#38!
18#Negros#Navigation#Co.,#Inc.#v.#CA,#281#SCRA#534*#NTiu#.................................................#40!
19#Vasquez#v.#CA,#138#SCRA#553*#NPuno#...................................................................................#42!
20#Aboitiz#Shipping#v.#New#India#Assurance,#488#SCRA#563#–Sanchez#.......................#44!
21#Aboitiz#Shipping#v.#CA,#569#SCRA#294#NNathan#Oducado#............................................#45!
22#De#La#Torre#v.#CA,#653#SCRA#714#NBascara#........................................................................#48!
#
# #
# #
10#Transpo#Compiled#Digests.#Week#12.#Atty.#Ampil.# 2#
#
XII.# 12TH# WEEK# (OVERLAND# TRANSPORTATIONL# VESSELS;# REAL# AND# Thereafter,# Ocampo# decided# to# register# the# cabs# in# his# name# so# he# requested# LITA# to#
HYPOTHECARY#NATURE#OF#MARITIME#LAW)# turn#over#the#registration#papers#of#the#cabs#to#him#but#it#refused.#Hence,#Ocampo#sued#
LITA#for#reconveyance.#LITA#was#ordered#by#the#lower#court#to#transfer#the#registration#
# Read:## certificate#to#Ocampo.##
# 1#LITA#ENTERPRISES,#INC.#V.#IAC,#129#SCRA#79#NJAYPEE#ORTIZ# %
Lita%Enterprises%vs.%IAC,%%(J.%Escolin,%April%27%1984)%% Issue:#Should#the#parties#have#been#given#relief#by#the#court?#NO.#KABIT#SYSTEM.##
#
Common#Carrier:## Taxicabs# %
Parties# Sps.#OcampoN##actual#owners#of#taxi#cabs#
Lita#EntN#holders#of#certificate#of#public#convenience# Held:#The#arrangement#by#the#parties#is#known#as#the#"kabit#system",#whereby#a#person#
Problem:# Sps# Ocampo# contracted# with# Lita# for# the# former# to# make# use# of# who# has# been# granted# a# certificate# of# convenience# allows# another# person# who# owns#
Lita’s# certificate# of# public# convenience.# # One# of# the# cabs# collided# motors# vehicles# to# operate# under# such# franchise# for# a# fee.# A# certificate# of# public#
with# a# motorycle.# The# motorcycle# driver# died.# Civil# case# against# convenience#is#a#special#privilege#conferred#by#the#government.#Abuse%of%this%privilege%
Lita# was# filed.# # Judgement# rendered# against# Lita.# # Two/five# cabs# by% the% grantees% thereof% cannot% be% countenanced.% In% the% words% of% Chief% Justice%
owned#by#Ocampo#were#levied#upon#and#sold#at#a#public#auction.# Makalintal,%"this%is%a%pernicious%system%that%cannot%be%too%severely%condemned.%It%
Sps#Ocampo,#now#wanted#to#register#the#cabs#in#their#name.#Lita# constitutes%an%imposition%upon%the%good%faith%of%the%government."##
refused#to#surrender#registration#papers.##
Who#won# Nada.#In#pari#delicto.#
#
DOCTRINE:## Having% entered% into% an% illegal% contract,% neither% can% seek%
relief%from%the%courts,%and%each%must%bear%the%consequences%
of%his%acts.%% Although# not# outrightly# penalized# as# a# criminal# offense,# the# "kabit# system"# is%
# recognized% as% being% contrary% to% public% policy% and,% therefore,% void% and% inexistent%
# under%Article%1409%of%the%Civil%Code,##
ER:#(JP:%ok%na%itong%ER)%
#
Facts:#Spouses#Ocampo#bought#in#installment#5#Toyota#Corona#cars#from#Delta#Motors##
to#be#used#as#taxicabs.#Since#they#had#no#franchise#to#operate,#they#contracted#with#LITA# It#is#a#fundamental#principle#that#the#court#will#not#aid#either#party#to#enforce#an#illegal#
ENTERPRISES# so# that# they# can# use# its# certificate# of# public# convenience.# In# the# setNup,# contract,#but#will#leave#them#both#where#it#finds#them.#THEREFORE#it#was#incorrect#for#
they#would#pay#LITA#the#initial#payment#of#P1,000.00#and#a#monthly#rental#of#P200.00# the# lower# court# to# have# given# parties# relief# from# their# predicament.# Moreover,# where%
per# taxicab# for# the# use# of# the# certificate.# Pursuant# to# the# agreement,# the# cabs# were# the%parties%are%in%pari%delicto%(both%at%fault),%no%affirmative%relief%of%any%kind%will%
registered# in# LITA‘s# name# but# were# operated# by# the# spouses# but# maintained# the# trade# be%given%to%one%against%the%other%%
name#of#LITA#(ACME#TAXI)##
Case%dismissed.%BOTH%lost.%%
#
#
A#year#later,#one#of#the#cabs#driven#by#Ocampos’#employee#figured#in#an#accident#with#a# Doctrine:# # No% action% arises% out% of% an% illicit% bargain# is# the# tuneNhonored# maxim# that#
motorcycle#driver.#The#motorcycle#driver#suffered#head#injuries#and#eventually#died.#A# must# be# applied# to# the# parties# in# the# case# at# bar.# Having% entered% into% an% illegal%
criminal# case# was# filed# against# the# taxi# driver# while# a# civil# case# was# instituted# against# contract,% neither% can% seek% relief% from% the% courts,% and% each% must% bear% the%
LITA# where# it# # was# held# liable# for# damages.# Pursuant# to# the# judgment,# 2# cars# of# the# consequences%of%his%acts.%Where#the#parties#are#in#pari#delicto,#no#affirmative#relief#of#
spouses#Ocampo#were#levied#upon#and#sold.## any#kind#will#be#given#to#one#against#the#other."%
#
# Facts:##
#
• In# 1966,# the# spouses# Nicasio# and# Francisca# OCAMPO,# # purchased# five# Toyota#
#
CARS# in# installment# in# installment# from# the# Delta# Motors# to# be# used# as# • Lita#Enterprises’#MR#was#denied.##
taxicabs.# #
# • On#appeal#to#IAC,#the#appellate#court#said#that#In#the#event#the#condition#of#the#
• Since#the#OCAMPOs#had#no#franchise#to#operate#taxicabs,#they#contracted#with## three#Toyota#cars#will#no#longer#serve#the#purpose#of#the#deed#of#conveyance#
Lita#Enterprises,#Inc.#for#the#use#of#the#latter's#certificate#of#public#convenience.# because# of# their# deterioration,# or# because# they# are# no# longer# serviceable,# or#
# because# they# are# no# longer# available,# then# Lita# Enterprises,# Inc.# is# ordered# to#
• To#make#use#of#Lita’s#certificate#of#public#convenience,##the#agreement#was#for# pay#to##the#OCAMPOs##the#cars’#fair#market#value#as#of#July#22,#1975.##
the# OCAMPOs# to# pay# an# initial# payment# of# P1,000.00# and# a# monthly# rental# of# #
P200.00#per#taxicab#unit.## • LITA#filed#MR#in#the#IAC#which#was#also#denied.##
# #
• To# effectuate# the# agreement,# the# cars# were# REGISTERED% IN% THE% NAME% OF% • Lita# goes# to# the# SC# to# annul# the# IAC# decision# and# for# the# court# to# declare# the#
LITA% ENTERPRISES.# # Possession,# however,# remained# with# spouses% Ocampo% Ocampos#liable#to#Lita#for#whatever#amount#LITA#enterprises#has#paid#or#was#
who%operated%and%maintained%the%same%under%the%name%Acme%Taxi,%Lita’s% declared# liable# in# Civil# Case# 1# involving# the# action# for# damages# instituted# by#
trade%name.%% Sebastian# Vda.# de# Galvez,# heir# of# the# victim# Florante# Galvez,# who# died# as# a#
% result# ot# the# gross# negligence# of# # Ocampos’# driver# while# driving# one# of# the#
• About# a# year# later,# one# of# said# taxicabs# driven# by# Ocampo’s# employee,# taxicabs#owned#by#the#Ocampos.##
Emeterio# Martin,# collided# with# a# motorcycle# resulting# in# the# death# of# Galvez,## #
the#motorcycle#driver.## ISSUE:#Should#the#parties#have#been#given#relief#by#the#court?#NO.#KABIT#SYSTEM.#Illegal#
# arrangementN#in#pari#delicto.###
• #A#criminal#case#was#filed#against#the#driver#Emeterio#Martin,#while#a#civil%case% #
for% damages#(civil#case#1)#was#instituted#by#Rosita#Sebastian#Vda.#de#Galvez,# #
heir# of# the# victim,# against% Lita% Enterprises,# Inc.,# as# registered# owner# of# the# Held:##
taxicab#in#a#Civil#Case#in#CFI#Manila.### The#parties#operated#under#an#arrangement#known#as#the#"kabit% system",% whereby% a%
# person%who%has%been%granted%a%certificate%of%convenience%allows%another%person%
• Lita#Enterprises,#Inc.#was#adjudged#liable#for#damages.#A#writ#of#execution#was# who%owns%motors%vehicles%to%operate%under%such%franchise%for%a%fee.#
issued.##TWO%of%the%FIVE%cars%owned%by%Spouses%Ocampo%was%levied%upon% #
and%sold%at%a%public%auction%to%3rd%persons.%%
# A# certificate# of# public# convenience# is# a# special# privilege# conferred# by# the# government.#
• Thereafter,#Nicasio#Ocampo#decided#to#register#his#taxicabs#in#his#name.## Abuse# of# this# privilege# by# the# grantees# thereof# cannot# be# countenanced.# The# "kabit#
# system"# has# been# identified# as# one# of# the# root# causes# of# the# prevalence# of# graft# and#
• He#requested#the#manager#of#Lita#Enterprises,#Inc.#to#turn#over#the#registration# corruption# in# the# government# transportation# offices.# .% In% the% words% of% Chief% Justice%
papers#to#him,#but#the#latter#refused.## Makalintal,%"this%is%a%pernicious%system%that%cannot%be%too%severely%condemned.%It%
# constitutes%an%imposition%upon%the%good%faith%of%the%government."##
• Hence,# the# Ocampos# filed# a# complaint# against# Lita# Enterprises,# Inc.,# Rosita#
Sebastian# Vda.# de# Galvez,# Visayan# Surety# &# Insurance# Co.# and# the# Sheriff# of# #
Manila#for#reconveyance#of#motor#vehicles#with#damages#(Civil#Case#2)#in#CFI# #
Manila.## Although% not% outrightly% penalized% as% a% criminal% offense,% the% "kabit% system"% is%
# invariably% recognized% as% being% contrary% to% public% policy% and,% therefore,% void% and%
• In# the# reconveyance# case,# # the# complaint# is# dismissed# as# far# as# defendants# inexistent%under%Article%1409%of%the%Civil%Code.%%
Rosita#Sebastian#Vda.#de#Galvez,#Visayan#Surety#&#Insurance#Company#and#the# %
Sheriff# of# Manila# are# concerned.# BUT# LITA# ENTERPRISES# # was# ordered# to# It%is%a%fundamental%principle%that%the%court%will%not%aid%either%party%to%enforce%an%
transfer#the#registration#certificate#of#the#three#Toyota#cars#not#levied#upon#by# illegal%contract,%but%will%leave%them%both%where%it%finds%them.#Upon%this%premise,%it%
executing#a#deed#of#conveyance#in#favor#of#the#OCAMPOs.## was% flagrant% error% on% the% part% of% both% the% trial% and% appellate% courts% to% have%
# accorded%the%parties%relief%from%their%predicament.##
• #Also#in#the#same#case,#Sps#Ocampo#were#ordererd#to#pay#Lita#Enterprises,#Inc.,# #
the# rentals# in# arrears# for# the# certificate# of# convenience# at# the# rate# of# P200# a# Article#1412#of#the#Civil#Code#denies#them#such#aid.##
month#per#unit#for#the#three#cars.# #
#
#
ART.# 1412.# if# the# act# in# which# the# unlawful# or# forbidden# cause# consists# does# not# #
constitute#a#criminal#offense,#the#following#rules#shall#be#observed;# #
# ER:#edited%Ramiro#notes##
(1)#when%the%fault,%is%on%the%part%of%both%contracting%parties,%neither%may%recover%
what% he% has% given% by% virtue% of% the% contract,% or% demand% the% performance% of% the% • In#1982,#GONZALES#bought#an#Isuzu#passenger#jeep#from#VALLARTA,#who#was#then#
other's%undertaking.% a# holder# of# certificate# of# a# public# convenience# for# the# operation# of# a# public# utility#
# vehicles#(PUVs)#on#the#MONUMENTONBULACAN#ROUTE.##
The%defect%of%inexistence%of%a%contract%is%permanent%and%incurable,%and%cannot%be% #
cured%by%ratification%or%by%prescription.#As#held#in#once#case#"the#mere#lapse#of#time# • GONZALES# continued# to# operate# the# route,# but# he# did# not# register# the# jeep# in# his#
cannot#give#efficacy#to#contracts#that#are#null#void."# name#nor#did#he#get#a#certificate#of#public#convenience.##
# #
The#doctrine##of#IN% PARI% DELICTO#is#stated#thus:#"The#proposition#is#universal#that#no# • In# 1990,# the# jeepney# collided# with# a# 10# wheeler# truck# owned# by# LIM.# The# driver#
action#arises,#in#equity#or#at#law,#from#an#illegal#contract;#no#suit#can#be#maintained#for# took# responsibility,# admitting# that# the# truck# lost# its# brakes.# LIM# offered# to# repair#
its# specific# performance,# or# to# recover# the# property# agreed# to# be# sold# or# delivered,# or# the# jeep# and# when# GONZALES# refused,# LIM# offered# to# pay# the# assessed# damage#
damages#for#its#property#agreed#to#be#sold#or#delivered,#or#damages#for#its#violation.## (20k,#as#estimated#by#a#mechanic).#It#was#again#refused.#GONZALES#wanted#a#brand#
# new#jeep#or#the#amount#of#236K#
The#rule#has#sometimes#been#laid#down#as#though#it#was#equally#universal,#that#where# #
the# parties# are# in# pari# delicto,# no# affirmative# relief# of# any# kind# will# be# given# to# one# • GONZALES# then# sued# LIM# for# damages.# LIM# argues# that# since# the# set# up# between#
against#the#other."#Although#certain#exceptions#to#the#rule#are#provided#by#law,#We#see# GONZALES# and# VALLARTA# was# under# a# KABIT# SYSTEM,# VALLARTA# remained# as#
no#cogent#reason#why#the#full#force#of#the#rule#should#not#be#applied#in#the#instant#case.# the# owner# of# the# jeep# and# therefore,# he# was# the# one# who# was# the# real# party# in#
# interest,#and#NOT#GONZALES.##
Therefore,#neither#party#is#entitled#to#relief.# #
# Issue:#w/n%Gonzales%is%the%real%party%in%interest%in%the%suit,%despite%the%fact%that%he%
is%not%the%registered%owner%under%the%certificate%of%public%convenience`%%yes!!!%
%
# 2#LIM#V.#CA,#373#SCRA#394#NJAYPEE#ORTIZ#
The#kabit#system#is#recognized#as#being#contrary#to#public#policy#and#therefore#void#and#
Abellardo#Lim#v#CA##
inexistent# under# Art.# 1409# of# the# Civil# Code.# The# kabit# system# renders# illusory# the#
#
purpose#of#granting#the#certificate%of%public%convenience#
Common#Carrier:## Isuzu#passenger#jeepney#collided#with#a#10#wheeler#truck# #
Parties# GonzalesN#transferee#Isuzu#jeepney/#operator# • It#allows#holders#of#franchises#to#simply#transfer#their#vehicles#to#one#who#has#no#
VallartaN# previous# owner# of# jeepney,# holder# of# cert.# of# public# property#so#that#when#the#vehicle#figures#in#an#accident,#the#franchisee#will#be#able#
convenience# to#escape#liability.##
LimN##owner#of#truck# #
GunnabanN#driver#of#truck.# o For#the#safety#of#passengers#and#the#public#who#may#have#been#wronged#
Problem:# Truck# lost# brakes.# It# collided# with# a# passenger# jeepney.# Jeepney# and# deceived# through# the# baneful#kabit#system,# the# registered# owner# of#
was# registered# under# Vallarta’s# name# but# at# the# time# of# the# the# vehicle# is# not# allowed# to# prove# that# another# person# has# become# the#
accident,# it# was# already# sold# to# Gonzales.# Truck# driver# admits# owner#so#that#he#may#be#freed#from#liability.##
responsibility.# Truck# owner# offers# to# pay# Gonzales.# Gonzales# #
demands# new# jeep# or# 236K.# # Gonzales# files# action# for# Damages.# o Therefore,#the#evil#that#the#principle#seeks#to#prevent#is#the#DECEIT.#
Truck#owner#claims#that#the#real#party#in#interest#is#the#registered# #
owner# of# the# jeepney# and# not# the# actual# owner/operator# of# the# • In# this# case,# the# evil# that# is# sought# to# be# prevented# in# enjoining# the# kabit# system#
jeep## does#not#exist#
Who#won# THE#ACTUAL#OWNER/#TRANSFEREE/#OPERATOR/# #
DOCTRINE:## When#the#operator#in#a#kabit#system#gets#into#an#accident#and#the# o FIRST:# Neither# of# the# parties# to# the# kabit# system# is# being# held# liable.# In#
one# at# fault# is# a# 3rd# party,# the# operator# has# standing# to# sue# the# fact,#it#is#one#of#the#parties#(GONZALES)#who#is#trying#to#sue#LIM.#
negligent#party/party#in#fault.##%
#
o SECOND:# The# case# was# due# to# the# negligence# of# another# vehicle# Thus# it# employees.##
cannot#be#said#that#private#respondent#Gonzales#and#the#registered#owner# o #SINCE% the% jeepney% was% registered% in% Vallarta’s% name,% it% was%
of#the#jeepney#were#in#estoppel#for#leading#the#public#to#believe#that#the# Vallarta% and% not% Gonzales% who% was% the% real% party% in% interest.%
jeepney#belonged#to#the#registered#owner.## (main%issue)%
o THIRD:#the#public#was#not#inconvenienced#by#the#illegal#arrangement.#In# %
fact,#is#GONZALES,#one#of#the#parties#to#the#illegal#arrangement,#who#was# • Gunnaban%(Lim’s%driver)%averred%that%the%accident%was%a%fortuitous%event.#
wronged#(damage#due#to#negligence)## %#
# • Meanwhile,# the# damaged# jeepney# was# left# by# the# roadside# to# corrode# and#
• GONZALES# has# the# right# to# proceed# against# LIM# for# the# damage# caused# on# his# decay.##Gonzales#explained#that#although#he#wanted#to#take#his#jeepney#home#he#had#
passenger#jeepney#as#well#as#on#his#business.#(GONZALES#WON)# no#capability,#financial#or#otherwise,#to#tow#the#damaged#vehicle.#
# #
# • Both# parties# question# the# amount# of# damages.# Gonzales# averred# that# per# estimate#
Facts:## made#by#an#automobile#repair#shop#he#would#have#to#spend#P236,000.00#to#restore#
# his# jeepney# to# its# original# condition.# Lim# and# Gunnaban# insisted# that# they# could#
• In# 1982# respondent# Donato% Gonzales% purchased% an% Isuzu% passenger% jeepney% have#the#vehicle#repaired#for#P20,000.00.#
from%Vallarta,%holder%of%a%certificate%of%public%convenience%for%the%operation%of% #
public%utility%vehicles%plying%the%Monumento`Bulacan%route.### Findings#of#the#TC:##
# • TC#upheld#Gonzales’#claim#and#awarded#him#236K#with#legal% interest% which% will%
• Gonzales# continued# offering# the# jeepney# for# public# transport# services# but# he% did% begin% to% run% from% the# date% of% the% accident# as# compensatory# damages# 30K# as#
not% have% the% registration% of% the% vehicle% transferred% in% his% name% nor% did% he% attorney's#fees.#####
secure% for# himself# a# certificate# of# public# convenience# for# its# operation.### Thus% #
Vallarta%remained%on%record%as%its%registered%owner%and%operator.% • It%held%that%as%current%owner%of%the%passenger%jeepney,%%Gonzales%stood%for%all%
% intents%and%purposes%as%the%real%party%in%interest.%#Even#Vallarta#(grantee#of#the#
• In#1990,#while#the#jeepney#was#running#NORTHBOUND#along#the#North#Diversion# certificate)# supported# Gonzales’# assertion# of# interest# over# the# jeepney.# Vallarta#
Road# # in# Meycauayan,% Bulacan,# it# collided# with# a# tenNwheelerNtruck# owned# by# dispossessed#himself#of#any#claim#on#the#property#when#he#was#called#to#testify.#
petitioner#Abelardo#Lim#and#driven#by#his#coNpetitioner#Gunnaban.### #
# • Gunnaban#was#found#to#have#caused#the#accident#since#he#panicked#in#the#face#of#an#
• Gunnaban#explained#that#while#he#was#traveling#towards#Manila#the#truck#suddenly# emergency.# Lim's# liability# for# Gunnaban's# negligence# was# premised# on# his# want# of#
lost% its% brakes.##To#avoid#collision#with#another#vehicle,#he#swerved#to#the#center# diligence#in#supervising#his#employees.##It#was#admitted#during#trial#that#Gunnaban#
island.#As#the#center#island#eventually#came#to#an#end,#he#veered#farther#to#the#left# doubled# as# mechanic# of# the# truck# despite# the# fact# that# he# was# neither# tutored# nor#
until#he#smashed#into#a#Ferroza#automobile#and#into#Gonzales’#passenger#jeepney.## trained#to#handle#such#task.#
The# impact# caused# severe# damage# to# both# the# Ferroza# and# the# passenger# jeepney# #
and#left#one#(1)#passenger#dead#and#many#others#wounded.# • Lim# and# Gunnaban# appealed# to# the# CA.# The# CA# upheld# the# TC# decision# and#
# concluded% that% while% an% operator% under% the% kabit% system% could% not% sue%
• Lim#shouldered#the#costs#for#hospitalization#of#the#wounded,#compensated#the#heirs# without% joining% the% registered% owner% of% the% vehicle% as% his% principal,% equity%
of#the#deceased#passenger,#and#had#the#Ferroza#restored#to#good#condition.#### demanded%that%the%present%case%be%made%an%exception.#
# #
• Lim#offered#to#repair#the#jeepney#at#his#shop.##Gonzales#did#not#accept#the#offer#so# Issue:##
Lim#offered#him#P20,000.00,#the#assessment#of#the#damage#as#estimated#by#his#chief# #
mechanic.## Again,# Lim's# proposition# was# rejected;# instead,# Gonzales% demanded% a% w/n%Gonzales%is%the%real%party%in%interest%in%the%suit,%despite%the%fact%that%he%is%not%
brand`new% jeep% or% the% amount% of% P236,000.00.%% Lim% increased% his% bid% to% the%registered%owner%under%the%certificate%of%public%convenience`%%yes!!!%
P40,000.00.%Gonzales%refused.%# #
# #
• Gonzales#filed#a#complaint#for#damages#against#Lim.### Held:####
# #
• Lim#denied#liability#by#contending#that:# The# kabit# system# is# an# arrangement# whereby# a# person# who# has# been# granted# a#
# certificate# of# public# convenience# allows# other# persons# who# own# motor# vehicles# to#
o #He# exercised# due# diligence# in# the#selection# and# supervision# of# his# operate#them#under#his#license,#sometimes#for#a#fee#or#percentage#of#the#earnings##
#
# BONUS%%!#
Although#the#parties#to#such#an#agreement#are#not#outrightly#penalized#by#law,#the#kabit# %%
system# is# invariably# recognized# as# being# contrary# to# public# policy# and# therefore# void# #
and#inexistent#under#Art.#1409#of#the#Civil#Code.# ON#DAMAGES:##
# #
The#Court#explained#that#one%of%the%primary%factors%considered%in%the%granting%of%a% • a#defendant#cannot#be#held#liable#in#damages#for#more#than#the#actual#
certificate% of% public% convenience% for% the% business% of% public% transportation% is% the% loss# which# he# has# inflicted# and# that# a# plaintiff# is# entitled# to# no# more#
financial% capacity% of% the% holder% of% the% license,% so% that% liabilities% arising% from% than#the#just#and#adequate#compensation#for#the#injury#suffered.###
accidents%may%be%duly%compensated.%%%The#kabit#system#renders#illusory#the#purpose# • His# recovery# is,# in# the# absence# of# circumstances# giving# rise# to# an#
of#granting#the#certificate%of%public%convenience%#and,#worse,#may##still#be#availed#of#by# allowance# of# punitive# damages,# limited# to# a# fair# compensation# for# the#
the# grantee# to# escape# civil# liability# caused# by# a# negligent# use# of# a# vehicle# owned# by# harm#done.###
another#and#operated#under#his#license.##% • The#law#will#not#put#him#in#a#position#better#than#where#he#should#be#in#
• If# a# registered# owner# is# allowed# to# escape# liability# by# proving# who# the# had#not#the#wrong#happened.#
supposed# owner# of# the# vehicle# is,# it# would# be# easy# for# him# to# transfer# the# #
subject# vehicle# to# another# who# possesses# no# property# The#236K#compensatory#damages#is#proper.##
with## which## to## respond## financially## for# the# damage# done.## Thus,% for% the% While# LIM# insists# that# the# # jeepney# was# purchased# for# 30# K# to# award# damages,#
safety% of% passengers% and% the% public% who% may% have% been% wronged% and% indemnification# for# damages# comprehends# not# only# the# value# of# the# loss# suffered# but%
deceived% through% the% baneful% kabit% system,% the% registered% owner% of% the% also% that% of% the% profits% which% the% obligee% failed% to% obtain.## In# other# words,#
vehicle% is% not% allowed% to% prove% that% another% person% has% become% the% indemnification# for# damages# is# not# limited# to% damnum% emergens% or# actual# loss# but#
owner%so%that%he%may%be%thereby%relieved%of%responsibility.### extends#to#lucrum%cessans#or#the#amount#of#profit#lost.#
# #
# Gonzales# avers# that# he# derives# an# average# income# of# P300.00# per# day# from# his#
The#thrust#of#the#law#in#enjoining#the%kabit%#system%is%NOT%SO%MUCH%AS%TO%PENALIZE% passenger#jeepney#and#this#earning#was#included#in#the#award#of#damages#made#by#the#
THE%PARTIES%BUT%TO%IDENTIFY%THE%PERSON%UPON%WHOM%RESPONSIBILITY%MAY% trial#court#and#upheld#by#the#appeals#court.##The% award% therefore% of% P236,000.00% as%
BE% FIXED% in% case% of% an% accident% with% the% end% view% of% protecting% the% riding% compensatory% damages% is%% not% beyond% reason% nor% speculative% as% it% is% based% on% a%
public.%% The% policy% therefore% loses% its% force% if% the% public% at% large% is% not% deceived,% reasonable%estimate%of%the%total%damage%suffered%by%Gonzales.%Lim#did#not#offer#any#
much%less%involved.# substantive#evidence#to#refute#the#estimate#made#by#the#courts#a%quo.#
# #
In%the%present%case,%the%evil%sought%to%be%prevented%in%enjoining%the%kabit&%system% RE:#when#legal#interest#begins#to#run:##CA#says#legal#interest#begins#to#run#from#
does%not%exist.%#(three#reasons)% date#of#accident;#SC#says#it#should#begin#to#run#from#the#time#the#TC#rendered#judgment.#
1. #Neither# of# the# parties# to# the# pernicious%kabit% system# is# being# held# liable# for## #
damages.### Art.# 2213# of# the# Civil# Code# provides:# interest# "cannot# be# recovered# upon#
2. #The#case#arose#from#the#negligence#of#another#vehicle#in#using#the#public#road# unliquidated# claims# or# damages,# except# when# the# demand# can# be# established# with#
to# whom# no# representation,# or# misrepresentation,# as# regards# the# ownership# reasonable#certainty."#It#is#axiomatic#that#if#the#suit#were#for#damages,#unliquidated#and#
and# operation# of# the# passenger# jeepney# was# made# and# to# whom# no# such# not# known# until# definitely# ascertained,# assessed# and# determined# by# the# courts# after#
representation,# or# misrepresentation,# was# necessary.## Thus# it# cannot# be# said# proof,# interest# at# the# rate# of# six# percent# (6%)# per# annum# should# be# from# the# date# the#
that# Gonzales# and# the# registered# owner# of# the# jeepney# were# in# estoppel# for# judgment# of# the# court# is# made# (at# which# time# the# quantification# of# damages# may# be#
leading# the# public# to# believe# that# the# jeepney# belonged# to# the# registered# deemed#to#be#reasonably#ascertained).#
owner.### #
3. The#riding#public#was#not#bothered#nor#inconvenienced#at#the#very#least#by#the# In#this#case,#the#matter#was#not#a#liquidated#obligation#as#the#assessment#of#the#
illegal# arrangement.## On# the# contrary,# it# was# Gonzales# himself# who# had# been# damage#on#the#vehicle#was#heavily##debated#upon#by#the#parties#with#Gonzales's#demand#
wronged# and# was# seeking## compensation# for# the# damage# done# to# for#P236,000.00#being#refuted#by#petitioners#who#argue#that#they#could#have#the#vehicle#
him.##Certainly,#it#would#be#the#height#of#inequity#to#deny#him#his#right.# repaired#easily#for#P20,000.00.##In%fine,%the%amount%due%private%respondent%was%not%
# a%liquidated%account%that%was%already%demandable%and%payable.#
Gonzales# has# the# right# to# proceed# against# Lim# and# Gunnaban# for# the# damage# #
caused#on#his#passenger#jeepney#as#well#as#on#his#business# RE:#duty#of#complainant#to#mitigate#injury#
NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN# #
# Gonzales# left# the# jeepney# by# the# roadside# at# the# mercy# of# the# elements.## Article#
#
2203# of# the# Civil# Code# exhorts# parties# suffering# from# loss# or# injury# to# exercise# the# • TAMAYO# was# a# holder# of# a# certificate# of# public# convenience# to# operate# 2# trucks.#
diligence#of#a#good#father#of#a#family#to#minimize#the#damages#resulting#from#the#act#or# While# EPIFANIA# was# riding# one# of# the# trucks,# it# figured# in# an# accident.# The# truck#
omission.##The#injured#party#should#exercise#reasonable#care#and#diligence#to#minimize# collided#with#a#culvert#(gutter)#and#Epifania#was#thrown#out#of#the#vehicle#and#two#
the# resulting# damage.## Anyway,# he# can# recover# from# the# wrongdoer# money# lost# in# pieces# of# wood# embedded# in# her# skull# resulting# to# EPIFANIA’s# death.# THUS,#
reasonable# efforts# to# preserve# the# property# injured# and# for# injuries# incurred# in# INOCENCIO#AQUINO,#the#husband,#sued#TAMAYO#for#damages.##
attempting#to#prevent#damage#to#it.# #
# • In#his#defense,#TAMAYO#alleged#that#he#already#sold#the#truck#to#RAYOS.#TAMAYO#
However% Lim% failed% to% offer% in% evidence% the% estimated% amount% of% the% then# filed# a# 3rd# party# complaint# against# RAYOS.# # # CFI# dismissed# the# third# party#
damage%caused%by%Gonzales%unconcern%towards%the%damaged%vehicle.%%Lim%has%the% complaint# and# held# that# TAMAYO# and# RAYOS# were# solidarily# liable# as# joint#
burden%to%show%satisfactorily%not%only%that%the%injured%party%could%have%mitigated% tortfeasors.# TAMAYO# appealed,# alleging# that# he# shouldn’t# be# held# liable# because#
his% damages% but% also% the% amount% thereof;% failing% in% this% regard,% the% amount% of% RAYOS#was#the#one#who#owned#and#operated#the#truck.#
damages%awarded%cannot%be%proportionately%reduced.% #
# • CA# affirmed# the# CFI.# They# were# ordered# to# pay# compensatory# and# MORAL#
DAMAGES#by#the#CA.##On#appeal#to#the#SC,#Tamayo#also#questions#the#propriety#of#
# the#CA#decision#in#holding#that#Tamayo#and#Rayos#are#joint#tortfeasors.##
#
# 3#TAMAYO#V.#AQUINO,#105#PHIL#949#NJAYPEE#ORTIZ#
Issue:#Is#TAMAYO,#as#the#holder#of#the#franchise,#liable?#YES#If#yes,#can#he#hold#RAYOS#
liable#also?#YES.#
TAMAYO%V%AQUINO%%
#%
%
The% action% instituted% in% the% case% at% bar% is% one% for% breach% of% contract.% As% the% registered%
Common#Carrier:## TruckN#collided#with#a#culvert#(gutter)#
owner%(Tamayo)%and%his%transferee%(Rayos)%may%not%be%held%guilty%of%tort%or%a%quasiFdelict%
Parties# TamayoN#registered#owner# as%joint%tortfeasors;%their%responsibility%is%not%solidary%as%held%by%the%Court%of%Appeals.%%
EpifaniaN#passenger## #
RayosN#transferee/actual#owner#
• The# registered# owner# of# a# public# service# vehicle# is# responsible# for# damages# that#
Problem:# Epifania# was# a# passenger# in# a# truck.# Truck# collided# with# a# may#be#caused#to#any#of#the#passengers#therein,#even#if#the#said#vehicle#had#already#
culvert,#passenger#thrown#out#of#the#vehicle#then#died.#Husband# been# sold,# leased# or# transferred# to# another# person# who# was,# at# the# time# of# the#
filed#a#case#for#damages#against#Tamayo.#Tamayo#claims#that#the# accident,#actually#operating#the#vehicle.#THUS,#Tamayo,#as#the#registered#owner,#is#
truck# was# already# sold# to# Rayos# prior# to# the# incident.# Tamayo# directly#liable.#
filed#3rd#party#complaint.## #
What’s# the# nature# of# the# liability# of# the# actual# owner# and# the#
• HOWEVER,#the#transferee,#RAYOS,#is#also#liable#to#reimburse#TAMAYO#for#what#he#
registered#owner.#
will# be# adjudged# to# pay.# This# is# because,# in# operating# the# truck# without# transfer#
Who#won# #Heirs#of#passenger.## thereof# having# been# approved# by# the# Public# Service# Commission,# the# transferee#
As#against#the#third#party#defendant,#TAMAYO#won.## acted# merely# as# agent# of# the# registered# owner# and# should# be# responsible# to# him#
DOCTRINE:## It#is#true#that#the#registered#owner#of#a#vehicle#is#directly#liable# (the# registered# owner),# for# any# damages# that# he# may# cause# the# latter# by# his#
for#injuries#caused#by#such#vehicle#even#if#he#has#already#sold#or# negligence#
transferred#it.#However,#he#may#ask% for% reimbursement% from% #
the% transferee% for% whatever% amount% he% was% adjudged% to% ON#AWARD#of#Damages:##
pay.%% The#violation#of#the#rules#of#the#Public#Service#Commission#(PSC)#prohibiting#transfer#of#
% public#vehicles#without#approval#by#the#PSC#is#not#BAD#FAITH#OR#FRAUD#which#would#
Registered%owner%is%directly%liable%to%the%public/%passenger.% justify# the# award# of# moral# damages.# CA# and# CFI# erred# in# awarding# Moral# damages# on#
% this#basis.#
Transferee,%is%in%effect%an%agent%of%the%Registered%owner.%% #
# #
% Facts:##
DOCTRINE:#% #
ER% Jose#Tamayo#was#the#holder#of#a#certificate#of#public#convenience#to#operate#two#trucks##
#
#
Epifania#Gonzalez,#wife#of#Inocencio#Aquino,#was#a#passenger#of#one#of#Tamayo’s#Truck# vehicle#is#responsible#for#damages#that#may#be#caused#to#any#of#the#passengers#therein,#
with#plate#no.#TPU#735,## even#if#the#said#vehicle#had#already#been#sold,#leased#or#transferred#to#another#person#
# who#was,#at#the#time#of#the#accident,#actually#operating#the#vehicle.#
The# truck# bumped# a# culvert# (gutter/watercourse)# on# the# side# of# the# road# in# Bugallon# #
Pangasinan.#Epifania%Gonzales%was%thrown%away#from#the#vehicle#and#two%pieces%of% The# reason# for# the# liability# imposed# upon# the# registered# owner# of# the# vehicle# under# a#
wood%embedded%in%her%skull%causing%her%death.# certificate#of#public#convenience#is#as#follows:jgc:chanrobles.com.ph#
# #
The#impact#of#the#truck#against#the#culvert#was#so#violent#that#the#roof#of#the#vehicle#was# • Were# a# registered# owner# be# allowed# to# evade# responsibility# by# proving# who#
ripped# off# from# its# body,# one# fender# was# smashed# and# the# engine# damaged# beyond# the# supposed# transferee# or# owner# is,# it# would# be# easy# for# him# by% collusion%
repair.## with% others% or% otherwise,% to% escape% said% responsibility% and% transfer% the%
# same% to% an% indefinite% person,# or# to# one# who# possesses# no# property# with#
Complaint#was#filed#by#Innocencio#(husband)#and#his#children#for#the#recovery#of#actual# which#to#respond#financially#for#the#damage#or#injury#done.##
damages#(10k),#moral#damages#(10K),#and#costs#against#Tamayo.## #
# • A%victim%of%recklessness%on%the%public%highways%is%usually%without%means%
Defendant#Tamayo,#answered#alleging#that#the#truck#is#owned#by#Silvestre#Rayos# to%discover%or%identify%the%person%actually%causing%the%injury%or%damage.%
# He%has%no%means%other%than%by%a%recourse%to%the%registration%in%the%Motor%
Tamayo##filed#a#third`party%complaint#against#Rayos,#alleging#that#he#no#longer#had#any# Vehicles%Office%to%determine%who%is%the%owner.##If#the#policy#of#the#law#is#to#
interest# whatsoever# in# the# said# truck,# as# he# had# sold# the# same# before# the# accident# to# be# enforced# and# carried# out,# the# registered# owner# should# not# be# allowed# to#
Rayos.## prove# that# a# third# person# or# another# has# become# the# owner,# so# that# he# may#
# thereby#be#relieved#of#the#responsibility#to#the#injured."#(Erezo#v.#Jepte)#
Rayos#alleged#that#if#any#indemnity#is#due,#it#should#come#from#Jose##because#he#did#not# #
have#any#transaction#with#him#regarding#such#sale.## ON%THE%LIABILITY%OF%REGISTERED%OWNER%AND%THE%TRANSFEREE:%NOT%SOLIDARY%AS%
# JOINT% TORTFEASORS% BUT% DIRECT% BECAUSE% THE% CAUSE% OF% ACTION% IS% BREACH% OF%
The#CFI#found#that:# CONTRACT%AND%NOT%QUASI%DELICT.%%
# #
• the# truck# was# one# of# the# trucks# of# Tamayo# under# a# certificate# of# public# The#decision#of#the#CA#is#also#attacked#insofar#as#it#holds#that#inasmuch#as#the#Rayos#had#
convenience#issued#to#him;## used#the%truck%on%a%route%not%covered%by%the%registered%owner’s%franchise,#both#the#
• that%Tamayo%sold%it%to%Rayos%in%March,%1953,%# registered# owner# and# the# actual# owner# and# operator# should# be# considered# as# joint#
• Tamayo%did%not%inform%the%Public%Service%Commission%(PSC)%of%the%sale% tortfeasors#and#should#be#made#liable#in#accordance#with#Article#2194#of#the#Civil#Code#
until%June%30,%1953,%one%month%after%the%accident.# which# provides# that# “The# responsibility# of# two# or# more# persons# who# are# liable# for# a#
# quasiNdelict#is#solidary."cralaw#virtua1aw#library#
The#CFI#ordered#Tamayo#and#Rayos#to#pay#solidarily#the#sum#of#6K##as#compensatory# #
damages,#and#5K#as#moral#damages,#with#interest,#and#authorized#the#Tamayo#or#Rayos,# #The% action% instituted% in% the% case% at% bar% is% one% for% breach% of% contract.# As% the%
whoever#should#pay%the%entire%amount,%to%recover%from%the%other%any%sum%in%excess% registered% owner% (Tamayo)% and% his% transferee% (Rayos)% may% not% be% held% guilty% of%
of% one`half% of% the% amount% ordered% to% be% paid,% with% interest.# THE# COURT# ALSO# tort% or% a% quasi`delict;% their% responsibility% is% not% solidary% as% held% by% the% Court% of%
DISMISSED#THE#THIRDNPARTY#COMPLAINT.## Appeals.%%
# #
CA#affirmed#the#CFI#decision#holding#that#Tamayo#and#Rayos#are#joint#tortfeasors.## Therefore,#
# #
# As#Tamayo#is#the#registered#owner#of#the#truck,#his% responsibility% to% the% public#or#to#
Tamayo# claims# exemption# from# liability,# arguing# that# the# owner# and# operator# of# the# any#passenger#riding#in#the#vehicle#or#truck#must#be#direct.%%
truck# at# the# time# of# accident# was# Rayos.# # The# CA# decision# holding# that# Rayos# and# %
Tamayo#are#solidarily#liable#as#joint#tortfeasors#is#also#challenged.##% RAYOS,% who# operated# the# vehicle# when# the# passenger# died,# is# the# one# directly#
# responsible# for# the# death# he# should# in# turn# be# made# responsible% to% the% registered%
Issue:#Is#TAMAYO,#as#the#holder#of#the#franchise,#liable?#YES.#If#yes,#can#he#hold#RAYOS# owner% for% what% the% latter% may% have% been% adjudged% to% pay.# In# operating# the# truck#
liable#also?#YES.# without#the#transfer#being#approved#by#the#PSC,#the#RAYOS/transferee#acted#merely%as%
# agent% of% the% registered% owner% and% should% be% responsible% to% him,#for#any#damages#
Held:# SC# in# numerous# cases# already# held# that# the# registered# owner# of# a# public# service# that#he#may#cause#the#latter#by#his#negligence.##
#
# immediate%cause%of%the%accident.#It#was#the#negligence#of#the#driver#which#caused#the#
NOTE#THAT#the#SC#also#found,#that#the#agreement#between#Tamayo#and#Rayos#was#for# accident.# What%the%law%would%seem%to%consider%as%bad%faith%which%may%furnish%a%ground%
the# latter# to# use# the# truck# in# carrying# gasoline,# BUT% RAYOS% used% the% truck% in% for%the%award%of%moral%damages%in%the%case%at%bar%would%be& bad& faith& in& the& securing&
transporting%passengers%outside%the%route%covered%by%the%franchise%of%Tamayo.%% and& in& the& execution& of& the& contract& and& in& the& enforcement& of& its& terms& (Article&
# 1338,& Civil& Code),& or& any& other& kind& of& deceit& which& may& have& been& used& by& both&
For# this# additional# reason,# the% agent% or% Rayos% must% be% held% responsible% to% the% defendants.##While#there#was#negligence#of#the#driver#employed#by#him,#this#is##not#the#
registered%owner,%to%the%extent%that%the%latter%may%suffer%damage%by%reason%of%the% bad#faith#on#defendants’#part#contemplated#by#law.##
death% caused% during% the% accident.# The# responsibility# of# the# transferee# was# already# #
adverted#to#by#us#in#the#case#of#Erezo#v.#Jepte:### JUdgement:#CA#decision#modified.##
# #
"we% hold% that% the% registered% owner,% has% a% right% to% be% indemnified% by% the% real% or% Tamayo#is#ordered#to#pay#to#the#Inocencio#the#sum#of#P6,000#as#compensatory#damages#
actual% owner% of% the% amount% that% he% may% be% required% to% pay% as% damage% for% the% for#the#death#of#the#deceased,#but#that#he#(Tamayo)#has#the#right#to#be#indemnified#by#
injury%caused%to%the%plaintiff`appellant."#(Erezo#v.#Jepte,#supra.)## thirdNparty#defendantNappellant#Rayos#of#the#amount#he#is#hereby#ordered#to#pay.#Moral#
# damages#deleted.#
WHAT%IS%THE%PROCEDURAL%MEANS%TO%ENFORCE%LIABILITY%OF%THE%TRANSFEREE:%%
# #
The# procedural# means# by# which# the# liability# of# the# transferee# to# the# holder# of# the#
certificate# is# THROUGH# A# THIRD# PARTY# COMPLAINT# filed# by# the# registered# owner#
# 4#PEREZ#V.#GUTIERREZ,#53#SCRA#149#NJAYPEE#ORTIZ#
against#the#transferee#The%CFI%should%not%have%dismissed%the%third`party%complaint,%
and% should% have% adjudged% the% responsibility% to% make% indemnity% in% accordance%
therewith.# The% transferee% is% liable% to% indemnify% the% registered% owner% for% the% Perez#v.#Gutierrez.##
damages%that%the%latter%may%be%required%to%pay%for%the%accident,%hence%the%remedy% Common#Carrier:## AC#Passenger#JeepneyN#(Auto#Calesa)#
is%by%third`party%complaint#(See#Rule#12,#Rules#of#Court).## Parties# PerezN#Passenger#
# GutierrezN#Registered#owner/#holder#of#franchise#
On#DAMAGES:## AlajarN#Actual#owner#
Only#the#award#of#moral#damages#is#questioned#by#the#defendants.#As#the#responsibility# CoderoN#driver#
of#Tamayo#and#his#agent#Rayos#is#culpaNcontractual,#no#award#of#moral#damages#can#be# Problem:# The# auto# calesa# met# an# accident# due# to# reckless# driving.#
given#in#the#absence#of#bad#faith#or#fraud.#Article#2220#of#the#Civil#Code#provides:## Passenger#was#injured.##Perez#sued#Gutierrez.#Gutierrez#filed#3rd#
# party# complaint# against# Alajar.# NOTE# that# in# this# case,# # Trial#
"Willful# injury# to# property# may# be# a# legal# ground# for# awarding# moral# damages# if# the# court#held#that#the#actual#owner#is#liable#to#the#passenger.#Perez#
court#should#find#that,#under#the#circumstances,#such#damages#are#justly#due.#The%same% appeals# on# the# ground# that# the# registered# onwer# should# be# the#
rule%applies%to%breaches%of%contract%where%the%defendant%acted%fraudulently%or%in% one#directly#liable#to#the#passenger.#
bad%faith."cralaw%virtua1aw%library% Who#won# PerezNpassenger.#Registered#owner’s#liability#is#direct.##
# DOCTRINE:## Registered#owner#is#directly#liable#to#the#public/#passenger%
The#violation#of#the#rules#of#the#Public#Service#Commission#(PSC)#prohibiting#transfer#of# #
public#vehicles#without#approval#by#the#PSC#is#not#BAD#FAITH#OR#FRAUD#to#justify#the# ER:#(from%Ramiro%Notes)#
award#of#Moral#Damages.#CA#and#CFI#erred#in#awarding#Moral#damages#on#this#basis.# #
# • PEREZ,# together# with# 9# other# coNteachers,# was# a# passenger# of# an# AC# (autoNcalesa)#
Tamayo,%was%not%guilty%of%fraud%or%bad%faith.%There%appears%to%be%no%fraud%at%all%in% Jeep#registered#in#the#name#of#GUITERREZ.#Due#to#the#reckless#driving#of#the#driver,#
the% transfer.# There# may# have# been# a# violation# of# the# regulations# because# Tamayo# did# the# jeep# figured# in# an# accident# that# resulted# to# the# injury# of# PEREZ.# PEREZ# thus#
not#secure#a#previous#authority#to#transfer#from#the#PSC,#but#he#actually#applied#for#and# sued#GUITERREZ,#the#registered#owner.#
obtained# said# permission# or# approval# about# a# month# after# the# accident.# Besides,% the% #
truck%was%transferred%to%Rayos%with%the%understanding%that%the%same%was%not%to% • GUITERREZ# alleged# that# he# should# not# be# held# liable# because# he# already# sold# the#
be% used% as% a% public% convenience,% so% that% insofar% as% Tamayo% is% concerned,% there% jeep# to# ALAJAR.# He# therefore# filed# a# 3rd# party# complaint# against# ALAJAR.#
could%have%been%no%shade%or%tint%of%bad%faith%at%all.## GUITERREZ# further# alleged# that# under# the# deed# of# sale,# ALAJAR# assumed# all#
# responsibilities#for#the#operation#of#the#vehicle.##
Rayos,# transferee/agent# was# not# guilty# of# fraud# or# bad# faith.# There# may# have# been# a# #
BREACH% OF% THE% AGREEMENT% BETWEEN#Tamayo#and#Rayos,#but#this% was% NOT% the%
#
• The#trial#court#held#ALAJAR#(actual#owner)#liable#for#actual#damages#to#PEREZ#and# o The# VENDEE% (ALAJAR)% BINDS% HIMSELF% AND% ASSUMES%
moral# damages# to# GUITERREZ.# PEREZ# appealed,# arguing# that# it# should# be# the# RESPONSIBILITY# for# all# actions,# claims,# demands,# and# rights# of#
registered#owner#who#should#be#held#liable#for#damages#resulting#from#a#breach#of# action#arising#from#the#course#of#operation#vehicle#
contract.# #
# Panfilo#Alajar,#in# his# answer# to# the# thirdNparty#complaint,#disclaimed#responsibility#for#
the#accident,#alleging#that:##
Issue:# Was# the# TC# correct# in# directly# holding# ALAJAR# liable?% No,% because% it% is% the% a. That# deed% of% sale% is% null% and% void# for# not% being% registered# with# the# PSC#
registered%owner%who%should%be%held%directly%liable.# despite#repeated#demands#on#the#3rdNparty#complainant#(Gutierrez)#to#do#so;##
# b. The#passenger#jeepney#remained#in#the#control#of#Gutierrez#together#with#her#
• To# bind# the# public# with# the# sale# of# the# property# covered# by# a# franchise,# the# sale# lawyerNhusband,#who#had#been#collecting#rentals#from#Alajar#for#the#use#of#the#
must# be# first# approved# by# the# Public# Service# Commission.# Without# this# approval,# said#vehicle;#and#
the#transferor#continues#to#be#the#owner#in#the#contemplation#of#the#law.## c. by# express# agreement,# title# to# the# said# vehicle# remained# with# the# 3rdNparty#
# complainant/vendor#(Gutierrez)#pending#approval#of#the#sale#by#the#PSC.#
• the#TC#erred#in#holding#ALAJAR,#rather#than#GUTIERREZ,#as#the#one#directly#liable# #
to#PEREZ#for#the#her#injuries#and#the#corresponding#damages#incurred.## The#defendant#Leopoldo#Cordero#(driver)#was#declared#in#default#and#did#not#appeal.#
# #
• Moreover,#that#the#court#below#inexplicably#failed#to#hold#the#driver#whom#it#found# The# trial# court# found# Leopoldo# Cordero# (driver)# guilty# of# reckless# imprudence,# and#
guilty# of# reckless# imprudence,# jointly# and# solidarily# liable# with# GUITERREZ# to# Fe# finding#that%Panfilo%Alajar%owned%and%operated%the%auto%calesa#in%question%and,%in%
Perez#in#accordance#with#the#provisions#of#article#2184#in#relation#to#article#2180#of# fact,% after% the% accident,% even% assumed% responsibility% for% the% payment% of% the%
the#new#Civil#Code.# hospital%bills%%for%treatment%of%the%injuries%suffered%by%Fe%Perez.##
# #
• However,#ALAJAR#is#liable#to#GUITERREZ#for#such#amount#that#the#latter#may#pay#to# The# trial# court# ordered# Panfilo# Alajar# (actual# owner)# to# pay# Perez:# actual# damages#
PEREZ# (hospital#and#incidental#expenses),#moral#damages;#attorney's#fees.##
# #
Facts:%% Panfilo# Alajar# was# also# ordered# to# pay# defendant# thirdNparty# plaintiff# Gutierrez# moral#
Fe# Perez# filed# a# complaint# for# damages# with# CFIN# Davao# against# Josefina# Gutierrez,# for# damages;#attorney's#fees,#and#to#pay#the#costs#of#the#proceedings#on#both#cases.#
breach#of#contract#of#carriage.# #
# Perez#(passengerN#victim)#appeals,#arguing#that#the#registered#owner#of#a#motor#vehicle#
# should#be#the#one#held#liable#for#damages#resulting#from#breach#of#contract#of#carriage#
# by#a#common#carrier.#
The#complaint#alleges:### #
• On#September#6,#1959,#she,#together#with#nine#coNteachers,#was#a#passenger#of# ISSUE:# w/n# the# Trial# court# erred# in# its# decision# which# found# Panfilo# Alajar# (actual#
an#AC#jeepney#(autoNcalesa)# owner)#instead#of#Josefina#Gutierrez#(registered#owner),#as#the#party#liable#to#Perez#for#
• The#AC#jeepney#was#registered#under#the#name#of#the#defendant#Gutierrez# the#payment#of#the#damages.#
• The# said# vehicle# met# an# accident# due# to# the# reckless# driving# of# its# driver# #
Leopoldo#Cordero,## Held:# The# court# below# erred# in# holding# Panfilo# Alajar# (actual# owner),# rather# than#
• Fe#Perez,#was#injured#which#required#her#hospitalization.## Josefina# Gutierrez# (registered# owner),# as# the# one# directly# liable# to# Fe# Perez# for# the#
# latter's#injuries#and#the#corresponding#damages#incurred.##
In#her#answer,#Josefina#Gutierrez#averred:## #
# In#Peralta%vs.%Mangusang%#it#was#held#that:##
• that# the# liability# should# be# with# Panfilo# Alajar,# THE% ACTUAL% OWNER,% BY% • Public#Service#Act#requires#the#approval#of#the#PSC#in#order#that#a#franchise,#or#
PURCHASE,#of#the#passenger#jeepney#when#the#accident#occurred#and#against# any#privileges#pertaining#thereto,#may#be#sold#or#leased#without#infringing#the#
whom%she%has%filed%a%third`party%complaint.% certificate#issued#to#the#grantee.#
% #
• The#deed#of#sale#attached#to#the#thirdNparty#complaint#provides%that:% • A# franchise# is# personal# in# nature# any# transfer# or# lease# thereof# should# be#
o The#vendor#(Gutierrez)#and#vendee#(Alajar)#agree#that##the#TITLE#to# submitted# for# approval# of# the# PSC,# so# that# the# latter# may# take# proper#
the#vehicle#SHALL#REMAIN#WITH#THE#VENDOR,#pending% approval% safeguards#to#protect#the#interest#of#the#public.##
of%the%herein%SALE%by#the#PSC## #
#
• If# the# property# covered# by# the# franchise# is# transferred# or# leased# to# another# it# found# guilty# of# reckless# imprudence,# jointly% and% solidarily% liable% with% Josefina%
without#obtaining#the#requisite#approval,#the#transfer#is#not#binding#on#the#PSC# Gutierrez% to# Fe# Perez# in# accordance# with# the# provisions# of# article# 2184# in# relation# to#
and,#in#contemplation#of#law,#the%grantee%continues%to%be%responsible%under% article#2180#of#the#new#Civil#Code.%
the% franchise% in% relation% to% the% Commission% and% to% the% public% for% the% #
consequences%incident%to%the%operation%of%the%vehicle,%one%of%them%being% Josefina# Gutierrez# (registered# owner)# and# Leopoldo# Cordero# are# hereby# adjudged#
the%collision%under%consideration.## directly#and#jointly#and#solidarily#liable#to#Fe#Perez.##
# #
Panfilo#Alajar#is,#in#turn,#hereby#held#answerable#to#Josefina#Gutierrez#for#such#amount#
In#EREZO&VS.&JEPTE,%##the#Court#held#that#the#doctrine#making#the#registered%owner%of% as# the# latter# may# pay# to# Fe# Perez# in# satisfaction# of# the# judgment# appealed# from.# Costs#
a% common% carrier% answerable% to% the% public% for% negligence% injuries% to% its% against#both#the#defendantNthird#party#plaintiffNappellee#Josefina#Gutierrez#and#the#third#
passengers% or% third% persons,% even% though% the% vehicle% had% already% been# is# based# party#defendantNappellee#Panfilo#Alajar.#
upon#the#principle#—# #
• the%public%has%the%right%to%ASSUME%OR%PRESUME%THAT%THE%REGISTERED%
OWNER% IS% THE% ACTUAL% OWNER% THEREOF,% for#it#would#be#difficult#for#the# # 5#JUANIZA#V.#JOSE,#89#SCRA#306#–GERALDEZ#
public#to#enforce#the#actions#that#they#may#have#for#injuries#caused#to#them#by#
the# vehicles# being# negligently# operated# if# the# public# should# be# required# to# VICTOR% JUANIZA,% Heirs% of% Josefa% P.% Leus% etc.,% et% al.,% vs.# EUGENIO% JOSE,% THE%
prove#who#the#actual#owner#is.## ECONOMIC%INSURANCE%COMPANY,%INC.,%and%ROSALIA%ARROYO%(1979)%–%Geraldez#
#
ER:# Jose# was# the# owner# of# a# jeepney# that# collided# with# a# train# of# the# Phil.# National#
• How# would# the# public# or# third# persons# know# against# whom# to# enforce# their# Railways.# 7# died,# 5# were# physically# injured.# There# were# two# cases# filed# in# CFI# Laguna,#
rights#in#case#of#subsequent#transfers#of#the#vehicles?## wherein# Jose# and# Rosalia# Arroyo# were# held# to# be# solidarily# liable# to# the# victims# (or#
• However,#the#registered#owner#may#recover#whatever#amount#he#had#paid#by# heirs).#Rosalia#Arroyo#is#just#a#kabit#of#Jose#for#16#years,#the#latter#being#legally#married.#
virtue#of#his#liability#to#third#persons#from#the#person#to#whom#he#had#actually# The#CFI#based#its#ruling#on#Art.#144#of#the#NCC,#which#says#that#those#coNhabiting#as#man#
sold,#assigned#or#conveyed#the#vehicle.# and#wife#are#governed#by#coNownership#laws.#On#appeal#by#Rosalia#Arroyo,#CA#reverses,#
# and# SC# affirms# CA,# saying# that# Art.# 144# applies# only# when# there# are# no# legal#
impediments#to#marriage.#Here,#Jose#is#married;#that#is#an#impediment.#As#such,#Rosalia#
In#Tamayo%vs.%Aquino,%this#Court#described#the#nature#of#the#liability#of#the##transferee#of# Arroyo#is#not#liable.#Only#the#registered#owner#–#Jose#–#is#liable.#
a#vehicle,#the#negligent#operation#of#which#gives#rise#to#injuries#to#its#passengers:#
#
• The# Registered# owner# and# the# actual# owner# are# not# joint# tortfeasors# making# Facts:%
their#liability#solidary#because#the#cause#of#action#is#the#breach#of#contract#of#
carriage.## 1. Eugenio# Jose# was# the# registered# owner# and# operator# of# the# passenger# jeepney#
# involved# in# an# accident# of# collision# with# a# freight# train# of# the# Philippine# National#
• As# such,# the# responsibility% of% the% registered% owner# of# the# vehicle# to# the# Railways#that#took#place#on#November#23,#1969.#
PUBLIC%or#to#any#PASSENGER#riding#in#the#vehicle#or#truck#must#be#direct.%% 2. It# resulted# in# the# death# to# seven# (7)# and# physical# injuries# to# five# (5)# of# its#
# passengers.##
• But#as#the#transferee,#who#operated#the#vehicle#when#the#passenger#died,#is#the# 3. At#the#time#of#the#accident,#Eugenio#Jose#was#legally#married#to#Socorro#Ramos#but#
one# directly# responsible# for# the# accident# and# death,% he% should% in% turn% be% had# been# cohabiting# with# defendantNappellant,# Rosalia# Arroyo,# for# sixteen# (16)#
made% responsible% to% the% registered% owner% for% what% the% latter% may% have% years#in#a#relationship#akin#to#that#of#husband#and#wife.##
been% adjudged% to% pay.% In# operating# the# vehicle# without# transfer# thereof# 4. 2#cases#for#damages#with#the#CFI#of#Laguna.#It#ruled#that:#
having#been#approved#by#the#PSC,#the% transferee% acted% merely% as% agent% of% a. Eugenio#Jose#and#Rosalia#Arroyo#jointly#and#severally#to#pay#plaintiff#
the% registered% owner% and% should% be% responsible% to% him% (the% registered% Victor#Juaniza#the#sum#of#P1,600.00.#
owner),%for%any%damages%that%he%may%cause%the%latter%by%his%negligence."% b. Eugenio# Jose# and# Rosalia# Arroyo# jointly# and# severally# to# pay# the#
% respective#heirs#of#the#deceased#Josefa#P.#Leus,#Fausto#Retrita,#Nestor#
del# Rosario# Añonuevo# and# Arceli# de# la# Cueva# in# the# sum# of#
NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN# P12,000.00#for#the#life#of#each.#
Also#the#court#below#inexplicably#failed#to#hold#the#DRIVER%(Leopoldo#Cordero),#whom#
#
5. MR# by# Rosalia# Arroyo# praying# that# the# decision# be# reconsidered# insofar# as# it# G.R.#No.#LN57298##
condemns#her#to#pay#damages#jointly#and#severally#with#her#coNdefendant,#but#was#
denied.## September#7,#1984#
6. The#lower#court#based#her#liability#on#the#provision#of#Article#144#of#the#Civil#Code#
which#reads:## #
ER:#
When# a# man# and# woman# living# together# as# husband# and# wife,# but#
they# are# not# married,# or# their# marriage# is# void# from# the# beginning,#
MYC#owned#trucks#for#its#agricultural#business.#One#day,#the#driver#negligently#bumped#
the# property# acquired# by# either# or# both# of# them# through# their# work#
a#jeep#in#the#right#center#side,#causing#it#to#turn#turtle#and#destroy#a#fence.#The#victims#
or#industry#or#their#wages#and#salaries#shall#be#governed#by#the#rules#
files#a#complaint#for#damages.#MYC#argues#that#it#had#no#control#over#the#trucks#as#it#was#
on#coNownership.##
leased# to# Jaguar# Corp.# RTC# rules# that# the# lease# was# a# mere# subterfuge# to# shift# liability#
from#MYC#to#Jaguar#as#in#fact,#MYC#had#total#control#over#the#trucks#as#Jaguar#used#them#
7. Rosalia# Arroyo# then# appealed# to# the# CA.# CA# certified# it# to# SC# for# being# a# pure# only#for#the#purposes#of#finishing#their#business#with#MYC.#
question#of#law.#
In# the# SC,# MYC# alleges# that# the# appellate# court# erred# in# holding# that# Jaguar#
Issue:%% Transportation# Company# was# a# mere# dummy# or# conduit# of# MYC# which# should# be#
considered#as#the#true#owner#of#the#vehicle.#N#NO#
1. W/N# Article# 144# applies# in# a# case# where# one# of# the# parties# in# a# commonNlaw# The#registered#owner#of#the#Toyota#truck#is#petitioner.#
relationship#is#incapacitated#to#marry?#W/N#Rosalia#who#is#not#a#registered#owner#
of# the# jeepney# can# be# held# jointly# and# severally# liable# for# damages# with# the# [t]he# registered# owner/operator# of# a# passenger# vehicle# is# jointly# and# severally# hable#
registered#owner#of#the#same.## with#the#driver#for#damages#incurred#by#passengers#or#third#persons#as#a#consequence#
of#injuries#(or#death)#sustained#in#the#operation#of#said#vehicles.#...#Regardless#of#who#the#
Ratio:% actual#owner#of#a#vehicle#is,#the#operator#of#record#continues#to#be#the#operator#of#the#
vehicles# as# regards# the# public# and# third# persons,# and# as# such# is# directly# and# primarily#
• It#has#been#consistently#ruled#by#this#Court#that#the#coNownership#contemplated#in# responsible#for#the#consequences#incident#to#its#operation,#so#that,#in#contemplation#of#
Article#144#of#the#Civil#Code#requires#that#the#man#and#the#woman#living#together# law,# such# owner/operator# of# record# is# the# employer# of# the# driver,# the# actual# operator#
must# not# in# any# way# be# incapacitated# to# contract# marriage.# Since# Eugenio# Jose# is# and#employer#being#considered#merely#as#his#agent."#
legally# married# to# Socorro# Ramos,# there# is# an# impediment# for# him# to# contract#
#
marriage# with# Rosalia# Arroyo.# Under# the# aforecited# provision# of# the# Civil# Code,#
Arroyo# cannot# be# a# coNowner# of# the# jeepney.# The# jeepney# belongs# to# the# conjugal#
Facts:#
partnership#of#Jose#and#his#legal#wife.#There#is#therefore#no#basis#for#the#liability#of#
Arroyo#for#damages#arising#from#the#death#of,#and#physical#injuries#suffered#by,#the#
A%truck%hit%a%jeepney%at%its%right%center%side%causing%the%jeep%to%turn%turtle%killing%7%
passengers#of#the#jeepney#which#figured#in#the#collision.##
passengers%with%8%others%injured.%
• Rosalia#Arroyo,#who#is#not#the#registered#owner#of#the#jeepney#can#neither#be#liable#
for#damages#caused#by#its#operation.#It#is#settled#in#our#jurisprudence#that#only#the#
• About#4:30#in#the#afternoon#of#March#21,#1971,#a#Toyota#truck#with#Plate#No.#12N90N
registered# owner# of# a# public# service# vehicle# is# responsible# for# damages# that# may#
4# CT# '70# owned# by# MYC# AgroNIndustrial# and# operated# by# Ceferino# Arevalo# hit# the#
arise# from# consequences# incident# to# its# operation,# or# maybe# caused# to# any# of# the#
right# center# side# of# a# jeepney# with# Plate# No.# 24N97N40N3# 1970# owned# by# Nicanor#
passengers#therein.## Silla#and#operated#by#Alfredo#Rodolfo.#
• There#were#fifteen#(15)#passengers#of#the#jeepney.1#
Rosalia#Arroyo#is#hereby#declared#free#from#any#liability#for#damages.#
# 6#MYC#AGRONINDUSTRIAL#V.#VDA.#DE#CALDO,#132#SCRA#10#–KING# #############################################################
1# (1) Laureano Lacson, (2) Salome Bautista, (3) Chona Alcaraz, (4)
MYC#AgroNIndustrial#v#Vda.#de#Caldo#et#al# Ruby Gonzaga, (5) Felicitacion Gonzaga, (6) Epifania Bautista, (7)
Avelino Ignacio, (8) Erlinda Candado, (9) Leniza Alcaraz, (10) Sotera
#
• The#jeepney,#at#the#time#of#the#impact,#was#parked#at#Regiment#Street,#Anabu#Imus,# RTC%Ruling%which%was%affirmed%by%CA%
Cavite.#
• Said# jeepney# turned# turtle# and# was# pushed# to# a# cemented# fence# owned# by# Lucila# • The#lease#was#simulated,#a#subterfuge#intended#to#shift#liability#from#MYC#to#Jaguar#
Reyes.# Transportation#Company#which#appears#to#be#nothing#more#than#a#conduit#of#MYC.#
• The#aforementioned#jeepney#and#the#wall#fence#were#also#damaged.# • While# the# contract# is# denominated# as# one# of# lease# with# sale# and# the# ten# Toyota#
# trucks#were#supposed#to#be#leased#to#Jaguar;#the#right#of#Jaguar#to#use#these#trucks#
was#subject#to#a#hauling#contract#with#defendant#MYC.#
Meanwhile,%a%criminal%case%was%filed%against%the%truck%driver%who%pleaded%guilty% • The# supposed# lessee# Jaguar# may# use# these# trucks# only# if# the# lessor# shall# have# no#
more#need#for#the#trucks#herein#leased.##
• Ceferino#Arevalo,#driver#of#the#truck#in#question#was#named#defendant#in#Criminal# • That#the#defendant#MYC#remained#the#true#and#real#owner#and#possessor#of#these#
Case# No.# 53N71# of# the# then# Court# of# First# Instance# of# Cavite,# Branch# V.# Upon# trucks#is#further#indicated#by#the#fact#that#those#trucks,#although#purportedly#sold#
arraignment,#he#pleaded#guilty#to#the#crimes#of#multiple#homicide,#multiple#serious# to# Jaguar# on# installment,# were# never# mortgaged# to# MYC# by# way# of# security;# the#
physical#injuries,#multiple#less#serious#physical#injuries,#slight#physical#injuries#and# same# trucks# leased# and# sold# to# Jaguar# were# exclusively# used# for# the# business# of#
damage#to#property#thru#reckless#imprudence.# MYC#in#the#hauling#of#its#agricultural#products;#said#trucks#may#not#be#sold,#leased,#
# alienated#or#encumbered#by#Jaguar#without#MYC's#written#consent.#
• Contract#had#a#3#year#period.#
Complaint% for% damages% filed% by% the% wall% owner,% victims% and% the% heirs% of% the% • MYC#AgroNIndustrial#is#liable#for#damages#in#favor#the#victims#and#their#heirs.#
deceased%victims% #
• Against#MYC,#Arevalo#the#driver#and#KalawNKatigbak,#the#general#manager#of#MYC.# In%the%SC:%
• In#its#responsive#pleading,#MYC#admitted#ownership#over#the#truck#but#alleged#that#
the# truck# was# leased# to# Jaguar# Transportation,# Inc.# and# that# the# two# other# • MYC# alleges# that# the# appellate# court# erred# in# holding# that# Jaguar# Transportation#
defendants#were#not#its#employees.# Company#was#a#mere#dummy#or#conduit#of#MYC#which#should#be#considered#as#the#
• A#third#party#complaint#was#filed#against#Jaguar.# true#owner#of#the#vehicle.#
• Jaguar# alleges# that# its# liability# is# only# secondary.# It# had# already# complied# with# its# #
obligation#under#its#contract#of#lease#with#petitioner#when#it#secured#a#thirdNparty#
liability#insurance#from#Federal#Insurance#Company,#Inc.#A#fourth#party#complaint# Issue:#Is#MYC#liable?#–#YES#
was#filed#against#Federal#Insurance#Company.#
• Federal# answers# by# saying# that# the# victims# have# no# cause# of# action# against# Jaguar# Ratio:#
and#that#MYC#Agro#is#the#liable#party.#
# The#registered#owner#of#the#Toyota#truck#is#petitioner.#
Evidence:% [t]he# registered# owner/operator# of# a# passenger# vehicle# is# jointly# and# severally# hable#
with#the#driver#for#damages#incurred#by#passengers#or#third#persons#as#a#consequence#
• The# death# of# seven# (7)# persons# and# the# injuries# suffered# by# private# respondents# of#injuries#(or#death)#sustained#in#the#operation#of#said#vehicles.#...#Regardless#of#who#the#
were# due# to# the# negligence# and# reckless# operation# of# the# Toyota# truck,# owned# by# actual#owner#of#a#vehicle#is,#the#operator#of#record#continues#to#be#the#operator#of#the#
MYC#Agro#and#driven#by#Ceferino#Arevalo.# vehicles# as# regards# the# public# and# third# persons,# and# as# such# is# directly# and# primarily#
• Subject#vehicle#was#registered#in#the#name#of#MYC#AgroNIndustrial# responsible#for#the#consequences#incident#to#its#operation,#so#that,#in#contemplation#of#
• The# contract# of# lease# with# Jaguar# which# MYC# uses# to# exculpate# themselves# from# law,# such# owner/operator# of# record# is# the# employer# of# the# driver,# the# actual# operator#
liability# and#employer#being#considered#merely#as#his#agent."#
#
#
############################################################################################################################################### Others:#
Ramirez, (11) Rosario Ordoñez, (12) Maximina Bautista, (13) Cornelio
Jaguar's#answer#to#third#party#complaint#tendered#no#genuine#or#real#issue.##
Bautista, (14) Hermogena Bautista and (15) Felicidad Alcaraz.
#
#
#
Jaguar's# representative# did# not# even# appear# in# court# after# impleading# fourth# party# • The#right#to#be#indemnified#being#recognized,#recovery#by#the#registered#owner#or#
defendants#and#its#President,#Benedicto#Katigbak,#did#not#adduce#evidence#in#his#behalf.# operator# may# be# made# in# any# formNeither# by# a# crossNclaim,# thirdNparty# complaint,#
or#an#independent#action.%
# #
#
The# sign# MYC# which# stands# for# petitioner# still# appears# on# subject# vehicle# and,# as# aptly# Facts:#
observed# by# the# appellate# court# the# agreement# which# allegedly# transferred# the# truck# • Domingo#Pardorla,#Jr.#is#the#holder#of#a#certificate#of#public#convenience#for#the#
from#MYC#to#Jaguar#failed#to#provide#for#a#chattel#mortgage#to#secure#said#transfer.#The# operation#of#a#jeepney#line#in#Iloilo#City.#
wellNknown#practice#is#that#motor#vehicles#acquired#through#installment#payments#are# • One# of# his# jeepneys,# driven# by# Narciso# Jaravilla,# hit# Judge# Jesus# S.# Rodriguez#
secured#by#a#chattel#mortgage#over#the#vehicle#sold.#None#exists#in#the#instant#case.# and# his# wife,# Soledad,# while# they# were# crossing# Bonifacio# Drive,# Iloilo# City,#
causing#injuries#to#them,#which#resulted#in#the#death#of#Judge#Rodriguez#
# 7#JEREOS#V.#CA,#117#SCRA#395#–LAGOS# • Narciso#Jaravilla#was#convicted#of#the#crime#of#Homicide#and#Physical#Injuries#
through#Reckless#Imprudence#and#sentenced#accordingly.##
Common#Carrier:#Pardorla# • Thus,#Soledad#Rodriguez#and#her#children#filed#with#the#Court#of#First#Instance#
Actual#owner#of#jeep:#Jereos# of#Iloilo#an#action#for#damages#against#Narciso#Jaravilla,#Domingo#Pardorla,#Jr.,#
Driver:#Jaravilla# and#Angel#Jereos,#the#actual#owner#of#the#jeepney.##
Pedestrian:#Judge#Rodriguez#and#wife# • Domingo# Pardorla,# Jr.,# upon# the# other# hand,# claimed# that# he# was# only# the#
Problem:# Pedestrian# Judge# Rodriguez# and# wife,# while# crossing# the# street,# was# hit# by# franchise# owner# and# has# nothing# to# do# with# the# actual# operation# and#
Pardorla’s#jeepney## supervision# of# the# passenger# jeepney# in# question# which# is# under# the# actual#
Who#won:#Judge#Rodriguez#and#wife# control,# operation# and# supervision# of# Angel# Jereos# who# operates# the# same#
# under#the#"kabit%system."##
Emergency:# • CFI# ordered# Narciso# Jaravilla# and# Doming# Pardorla,# Jr.# to# pay,# jointly# and#
• Pardorla# operates# a# jeepney# line# in# Iloilo# City.# One# of# his# jeepneys# hit# Judge# severally,#damages#to#Rodriguez.#
Rodriguez#and#his#wife#while#crossing#Bonifacio#Drive.#Judge#Rodriguez#died.# o Angel# Jereos# was# exonerated# for# the# reason# that# the# Court# found# no#
• The# wife# of# Judge# Rodriguez# thus# filed# an# action# for# damages# against# the# driver,# credible# evidence# to# support# Rodriguez's# as# well# as# Pardorla's#
Pardorla,#and#Jereos#(actual#owner#of#jeepney).# contention# that# Jereos# was# the# operator# of# the# passenger# jeepney# in#
• Pardorla’s#defense#is#that#he#is#only#the#franchise#owner#and#has#nothing#to#do#with# question#at#the#time#of#the#accident#
the# operation# and# supervision# of# the# jeepney# in# question# since# it# is# Jereos# who# o The# accident# happened# on# February# 3,# 1971# and# Jereos# sold# on#
operates#the#same.## November#19,#1970#the#said#passenger#jeepney#to#Flaviana#Tanoy#as#
shown# in# the# notarized# deed# of# who# later# transferred# ownership#
• CFI# rendered# judgment# against# Pardorla# and# the# driver,# ordering# them# to# pay#
jointly#and#severally#damages#to#Rodriguez.## thereof# to# Pardorla,# Jr.,# whose# registration# certificate# thereof# # was#
issued# by# the# Land# Transportation# Commission# on# November# 24,#
• On# appeal# to# the# CA,# the# CFI’s# decision# was# modified,# making# Jereos# jointly# and#
1970.#
severally#liable#being#the#registered#owner#of#the#jeepney#at#the#time#of#the#accident#
saying#that#the#sale#of#the#jeepney#by#Jereos#was#fictitious#or#simulated.# • Jaravilla#and#Pardorla#appealed#to#the#CA.#CA#modified#the#lower#court’s#ruling#
by#holding#Jereos#jointly#and#severally#liable.##
• ISSUE:#WON#Jereos#is#exempted#from#paying#damages#to#Rodriguez?#
o for#the#reason#that#the#rule#stated#in#the#case#of#Vargas%vs.%Langcay#(6#
• While#the#Court#ruled#in#Vargas%vs.%Langcay#that#the#registered#owner#or#operator#
SCRA#174)#that#it#is#the#registered#owner#of#a#passenger#vehicle#who#
of# a# passenger# vehicle# is# jointly# and# severally# liable# with# the# driver# of# the# said#
is#jointly#and#severally#liable#with#the#driver#for#damages#incurred#by#
vehicle# for# damages# incurred# by# passengers# or# third# persons# as# a# consequence# of#
passengers# or# third# persons# as# a# consequence# of# injuries# or# death#
injuries#or#death#sustained#in#the#operation#of#the#said#vehicle,#the#Court#did#so#to#
sustained#in#the#operation#of#said#motor#vehicle,#which#is#invoked#by#
correct# the# erroneous# findings# of# the# Court# of# Appeals# that# the# liability# of# the#
Angel# Jereos,# cannot# be# applied# in# this# case# since# the# sale# of# the#
registered# owner# or# operator# of# a# passenger# vehicle# is# merely# subsidiary,# as#
jeepney#by#Angel#Jereos#to#his#own#sisterNinNlaw,#Flaviana#Panoy,#and#
contemplated#in#Art.#103#of#the#Revised#Penal#Code.#
its#registration#in#the#name#of#Domingo#Pardorla,#Jr.,#were#simulated,#
• In% no% case% did% the% Court% exempt% the% actual% owner% of% the% passenger% vehicle% fictitious#transactions,#parts#and#parcel#of#a#strategem,#to#place#Angel#
from%liability%
Jereos#beyond#the#reach#of#his#creditors#past#or#future.#
• The%registered%owner%or%operator%has%the%right%to%be%indemnified%by%the%real% #
or%actual%owner%of%the%amount%that%he%may%be%required%to%pay%as%damage%for% Issue:#
the%injury%caused.% WON#Jereos#is#exempted#from#paying#damages#to#Rodriguez?#NO.#
#
# In#the#afternoon#of#the#following#day,#he#delivered#to#the#other#two#defendants,#Ipil,#and#
Held:# Solamo,#master#and#supercargo,#respectively,#of#the#banca,#the#sum#of#P450,#which#was#
• In#the#instant#case,#the#Court#of#Appeals#found#that#the#trial#court,#in#exempting# in#a#trunk#belonging#to#Yu#Con#and#was#taken#charge#of#by#Ipil#and#Solamo,#who#received#
Angel# Jereos# from# liability,# "relied# solely# on# the# deed# of# sale# (Exh.# 1NJereos)N# this#money#from#Yu#Con,#for#the#purpose#of#its#delivery#to#the#latter’s#shop#in#Catmon#for#
ignoring#altogether#the#testimony#of#Flora#Jaravilla#(wife#of#the#driver)#and#of# the# purchase# of# corn# in# this# town.# While# the# money# was# still# in# said# trunk# aboard# the#
appellee#Domingo#Pardorla,#Jr.# vessel,# on# the# night# of# 18# October,# the# time# scheduled# for# the# departure# of# the# Maria#
• Jereos,#citing#the#case#of#Vargas#vs.#Langcay,#7#contends#that#it#is#the#registered# from# the# port# of# Cebu,# said# master# and# said# supercargo# transferred# the# P450# from# Yu#
owner# of# the# vehicle,# rather# than# the# actual# owner,# who# must# be# jointly# and# Con’s#trunk,#where#it#was,#to#theirs,#which#was#in#a#stateroom#of#the#banca,#from#which#
severally#liable#with#the#driver#of#the#passenger#vehicle#for#damages#incurred# stateroom#both#the#trunk#and#the#money#disappeared#during#that#same#night,#and#that#
by# third# persons# as# a# consequence# of# injuries# or# death# sustained# in# the# the# investigations,# made# to# ascertain# their# whereabouts,# produced# no# result.# Yu# Con#
operation#of#said#vehicle.# brought# action# to# enable# him# to# recover# from# Ipil,# Lauron,# and# Solamo# in# solidum# the#
• The# contention# is# devoid# of# merit.# While# the# Court# therein# ruled# that# the# sum#of#P450#lost.##At#the#termination#of#the#trial,#the#court,#held#that#the#sole#cause#of#the#
registered# owner# or# operator# of# a# passenger# vehicle# is# jointly# and# severally# disappearance#of#the#money#from#the#said#banca#was#the#negligence#of#the#master#and#
liable#with#the#driver#of#the#said#vehicle#for#damages#incurred#by#passengers#or# the#supercargo,#Ipil#and#Solamo,#respectively,#and#that#Lauron#was#responsible#for#that#
third#persons#as#a#consequence#of#injuries#or#death#sustained#in#the#operation# negligence,#as#owner#of#the#banca,#pursuant#to#articles#586,#587,#and#618#of#the#Code#of#
of# the# said# vehicle,# the# Court# did# so# to# correct# the# erroneous# findings# of# the# Commerce.##
Court# of# Appeals# that# the# liability# of# the# registered# owner# or# operator# of# a#
passenger# vehicle# is# merely# subsidiary,# as# contemplated# in# Art.# 103# of# the# ##
Revised#Penal#Code.##
• In#no#case#did#the#Court#exempt#the#actual#owner#of#the#passenger#vehicle#from# Issue:#
liability.#On#the#contrary,#it#adhered#to#the#rule#followed#in#the#cases#of#Erezo%
vs.%Jepte,#8#Tamayo%vs.%Aquino,%9#and#De%Peralta%vs.%Mangusang,#10among# others,# 1.#Whether#or#not#the#banca#may#be#considered#as#a#vessel##
that# the# registered# owner# or# operator# has# the# right# to# be# indemnified# by# the#
real#or#actual#owner#of#the#amount#that#he#may#be#required#to#pay#as#damage# 2.# Whether# or# not# Glicerio# Ipil,# as# a# master,# may# be# considered# as# the# captain# in# the#
for#the#injury#caused.# determination#of#liability.#
• The# right# to# be# indemnified# being# recognized,# recovery# by# the# registered#
3.#Whether#or#not#ownerNLauron#can#also#be#held#liable#
owner# or# operator# may# be# made# in# any# formNeither# by# a# crossNclaim,# thirdN
party#complaint,#or#an#independent#action.#The#result#is#the#same.#
##
#
Held:#
# 8#YU#CON#V.#IPIL,#41#PHIL#770#–LOPA#
##
YU%CON%v.%GLIVERIO%IPIL,%NARCISO%LAURON%and%JUSTO%SOLAMO%
Yes.#
G.R.%No.%L`10195%December%29,%1916%
##
#
For#legal#purposes,#that#is,#for#the#determination#of#the#nature#and#effect#of#the#relations#
EMERGENCY#DIGEST:## created#between#the#plaintiff,#as#owner#of#the#merchandise#laden#on#said#craft#and#of#the#
money#that#was#delivered#to#the#master,#Ipil,#and#the#defendant#Lauron,#as#owner#of#the#
Yu# Con# had# several# times# chartered# from# Narciso# Lauron,# a# banca# named# Maria# craft,# the# latter# was# a# vessel,# according# to# the# meaning# and# construction# given# to# the#
belonging#to#the#latter,#of#which#Glicerio#Ipil#was#master#and#Justo#Solamo,#supercargo,# word# vessel# in# the# Mercantile# Code,# in# treating# of# maritime# commerce,# under# Title# 1,##
for# the# transportation# of# certain# merchandise# and# some# money# to# and# from# the# said# Book#3.#The#word#vessel#serves#to#designate#every#kind#of#craft#by#whatever#particular#
town#and#the#port#of#Cebu.#On#17#October,#1911#Yu#Con#chartered#the#said#banca#from# or#technical#name#it#may#now#be#known#or#which#nautical#advancements#may#give#it#in#
Lauron#for#the#transportation#of#various#merchandise#from#the#port#of#Cebu#to#Catmon,# the#future.#The#banca#called#Maria#was#a#"vessel",#pursuant#to#the#meaning#this#word#has#
at#the#price#of#P45#for#the#round#trip,#which#merchandise#was#loaded#on#board#the#said# in#mercantile#law,#that#is,#in#accordance#with#the#provisions#of#the#Code#of#Commerce#in#
craft#which#was#then#at#anchor#in#front#of#one#of#the#graded#fills#of#the#wharf#of#said#port.# force.#
#
Glicerio#Ipil,#the#master#of#the#said#banca#Maria,#must#also#be#considered#as#its#captain,# • Banca:#Maria##
in# the# legal# acceptation# of# this# word.# The# same# Code# of# Commerce# in# force# in# these# • Owner:#Narciso#Lauron#
Islands# compares,# in# its# article# 609,# masters# with# captains.# Captain# is# applied# to# those# • Master:#Gliverio#Ipil##
who# govern# vessels# that# navigate# the# high# seas# or# ships# of# large# dimensions# and# • Supercargo:#Justo#Solamo##
importance,# although# they# are# engaged# in# the# coastwise# trade.Masters# are# those# who# #
command#smaller#ships#engaged#exclusively#in#the#coastwise#trade.For#the#purposes#of#
maritime# commerce,# the# words# "captain"# and# "master"# have# the# same# meaning;# both# Facts:##
being#the#chiefs#or#commanders#of#ships.#
• Yu#Con#had#several#times#chartered#from#the#defendantNowner#Lauron#a#banca#
It#is#therefore#evident#that,#in#accordance#with#the#provisions#of#the#Code#of#Commerce# named#Maria#of#which#Ipil#was#the#master#and#Solamo#was#the#supercargo#for#
in#force,#which#are#applicable#to#the#instance#case,#the#defendant#Narciso#Lauron,#as#the# the#transport#of#certain#merchandise#and#money#from#Cebu#to#Catmon,#where#
proprietor# and# owner# of# the# craft# of# which# Glicerio# Ipil# was# the# master# and# in# which,# his#store#was##
through#the#fault#and#negligence#of#the#latter#and#of#the#supercago#Justo#Solamo,#there# • On#or#about#the#17th#of#October,#1911,#Yu#Con#chartered#the#said#banca%from#
occurred#the#loss,#theft,#or#robbery#of#the#P450#that#belonged#to#the#plaintiff#and#were# the#defendant#Lauron#for#the#transportation#of#various#merchandise#from#the#
delivered#to#said#master#and#supercargo,#a#theft#which,#on#the#other#hand,#as#shown#by# port# of# Cebu# to# Catmon,# at# the# price# of# P45# for# the# round# trip,# which#
the#evidence,#does#not#appear#to#have#been#committed#by#a#person#not#belonging#to#the# merchandise# was# loaded# on# board# the# said# craft.# On# the# following# day,# he#
craft,# should,# for# said# loss# or# theft,# be# held# civilly# liable# to# the# plaintiff,# who# executed# delivered# to# the# other# two# defendants,# Ipil,# and# Solamo,# master# and#
with#said#defendant#Lauron#the#contract#for#the#transportation#of#the#merchandise#and# supercargo,# respectively,# of# the# aforenamed#banca,#the# sum# of# P450# for# the#
money#aforementioned#between#the#port#of#Cebu#and#the#town#of#Catmon,#by#means#of# purpose#of#its#delivery#to#the#latter's#shop#in#Catmon#for#the#purchase#of#corn#
the#said#craft.# in#this#town#
• Said# master# and# said# supercargo# transferred# the# P450# from# the# plaintiff's#
# trunk,# where# it# was,# to# theirs,# which# was# in# a# stateroom# of# the#banca,#from#
which#stateroom#both#the#trunk#and#the#money#disappeared#during#that#same#
Pertinent#provisions#of#the#Code#of#Commerce:## night,# and# that# the# investigations,# made# to# ascertain# their# whereabouts,#
produced# no# result.# During# the# night# in# question,# both# the# master# and# the#
Article#587#of#the#Code#of#Commerce#in#force#provides:#
supercargo#and#four#cabinNboys#were#aboard#the#banca.#
• It# was# likewise# proven# by# the# affidavits# made# by# the# master# Ipil,# the#
The#agent#shall#be#civilly#liable#for#the#indemnities#in#favor#of#third#persons#which#arise#
supercargo# Solamo,# and# the# cabinNboys# of# said# vessel,# Juan# Quiamco# and#
from#the#conduct#of#the#captain#in#the#care#of#the#goods#which#the#vessel#carried;#but#he#
Gabriel# Basang# and# by# the# testimony# given# at# the# trial# by# the# defendants# Ipil#
may# exempt# himself# therefrom# by# abandoning# the# vessel# with# all# her# equipments# and#
and#Solamo,#that#both#said#cabinNboys#and#the#other#two,#Simeon#Solamo#and#
the#freight#he#may#have#earned#during#the#trip.#
Eulalio# Quiamco,# knew# of# the# existence# of# the# money# in# the# trunk# inside# the#
## stateroom#and#witnessed#its#removal#to#said#trunk#from#the#plaintiff's;#that#the#
last# two# cabinN# boys# aboveNnamed,# in# company# with# the# master# and# the#
Article#618#of#the#same#Code#also#prescribes:# supercargo,#conveyed#the#plaintiff's#trunk,#in#which#the#money#was#previously#
contained,# from# the# plaintiff's# shop# to# the#banca;# and# that# no# person# not#
The# captain# shall# be# civilly# liable# to# the# agent# and# the# latter# to# the# third# persons# who# belonging# to# the# vessel# knew# that# the# money# was# in# the# trunk# inside# said#
may#have#made#contracts#with#the#former#—# stateroom.#
• According# to# the# testimony# of# the# master# Ipil# himself# he# slept# outside# the#
1.#For#all#the#damages#suffered#by#the#vessel#and#its#cargo#by#reason#of#want#of#skill#or# stateroom# that# night,# but# a# cabinNboy# named# Gabriel# slept# inside.# The# latter,#
negligence#on#his#part,#if#a#misdemeanor#or#crime#has#been#committed#he#shall#be#liable# however,#was#not#presented#by#the#defendants#to#be#examined#in#regard#to#this#
in#accordance#with#the#Penal#Code.# point,#nor#does#it#appear#that#he#testified#in#respect#thereto#in#his#affidavit.##
• The# master# Ipil# and# the# supercargo# Solamo# also# testified# that# they# left# the#
2.# For# all# the# thefts# committed# by# the# crew,# reserving# his# right# of# action# against# the# cabinNboy# Simeon# Solamo# on# guard# that# night;# but# this# affirmation# was# not#
guilty#parties.# corroborated# by# Solamo# at# the# trial,# for# he# was# not# introduced# as# a# witness,#
and#only#his#affidavit#was#presented.#
# • This#affidavit##shows#that#Simeon#Solamo#stated#that#he#was#not#designated#to#
do#guard#duty#that#night,#but#that#on#the#morning#of#the#next#day.#
Parties# • Defense#of#the#defendants:##
#
o denied#the#allegations#in#the#complaint## • Master# and# the# supercargo# gave# no# satisfactory# explanation# in# regard# to# the#
o Plaintiff,# at# his# own# expense# and# under# his# exclusive# responsibility,# disappearance# of# the# trunk# and# the# money# therein# contained,# from# the#
chartered# the# said#banca,# the# property# of# the# defendant# Lauron,# for# stateroom#in#which#the#trunk#was,#nor#as#to#who#stole#or#might#have#stolen#it.##
the#fixed#period#of#three#days,#at#the#price#of#P10#per#diem,#and#that,# o The# master# of# the#banca%merely# testified# that# they,# he# and# the#
through# the# misfortune,# negligence,# or# abandonment# of# the# plaintiff# supercargo,#did#to#know#who#the#robbers#were,#for,#when#the#robbery#
himself,# the# loss# complained# of# occurred,# while# said#banca%was# at# was#committed,#they#were#sound#asleep,#as#they#were#tired,#and#that#
anchor# in# the# port# of# Cebu,# and# was# caused# by# theft# committed# by# he# believed# that# the# guard# Simeon# also# fell# asleep# because# he,# too,#
unknown#thieves.## was#tired.#The#second#defendant#gave#the#same#testimony.##
o Lauron,#owner#of#the#banca,%merely#placed#this#craft#at#the#disposal#of# o Both# of# them# testified# that# the# small# window# of# the# stateroom# had#
the#plaintiff#for#the#price#and#period#agreed#upon,#and#did#not#go#with# been# broken,# and# the# master# stated# that# all# the# windowNblinds# had#
the#banca%on#its#voyage## been# removed# from# the# windows,# as# well# as# part# of# the# partition# in#
o Counterclaim:### which# they# were,# and# that# the# trunk# in# which# the# money# was#
" the# defendants# also# asked# that# the# plaintiff# be# ordered# to# contained#could#have#been#passed#through#said#small#window#
pay# the# freight# agreed# upon,# which# had# not# yet# been# paid,# o The# chief# pilot# of# the# harbor# of# Cebu,# Placido# Sepeda,# who# officially#
amounting#to#P80,#plus#the#sum#of#P70,#as#an#indemnity#for# visited# the# said#banca,#also# stated# that# the# small# wooden# window# of#
the# losses# and# damages# caused# them# by# the# attachment# of# the# stateroom# was# broken,# and# that# he# believed# that# in# breaking# it#
the#banca,# issued# at# the# instance# of# the# plaintiff# upon# filing# much# noise# must# have# been# produced.# However,# no# evidence#
his#complaint.## whatever# was# offered# by# counsel# for# the# defendants# to# prove# that# it#
" additional# sum# of# P100,# for# the# deterioration# of# the# might# have# been# possible# to# remove# the# trunk# from# the# stateroom#
said#banca,# and# also# that# of# P200# for# other# deterioration# through# the# opening# made# by# the# breaking# of# the# small# window.#
suffered#by#the#same#since#November,#1911,#and#which#had# Neither#was#the#size#of#the#trunk#proven.##
not#been#paid#for.## • It# is# therefore# beyond# all# doubt# that# the# loss# or# disappearance,# on# the# night#
" Defendants#filed#verbal#motion#to#declare#plaintiff#Yu#Con#in# aforementioned,# of# the# P450,# the# property# of# the# plaintiff,# which,# were# in# the#
default# regarding# the# counterclaim.# Denied# by# the# lower# possession# of# the# defendants,# the# master# and# the# supercargo# of# the# banca%
court.# Maria,#occurred#through#the#manifest#fault#and#negligence#of#said#defendants#
o The# lower# court# held# that# the# sole# cause# of# the# disappearance# of# the# money# o failed# to# take# the# necessary# precautions# in# order# that# the# stateroom#
from#the#said#banca%was#the#negligence#of#the#master#and#the#supercargo,#the# containing# the# trunk# in# which# they# kept# the# money# should# be#
defendants# Ipil# and# Solamo,# respectively,# and# that# the# defendant# Narciso# properly#guarded#by#members#of#the#crew#and#put#in#such#condition#
Lauron#was#responsible#for#that#negligence,#as#owner#of#the#banca,#pursuant#to# that#it#would#be#impossible#to#steal#the#trunk#from#it#or#that#persons#
articles# 589,# 587,# and# 618# of# the# Code# of# Commerce,# the# plaintiff# therefore# not# belonging# to# the# vessel# might# force# an# entrance# into# the#
being#entitled#to#recover#the#amount#lost.#The#plaintiff#was#absolved#from#the# stateroom#from#the#outside#
defendant's#counterclaim.## o did# not# expressly# station# some# person# inside# the# stateroom# for# the#
o MNT#denied.#Appeal#to#the#SC# guarding#and#safeNkeeping#of#the#trunk#
# o On#the#contrary,#it#was#proven#by#the#master's#own#statement#that#all#
the# people# of# the# vessel,# including# himself# and# the# supercargo#
ISSUES:## Solamo,# slept# soundly# that# night.# This# increases# their# liability,#
because#it#is#very#strange#that#none#of#them,#who#were#six#and#were#
1.#Whether#or#not#the#banca#may#be#considered#as#a#vessel## around#or#near#the#stateroom,#should#have#heard#the#noise#which#the#
robbers#must#have#made#in#breaking#its#window.##
2.# Whether# or# not# Glicerio# Ipil,# as# a# master,# may# be# considered# as# the# captain# in# the# • MasterNIpil# and# SupercargoNSolamo,# being# the# depositaries# of# the# sum# in#
determination#of#liability.# question,# and# they# having# failed# to# exercise# for# its# safeNkeeping# the# diligence#
required# by# the# nature# of# the# obligation# assumed# by# them# and# by# the#
3.#Whether#or#not#ownerNLauron#can#also#be#held#liable# circumstances#of#the#time#and#the#place,#it#is#evident#that,#in#pursuance#of#the#
provisions# of# articles# 1601# and# 1602,# in# their# relation# to# articles# 1783# and#
# 1784,#and#as#prescribed#in#articles#1770,#of#the#Civil#Code,#they#are#liable#for#its#
loss# or# misplacement# and# must# restore# it# to# the# plaintiff,# together# with# the#
HELD:##
corresponding# interest# thereon# as# an# indemnity# for# the# losses# and# damages#
caused#him#through#the#loss#of#the#said#sum.#
#
# o In#maritime#commerce,#the#shippers#and#passengers#in#making#contracts#
with#the#captain#do#so#through#the#confidence#they#have#in#the#shipowner#
In#re:#Liability#of#banca#owner#Lauron:## who# appointed# him;# they# presume# that# the# owner# made# a# most# careful#
investigation# before# appointing# him,# and,# above# all,# they# themselves# are#
o In#re:#definition#of#vessel# unable#to#make#such#an#investigation,#and#even#though#they#should#do#so,#
o The#banca#was#a#vessel#as#defined#by#Title#1#Book#3#of#the#Mercantile# they#could#not#obtain#complete#security,#inasmuch#as#the#shipowner#can,#
Code2# whenever#he#sees#fir,#appoint#another#captain#instead.#
o According# to# the# Dictionary# of# Legislation# and# Jurisprudence# by# o On#the#other#hand,#if#the#shipowner#derives#profits#from#the#results#of#the#
Escriche,#a#vessel%is#any#kind#of#craft,#considering#solely#the#hull.# choice#of#the#captain#and#the#crew,#when#the#choice#turns#out#successful,#it#
o Blanco,# the# commentator# on# mercantile# law,# says# that# the# words# is# also# just# that# he# should# suffer# the# consequences# of# an# unsuccessful#
"ship"#and#"vessel"#also#designate#every#craft,#large#or#small,#so#long# appointment,# by# application# of# the# rule# of# natural# law# contained# in# the#
as#it#be#not#an#accessory#of#another,#such#as#the#small#boat#of#a#vessel,# Partidas,# viz.,#that% he% who% enjoys% the% benefits% derived% from% a% thing% must%
of# greater# or# less# tonnage.# This# definition# comprises# both# the# craft# likewise%suffer%the%losses%that%ensue%therefrom.#
intended#for#ocean#or#for#coastwise#navigation,#as#well#as#the#floating# o RPC# declares# that# such# persons# as# undertake# and# carry# on# any# industry#
docks,# mud# lighters,# dredges,# dumpscows# or# any# other# floating# shall#be#civilly#liable,#in#default#of#those#who#may#be#criminally#liable,#for#
apparatus# used# in# the# service# of# an# industry# or# in# that# of# maritime# the# misdemeanors# and# crimes# committed# by# their# subordinates# in# the#
commerce# discharge#of#their#duties.#
o A# the#banca%called# Maria,# chartered# by# the# plaintiff# Yu# Con# from# the# o OWNERNLAURON#IS#CIVILLY#LIABLE#FOR#THE#LOSS,#THEFT#OR#ROBERRY#OF#
defendant# Narciso# Lauron,# was# a# "vessel",# pursuant# to# the# meaning# THE#P450.##
this# word# has# in# mercantile# law,# that# is,# in# accordance# with# the# #
provisions#of#the#Code#of#Commerce#in#force.#
o In#re:#master#being#the#captain#of#the#vessel# #
o Glicerio# Ipil,# the# master# of# the# said#banca%Maria,# must# also# be#
considered#as#its#captain,#in#the#legal#acceptation#of#this#word.# In#re:#default#in#connection#with#the#crossNcomplaint#
o General#Review#of#Legislation#and#Jurisprudence#says:#
The# name# of# captain# or# master# is# given,# according# to# the# kind# of# o Yu# Con# filed# his# answer# to# the# crossNcomplaint# as# soon# as# the# defendant#
vessel,#to#the#person#in#charge#of#it.# presented#their#motion#for#a#declaration#of#the#plaintiff's#default##
o it# being# optional# with# the# court# to# make# in# such# cases# the# declaration# of#
The# first# denomination# is# applied# to# those# who# govern# vessels# default,# as# provided# in# section# 129# of# the# Code# of# Civil# Procedure,# the# said#
that# navigate# the# high# seas# or# ships# of# large# dimensions# and# court#did#not#incur#the#second#error#assigned#by#the#appellants#in#their#brief.#
importance,#although#they#be#engaged#in#the#coastwise#trade.# #
Masters# are# those# who# command# smaller# ships# engaged# In#re:#counterclaim#–#overruled!#

exclusively#in#the#coastwise#trade.#
o banca%Maria%did#not#make#the#trip#she#should#have#made#from#the#port#of#Cebu#
# to#the#town#of#Catmon,#on#the#occasion#in#question,#through#cases#chargeable,#
as# has# been# seen,# to# the# captain# and# the# supercargo# of# said#banca,#to# wit,#
o Estasen,#in#his#work#on#the#Institutes#of#Mercantile#Law#(Vol.#4,#p.#280),#makes# because#of#the#loss,#theft#of#robbery#of#the#P450#belonging#to#the#plaintiff#
the#following#remarks# o contract#was#made#for#the#transportation#of#the#said#sum#and#the#merchandise#
o It# is# well# and# good# that# the# shipowner# be# not# held# criminally# liable# for# from#one#of#said#points#to#the#other,#for#the#round#trip#
such#crimes#or#quasi#crimes;#but#the#cannot#be#excused#from#liability#for# proofs#presented#by#the#defendants#in#regard#to#this#point#were#insufficient,#as#the#trial#
the# damage# and# harm# which,# in# consequence# of# those# acts,# may# be# court#so#held,#neither#did#they#incur#error#in#overruling#the#crossNcomplaint#formulated#
suffered# by# the# third# parties# who# contracted# with# the# captain,# in# his# by#the#defendants#in#their#answer#against#the#plaintiff.#
double#capacity#of#agent#and#subordinate#of#the#shipowner#himself.##
# 9#LOPEZ#V.#DURUELO,#52#PHIL#229#–LUCENARIO#
#############################################################
2#The#word#vessel#serves#to#designate#every#kind#of#craft#by#whatever#particular#or#technical#name#
it#may#now#be#known#or#which#nautical#advancements#may#give#it#in#the#future.#
#
Lopez#v.#Duruelo,#52#Phil#229#(1928)#–#there%was%a%discussion%on%the%different%definitions% o Complaint# was# found# to# state# a# sufficient# cause# of# action# under# the# Civil#
of%“ships”%etc.%from%different%sources%F%I%just%included%all%in%the%ratio%in%case%he%asks%for%the% Code#
different%authorities.%But%they%basically%just%say%the%same%thing.% o General# rule# is# that# a# case# should# not# be# dismissed# on# demurrer# when,#
under# any# reasonable# interpretation# of# the# complaint,# a# cause# of# action#
# can# be# made# out.# In# passing# upon# a# demurrer,# every# reasonable#
intendment#is#to#be#taken#in#favor#of#the#pleader.#
Emergency%Recitation:% #
• LOPEZ# wanted# to# board# the# interisland# steamer# San% Jacinto# which# was# anchored# FACTS:#
about#half#a#mile#from#the#port#of#Silay.#In#order#to#get#to#the#ship,#he#had#to#ride#on#
a#small#motor#boat#Jison#operated#by#a#16Nyear#old#apprentice#Rodolin#Duruelo,#and# • Augusto#LOPEZ,#resident#of#Silay,#Negros#Occidental.##
owned#by#Ablino#Jison,#with#patron#Juan#Duruelo.#Note:#boat#was#also#overladen#(14# • Feb.#10,#1927# –#LOPEZ#sought#to#board#the#interisland#steamer# San%Jacinto#bound#
passengers#when#capacity#was#only#8N9)# for#Iloilo#
• On#the#way#to#the#ship,#DURUELO#was#negligent#and#brought#the#small#motorboat# • At#the#time,#San%Jacinto#was#anchored#about#half#a#mile#from#the#port#of#Silay#hence#
too# near# the# propeller# of# the# San%Jacinto.# “As# the# motor# boat# approached# the# San# passengers# and# luggage# had# to# ride# on# a# small# motorboat# Jison# from# the# port# to#
Jacinto#in#a#perfectly#quiet#sea,#it#came#too#near#to#the#stern#of#the#ship,#and#as#the# bring#them#to#San%Jacinto#
propeller#of#the#ship#had#not#yet#ceased#to#turn,#the#blades#of#the#propeller#struck# • LOPEZ# rode# on# Jison# which# was# owned# and# operated# by# Albino# Jison,# with# Juan#
the#motor#boat#and#sank#it#at#once.”## Duruelo# as# patron.# At# the# time,# the# engineer# (maquinista)# was# Rodolin# Duruelo,# a#
• LOPEZ#was#thrown#into#the#water#and#the#revolving#blades#of#the#propeller#hit#him.## 16# year# old# boy# who# was# on# the# 3rd# day# of# his# apprenticeship# program,# a# mere#
• Injuries#suffered###a#bruise#in#the#breast,#two#serious#fractures#of#the#bones#of#the# novice#with#hardly#any#experience#in#running#motor#boats.##
left#leg,#and#a#compound#fracture#of#the#left#femur# • Moreover,#the#boat#was#overladen#–#14#passengers#when#capacity#was#only#8N9.#
• LOPEZ#sued#for#damages#(approx.#Php120,000)#against#JISON#and#DURUELO.#Case# ACCIDENT###As#the#motor#boat#approached#the#San#Jacinto#in#a#perfectly#quiet#sea,#it#
was#dismissed#when#a#demurrer#was#filed.#The#demurrer#claimed#that#to#a#cause#of# came#too#near#to#the#stern#of#the#ship,#and#as#the#propeller#of#the#ship#had#not#yet#ceased#
action# arise,# the# Code# of# Commerce# requires# as# a# condition# precedent# that# the# to#turn,#the#blades#of#the#propeller#struck#the#motor#boat#and#sank#it#at#once.##
victim# must# file# a# protest# within# twentyNfour# hours# after# the# occurrence,# to# the# As#the#Jison#sank,#the#plaintiff#was#thrown#into#the#water#against#the#propeller,#and#the#
competent#authority#at#the#port#where#the#accident#occurred.#LOPEZ#did#not#do#this# revolving#blades#inflicted#various#injuries#upon#him,#consisting#of#a#bruise#in#the#breast,#
hence#no#right#of#action#allegedly#arose.# two# serious# fractures# of# the# bones# of# the# left# leg,# and# a# compound# fracture# of# the# left#
• ISSUE:#W/N#Code#of#Commerce#requiring#the#protest#applies#in#this#case###NO# femur.##
• Numerous# sources# were# cited# showing# that# such# Code# of# Commerce# provision# As#a#consequence#of#these#injuries#the#plaintiff#was#kept#in#bed#in#a#hospital#in#the#City#of#
requiring#the#condition#precedent#of#a#protest#should#not#apply#to#the#present#case# Manila#from#the#28th#of#February#until#October#19#of#the#year#1927,#or#approximately#
for#a#small#motorboat.# eight#months.##
• The# article# in# question# (835,# Code# of# Com.)# is# found# in# the# section# dealing# with# • It# is# alleged# in# the# complaint# that# the# approach# of# the# Jison# to# this# dangerous#
collisions,#and#the#context#shows#the#collisions#intended#are#collisions#of#seaNgoing# proximity#with#the#propeller#of#the#San#Jacinto#was#due#to#the#fault,#negligence#and#
vessels.# Said# article# cannot# be# applied# to# small# boats# engaged# in# river# and# bay# lack#of#skill#of#the#defendant#Juan#Duruelo,#as#patron#of#the#Jison.##
traffic.## • LOPEZ#claims#damages#of#around#Php120,000.#
• Other#vessels#of#a#minor#nature#not#engaged#in#maritime#commerce,#such#as#river# • DURUELO#and#JISON#filed#a#demurrer#based#on#the#ground#that#LOPEZ’#complaint#
boats# and# those# carrying# passengers# from# ship# to# shore,# must# be# governed,# as# to# did#not#show#a#right#of#action.#
their#liability#to#passengers,#by#the#provisions#of#the#Civil#Code#or#other#appropriate# o Basis:#the#complaint#does#not#allege#that#a#protest#had#been#presented#by#
special#provisions#of#law.# LOPEZ# within# twentyNfour# hours# after# the# occurrence,# to# the# competent#
• When# the# mercantile# codes# speak# of# vessels,# they# refer# solely# and# exclusively# to# authority#at#the#port#where#the#accident#occured.#It#is#accordingly#insisted#
merchant#ships,#as#they#do#not#include#war#ships#furthermore,#they#almost#always# that,# under# article# 835# of# the# Code# of# Commerce,# the# plaintiff# has# shown#
refer#to#craft#which#are#not#accessory#to#another#as#is#the#case#of#launches,#lifeboats,# no#cause#of#action.#
etc.## • Lower#Court#granted#the#Demurrer#and#dismissed.#LOPEZ#now#appeals.#
• In#a#word,#they#refer#to#merchant#vessels#and#in#no#way#can#they#or#should#they#be# #
understood# as# referring# to# pleasure# craft,# yachts,# pontoons,# health# service# and#
harbor#police#vessels,#floating#storehouses,#warships#or#patrol#vessels,#coast#guard# ISSUE:#
vessels,#fishing#vessels,#towboats,#and#other#craft#destined#to#other#uses#
• Final#points:# #
#
• W/N#the#Code#of#Commerce#applies#to#this#case#requiring#a#protest#for#a#cause# place#to#another;#in#a#word,#they#refer#to#merchant#vessels#and#in#no#way#can#
of#action#to#arise###NO# they# or# should# they# be# understood# as# referring# to# pleasure# craft,# yachts,#
• W/N#the#demurrer#should#be#dismissed###YES# pontoons,# health# service# and# harbor# police# vessels,# floating# storehouses,#
# warships#or#patrol#vessels,#coast#guard#vessels,#fishing#vessels,#towboats,#and#
other# craft# destined# to# other# uses,# such# as# for# instance# coast# and# geodetic#
HELD:# The# judgment# appealed# from# is# reversed,# the# demurrer# overruled,# and# the# survey,# those# engaged# in# scientific# research# and# exploration,# craft# engaged# in#
defendant#is#required#to#answer#the#complaint#within#five#days#after#notification#of#the# the# loading# and# discharge# of# vessels# from# same# to# shore# or# docks,# or# in#
return#of#this#decision#to#the#court#of#origin.#So#ordered,#with#costs#against#the#appellee.# transhipment#and#those#small#craft#which#in#harbors,#along#shore,#bays,#inlets,#
# coves# and# anchorages# are# engaged# in# transporting# passengers# and# baggage.#
(Estasen,#Der.#Mer.,#vol#IV,#p.#195.)#
RATIO:# #
Assuming# that# the# article# of# the# Code# of# Commerce# relied# upon# states# a# condition# In#the#case#before#us#the#Jison,#as#we#are#informed#in#the#complaint,#was#propelled#by#a#
precedent#to#the#maintenance#of#an#action#in#case#where#protest#is#required#and#that#the# secondNhand# motor,# originally# used# for# a# tractor# plow;# and# it# had# a# capacity# for# only#
making# of# protest# must# be# alleged# in# the# complaint# in# order# to# show# a# good# cause# of# eight# persons.# The# use# to# which# it# was# being# put# was# the# carrying# of# passengers# and#
action#—#an#assumption#that#is#possibly#without#basis,#for#the#reason#that#lack#of#protest# luggage#between#the#landing#at#Silay#and#ships#in#the#harbor.#This#was#not#such#a#boat#as#
in#a#case#where#protest#is#necessary#would#seem#to#supply#matter#of#defense#proper#to# is# contemplated# in# article# 835# of# the# Code# of# Commerce,# requiring# protest# in# case# of#
be# set# up# in# the# answer,# —# we# nevertheless# are# of# the# opinion# that# protest# was# not# collision.#
necessary#in#the#case#now#before#us.## #
The#article#in#question#(835,#Code#of#Com.)#is#found#in#the#section#dealing#with#collisions,#
and#the#context#shows#the#collisions#intended#are#collisions#of#seaNgoing#vessels.## The#words#"ship"#(nave)#and#"vessel"#(buque),#in#their#grammatical#sense,#are#applied#to#
Said#article#cannot#be#applied#to#small#boats#engaged#in#river#and#bay#traffic.## designate# every# kind# of# craft,# large# or# small,# merchant# vessels# or# war# vessels,# a#
The# Third# Book# of# the# Code# of# Commerce,# dealing# with# Maritime# Commerce,# of# which# signification# which# does# not# differ# essentially# from# its# juridical# meaning,# according# to#
the#section#of#Collisions#forms#a#part,#was#evidently#intended#to#define#the#law#relative# which#vessels#for#the#purposes#of#the#Code#and#Regulations#for#the#organization#of#the#
to# merchant# vessels# and# marine# shipping;# and,# as# appears# from# said# Code,# the# vessels# Mercantile# Registry,# are# considered# not# only# those# engaged# in# navigation,# whether#
intended# in# that# Book# are# such# as# are# run# by# masters# having# special# training,# with# the# coastwise#or#on#the#high#seas,#but#also#floating#docks,#pantoons,#dredges,#scows#and#any#
elaborate#apparatus#of#crew#and#equipment#indicated#in#the#Code.## other#floating#apparatus#destined#for#the#service#of#the#industry#or#maritime#commerce.#
The# word# "vessel"# (Spanish# "buque,"# "nave"),# used# in# the# section# referred# to# was# not# Yet# notwithstanding# these# principles# from# which# it# would# seem# that# any#
intended#to#include#all#ships,#craft#or#floating#structures#of#every#kind#without#limitation,# floating# apparatus# which# serves# directly# for# the# transportation# of# things# or#
and#the#provisions#of#that#section#should#not#be#held#to#include#minor#craft#engaged#only# persons#or#which#inderectly#is#related#to#this#industry,#ought#to#be#subjected#to#
in#river#and#bay#traffic.## the# principles# of# the# Code# with# reference# to# ownership,# transfer,# rights,#
Vessels# which# are# licensed# to# engage# in# maritime# commerce,# or# commerce# by# sea,# registration,#etc.,#we#agre#with#Benito#(obra%cit.)#and#it#so#happens#in#practice#
whether#in#foreign#or#coastwise#trade,#are#no#doubt#regulated#by#Book#III#of#the#Code#of# that# they# are# not# aplicable# to# small# which# are# subject# to# administrative#
Commerce.## (customs)#regulations#in#the#matter#of#port#service#and#in#the#fishing#industry.#
Other#vessels#of#a#minor#nature#not#engaged#in#maritime#commerce,#such#as#river#boats# #
and#those#carrying#passengers#from#ship#to#shore,#must#be#governed,#as#to#their#liability#
to#passengers,#by#the#provisions#of#the#Civil#Code#or#other#appropriate#special#provisions# We# may# add# that# the# word# "nave"# in# Spanish,# which# is# used# interchangeably# with#
of#law.# "buque"# in# the# Code# of# Commerce,# means,# according# to# the# SpanishNEnglish# Dictionary#
# complied#by#Edward#R.#Bensley#and#published#at#Paris#in#the#year#1896,#"Ship,%a%vessel%
This# conclusion# is# substantiated# by# the# writer# Estasen# who# makes# comment# upon# the# with%decks%and%sails."##
word#"vessel"#to#the#following#effect:# Particularly#significant#in#this#definition#is#the#use#of#the#word#"decks"#since#a#deck#is#not#
When#the#mercantile#codes#speak#of#vessels,#they#refer#solely#and#exclusively# a#feature#of#the#smallest#types#of#water#craft.#
to#merchant#ships,#as#they#do#not#include#war#ships#furthermore,#they#almost# In# this# connection# a# most# instructive# case# from# a# Federal# Court# in# the# United# States# is#
always# refer# to# craft# which# are# not# accessory# to# another# as# is# the# case# of# that#of#the#Mamie#(5#Fed.,#813),#wherein#it#was#held#that#only#vessels#engaged#in#what#is#
launches,#lifeboats,#etc.## ordinarily# known# as# maritime# commerce# are# within# the# provisions# of# law# conferring#
Moreover,#the#mercantile#laws,#in#making#use#of#the#words#ship,#vessels,#boat,# limited#liability#on#the#owner#in#case#maritime#disaster.##
embarkation,# etc.,# refer# exclusively# to# those# which# are# engaged# in# the# In#the#course#of#the#opinion#in#that#case#the#author#cites#the#analogous#provisions#in#the#
transportation#of#passengers#and#freight#from#one#port#to#another#or#from#one# laws# of# foreign# maritime,# nations,# especially# the# provisions# of# the# Commercial# Code# of#
#
France;#and#it#is#observed#that#the#word#"vessel"#in#these#codes#is#limited#to#ships#and# help,#but#no#one#was#near#the#place.#The#weather#became#bad.#The#
other#seaNgoing#vessels.## tugboat#failed#to#anchor.#The#tugboat#hit#the#rocks,#causing#a#hole#
"Its#provisions#are#not#applicable,"#said#the#court,#"to#vessels#in#inland#navigation,#which# in# the# hull# that# made# it# sink# eventually.# The# barge# containing# the#
are#especially#designated#by#the#name#of#boats."#Quoting#from#the#French#author#Dufour# gasoline#was#severely#damaged,#causing#it#to#leak.##
(1#Droit#Mer.,#121),#the#writer#of#the#opinion#in#the#case#cited#further#says:#"Thus,#as#a# Who#won# Standard#Vacuum.#No#fortuitous#event.#
general# rule,# it# appears# to# me# clearly,# both# by# the# letter# and# spirit# of# the# law,# that# the# #
provisions# of# the# Second# Book# of# the# Commercial# Code# [French]# relate# exclusively# to# EMERGENCY%DIGEST:%%
maritime#and#not#to#fluvial#navigation;#and#that#consequently#the#word#'ship'#when#it#is# Standard#Vacuum#entered#into#a#contract#with#Luzon#Stevedoring#for#the#shipping#of#its#
found# in# these# provisions,# ought# to# be# understand# in# the# sense# of# a# vessel# serving# the# barrels# of# gasoline# to# Iloilo.# # It# was# places# in# tugboat# ‘Snapper’.# 2# days# in# the# voyage,#
purpose# of# maritime# navigation# of# seagoing# vessel,# and# not# in# the# sense# of# a# vessel# while#the#weather#was#still#good,#Snapper#stopped#due#to#a#broken#idler#somewhere#in#
devoted#to#the#navigation#of#rivers."# Elefante# island.# Luzon# radioed# for# help,# but# no# one# was# near# their# place.# So# it# radioed#
# another#one#of#its#tugboat#in#Batangas,#tugboat#Tamban.#The#weather#started#to#become#
It#is#therefore#clear#that#a#passenger#on#a#boat#like#the#Jison,#in#the#case#before#us,#is#not# bad.# The# captain# tried# to# cast# anchor,# but# the# waters# were# too# deep,# so# the# attempt#
required# to# make# protest# as# a# condition# precedent# to# his# right# of# action# for# the# injury# failed.# Snapper# hit# the# rocks,# causing# a# hole# in# the# hull# where# the# barges# were# placed.#
suffered#by#him#in#the#collision#described#in#the#complaint.#In#other#words,#article#835#of# The# tugboat# sunk.# The# barge# where# the# gasoline# was# put# leaked.# Tamban# arrived# for#
the# Code# of# Commerce# does# not# apply.# But# even# if# said# provision# had# been# considered# rescue#after#the#gasoline#has#already#been#lost.#
applicable# to# the# case# in# hand,# a# fair# interpretation# of# the# allegations# of# the# complaint# Standard#Vacuum#filed#a#case#for#damages.#
indicates,#we#think,#that#the#injuries#suffered#by#the#plaintiff#in#this#case#were#of#such#a# CFIN#In#favor#of#Luzon#Stevedoring.#Fortuitous#event.#
nature# as# to# excuse# protest;# for,# under# article# 836,# it# is# provided# that# want# to# protest# #
cannot# prejudice# a# person# not# in# a# condition# to# make# known# his# wishes.# An# individual# ISSUE:#W/N#the#loss#of#the#gasoline#was#due#to#a#fortuitous#event?#–#No.##
who#has#suffered#a#compound#fracture#of#the#femur#and#received#other#physical#injuries# ART.% 361.% The% merchandise% shall% be% transported% at% the% risk% and% venture% of% the%
sufficient# to# keep# him# in# a# hospital# for# may# months,# cannot# be# supposed# to# have# in# a# shipper,%if%the%contrary%was%not%expressly%stipulated.%
condition#to#make#protest#within#twentyNfour#hours#of#such#occurrence.#It#follows#that# Therefore,% all% damages% and% impairment% suffered% by% the% goods% during% the%
the#demurrer#in#this#case#was#not#well#taken#and#should#have#been#overruled.# transportation,%by%reason%of%accident,%force&majeure,%or%by%virtue%of%the%nature%or%
# defect%of%the%articles,%shall%be%for%the%account%and%risk%of%the%shipper.%The%proof%of%
these%accidents%is%incumbent%on%the%carrier.%
Lastly,#the#complaint#states#a#good#cause#of#action#upon#a#civil#liability#arising#from#tort# Luzon#Stevedoring#was#negligent#because:#
under#articles#1902#and#1903#of#the#Civil#Code,#and#our#attention#has#not#been#drawn#to# 1) Snapper# was# a# surplus# property.# It# failed# to# comply# with# the# equipment#
any# provision# of# law# which# would# constitute# an# obstacle# to# the# maintenance# of# the# requirements.#
action.# 2) Snapper#failed#to#carry#on#board#necessary#spare#parts.#
# 3) Snapper#was#undermanned.#Seaworthiness#includes#proper#manning.#
We# have# repeatedly# called# the# attention# of# trial# courts# to# the# general# rule# that# a# case# 4) It# was# not# dryNdocked,# which# was# necessary# for# its# proper# inspection,#
should#not#be#dismissed#on#demurrer#when,#under#any#reasonable#interpretation#of#the# especially#since#it#is#a#surplus#property.#
complaint,# a# cause# of# action# can# be# made# out;# and# the# fact# that# a# complaint# is# 5) It#should#have#another#boat#ready#for#rescue.#Tamban#was#not#sufficient.#It#is#
inartificially# drawn# or# in# a# certain# degree# lacking# in# precision# constitutes# no# sufficient# small,#and#was#only#allowed#to#operate#within#Manila#bay.#
reason#for#dismissing#it.## #
In#passing#upon#a#demurrer,#every#reasonable#intendment#is#to#be#taken#in#favor#of#the# COMPLETE%DIGEST%%
pleader.## Luzon# Stevedoring# is# a# private# stevedoring# company# engaged# in# transporting# local#
# products,#including#gasoline#in#bulk#and#has#a#fleet#of#about#140#tugboats#and#about#90#
per# cent# of# its# business# is# devoted# to# transportation.# Though# it# is# engaged# in# a# limited#
# 10# STANDARD# VACUUM# OIL# CO.# V.# LUZON# STEVEDORING,# 98# PHIL# 817# – contract#of#carriage#in#the#sense#that#it#chooses#its#customers#and#is#not#opened#to#the#
MAGTAGNOB# public,#nevertheless,#the#continuity#of#its#operation#in#this#kind#of#business#have#earned#
for#it#the#level#of#a#public#utility.#
Standard#Vacuum#entered#into#a#contract#with#Luzon#Stevedoring#to#transport#between#
Carrier# Luzon#Stevedoring#
the# ports# of# Manila# and# Iloilo,# 2,916.44# barrels# of# bulk# gasoline,# which# was# places# in#
Shipper# Standard#Vacuum#Oil#
barge#No.#LN522.#
Product#Shipped# Gasoline#Oil# The#weather#was#good#when#on#that#day#the#tugboat#with#its#tow#started#on#its#voyage.#2#
Problem# The# tugboat# stopped# due# to# mechanical# defect.# Luzon# called# for# days# after,# the# engine# of# the# tugboat# came# to# a# dead# stop.# The# engineer# on# board# the#
#
tugboat#found#out#that#the#trouble#was#due#to#a#broken#idler.# that#had#been#in#the#service#of#the#United#States#Armed#Forces#prior#to#its#purchase#by#
A# message# was# then# sent# to# Luzon# Stevedoring's# radio# station# in# Manila# informing# its# the#Luzon#Stevedoring#Co.#It#has#not#been#dryNdocked3,#and#was#not#provided#with#the#
official#of#the#engine#trouble.#Luzon#Stevedoring#called#up#several#shipping#companies#in# requisite# equipment# to# make# it# seaworthy.# The% foregoing% circumstances% show% that%
Manila#to#find#out#if#they#had#any#vessels#in#the#vicinity#where#the#"Snapper'#had#stalled# Luzon%Stevedoring%did%not%use%reasonable%diligence%in%putting%the%tugboat%in%such%
but# said# companies# replied# in# the# negative.# Luzon# Stevedoring# radioed# its# tugboat# a%condition%as%would%make%its%use%safe%for%operation.##
‘Tamban'#which#was#docked#at#Batangas,#ordering#it#to#proceed#to#the#place#where#the# There#are#other#circumstances#which#show#the#lack#of#precaution#and#diligence#taken#by#
‘Snapper'#was.# Luzon#Stevedoring#to#make#the#travel#of#the#tugboat#safe.#One#is#the#failure#to#carry#on#
The# master# of# the# Snapper'# attempted# to# cast# anchor# but# the# water# areas# around# board#the#necessary#spare#parts.#When#the#idler#was#broken,#the#engineer#of#the#tugboat#
Elefante#Island#were#so#deep#that#the#anchor#did#not#touch#bottom.#The#weather#become# examined#it#for#the#first#time#and#it#was#only#then#that#he#found#that#there#were#no#spare#
worse#as#the#wind#increased#in#intensity#and#the#waves#were#likewise#increased#in#size# parts# to# use# except# a# worn# out# spare# driving# chain.# And# the# necessity# of# carrying# such#
and#force.# spare#parts#was#emphasized#by#the#very#Luzon#Stevedoring's#witness,#Mr.#Depree,#who#
The# anchor# chains# of# the# ‘Snapper'# and# the# four# barges# broke# one# by# one# and# as# a# said# that# in# vessels# motored# by# diesel# engines# it# is# necessary# always# to# carry# spare#
consequence#thereof#they#were#drifted#and#were#finally#dashed#against#the#rocks.#A#hole# chains,#ball#bearings#and#chain#drives.#And#this#was#not#done.#
was#opened#in#the#hull#of#the#Snapper',#which#ultimately#caused#it#to#sink,#while#barge# A%tug%engaged%to%tow%a%barge%is%liable%for%damage%to%the%cargo%of%the%barge%caused%
No.#LN522#was#so#badly#damaged#that#the#gasoline#it#had#on#board#leaked#out.#Tamban# by%faulty%equipment%of%the%tug.%%
arrived#at#the#place#after#the#gasoline#had#already#leaked#out.# Another#circumstance#refers#to#the#deficiency#or#incomplete#in#the#man#power#of#the#tug#
The#gasoline#was#delivered#in#accordance#with#the#contract#but#Luzon#Stevedoring#failed# boat.#According#to#law,#a#tugboat#of#the#tonnage#and#powers#of#one#like#the#"Snapper"#is#
to#transport#it#to#its#place#of#destination.#Standard#Vacuum#brought#his#action#in#the#CFI# required#to#have#a#complement#composed#of#one#first#mate,#one#second#mate,#one#third#
of#Manila#to#recover#the#sum#of#P75,578.50#as#damages.# mate,# one# chief# engineer,# one# second# engineer,# and# one# third# engineer,# (section# 1203,#
Luzon#Stevedoring,#in#its#answer,#pleaded#that#its#failure#to#deliver#the#gasoline#was#due# Revised#Administrative#Code),#but#when#the#trip#in#question#was#undertaken,#it#was#only#
to#fortuitous#event#or#caused#by#circumstances#beyond#its#control#and#not#to#its#fault#or# manned# by# one# master,# who# was# merely# licensed# as# a# bay,# river# and# lake# patron,# one#
negligence#or#that#of#any#of#its#employees.## second#mate,#who#was#licensed#as#a#third#mate,#one#chief#engineer#who#was#licensed#as#
CFIN# Disaster# to# the# tugboat# was# avoidable,# but# the# loss# of# the# gasoline# was# due# to# a# third#motor#engineer,#one#assistant#engineer,#who#was#licensed#as#a#bay,#river,#and#lake#
fortuitous#event.#Dismissed#Standard#Vacuum’s#claim.# motor# engineer,# and# one# second# assistant# engineer,# who# was# unlicensed.# The#
% employment#of#this#crew#to#perform#functions#beyond#its#competence#and#qualifications#
ISSUE:## is#not#only#risky#but#against#the#law#and#if#a#mishap#is#caused,#as#in#this#case,#one#cannot#
Whether# the# loss# of# the# gasoline# was# a# result# of# a# fortuitous# event# that# is# beyond# the# but#surmise#that#such#incompetence#has#something#to#do#with#the#mishap.#The#fact#that#
control#of#Luzon#Stevedoring?#–#No.#Luzon#Stevedoring#LOST.# the#tugboat#had#undertaken#several#trips#before#with#practically#the#same#crew#without#
# any#untoward#consequence,#cannot#furnish#any#justification#for#continuing#in#its#employ#
HELD:# a#deficient#or#incompetent#personnel#contrary#to#law#and#the#regulations#of#the#Bureau#
Wherefore,#the#decision#appealed#from#is#reversed.#Luzon#Stevedoring#is#hereby#ordered# of#Customs.#
to#pay#to#Standard#Vacuum#the#sum#of#P75,578.50,#with#legal#interest#from#the#date#of# Generally,#seaworthiness#is#that#strength,#durability#and#engineering#skill#made#a#part#
the#filing#of#the#complaint,#with#costs.# of# a# ship's# construction# and# continued# maintenance,# together% with% a% competent% and%
% sufficient% crew,# which# would# withstand# the# vicissitudes# and# dangers# of# the# elements#
RATIO:# which#might#reasonably#be#expected#or#encountered#during#her#voyage#without#loss#or#
The#pertinent#law#is#article#361#which#provides:# damage#to#her#particular#cargo.#
ART.% 361.% The% merchandise% shall% be% transported% at% the% risk% and% venture% of% the% Let# us# now# come# to# the# efforts# exerted# by# Luzon# Stevedoring# in# extending# help# to# the#
shipper,%if%the%contrary%was%not%expressly%stipulated.% tugboat#when#it#was#notified#of#the#breakage#of#the#idler.#The#evidence#shows#that#the#
Therefore,% all% damages% and% impairment% suffered% by% the% goods% during% the% idler#was#broken#at#about#3:00am.#Within#a#few#minutes,#a#massage#was#sent#to#Luzon#
transportation,%by%reason%of%accident,%force&majeure,%or%by%virtue%of%the%nature%or% Stevedoring# by# radio# informing# it# of# the# engine# trouble.# The# weather# was# good# until#
defect%of%the%articles,%shall%be%for%the%account%and%risk%of%the%shipper.% 12:00nn# when# the# wind# started# to# blow.# According# to# Luzon# Stevedoring,# since# it#
The%proof%of%these%accidents%is%incumbent%on%the%carrier.% received#the#message,#it#called#up#different#shipping#lines#in#Manila#asking#them#if#they#
Implementing#this#provision,#our#Supreme#Court#has#held#that#all#a#shipper#has#to#prove# had#any#vessel#in#the#vicinity#where#the#"Snapper"#stalled#but,#unfortunately,#none#was#
in#connection#with#sea#carriage#is#delivery#of#the#merchandise#in#good#condition#and#its# available#at#the#time,#and#as#its#tug#"Tamban"#was#then#docked#in#Batangas,#which#was#
nonNdelivery#at#the#place#of#destination#in#order#that#the#burden#of#proof#may#shift#to#the# nearest#to#the#place,#it#radioed#said#tug#to#go#to#the#aid#of#the#"Snapper".#Accordingly,#the#
carrier#to#prove#any#of#the#accidents#above#adverted#to.##
It# appears# that# the# tugboat# "Snapper"# was# acquired# by# Luzon# Stevedoring# from# the# #############################################################
foreign# Liquidation# Commission.# It# was# a# surplus# property.# It# was# a# deepNsea# tugboat# 3#DryNdock:#a#dock#that#can#be#drained#of#water#to#allow#the#inspection#and#repair#of#a#
ship's#hull.#
#
tug#"Tamban"#set#sail#from#Batangas#for#the#rescue#only#to#return#to#secure#a#map#of#the# • The#fire#in#the#motor#boat#Alfonso#spread#to#the#steamer#Y,#causing#damages#to#her#
vicinity# where# the# "Snapper"# had# stalled,# which# entailed# a# delay# of# two# hours.# In# the# deck,#according#to#Sontua,#amounting#to#P67,400.#
meantime,#the#captain#of#the#"Snapper"#attempted#to#cast#anchor.##
The# efforts# made# by# defendant# fall# short# of# that# diligence# and# precaution# that# are# • Sontua,#which#is#a#regular#partnership#and#the#owner#of#the#steamer#Y,#brought#this#
action#to#recover#from#Ossorio,#the#owner#and#agent#of#said#motor#boat#Alfonso.#
demanded#by#the#situation#to#save#the#tugboat#and#the#barge#it#was#towing#from#disaster#
for# it# appears# that# more# than# twentyNfour# hours# had# elapsed# before# the# tug# "Tamban"# • Sontua#alleges#that#it#sustained#damages#through#the#negligence#of#the#agents#and#
showed# up# to# extend# help.# The# delay# was# caused# not# so# much# because# of# the# lack# of# employees# of# the# Ossorio,# which# caused# the# fire# in# the# motorboat,# wherefrom# it#
available# ships# in# the# vicinity# where# the# "Snapper"# stalled# but# because# Luzon# spread,#and#caused#said#damages#to#the#steamer#Y.##
Stevedoring#did#not#have#in#readiness#any#tugboat#sufficient#in#tonnage#and#equipment#
to#attend#to#the#rescue.## • These#damages#are#specified#in#the#two#causes#of#action#set#forth#in#the#complaint,#
The#tug#"Tamban"#that#was#ordered#to#extend#help#was#fully#inadequate#for#the# in# the# first# of# which# are# mentioned# the# appurtenances# and# parts# of# the# aforesaid#
purpose.# It# was# a# small# vessel# that# was# authorized# to# operate# only# within# Manila# Bay# vessel# that# were# destroyed# and# damaged# by# the# said# fire,# and# for# the# repair# of#
and#did#not#even#have#any#map#of#the#Visayan#Islands.#A#public#utility#that#is#engaged#in# which#the#sum#of#P40,000#was#expended.##
sea#transportation#even#for#a#limited#service#with#a#fleet#of#140#tugboats#should#have#a# o In# the# second# cause# of# action# it# is# alleged# that# the# Sontua# sustained#
competent# tug# to# rush# for# towing# or# repairs# in# the# event# of# untoward# happening# damages# to# the# amount# of# ¥=27,400# for# the# demurrage# and# delay# in# the#
overseas.## ordinary#voyages#of#the#aforesaid#vessel.##
While#the#breaking#of#the#idler#may#be#due#to#an#accident,#or#to#something#unexpected,#
the#cause#of#the#disaster#which#resulted#in#the#loss#of#the#gasoline#can#only#be#attributed# • After# denying# generally# and# specifically# the# allegations# of# the# complaint,# Ossorio#
to#the#negligence#or#lack#of#precaution#to#avert#it#on#the#part#of#Luzon#Stevedoring.## alleges,#as#special#defense,#that##
# o he#has#taken#no#part#either#directly#or#indirectly#in#the#acts#alleged#in#the#
complaint;##
# 11#YU#BIAO#SONTUA#V.#OSSORIO,#43#PHIL#511#–MUTI# o that#if#Sontua#has#sustained#any#damages,#they#are#not#the#result#of#the#act#
said# to# have# been# committed# by# the# agents# and# employees# of# the#
ER:#There#are#two#vessels#involved#here:#a#steamer#owned#by#Sontua#and#a#motor#boat# defendant;#and##
owned# by# Ossorio(also# the# ship# agent).# On# 1920,# a# fire# broke# out# on# board# the# motor# o that# such# damages# were# caused# by# a# fortuitous# event# and# are# not#
boat,#which#was#loaded#with#a#considerable#amount#of#gasoline.#The#fire#spread#to#the# imputable# to# the# negligence# of# the# Ossorio,# or# any# of# his# agents,#
steamer.# Sontua# sued# Ossorio# for# damages.# Issue# is# W/N# Ossorio# should# be# held# liable# employees,#or#mandataries.#
for#negligence#of#his#agents#and#employees#which#caused#the#fire#N#YES#
• The#court#held#in#favor#of#Sontua.#Ossorio#appeals#to#this#court.#
HELD:% The# doctrines# having# reference# to# the# relations# between# principal# and# agent#
CANNOT#be#applied#in#the#case#of#ship#agent#and#his#agents#and#employees.#Ossorio#is# #
liable#because#the#persons#responsible#for#the#fire#were#his#employees.#Where#the#vessel# Issues:%
is#one#of#freight,#a#public#concern#or#public#utility,#its#owner#or#agent#is#liable#for#tortious#
acts#of#his#employees.# 1. W/N#the#explosion#in#question#was#due#to#the#negligence#of#the#persons#in#charge#of#
the#motor#boat#Alfonso%N#YES#
With#regard#to#the#allegation#that#the#obligations#enumerated#in#article#612#of#our#Code#
of#Commerce#are#inherent#in#the#master,#such#inherent#duties#do#not#limit#to#the#master# 2. W/N#Ossorio#is#liable#for#the#negligence#of#his#agents#and#employees#N#YES#
the#civil#liability#arising#from#their#nonfulfillment,#but#while#the#master#is#responsible#to# 3. W/N#the#sum#of#damages#awarded#was#excessive#–#YES#
the# ship# agent,# the# ship# agent,# in# turn,# is# responsible# to# third# persons,# as# is# clearly#
provided#in#article#618#of#said#Code,#in#which#express#mention#is#made,#is#subsections#5# #
and#7,#of#the#duties#enumerated#in#the#said#article#612.## Ratio:%
# The%explosion%was%due%to%the%negligence%of%the%persons%in%charge%of%the%motor%boat%
Facts:%% • During#the#day#and#night#of#the#12th,#and#during#the#day#of#the#13th#of#March,#1920,#
• On#the#evening#of#the#13th#of#March,#1920,#a#fire#broke#out#on#board#the#motor#boat# there# were# loaded# in# the# said# motor# boat# cases# of# petroleum# and# gasoline,# which#
Alfonso#when#this#boat#was#in#the#Pasig#River,#city#of#Manila,#ready#to#weigh#anchor.# were#placed#in#the#hold#of#said#motor#boat,#and#the#balance#on#deck.#
A# short# distance# from# the# Alfonso# the# steamer# Y.% Sontua% (“Steamer# Y”)# was# lying# o Said#loading#was#done#without#permission#from#the#customs#authorities.#
alongside#moored#to#the#wharf#of#said#river.#
#
o The# said# cases# were# loaded# by# means# of# straps# and# were# placed# in# the# losses#are#not#within#the#exceptions#either#of#act#of#God,#or#peril#of#the#sea,#
hold# about# 14# feet# from# the# boiler# of# the# main# engine# and# about# 4# feet# except#by#local#custom,#unless#proximately#caused#by#one#of#these#events.#
from#the#boiler#of#the#smaller#engine.# In#jurisdictions#where#the#civil#law#obtains,#however,#it#has#been#held#that#
if#property#on#a#steamboat#is#destroyed#by#fire,#the#owners#of#the#boat#are#
• The# fire# in# said# motor# boat# burst# out# with# an# explosion# followed# by# a# violent#
not#responsible,#if#it#was#being#navigated#with#proper#diligence,#although#
expulsion#of#gasoline#and#petroleum.#
the#accident#occurred#at#night.#The#common#law#liability#extends#even#to#
• Owing#to#the#proximity#of#the#motor#boat#to#the#steamer#Y,%the#magnitude#of#the#fire# loss# by# fires# caused# entirely# by# spontaneous# combustion# of# the# cargo,#
and#the#inflammability#of#the#material#that#served#as#fuel,#the#fire#spread#to#the#said# without#any#negligence#on#the#part#of#master#or#crew."##
steamer#Y,#and#so#rapidly#that#it#was#impossible#for#the#crew#to#check#its#progress.#
• With#regard#to#the#allegation#that#the#obligations#enumerated#in#article#612#of#our#
• Expert#testimony#was#also#introduced#by#Sontua#to#the#effect#that#it#is#but#natural# Code#of#Commerce#are#inherent#in#the#master#such#inherent#duties#do#not#limit#to#
that,#after#several#transhipments#of#gasoline#and#petroleum,#there#is#bound#to#be#a# the#latter#the#civil#liability#arising#from#their#nonfulfilment,#but#while%the%master%is%
leakage#due#to#the#fact#that#the#loading#is#effected#by#means#of#straps#which,#quite# responsible% to% the% ship% agent,% the% ship% agent,% in% turn,% is% responsible% to% third%
frequently,# receive# violent# bumps# resulting# in# damage# to# the# cans# and# the# persons,# as# is# clearly# provided# in# article# 618# of# said# Code,# in# which# express#
consequent#leakage.# mention#is#made,#in#subsections#5#and#7,#of#the#duties#enumerated#in#the#said#article#
612.#(Note:%Said%allegation%was%not%provided%in%the%facts.)#
• It#was#also#shown#by#expert#testimony#that#the#gases#formed#by#the#volatilization#of#
the# gasoline# or# petroleum# leaking# from# the# cases# are# apt# to# accumulate# in# a# The%sum%of%damages%awarded%was%excessive%
compartment,#such#as#the#hold#of#a#ship,#without#sufficient#ventilation#causing#the#
• As# the# evidence# does# not# sufficiently# show# the# time# consumed# in# repairing# the#
gases#to#ignite#upon#coming#in#contact#with#a#spark#or#upon#the#temperature#being#
actual#damage#caused#by#the#said#fire,#nor#the#time#employed#in#making#the#other#
sufficiently#raised.#
repairs,# and# as# the# damage,# if# any,# resulting# from# the# ten# days'# delay# in# the# Pasig#
• Under# these# circumstances# we# are# constrained# to# hold# that# the# fire# was# the# River,#is#remote#and,#therefore,#not#chargeable#to#Ossorio#since#said#delay#is#in#no#
inevitable#effect#of#the#explosion#and#fire#which#occurred#in#the#motor#boat#Alfonso# way#imputable#to#him,#we#think#that#the#delay#should#be#reduced#to#oneNhalf#of#the#
and# that# this# is# imputable# to# the# negligence# of# the# persons# having# charge# at# that# net#profit#that#the#aforesaid#steamer#Y.%Sontua#failed#to#realize#as#a#consequence#of#
time# of# said# motor# boat# and# under# whose# direction# the# loading# of# the# aforesaid# said#delay.##
cases#of#petroleum#and#gasoline#had#been#performed.#
• Sontua# further# asks# that# he# be# awarded,# by# way# of# damages,# the# sum# of# P4,400#
# covering#maintenance#and#salary#of#the#officers#and#crew#of#his#steamer#during#the#
delay#aforementioned.#We#do#not#feel#that#he#is#entitled#to#this#item#for#the#reason#
Ossorio%is%liable%for%the%negligence%of%his%agents%and%employees%%
that# such# expenses# have# already# been# taken# into# account# in# determining# the# net#
• It#is#proven#that#the#agents#and#employees,#through#whose#negligence#the#explosion# daily#profit#above#referred#to.##
and#fire#in#question#occurred,#were#agents,#employees,#and#mandataries#of#Ossorio.##
The#judgment#appealed#from#is#modified,#damages#reduced#to#P54,486.70.#
• Where#the#vessel#is#one#of#freight,#a#public#concern#or#public#utility,#its% owner% or%
agent%is%liable%for%the%tortious%acts%of%his%agents#(arts.#587,#613,#and#618,#Code#of#
# 12#RUBISO#V.#RIVERA,#37#PHIL#72#–NARVASA#
Commerce;#and#arts.#1902,#1903,#1908,#Civil#Code).##
• The# doctrines# cited# by# Ossorio# in# support# of# his# theory# have% reference% to% the% RUBISO#(and#Gelito)#vs.#RIVERA#(1917)#–#Narvasa#
relations% between% principal% and% agent% in% general,% but% not% to% the% relations%
between%ship%agent%and%his%agents%and%employees;#for#this#reason#they#CANNOT# #
be#applied#in#the#present#case.#(Note:%case%didn’t%mention%what%doctrines%were%cited%
by%Ossorio.)% #
• In# American# law,# principles# similar# to# those# in# force# in# the# Philippines# and# ER:%
contained#in#the#Code#of#Commerce#above#cited,#are#prevailing:#
o "Vessel% owner's% liability% in% general.—The# general% liability% of% a% vessel% • Rivera# acquired# pilot# boat# Valentina# on# January# 4,# 1915,# from# its# original#
owner%extends%to%losses%by%fire%arising%from%other%than%a%natural%or% owner#the#Chinaman#Sy#Qui,#but%did%not%inscribe%his%title%in%the%mercantile%
other%excepted%cause,%whether%occurring%on%the%ship%accidentally,%or% registry#according#to#article#573#of#the#Code#of#Commerce#in#relation#to#article#
communicated%from%another%vessel,#or#from#the#shore;#and#the#fact#that# 2#of#Act#No.#1900,#until#much#later#on.##
fire# produces# the# motive# power# of# a# boat# does# not# affect# the# case.# Such#
#
• Subsequently#Rubiso#bought#said#pilot#boat#in#a#sale#at#public#auction#for#the# " Evidenced# by# a# deed# ratified# on# the# same# date# before# a#
sum# of# P55.45# and% inscribed% his% title% in% the% mercantile% registry% notary,#then#registered#in#the#Bureau#of#Customs#on#March#
immediately.# 17th.#
Who%has%a%better%right?# • After#the#sale#of#the#boat#to#the#defendant#Rivera,#there#was#a#suit#against#the#
Chinaman# Sy# Qui# to# enforce# payment# of# a# certain# sum# of# money# by# Fausto#
• The# requisite# of# registration# in# the# registry# of# the# purchase# of# a# vessel# is# Rubiso.#
necessary# and# indispensable# in# order# that# the# purchaser's# rights# may# be# o Rubiso#then#acquired#said#vessel#at#a#public#auction#sale#and#for#the#
maintained#against#a#claim#filed#by#a#third#person.## sum#of#P55.45.##
• Rubiso# wins# because# he# registered# his# right# first,# despite# the# previous# o The# certificate# of# sale# and# adjudication# of# the# boat# in# question# was#
purchase#of#Rivera.## issued# by# the# sheriff# on# behalf# of# Fausto# Rubiso,# in# the# office# of# the#
# Collector# of# Customs,# on# January# 27# of# the# same# year# and# was# also#
entered#in#the#commercial#registry.#
Facts:%
To#Clarify:#
• Rubiso# (and# Gelito)# alleged# that# they# are# the# owner# of# the# pilot# boat# named#
Valentina,#which#had#been#in#bad#condition#since#the#year#1914.##
o That#such#boat#was#stranded#in#Tingloy,#of#the#municipality#of#Bauan,# • Valentina#was#twice#sold:##
Batangas;##
o the#defendant#Florentino#E.#Rivera#took#charge#or#possession#of#said# 1.# first# privately# by# its# owner# Sy# Qui# to# the# defendant# Florentino# E.# Rivera,# on#
vessel#without#the#knowledge#or#consent#of#the#plaintiff#and#refused# January#4,#1915,#and#
to#deliver#it#to#them,#under#claim#that#he#was#the#owner#thereof;#
o That#he#suffered#damages.#That#he#cannot#repair#the#vessel#and#from# 2.# At# public# auction# in# conformity# with# the# order# contained# in# the# judgment#
unrealized#profit.#(P1,750)# rendered#by#the#justice#of#the#peace,#court,#on#January#23#of#the#same#year,#against#the#
o Prayed#that#defendant#deliver#said#pilot#boat#to#the#plaintiffs#and#pay# Chinaman#Sy#Qui#and#in#behalf#of#the#plaintiff,#Fausto#Rubiso.#
damages.#
• Defendant#Rivera#denied#all#these,#with#the#exception#of#those#admitted#in#the#
special#defense#and#consisting#in#that#said#pilot#boat#belonged#to#the#concern# Whose%claim%to%the%boat%is%superior?%
named#"Gelito#and#Co.,"##
o Bonifacio#Gelito#being#a#copartner#thereof#to#the#extent#of#twoNthirds,# • It#is#undeniable#that#the#defendant#Rivera#acquired#by#purchase#the#pilot#boat#
and#the#Chinaman#Sy#Qui,#to#that#of#the#oneNthird,#of#the#value#of#said# Valentina# on# a# date# prior# to# that# of# the# purchase# and# adjudication# made# at#
vessel;## public#auction,#by#and#on#behalf#of#the#plaintiff#Rubiso;#but#it#is#no#less#true#that#
o Gelito# sold# his# share# to# his# copartner# Sy# Qui,# as# attested# by# the# the#sale#of#the#vessel#by#Sy#Qui#to#Florentino#E.#Rivera,#on#January#4,#1915,#was#
instrument# Exhibit# A,# registered# in# the# office# of# the# Collector# of# entered#in#the#customs#registry#only#on#March#17,#1915,#while#its#sale#at#public#
Customs#and#made#a#part#of#his#answer;#that#later#said#Chinaman,#the# auction# to# Fausto# Rubiso# on# the# 23d# of# January# of# the# same# year,# 1915,# was#
absolute#owner#of#the#vessel,#sold#it#in#turn#to#the#defendant#Rivera,# recorded# in# the# office# of# the# Collector# of# Customs# on# the# 27th# of# the# same#
according# to# the# public# instrument,# also# attached# to# his# answer# as# month,#and#in#the#commercial#registry#on#the#4th#of#March,#following;#that#is,#
Exhibit# B;# and# that,# for# the# reason,# Rivera# took# possession# of# said# the# sale# on# behalf# of# the# defendant# Rivera# was# prior# to# that# made# at# public#
pilot#boat#Valentina,#as#its#sole#owner.## auction# to# Rubiso,# but# the# registration# of# this# latter# sale# was# prior# by# many#
• The# record# shows# it# to# have# been# fully# proven# that# Bonifacio# Gelito# sold# his# days#to#the#sale#made#to#the#defendant.#
share#in#the#pilot#boat#Valentina,#consisting#of#a#twoNthirds#interest#therein,#to#
the# Chinaman# Sy# Qui,# the# coNowner# of# the# other# oneNthird# interest# in# said# #
vessel;##
o Gelito#is#no#longer#entitled#to#exercise#any#action#whatever#in#respect#
Article#573#of#the#Code#of#Commerce#provides,#in#its#first#paragraph:#
to#the#boat#in#question.#Selling#his#share,#the#whole#ownership#in#the#
vessel#having#been##
o Sy#then#sold#this#boat#to#Florentino#E.#Rivera#for#P2,500.# #
#
Merchant#vessels#constitute#property#which#may#be#acquired#and#transferred# o Despite# latter's# acquisition# of# the# vessel# at# public# auction# was# later#
by# any# of# the# means# recognized# by# law.# The# acquisition# of# a# vessel# must# be# than# that# the# defendant# Rivera,# nevertheless# said# sale# at# public#
included# in# a# written# instrument,# which# shall% not% produce% any% effect% with% auction# was# antecedently# recorded# in# the# office# of# the# Collector# of#
regard%to%third%persons%if%not%recorded%in%the%commercial%registry.% Customs,#on#January#27,#and#entered#in#the#commercial#registry#—#an#
unnecessary#proceeding#—#on#March#4th;##
# o while#the#private#and#voluntary#purchase#made#by#Rivera#on#a#prior#
date#was#not#recorded#in#the#office#of#the#Collector#of#Customs#until#
many#days#afterwards,#that#is,#not#until#March#17,#1915.#
• Inscription# in# the# commercial# registry# was# indispensable,# in# order# that# said# • The#amendment#set#down#in#the#Mercantile#Code#subsists#refers#to#the#official#
acquisition# might# affect,# and# produce# consequences# with# respect# to# third# who#shall#make#the#entry.#
persons.# • However,% with% respect% to% the% rights% of% the% two% purchasers,% whichever% of%
them% first% registered% his% acquisition% of% the% vessel% is% the% one% entitled% to%
# enjoy%the%protection%of%the%law,%which%considers%him%the%absolute%owner%
of% the% purchased% boat,% and% this% latter% to% be% free% of% all% encumbrance% and%
• However,#since#the#enactment#of#Act#No.#1900,#on#May#18,#1909,#said#article#of# all%claims%by%strangers.##
the#Code#of#Commerce#was#amended,#as#appears#by#section#2#of#that#Act,#here# o pursuant# to# article# 582# of# the# said# code,# after# the# bill# of# the# judicial#
below#transcribed.# sale# at# auction# has# been# executed# and# recorded# in# the# commercial#
registry,#all#the#other#liabilities#of#the#vessel#in#favor#of#the#creditors#
shall#be#considered#canceled.##
#
• The#purchaser#at#public#auction,#Fausto#Rubiso,#who#was#careful#to#record#his#
acquisition,#opportunely#and#on#a#prior#date,#has,#according#to#the#law,#a#better#
The#documenting,#registering,#enrolling,#and#licensing#of#vessels#in#accordance# right#than#the#defendant#Rivera#who#subsequently#recorded#his#purchase.##
with# the# Customs# Administrative# Act# and# customs# rules# and# regulations# shall# o The# latter# is# a# third# person,# who# was# directly# affected# by# the#
be#deemed#to#be#a#registry#of#vessels#within#the#meaning#of#the#title#two#of#the# registration#which#the#plaintiff#made#of#his#acquisition.#
Code#of#Commerce,#unless#otherwise#provided#in#said#Customs#Administrative# • Ships# or# vessels,# whether# moved# by# steam# or# by# sail,# partake,# to# a# certain#
Act# or# in# said# customs# rules# and# regulations,# and# the# Insular# Collector# of# extent,#of#the#nature#and#conditions#of#real#property,#on#account#of#their#value#
Customs# shall# perform# the# duties# of# commercial# register# concerning# the# and#importance#in#the#world#commerce;#and#for#this#reason#the#provisions#of#
registering#of#vessels,#as#defined#in#title#two#of#the#Code#of#Commerce.# article#573#of#the#Code#of#Commerce#are#nearly#identical#with#those#of#article#
1473#of#the#Civil#Code.#
# • No#Damages#
o No#proof#of#losses#
No#bad#faith#
• The# requisite# of# registration# in# the# registry# of# the# purchase# of# a# vessel# is#
necessary# and# indispensable# in# order# that# the# purchaser's# rights# may# be#
maintained#against#a#claim#filed#by#a#third#person.## # 13#LUZON#STEVEDORING#V.#CA,#156#SCRA#169*#NPEREZ#DE#TAGLE#
o Such# registration# is# required# both# by# the# Code# of# Commerce# and# by#
Act#No.#1900.## Luzon#Stevedoring#v.#CA#
o The#amendment#solely#consisted#in#charging#the#Insular#Collector#of#
Customs,# as# at# present,# with# the# fulfillment# of# the# duties# of# the# #
commercial#register#concerning#the#registering#of#vessels;##
o so#that#the#registration#of#a#bill#of#sale#of#a#vessel#shall#be#made#in#the# Common# Both#were#carriers.#Luzon#Stevedoring#and#Hijos#de#Escano.##
office# of# the# insular# Collector# of# Customs,# who,# since# May# 18,# 1909,# Carrier# #
has#been#performing#the#duties#of#the#commercial#register#in#place#of# Passenger# NA#
this#latter#official.# Problem# Maritime# collision,# North# Harbor,# Manila.# Hijos# successfully#
• In#view#of#said#legal#provisions,#it#is#undeniable#that#the#defendant#Florentino# prosecutes# admiralty# case# against# LSC.# LSC# appeals# and# questions#
E.# Rivera's# rights# cannot# prevail# over# those# acquired# by# Fausto# Rubiso# in# the# w/n# abandonment# is# required# to# invoke# Art.# 837# as# a# basis# for#
ownership#of#the#pilot#boat#Valentina.# limiting#liability#
#
#
Who#won# Hijos#de#Escano# should#it#be#made?#(not#decided#by#court#because#it#ruled#it#unnecessary)#
#
Held:#
ER:# There# was# a# maritime# collision# between# a# ship# owned# by# LSC# and# one# owned# by#
Hijos#de#Escano#(HDE).#The#latter#sunk#thus#an#action#in#admiralty#was#field#by#HDE#and# WHEREFORE,#the#petition#is#DENIED#with#costs#against#petitioner.#
the#Domestic#Insurance#Company#against#LSC#in#the#CFI#Cebu.#LSC#lost.#Issue:% Whether#
abandonment# is# required# under# Article# 837# of# the# Code# of# Commerce.# (YES)# Ratio:% Ratio:#
Article# 837# is# a# mere# amplification# of# the# Arts.# 587# and# 590,# which# both# require#
abandonment.# All# three# articles# reflect# the# “real# and# hypothecary”# nature# of# maritime#
GPT:# The# oldie# case# is# all# citations# and# excerpts# from# jurisprudence# and# treatises#
law,#i.e.,#that#liability#of#the#ship#owner#or#agent#is#limited#to#the#value#of#the#vessel,#its#
regarding#maritime#law#and#the#three#articles#below.#PART#I#is#the#ratio#I#rearranged#to#
appurtenances# and# freightage# earned# in# the# voyage,# provided# that# owner# or# agent#
make#the#case#flow#logically.#PART#II#is#the#discourse#and#textbook#type#stuffs.##
abandons# the# vessel.# The# rule# therefore# 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# Pertinent#articles#for#ratio:##
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# • ART.#5874;#ART.#5905;#ART.#8376.##
extinguished.#
PART%I%
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# • We#reiterate#what#We#said#in#previous#decisions#that#the#real#and#hypothecary#
petitioner#has#not#abandoned#the#vessel.#Hence#petitioner#cannot#invoke#the#benefit#of# nature#of#the#liability#of#the#shipowner#or#agent#is#embodied#in#the#provisions#
the#provisions#of#Article#837#of#the#Code#of#Commerce#to#limit#its#liability#to#the#value#of# of#the#Maritime#Law,#Book#III,#Code#of#Commerce.##
the#vessel,#all#the#appurtenances#and#freightage#earned#during#the#voyage.#
The%Real%and%Hypothecary%Nature%of%Maritime%Law%(topic%where%the%case%is%found%
# under)%
Facts:#
• These#doctrines#highlight#the#“real#and#hypothecary”7#(footnote#for#definition)#
nature#of#maritime#law.#This#is#explained#further#by#an#excerpt#from#a#treatise#
• A#maritime#collision#occurred#within#the#vicinity#of#the#entrance#to#the#North#
cited#in#the#ratio:#
Harbor,#Manila#between#the#tanker#LSCO#"Cavite"#owned#by#Luzon#Stevedoring#
o That# which# distinguishes# the# maritime# from# the# civil# law# and# even#
Corporation#and#MV#"Fernando#Escano"#a#passenger#ship#owned#by#Hijos#de#F.#
from#the#mercantile#law#in#general#is#the#real#and#hypothecary#nature#
Escano,#Inc.#as#a#result#of#which#said#passenger#ship#sunk.##
of#the#former.##
• An# action# in# admiralty# was# filed# by# Hijos# de# F.# Escano,# Inc.# and# Domestic# o Maritime# law# fixes# many# securities# of# a# real# nature# that# originate#
Insurance#Company#of#the#Philippines#against#the#Luzon#Stevedoring#Company#
(LSC)#in#the#Court#of#First#Instance#of#Cebu.#
o A# decision# was# rendered# finding# that# LSCO# "Cavite"# was# solely# to#
#############################################################
4#Art#587.#The#agent#shall#also#be#civilly#liable#for#the#indemnities#in#favor#of#third#
blame#for#the#collision#
persons#which#arise#from#the#conduct#of#the#captain#in#the#care#of#the#goods#which#the#
o The# trial# court# found# that# the# defense# of# LSC# (Art.# 837)# was# not#
vessel#carried#but#he#may#exempt#himself#therefrom#by#abandoning#the#vessel#with#all#
sufficiently#established#by#the#evidence.##
her#equipments#and#the#freight#he#may#have#earned#during#the#trip#
• Appeal#to#the#CA;#affirmed#the#TC.#MR#denied.#
5#Art#590.#The#part#owners#of#a#vessel#shall#be#civilly#liable,#in#the#proportion#of#their#
• Certiorari#to#SC.#Denied.#MR#denied.#Second#MR#given#due#course.#
contribution#to#the#common#fund,#for#the#results#of#the#acts#of#the#captain#referred#to#in#
#
Article#587.#Each#part#owner#may#exempt#himself#from#this#liability#by#the#
abandonment,#before#a#notary,#of#the#part#of#the#vessel#belonging#to#him.#
Issues:#
6#Art#837.#The#civil#liability#incurred#by#the#shipowners#in#the#cases#prescribed#in#this#
section,#shall#be#understood#as#limited#to#the#value#of#the#vessel#with#all#her#
1. Whether#abandonment#is#required#under#Article#837#of#the#Code#of#Commerce.#
appurtenances#and#freight#earned#during#the#voyage”#
(YES)#
7#a#right#established#by#law#over#a#debtor's#property#that#remains#in#the#debtor's#
2. If#abandonment#is#required#under#Article#837#of#the#Code#of#Commerce,#when#
possession.#(Mac#Dictionary)#
#
from#maritime#custom,#the#laws,#the#codes,#and#jurisprudence.## o However,# if# the# injury# or# damage# is# caused# by# the# shipowner's# fault#
o These#securities#have#provided#for#the#protection#of#the#various#and# as#where#he#engages#the#services#of#an#inexperienced#and#unlicensed#
conflicting# interests# which# are# ventured# and# risked# in# maritime# captain#or#engineer,#he#cannot#avail#of#the#provisions#of#Article#837#of#
expeditions,#such#as#the#interests## the# Code# by# abandoning# the# vessel.# He# is# personally# liable# for# the#
" (1)#of#the#vessel#and#of#the#agent,## damages#arising#thereby.#
" (2)#those#of#the#owners#of#the#cargo#and#consignees,##
" (3)#those#who#salvage#the#ship,## Applied%to%the%Facts%
" (4)#those#who#make#loans#upon#the#cargo,##
" (5)#those#of#the#sailors#and#members#of#the#crew#as#to#their# • In# the# case# now# before# the# Court# there# is# no# question# that# the# action# arose#
wages,#and## from# a# collision# and# the# fault# is# laid# at# the# doorstep# of# LSCO# "Cavite"# of#
" (6)#those#of#a#constructor#as#to#repairs#made#to#the#vessel.# petitioner.# Undeniably# petitioner# has# not# abandoned# the# vessel.# Hence#
• As#evidence#of#this#"real"#nature#of#the#maritime#law#we#have## petitioner#cannot#invoke#the#benefit#of#the#provisions#of#Article#837#of#the#Code#
o (1)# the# limitation# of# the# liability# of# the# agents# to# the# actual# value# of# of# Commerce# to# limit# its# liability# to# the# value# of# the# vessel,# all# the#
the#vessel#and#the#freight#money,#and## appurtenances#and#freightage#earned#during#the#voyage.#
o (2)#the#right#to#retain#the#cargo#and#the#embargo#and#detention#of#the# • In# the# light# of# the# foregoing# conclusion,# the# issue# as# to# when# abandonment#
vessel# even# in# cases# where# the# ordinary# civil# law# would# not# allow# should#be#made#need#not#be#resolved.#
more#than#a#personal#action#against#the#debtor#or#person#liable.##
PART%II%
The%Laws%
Liabilities%of%Ship%Agent/Owner%vis`à`vis%acts%of%the%captain%
• Articles#587,#590#and#837#of#the#same#code#are#precisely#intended#to#limit#the#
liability#of#the#shipowner#or#agent#to#the#value#of#the#vessel,#its#appurtenances#
• The# difference# which# exists# between# the# lawful# acts# and# lawful# obligations# of#
and# freightage# earned# in# the# voyage,# provided# that# owner# or# agent# abandons#
the# captain# and# the# liability# which# he# incurs# on# account# of# any# unlawful# act#
the#vessel.#(REAL#AND#HYPOTHECARY#NATURE)#
committed#by#him.##
• Although#it#is#not#specifically#provided#for#in#Article#837#of#the#same#code#that# o [LAWFUL# ACTS]# In# the# first# case,# the# lawful# acts# and# obligations# of#
in# case# of# collision# there# should# be# such# abandonment# to# enjoy# such# limited# the# captain# beneficial# to# the# vessel# may# be# enforced# as# against# the#
liability,# said# article# on# collision# of# vessels# is# a# mere# amplification# of# the# agent# for# the# reason# that# such# obligations# arise# from# the# contract# of#
provisions# of# Articles# 587# and# 590# of# same# code# where# abandonment# of# the# agency# (provided,# however,# that# the# captain# does# not# exceed# his#
vessel#is#a#preN#condition.## authority),##
• Even#without#said#article,#the#parties#may#avail#of#the#provisions#of#Articles#587# o [UNLAWFUL# ACTS]# While# as# to# any# liability# incurred# by# the# captain#
and#590#of#same#code#in#case#of#collision.#This#is#the#reason#why#Article#837#of# through#his#unlawful#acts,#the#ship#agent#is#simply#subsidiarily#civilly#
the#same#code#is#considered#a#superfluity.## liable.##
• This#liability#of#the#agent#is#limited#to#the#vessel#and#it#does#not#extend#further.##
The%rule%based%on%the%aforementioned%laws% • For#this#reason#the#Code#of#Commerce#makes#the#agent#liable#to#the#extent#of#
the#value#of#the#vessel,#as#the#codes#of#the#principal#maritime#nations#provide,#
• Hence#the#rule#is#that#in#case#of#collision#there#should#be#abandonment#of#the# with#the#vessel,#and#not#individually#
vessel# by# the# shipowner# or# agent# in# order# to# enjoy# the# limited# liability#
provided#for#under#said#Article#837.# Abandonment%
o 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.#
• The#rule#is#that#in#the#case#of#collision,#abandonment#of#the#vessel#is#necessary#
Because# of# such# total# loss# the# liability# of# the# shipowner# or# agent# for#
in#order#to#limit#the#liability#of#the#shipowner#or#the#agent#to#the#value#of#the#
damages# is# extinguished.# Nevertheless,# the# shipowner# or# agent# is#
vessel,# its# appurtenances# and# freightage# earned# in# the# voyage# in# accordance#
personally#liable#for#claims#under#the#Workmen's#Compensation#Act#
with#Article#837#of#the#Code#of#Commerce.##
and#for#repairs#of#the#vessel#before#its#loss.##
• The# only# instance# where# such# abandonment# is# dispensed# with# is# when# the#
• In# case# of# illegal# or# tortious# acts# of# the# captain# the# liability# of# the# shipowner#
vessel#was#entirely#lost.#In#such#case,#the#obligation#is#thereby#extinguished.#
and#agent#is#subsidiary.#In#such#instance#the#shipowner#or#agent#may#avail#of#
• "the#total#destruction#of#the#vessel#extinguishes#a#maritime#lien,#as#there#is#no#
the#provisions#of#Article#837#of#the#Code#by#abandoning#the#vessel.##
longer#any#risk#to#which#it#can#attach,#but%the%total%destruction%of%the%vessel%does%
#
not%affect%the%liability%of%the%owner%for%repairs%of%the%vessel%completed%before%its%
& agent#must#abandon#the#vessel.#In#such#case#the#civil#liability#shall#be#limited#to#
loss, interpreting% the% provision% of% Article% 591% of% the% Code% of% Commerce# in# the# value# of# the# vessel# with# all# the# appurtenances# and# freight# earned# during#
relation#with#the#other#Articles#of#the#same#Code.# the# voyage.# However,# where# the# injury# or# average# is# due# to# the# shipNowner's#
fault#as#in#said#case,#the#shipowner#may#not#avail#of#his#right#to#limited#liability#
The%interplay%between%Articles%587,%590,%and%837% by#abandoning#the#vessel.#
• The% provision% accords% a% shipowner% or% agent% the% right% of% abandonment;% and% by% #
necessary% implication,% his% liability% is% confined% to% that% which% he% is% entitled% as% of%
right% to% Fabandon% —% "the% vessel% with% all% her% equipment% and% the% freight% it% may% # 14#CHUA#YEK#HONG#V.#IAC,#166#SCRA#183*#NRAZON#
have%earned%during%the%voyage."%It# is# true# that# the# article# appears# to# deal# only#
with#the#limited#liability#of#shipowners#or#agents#for#damages#arising#from#the#
CHUA% YEK% HONG,% petitioner,% vs.% INTERMEDIATE% APPELLATE% COURT,% MARIANO%
misconduct#of#the#captain#in#the#care#of#the#goods#which#the#vessel#carries,#but#
GUNO,%and%DOMINADOR%OLIT,%respondents.%
this#is#a#mere#deficiency#of#language#and#in#no#way#indicates#the#true#extent#of#
%
such#liability.#The#consensus#of#authorities#is#to#the#effect#that#notwithstanding#
DOCTRINE:%If%the%ship%owner%or%agent%may%in%any%way%be%held%civilly%liable%at%all%for%injury%
the# language# of# the# aforeNquoted# provision,# the# benefit# of# limited# liability#
to%or%death%of%passengers%arising%from%the%negligence%of%the%captain%in%cases%of%collisions%or%
therein#provided#for,#applies#in#all#cases#wherein#the#shipowner#or#agent#may#
shipwrecks,% his% liability% is% merely% coFextensive% with% his% interest% in% the% vessel% such% that% a%
properly#be#held#liable#for#the#negligent#or#illicit#acts#of#the#captain#
total%loss%thereof%results%in%its%extinction.#
• A# cursory# examination# will# disclose# that# the% principle% of% limited% liability% of% a% %
shipowner%or%agent%is%provided%for%in%but%three%articles%of%the%Code%of%Commerce%
COMMON%CARRIER:%‘M/V#Luzviminda#I’#owned#by#Guno#and#Olit%
—% Article% 587% aforequoted% and% articles% 590% and% 837.% Article% 590% merely% Shipper:%Chua#Yek#Hong#
reiterates% the% principle% embodied% in% article% 587,% where% the% vessel% is% owned% by% Goods:%1,000#sacks#of#copra#
several%person%Article%837%applies%the%same%principle%in%cases%of%collision%and%it% PROBLEM:%Cargo#was#lost#when#vessel#sank.#
has%been%observed%that%said%article%is%but%'a%necessary%consequence%of%the%right%to% Who%WON:%Guno#and#Olit#(CC)%
abandon%the%vessel%given%to%the%shipowner%in%Article%587%to%the%Code,%and%it%is%one% %
of%the%many%superfluities%contained%in%the%Code.%(Lorenzo%Benito,%Lecciones%352,% EMERGENCY% DIGEST:% Chua# Yek# Hong# (CHUA)# loaded# 1,000# sacks# of# copra# on# board#
quoted%in%Philippine%Shipping%Co.%vs.%Garcia,#6#Phil.#281,#282.)#In#effect#therefore,# vessel# M/V# Luzviminda# I# (COMMON# CARRIER)# for# shipment# from# Puerto# Galera# to#
only# Articles# 587# and# 590# are# the# provisions# contained# in# our# Code# of# Manila.# The# cargo# did# not# reach# Manila# because# the# vessel# sank# with# all# its# cargo#
Commerce# on# the# matter,# and# the# framers# of# said# code# had# intended# those# somewhere#between#Cape#Santiago#and#Calatagan,#Batangas.#CHUA#filed#a#complaint#for#
provisions#to#embody#the#universal#principle#of#limited#liability#in#all#cases.#...#.## damages#before#CFI#Oriental#Mindoro.#CFI#ruled#in#favor#of#CHUA#and#awarded#damages.#
• If#the#shipowner#or#agent#may#in#any#way#be#held#civilly#liable#at#all#for#injury# CA#reversed#and#absolved#COMMON#CARRIER#of#liability#in#view#of#abandonment#of#the#
to#or#death#of#passengers#arising#from#the#negligence#of#the#captain#in#cases#of# vessel.#CA#based#its#decision#in#the#limited#liability#provision#of#the#Code#of#Commerce8,#
collisions#or#shipwrecks,#his#liability#is#merely#coextensive#with#his#interest#in# which#extinguishes#liability#of#ship#owner/agent#for#injury/death,#upon#abandonment#of#
the#vessel#such#that#a#total#loss#thereof#results#in#its#extinction.# vessel#due#to#total#loss.#SC#affirmed#CA#decision#and#upheld#applicability#of#the#provision#
• assuming# that# petitioner# is# liable# for# a# breach# of# contract# of# carriage,# the# of#the#Code#of#Commerce.#
exclusively# "real# and# hypothecary# nature"# of# maritime# law# operates# to# limit# %
such#liability#to#the#value#of#the#vessel,#or#to#the#insurance#thereon,#if#any.# %
• it# is# a# general# principle,# well# established# maritime# law# and# custom,# that# COMPLETE%DIGEST:%
shipowners#and#ship#agents#are#civilly#liable#for#the#acts#of#the#captain#(Code#of# • Chua#Yek#Hong#(CHUA)#is#a#duly#licensed#copra#dealer#based#at#Puerta#Galera,#
Commerce,#Article#586)#and#for#the#indemnities#due#the#third#persons#(Article# Oriental#Mindoro.##
587);# so# that# injured# parties# may# immediately# look# for# reimbursement# to# the# • Mariano# Guno# and# Dominador# Olit# are# the# owners# of# the# vessel,# "M/V#
owner# of# the# ship,# it# being# universally# recognized# that# the# ship# master# or# Luzviminda#I,"#a#common#carrier#engaged#in#coastwise#trade#from#the#different#
captain#is#primarily#the#representative#of#the#owner#(Standard#Oil#Co.#vs.#Lopez# ports#of#Oriental#Mindoro#to#the#Port#of#Manila.#
Castelo,# 42# Phil.# 256,# 260).# This% direct% liability,% moderated% and% limited% by% the%
owner's%right%of%abandonment%of%the%vessel%and%earned%freight%(Article%587)%has% #############################################################
been%declared%to%exist%not%only%in%case%of%breached%contracts,%but%also%in%cases%of%
tortious%negligence#
8#Art.#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#
• From# the# foregoing,# it# is# clear# that# in# case# of# collision# of# vessels,# in# order# to# on# the# vessel;# but# he# may# exempt# himself# therefrom# by# abandoning# the# vessel# with# all# the#
avail#of#the#benefits#of#Article#837#of#the#Code#of#Commerce#the#shipowner#or# equipments#and#the#freight#it#may#have#earned#during#the#voyage.#
#
• In#October#1977,#CHUA#loaded#1,000#sacks#of#copra,#valued#at#P101,227.40,#on# his# captain,# and# the# apprehension# of# this# would# be# fatal# to# the# interest# of#
board#the#vessel#"M/V#Luzviminda#I"#for#shipment#from#Puerta#Galera,#Oriental# navigation.#
Mindoro,# to# Manila.# Said# cargo,# however,# did# not# reach# Manila# because# • The# limited# liability# rule,# however,# is# not# without# exceptions,# namely:# (1)#
somewhere# between# Cape# Santiago# and# Calatagan,# Batangas,# the# vessel# where#the#injury#or#death#to#a#passenger#is#due#either#to#the#fault#of#the#ship#
capsized#and#sank#with#all#its#cargo.# owner,#or#to#the#concurring#negligence#of#the#ship#owner#and#the#captain;#(2)#
• Thereafter,#CHUA#filed#before#CFI#Oriental#Mindoro,#a#Complaint#for#damages# where#the#vessel#is#insured;#and#(3)#in#workmen's#compensation#claims.#In#this#
based# on# breach# of# contract# of# carriage# against# Guno# and# Olit# (COMMON# case,#there#is#nothing#in#the#records#to#show#that#the#loss#of#the#cargo#was#due#
CARRIER).# to# the# fault# of# the# private# respondent# as# shipowners,# or# to# their# concurrent#
• In# their# Answer,# COMMON# CARRIER# averred# that# even# assuming# that# the# negligence#with#the#captain#of#the#vessel.#
alleged# cargo# was# truly# loaded# aboard# their# vessel,# their# liability# had# been# • Considering% the% "real% and% hypothecary% nature"% of% liability% under%
extinguished#by#reason#of#the#total#loss#of#said#vessel.# maritime%law,%the%provisions%of%the%Civil%Code%on%common%carriers%would%
• Trial#Court#ruled#in#favor#of#CHUA.#CA#reversed.#CA#applied#Article#587#of#the# not%have%any%effect%on%the%principle%of%limited%liability%for%ship%owners%or%
Code#of#Commerce#and#the#doctrine#in#Yangco%vs.%Lasema%(73%Phil.%330%[1941])# ship%agents.%
and#held#that#COMMON#CARRIER’s#liability,#as#ship#owners,#for#the#loss#of#the# In# other# words,# the# primary# law# is# the# Civil# Code# (Arts.# 1732,1766)# and# in# default#
cargo#is#merely#coNextensive#with#their#interest#in#the#vessel#such#that#a#total# thereof,#the#Code#of#Commerce#and#other#special#laws#are#applied.#Since#the#Civil#Code#
loss#thereof#results#in#its#extinction.#Thus,#appeal#to#SC.# contains#no#provisions#regulating#liability#of#ship#owners#or#agents#in#the#event#of#total#
% loss# or# destruction# of# the# vessel,# it# is# the# provisions# of# the# Code# of# Commerce,# more#
ISSUE:%Whether#or#not#the#limited#liability#provision#of#the#Code#of#Commerce#applies#in# particularly#Article#587,#that#govern#in#this#case.#
this#case?#YES#
#
# 15#ABOITIZ#SHIPPING#V.#GENERAL#ACCIDENT#FIRE,#217#SCRA#359*#NSANTOS#
HELD:%Decision#of#CA#affirmed.#
%
RATIO:%% ABOITIZ% SHIPPING% CORPORATION% vs.% GENERAL% ACCIDENT% FIRE% AND% LIFE%
• The# direct# liability# of# ship# owner/agent# is# moderated# and# limited# by# the# ship# ASSURANCE%CORP.%(1993)%
agent's#or#ship#owner's#right#of#abandonment#of#the#vessel#and#earned#freight.#
This#expresses#the#universal#principle#of#limited#liability#under#maritime#law.# ER:%ABOITIZ#SHIPPING#owned#and#operated#a#ship.#It#sank.#General#Accident#Insurance#
The# most# fundamental# effect# of# abandonment# is# the# cessation# of# the# (GAFLAC)# is# the# insurance# company# who# paid# the# consignees# for# the# cargo# that# sank#
responsibility#of#the#ship#agent/owner.#It#has#thus#been#held#that#by#necessary# with#the#vessel.#GAFLAC#is#now#pursuing#ABOITIZ.#Several#suits#were#filed#(for#recovery#
implication,#the#ship#agent's#or#ship#owner's#liability#is#confined#to#that#which# of# lost# cargo,# by# shippers,# successors# in# interest,# cargo# insurers).# The# Board# of# marine#
he#is#entitled#as#of#right#to#abandon#the#vessel#with#all#her#equipment#and#the# Inquiry#(BMI)#investigated#and#found#that#the#sinking#was#due#to#force#majeure#and#that#
freight#it#may#have#earned#during#the#voyage,"#and#"to#the#insurance#thereof#if# the# vessel# was# seaworthy.# Despite# this# finding# the# RTC,# in# one# of# the# cases# against#
any.”# In% other% words,% the% ship% owner's% or% agent's% liability% is% merely% co` ABOITIZ#(GAFLAC#as#claimant),#ruled#against#the#carrier#saying#that#the#sinking#was#not#
extensive% with% his% interest% in% the% vessel% such% that% a% total% loss% thereof% due#to#force#majeure.#CA#and#SC#affirmed#this#decision.#Now#an#execution#is#sought#by#
results% in% its% extinction.% "No% vessel,% no% liability"% expresses% in% a% nutshell% GAFLAC.#It#is#important#to#note#that#other#cases#related#to#the#same#sinking#ruled#that#
the% limited% liability% rule.# The# total# destruction# of# the# vessel# extinguishes# the# vessel# was# seaworthy# and# that# the# sinking# of# the# ABOITIZ# ship# was# due# to# force#
maritime#liens#as#there#is#no#longer#any#res#to#which#it#can#attach.# majeure.# Thus# the# SC# is# sought# to# prevent# execution# of# the# GAFLAC# claim# and# to#
• The# real# and# hypothecary# nature# of# the# liability# of# the# ship# owner# or# agent# reconcile#the#apparent#contrary#findings.##
embodied#in#the#provisions#of#the#Maritime#Law,#Book#III,#Code#of#Commerce,#
had# its# origin# in# the# prevailing# conditions# of# the# maritime# trade# and# sea#
ISSUE:# WON# the# LIMITED# LIABILITY# RULE# provided# by# the# CODE# OF# COMMERCE#
voyages# during# the# medieval# ages,# attended# by# innumerable# hazards# and#
arising#out#of#the#hypothecary#nature#of#maritime#law#should#apply#–#YES.#The#liability#of#
perils.# To# offset# against# these# adverse# conditions# and# to# encourage# ship#
the#vessel#owner#and#agent#arising#from#the#operation#of#such#vessel#are#confined#to#the#
building# and# maritime# commerce,# it# was# deemed# necessary# to# confine# the#
vessel# itself,# its# equipment,# freight,# and# insurance,# if# any,# which# limitation# served# to#
liability#of#the#owner#or#agent#arising#from#the#operation#of#a#ship#to#the#vessel,#
induce#capitalists#into#effectively#wagering#their#resources#against#the#consideration#of#
equipment,#and#freight,#or#insurance,#if#any,#so#that#if#the#ship#owner#or#agent#
the# large# profits# attainable# in# the# trade.# SC% has% been% consistent% in% holding% that%
abandoned#the#ship,#equipment,#and#freight,#his#liability#was#extinguished.#
the%only%time% the% Limited% Liability% Rule%does&not&apply&is% when% there% is% an% actual%
• Without#the#principle#of#limited#liability,#a#ship#owner#and#investor#in#maritime#
finding%of%negligence%on%the%part%of%the%vessel%owner%or%agent,%there%was%no%such%
commerce#would#run#the#risk#of#being#ruined#by#the#bad#faith#or#negligence#of#
finding% in% the% case% against% ABOITIZ.% MOREOVER,% The% rights% of% parties% to% claim%
#
against% an% agent% or% owner% of% a% vessel% may% be% compared% to% those% of% creditors% • ON#THE#OTHER#HAND,#other#cases#(no#mention#of#the#specifics)#have#resulted#
against% an% insolvent% corporation% whose% assets% are% not% enough% to% satisfy% the% in#findings#upholding#the#conclusion#of#the#BMI#that#the#vessel#was#seaworthy#
totality%of%claims%as%against%it.%In%both%insolvency%of%a%corporation%and%the%sinking% at#the#time#of#the#sinking,#and#that#such#sinking#was#due#to%force%majeure.##
of% a% vessel,% the% claimants% or% creditors% are% limited% in% their% recovery% to% the% o One#such#ruling#was#likewise#elevated#to#the#SC#and#was#sustained.##
remaining%value%of%accessible%assets.#In#the#case#of#an#insolvent#corporation,#these#are# • Part#of#the#task#resting#upon#this#Court,#therefore,#is#to#reconcile#the#resulting#
the#residual#assets#of#the#corporation#left#over#from#its#operations.#In%the%case%of%a%lost% apparent#contrary#findings#in#cases#originating#out#of#a#single#set#of#facts.#
vessel,%these%are%the%insurance%proceeds%and%pending%freightage%for%the%particular% • It#is#in#this#factual#milieu#that#the#instant#petition#seeks#a#pronouncement#as#to#
voyage.#THUS,#there#is#a#need%to%collate%all%claims%preparatory%to%their%satisfaction% the# applicability# of# the# doctrine# of# limited# liability# on# the# totality# of# the#
from% the% insurance% proceeds% on% the% vessel% M/V% P.% Aboitiz% and% its% pending% claims#vis% a% vis#the# losses# brought# about# by# the# sinking# of# the# vessel# M/V# P.#
freightage%at%the%time%of%its%loss.#No#claimant#can#be#given#precedence#over#the#others# ABOITIZ,#as#based#on#the#real#and#hypothecary#nature#of#maritime#law.#This#is#
by# the# simple# expedience# of# having# filed# or# completed# its# action# earlier# than# the# rest.# an#issue#which#begs#to#be#resolved#considering#that#a#number#of#suits#alleged#
Execution% of% judgment% in% earlier% completed% cases,% even% those% already% final% and% in# the# petition# number# about# 110# still# pend# and# whose# resolution# shall# wellN
executory,% must% be% stayed% pending% completion% of% all% cases% occasioned% by% the% nigh#result#in#more#confusion#than#presently#attends#the#instant#case.#
subject%sinking.%Then%and%only%then%can%all%such%claims%be%simultaneously%settled,% • ABOITIZ#argues#that#that#LIMITED#LIABILITY#RULE#SHOULD#APPLY#and#thus#
either%completely%or%pro`rata%should%the%insurance%proceeds%and%freightage%be%not% the# execution# of# the# judgment# against# it# must# be# stayed# (since# if# limited#
enough%to%satisfy%all%claims.% liability# rule# applies,# then# the# liability# of# the# vessel# owner# is# confined# to# the#
vessel#itself,#its#equipment,#freight,#and#insurance#if#any#–#which#means#that#the#
FACTS:% claimants#must#share#in#these#things)#
• ABOITIZ#SHIPPING#is#engaged#in#the#business#of#maritime#trade#as#a#carrier.#It# ISSUE:# # WON# execution# of# judgments# which# have# become# final# and# executory# may# be#
owned# and# operated# the# illNfated# "M/V# P.# ABOITIZ,"# a# common# carrier# which# stayed#–##YES##
sank#on#a#voyage#from#Hongkong#to#the#Philippines.#
• General# Accident# Fire# and# Life# Assurance# Corporation,# Ltd.# (GAFLAC),# on# the# WON# the# Limited# Liability# Rule# arising# out# of# the# real# and# hypothecary# nature# of#
other# hand,# is# a# foreign# insurance# company# pursuing# its# remedies# as# a# maritime#law#should#apply#in#this#case#N#YES#(OUR#TOPIC)#
subrogee# of# several# cargo# consignees# whose# respective# cargo# sank# with# the#
said#vessel#and#for#which#it#has#priorly#paid.#
SUB#ISSUE:#WON#there#was#negligence#on#the#part#of#the#shipowner#(ABOITIZ)#NNO#
• The#vessel#sank#which#gave#rise#to#the#filing#of#suits#for#recovery#of#lost#cargo#
either# by# the# shippers,# their# successorNinNinterest,# or# the# cargo# insurers# like#
GAFLAC#as#subrogees.## HELD:##Petition#granted.#RTC#decision#set#aside.#The#trial#court#is#directed#to#desist#from#
• The# sinking# was# initially# investigated# by# the# Board# of# Marine# Inquiry# which# proceeding# with# the# execution# of# the# judgment# rendered# in# CIVIL# CASE# pending%
found#that#such#sinking#was#due#to%force%majeure#and#that#subject#vessel,#at#the# determination% of% the% totality% of% claims% recoverable% from% the% petitioner% as% the%
time#of#the#sinking#was#seaworthy.## owner%of%the%M/V%P.%Aboitiz.##
• Despite#this#administrative#finding,#the#trial#court#in#said#Civil#Case#No.#144425#
(CIVIL#CASE#which#is#later#elevated#to#CA#and#SC#as#aboitiz#vs.#ca)#ruled#against# RATIO:%
the#carrier#on#the#basis#that#the#loss#subject#matter#therein#did#not#occur#as#a#
result#of%force%majeure.## It#is#important#to#determine#first#whether#or#not#the#Resolution#of#this#Court#in,#Aboitiz%
• GAFLAC’s#claim#was#awarded.#The#trial#court#in#doing#so,#swept#aside#ABOITIZ# Shipping,%Corporation%vs.%CA%(the%case%elevated%to%the%SC)%effectively# bars# and# precludes#
opposition# which# was# grounded# on# the# real# and# hypothecary# nature# of# the#instant#petition#as#argued#by#respondent#GAFLAC.#
ABOITIZ’#liability#as#ship#owner.##The#application#of#this#established#principle#
of# maritime# law# would# necessarily# result# in# a# probable# reduction# of# the#
An# examination# of# the# case# shows# that# the# same# settles# two# principal# matters,# first# of#
amount# to# be# recovered# by# GAFLAC,# since# it# would# have# to# share# with# a#
which# is# that#the% doctrine% of% primary% administrative% jurisdiction% is% not% applicable%
number# of# other# parties# similarly# situated# in# the# insurance# proceeds# on# the#
there;#and%second%is%that%a%limitation%of%liability%in%said%case%would%render%inefficacious%the%
vessel#that#sank.#
extraordinary%diligence%required%by%law%of%common%carriers.#
• This#decision#in#favor#of#GAFLAC#was#elevated#all#the#way#up#to#the#SC#(Aboitiz#
v.# Court# of# Appeals)# with# ABOITIZ# losing.# The# attempted# execution# of# the#
judgment#award#in#said#case#in#the#amount#of#P1,072,611.20#plus#legal#interest# The#limited#liability#discussed#in#said#case#is#not#the#same#one#now#in#issue#at#bar,#but#an#
has#given#rise#to#the#instant#petition.# altogether# different# aspect.# The# limited# liability# settled# in# ABOITIZ# vs# CA# is# that# which#
#
attaches# to# cargo# by# virtue# of# stipulations# in# the# Bill# of# Lading,# popularly# known# as# Despite# the# modernization# of# the# shipping# industry# and# the# development# of# highN
package# limitation# clauses,# which# in# that# case# was# contained# in# Section# 8# of# the# Bill# of# technology# safety# devices# designed# to# reduce# the# risks# therein,# the# limitation# has# not#
Lading#and#which#limited#the#carrier's#liability#to#US$500.00#for#the#cargo#whose#value# only# persisted,# but# is# even# practically# absolute# in# wellNdeveloped# maritime# countries#
was# therein# sought# to# be# recovered.# Said# resolution# did# not# tackle# the# matter# of# the# such# as# the# United# States# and# England# where# it# covers# almost# all# maritime# casualties.#
Limited# Liability# Rule# arising# out# of# the# real# and# hypothecary# nature# of# maritime# law,# Philippine#maritime#law#is#of#AngloNAmerican#extraction,#and#is#governed#by#adherence#
which#was#not#raised#therein,#and#which#is#the#principal#bone#of#contention#in#this#case.# to#both#international#maritime#conventions#and#generally#accepted#practices#relative#to#
The# issues# in# that# case,# particularly# those# dealing# with# the# issues# on# primary# maritime# trade# and# travel.# This# is# highlighted# by# the# following# excerpts# on# the# limited#
administrative# jurisdiction# and# the# package# liability# limitation# provided# in# the# Bill# of# liability#of#vessel#owners#and/or#agents.9##
Lading,# are# now# settled# and# should# no# longer# be# touched.# The# instant# case# raises# a#
completely#different#issue.#The#resolution#in#such#case#has#no#bearing#other#than#factual#
to#the#instant#case.#
#############################################################
9!Sec.!183.!The!liability!of!the!owner!of!any!vessel,!whether!American!or!
1st%ISSUE:%IT%MAY%BE%STAYED!%%
foreign,!for!any!embezzlement,!loss,!or!destruction!by!any!person!of!any!
person! or! any! property,! goods,! or! merchandise! shipped! or! put! on! board!
.#.#.#every#court#having#jurisdiction#to#render#a#particular#judgment#has#inherent#power#
to# enforce# it,# and# to# exercise# equitable# control# over# such# enforcement.# The# court# has#
such! vessel,! or! for! any! loss,! damage,! or! forfeiture,! done,! occasioned,! or!
authority# to# inquire# whether# its# judgment# has# been# executed,# and# will# remove# incurred,!without!the!privity!or!knowledge!of!such!owner!or!owners!shall!
obstructions#to#the#enforcement#thereof.#Such#authority#extends#not#only#to#such#orders# not! exceed! the! amount! or! value! of! the! interest! of! such! owner! in! such!
and#such#writs#as#may#be#necessary#to#carry#out#the#judgment#into#effect#and#render#it# vessel,! and! her! freight! then! pending.! (Section! 183! of! the! US! Federal!
binding# and# operative,# but# also# to# such# orders# and# such# writs# as# may# be# necessary# to# Limitation!of!Liability!Act).![MIGHT!BE!TRIVIA]!
prevent# an# improper# enforcement# of# the# judgment.# If# a# judgment# is# sought# to# be# —and—!
perverted# and# made# a# medium# of# consummating# a# wrong# the# court# on# proper#
1.!The!owner!of!a!seaSgoing!ship!may!limit!his!liability!in!accordance!with!
application#can#prevent#it.##
Article! 3! of! this! Convention! in! respect! of! claims! arising,! from! any! of! the!
following! occurrences,! unless! the! occurrence! giving! rise! to! the! claim!
The# rule# that# once# a# decision# becomes# final# and# executory,# it# is# the# ministerial# duty# of#
the#court#to#order#its#execution,#admits#of#certain#exceptions#as#in#cases#of#special#and# resulted!from!the!actual!fault!or!privity!of!the!owner;!
exceptional#nature#where#it#becomes#the#imperative#in#the#higher#interest#of#justice#to# (a)! loss! of! life! of,! or! personal! injury! to,! any! person! being! carried! in! the!
direct#the#suspension#of#its#execution;#whenever#it#is#necessary#to#accomplish#the#aims# ship,!and!loss!of,!or!damage!to,!any!property!on!board!the!ship.!
of# justice;# or# when# certain# facts# and# circumstances# transpired# after# the# judgment# (b)!loss!of!life!of,!or!personal!injury!to,!any!other!person,!whether!on!land!
became#final#which#would#render#the#execution#of#the#judgment#unjust.## or! on! water,! loss! of! or! damage! to! any! other! property! or! infringement! of!
any! rights! caused! by! the! act,! neglect! or! default! the! owner! is! responsible!
2nd% ISSUE:% the% LIMITED% LIABILITY% RULE% arising% out% of% the% REAL% AND% for,!or!any!person!not!on!board!the!ship!for!whose!act,!neglect!or!default!
HYPOTHECARY% NATURE% of% MARITIME% LAW% APPLIES!% (OUR% TOPIC)% and% not% the! owner! is! responsible:! Provided,! however,! that! in! regard! to! the! act,!
ACTUAL%FINDING%OF%NEGLIGENCE!%
neglect! or! default! of! this! last! class! of! person,! the! owner! shall! only! be!
entitled!to!limit!his!liability!when!the!act,!neglect!or!default!is!one!which!
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,#
occurs!in!the!navigation!or!the!management!of!the!ship!or!in!the!loading,!
which# is# hypothecated# for# such# obligations# or# which# stands# as# the# guaranty# for# their# carriage! or! discharge! of! its! cargo! or! in! the! embarkation,! carriage! or!
settlement.# It# has# its# origin# by# reason# of# the# conditions# and# risks# attending# maritime# disembarkation!of!its!passengers.!
trade#in#its#earliest#years#when#such#trade#was#replete#with#innumerable#and#unknown# (c)!any!obligation!or!liability!imposed!by!any!law!relating!to!the!removal!of!
hazards# since# vessels# had# to# go# through# largely# uncharted# waters# to# ply# their# trade.# It# wreck! and! arising! from! or! in! connection! with! the! raising,! removal! or!
was#designed#to#offset#such#adverse#conditions#and#to#encourage#people#and#entities#to# destruction! of! any! ship! which! is! sunk,! stranded! or! abandoned! (including!
venture# into# maritime# commerce# despite# the# risks# and# the# prohibitive# cost# of#
anything!which!may!be!on!board!such!ship)!and!any!obligation!or!liability!
shipbuilding.#Thus,#the#liability#of#the#vessel#owner#and#agent#arising#from#the#operation#
of#such#vessel#were#confined#to#the#vessel#itself,#its#equipment,#freight,#and#insurance,#if# arising! out! of! damage! caused! to! harbor! works,! basins! and! navigable!
any,# which# limitation# served# to# induce# capitalists# into# effectively# wagering# their# waterways.!(Section!1,!Article!I!of!the!Brussels!International!Convention!of!
resources#against#the#consideration#of#the#large#profits#attainable#in#the#trade.# 1957)![MIGHT!BE!TRIVIA]!
#
In#this#jurisdiction,#on#the#other#hand,#its#application#has#been#nearly#constricted#by#the# findings#of#the#trial#court,#adding#that#the#cause#of#the#sinking#of#the#vessel#was#because#
very# statute# from# which# it# originates.# The# Limited# Liability# Rule# in# the# Philippines# is# of# unseaworthiness# due# to# the# failure# of# the# crew# and# the# master# to# exercise#
taken#up#in#Book#III#of#the#Code#of#Commerce:# extraordinary# diligence.# Indeed,# there# appears# to# have# been# no# evidence# presented#
sufficient#to#form#a#conclusion#that#ABOITIZ,#the#shipowner#itself,#was#negligent,#and#no#
Art.#587.#The#ship#agent#shall#also#be#civilly#liable#for#the#indemnities#in#favor# tribunal,#including#this#Court#will#add#or#subtract#to#such#evidence#to#justify#a#conclusion#
of#third#persons#which#may#arise#from#the#conduct#of#the#captain#in#the#care#of# to#the#contrary.#
the#goods#which#he#loaded#on#the#vessel;#but#he#may#exempt#himself#therefrom#
by# abandoning# the# vessel# with# all# her# equipment# and# the# freight# it# may# have# The# qualified# nature# of# the# meaning# of# "unseaworthiness,"# under# the# peculiar#
earned#during#the#voyage.# circumstances#of#this#case#is#underscored#by#the#fact#that#in#the#other#case,#arising#from#
the# same# sinking,# the# Court# sustained# the# decision# of# the# Court# of# Appeals# that# the#
Art.# 590.# The# coNowners# of# a# vessel# shall# be# civilly# liable# in# the# proportion# of# sinking#of#the#M/V#P.#Aboitiz#was#due#to%force%majeure.#
their# interests# in# the# common# fund# for# the# results# of# the# acts# of# the# captain#
referred#to#in#Art.#587.# On# this# point,# it# should# be# stressed# that# unseaworthiness% is% not% a% fault% that% can% be%
attributed% to% ABOITIZ,% absent% a% factual% basis% for% such% a% conclusion.% The%
Each# coNowner# may# exempt# himself# from# this# liability# by# the# abandonment,# unseaworthiness% found% in% some% cases% where% the% same% has% been% ruled% to% exist% is%
before#a#notary,#of#the#part#of#the#vessel#belonging#to#him.# directly% attributable% to% the% vessel's% crew% and% captain,% more% so% on% the% part% of% the%
latter%since%Article%612%of%the%Code%of%Commerce%provides%that%among%the%inherent%
duties% of% a% captain% is% to% examine% a% vessel% before% sailing% and% to% comply% with% the%
Art.# 837.# The# civil# liability# incurred# by# shipowners# in# the# case# prescribed# in# laws% of% navigation.#Such#a#construction#would#also#put#matters#to#rest#relative#to#the#
this# section# (on# collisions),# shall# be# understood# as#limited% to% the% value% of% the% decision# of# the# Board# of# Marine# Inquiry.# While# the# conclusion# therein# exonerating# the#
vessel%with%all%its%appurtenances%and%freightage%served%during%the%voyage.## captain# and# crew# of# the# vessel# was# not# sustained# for# lack# of# basis,# the# finding# therein#
contained# to# the# effect# that# the# vessel# was# seaworthy# deserves# merit.# Despite#
Taken# together# with# related# articles,# the# foregoing# cover# only# liability# for# injuries# to# appearances,#it#is#not#totally#incompatible#with#the#findings#of#the#trial#court#and#the#CA,#
third#parties#(Art.#587),#acts#of#the#captain#(Art.#590)#and#collisions#(Art.#837).# whose#finding#of#"unseaworthiness"#clearly#did%not%pertain%to%the%structural%condition%of%
the%vessel%which%is%the%basis%of%the%BMI's%findings,%but%to%the%condition%it%was%in%at%the%time%
This#Court#shall#not#take#the#application#of#such#limited#liability#rule,#which#is#a#matter# of%the%sinking,%which%condition%was%a%result%of%the%acts%of%the%captain%and%the%crew.#
of# near# absolute# application# in# other# jurisdictions,# so# lightly# as# to# merely# "imply"# its#
inapplicability,# because# as# could# be# seen,# the# reasons# for# its# being# are# still# apparently# The%rights%of%a%vessel%owner%or%agent%under%the%Limited%Liability%Rule%are%akin%to%
much#in#existence#and#highly#regarded.# those%of%the%rights%of%shareholders%to%limited%liability%under%our%corporation%law.%
Both% are% privileges% granted% by% statute,% and% while% not% absolute,% must% be% swept%
IN# THE# INSTANT# CASE:# SC% has% been% consistent% in% holding% that% the%only%time% the% aside% only% in% the% established% existence% of% the% most% compelling% of% reasons.% In% the%
Limited% Liability% Rule%does& not& apply&is% when% there% is% an% actual% finding% of% absence% of% such% reasons,% this% Court% chooses% to% exercise% prudence% and% shall% not%
negligence%on%the%part%of%the%vessel%owner%or%agent%(list#of#Philippine#jurisprudence).# sweep% such% rights% aside% on% mere% whim% or% surmise,% for% even% in% the% existence% of%
The#pivotal#question,#thus,#is#whether#there#is#a#finding#of#such#negligence#on#the#part#of# cause%to%do%so,%such%incursion%is%definitely%punitive%in%nature%and%must%never%be%
the#owner#in#the#instant#case.# taken%lightly.%
A#careful#reading#of#the#decision#rendered#by#the#trial#court#(CIVIL#CASE)#as#well#as#the# The% rights% of% parties% to% claim% against% an% agent% or% owner% of% a% vessel% may% be%
entirety#of#the#records#in#the#instant#case#will#show#that#there#has#been#no#actual#finding# compared%to%those%of%creditors%against%an%insolvent%corporation%whose%assets%are%
of#negligence#on#the#part#of#ABOITIZ.#Trial#court#merely#held#that:#“.#.#.#Considering#the# not% enough% to% satisfy% the% totality% of% claims% as% against% it.# While# each# individual#
foregoing#reasons,#the#Court#holds#that#the#vessel#M/V#"Aboitiz"#and#its#cargo#were#not# creditor# may,# and# in# fact# shall,# be# allowed# to# prove# the# actual# amounts# of# their#
lost#due#to#fortuitous#event#or#force#majeure."## respective#claims,#this#does#not#mean#that#they#shall#all#be#allowed#to#recover#fully#thus#
favoring#those#who#filed#and#proved#their#claims#sooner#to#the#prejudice#of#those#who#
come# later.# As# held# in# a# case:# # “after# the# Monetary# Board# has# declared# that# a# bank# is#
The#same#is#true#of#the#decision#of#the#decision#of#the#CA#and#the#SC#since#both#decisions# insolvent# and# has# ordered# it# to# cease# operations,# the# Board# becomes# the# trustee# of# its#
did# not# make# any# new# and# additional# finding# of# fact.# Both# merely# affirmed# the# factual# assets#for#the#equal#benefit#of#all#creditors,#and#after#its#insolvency,#one#cannot#obtain#an#
############################################################################################################################################### advantage#or#preference#over#another#by#an#attachment,#execution#or#otherwise.“#
#
#
In% both% insolvency% of% a% corporation% and% the% sinking% of% a% vessel,% the% claimants% or% KEYWORD:%Aboitiz#ship#sank#when#Yoning#was#in#the#Philippines#
creditors%are%limited%in%their%recovery%to%the%remaining%value%of%accessible%assets.# PONENTE:#De#Leon#
In#the#case#of#an#insolvent#corporation,#these#are#the#residual#assets#of#the#corporation# #
left# over# from# its# operations.# In% the% case% of% a% lost% vessel,% these% are% the% insurance% Common%Carrier% Aboitiz#Shipping.#Cargo:#M/V#P.#Aboitiz.##
proceeds%and%pending%freightage%for%the%particular%voyage.# Vessel#Captain:#Capt.#Racines#
Claimants% Monarch# Insurance,# Tabacalera# Insurance,# Allied# Guarantee#
In%the%instant%case,%there%is,%therefore,%a%need%to%collate%all%claims%preparatory%to% % Insurance,#Equitable#Insurance#
their%satisfaction%from%the%insurance%proceeds%on%the%vessel%M/V%P.%Aboitiz%and%its% Problem% Vessel# sank.# Multiple# claims# against# Aboitiz# for# the# value# of# the#
pending% freightage% at% the% time% of% its% loss.% No% claimant% can% be% given% precedence% goods# lost.# Question# on# whether# the# limited# liability# rule# is#
over% the% others% by% the% simple% expedience% of% having% filed% or% completed% its% action% applicable#despite#negligence#of#Aboitiz.##
earlier%than%the%rest.%Thus,%execution%of%judgment%in%earlier%completed%cases,%even% Who%won% Insurers#since#Aboitiz#liable.#BUT#limited#liability#rule#is#applicable#
those%already%final%and%executory,%must%be%stayed%pending%completion%of%all%cases% FACTOID:#Wind#speed#during#the#sinking#is#only#10N15#knots.#Moderate#breeze!#
occasioned% by% the% subject% sinking.% Then% and% only% then% can% all% such% claims% be% NSS:%WILD.%3%consolidated%cases%so%facts%long.%
simultaneously% settled,% either% completely% or% pro`rata% should% the% insurance% #
proceeds%and%freightage%be%not%enough%to%satisfy%all%claims.% EMERGENCY#RECIT#
FACTS:#The#case#before#the#Supreme#Court#consolidated#three#different#cases#initiated#
against#Aboitiz#by#three#different#insurers—Monarch,#Tabacalera,#Allied#Guarantee#and#
Finally,#the#Court#notes#that#ABOITIZr#has#provided#this#Court#with#a#list#of#all#pending#
Equitable.#What#happened#is#that#the#ship#M/V#P.#Aboitiz#owned#by#Aboitiz#sank#in#the#
cases,# together# with# the# corresponding# claims# and# the# proNrated# share# of# each.# We#
likewise#note#that#some#of#these#cases#are#still#with#the#CA,#and#some#still#with#the#trial# South# China# Sea.# The# vessel# was# ultimately# abandoned.# The# insurers# argued# that# the#
courts#and#which#probably#are#still#undergoing#trial.#It#would#not,#therefore,#be#entirely# vessel#sank#because#of#Aboitiz’#negligence,#as#well#as#the#negligence#of#the#captain#and#
correct#to#preclude#the#trial#courts#from#making#their#own#findings#of#fact#in#those#cases# the# crew.# According# to# the# witnesses# presented# during# the# trial,# the# vessel# sank# when#
and# deciding# the# same# by# allotting# shares# for# these# claims,# some# of# which,# after# all,# the#wind#speed#is#only#10N15#knots,#which#is#just#moderate#breeze.#The#fast#flooding#of#
might#not#prevail,#depending#on#the#evidence#presented#in#each.#We,#therefore,#rule#that# the# cargo# hold# also# means# that# there# are# already# breaches# of# the# hull.# All# the# insurers#
the#proNrated#share#of#each#claim#can#only#be#found#after#all#the#cases#shall#have#been# won#in#their#respective#cases#and#had#final#and#executory#decisions#already.#HOWEVER!#
Aboitiz#got#a#preliminary#injunction,#arguing#that#while#it#may#be#liable#to#the#insurers,#
decided.#
its#liability#is#not#the#full#amount#awarded#to#the#insurers,#but#only#limited#to#the#value#
of# vessel.# The# insurers’# claims# must# also# be# prorated.# This# according# to# Aboitiz,# is#
In#fairness#to#the#claimants,#and#as#a#matter#of#equity,#the#total#proceeds#of#the#insurance# pursuant# to# the# doctrine# of# the# Limited# Liability# Rule# arising# out# of# the# real# and#
and#pending#freightage#should#now#be#deposited#in#trust.# hypothecary#nature#of#maritime#law.#
#
# 16#MONARCH#INSURANCE#V.#CA,#333#SCRA#71#–SUPERABLE# ISSUE:#Whether#the#claims#should#be#limited#pursuant#to#the#Limited#Liability#Rule#
#
[G.R.%No.%92735.%June%8,%2000]# HELD:# YES!# The# limited# liability# rule# states# that# the# shipowner’s# or# agent’s# liability# is#
MONARCH%INSURANCE%CO.,%INC.,%TABACALERA%INSURANCE%CO.,%INC%and%Hon.%Judge% merely#coNextensive#with#his#interest#in#the#vessel#such#that#a#total#loss#thereof#results#in#
AMANTE% PURISIMA,% petitioners,& vs.% COURT% OF% APPEALS% and% ABOITIZ% SHIPPING% its# extinction.# The# total# destruction# of# the# vessel# extinguishes# maritime# liens# because#
CORPORATION,%respondents.& there#is#no#longer#any#res#to#which#it#can#attach.#This#doctrine#is#based#on#the#real#and#
# hypothecary#nature#of#maritime#law.#However,#there#are#exceptions#to#this#doctrine.#The#
[G.R.%No.%94867.%June%8,%2000]# exceptions#are#(1)#where#the#injury#or#death#to#a#passenger#is#due#either#to#the#fault#of#
ALLIED% GUARANTEE% INSURANCE% COMPANY,% petitioner,& vs.& COURT% OF% APPEALS,% the# shipowner,# or# to# the# concurring# negligence# of# the# shipowner# and# the# captain;# (2)#
Presiding% Judge,% RTC% Manila,% Br.% 24% and% ABOITIZ% SHIPPING% CORPORATION,& where#the#vessel#is#insured;#and#(3)#in#workmen’s#compensation#claims.#
respondents.# #
% However,# here,# Aboitiz# failed# to# show# that# it# was# not# negligent# or# at# fault# when# the#
[G.R.%No.%95578.%June%8,%2000]# vessel#sank.#Usually,#this#would#mean#that#the#limited#liability#rule#sis#not#applicable.#But#
EQUITABLE% INSURANCE% CORPORATION,% petitioner,& vs.& COURT% OF% APPEALS,% because#of#the#peculiar#nature#of#the#case,#the#limited#liability#rule#should#be#applied.#By#
Former% First% Division% Composed% of% Hon.% Justices% RODOLFO% NOCON,% PEDRO% doing#this,#all#those#who#have#claims#can#recover#at#least#part#of#their#loss#from#Aboitiz.#
RAMIREZ,% and% JESUS% ELBINIAS% and% ABOITIZ% SHIPPING% CORPORATION,% The# claimants# must# be# treated# as# "creditors# in# an# insolvent# corporation# whose# assets#
respondents.#(NONS)# are#not#enough#to#satisfy#the#totality#of#claims#against#it."##
% #
#
Here’s#how#the#limited#liability#should#be#applied:## was# probably# not# seaworthy# as# there# were# breaches# of# the# hull# and# serious#
1. Collate# all# claims# against# Aboitiz.# Final# and# executory# judgments# should# be# flooding#of#2#cargo#holds#during#seasonal#weather.##
stayed#while#the#other#cases#are#still#pending.## • Only#Aboitiz#was#found#by#the#RTC#to#be#liable#for#all#the#amounts#mentioned#
2. In#fairness#to#the#claimants,#and#as#a#matter#of#equity,#the#total#proceeds#of#the# above,#including#attorney’s#fees#and#legal#interest.#The#RTC#appeal#was#denied.#
insurance#and#pending#freightage#should#now#be#deposited#in#trust.## In# the# CA,# the# appeal# was# dismissed# because# of# Aboitiz’# failure# to# file# the#
3. Aboitiz#should#institute#the#necessary#limitation#and#distribution#action#before# appellant’s#brief.#The#CA#denied#the#appeal#of#the#dismissal#for#lack#of#merit.#In#
the# proper# admiralty# court# within# 15# days# from# finality# of# this# decision,# and# the# SC,# the# SC# denied# the# appeal# for# being# filed# out# of# time;# and# the# MR# was#
thereafter# deposit# with# it# the# proceeds# from# the# insurance# company# and# also#denied.#Judgment#was#entered#in#the#case.#
pending#freightage#in#order#to#safeguard#the#same#pending#final#resolution#of# • Monarch# and# Tabacalera# moved# for# the# execution# of# judgment# and# the# RTC#
all#incidents,#for#final#proNrating#and#settlement#thereof.# issued#writs#of#execution.#Aboitiz#filed#a#motion#to#quash#the#writ#invoking#the#
# real#and#hypothecary#nature#of#liability#in#maritime#law.%#
COMPLETE#DIGEST# o According#to#Aboitiz,#since#its#liability%is%limited%to%the%value%of%the%
FACTS:%% vessel% which% was% insufficient% to% satisfy% the% aggregate% claims% of%
• On#October#31,#1980,#M/V#P.#Aboitiz,#owned#and#operated#by#Aboitiz#Shipping,# all% 110% claimants,% to% indemnify% Monarch% and% Tabacalera% ahead%
sank# on# her# voyage# from# Hongkong# to# Manila.% The% vessel% was% abandoned.# of%the%other%claimants%would%be%prejudicial#to#the#latter.#
This# case# involves# three# different# cases# which# arose# from# the# sinking# of# the# • The# sheriff# was# able# to# levy# 5# heavy# equipment# owned# by# Aboitiz# for# public#
cargo#vessel.#(FACTOID:#110#cases#filed#against#Aboitiz#for#indemnity#of#P41M# auction# sale.# Monarch# got# two# equipment# while# Tabacalera# got# three#
which#is#thrice#the#value#of#the#insurance#proceeds#of#P14.5M)# equipment.#Certificates#of#sale#were#issued#to#both.##
NSS:%Multiple%consolidated%cases.%All%cases%originated%from%the%Manila%RTC.% • Judge# Purisima# denied# the# motion# to# quash# but# froze# the# execution#
FIRST%CASE%between%Monarch%and%Tabacalera%Insurance,%and%Aboitiz%% proceedings# to# give# Aboitiz# time# to# ask# for# injunction# from# a# higher# court.#
• Monarch# and# Tabacalera# were# insurers# who# were# subrogated# to# the# rights,# Aboitiz#then#filed#before#the#CA#a#Rule#65#petition#with#preliminary#injunction.#
interests#and#actions#of#the#shippers#(who#they#paid#already)#against#Aboitiz.# The# CA# granted# Aboitiz’# petition# and# ruled% that% the% amount% given% to%
o Monarch#instituted#2#civil#cases.## Monarch%and%Tabacalera%exceeded%their%pro`rata%shares%in%the%insurance%
(1)# Monarch# sued# Aboitiz,# Malaysian# International# and# Litonjua# for# procceds% of% Aboitiz% in% relation% to% the% pro`rata% shares% of% the% 106% other%
the#value#of#3#pallets#of#glass#tubing#that#sank#(value:#P30k).## claimants.#Thus,#the#CA#in#effect#ruled#that#Monarch#and#Tabacalera#can#only#
(2)#Monarch#sued#Aboitiz,#Compagnie#Maritime#des#Chargeurs#Reunis# claim#their#proNrata#share,#and#not#the#actual#value#of#the#lost#goods.##
and# F.E.# Zuellig# for# the# value# of# one# case# of# motor# vehicles# parts# • Monarch#and#Tabacalera#appeals#now#to#the#SC.#
(value:#P40k)#and#attorney’s#fees.# SECOND% CASE% between% Allied% Guarantee% and% Aboitiz% and% THIRD% CASE% between%
o Tabacalera#instituted#2#civil#cases.## Equitable%and%Aboitiz#
(1)# Tabacalera# sued# Aboitiz,# F.E.# Zuellig# and# Franco# Beligna# for# the# • Second# case:# Allied# Guarantee# was# subrogated# to# the# rights# of# Peak# Plastic.#
value#of#9#cases#of#Renault#spare#parts,#25#cases#of#door#closers#and# Allied#Guarantee#sued#Aboitiz#for#the#value#676#bags#of#PVC#compound#and#10#
18#cases#of#plastic#spangle#(total#value:#P366k)#and#attorney’s#fees.## bags#of#ABS#plastic#(value:#280k)#and#attorney’s#fees#and#damages.##
(2)#Tabacalera#sued#Aboitiz,#Citadel#Lines#and#HK#Island#Shipping#for# • Third# case:# Equitable# was# subrogated# to# the# rights# of# Axel# Manufacturing.#
the#value#of#4#motor#vehicle#parts#(value:#75k)#and#attorney’s#fees.# Equitable# sued# Aboitiz,# F.E.# Zuellig# and# Franco# Belgian# for# the# value# of# 76#
• Aboitiz#argued#that#the#sinking#of#the#cargo#vessel#was#due#to#force%majeure#but# drums# of# synthetic# organic# tanning# substances# and# 1,000# kilos# of# optical#
since#it#failed#to#appear#during#the#preNtrial,#Aboitiz#was#declared#in#default.#It# bleaching#agents#(value:#195k)#and#attorney’s#fees#and#damages.#
moved#to#lift#the#order#of#the#default#but#the#judge#who#was#handling#the#case# • Aboitiz# argued# that# the# sinking# was# due# to# force# majeure# and# that# the# vessel#
was#elevated#to#the#IAC.## was# seaworthy# at# the# time# of# the# loss.# It# presented# Capt.# Racines,# master#
• The# cases# were# reNraffled# to# Judge# Purisima.# Judge# Purisima# set# the# case# for# mariner# of# the# vessel;# and# Justo# Iglesias,# a# meteorologist# from# PAGASA.#
hearing# without# rendering# judgment# on# the# motion# to# lift# order# of# default.# According#to#Capt.#Racines:#
Again,#Aboitiz#repeatedly#failed#to#appear#in#court,#Judge#Purisima#denied#the# o October#29,#1980#–#7:30pm.#The#vessel#secured#departure#clearance#
motion# to# lift# the# default# order# and# allowed# Monarch# and# Tabacalera# to# from#HK#Port#Authority.##Capt.#Racines#delayed#the#vessel’s#departure#
present#evidence#ex%parte.## as#he#was#observing#the#direction#of#the#storm#that#crossed#the#Bicol#
• Monarch# and# Tabacalera# presented# Perfect# Lambert,# the# surveyor# who# Region.#The#ship#left#after#a#2hr#delay.#
investigated# why# the# vessel# sank.# According# to# Lambert,# the# vessel# did# not# o October# 30# –# 8am.# The# vessel# encountered# rough# seas# with# 15N20ft.#
encounter#any#weather#that#would#cause#its#sinking.#The#wind#force#of#10N15# waves.#The#chief#engineer#found#that#sea#water#entered#cargo#holds#1#
knots# that# the# vessel# encountered# was# normal# at# that# time# of# the# year# in# the# and#2.#The#water#was#pumped#out#by#the#vessel’s#bilge#pump.#
South# China# Sea# and# was# considered# as# moderate# winds.# Further,# the# vessel#
#
o October#31#–#6am.#Capt.#Racines#was#informed#by#the#chief#engineer# General%Accident%Fire%and%Life%Assurance%Corporation,%Ltd.,# G.R.# No.# 100446,# January# 21,#
that#despite#the#initial#pumping#out#of#the#sea#water,#the#water#level# 1993,#to#(a)#institute#the#necessary#limitation#and#distribution#action#before#the#proper#
in#the#cargo#holds#was#rising#rapidly.#The#vessel’s#route#was#diverted# Regional#Trial#Court,#acting#as#admiralty#court,#within#fifteen#(15)#days#from#the#finality#
to# the# northern# tip# of# the# vessel# to# avoid# the# waves.# Unfortunately,# of#this#decision,#and#(b)#thereafter#to#deposit#with#the#said#court#the#insurance#proceeds#
the#vessel#(at#that#point,#250miles#from#the#eye#of#the#storm)#began#to# from# the# loss# of# the# vessel,# M/V# P.# Aboitiz,# and# the# freightage# earned# in# order# to#
tilt#at#its#starboard#side.# safeguard# the# same# pending# final# resolution# of# all# incidents# relative# to# the# final# proN
o October#31#–#12nn.#Water#levels#at#the#cargo#hold#rose#from#3ft#to#12# rating#thereof#and#to#the#settlement#of#all#claims.#
feet.#The#pump#was#now#disabled#and#the#crew#were#not#able#to#make# #
much#headway.# RATIO:%
o October# 31# –# 7pm.# The# ship# sank.# It# was# 270# miles# from# Cape# (Not%related%to%Transpo)%
Bojeador# in# Bangui,# Ilocos# Norte.# The# crew# was# recued# by# M/V# • Judge# Purisima# was# named# as# coNpetitioner# in# the# Monarch# case.# It# was# not#
Capuas,#manned#by#Capt.#Gonzales.#The#crew#was#brought#to#Waileen,# shown# whether# he# was# a# real# partyNinNinterest# in# the# case.# The# SC# reiterated#
Taiwan#where#Capt.#Racines#lodged#his#marine#protest.# the# rule# that# courts# or# individual# judges# are# not# supposed# to# be# interested#
• According# to# Iglesias# and# another# Aboitiz# witness,# from# Oct.# 28N31,# the# "combatants"#in#any#litigation#they#resolve.#
Philippine# Area# of# Responsibility# experience# stormy# weather# due# to# tropical# #
depression# “Yoning”.# On# October# 31,# PAGASA# did# not# issue# any# weather# (Back% to% regular% programming.% Procedural% matters% first.% Monarch% et.% al% refers% to% the%
bulletins# as# Yoning# had# exited# the# Philippines# through# Bataan# and# made# its# insurers%in%the%three%cases:%Monarch,%Tabacalera,%Allied%Guarantee%and%Equitable)#
way#to#South#China#Sea.# • FIRST#ARGUMENT:#Monarch#et.#al.#argues#that#the#limited#liability#rule#based#
• Allied# and# Equitable# alleged# that# there# was# no# force# majeure# relying# on# Capt.# on# the# real# and# hypothecary# nature# of# maritime# law# is# already# the# law# of# the#
Racines’# protest# and# the# Beaufort# Scale# of# Wind.# According# to# the# marine# case.#
protest,# the# wind# force# was# only# 10N15# knots;# and# according# to# the# Beaufort# • WRONG!#As#already#held#in#Aboitiz%v%General%Accident%Fire%and%Life%Assurance,#
Scale,#the#wind#velocity#was#only#under#Scale#No.#4#and#the#sea#condition#was# o It# should# be# pointed# out,# however,# that# the# limited% liability%
described# "moderate# breeze,"# and# "small# waves# becoming# longer,# fairly# discussed% in% said% case% is% not% the% same% one% now% in% issue% at% bar,%
frequent#white#horses."# but% an% altogether% different% aspect.# The# limited# liability# settled# in#
• The#RTC#found#Aboitiz#to#be#liable#and#ordered#Aboitiz#to#pay#Allied#Guarantee# G.R.# No.# 88159# is# that# which# attaches# to# cargo# by# virtue# of#
and#Equitable.## # stipulations# in# the# Bill# of# Lading,# popularly# known# as# package#
• Aboitiz#appealed#the#Allied#Guarantee#ruling.#The#CA#affirmed#the#decision#and# limitation# clauses…# Said% resolution% did% not% tackle% the% matter% of%
the# MR# was# denied.# Aboitiz# appealed# to# the# SC.# While# the# SC# appeal# was# the%Limited%Liability%Rule%arising%out%of%the%real%and%hypothecary%
pending,#Allied#was#granted#by#the#RTC#a#writ#of#execution.#Aboitiz#asked#the# nature%of%maritime%law,%which%was%not%raised%therein,#and#which#
CA# to# set# aside# the# writ# and# the# RTC# was# ordered# to# stay# the# execution# of# is#the#principal#bone#of#contention#in#this#case.##
judgment.#Allied#appealed#the#CA#order#to#the#SC.#The#same#thing#happened#to# • SECOND# ARGUMENT:# Monarch,# et.# al# argues# that# the# RTC# judgments# were#
the#Equitable#judgment.#Equitable#also#appealed#to#the#SC.## already#final#and#executory#and#can#no#longer#be#altered,#modified,#etc.##
• The# CA,# in# both# instances,# ruled# that# while# Aboitiz# is# liable# for# the# loss,# the# • WRONG!#While#that#is#the#general#rule,#the#exception#is#applicable—where#the#
amount# to# be# awarded# should# be# proNrated# in# relation# to# the# claims# of# the# interests#of#justice#so#requires.#
other#106#claimants.#This#is#based#on#the#limited#liability#rule#in#maritime#law.# • The#unjust% and% inequitable% effects% upon% various% other% claimants% against%
# Aboitiz% should% we% allow% the% execution% of% judgments% for% the% full%
ISSUE:#Whether#the#limited#liability#rule#is#applicable#to#Aboitiz## indemnification% of% petitioners’% claims% impel% us% to% uphold% the% stay% of%
# execution#as#ordered#by#the#respondent#Court#of#Appeals.#The#SC#reiterated#its#
HELD:# YES.% WHEREFORE,# the# petitions# in# G.R.# Nos.# 92735,# 94867,# and# 95578# are# pronouncement# in# Aboitiz% Shipping% Corporation% vs.% General% Accident% Fire% and%
DENIED.#The#decisions#of#the#Court#of#Appeals#in#CANG.R.#No.#SPN17427#dated#March#29,# Life%Assurance%Corporation#on#this#very#same#issue.#
1990,# CANG.R.# SP# No.# 20844# dated# August# 15,# 1990,# and# CANG.R.# CV# No.# 15071# dated# • THIRD# ARGUMENT:# Monarch# and# Tabacalera# argues# that# Aboitiz# failed# to#
August# 24,# 1990# are# AFFIRMED# with# the# MODIFICATION# that# respondent# Aboitiz# present#evidence#to#prove#its#entitlement#to#the#limited#liability#rule#as#Aboitiz#
Shipping#Corporation#is#ordered#to#pay#each#of#the#respective#petitioners#the#amounts#of# was#declared#in#default.#
P100,000.00#as#moral#damages#and#P50,000.00#as#attorney’s#fees,#and#treble#the#cost#of# • While#it#is#true#that#Aboitiz#was#already#declared#in#default,#this#circumstance#
suit.% does#not#prevent#the#CA#from#taking#cognizance#of#Aboitiz’#defenses#on#appeal.#
# Aboitiz# was# only# absent# during# the# preNtrial# and# trial,# but# its# defenses# were#
Respondent#Aboitiz#Shipping#Corporation#is#further#directed#to#comply#with#the#Order# already#raised#in#its#answer.#
promulgated# by# this# Court# on# January# 21,# 1993# in# Aboitiz% Shipping% Corporation% v.%
#
• A% judgment% of% default% does% not% imply% a% waiver% of% rights% except% that% of% passenger# is# due# either# to# the# fault# of# the# shipowner,# or# to# the# concurring#
being% heard% and% presenting% evidence% in% defendant’s% favor.% # It# does# not# negligence#of#the#shipowner#and#the#captain;#(2)#where#the#vessel#is#insured;#
imply# admission# by# the# defendant# of# the# facts# and# causes# of# action# of# the# and#(3)#in#workmen’s#compensation#claims.#
plaintiff.#Nor#could#it#be#interpreted#as#an#admission#by#the#defendant#that#the# • We# have# categorically# stated# that# Article% 587% speaks% only% of% situations%
plaintiff’s#causes#of#action#find#support#in#the#law#or#that#the#latter#is#entitled#to# where%the%fault%or%negligence%is%committed%solely%by%the%captain.#In%cases%
the#relief#prayed#for.% where% the% ship% owner% is% likewise% to% be% blamed,% Article% 587% does% not%
• The%defendant%who%is%declared%in%default%for%failing%to%appear%in%the%pre` apply.%Such%a%situation%will%be%covered%by%the%provisions%of%the%Civil%Code%
trial% and% trial% should% be% allowed% to% reiterate% all% affirmative% defenses% on%common%carriers.%
pleaded% in% his% answer% before% the% CA.# Likewise,# the# CA# may# review# the# • If# the# loss# of# the# vessel# was# due# to# a# fortuitous# event,# Aboitiz# would# not# be#
correctness#of#the#evaluation#of#the#plaintiff’s#evidence#by#the#lower#court.% liable# pursuant# to# Art.# 1734(1).# If# Aboitiz# is# liable—that# is,# Aboitiz,# the# ship#
• It# should# also# be# pointed# out# that# Aboitiz# is# not# raising# the# issue# of# its# captain# or# the# crew# is# negligent—then# the# rule# of# limited# liability# is# not#
entitlement#to#the#limited#liability#rule#for#the#first#time#on#appeal#thus,#the#CA# applicable.##
may#properly#rule#on#the#same.# #
# Aboitiz’%liability%
#(Important%for%the%topic)#Rule%on%Limited%Liability.## • In# all# the# cases# before# the# SC,# the# RTCs# found# that# Aboitiz# was# liable# because#
• Monarch,#et.#al#argues#that#the#vessel#M/V#P.#Aboitiz#did#not#sink#by#reason#of# the# sinking# was# not# due# to# force# majeure# but# due# to# the# unseasworthiness# of#
force% majeure# but# because# of# its# unseaworthiness# and# the# concurrent# fault# the#vessel.#However,#the#CA,#in#all#the#cases,#found#that#Aboitiz#cannot#be#liable#
and/or#negligence#of#Aboitiz,#the#captain#and#its#crew,#thereby#barring#Aboitiz# for#the#full#amount#of#the#loss#because#while#the#vessel#was#unseaworthy,#the#
from#availing#of#the#benefit#of#the#limited#liability#rule.# limited#liability#rule#applies.#
• The#principle#of#limited#liability#is#enunciated#in#Articles#587,#590#and#837#of# • The#issue#of#whether#the#vessel#sank#due#to#force#majeure#has#not#been#settled.#
the#Code#of#Commerce.## In# Aboitiz% v% CA,# it# was# held# that# the# vessel# sank# because# of# the# fault# and#
• Article% 837% applies% the% principle% of% limited% liability% in% cases% of% collision,% negligence# of# Aboitiz,# its# master# and# crew.# In# Country% Bankers% v% CA,% the# SC#
hence,% Arts.% 587% and% 590% embody% the% universal% principle% of% limited% affirmed# the# CA# ruling# which# held# that# the# sinking# of# the# vessel# was# due# to#
liability%in%all%cases.## force#majeure.###
• In#Yangco%v.%Laserna,#the#SC#discussed#the#importance#of#Art.#587:# • After#reviewing#the#records#of#the#instant#cases,#the#SC#held#that% by% the% facts%
o "The# provision# accords# a# shipowner# or# agent# the# right# of# on%record,%the%M/V%P.%Aboitiz%did%not%go%under%water%because%of%the%storm%
abandonment;# and# by# necessary# implication,# his# liability# is# confined# "Yoning."#
to#that#which#he#is#entitled#as#of#right#to#abandonN‘the#vessel#with#all# • While#it#is#true#that#according#to#Iglesias,#a#stormy#weather#condition#existed#in#
her# equipments# and# the# freight# it# may# have# earned# during# the# the#Philippined#between#Oct.#28N31,#the#marine#protest#of#Capt.#Racines#shows#
voyage.’# The# consensus# of# authorities# is# to# the# effect# that# that# the# windforce# was# 10N15# knots# with# moderate# breeze# according# the#
notwithstanding# the# language# of# the# aforequoted# provision,# the% Beaufort#scale.#Further,#the#vessel#was#200#miles#away#from#the#storm#when#it#
benefit% of% limited% liability% therein% provided% for,% applies% in% all% sank.#Thus,#there#was#no#force#majeure.##
cases% wherein% the% shipowner% or% agent% may% properly% be% held% • The# issue# of# whether# there# was# negligence# on# the# part# of# the# master# and# the#
liable%for%the%negligent%or%illicit%acts%of%the%captain."# crew#of#the#vessel#is#also#not#settled.#In#Country%Bankers,%there#was#no#finding#
• "No# vessel,# no# liability,"# expresses# in# a# nutshell# the# limited# liability# rule.# The# of# fault# and# negligence.# In# Aboitiz,% while# Aboitiz# was# not# liable,# the#
shipowner’s# or# agent’s# liability# is# merely# coNextensive# with# his# interest# in# the# unseaworthiness#of#the#vessel#was#due#to#the#negligence#of#the#captain#and#the#
vessel#such#that#a#total#loss#thereof#results#in#its#extinction.## crew#per#Art.#612#of#the#Code#of#Commerce.##
• The% total% destruction% of% the% vessel% extinguishes% maritime% liens% because% • The#SC#reiterated#its#ruling#in#the#General%Accident#(the#one#cited#above)% that%
there%is%no%longer%any%res&to%which%it%can%attach.%This%doctrine%is%based%on% the%unseaworthiness%of%the%M/V%P.%Aboitiz%had%caused%it%to%founder.#BUT#
the%real%and%hypothecary%nature%of%maritime%law%which%has%its%origin%in% on# the# matter# of# Aboitiz’# negligence,# the# SC# reiterated# its# ruling# in# Aboitiz#
the% prevailing% conditions% of% the% maritime% trade% and% sea% voyages% during% (earlier#cited)]#that%found%Aboitiz,%and%the%captain%and%crew%of%the%M/V%P.%
the%medieval%ages,%attended%by%innumerable%hazards%and%perils.## Aboitiz%to%have%been%concurrently%negligent.#
• To#offset#against#these#adverse#conditions#and#to#encourage#shipbuilding#and# • Per# Perfect# Lambert’s# (Monarch# and# Tabacalera’s# witness)# survey# of# why# the#
maritime# commerce# it# was# deemed# necessary# to# confine# the# liability# of# the# ship#sank,#it#was#established#that#the#cause#of#the#sinking#of#the#vessel#was#the#
owner#or#agent#arising#from#the#operation#of#a#ship#to#the#vessel,#equipment,# leakage#of#water#into#the#M/V#P.#Aboitiz#which#probably#started#in#the#forward#
and#freight,#or#insurance,#if#any.# part#of#the#No.#1#hull,#although#no#explanation#was#proffered#as#to#why#the#No.#
• The#doctrine#of#limited#liability#is#still#applicable#today#contrary#to#Monarch,#et.# 2#hull#was#likewise#flooded.##
al.’s# contention.# The# exceptions# are# (1)# where# the# injury# or# death# to# a#
#
o Perfect# Lambert# surmised# that# the# flooding# was# due# to# a# leakage# in# o Moreover,# Aboitiz# should# institute# the# necessary# limitation# and#
the#shell#plating#or#a#defect#in#the#water#tight#bulk#head#between#the# distribution#action#before#the#proper#admiralty#court#within#15#days#
Nos.#1#and#2#holds#which#allowed#the#water#entering#hull#No.1#to#pass# from# finality# of# this# decision,# and# thereafter# deposit# with# it# the#
through#hull#No.#2.## proceeds# from# the# insurance# company# and# pending# freightage# in#
o The# surveyor# concluded# that# whatever# the# cause# of# the# leakage# of# order#to#safeguard#the#same#pending#final#resolution#of#all#incidents,#
water# into# these# hulls,# the# seaworthiness% of% the% vessel% was% for#final#proNrating#and#settlement#thereof.#[underscoring#supplied]#
definitely% in% question% because% the% breaches% of% the% hulls% and% #
serious%flooding%of%the%two%cargo%holds%occurred%simultaneously% Award%of%Damages#
in%seasonal%weather.% • There# is# no# record# that# Aboitiz# has# instituted# such# action# or# that# it# has#
• The#SC#agreed#with#the#uniform#finding#of#the#lower#courts#that% Aboitiz% had% deposited#in#trust#the#insurance#proceeds#and#freightage#earned.##
failed%to%prove%that%it%observed%the%extraordinary%diligence%required%of%it% • It#was#obvious#that#from#among#the#many#cases#filed#against#it#over#the#years,#
as%a%common%carrier.#Aboitiz’#liability#has#been#established#in#the#Aboitiz%case# Aboitiz#was#waiting#for#a#judgment#that#might#prove#favorable#to#it,#in#blatant#
(cited#above),#and#the#SC#held#that#per#Art.#1732#of#the#Civil#Code,#Aboitiz#failed# violation# of# the# basic# provisions# of# the# Civil# Code# on# abuse# of# rights.# Aboitiz#
to#prove#hat#the#loss#of#the#subject#cargo#was#not#due#to#its#fault#or#negligence.# failed#to#give#the#claimants#their#due#and#to#observe#honesty#and#good#faith#in#
• For# Aboitiz’# failure# to# show# evidence# that# would# itself# from# fault# and/or# the#exercise#of#its#rights.#
negligence#in#the#sinking#of#its#vessel,#Aboitiz#was#concurrently#at#fault#and/or# • Aboitiz’# blatant# disregard# of# the# order# in# the# General%Accident%case# cannot# be#
negligent# with# the# ship# captain# and# crew# of# the# M/V# P.# Aboitiz.# This% is% in% anything# but# willful# on# its# part.# An# act# is# considered# willful# if# it# is# done# with#
accordance% with% the% rule% that% in% cases% involving% the% limited% liability% of% knowledge# of# its# injurious# effect;# it# is# not# required# that# the# act# be# done#
shipowners,%the%initial%burden%of%proof%of%negligence%or%unseaworthiness% purposely# to# produce# the# injury.# Having# willfully# caused# loss# or# injury# to#
rests% on% the% claimants.% However,% once% the% vessel% owner% or% any% party% Monarch,#et.#al.#in#a#manner#that#is#contrary#to#morals,#good#customs#or#public#
asserts% the% right% to% limit% its% liability,% the% burden% of% proof% as% to% lack% of% policy,#Aboitiz#is#liable#for#damages#to#the#latter.#
privity%or%knowledge%on%its%part%with%respect%to%the%matter%of%negligence% • Thus,#for#its#contumacious%act%of%defying%the%order%of%this%Court%to%file%the%
or% unseaworthiness% is% shifted% to% it.#This#burden,#Aboitiz#had#unfortunately# appropriate%action%to%consolidate%all%claims%for%settlement,%Aboitiz%must%
failed#to#discharge.## be% held% liable% for% moral% damages% which#may#be#awarded#under#Articles#19#
• That% Aboitiz% failed% to% discharge% the% burden% of% proving% that% the% to#36#of#the#Civil#Code.#
unseaworthiness% of% its% vessel% was% not% due% to% its% fault% and/or% negligence# • On# account# of# Aboitiz’% refusal% to% satisfy% Monarch,% et.% al.’s% claims% in%
should% not% however% mean% that% the% limited% liability% rule% will% not% be% accordance% with% the% directive% in% the% General& Accident% case,& it% acted% in%
applied% to% the% present% cases.#The#peculiar#circumstances#here#demand#that# gross% and% evident% bad% faith.% Pursuant% to% Art.% 2208% of% the% Civil% Code,%
there# should# be# no# strict# adherence# to# procedural# rules# on# evidence# lest# the# Monarch,%et.%al.%are%awarded%attorney’s%fees.#
just#claims#of#shippers/insurers#be#frustrated.## #
• The# rule# on# limited# liability# should# be# applied# in# accordance# with# the# latest# #
ruling#in#the#General%Accident%case#(cited#above,#decided#1992),#that%claimants%
be%treated%as%"creditors%in%an%insolvent%corporation%whose%assets%are%not%
enough%to%satisfy%the%totality%of%claims%against%it."## # 17#PHILNAM#GENERAL#INSURANCE#V.#CA,#273#SCRA#262#–TANDOC#
• To#do#so,#the#Court#set#out#in#that#case#the#procedural#guidelines:#
o There#is#a#need#to#collate#all#claims#preparatory#to#their#satisfaction# ER:#
from# the# insurance# proceeds# on# the# vessel# M/V# P.# Aboitiz# and# its# CocaNCola# loaded# on# a# vessel# owned# by# FELMAN# 7,500# cases# of# softdrink# bottles# to# be#
pending#freightage#at#the#time#of#its#loss.## transported# from# Zambaonga# City# to# Cebu# City.# These# bottles# were# placed# on# deck#
" Thus,# execution# of# judgment# in# earlier# completed# cases,# making#the#vessel##not#seaworthy.#The#ship#sank.#Philamgen,#insurer#of#the#cargoes,#paid#
even# those# already# final# and# executory# must# be# stayed# CocaNCola.#Philamgen#wanted#to#ask#reimbursement#from#Felman.#
pending# completion# of# all# cases# occasioned# by# the# subject#
sinking.## W/on#the#limited#liability#under#Art.#587#of#the#Code#of#Commerce#should#apply.#–nope#
" Then# and# only# then# can# all# such# claims# be# simultaneously#
RATIO:#
settled,# either# completely# or# proNrata# should# the# insurance#
proceeds#and#freightage#be#not#enough#to#satisfy#all#claims.#
Art.#587#of#the#Code#of#Commerce#is#not#applicable#to#the#case#at#bar.%8#Simply#put,#the#
o In# fairness# to# the# claimants,# and# as# a# matter# of# equity,# the# total#
ship#agent#is#liable#for#the#negligent#acts#of#the#captain#in#the#care#of#goods#loaded#on#the#
proceeds# of# the# insurance# and# pending# freightage# should# now# be#
vessel.# This# liability# however# can# be# limited# through# abandonment# of# the# vessel,# its#
deposited#in#trust.##
#
equipment# and# freightage# as# provided# in# Art.# 587.# Nonetheless,# there# are# exceptional# RATIO:#
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# 1. Contrary#to#the#ship#captain's#allegations,#evidence#shows#that#approximately#
captain.%9#The#international#rule#is#to#the#effect#that#the#right#of#abandonment#of#vessels,# 2,500# cases# of# softdrink# bottles# were# stowed# on# deck.# Several# days# after# "MV%
as#a#legal#limitation#of#a#shipowner's#liability,#does#not#apply#to#cases#where#the#injury#or# Asilda"#sank,#an#estimated#2,500#empty#CocaNCola#plastic#cases#were#recovered#
average#was#occasioned#by#the#shipowner's#own#fault.#10#It#must#be#stressed#at#this#point# near# the# vicinity# of# the# sinking.# Considering# that# the# ship's# hatches# were#
that#Art.#587#speaks#only#of#situations#where#the#fault#or#negligence#is#committed#solely# properly#secured,#the#empty#CocaNCola#cases#recovered#could#have#come#only#
by# the# captain.# Where# the# shipowner# is# likewise# to# be# blamed,# Art.# 587# will# not# apply,# from#the#vessel's#deck#cargo.#It#is#settled#that#carrying#a#deck#cargo#raises#the#
and#such#situation#will#be#covered#by#the#provisions#of#the#Civil#Code#on#common#carrier# presumption# of# unseaworthiness# unless# it# can# be# shown# that# the# deck# cargo#
will# not# interfere# with# the# proper# management# of# the# ship.# However,# in# this#
NIn# this# case,# the# shipowner# could# not# avail# of# the# limited# liability# under# the# Code# of# case#it#was#established#that#"MV%Asilda"#was#not#designed#to#carry#substantial#
Commerce# since# it# allowed# the# bottles# to# be# placed# on# the# deck# making# the# vessel# not# amount#of#cargo#on#deck.#The#inordinate#loading#of#cargo#deck#resulted#in#the#
seaworthy.#In#other#words,#the#ship#sank#because#of#the#shipowner’s#negligence.# decrease# of# the# vessel's# metacentric# height# 7# thus# making# it# unstable.# The#
strong# winds# and# waves# encountered# by# the# vessel# are# but# the# ordinary#
FACTS:# vicissitudes# of# a# sea# voyage# and# as# such# merely# contributed# to# its# already#
unstable#and#unseaworthy#condition#
N# On# 6# July# 1983# CocaNCola# Bottlers# Philippines,# Inc.,# loaded# on# board# "MV% Asilda,"# a#
vessel#owned#and#operated#by#respondent#Felman#Shipping#Lines#(FELMAN#for#brevity),# 2. Art.#587#of#the#Code#of#Commerce#is#not#applicable#to#the#case#at#bar.%8#Simply#
7,500#cases#of#1Nliter#CocaNCola#softdrink#bottles#to#be#transported#from#Zamboanga#City# put,#the#ship#agent#is#liable#for#the#negligent#acts#of#the#captain#in#the#care#of#
to#Cebu#City#for#consignee#CocaNCola#Bottlers#Philippines,#Inc.,#Cebu.%1%% 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#
`The#shipment#was#insured#with#petitioner#Philippine#American#General#Insurance#Co.,# could#still#be#held#answerable#despite#the#abandonment,#as#where#the#loss#or#
Inc.#(PHILAMGEN#for#brevity),#under#Marine#Open#Policy#No.#100367NPAG.# injury# was# due# to# the# fault# of# the# shipowner# and# the# captain.% 9# The#
international#rule#is#to#the#effect#that#the#right#of#abandonment#of#vessels,#as#a#
N"MV%Asilda"#left#the#port#of#Zamboanga#in#fine#weather#at#eight#o'clock#in#the#evening#of# legal# limitation# of# a# shipowner's# liability,# does# not# apply# to# cases# where# the#
the#same#day.#At#around#eight#fortyNfive#the#following#morning,#7#July#1983,#the#vessel# injury#or#average#was#occasioned#by#the#shipowner's#own#fault.# 10#It#must#be#
sank# in# the# waters# of# Zamboanga# del# Norte# bringing# down# her# entire# cargo# with# her# stressed#at#this#point#that#Art.#587#speaks#only#of#situations#where#the#fault#or#
including#the#subject#7,500#cases#of#1Nliter#CocaNCola#softdrink#bottles.# 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#
NOn# 15# July# 1983# the# consignee# CocaNCola# Bottlers# Philippines,# Inc.,# Cebu# plant,# filed# a# provisions#of#the#Civil#Code#on#common#carrier.#11#
claim#with#respondent#FELMAN#for#recovery#of#damages#it#sustained#as#a#result#of#the#
loss#of#its#softdrink#bottles#that#sank#with#"MV%Asilda."#Respondent#denied#the#claim#thus# It#was#already#established#at#the#outset#that#the#sinking#of#"MV%Asilda"#was#due#to#
prompting# the# consignee# to# file# an# insurance# claim# with# PHILAMGEN# which# paid# its# its#unseaworthiness#even#at#the#time#of#its#departure#from#the#port#of#Zamboanga.#It#
claim#of#P755,250.00.# was# topNheavy# as# an# excessive# amount# of# cargo# was# loaded# on# deck.# Closer#
supervision# on# the# part# of# the# shipowner# could# have# prevented# this# fatal#
# miscalculation.#As#such,#FELMAN#was#equally#negligent.#It#cannot#therefore#escape#
liability# through# the# expedient# of# filing# a# notice# of# abandonment# of# the# vessel# by#
ISSUES:# virtue#of#Art.#587#of#the#Code#of#Commerce.#
1.#W/on#"MV%Asilda"#was#seaworthy#when#it#left#the#port#of#Zamboanga.Nnope# Under#Art#1733#of#the#Civil#Code,#"(c)ommon#carriers,#from#the#nature#of#their#business#
and# for# reasons# of# public# policy,# are# bound# to# observe# extraordinary# diligence# in# the#
2.#W/on#the#limited#liability#under#Art.#587#of#the#Code#of#Commerce#should#apply.Nnope# vigilance# over# the# goods# and# for# the# safety# of# the# passengers# transported# by# them,#
according#to#all#the#circumstances#of#each#case#.#.#."#In#the#event#of#loss#of#goods,#common#
3.#W/on#PHILAMGEN#was#properly#subrogated#to#the#rights#and#legal#actions#which#the# carriers#are#presumed#to#have#acted#negligently.#FELMAN,#the#shipowner,#was#not#able#
shipper#had#against#FELMAN,#the#shipowner.Nyes# to#rebut#this#presumption.#
#
#
The# doctrine# of# subrogation# has# its# roots# in# equity.# It# is# designed# to# promote# and# to# specifically#denied#that#the#4#passengers#actually#boarded#the#Don%Juan,#as#shown#by#the#
accomplish#justice#and#is#the#mode#which#equity#adopts#to#compel#the#ultimate#payment# fact# that# their# bodies# were# never# recorded.# NN# further# averred# that# the# Don%Juan%was#
of#a#debt#by#one#who#in#justice,#equity#and#good#conscience#ought#to#pay.# 19#Therefore,# seaworthy,#manned#by#a#full#and#competent#crew,#and#that#the#collision#was#entirely#due#
the# payment# made# by# PHILAMGEN# to# CocaNCola# Bottlers# Philippines,# Inc.,# gave# the# to#the#fault#of#Tacloban%City.#
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#1Nliter# #
CocaNCola#softdrink#bottles#is#inevitable.#
N#Eventually,#PNOC#and#NN#entered#into#compromise#agreement,#whereby#NN#assumed#
full#responsibility#for#the#payment#and#satisfaction#of#all#claims#and#released#PNOC#from#
# 18#NEGROS#NAVIGATION#CO.,#INC.#V.#CA,#281#SCRA#534*#NTIU# any#liability.#Miranda#and#the#dela#Victorias#did#not#join#in#the#agreement.##
ER:% Miranda# bought# 4# tickets# from# Negros# Navigation# (NN)# for# the# trip# of# his# wife,# #
daughter,#son,#and#niece#to#Bacolod.#During#the#course#of#the#voyage,#NN’s#M/V#Don%Juan#
collided# with# PNOC’s# M/V# Tacloban% City.# The# bodies# of# the# 4# passengers# were# never# N#The#RTC#awarded#actual#and#moral#damages,#as#well#as#attorney’s#fees#to#Miranda#and#
found.# Miranda# and# the# de# la# Victorias# (parents# of# the# niece)# filed# a# case# for# damages# the#de#la#Victorias.#The#CA#affirmed#the#RTC#with#modification#as#to#the#damages.#
with#the#RTC,#which#ruled#in#their#favor.#The#CA#affirmed#the#RTC#decision.#NN#contends#
that# the# 4# passengers# never# boarded# the# Don%Juan,# that# the# Mencenas%case# (prior# case# #
against# NN)# should# not# be# binding# in# this# case,# that# the# total# loss# of# the# Don% Juan%
extinguished# NN’s# liability,# and# the# damages# were# excessive.# Is% NN% liable?% Hell% yeah.% Issues:#
(1)# The# fact# that# the# 4# passengers# were# on# board# the# Don# Juan# was# proven# by# the#
testimony#of#Miranda#who#stayed#in#the#port#until#the#ship#left,#which#was#corroborated# (1)#Whether#the#4#passengers#were#actually#passengers#of#the#Don%Juan;#
by#a#surviving#passenger#who#testified#that#he#interacted#with#the#victims#on#board.#(2)#
Stare%decisis%dictates#that#the#finding#of#negligence#on#the#part#of#NN#should#apply#in#this# (2)##Whether#the#ruling#in#Mecenas%v.%Court%of%Appeals,%finding#the#crew#members#
case.#In#Mencenas,#it#was#held#that#while#the#proximate#cause#of#the#accident#was#due#to# of#NN#to#be#grossly#negligent#in#the#performance#of#their#duties,#is#binding#in#this#
the# Tacloban%City,# the# crew# of# the# Don%Juan,# was,# nevertheless# guilty# of# negligence.# (3)# case;#
Jurispurdence# has# held# that# if# fault# can# be# attributed# to# the# shipowner,# then# it# may# be#
held# liable# for# injuries# to# passengers,# despite# the# exclusively# real# and# hypothecary# (3)#Whether#the#total#loss#of#the#Don%Juan#extinguished#NN’s#liability;#and#
nature# of# maritime# law.# This# makes# the# total# loss# of# the# Don%Juan%immaterial.# (4)# The#
damages#awarded#were#in#accordance#with#law.# (4)## Whether# the# damages# awarded# by# the# CA# are# excessive,# unreasonable# and#
unwarranted#
#
#
Facts:# Respondent# Ramon# Miranda# (Miranda)# purchased# from# the# Negros# Navigation#
Co.,# Inc.# (NN)# 4# special% cabin% tickets# for# his# wife# (Adrita),# daughter# (Rosario),# son# Held:##
(Ramon)# and# niece# (Elfreda)# (4& passengers)# who# were# going# to# Bacolod# to# attend# a#
family#reunion.## (1)#People#do#not#normally#lie#about#so#grave#a#matter#as#the#loss#of#dear#ones.##
- The#tickets#were#for#Voyage%No.%457`A#of#the#M/V#Don%Juan,%leaving#Manila# ## Here,# the# RTC% held# that# the# 4# passengers# boarded# the# Don% Juan,% as% proven# by#
at#1:00PM#on#22#April#1980.#The#ship#sailed#on#schedule.# Miranda,# who# testified# that# he# purchased# tickets# from# NN# for# Voyage# No.# 47NA# of# the#
# M/V# Don% Juan,# leaving# Manila# on# 22# April# 1980.## This# was# corroborated# by# the#
passenger% manifest# on# which# the# numbers# of# the# tickets# and# the# names# of# the# 4#
N#In#the#evening#of#22#April,#the#Don%Juan#collided#off#the#Tablas%Strait%in%Mindoro#with# passengers.# Miranda# testified# that# he# personally# took# his# family# and# his# niece# to# the#
the# M/T# Tacloban%City,# an# oil# tanker# owned# by# PNOC.## The# Don%Juan# sank# and# several# vessel#on#the#day#of#the#voyage#and#stayed#with#them#on#the#ship#until#it#was#time#for#it#
died.#The#bodies#of#Miranda’s#family#were#never#found.# to# leave.# NN’s# only# proof# is# that# the# bodies# of# the# supposed# victims# were# not# among#
those# recovered# from# the# site# of# the# mishap,## but# so# were# the# bodies# of# the# other#
# passengers#reported#missing#not#recovered,#as#held#in#the#Mecenas#case.#
N#Miranda#and#the#dela#Victorias#(parents#of#Elfreda)#filed#a#complaint#in#the#RTC#Manila# ## Miranda’s# testimony# was# corroborated# by# Edgardo# Ramirez.## Ramirez# was# a#
against#NN#and#PNOC,#seeking#damages.#NN#admitted#all#of#the#material#allegations,#but# seminarian# and# one# of# the# survivors# of# the# collision.# He# testified# that# he# saw# Mrs.#
#
Miranda#and#Elfreda#on#the#ship.#Mrs.#Miranda#was#Ramirez’#teacher#in#the#grade#school,# and#100K#for#the#de#la#Victorias#in#accordance#Mecenas.#
while#Elfreda#was#Ramirez’#childhood#friend.###
#
#
#
(2)# Adherence# to# the# Mecenas# case# is# dictated# by# this# Court’s# policy# of# maintaining#
stability#in#jurisprudence#in#accordance#with#stare%decisis%et%non%quieta%movere.## (5)# The# accepted# formula# for# determining# life# expectancy# is# 2/3## multiplied# by# (80#
minus#the#age#of#the#deceased).##It#may#be#that#in#the#Philippines#the#age#of#retirement#
## Here,# in# finding# NN# guilty# of# negligence# the# lower# courts# relied# on# the# SC# ruling# in# generally# is# 65# but,# in# calculating# the# life# expectancy# of# individuals# for# the# purpose# of#
Mecenas%(penned#by#Justice#Feliciano),#which#was#a#case#brought#for#the#death#of#other# determining#loss#of#earning#capacity#under#Art.#2206(1)#of#the#Civil#Code,##it#is#assumed#
passengers.## Mencenas% held# that# although# the# proximate# cause# of# the# mishap# was# the# that# the# deceased# would# have# earned# income# even# after# retirement# from# a# particular#
negligence# of# Tacloban%City,# the# crew# of# the# Don%Juan%was# equally# negligent# its# master,# job.##
Capt.#Santisteban,#was#playing#mahjong#at#the#time#of#collision#and#the#officer#on#watch,#
Senior#Third#De#Vera,#admitted#that#he#failed#to#call#the#attention#of#Santisteban#to#the# ##As#to#the#determination#of#earning#capacity#of#the#victims,#the#lower#court#awarded#
imminent# danger# facing# them.#Mencenas%also# held# that# the# Don%Juan%was# overloaded# –# damages#as#follows:##
there#were#1004#people#on#board,#when#it#should#have#only#been#limited#to#864.#
(A)#For#Ardita:#She#was#48#years#old.#In#accordance#with#VillaFRey%Transit,%Inc.,#
# the#life#expectancy#of#Ardita#was#correctly#determined#to#be#21.33#years,#or#up#
to#age#69.##Petitioner#contends,#however,#that#Mrs.#Miranda#would#have#retired#
(3)# The# rule# is# wellNentrenched# in# our# jurisprudence# that# a% shipowner% may% be% held% from#her#job#as#a#public#school#teacher#at#65,#hence#her#loss#of#earning#capacity#
liable% for% injuries% to% passengers,% notwithstanding% the% exclusively% real% and% should#be#reckoned#up#to#17.33#years#only.#Here,#the#RTC#took#into#account#the#
hypothecary%nature%of%maritime%law%if%fault%can%be%attributed%to%the%shipowner.% fact#that#Mrs.#Miranda#had#a#master’s#degree#and#a#good#prospect#of#becoming#
principal# of# the# school# in# which# she# was# teaching.## Her# income# would# have#
##In#Mecenas,#NN#was#found#guilty#of#negligence.#Thus,#notwithstanding#the#total#loss#of# increased#through#the#years#and#she#could#still#earn#more#after#her#retirement,#
the#Don%Juan,#NN#is#liable#to#pay#damages#to#the#full#extent.# e.g.,# by# becoming# a# consultant,# had# she# not# died.## The# gross# earnings# which#
Ardita# could# reasonably# be# expected# to# earn# was,# therefore,# correctly#
# computed#to#be#P218,077.92#(given#a#gross#annual#income#of#P10,224.00#and#
life#expectancy#of#21.33#years).#
(4)#The#award#of#300K#for#moral#damages#is#reasonable#considering#the#grief#Miranda#
suffered#as#a#result#of#the#loss#of#his#entire#family.##In#fact,#3#months#after#the#collision,#he# ## In# this# regard,# NN# contends# that# from# the# amount# of# gross#
developed# a# heart# condition# undoubtedly# caused# by# the# strain# of# the# loss# of# his# earnings,#60%#should#be#deducted#as#necessary#living#expenses,#and#
family.##The#100K#given#to#the#de#la#Victorias#should#likewise#be#affirmed.# not#merely#30%#as#the#RTC#allowed#as#such#is#unrealistic,#considering#
that#Mrs.#Miranda’s#earnings#would#have#been#subject#to#taxes,#social#
N#As#for#the#amount#of#civil#indemnity,#the#award#of#50K#per#victim#should#be# security#deductions#and#inflation#–#CORRECT.##
sustained.## The# amount# of# 30K# formerly# held# in# jurisprudence# has# been#
increased#to#50#in#Sulpicio%Lines,%Inc.%v.%Court%of%Appeals.# ## Thus,# a# deduction# of# 50%# from# Mrs.# Miranda’s# gross# earnings#
(P218,077.92)#would#be#reasonable,#so#that#her#net#earning#capacity#
N#Actual#damages#in#the#amount#of#P23,075.00#was#determined#on#the#basis#of# should# be# P109,038.96.## There# is# no# basis# for# supposing# that# her#
receipts# submitted# by# Miranda.## This# amount# is# reasonable# considering# the# living#expenses#constituted#a#smaller#percentage#of#her#gross#income#
expenses# incurred# by# Miranda# in# organizing# 3# search# teams# to# look# for# his# than#the#living#expenses#in#the#decided#cases.###To#hold#that#she#would#
family,# spending# for# transportation# in# going# to# places# such# as# Batangas# City# have# used# only# a# small# part# of# her# income# for# herself,# a# larger# part#
and#Iloilo,#where#survivors#and#the#bodies#of#other#victims#were#found,#making# going# to# the# support# of# her# children# would# be# conjectural# and#
long#distance#calls,#erecting#a#monument#in#honor#of#the#four#victims,#spending# unreasonable.#
for#obituaries#in#the#Bulletin%Today%#and#for#food,#masses#and#novenas.#
#
N#As#for#the#award#of#attorney’s#fees,#the#amount#of#40K#for#Miranda#and#15K#
for#the#de#la#Victorias#is#justified.### (B)#For#Elfreda:#She#was#26#years#old.#Elfreda##was#a#teacher#in#a#private#school#
in# Malolos,# Bulacan,# earning# P6,192.00# per# annum.## Her# loss# of# earning#
N# The# award# of# exemplary# damages# should# be# increased# to# 300K# for# Miranda# capacity#is#P111,456.00.#
#
# #
The#RTC#ruled#in#favour#of#the#parents#citing#that#the#ship#captain#and#crew#knew#prior#
to#sailing#that#a#typhoon#was#coming#evidenced#by#the#acts#of#the#crew#(such#as#lashing#
# 19#VASQUEZ#V.#CA,#138#SCRA#553*#NPUNO#
the#cargo#to#the#hold#via#ropes)#and#holding#repeated#conferences.#
#
PEDRO% VASQUEZ,% SOLEDAD% ORTEGA,% CLETO% B.% BAGAIPO,% AGUSTINA% VIRTUDES,% On#appeal,#the#CA#ruled#for#Carrier#exonerating#it#from#liability.#
ROMEO%VASQUEZ%and%MAXIMINA%CAINAY%v.%CA%and%FILIPINAS%PIONEER%LINES,%INC.% #
G.R.%No.%L`42926%September%13,%1985% On#appeal,#the#SC#said#that#the#carrier#was#liable#for#the#failure#to#prove#that#it#exercised#
MELENCIO`HERRERA,%J.:% extraordinary# diligence.# The# captain# and# crew# took# calculated# risks# which# backfired#
# without# taking# into# consideration# the# safety# of# its# passengers.# There# was# no# caso#
Carrier# Filipinas#Pioneer#Lines# fortuito.#The%event%was%foreseen%and%Possible%to%avoid.10##
Vessel# M/V#Pioneer#Cebu#(interNisland#vessel#transporting#passengers# #
and#goods)# As#to#the#claim#of#total#loss#of#the#vessel,#Art.#587#of#the#Code#of#Commerce#states#that#
Route# Manila#to#Cebu#via#Romblon# the# ship# agent# shall# also# be# civilly# liable# for# the# indemnities# in# favor# of# third# persons#
Passengers# 1.#Sps.#Alfonso#Vasquez#and#Filipinas#Bagaipo# which#may#arise#from#the#conduct#of#the#captain#in#the#vigilance#over#the#goods#which#
2.##Mario#Marlon#Vasquez#(not#their#son)# the#vessel#carried.#The#ship’s#insurance#is#liable#for#damages#incurred#by#the#shipowner#
due#to#death#of#its#passengers.#
Natural#Calamity# Typhoon# Klaring# (vessel# hit# reef# at# Malapascua# Island# located#
#
North#of#Cebu)#
FACTS%
Cause#of#Action# Recovery# of# Damages# because# children# Lost# at# Sea# due# to# #
Sinking#of#Vessel# Filipinas#Pioneer#Lines,#Inc.#owned#and#operated#MV#Pioneer#Cebu.#The#vessel#was#used#
Defenses# 1. Force#Majeure#(Civil#Code)# to#transport#goods#and#passengers#in#interNisland#shipping.#It#had#a#maximum#passenger#
2. Total#Loss#of#Vessel#(Code#of#Commerce)# capacity#of#322#(including#the#crew).#
RTC#Ruling# For#Parents# #
CA#Ruling## For#CARRIER# The#vessel#was#scheduled#to#leave#on#9pm#of#May#14,#1966.#However,#it#only#left#5am#of#
SC# Ruling# –# Who# PARENTS# May# 15,# 1966# under# a# special# permit# issued# by# the# Collector# of# Customs.# The# special#
WON# permit# was# issued# since,# upon# inspection,# it# was# found# to# be# without# an# emergency#
RATIO# 1. Captain# and# crew# took# a# calculated# risk,# did# not# electrical#power#system#and#lacked#safety#devices#sufficient#for#322#persons.#The#special#
exercise#extraordinary#diligence# permit#authorized#the#vessel#to#carry#only#260#passengers.#A#headcount#was#made#of#the#
2. Despite# total# loss# of# vessel,# insurance# of# vessel# still# passengers#on#board,#resulting#on#the#tallying#of#168#adults#and#20#minors#(TOTAL:188),#
liable#for#damages#shipowner#is#liable#for#due#to#death# although# the# passengers# manifest# only# listed# 106# passengers.# This# manifest# was# not#
of#passengers# reliable#since#it#was#done#by#one#man#on#board#the#vessel.#
DOCTRINE# Carrier#remains#liable#for#damages#incurred#due#to#the#death#of# #
its#passengers#regardless#of#the#total#loss#of#the#vessel.#Liability# When# the# vessel# left# Manila,# its# officers# were# already# aware# of# the# typhoon# Klaring#
extends#only#to#the#extent#of#the#value#of#the#vessel#lost#or#the# building#up#somewhere#in#Mindanao.#However,#since#there#were#no#typhoon#signals#on#
insurance#over#it.# the# route# from# Manila# to# Cebu,# and# clearance# by# the# Customs# authorities# have# been#
# issued,#the#vessel#proceeded#with#its#voyage.#
EMERGENCY%RECITATION% #
% When#it#reached#Romblon#Island,#Captain#Floro#Yap#decided#not#to#seek#shelter#since#the#
MV#Pioneer#Cebu,#an#interNisland#vessel,#was#owned#by#Filipinas#Pioneer#Lines.#It#left#the# weather#condition#was#still#good.#After#passing#Romblon#and#while#near#Jintotolo#island,#
Port#of#Manila,#under#a#special#permit#to#operate,#towards#Cebu.#It#encountered#Typhoon# the#barometer#still#indicated#the#existence#of#good#weather.#However,#when#the#vessel#
Klaring.# The# vessel# hit# a# reef# south# of# Malapascua# Island,# an# island# North# of# Cebu# and# approached# Tanguingui# island,# the# weather# suddenly# changed# and# heavy# rains# fell.#
sank.#Sps.#Alfonso#and#Filipinas#Vasquez,#together#with#a#child,#Mario,#were#passengers# Fearing# that# due# to# zero# visibility,# the# vessel# might# hit# the# Chocolate# island# group,#
of#the#vessel#who#were#never#seen#again.# Captain#Yap#ordered#a#reversal#of#the#course#so#that#the#vessel#could#'weather#out'#the#
#
Petitioners# are# Parents# of# the# Passengers.# They# filed# at# the# CFI# Manila# a# case# for# #############################################################
recovery# of# damages# due# to# the# loss# at# sea# of# their# children.# The# Carrier# claimed# force# 10#JAPS:#This#was#not#a#line#in#the#case.#May#transitory#gap#
majeure#and#total#loss#of#a#vessel#to#exonerate#itself#from#liability.#
between#discussions#so#I#inserted#to#summarize.##
#
typhoon# by# facing# the# winds# and# the# waves# in# the# open.# Unfortunately,# at# about# against;# and# that# there# was# no# negligence# on# the# part# of# the# common# carrier# in# the#
noontime# on# May# 16,# 1966,# the# vessel# struck# a# reef# near# Malapascua# island,# sustained# discharge#of#its#duties.##
leaks#and#eventually#sunk.#Passengers#were#never#heard#of#again.# #
# ISSUE:#Whether#CARRIER#is#liable#for#damages#for#the#presumptive#death#of#passengers##
Plaintiffs# (PARENTS)# filed# a# case# for# recovery# of# damages# at# the# CFI# Manila# due# to# the# #
loss#at#sea#of#Alfonso#Vasquez,#Filipinas#Bagaipo#and#Mario#Marlon#Vasquez#during#said# HELD:%Carrier#is#Liable.##
voyage.# #
# RATIO:%%
Passenger#Name# Plaintiff# Relationship# to# #
Passenger# To# constitute# a# caso# fortuito# that# would# exempt# a# person# from# responsibility,# it# is#
Alfonso# Vasquez# (husband# to# Pedro# Vasquez# &# Soledad# Parents# necessary#that:#
Filipinas)# Ortega# (1) the#event#must#be#independent#of#the#human#will;##
Filipinas# Bagaipo# (wife# to# Cleto# Bagaipo# &# Agustina# Parents# (2) the#occurrence#must#render#it#impossible#for#the#debtor#to#fulfill#the#obligation#
Alfonso)# Virtudes# in#a#normal#manner;#
Mario#Marlon#Vasquez# Romeo# Vasquez# &# Maxima# Parents# (3) the#obligor#must#be#free#of#participation#in,#or#aggravation#of,#the#injury#to#the#
Cainay# creditor.##
# #
At#the#preNtrial,#CARRIER,#admitted#the:# In#the#language#of#the#law,#the#event#must#have#been#impossible#to#foresee,#or#if#it#could#
1. Existence#of#the#contract#of#carriage# be#foreseen,#must#have#been#impossible#to#avoid.#There#must#be#an#entire#exclusion#of#
2. Fact#of#the#sinking#off#the#ship.# human#agency#from#the#cause#of#injury#or#loss.####
# #
CARRIER#alleged#force#majeure#as#the#cause#of#the#sinking#and#that#its#liability#had#been# Records#show#that#before#the#vessel#sailed,#the#officers#and#crew#were#aware#of#typhoon#
extinguished#by#the#total#loss#of#the#vessel.## "Klaring"# that# was# reported# building# up# at# 260# kms.# east# of# Surigao.# In# fact,# they# had#
# lashed#all#the#cargo#in#the#hold#before#sailing#in#anticipation#of#strong#winds#and#rough#
The#RTC#ruled#in#favour#of#the#PARENTS#arguing#that#the#officers#and#crew#knew#prior# waters.#Upon#reaching#Romblon,#they#received#the#weather#report#that#the#typhoon#was#
to# beginning# the# voyage# that# Typhoon# Klaring# was# brewing# in# the# same# general# 154#kms.#east#southeast#of#Tacloban#and#was#moving#west#northwest.#Since#they#were#
direction# to# which# the# vessel# was# going.# The# crew# took# a# calculated# risk# when# it# still# not# within# the# radius# of# the# typhoon# and# the# weather# was# clear,# they# deliberated#
proceeded# despite# the# typhoon# advisory.# This# is# quite# evident# from# the# fact# that# the# and# decided# to# proceed# with# the# course.# At# Jintotolo# Island,# the# typhoon# was# already#
officers#of#the#vessel#had#to#conduct#conferences#amongst#themselves#to#decide#whether# reported# to# be# reaching# the# mainland# of# Samar.# # They# still# decided# to# proceed# noting#
or#not#to#proceed.#The#crew#assumed#a#greater#risk#when,#instead#of#seeking#shelter#in# that# the# weather# was# still# "good"# although,# according# to# the# Chief# Forecaster# of# the#
Romblon#and#other#islands#the#vessel#passed#en#route,#they#decided#to#take#a#change#on# Weather# Bureau,# they# were# already# within# the# typhoon# zone.# # At# Tanguingui# Island,#
the# expected# continuation# of# the# good# weather# the# vessel# was# encountering,# and# the# about#2:00#A.M.#of#May#16,#1966,#the#typhoon#was#in#an#area#quite#close#to#Catbalogan,#
possibility#that#the#typhoon#would#veer#to#some#other#directions.#The#eagerness#of#the# placing# Tanguingui# also# within# the# typhoon# zone.# Despite# knowledge# of# that# fact,# they#
crew# of# the# vessel# to# proceed# on# its# voyage# and# to# arrive# at# its# destination# is# readily# again#decided#to#proceed#relying#on#the#forecast#that#the#typhoon#would#weaken#upon#
understandable.#It#is#undeniably#lamentable,#however,#that#they#did#so#at#the#risk#of#the# crossing# the# mainland# of# Samar.# # # After# about# half# an# hour# of# navigation# towards#
lives#of#the#passengers#on#board.## Chocolate# Island,# there# was# a# sudden# fall# of# the# barometer# accompanied# by# heavy#
# downpour,# big# waves,# and# zero# visibility.# The# Captain# of# the# vessel# decided# to# reverse#
It#awarded#the#following#damages:# course# and# face# the# waves# in# the# open# sea# but# because# the# visibility# did# not# improve#
1. For# Parents# Pedro# Vasquez# and# Soledad# Ortega# N# P15,000.00# for# # Loss# of# they# were# in# total# darkness# and,# as# a# consequence,# the# vessel# ran# aground# a# reef# and#
Earning#capacity,#P2,100.00#for#support,#and#P10,000.00#for#moral#damages;## sank# on# May# 16,# 1966# around# 12:45# P.M.# near# Malapascua# Island# somewhere# north# of#
2. For# Parents# Cleto# B.# Bagaipo# and# Agustina# Virtudes# N# P17,000.00# for# loss# of# the#island#of#Cebu.##
earning#capacity#and#P10,000.00#for#moral#damages;#and## #
3. Parents# # Romeo# Vasquez# and# Maximina# Cainay# N# P10,000.00# by# way# of# moral# Under#the#circumstances,#while,#indeed,#the#typhoon#was#an#inevitable#occurrence,#yet,#
damages#by#reason#of#the#death#of#Mario#Marlon#Vasquez.## 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#
On# appeal# the# CA# reversed# and# and# absolved# private# respondent# from# any# and# all# hopped# from# island# to# island# from# Romblon# up# to# Tanguingui.# They# held# frequent#
liability.# It# believed# that# the# calamity# was# caused# solely# and# proximately# by# fortuitous# conferences,# and# oblivious# of# the# utmost# diligence# required# of# very# cautious# persons,#
event#which#not#even#extraordinary#diligence#of#the#highest#degree#could#have#guarded# 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% The#goods#were#transferred#to#the#vessel#owned#by#ABOITIZ#(party#in#this#case)#which#
passengers% transported% by% them% with% due% regard% for% an% circumstances# # and# was# insured# by# NEW# INDIA# (party# in# this# case).# Before# leaving# HK,# the# vessel# was#
unnecessarily# exposed# the# vessel# and# passengers# to# the# tragic# mishap.# They# failed# to# informed#that#it#was#safe#to#travel—but#while#at#sea,#it#was#notified#that#a#typhoon#was#
overcome#that#presumption#of#fault#or#negligence#that#arises#in#cases#of#death#or#injuries# there—it# avoided# the# typhoon# but# the# hull# still# leaked# and# the# vessel# sank.# ABOITIZA#
to#passengers.## notified#GENERAL#TEXTILE,#with#the#latter#claiming#and#getting#the#insurance#proceeds#
# from# NEW# INDIA.# New# India# investigated,# and# the# cause# was# the# vessel’s# questionable#
While# the# Board# of# Marine# Inquiry,# which# investigated# the# disaster,# exonerated# the# seaworthiness.#New#India#filed#a#complaint#for#damages#against#ABOITIZ#because#of#the#
captain#from#any#negligence,#it#was#because#it#had#considered#the#question#of#negligence# (1)#unseaworthiness#and#(2)#negligence#of#the#crew.#(It#won#for#the#full%amount)#
as# "moot# and# academic,"# the# captain# having# "lived# up# to# the# true# tradition# of# the#
profession."# While# we# are# bound# by# the# Board's# factual# findings,# we# disagree# with# its# During#the#pendency#of#the#RTC#case,#the#Board#of#Marine#Inquiry#conducted#
conclusion# since# it# obviously# had# not# taken# into# account# the# legal# responsibility# of# a# an# investigation# and# found# out# that# the# vessel# was# seaworthy# and# the# cause# was# the#
common#carrier#towards#the#safety#of#the#passengers#involved.## typhoon,# but# ABOITIZ# never# told# the# RTC# about# this.% ABOITIZ# appeals# to# the# CA,# this#
# time# bringing# the# BMI# findings,# but# it# still# lost# b/c# the# administrative# findings# are# not#
!!!ISSUE%FOR%DISCUSSION!!!% automatically#binding#upon#the#civil#courts.#ABOITIZ#appeals#to#the#SC#claiming#that#it’s#
% only#limitedly#liable.#
With# CARRIER’S# submission# that# the# total# loss# of# the# vessel# extinguished# its# liability#
pursuant#to#Article#587#of#the#Code#of#Commerce11#as#construed#in#Yangco#vs.#Laserna,## # Issue:#WON#ABOITIZ#should#be#liable#for#the#whole#amount#(Yes).#
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% # HELD:# ABOITIZ# has# the# burden# of# showing# that# it# exercised# extraordinary#
insurance%answers%for%the%damages%that%a%shipowner%or%agent%may%be%held%liable% diligence# in# the# transport# of# the# goods# it# had# on# board# in# order# to# invoke# the# limited#
for%by%reason%of%the%death%of%its%passengers.# liability#doctrine.#Differently%put,%to%limit%its%liability%to%the%amount%of%the%insurance%
proceeds,% ABOITIZ% has% the% burden% of% proving% that% the% unseaworthiness% of% its%
vessel% was% not% due% to% its% fault% or% negligence.#It#initially#attributed#the#sinking#to#the#
# 20#ABOITIZ#SHIPPING#V.#NEW#INDIA#ASSURANCE,#488#SCRA#563#–SANCHEZ# typhoon#and#relied#on#the#BMI#findings#that#it#was#not#at#fault.##However,#both#the#trial#
and#the#appellate#courts,#in#this#case,#found#that#the#sinking#was#not#due#to#the#typhoon#
Aboitiz%Shipping%Corporation%v.%New%India%Assurance%Company,%Ltd.# but#to#its#unseaworthiness.##Evidence#on#record#showed#that#the#weather#was#moderate#
when#the#vessel#sank.#
ER:#
FACTS:#
Goods:# Textiles# and# auxiliary# chemicals#
Shipper:# Societe% Francaise% Des% Colloides# S Societe% Francaise% Des% Colloides#loaded# a# cargo# of# textiles# and# auxiliary#
Insurer:#New# India# Assurance# chemicals# from#France#on# board# a# vessel# owned# by# FrancoNBelgian# Services,#
Carrier:#Aboitiz# Shipping# Corporation# Inc.##The#cargo#was#consigned#to#General#Textile,#Inc.,#in#Manila#and#insured#by#
Problem:#M/V.P.%Aboitiz#sank#along#with#ze#goodz.#Aboitiz#wants#to#limit#its#liability#via# respondent#New#India#Assurance#Company,#Ltd.##While#in#Hongkong,#the#cargo#
the# doctrine# of# “limited# liability”# was# transferred# to#M/V& P.& Aboitiz#[Owned# by# Aboitiz]# for# transshipment#
Who#won:#New#India.#For#the#whole#amount.# to#Manila.#
S Before# departing,# the# vessel# was# informed# by# the# Japanese# Meteorological#
# Societe%Francaise%Des%Colloides%sold#textiles#and#auxiliary#chemicals#to#General# Center#that#it#was#safe#to#travel#to#its#destination.#However,#while#at#sea,#it#was#
Textile,#Inc.#via#the#vessel#owned#by#FrancoNBelgian#Services#from#France#to#Hong#Kong.# notified#that#a#typhoon#was#going#to#its#path#and#it#avoided#such#typhoon.#The#
hull#still#leaked#which#made#the#vessel#sink.#
############################################################# S ABOITIZ# filed# a# Marine# Protest# stating# that# the# wind# force# was# at# 10# to# 15#
11#Art.# 587.# The# ship# agent# shall# also# be# civilly# liable# for# the# knots#at#the#time#the#ship#foundered#and#described#the#weather#as#“moderate#
breeze,#small#waves,#becoming#longer,#fairly#frequent#white#horses.”#
indemnities# in# favor# of# third# persons# which# may# arise# from# the# S ABOITIZ# notified# GENERAL# TEXTILE,# and# the# latter# lodged# a# claim# with# New#
conduct# of# the# captain# in# the# vigilance# over# the# goods# which# the# India#Assurance.#The#claim#was#granted.#
vessel# carried;# but# he# may# exempt# himself# therefrom# by# S NEW# INDIA# ASSURANCE# investigated# the# cause# of# the# sinking,# it# found# out#
that:#
abandoning#the#vessel#with#all#her#equipments#and#the#freight#he#
may#have#earned#during#the#voyage#
#
o The#cause#was#the#flooding#of#the#holds#brought#about#by#the#vessel’s# We#thus#find#it#necessary#to#clarify#now#the#applicability#here#of#the#
questionable#seaworthiness# decision#in#Monarch.#
S Because# New# India# was# subrogated# to# the# rights# of# General# Textile,# it# filed# a# S #From# the# nature# of# their# business# and# for# reasons# of# public# policy,# common#
complaint# for# damages# against# ABOITIZ,# FRANCONBELGIAN# SERVICES,# and# carriers# are# bound# to# observe# extraordinary# diligence# over# the# goods# they#
ZUELLIG#(local#agent#of#FrancoNBelgian#Services)#because#of#the#breach#of#the# transport#according#to#all#the#circumstances#of#each#case.#In#the#event#of#loss,#
contract# of# carriage# because# of# the# unseaworthiness# of# the# vessel# plus# the# destruction# or# deterioration# of# the# insured# goods,# common# carriers# are#
negligence#of#the#master#and#the#crew#of#the#ship.# responsible,# unless# they# can# prove# that# the# loss,# destruction# or# deterioration#
S [Note]# The# Board# of# Marine# Inquiry# also# did# its# independent# investigation.# It# was#brought#about#by#the#causes#specified#in#Article#1734#of#the#Civil#Code.#In#
found#that#the#vessel#was#seaworthy#and#the#sinking#was#due#to#the#exposure# all#other#cases,#common#carriers#are#presumed#to#have#been#at#fault#or#to#have#
to# the# approaching# typhoon.# Aboitiz% never% informed% the% RTC% of% this% acted# negligently,# unless# they# prove# that# they# observed# extraordinary#
investigation.# diligence.#Moreover,#where#the#vessel#is#found#unseaworthy,#the#shipowner#is#
o RTC#RULING:#ABOITIZ#is#LIABLE#to#pay#unto#NEW#INDIA#the#amount# also# presumed# to# be# negligent# since# it# is# tasked# with# the# maintenance# of# its#
of#P142,401.60,#plus#legal#interest#thereon#until#the#same#is#fully#paid,# vessel.##Though# this# duty# can# be# delegated,# still,# the# shipowner# must# exercise#
attorney’s# fees# equivalent# to# fifteen# [percent]# (15%)# of# the# total# close#supervision#over#its#men.##
amount#due#and#the#costs#of#suit.# S In# the# present# case,# ABOITIZ# has# the# burden# of# showing# that# it# exercised#
o FRANCONBELGIAN#AND#ZUELLIG#are#not#liable#for#anything.# extraordinary#diligence#in#the#transport#of#the#goods#it#had#on#board#in#order#
S ABOITIZ#appealed#to#the#CA,#this#time#presenting#the#findings#of#the#Board#of# to#invoke#the#limited#liability#doctrine.#Differently%put,%to%limit%its%liability%to%
Marine#Inquiry,#where#it#still#lost.#The#CA#held#that#the#proceedings#before#the# the%amount%of%the%insurance%proceeds,%ABOITIZ%has%the%burden%of%proving%
BMI#was#only#for#the#administrative#liability#of#the#captain#and#crew,#and#was# that% the% unseaworthiness% of% its% vessel% was% not% due% to% its% fault% or%
unilateral#in#nature,#hence#not#binding#on#the#courts.# negligence.#Considering# the# evidence# presented# and# the# circumstances#
S MR#was#also#denied,#hence#the#SC#case.# obtaining#in#this#case,#we#find#that#ABOITIZ#failed#to#discharge#this#burden.##It#
initially# attributed# the# sinking# to# the# typhoon# and# relied# on# the# BMI# findings#
ISSUE:#Whether#ABOITIZ#is#liable#under#the#doctrine#of#limited#liability#under#ARTICLES# that#it#was#not#at#fault.##However,#both#the#trial#and#the#appellate#courts,#in#this#
587,#590#AND#837#OF#THE#CODE#OF#COMMERCE.#(No.#It’s#liable#for#the#total#amount#b/c# case,# found# that# the# sinking# was# not# due# to# the# typhoon# but# to# its#
it#failed#to#overcome#its#burden)# unseaworthiness.##Evidence#on#record#showed#that#the#weather#was#moderate#
when#the#vessel#sank.##These#factual#findings#of#the#Court#of#Appeals,#affirming#
HELD:# those# of# the# trial# court# are# not# to# be# disturbed# on# appeal,#but# must# be#
accorded#great#weight.##These# findings# are# conclusive# not# only# on# the# parties#
WHEREFORE,# the# petition# is#DENIED%for# lack# of# merit.##The# Decision#dated#August# 29,# but#on#this#Court#as#well.#
2002#and#Resolution#dated#January# 23,# 2003#of# the# Court# of# Appeals# in# CANG.R.# CV# No.# Re:%the%weight%of%the%findings%of%the%Board%of%Marine%Inquiry%
28770#are#AFFIRMED.# S In# contrast,# the# findings# of# the# BMI# are# not# deemed# always# binding# on# the#
courts.#Besides,#exoneration#of#the#vessel’s#officers#and#crew#by#the#BMI#merely#
RATIO:# concerns# their# respective# administrative# liabilities.# It# does# not# in# any# way#
operate#to#absolve#the#common#carrier#from#its#civil#liabilities#arising#from#its#
S [Carlo# –# the# Court# cited# an# earlier# decision,# Monarch,# to# determine# if# limited# failure# to# exercise# extraordinary# diligence,# the# determination# of# which#
liability# governs.# Here,# it# did# not# govern.# Aboitiz# was# liable# for# the# whole#
properly#belongs#to#the#courts.#
amount.]#
Where% the% shipowner% fails% to% overcome% the% presumption% of% negligence,% the%
o In#Monarch,#we#said#that#the#sinking#of#the#vessel#was#not#due#to#force%
doctrine%of%limited%liability%cannot%be%applied.#Therefore,#we#agree#with#the#appellate#
majeure,%but# to# its# unseaworthy# condition.#Therein,# we# found#
court#in#sustaining#the#trial#court’s#ruling#that#ABOITIZ#is#liable#for#the#total#value#of#the#
ABOITIZ# concurrently# negligent# with# the# captain# and# crew.#But# the#
lost#cargo.#
Court#stressed#that#the#circumstances#therein#still#made#the#doctrine#
of#limited#liability#applicable.##
o Our#ruling#in#Monarch%may#appear#inconsistent#with#the#exception#of# # 21#ABOITIZ#SHIPPING#V.#CA,#569#SCRA#294#NNATHAN#ODUCADO#
the#limited#liability#doctrine,#as#explicitly#stated#in#the#earlier#part#of#
the#Monarch%decision.##An#exception#to#the#limited#liability#doctrine#is# October#17,#2008||#Tinga,#J.#
when# the# damage# is# due# to# the# fault# of# the# shipowner# or# to# the# #
concurrent# negligence# of# the# shipowner# and# the# captain.##In# which# SUMMARY:%
case,# the# shipowner# shall# be# liable# to# the# fullNextent# of# the# damage.# 3# consolidated# case# for# damages# were# filed# against# Aboitiz# arising# from# the# sinking# of#
M/V#P.#Aboitiz.#RTC#and#CA#of#the#different#courts#ruled#against#Aboitiz.#A#common#issue#
#
of# WHETHER# OR# NOT# THE# DOCTRINE# OF# REAL# AND# HYPOTHECARY# NATURE# OF# were#Compagnie#Maritime# des#Chargeurs#Reunis#(CMCR),# its# local# ship# agent,#
MARITIME# LAW# (ALSO# KNOWN# AS# THE# “LIMITED# LIABILITY# RULE”)# APPLIES,# was# F.E.#Zuellig#(M),# Inc.# (Zuellig),# and#Aboitiz.# Malayan# also# filed# Civil# Case# No.# RN
raised# in# the# SC.# Aboitiz# heavily# relies# on# the# defense# of# Force# majeure# and# the# 1993# 81N526#only#against#CMCR#and#Zuellig.#Thus,#defendants#CMCR#and#Zuelligfiled#
GAFLAC#case#wherein#the#court#held#in#that#case#its#liability#is#limited#to#the#value#of#the# a#thirdNparty#complaint#against#Aboitiz.#In#the#fifth#complaint#docketed#as#Civil#
ship#because#there#is#no#express#finding#of#fault#or#negligence#by#Aboitiz.## Case#No.#138879,#only#Aboitiz#was#impleaded#as#defendant.#
• Aboitiz#raised# the# defenses# of# lack# of# jurisdiction,# lack# of# cause# of# action# and#
The#Court#held#however,#that#the#1993#GAFLAC#case#is#not#applicable.#A#perusal#of#the# prescription.# It# also# claimed# that#M/V% P.%Aboitiz%was# seaworthy,# it# exercised#
decisions# of# the# courts# below# in# all# three# petitions# reveals# that# there# is# a# categorical# extraordinary#diligence#and#that#the#loss#was#caused#by#a#fortuitous#event.#
finding# of# negligence# on# the# part# of#Aboitiz.# For# instance,# in# G.R.# No.# 121833,# the# RTC# • The#RTC#of#Manila#rendered#a#decision#finding#that#Aboitiz#is#liable#
therein#expressly#stated#that#the#captain#of#M/V%P.%Aboitiz#was#negligent#in#failing#to#take# " Civil#Case#No.#138072#(RN81N526NCV)#N##P128,896.79#
a#course#of#action#that#would#prevent#the#vessel#from#sailing#into#the#typhoon.# #In#G.R.# " Civil#Case#No.#138761#N#P163,713.38#
No.# 130752,# the# RTC# concluded# that#Aboitiz#failed# to# show# that# it# had# exercised# the# " Civil#Case#No.#138762#N#P73,569.94#and#P64,704.77#
required# extraordinary# diligence# in# steering# the# vessel# before,# during# and# after# the# " Civil#Case#No.#139083#N#P156,287.64#
storm.# In# G.R.# No.# 137801,# the# RTC# categorically# stated# that# the# sinking# of#M/V% • Aboitiz,#CMCR#and#Zuellig#appealed#the#RTC#decision#to#the#Court#of#Appeals.#
P.%Aboitiz#was# attributable# to# the# negligence# or# fault# of#Aboitiz.# Moreover# • CA#It#disregarded#Aboitiz’s#argument#that#the#sinking#of#the#vessel#was#caused#
in#Aboitiz%Shipping% Corporation% v.% New% India% Assurance% Company,% Ltd.#(New% India),# by# a#forcemajeure,# in# view# of# this# Court’s# finding# in# a# related#
reiterating# the# wellNsettled# principle# that# the# exception# to# the# limited# liability# doctrine# case,#Aboitiz%Shipping%Corporation%v.%Court%of%Appeals,%et%al.#(the# 1990# GAFLAC#
applies# when# the# damage# is# due# to# the# fault# of# the#shipowner#or# to# the# concurrent# case).#
negligence#of#the#shipowner#and#the#captain.#Where#the#shipowner#fails#to#overcome#the# • As#to#the#computation#of#Aboitiz’s#liability,#the#CA#based#its#ruling#on#the#1990#
presumption#of#negligence,#the#doctrine#of#limited#liability#cannot#be#applied.# GAFLAC# (General# Accident# Fire# and# Life# Assurance# Corp)# case#
# that#Aboitiz’s#liability#should#be#based#on#the#declared#value#of#the#shipment#in#
Doctrine:# As# a# general# rule,# a# ship# owner’s# liability# is# merely# coNextensive# with# his# consonance# with# the# exceptional# rule# under# Section# 4(5)# of# the# Carriage# of#
interest# in# the# vessel,# except# where# actual# fault# Goods#by#Sea#Act.#
is#attributable##to##the##shipowner.##Thus,##as###an###exception##to##the#limited# • Aboitiz# filed# a# petition# for# certiorari,# arguing# that# the# basis# of# the# liability#
liability#doctrine,# a#shipowner#or# ship# agent# may# be# held# liable# for# damages# when# the# should#be#based#on#what#appears#in#the#bill#of#lading.#The#SC#denied#this.##
sinking#of#the#vessel#is#attributable#to#the#actual#fault#or#negligence#of#the#shipowner#or# • Aboitiz#MR,# arguing# that# the# limited# liability# doctrine# enunciated# in# the#
its#failure#to#ensure#the#seaworthiness#of#the#vessel.# 1993#GAFLAC#case#should#be#applied#in#the#computation#of#its#liability.#
%
• The# Court#granted# the# motion# and# ordered# the# reinstatement# of# the# petition#
FACTS:%
and#the#filing#of#a#comment.#
• Involved#in#this#case#are#three#consolidated#Rule#45#petitions#all#involving#the# G.R.%No.%130752##
issue# of# whether# the# real# and# hypothecary# doctrine# may# be# invoked# by#
• Asia# Traders# Insurance# Corporation# (Asia# Traders)# and# Allied# Guarantee#
the#shipowner#in# relation# to# the# loss# of# cargoes# occasioned# by# the# sinking#
Insurance# Corporation# (Allied)# filed# separate# actions# for# damages#
of#M/V%P.%Aboitiz%on#31#October#1980.#
against#Aboitiz#to# recover# by# way# of# subrogation# the# value# of# the# cargoes#
• The# three# petitions# stemmed# from# some# of# the# several# suits# filed# insured#by#them.#
against#Aboitiz#before# different# regional# trial# courts# by# shippers# or# their#
• Aboitiz# reiterated# its# defense# of# Force% Majeure.# RTC# of# Manila# (Branch# 20)#
successorsNinNinterest# for# the# recovery# of# the# monetary# value# of# the# cargoes#
ruled#against#Aboitiz#ordering#it#to#pay#damages#in#the#amount#of#P646,926.30.#
lost,#or#by#the#insurers#for#the#reimbursement#of#whatever#they#paid.#The#trial#
• Aboitiz#elevated# the# case# to# the# CA.# While# the# appeal# was# pending,# this# Court#
courts#awarded#to#various#claimants#the#amounts#ofP639,862.02,#P646,926.30,#
promulgated# the# decision# in# the# 1993#GAFLAC%case.# The# Court# of# Appeals#
and#P87,633.81#in#G.R.#Nos.#121833,#130752#and#137801,#respectively#
subsequently#rendered#a#decision#on#30#May#1994,#affirming#the#RTC#decision#
G.R.%No.%121833##
• SC#denied#the#appeal#and#subsequent#MR#of#Aboitiz.#
• Malayan#Insurance#Company,#Inc.#(Malayan)#filed#five#separate#actions#against#
• When# Asia# Traders# and# Allied# filed# a# motion# for# execution,# Aboitiz# opposed#
several# defendants# for# the# collection# of# the# amounts# of# the# cargoes# allegedly#
this# and# filed# a# petitioner# for# certiorari# and# prohibition# with# the# CA.# The#
paid# by# Malayan# under# various# marine# cargo# policies#issued# to# the# insurance#
petition#was#mainly#anchored#on#this#Court’s#ruling#in#the#1993#GAFLAC%case.#
claimants.#
• CA# denied# its# petition.# Based# on# the# trial# court’s# finding# thatAboitiz#was#
• The# defendants# in# Civil# Case# No.# 138761# and# in# Civil# Case# No.# 139083# were#
actually# negligent# in# ensuring# the# seaworthiness# of#M/V% P.%Aboitiz,# the#
Malayan# International# Shipping# Corporation,#a# foreign# corporation# based#
appellate#court#held#that#the#real#and#hypothecary#doctrine#enunciated#in#the#
in#Malaysia,#its#local#ship#agent,#Litonjua#Merchant#Shipping#Agency#(Litonjua),#
1993#GAFLAC%case#may#not#be#applied#in#the#case.#
and#Aboitiz.# The# defendants# in# Civil# Case# No.# 138762#
G.R.%No.%137801#
#
• On# 27# February# 1981,# Equitable# Insurance# Corporation# (Equitable)# filed# an# claims#so#that#the#proNrated#share#of#each#claim#could#be#determined#
action#for#damages#against#Aboitiz#to#recover#by#way#of#subrogation#the#value# after#all#the#cases#shall#have#been#decided.#
of# the# cargoes# insured# by# Equitable# that# were# lost# in# the# sinking# of#M/V% " Moreover,# in# that# case,# the# Court# applied# the# limited# liability# rule# in#
P.%Aboitiz.# favor# of#Aboitiz#based# on# the# trial# court’s# finding# therein#
• #RTC#of#Manila,#Branch#7,#rendered#judgment#ordering#Aboitiz#to#pay#Equitable# that#Aboitiz#was# not# negligent.# The# Court# held,# that# the# Limited#
the# amount# of#P87,633.81,# plus# legal# interest# and# attorney’s# fees.#It# found# Liability# Doctrine# does# not# apply# when# there# is# negligence,# but#
that#Aboitiz#was#guilty#of#contributory#negligence#and,#therefore,#liable#for#the# examining# the# records# in# its# in# entirety# will# show# that#there% has%
loss.## been%no%actual%finding%of%negligence%on%the%part%of%petitioner.#
• In#its#appeal,#docketed#as#CANG.R.#CV#No.#43458,#Aboitiz#invoked#the#doctrine#of# " The# ruling# in# the# 1993#GAFLAC#case# cited# the#real#
limited# liability# and# claimed# that# the# typhoon#was#the# proximate# cause# of# the# and#hypothecary#doctrine# in# maritime# law# that# the#shipowner#or#
loss.#However,#the#CA#affirmed#the#RTC#decision.# agent’s#liability#is#merely#coNextensive#with#his#interest#in#the#vessel#
• Aboitiz# filed# a# petition# for# review# on# certiorari# and# raised# the# issue# of# such# that# a# total# loss# thereof# results# in# its# extinction.# “No# vessel,# no#
WHETHER#OR#NOT#THE#DOCTRINE#OF#REAL#AND#HYPOTHECARY#NATURE#OF# liability”#expresses#in#a#nutshell#the#limited#liability#rule.#
MARITIME#LAW#(ALSO#KNOWN#AS#THE#“LIMITED#LIABILITY#RULE”)#APPLIES.# • Limited%liability%rule%
% " The#limited#liability#rule#is#embodied#in#Articles#587,#590#and#83712#
% under#Book#III#of#the#Code#of#Commerce.#
ISSUE:% " These# articles# precisely# intend# to# limit# the# liability# of#
Whether#Aboitiz#can# avail# limited# liability# on# the# basis# of# the# real# the#shipowner#or# agent# to# the# value# of# the# vessel,# its# appurtenances#
and#hypothecary#doctrine#of#maritime#law.#NO.# and# freightage# earned# in# the# voyage,# provided# that# the# owner# or#
# agent#abandons#the#vessel.#
HELD:% " When# the# vessel# is# totally# lost# in# which# case# there# is# no# vessel# to#
WHEREFORE,# the# petitions# in# G.R.# Nos.# 121833,# 130752# and# 137801# are#DENIED.# The# abandon,#abandonment#is#not#required.#Because#of#such#total#loss#the#
decisions#of#the#Court#of#Appeals#in#CANG.R.#SP#No.#35975NCV,#CANG.R.#SP#No.#41696#and# liability#of#the#shipowner#or#agent#for#damages#is#extinguished.#
CANG.R.#CV#No.#43458#are#hereby#AFFIRMED.#Costs#against#petitioner# " However,# despite# the# total# loss# of# the# vessel,# its# insurance# answers#
% for#the#damages#for#which#a#shipowner#or#agent#may#be#held#liable.#
RATIO:% " The#international#rule#is#to#the#effect#that#the#right#of#abandonment#of#
• 1993%GAFLAC%case%explained.% vessels,#as#a#legal#limitation#of#a#shipowner’s#liability,#does#not#apply#
" The# 1993#GAFLAC#case# was# an# offshoot# of# an# earlier# final# to# cases# where# the# injury# or# average# was# occasioned# by#
and#executory#judgment#in#the#1990#GAFLAC%case,#where#the#General# the#shipowner’s#own#fault.##
Accident# Fire# and# Life# Assurance# Corporation,# Ltd.# (GAFLAC),# as#
judgment#obligee#therein,# sought# the# execution# of# the# monetary#
award#against#Aboitiz.##
" In# the# 1993#GAFLAC#case,#Aboitiz#argued# that# the# real# #############################################################
and#hypothecary#doctrine#warranted#the#immediate#stay#of#execution# 12##Art.#587.#The#ship#agent#shall#also#be#civilly#liable#for#the#indemnities#in#favor#of#
of#judgment#to#prevent#the#impairment#of#the#other#creditors’#shares.## third#persons#which#may#arise#from#the#conduct#of#the#captain#in#the#care#of#the#goods#
" Following# the# doctrine# of# limited# liability,# however,# the# Court# which#he#loaded#on#the#vessel;#but#he#may#exempt#himself#therefrom#by#abandoning#the#
declared# in# the# 1993#GAFLAC%case# that# claims# against#Aboitiz#arising# vessel#with#all#her#equipment#and#the#freight#it#may#have#earned#during#the#voyage.#
#
from#the#sinking#of#M/V%P.%Aboitiz%should#be#limited#only#to#the#extent#
Art.#590.#The#coNowners#of#the#vessel#shall#be#civilly#liable#in#the#proportion#of#their#
of#the#value#of#the#vessel.##
interests#in#the#common#fund#for#the#results#of#the#acts#of#the#captain#referred#to#in#Art.#
" Thus,#the#Court#held#that#the#execution#of#judgments#in#cases#already#
587.#
resolved#with#finality#must#be#stayed#pending#the#resolution#of#all#the#
##
other#similar#claims#arising#from#the#sinking#of#M/V%P.%Aboitiz.#
Each#coNowner#may#exempt#himself#from#this#liability#by#the#abandonment,#before#a#
" Considering# that# the# claims# against#Aboitiz#had# reached# more# than#
notary,#of#the#part#of#the#vessel#belonging#to#him.#
100,# the# Court# found# it# necessary# to# collate# all# these# claims# before#
##
their# payment# from# the# insurance# proceeds# of# the# vessel# and# its#
Art.#837.#The#civil#liability#incurred#by#shipowners#in#the#case#prescribed#in#this#section,#
pending#freightage.##
shall#be#understood#as#limited#to#the#value#of#the#vessel#with#all#its#appurtenances#and#
" As# a# result,# the# Court# exhorted# the# trial# courts# beforewhom#similar#
freightage#served#during#the#voyage.#
cases# remained# pending# to# proceed# with# trial# and# adjudicate# these#
#
#
" Likewise,#the#shipowner#may#be#held#liable#for#injuries#to#passengers# " In#New% India,# the# Court# clarified# that# the# earlier# pronouncement#
notwithstanding# the# exclusively# real# and#hypothecary#nature# of# in#Monarch% Insurance%was# not# an# abandonment# of# the# doctrine# of#
maritime#law#if#fault#can#be#attributed#to#the#shipowner.# limited# liability# and# that# the# circumstances# therein# still# made# the#
• The% circumstances% in% the% 1993%GAFLAC%case,% however,% are% not% obtaining% doctrine#applicable.#
in%the%instant%petitions.% " In#New% India,# the# Court# declared# that#Aboitiz#failed# to# discharge# its#
" A# perusal# of# the# decisions# of# the# courts# below# in# all# three# petitions# burden# of# showing# that# it# exercised# extraordinary# diligence# in# the#
reveals# that# there# is# a# categorical# finding# of# negligence# on# the# part# transport#of#the#goods#it#had#on#board#in#order#to#invoke#the#limited#
of#Aboitiz.## liability#doctrine.#Thus,#the#Court#rejected#Aboitiz’s#argument#that#the#
" For# instance,# in# G.R.# No.# 121833,# the# RTC# therein# expressly# stated# award#of#damages#to#respondent#therein#should#be#limited#to#its#pro%
that# the# captain# of#M/V% P.%Aboitiz#was# negligent# in# failing# to# take# a# rata#share# in# the# insurance# proceeds# from# the# sinking# of#M/V%
course# of# action# that# would# prevent# the# vessel# from# sailing# into# the# P.%Aboitiz.#
typhoon.# " The# instant# petitions# provide# another# occasion# for# the# Court# to#
" #In# G.R.# No.# 130752,# the# RTC# concluded# that#Aboitiz#failed# to# show# reiterate#the#wellNsettled#doctrine#of#the#real#and#hypothecary#nature#
that#it#had#exercised#the#required#extraordinary#diligence#in#steering# of#maritime#law.##
the#vessel#before,#during#and#after#the#storm.# " As#a#general#rule,#a#ship#owner’s#liability#is#merely#coNextensive#with#
" In# G.R.# No.# 137801,# the# RTC# categorically# stated# that# the# sinking# his# interest# in# the# vessel,# except# where# actual# fault#
of#M/V%P.%Aboitiz#was#attributable#to#the#negligence#or#fault#of#Aboitiz.# is#attributable##to##the##shipowner.##Thus,##as###an###exception##to##the#li
• The%finding%of%actual%fault%on%the%part%of%Aboitiz%is%central%to%the%issue%of% mited#liability#doctrine,#a#shipowner#or#ship#agent#may#be#held#liable#
its%liability%to%the%respondents.% for# damages# when# the# sinking# of# the# vessel# is# attributable# to# the#
" Aboitiz’s#contention,# that# with# the# sinking# of#M/V% P.%Aboitiz,# its# actual#fault#or#negligence#of#the#shipowner#or#its#failure#to#ensure#the#
liability#to#the#cargo#shippers#and#shippers#should#be#limited#only#to# seaworthiness#of#the#vessel.#
the#insurance#proceeds#of#the#vessel#absent#any#finding#of#fault#on#the#
part#of#Aboitiz,#is#not#supported#by#the#record.##
# 22#DE#LA#TORRE#V.#CA,#653#SCRA#714#–BASCARA#
" Thus,#Aboitiz#is# not# entitled# to# the# limited# liability# rule# and# is,#
therefore,# liable# for# the# value# of# the# lost# cargoes# as# so# duly# alleged#
and#proven#during#trial.# Emergency%Recitation%
" Events#have#supervened#during#the#pendency#of#the#instant#petitions.#
In# the# consolidated# petitions# of#Monarch% Ins.% Co.,% Inc% v.% Court% of% CRISOSTOMO#owns#LCTNJosephine#(THE#VESSEL).#Four#(4)#agreements#were#
Appeals,#Allied% Guarantee% Insurance% Company% v.% Court% of% executed#with#respect#to#the#VESSEL.##
Appeals#and#Equitable% Insurance% Corporation% v.% Court% of% Appeals#
(Monarchs# Insurance# case# for# brevity),# the# Court# deemed# it# fit# to# • First#contract:#Between#Crisostomo#and#Roland—for#dry#docking#and#
settle#once#and#for#all#this#factual#issue#by#declaring#that#the#sinking# repairs#of#the#VESSEL#and#its#charter#afterwards#
of#M/V% P.%Aboitiz#was# caused# by# the# concurrence# of# • Second#Contract:#Between#Crisostomo#and#PTSC#(represented#by#
the#unseaworthiness#of# the# vessel# and# the# negligence# of#
ROLAND)—charter#of#vessel#to#ROLAND#
both#Aboitiz#and# the# vessel’s# crew# and# master# and# not# because#
of#force%majeure.# Notwithstanding# this# finding,# the# Court# did# not# • Third#Contract:#Between#PTSC/ROLAND#and#TSL/AGUSTIN—sub#
reverse# but# reiterated# instead# the# pronouncement# in#GAFLAC%to# the# charter#to#TSL##
effect# that# the# claimants# be# treated# as# “creditors# in# an# insolvent# o *Agustin#is#Roland’s#father#
corporation# whose# assets# are# not# enough# to# satisfy# the# totality# of# • Fourth#Contract:#Between#TSL/AGUSTIN#and#RAMON—sub#charter#to#
claims#against#it.”# RAMON#for#the#transport#of#cargo#consisting#of#sand#and#gravel#to#
" However,# on#02# May# 2006,# the# Court# rendered# a# decision# Leyte.##
in#Aboitiz%Shipping% Corporation% v.% New% India% Assurance% Company,%
Ltd.#(New% India),# reiterating# the# wellNsettled# principle# that# the# On#November#23,#1984,#the#VESSEL#with#its#cargo#of#sand#and#gravel#arrived#at#
exception#to#the#limited#liability#doctrine#applies#when#the#damage#is#
Philpos,#Isabel,#Leyte.#The#VESSEL#was#beached#near#the#NDC#Wharf.#With#the#
due# to# the# fault# of# the#shipowner#or# to# the# concurrent# negligence# of#
the#shipowner#and# the# captain.# Where# the#shipowner#fails# to# VESSEL’s#ramp#already#lowered,#the#unloading#of#the#VESSEL’s#cargo#began#
overcome# the# presumption# of# negligence,# the# doctrine# of# limited# with#the#use#of#RAMON’s#payloader. While#the#payloader#was#on#the#deck#of#
liability#cannot#be#applied.# the#the#VESSEL#scooping#a#load#of#the#cargo,#the#VESSEL’s#ramp#started#to#move#
#
downward,#the#VESSEL#tilted#and#sea#water#rushed#in.#Shortly#thereafter,#the# negligence#of#AGUSTIN#to#whom#ROLAND#chose#to#subNcharter#or#
VESSEL#sank. CRISOSTOMO#demanded#that#PTSC/#ROLAND#refloat#the#VESSEL.# sublet#the#VESSEL.#
Although#the#latter#assured#CRISOSTOMO#that#negotiations#were#underway#for# o PTSC#is#liable#to#CRISOSTOMO#under#Articles#1665#and#1667#of#the#
the#refloating#of#his#VESSEL,#this#did#not#materialize.#In#the#complaint#filed#by# New#Civil#Code.#As#the#charterer#or#lessee#under#the#Contract#of#
CRISOSTOMO#for#Sum#of#Money#and#Damages,#the#RTC#declared#that#the# Agreement#dated#June#20,#1984,#PTSC#was#contractNbound#to#return#
“efficient#cause#of#the#sinking#of#the#VESSEL#was#the#improper#lowering#or# the#thing#leased#and#it#was#liable#for#the#deterioration#or#loss#of#the#
positioning#of#the#ramp,”#and#held#PTSC/ROLAND#and#AGUSTIN#(as#thirdNparty# same.#
defendant)#liable#to#CRISOSTOMO.#PTSC/ROLAND/#AGUSTIN#contends#that#the# o AGUSTIN,#on#the#other#hand,#who#was#the#subNcharterer#or#subNlessee#
Limited#Liability#Rule#under#the#Code#of#Commerce#should#be#applied#to#them.## of#the#VESSEL,#is#liable#under#Article#1651#of#the#New#Civil#Code.#
Although#he#was#never#privy#to#the#contract#between#PTSC#and#
Issue##1:##Whether#or#not#the#Limited#Liability#Rule#under#the#Code#of# CRISOSTOMO,#he#remained#bound#to#preserve#the#chartered#vessel#for#
Commerce#should#be#applied#in#the#present#case#with#respect#to#the#liability#of# the#latter.#Despite#his#nonNinclusion#in#the#complaint#of#CRISOSTOMO,#
the#petitioners#(PTSC/ROLAND/AGUSTIN)N#NO# it#was#deemed#amended#so#as#to#include#him#because#he#still#had#his#
day#in#court#as#he#was#in#fact#impleaded#as#a#thirdNparty#defendant#by#
o The#said#rule#has#been#explained#to#be#that#of#the#real#and#hypothecary# his#own#son,#ROLAND#–#the#very#same#person#who#represented#him#in#
doctrine#in#maritime#law#where#the#shipowner#or#ship#agent’s#liability# the#Contract#of#Agreement#with#RAMON#
is#held#as#merely#coNextensive#with#his#interest#in#the#vessel#such#that#a# o In#any#case,#all#three#petitioners#(ROLAND/PTSC/AGUSTIN)#are#liable#
total#loss#thereof#results#in#its#extinction.##What#is#contemplated#is#the# under#Article#1170#of#the#New#Civil#Code.##
liability#to#third#persons#who#may#have#dealt#with#the#shipowner,#the# o Clearly,#the#petitioners,#to#whom#the#possession#of#the#VESSEL#had#
agent#or#even#the#charterer#in#case#of#demise#or#bareboat#charter.#The# been#entrusted#as#early#as#the#time#when#it#was#dryNdocked#for#repairs,#
only#person#who#could#avail#of#this#is#the#shipowner,#CRISOSTOMO.#He# were#obliged#to#insure#the#same.#Unfortunately,#they#failed#to#do#so#in#
is#the#very#person#whom#the#Limited#Liability#Rule#has#been#conceived# clear#contravention#of#their#respective#agreements.#Certainly,#they#
to#protect.##The#petitioners#cannot#invoke#this#as#a#defense.#The#policy# should#now#all#answer#for#the#loss#of#the#vessel.##
which#the#rule#is#designed#to#promote#is#the#encouragement#of#
#Facts:#
shipbuilding#and#investment#in#maritime#commerce.#Ergo,#the#
charterer#or#the#subNcharterer,#whose#rights#cannot#rise#above#that#of#
• Respondent#Crisostomo#G.#Concepcion#(CRISOSTOMO)#owned#LCTN
the#former,#can#never#set#up#the#Limited#Liability#Rule#against#the#very#
Josephine#(THE#VESSEL),#a#vessel#registered#with#the#Philippine#Coast#
owner#of#the#vessel.##
Guard.##
Issue##2#Who#should#be#held#liable#and#to#what#extent# • First%Contract:%Between%Crisostomo%and%Roland%
o On#February#1,#1984,#CRISOSTOMO#entered#into#a#
o In#the#absence#of#any#showing#that#the#vessel#or#any#part#thereof#was# “Preliminary#Agreement”#with#Roland#de#la#
commercially#offered#for#use#to#the#public,#the#agreements/charter# Torre#(ROLAND)#for#the#dryNdocking#and#repairs#of#the#
parties#in#the#present#case#are#that#of#a#private#carriage#where#the# VESSEL#and#for#its#charter#afterwards.#Under#this#agreement,#
rights#of#the#contracting#parties#are#primarily#defined#and#governed#by# CRISOSTOMO#agreed#that#after#the#dryNdocking#and#repair#
the#stipulations#in#their#contract.#Thus,#the#NCC#applies#in#this#case.# of#the#VESSEL,#it#“should”#be#chartered#for#₱10,000#per#month#
o Thus,#ROLAND#who,#in#his#personal#capacity,#entered#into#the# along#with#certain#conditions#
Preliminary#Agreement#with#CRISOSTOMO#for#the#dryNdocking#and# • Second%Contract:%Between%Crisostomo%and%PTSC%
repair#of#the#VESSEL,#is#liable#under#Article#1189#of#the#New#Civil#Code.# o On#June#20,#1984,#CRISOSTOMO#and#the#Philippine#Trigon#
There#is#no#denying#that#the#vessel#was#not#returned#to#CRISOSTOMO# Shipyard#Corporation#(PTSC),#represented#by#ROLAND,#
after#the#repairs#because#of#the#provision#in#the#Preliminary# entered#into#a#“Contract#of#Agreement,”#wherein#ROLAND#
Agreement#that#the#same#“should”#be#used#by#ROLAND#for#the#first#two# would#charter#the#VESSEL#retroactive#to#May#1,#1984,#under#
years.#Before#the#vessel#could#be#returned,#it#was#lost#due#to#the# certain#conditions.#
#
• Third%Contract:%Between%PTSC/Roland%and%TSL/Agustin% ramp#according#to#ROLAND#“was#not#properly#put#into#peak#
o On#August#1,#1984,#PTSC/ROLAND#subNchartered#the#VESSEL# such#that#the#front#line#will#touch#the#bottom,#particularly#will#
to#Trigon#Shipping#Lines#(TSL),#a#single#proprietorship#owned# touch#the#sea#(4)#that#“the#tires#(of#the#payloader)#will#be#
by#Roland’s#father,#Agustin#de#la#Torre#(AGUSTIN).##The#subN submerged#to#the#sea”;#(5)#that#according#to#Sungayan#“the#
charter#between#ROLAND#and#AGUSTIN#was#subject#to#the# ramp#of#the#vessel#was#moving#down”;#(6)#that#the#payloader#
terms#and#conditions#of#another#“Contract#of#Agreement”.# had#to#be#maneuvered#by#its#operator#who#dumped#the#load#at#
• Fourth%Contract:%Between%TSL/Agustin%and%Ramon% the#side#of#the#vessel;#(7)#that#the#dumping#of#the#load#changed#
o On#November#22,#1984,#TSL#(represented#by#ROLAND#per# the#stability#of#the#vessel#and#tilted#it#to#the#starboard#side;#
AGUSTIN’s#Special#Power#of#Attorney)#subNchartered#the# and#(8)#that#the#tilting#caused#the#sliding#of#the#cargo#toward#
VESSEL#to#Ramon#Larrazabal#(RAMON)#for#the#transport#of# that#side#and#opened#the#manhole#through#which#seawater#
cargo#consisting#of#sand#and#gravel#to#Leyte.#The#subNcharter# rushed#in#
between#TSL#and#RAMON#was#subject#to#the#terms#and# o Hubart#Sungayan#also#admitted#at#the#trial#that#it#was#
conditions#of#a#contract13#executed#between#them.# TSL/AGUSTIN#that#was#was#inNcharge#of#the#VESSEL’s#
• On#November#23,#1984,#the#VESSEL#with#its#cargo#of#sand#and#gravel# operations#although#the#responsibility#of#loading#and#
arrived#at#Philpos,#Isabel,#Leyte.#The#VESSEL#was#beached#near#the# unloading#the#cargo#was#under#RAMON.##
NDC#Wharf.#With#the#VESSEL’s#ramp#already#lowered,#the#unloading#of# • The#defendants#(PTSC/ROLAND)#and#the#thirdNparty#defendant#
the#VESSEL’s#cargo#began#with#the#use#of#RAMON’s#payloader (AGUSTIN)#were#found#to#be#liable#to#CRISOSTOMO#jointly#and#
o While#the#payloader#was#on#the#deck#of#the#the#VESSEL#scooping#a#load# severally#in#the#sum#of#841,386.86#as#the#value#of#the#LCT#JOSEPHINE.#
of#the#cargo,#the#VESSEL’s#ramp#started#to#move#downward,#the# The#defendants#were#also#made#to#pay#CRISOSTOMO#unpaid#rentals#
VESSEL#tilted#and#sea#water#rushed#in.#Shortly#thereafter,#the#VESSEL# (P90,000)#and#lost#rentals#(P170,000).#The#defendants’#counterclaim#
sank. (₱24,304.35)#for#the#unpaid#balance#of#plaintiff#CRISOSTOMO’s#
• CRISOSTOMO#demanded#that#PTSC/#ROLAND#refloat#the#VESSEL.#The# obligation#for#the#dryNdocking#and#repair#of#the#VESSEL#were#however#
latter#assured#CRISOSTOMO#that#negotiations#were#underway#for#the# found#to#be#valid#and#ordered#deducted#from#the#unpaid#rentals.##The#
refloating#of#his#VESSEL.#Unfortunately,#this#did#not#materialize.# fourthNparty#complaint#against#the#fourthNparty#defendant,#RAMON#
• CRISOSTOMO#filed#a#complaint#for#“Sum#of#Money#and#Damages”# was#dismissed#for#being#without#basis.#
against#PTSC/ROLAND#before#the#RTC.#PTSC#and#ROLAND#filed#their# • AGUSTIN,#PTSC#and#ROLAND#went#to#the#CA#on#appeal.#The#appellate#
answer#together#with#a#thirdNparty#complaint#against#AGUSTIN.# court,#in#agreement#with#the#findings#of#the#RTC,#affirmed#its#
AGUSTIN,#in#turn,#filed#his#answer#plus#a#fourthNparty#complaint# decision#in#toto#
against#RAMON.#RAMON#filed#his#answer#and#counterclaim#but#was# • Still#not#in#conformity#with#the#CA#findings#against#them,#AGUSTIN,#
subsequently#declared#in#default#by#the#RTC.#Eventually,#the#fourthN PTSC#and#ROLAND#came#to#this#Court#through#these#petitions#for#
party#complaint#against#RAMON#was#dismissed#when#the#RTC# review.#In#G.R.#No.#160088,#petitioner#Agustin#raises#the#following#
rendered#its#decision#in#favor#of#CRISOSTOMO.#The#RTC#declared#that# issues:#
the#“efficient#cause#of#the#sinking#of#the#VESSEL#was#the#improper#
lowering#or#positioning#of#the#ramp,”#which#was#well#within#the#charge# MAIN&ISSUE:&Whether#or#not#the#Limited#Liability#Rule#under#the#Code#of#
or#responsibility#of#the#captain#and#crew#of#the#vessel.## Commerce#should#be#applied#in#the#present#case#with#respect#to#the#liability#of#
• In#said#RTC#decision,#the#following#observations#were#written:# the#petitioners#(PTSC/ROLAND/AGUSTIN)&
o The#testimonies#of#ROLAND#and#Hubart#Sungayan#(the#
chiefmate#of#LCTN#Josephine#and#under#the#employ#of# 1.%Whether%or%not%the%factual%findings%of%the%RTC/CA%must%be%reviewed%
TSL/AGUSTIN)#show:#(1)#that#the#payloader#was#used#to#
unload#the#cargo#of#sand#and#gravel;#(2)#that#the#payloader# o As#regards#the#issues#requiring#a#review#of#the#factual#findings#of#the#
had#to#go#inside#the#vessel#and#scoop#up#a#load;#(3)#that#the# trial#court,#the#Court#finds#no#compelling#reason#to#deviate#from#the#
rule#that#findings#of#fact#of#a#trial#judge,#especially#when#affirmed#by#
#############################################################
!
#
the#appellate#court,#are#binding#before#this#Court.#The#CA,#in#reviewing# extinction.#In#this#jurisdiction,#this#rule#is#provided#in#three#articles#of#
the#findings#of#the#RTC,#made#these#observations:% the#Code#of#Commerce.##These#are:#
o We#are#not#persuaded#that#the#trial#Court#finding#should#be#set# o Art.#587.#The#ship#agent#shall#also#be#civilly#liable#for#the#
aside.#The#Court#a#quo#sifted#through#the#records#and#arrived# indemnities#in#favor#of#third#persons#which#may#arise#from#the#
at#the#fact#that#clearly,#there#was#improper#lowering#or# conduct#of#the#captain#in#the#care#of#the#goods#which#he#loaded#
positioning#of#the#ramp,#which#was#not#at#“peak,”#according#to# on#the#vessel;#but#he#may#exempt#himself#therefrom#by#
ROLAND#and#“moving#down”#according#to#Sungayan#when#the# abandoning#the#vessel#with#all#her#equipment#and#the#freight#it#
payloader#entered#and#scooped#up#a#load#of#sand#and#gravel.# may#have#earned#during#the#voyage.#
Because#of#this,#the#payloader#was#in#danger#of#being#lost# o Art.#590.#The#coNowners#of#the#vessel#shall#be#civilly#liable#in#
(‘submerged’)#and#caused#RAMON#to#order#the#operator#to#go# the#proportion#of#their#interests#in#the#common#fund#for#the#
back#into#the#vessel,#according#to#ROLAND’s#version,#or#back# results#of#the#acts#of#the#captain#referred#to#in#Art.#587.#Each#
off#to#the#shore,#per#Sungayan.#Whichever#it#was,#the#fact# coNowner#may#exempt#himself#from#this#liability#by#the#
remains#that#the#ramp#was#unsteady#(moving)#and#compelled# abandonment,#before#a#notary,#of#the#part#of#the#vessel#
action#to#save#the#payloader#from#submerging,#especially# belonging#to#him.#
because#of#the#conformation#of#the#sea#and#the#shore.#% o Art.#837.#The#civil#liability#incurred#by#shipowners#in#the#case#
o The#contract#executed#on#June#20,#1984#(second#contract—the# prescribed#in#this#section,#shall#be#understood#as#limited#to#the#
one#between#CRISOSTOMO#and#PTSC)#showed#that#the# value#of#the#vessel#with#all#its#appurtenances#and#freightage#
services#of#the#crew#of#the#owner#of#the#vessel#were# served#during#the#voyage.#
terminated.#This#allowed#the#charterer,#ROLAND/PTSC,#to# o Article#837#specifically#applies#to#cases#involving#collision#which#is#a#
employ#their#own.#The#subNcharter#contract#between#PTSC#and# necessary#consequence#of#the#right#to#abandon#the#vessel#given#to#the#
thirdNparty#defendantNappellant#TSL#showed#similar#provision# shipowner#or#ship#agent#under#the#first#provision#–#Article#587.#
where#the#crew#of#PTSC#had#to#be#terminated#or#rehired#by# Similarly,#Article#590#is#a#reiteration#of#Article#587,#only#this#time#the#
TSL.#As#to#the#agreement#with#fourthNparty#RAMON,#it#is#silent# situation#is#that#the#vessel#is#coNowned#by#several#persons.#Obviously,#
on#who#would#hire#the#crew#of#the#vessel.#Clearly,#the#crew# the#forerunner#of#the#Limited#Liability#Rule#under#the#Code#of#
manning#the#vessel#when#it#sunk#belonged#to#TSL.#Hubart# Commerce#is#Article#587.#Now,#the#latter#is#quite#clear#on#which#
Sungayan,#the#acting#Chief#Mate,#testified#that#he#was#hired#by# indemnities#may#be#confined#or#restricted#to#the#value#of#the#vessel#
Agustin#de#la#Torre,#who#in#turn#admitted#to#hiring#the#crew.# pursuant#to#the#said#Rule,#and#these#are#the#–#“indemnities#in#favor#of#
The#actions#of#fourthNparty#defendant,#RAMON#and#his# third#persons#which#may#arise#from#the#conduct#of#the#captain#in#the#
payloader#operator#did#not#include#the#operation#of#docking# care#of#the#goods#which#he#loaded#on#the#vessel.”#Thus,#what#is#
where#the#problem#arose.% contemplated#is#the#liability#to#third#persons#who#may#have#dealt#with#
o Similarly,#the#Court#has#examined#the#records#at#hand#and#completely# the#shipowner,#the#agent#or#even#the#charterer#in#case#of#demise#or#
agree#with#the#CA#that#the#factual#findings#of#the#RTC#are#in#order.% bareboat#charter.#
o The#only#person#who#could#avail#of#this#is#the#
%2.%Whether%or%not%the%Limited%Liability%Rule%under%the%Code%of%Commerce% shipowner,#CRISOSTOMO.#He#is#the#very#person#whom#the#Limited#
should%be%applied%in%the%present%case%with%respect%to%the%liability%of%the% Liability#Rule#has#been#conceived#to#protect.##The#petitioners#cannot#
petitioners%(PTSC/ROLAND/AGUSTIN)%(the%important%issue!)% invoke#this#as#a#defense.##
o The#policy#which#the#rule#is#designed#to#promote#is#the#encouragement#
o With#respect#to#PTSC/ROLAND’s#position#that#the#Limited#Liability# of#shipbuilding#and#investment#in#maritime#commerce.#‘Grotius,#in#his#
Rule#under#the#Code#of#Commerce#should#be#applied#to#them,#the# law#of#War#and#Peace,#says#that#men#would#be#deterred#from#investing#
argument#is#misplaced.#The#said#rule#has#been#explained#to#be#that#of# in#ships#if#they#thereby#incurred#the#apprehension#of#being#rendered#
the#real#and#hypothecary#doctrine#in#maritime#law#where#the# liable#to#an#indefinite#amount#by#the#acts#of#the#master#
shipowner#or#ship#agent’s#liability#is#held#as#merely#coNextensive#with# o ‘No#vessel,#no#liability,’#expresses#in#a#nutshell#the#limited#liability#rule.#
his#interest#in#the#vessel#such#that#a#total#loss#thereof#results#in#its# The#shipowner’s#or#agent’s#liability#is#merely#coextensive#with#his#
#
interest#in#the#vessel#such#that#a#total#loss#thereof#results#in#its# repair#of#the#VESSEL,#is#liable#under#Article#1189#of#the#New#Civil#Code.#
extinction.#The#total#destruction#of#the#vessel#extinguishes#maritime# There#is#no#denying#that#the#vessel#was#not#returned#to#CRISOSTOMO#
liens#because#there#is#no#longer#any#res#to#which#it#can#attach.#This# after#the#repairs#because#of#the#provision#in#the#Preliminary#
doctrine#is#based#on#the#real#and#hypothecary#nature#of#maritime#law# Agreement#that#the#same#“should”#be#used#by#ROLAND#for#the#first#two#
which#has#its#origin#in#the#prevailing#conditions#of#the#maritime#trade# years.#Before#the#vessel#could#be#returned,#it#was#lost#due#to#the#
and#sea#voyages#during#the#medieval#ages,#attended#by#innumerable# negligence#of#AGUSTIN#to#whom#ROLAND#chose#to#subNcharter#or#
hazards#and#perils.#To#offset#against#these#adverse#conditions#and#to# sublet#the#VESSEL.#
encourage#shipbuilding#and#maritime#commerce,#it#was#deemed# o PTSC#is#liable#to#CRISOSTOMO#under#Articles#1665#and#1667#of#the#
necessary#to#confine#the#liability#of#the#owner#or#agent#arising#from#the# New#Civil#Code.#As#the#charterer#or#lessee#under#the#Contract#of#
operation#of#a#ship#to#the#vessel,#equipment,#and#freight,#or#insurance,# Agreement#dated#June#20,#1984,#PTSC#was#contractNbound#to#return#
if#any.# the#thing#leased#and#it#was#liable#for#the#deterioration#or#loss#of#the#
o In#view#of#the#foregoing,#CRISOSTOMO#as#the#real#shipowner#is#the#one# same.#
who#is#supposed#to#be#supported#and#encouraged#to#pursue#maritime# o AGUSTIN,#on#the#other#hand,#who#was#the#subNcharterer#or#subNlessee#
commerce.#Thus,#it#would#be#absurd#to#apply#the#Limited#Liability#Rule# of#the#VESSEL,#is#liable#under#Article#1651#of#the#New#Civil#Code.#
against#him#who,#in#the#first#place,#should#be#the#one#benefitting#from# Although#he#was#never#privy#to#the#contract#between#PTSC#and#
the#said#rule.## CRISOSTOMO,#he#remained#bound#to#preserve#the#chartered#vessel#for#
o In#Yueng#Sheng,#it#was#further#stressed#that#the#charterer#does#not# the#latter.#Despite#his#nonNinclusion#in#the#complaint#of#CRISOSTOMO,#
completely#and#absolutely#step#into#the#shoes#of#the#shipowner#or#even# it#was#deemed#amended#so#as#to#include#him#because,#despite#or#in#the#
the#ship#agent#because#there#remains#conflicting#rights#between#the# absence#of#that#formality#of#amending#the#complaint#to#include#him,#he#
former#and#the#real#shipowner#as#derived#from#their#charter# still#had#his#day#in#court#as#he#was#in#fact#impleaded#as#a#thirdNparty#
agreement.## defendant#by#his#own#son,#ROLAND#–#the#very#same#person#who#
represented#him#in#the#Contract#of#Agreement#with#RAMON.##
3.#Liability#of#the#charterer#and#subNcharterer## o In#any#case,#all#three#petitioners#(ROLAND/PTSC/AGUSTIN)#are#liable#
under#Article#1170#of#the#New#Civil#Code.#The#necessity#of#insuring#
o In#the#present#case,#the#charterer#(PTSC/ROLAND)#and#the#subN the#VESSEL,#regardless#of#who#will#share#in#the#payment#of#the#
charterer#(TSL)#through#their#respective#contracts#of# premium,#is#very#clear#under#the#Preliminary#Agreement#and#the#
agreement/charter#parties,#obtained#the#use#and#service#of#the# subsequent#Contracts#of#Agreement#dated#June#20,#1984#and#August#1,#
entire#VESSEL.#The#VESSEL#was#likewise#manned#by#the#charterer# 1984,#respectively.#The#August#17,#1984#letter#of#CRISOSTOMO’s#
(PTSC/ROLAND)#and#later#by#the#subNcharterer’s#(TSL)#people.#With# representative,#Rogelio#L.#Martinez,#addressed#to#ROLAND#in#his#
the#complete#and#exclusive#relinquishment#of#possession,#command# capacity#as#the#president#of#PTSC#inquiring#about#the#insurance#of#the#
and#navigation#of#the#vessel,#the#charterer#and#later#the#subNcharterer# VESSEL#as#well#as#reiterating#the#importance#of#insuring#the#said#
became#the#vessel’s#owner#pro#hac#vice.#Now,#and#in#the#absence#of#any# VESSEL#is#quite#telling.###
showing#that#the#vessel#or#any#part#thereof#was#commercially#offered# o Clearly,#the#petitioners,#to#whom#the#possession#of#the#VESSEL#had#
for#use#to#the#public,#the#above#agreements/charter#parties#are#that#of# been#entrusted#as#early#as#the#time#when#it#was#dryNdocked#for#repairs,#
a#private#carriage#where#the#rights#of#the#contracting#parties#are# were#obliged#to#insure#the#same.#Unfortunately,#they#failed#to#do#so#in#
primarily#defined#and#governed#by#the#stipulations#in#their#contract# clear#contravention#of#their#respective#agreements.#Certainly,#they#
o Although#certain#statutory#rights#and#obligations#of#charter#parties#are# should#now#all#answer#for#the#loss#of#the#vessel.#
found#in#the#Code#of#Commerce,#these#provisions#are#not#applicable#in#
the#present#case.#Indeed,#none#of#the#provisions#found#in#the#Code#of# #
Commerce#deals#with#the#specific#rights#and#obligations#between#the#
real#shipowner#and#the#charterer#obtaining#in#this#case.#Necessarily,#
the#Court#looks#to#the#New#Civil#Code#to#supply#the#deficiency.#
o Thus,#ROLAND#who,#in#his#personal#capacity,#entered#into#the#
Preliminary#Agreement#with#CRISOSTOMO#for#the#dryNdocking#and#

10 Transpo Digests (26 Feb) PDF

Cargado por

Información del documento

Título original

Derechos de autor

Formatos disponibles

Compartir este documento

Compartir o incrustar documentos

Opciones para compartir

¿Le pareció útil este documento?

¿Este contenido es inapropiado?

Copyright:

Formatos disponibles

10 Transpo Digests (26 Feb) PDF

Cargado por

Copyright:

Formatos disponibles

10#Transpo#Compiled#Digests.#Week#12.#Atty.#Ampil.

Masters# are# those# who# command# smaller# ships# engaged# In#re:#counterclaim#–#overruled!#

También podría gustarte