Caltex (Phils.) Inc. v.

Sulpicio Lines, 315 SCRA 709 (1999) (digest

ponente, Haulo) Because of the implied warranty of seaworthiness, shippers of goods,
when transacting with common carriers, are not expected to inquire
TICKLER: When MT Vector left the port of Limay, Bataan, on into the vessel’s seaworthiness.—The relationship between the
December 19, 1987 carrying petroleum products of Caltex parties in this case is governed by special laws. Because of the implied
(Philippines), Inc. (hereinafter Caltex) no one could have guessed that warranty of seaworthiness, shippers of goods, when transacting with
it would collide with MV Doña Paz, killing almost all the passengers common carriers, are not expected to inquire into the vessel’s
and crew members of both ships, and thus resulting in one of the seaworthiness, genuineness of its licenses and compliance with all
country's worst maritime disasters. HELD: Caltex Not liable for maritime laws. To demand more from shippers and hold them liable
damages. in case of failure exhibits nothing but the futility of our maritime laws
insofar as the protection of the public in general is concerned. By the
DOCTRINE: same token, we cannot expect passengers to inquire every time they
board a common carrier, whether the carrier possesses the necessary
For a vessel to be seaworthy it must be adequately equipped for the papers or that all the carrier’s employees are qualified. Such a
voyage and manned with a sufficient number of competent officers practice would be an absurdity in a business where time is always of
and crew.—The carriers are deemed to warrant impliedly the the essence. Considering the nature of transportation business,
seaworthiness of the ship. For a vessel to be seaworthy, it must be passengers and shippers alike customarily presume that common
adequately equipped for the voyage and manned with a sufficient carriers possess all the legal requisites in its operation.
number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition the vessel involved in its FACTS:
contract of carriage is a clear breach of its duty prescribed in Article 1. On December 19, 1987, motor tanker MT Vector left Limay,
1755 of the Civil Code. Bataan, at about 8:00 p.m., enroute to Masbate, loaded with 8,800
barrels of petroleum products shipped by petitioner Caltex.
The charterer of a vessel has no obligation before transporting its MT Vector is a tramping motor tanker owned and operated
cargo to ensure that the vessel it chartered complied with all legal by Vector Shipping Corporation, engaged in the business of
requirements.—The charterer of a vessel has no obligation before transporting fuel products such as gasoline, kerosene, diesel and
transporting its cargo to ensure that the vessel it chartered complied crude oil.
with all legal requirements. The duty rests upon the common carrier During that particular voyage, the MT Vector carried on
simply for being engaged in “public service.” The Civil Code demands board gasoline and other oil products owned by Caltex by virtue of a
diligence which is required by the nature of the obligation and that charter contract between them.
which corresponds with the circumstances of the persons, the time 2. On December 20, 1987, at about 6:30 a.m., the passenger
and the place. Hence, considering the nature of the obligation ship MV Doña Paz left the port of Tacloban headed for Manila with a
between Caltex and MT Vector, the liability as found by the Court of complement of 59 crew members and passengers totaling 1,493 as
Appeals is without basis. indicated in the Coast Guard Clearance.
 The MV Doña Paz is a passenger and cargo vessel owned and NO. See third discussion.
operated by Sulpicio Lines, Inc.
3. At about 10:30 p.m. of December 20, 1987, the two vessels HELD:
collided in the open sea within the vicinity of Dumali Point between
Marinduque and Oriental Mindoro. All the crewmembers of MV Doña First: The charterer has no liability for damages under Philippine
Paz died, while the two survivors from MT Vector claimed that they Maritime laws.
were sleeping at the time of the incident. 1. Petitioner and Vector entered into a contract of
4. The MV Doña Paz carried an estimated 4,000 passengers; affreightment, also known as a voyage charter.
many indeed, were not in the passenger manifest. 2. A charter party is a contract by which an entire ship, or some
Only 24 survived the tragedy after having been rescued from principal part thereof, is let by the owner to another person for a
the burning waters by vessels that responded to distress calls. specified time or use; a contract of affreightment is one by which the
Among those who perished were public school teacher owner of a ship or other vessel lets the whole or part of her to a
Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal merchant or other person for the conveyance of goods, on a
(11 years old), both unmanifested passengers but proved to be on particular voyage, in consideration of the payment of freight.
board the vessel. 3. A contract of affreightment may be either
5. On March 22, 1988, the board of marine inquiry in BMI Case time charter, wherein the leased vessel is leased to the
No. 659-87 after investigation found that the MT Vector, its charterer for a fixed period of time, or
registered operator Francisco Soriano, and its owner and actual voyage charter, wherein the ship is leased for a single voyage.
operator Vector Shipping Corporation, were at fault and responsible
for its collision with MV Doña Paz. In both cases, the charter-party provides for the hire of the
6. On February 13, 1989, Teresita Cañezal and Sotera E. vessel only, either for a determinate period of time or for a single or
Cañezal, Sebastian Cañezal's wife and mother respectively, filed with consecutive voyage, the ship owner to supply the ship's store, pay for
the Regional Trial Court, Branch 8, Manila, a complaint for "Damages the wages of the master of the crew, and defray the expenses for the
Arising from Breach of Contract of Carriage" against Sulpicio Lines, maintenance of the ship.
Inc. (hereafter Sulpicio). Sulpicio, in turn, filed a third party complaint 4. Under a demise or bareboat charter on the other hand, the
against Francisco Soriano, Vector Shipping Corporation and Caltex charterer mans the vessel with his own people and becomes, in
(Philippines), Inc. Sulpicio alleged that Caltex chartered MT Vector effect, the owner for the voyage or service stipulated, subject to
with gross and evident bad faith knowing fully well that MT Vector liability for damages caused by negligence.
was improperly manned, ill-equipped, unseaworthy and a hazard to 5. If the charter is a contract of affreightment, which leaves the
safe navigation; as a result, it rammed against MV Doña Paz in the general owner in possession of the ship as owner for the voyage, the
open sea setting MT Vector's highly flammable cargo ablaze. rights and the responsibilities of ownership rest on the owner. The
charterer is free from liability to third persons in respect of the ship.
ISSUE: Is the charterer of a sea vessel liable for damages resulting
from a collision between the chartered vessel and a passenger ship? Second: MT Vector is a common carrier
6. In this case, the charter party agreement did not convert the seaworthiness of the ship.
common carrier into a private carrier. The parties entered into a For a vessel to be seaworthy, it must be adequately equipped
voyage charter, which retains the character of the vessel as a for the voyage and manned with a sufficient number of competent
common carrier. officers and crew.
7. A common carrier is a person or corporation whose regular The failure of a common carrier to maintain in seaworthy
business is to carry passengers or property for all persons who may condition the vessel involved in its contract of carriage is a clear
choose to employ and to remunerate him. breach of its duty prescribed in Article 1755 of the Civil Code.
8. MT Vector fits the definition of a common carrier under 11. The provisions owed their conception to the nature of the
Article 1732 of the Civil Code. In Guzman vs. Court of Appeals business of common carriers. This business is impressed with a
Art. 1732. Common carriers are persons, corporations, firms special public duty.
or associations engaged in the business of carrying or transporting The public must of necessity rely on the care and skill of
passengers for passengers or goods or both, by land, water, or air for common carriers in the vigilance over the goods and safety of the
compensation, offering their services to the public. passengers, especially because with the modern development of
The above article makes no distinction between one science and invention, transportation has become more rapid, more
whose principal business activity is the carrying of persons or goods complicated and somehow more hazardous.
or both, and one who does such carrying only as an ancillary For these reasons, a passenger or a shipper of goods is under
activity (in local idiom, as "a sideline"). no obligation to conduct an inspection of the ship and its crew, the
Article 1732 also carefully avoids making any distinction carrier being obliged by law to impliedly warrant its seaworthiness.
between a person or enterprise offering transportation service on
Third: Is Caltex liable for damages under the Civil Code?
a regular or scheduled basis and one offering such services on
anoccasional, episodic or unscheduled basis. Sulpicio argues that Caltex negligently shipped its highly combustible
Neither does Article 1732 distinguish between a carrier fuel cargo aboard an unseaworthy vessel such as the MT Vector when
offering its services to the "general public," i.e., the general Caltex:
community or population, and one who offers services or solicits a. Did not take steps to have M/T Vector's certificate of
business only from a narrow segment of the general population. We inspection and coastwise license renewed;
think that Article 1733 deliberately refrained from making such b. Proceeded to ship its cargo despite defects found by Mr.
distinctions. Carlos Tan of Bataan Refinery Corporation;
9. Under the Carriage of Goods by Sea Act : c. Witnessed M/T Vector submitting fake documents and
Sec. 3. (1) The carrier shall be bound before and at the certificates to the Philippine Coast Guard.
beginning of the voyage to exercise due diligence to — d. The master of M/T Vector did not posses the required Chief
(a) Make the ship seaworthy; Mate license to command and navigate the vessel;
(b) Properly man, equip, and supply the ship; e. The second mate, Ronaldo Tarife, had the license of a Minor
10. Thus, the carriers are deemed to warrant impliedly the Patron, authorized to navigate only in bays and rivers when
 the subject collision occurred in the open sea; Considering the nature of transportation business,
f. The Chief Engineer, Filoteo Aguas, had no license to operate passengers and shippers alike customarily presume that common
the engine of the vessel; carriers possess all the legal requisites in its operation.
g. The vessel did not have a Third Mate, a radio operator and 15. Thus, the nature of the obligation of Caltex demands ordinary
lookout; and diligence like any other shipper in shipping his cargoes.
h. The vessel had a defective main engine. 16. A cursory reading of the records convinces us that Caltex had
reasons to believe that MT Vector could legally transport cargo that
12. We rule that it is not. time of the year.
13. The charterer of a vessel has no obligation before Caltex and Vector Shipping Corporation had been doing
transporting its cargo to ensure that the vessel it chartered complied business since 1985, or for about two years before the tragic incident
with all legal requirements. occurred in 1987. Past services rendered showed no reason for Caltex
The duty rests upon the common carrier simply for being to observe a higher degree of diligence.
engaged in "public service." Clearly, as a mere voyage charterer, Caltex had the right to
The Civil Code demands diligence which is required by the presume that the ship was seaworthy as even the Philippine Coast
nature of the obligation and that which corresponds with the Guard itself was convinced of its seaworthiness. All things
circumstances of the persons, the time and the place. considered, we find no legal basis to hold petitioner liable for
Hence, considering the nature of the obligation between damages.
Caltex and MT Vector, liability as found by the Court of Appeals is 17. What is negligence?
without basis. The Civil Code provides:
14. The relationship between the parties in this case is governed Art. 1173. The fault or negligence of the obligor
by special laws. consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of
Because of the implied warranty of seaworthiness, shippers the persons, of the time and of the place. When negligence shows
of goods, when transacting with common carriers, are not expected bad faith, the provisions of Article 1171 and 2201 paragraph 2, shall
to inquire into the vessel's seaworthiness, genuineness of its licenses apply.
and compliance with all maritime laws. If the law does not state the diligence which is to be observed
To demand more from shippers and hold them liable in case in the performance, that which is expected of a good father of a
of failure exhibits nothing but the futility of our maritime laws insofar family shall be required.
as the protection of the public in general is concerned.
By the same token, we cannot expect passengers to inquire
every time they board a common carrier, whether the carrier SAN MIGUEL CORPORATION, petitioner, vs. HEIRS OF SABINIANO
possesses the necessary papers or that all the carrier's employees are INGUITO, and JULIUS OUANO, respondents.
qualified. Such a practice would be an absurdity in a business where G.R. No. 141716. July 4, 2002.J.Ynares-Santiago
time is always of the essence.
JULIUS C. OUANO, petitioner, vs. THE COURT OF APPEALS, SAN such contract the ship owner retains the possession, command and
MIGUEL CORPORATION and THE HEIRS OF SABINIANO INGIUTO, navigation of the ship, the charterer or freighter merely having use of
FELIPE PUSA, ABUNDIO GALON, ISIDRO CELETARIA, GILBERT the space in the vessel in return for his payment of the charter hire.
GONZAGA, HENRY CABIGAS, RAFAEL MACAIRAN, ROGELIO MORENO, It appearing that Ouano was the employer of the captain and crew of
PETER ABAYON, SIMEON ASENTISTA, NORMAN LOON, EUGENIO the M/V Doña Roberta during the term of the charter, he therefore
GESTOPA, CHRISTOPHER SAVELLON, GEORGE BASILGO, RAMIL had command and control over the vessel. His son, Rico Ouano, even
PABAYO, FLAVIANO WABENA, testified that during the period that the vessel was under charter to
NESTOR GESTOPA, respondents. SMC, the Captain thereof had control of the navigation of all voyages.
G.R. No. 142025. July 4, 2002. J.Ynares-Santiago Under the foregoing definitions, as well as the clear terms of the
(Bon) Charter Party Agreement between the parties, the charterer, SMC,
should be free from liability for any loss or damage sustained during
SMC entered into a Time Charter party Agreement with Julius Ouano. the voyage, unless it be shown that the same was due to its fault or
In the said agreement, among the warranties provided were negligence.
seaworthiness, no employer-employee relationship between
Charterer and the crew members and damages in case of loss. The Doctrine: For a vessel to be seaworthy, it must be adequately
vessel left but later on a typhoon was spotted. The radio controller of equipped for the voyage and manned with a sufficient number of
SMC contacted the captain twice, advising him to take shelter. The competent officers and crew; Presumption of vicarious liability may
captain did not heed to the advise. The vessel sank leaving only five be overcome only by satisfactorily showing that the employer
of the crew alive. Now there is a contention of whether the vessel is exercised the care and the diligence of a good father of a family in
indeed seaworthy and whether this is a contract of affreightment or the selection and the supervision of its employee; A charter party is
a demise charter. The Court finds that the proximate cause of the a contract by virtue of which the owner or the agent of a vessel binds
accident was the lack of seaworthiness. For a vessel to be seaworthy, himself to transport merchandise or persons for a fixed price; In a
it must be adequately equipped for the voyage and manned with a contract of affreightment, the owner of the vessel leases part or all
sufficient number of competent officers and crew. In the assailed of its space to haul goods for others.
decision, the Court of Appeals found that the proximate cause of the
sinking of the vessel was the negligence of Captain Sabiniano Inguito. Facts:
It 1) San Miguel Corporation entered into a Time Charter Party
Agreement with Julius Ouano, doing business under the name
appears that the proximate cause of the sinking of the vessel was the and style J. Ouano Marine Services.
gross failure of the captain of the vessel to observe due care and to 2) Under the terms of the agreement, SMC chartered the M/V Doña
heed SMC’s advices to take shelter. Also this is a contract of Roberta owned by Julius Ouano for a period of two years, from
affreightment. In a contract of affreightment, the owner of the vessel June 1, 1989 to May 31, 1991, for the purpose of transporting
leases part or all of its space to haul goods for others. It is a contract SMC’s beverage products from its Mandaue City plant to various
for special service to be rendered by the owner of the vessel. Under points in Visayas and Mindanao.
3) Among the warranties of the Owner are as follows: him to take shelter. The captain responded that they can
manage.
4) That there is no employee-employer relationship between the 13) At 1:15 a.m., November 13, 1990, Captain Inguito called Moreno
charterer and the crew of the vessel. over the radio and requested him to contact Rico Ouano, son of
5) OWNER warrants that the vessel is seaworthy and in proper,
useful and operational condition and in the event that 14) Julius Ouano, because they needed a helicopter to rescue them.
CHARTERER finds any defect in the vessel with regards to its The vessel was about 20 miles west of Sulauan Point.
working order, condition and function, CHARTERER shall 15) At 2:30 a.m. of November 13, 1990, the M/V Doña Roberta sank.
immediately notify OWNER of this fact; Out of the 25 officers and crew on board the vessel, only five
6) The OWNER shall undertake to pay all compensation of all the survived, namely, Fernando Bucod, Rafael Macairan, Chenito
vessel’s crew, including the benefits, premia and protection Sugabo, Ramil Pabayo and Gilbert Gonzaga.15
7) The OWNER shall be responsible to and shall indemnify the 16) On November 24, 1990, shipowner Julius Ouano, in lieu of the
CHARTERER for damages and losses arising from the captain who perished in the sea tragedy, filed a Marine Protest.
incompetence and/or negligence of, and/or the failure to 17) The heirs of the deceased captain and crew, as well as the
observe the required extraordinary diligence by the crew. survivors,17 of the ill-fated M/V Doña Roberta filed a complaint
8) During the term of the charter, SMC issued sailing orders to the for tort against San Miguel Corporation and Julius Ouano.
Master of the M/V Doña Roberta, Captain Sabiniano Inguito, 18) Julius Ouano filed an answer with cross-claim, alleging that the
instructing him of the time of arrival and departure. proximate cause of the loss of the vessel and its officers and crew
9) In accordance with the sailing orders, Captain Inguito obtained was the fault and negligence of SMC, which had complete control
the necessary sailing clearance from the Philippine Coast Guard.3 and disposal of the vessel as charterer and which issued the
Loading of the cargo on the M/V Doña Roberta was completed at sailing order for its departure despite being forewarned of the
8:30 p.m. of November 11, 1990. However, the vessel did not impending typhoon.
leave Mandaue City until 6:00 a.m. of the following day, 19) Thus, he prayed that SMC indemnify him for the cost of the vessel
November 12, 1990. and the unrealized rentals and earnings thereof.
10) Meanwhile, at 4:00 a.m. of November 12, 1990, typhoon Ruping 20) In its answer to the complaint and answer to the cross-claim, SMC
was spotted . countered that it was Ouano who had the control, supervision
11) At 7:00 a.m., November 12, 1990, one hour after the M/V Doña and responsibilities over the navigation of the vessel.
Roberta departed from Mandaue City and while it was abeam a. This notwithstanding, and despite
Cawit Island off Cebu, SMC Radio Operator Rogelio P. Moreno his knowledge of the incoming
contacted Captain Inguito through the radio and advised him to typhoon, Ouano never bothered to
take shelter. Captain Inguito replied that they will proceed since initiate contact with his vessel.
the typhoon was far away from them, and that the winds were in b. Contrary to his allegation, SMC
their favor. argued that the proximate cause of
12) Moreno communicated with Captain Inguito twice and advised the sinking was Ouano’s breach of
 his obligation to provide SMC with a construction, equipment, officers, men, and outfit, for the trade or
seaworthy vessel duly manned by service in which it is employed.
competent crew members. SMC 3) It includes the fitness of a ship for a particular voyage with reference
interposed counterclaims against to its physical and mechanical condition, the extent of its fuel and
Ouano for the value of the cargo lost provisions supply, the quality of its officers and crew, and its
in the sea tragedy. adaptability for the time of voyage proposed.35
21) After trial, the court a quo rendered judgment finding that the 4) In the assailed decision, the Court of Appeals found that the
proximate cause of the loss of the M/V Doña Roberta was proximate cause of the sinking of the vessel was the negligence of
attributable to SMC. Captain Sabiniano Inguito
22) Both SMC and Ouano appealed to the Court of Appeals a) It appears that the proximate cause of the sinking of the vessel was
a) SMC argued that as mere charterer, it did not have control of the gross failure of the captain of the vessel to observe due care and
the vessel and that the proximate cause of the to heed SMC’s advices to take shelter.
5) Lepanto is vicariously liable
23) loss of the vessel and its cargo was the negligence of the ship
captain. a) Under Articles 2176 and 2180 of the Civil Code, owners and managers
a) For his part, Ouano complained of the reduced damages are responsible for damages caused by the negligence of a servant or
awarded to him by the trial court. an employee, the master or employer is presumed to be negligent
24) Court of Appleas modified the decision declaring defendant- either in the selection or in the supervision of that employee.
appellants San Miguel Corporation and Julian C. Ouano jointly b) This presumption may be overcome only by satisfactorily showing
and severally liable to plaintiffs-appellees, except to the heirs of that the employer exercised the care and the diligence of a good
Capt. Sabiniano Inguito. father of a family in the selection and the supervision of its employee.
25) SMC and Ouano filed separate motions for reconsideration,  Failed to be proven by Lepanto
which were denied by the Court of Appeals for lack of merit. 6) He failed to present proof that he exercised the due diligence of a
bonus paterfamilias in the selection and supervision of the captain of
Issue: the M/V Doña Roberta.
1. Is the lack of seaworthiness the cause of the accident? YES 7) Hence, he is vicariously liable for the loss of lives and property
2. Is the contract a demise charter or a contract of occasioned by the lack of care and negligence of his employee.
affreightment? CONTRACT OF AFFREIGHTMENT 8) The contention that it was the issuance of the sailing order by SMC
which was the proximate cause of the sinking is untenable.
Held: a) The fact that there was an approaching typhoon is of no moment. It
1. YES. For a vessel to be seaworthy, it must be adequately appears that on one previous occasion, SMC issued a sailing order to
equipped for the voyage and manned with a sufficient number of the captain of the M/V
competent officers and crew. b) Doña Roberta, but the vessel cancelled its voyage due to typhoon.40
2) Seaworthiness is defined as the sufficiency of the vessel in materials, Likewise, it appears from the records that SMC issued the sailing
 order on November 11, 1990, before typhoon “Ruping” was first ii) This advice was reiterated at 2:00 p.m.
spotted at 4:00 a.m. of November 12, 1990 iii) At that point, Moreno thought of calling Ouano’s son, Rico, but failed
to find him. At 4:00 p.m., Moreno again advised Captain Inguito to
1. It is a contract of affreightment take shelter and stressed the danger of venturing into the open sea.
9) Demise charter vs. Contract of affreightment iv) The Captain insisted that he can handle the situation.
a) Under a demise or bareboat charter, the charterer mans the vessel
with his own people and becomes, in effect, the owner of the ship 13) Decision: (Basically Ouano was the only one ordered to pay)
WHEREFORE, in view of the foregoing, the decision of the Court of
10) for the voyage or service stipulated, subject to liability for damages Appeals in CA-G.R. CV No. 48296 is MODIFIED as follows: Julius C.
caused by negligence. Ouano is ordered to pay each of the deceased officers and crew of
a) In a contract of affreightment, on the other hand, the owner of the the M/V Doña Roberta, except Captain Sabinano Inguito, death
vessel leases part or all of its space to haul goods for others. It is a indemnity in the amount of P50,000.00 and damages for loss of
contract for special service to be rendered by the owner of the vessel. earnings in the amounts awarded by the trial court. Further, Julius C.
Under such contract the ship owner retains the possession, Ouano is ordered to pay each deceased officer and crew members,
command and navigation of the ship, the charterer or freighter except Captain Sabiniano Inguito, including Gilbert Gonzaga,
merely having use of the space in the vessel in return for his payment P100,000.00 as moral damages, P50,000.00 as exemplary damages
of the charter hire. and P300,000.00 as attorney’s fees. Finally, Julius C. Ouano is ordered
11) Why argue whether demise charter or contract of affreightment? to pay San Miguel Corporation the sums of P10,278,542.40 as actual
a) If the charter is a contract of affreightment, which leaves the general damages.
owner in possession of the ship as owner for the voyage, the rights
and the responsibilities of ownership rest on the owner. The 14) clear terms of the Charter Party Agreement
charterer is free from liability to third persons in respect of the ship.
12) IN THE CASE AT BAR: 15) between the parties, the charterer, SMC, should be free from liability
a) It appearing that Ouano was the employer of the captain and crew of for any loss or damage sustained during the voyage, unless it be
the M/V Doña Roberta during the term of the charter, he therefore shown that the same was due to its fault or negligence.
had command and control over the vessel. His son, Rico Ouano, even a) The evidence does not show that SMC or its employees were amiss
testified that during the period that the vessel was under charter to in their duties.
SMC, the Captain thereof had control of the navigation of all voyages.
b) Under the foregoing definitions, as well as the THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY INC v.
CA
i) Radio Operator, Rogelio P. Moreno, who was tasked to monitor every (FELMAN SHIPPING LINES) 273 SCRA 226 June 11, 1997
shipment of its cargo, contacted Captain Inguito as early as 7:00 a.m., BELLOSILLO, J (bry)
one hour after the M/V Doña Roberta departed from Mandaue, and
advised him to take shelter from typhoon Ruping. Doctrine: The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner’s appealed, CA ordered it back to the lower court for trial on the merits
liability, does not apply to to which the court ruled in favour of FELMAN.
Respondent was able to show that the ship was indeed sea
cases where the injury or average was occasioned by the shipowner’s worthy by the certificates issued by the Coast Guard and its own
own fault. surveyor.
It was thus held that the loss of the ship was due to a
Facts: fortuitous event and in accordance no liability should attach unless it
6-7-83: Coca Cola Bottlers Philippines Inc. loaded on board is proven that the officers and crew were negligent or that it was
the “MV Asilda” owned by FELMAN 7,500 cases of 1L coke soft drinks. stipulated.
Said shipment was insured under Philippine American The lower court further ruled that assuming "MV Asilda" was
General Insurance Company under Marine Open Policy No. 100376 unseaworthy, still PHILAMGEN could not recover from FELMAN since
PAG.
Said ship left the port of Zamboanga at 8pm of the same day the assured (Coca-Cola Bottlers Philippines, Inc.) had breached its
under fine weather conditions. implied warranty on the vessel's seaworthiness. Resultantly, the
It sank the following morning at around 8:45am taking all the payment made by PHILAMGEN to the assured was an undue, wrong
coke onboard with it to the bottom of the sea. and mistaken payment. Since it was not legally owing, it did not give
7-15-83: Coca Cola Bottlers Phil. Inc., Cebu Plant filed a claim PHILAMGEN the right of subrogation so as to permit it to bring an
for damages with FELMAN for the lost cargo. action in court as a subrogee.
Of course FELMAN denied this, so Coke went to file an CA however reversed this decision of the Lower Court, Saying
insurance claim with PHILAMGEN who paid 755,250.00 php. that the ship was indeed unseaworthy for being top heavy with 2.5k
Claiming its right of subrogation, Petitioner then sought cases of softdrinks onboard. (In short while the ship may have been
recourse against respondent, who again denied any liability for the A-OK, it was carrying way more than it should be).
loss. Nonetheless, the appellate court denied the claim of
11-29-83: Petitioner sued respondent for sum of money and PHILAMGEN on the ground that the assured's implied warranty of
damages. seaworthiness was not complied with.
It claims that the MV Asilda was not sea worthy, it was PHILAMGEN was not properly subrogated to the rights and
improperly manned and that its officers were negligent. interests of the shipper.
Respondent then filed a motion to dismiss on the grounds Respondent court held that the filing of notice of
that no right of subrogation was transferred to petitioner. abandonment had absolved the ship owner/agent from liability
Respondent has also abandoned all rights, interests and under the limited liability rule.
ownership of the lost ship along with its cargo in order to limit and
extinguish its liability in accordance with Art. 587 of the code of Issues
commerce.
Initially the case was dismissed to which PHILAMGEN 1. Was “MV Asilda” was seaworthy when it left the port of
Zamboanga? -> Yes
2. Does the limited liability under Art. 587 of the Code of • The ship agent is liable for the negligent acts of the captain in
Commerce apply? the care of goods loaded on the vessel.
-> No • Such liability however can be limited through abandonment
of the vessel, its equipment and freightage as provided in Art. 587.
HELD Nonetheless, there are exceptional circumstances wherein the ship
On the first issue: agent could still be held answerable despite the abandonment, as
• The “MV Asilda” was unseaworthy when it left the port of where the loss or injury was due to the fault of the shipowner and
Zamboanga. We subscribe to the findings of the Elite Adjusters, Inc., the captain. The international rule is to the effect that the right of
and the Court of Appeals that the proximate cause of the sinking of abandonment of vessels, as a legal limitation of a shipowner’s
“MV Asilda” was its being top-heavy. Contrary to the ship captain’s liability, does not apply to cases where the injury or average was
allegations, evidence shows that approximately 2,500 cases of occasioned by the shipowner’s own fault.
softdrink bottles were stowed on deck. Several days after “MV
Asilda” sank, an estimated 2,500 empty Coca-Cola plastic cases were CALTEX VS SULPICIO
recovered near the vicinity of the sinking.
• Considering that the ship’s hatches were properly secured, DEKSAN VS CA
the
MADRIGAL VS. HANSON GR L-6106-07, APRIL 18 1958

ROQUE V IAC
empty Coca-Cola cases recovered could have come only from the
vessel’s deck cargo. It is settled that carrying a deck cargo raises the SAN MIGUEL V HEIRS OF INGUITO
presumption of unseaworthiness unless it can be shown that the
deck cargo will not interfere with the proper management of the PHILIPPINE MANUFACTURING V UNION INSURANCE GR NO 116473
ship. NOV 22 1921
• However, in this case it was established that “MV Asilda” was
not designed to carry substantial amount of cargo on deck. The
inordinate loading of cargo deck resulted in the decrease of the
vessel’s metacentric height thus making it unstable.
o The strong winds and waves encountered by the vessel are but the
ordinary vicissitudes of a sea voyage and as such merely contributed
to its already unstable and unseaworthy condition.

On the second issue: