Fisher vs.

Yangco Steamship Case Digest

Fisher vs. Yangco Steamship
(31 Phil 1)
Facts: The complained alleges that plaintiff is a stockholder in Yangco Steamship Company,
the owner of the large steam vessels, duly licensed to engage in the coastwise trade of the
Philippine Island; that on or about June 10, 1912, the directors of the company, adopted a
resolution which was thereafter ratified and affirmed by the stockholders of the company
expressly declaring and providing that the classes of merchandise to be carried by the
company in its business as common carrier do not include dynamite, powder or other
explosives, and expressly prohibiting the officers, agents an d servants of the company from
offering to carry, accepting for carriage or carrying said dynamite, powder or other
explosives.
Issue: Whether the refusal of the owner and officer of a steam vessel, to accept for carriage
dynamite, powder or other explosives for carriage can be held to be a lawful act?
Held: The traffic in dynamite gun powder and other explosive is vitally essential to the
material and general welfare of the inhabitants of this islands and it these products are to
continue in general use throughout the Philippines they must be transported from water to
port to port in various island which make up the Archipelago. It follows that a refusal by a
particular vessel engage as a common carrier of merchandise in coastwise trade in the
Philippine Island to accept such explosives for carriage constitutes a violation. The
prohibition against discrimination penalized under the statute, unless it can be shown that
there is so Real and substantial danger of disaster necessarily involved in the courage of any
or all of this article of merchandise as to render such refusal a due or unnecessary or a
reasonable exercise or prudence and discreation on the part of the ship owner.
Equitable Leasing Corporation vs. Lucita Suyom, Marissa Enano, MyrnaTamayo
and Felix Oledan
[G.R. No. 143360, 5 September 2002, 388 SCRA 445]
Facts:
A tractor driven by Raul Tutor rammed into a house-cum-store in Tondo, Manila. Part of the
house
was
destroyed.
Two
people
died
andfour were injured. Tutor was convicted of reckless imprudenceresulting
in
multiple
homicide and multiple physical injuries. Verification with the Land Transportation Office
revealed that the registered owner of the tractor was Equitable Leasing Corporation who
leased it to Edwin Lim. The relatives of the victims filed a civil case
or damages. The Regional Trial Court ruled against Equitable and ordered it to paydamages
to the victims relatives.Upon Equitables appeal, the Court of Appeals sustained the RTC.
Equitablefiled a petition for review with the Supreme Court.
Issue:
Whether Equitable Leasing is liable for damages
Held/Ratio:
Yes, Equitable Leasing is liable. The petition is denied and the CA decision is affirmed .As the
registered
owner
of
the
tractor,
Equitable
Leasing
is
liable
for
the
actsof Raul Tutor even if he was actually the employee of Equitablesformer lessee, Ecatine
Corporation, who became the actual owner of the tractor by virtue of a deed of sale not

registered with the LTO. Regardless of sales made of a motor vehicle, the registered owner is
the lawful operator insofar as the public and third persons are concerned;
consequently, it is directly and primarily responsible for theconsequences of its operation. In
the eyes of the law, theowner/operator of record is the employer of the driver, the actualown
er/operator being considered as merely the agent of the registered owner/operator. The
principle applies even if the registered owner of any vehicle does not use it for public
service. The main aim of motor vehicle registration is to identify the owner so that
if any accident happens, or any damage or injury is caused by thevehicle, responsibility can
be fixed on a definite individual, the registered owner. Failure to register the deed of sale
should not prejudice victims, who have the right to rely on the principle that the registered
owner is liable for damages caused by the negligence of the driver. Equitable Leasing cant
hide behind the allegation that Tutor was Ecatine Corps employee, because it will prevent
victims from recovering their loss on the basis of Equitables inaction in failing to register the
sale. The non-registration is Equitables fault, which should face the legal consequences
thereof.
Equitable Leasing Corp vs. Suyom, Enena, Tamayo & Oledan
Facts:
A Fuso Road tractor driven by Tutor rammed into the house cum of Tamayo which resulted in
the death of Tamayos son and Oledans daughter. Failure to claim from a criminal case
finding Tutor guilty of reckless imprudence, respondents filed a civil case based on quasi
delict against Equitable Leasing Corp, the registered owner of the tractor, among others.
Equitable contends that it should not be held liable for such damages which arose from the
negligence of the driver Fuso Road. That such tractor was already sold to the owner of Fuso
Road at the time of the accident. Thus, not having employed driver Tutor, it could not have
controlled or supervised him.
Issue: WON Equitable should be held liable for damages in an action based on quasi delict
for the negligent acts of a driver who was not its employee.
Held: Yes, Equitable should be held liable because it was the registered owner at the time of
the accident. The Court has consistently ruled that, regardless of sales made of a motor
vehicle, the registered owner is the lawful operator insofar as the public and third persons
are concerned; consequently, it is directly and primarily responsible for the consequences of
its operation. In contemplation of law, the owner/operator of record is the employer of the
driver, the actual operator and employer being considered as merely its agent. The same
principle applies even if the registered owner of any vehicle does not use it for public
service.
----------------The main aim of motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the registered owner.
BA Finance Corp vs. CA G.R. No. 98275 November 13, 1992
Facts:
Amare, the driver of an Isuzu truck was involved in an accident which caused the death of
three persons. Amare was found guilty beyond reasonable doubt of reckless imprudence. BA
Finance was found liable for damages since the truck was registered in its name. BA Finance
contends that it should not be held liable since it was not Amares employer at the time of

the accident. It also contends that the Isuzu truck was in the possession of Rock Component
Phil, by virtue of a lease agreement. Hence, BA Finance wants to prove who the actual/real
owner is at the time of the accident, and in accordance with such proof, evade liability and
lay the same on the person actually owning the vehicle.
Issues:
1 WON BA Finance should be held liable.
2 WON BA Finance can escape liability by proving the actual/real owner of the truck.
Held:
1 Yes, BA Finance is liable.
The registered owner of a certificate of public convenience is liable to the public for the
injuries or damages suffered by passengers or third persons caused by the operation of said
vehicle, even though the same had been transferred to a third person. Under the same
principle the registered owner of any vehicle, even if not used for a public service, should
primarily be responsible to the public or to the third persons for injuries caused the latter
while the vehicle is being driven on the highways or streets.
2 No, the law does not allow him. The law, with its aim and policy in mind,does not relieve
him directly of the responsibility that the law fixes and places upon him as an incident or
consequence of registration. This may appear harsh but nevertheless, a registered owner
who has already sold or transferred a vehicle has the recourse to a third-party complaint, in
the same action brought against him to recover for the damage or injury done, against the
vendee or transferee of the vehicle.
While the registered owner is primarily responsible for the damage caused, hehas a right to
be indemnified by the real or actual owner of the amount that he may be required to pay as
damage for the injury caused.
Duavit vs. CA, Sarmiento & Catuar G.R. No. 82318 May 18, 1989
Facts:
Private respondents were on board a jeep when they met an accident with another jeep
driven by Sabiniano. This accident caused injuries to private respondents, thus they filed a
case for damages against driver Salbiniano and owner of the jeep Duavit. Duavit admits
ownership of the jeep but contends that he should not be held liable since Salbiniano is not
his employee and that the jeep was taken by Salbiniano without his (Duavit) consent.
Issue: Whether or not the owner of a private vehicle which figured in an accident can be held
liable as an employer when the said vehicle was neither driven by an employee of the owner
nor taken with his consent.
Held: No, an owner of a vehicle cannot be held liable for an accident involving the said
vehicle if the same was driven without his consent or knowledge and by a person not
employed by him.
To hold the petitioner liable for the accident caused by the negligence of Sabiniano who was
neither his driver nor employee would be absurd as it would be like holding liable the owner
of a stolen vehicle for an accident caused by the person who stole such vehicle.
PCI LEASING AND FINANCE, INC. vs UCPB GENERAL INSURANCE CO., INC.
FACTS:
A Mitsubishi Lancer car owned by UCPB, insured with UCPB General Insurance Co., was
traversing the Laurel Highway, Barangay Balintawak, LipaCity. It was driven by Flaviano
Isaac with Conrado Geronimo (Asst. Manager of said bank), was hit and bumped by an 18wheeler Fuso Tanker Truck, owned by defendants-appellants PCI Leasing &Finance, Inc.

allegedly leased to and operated by defendant-appellant Superior Gas & Equitable Co., Inc.
(SUGECO) and driven by its employee, defendant appellant Renato Gonzaga. The impact
caused heavy damage to the Mitsubishi Lancer car resulting in an explosion of the rear part
of the car. The driver and passenger suffered physical injuries. However, the driver
defendant-appellant Gonzaga continued on its way to its destination and did not bother to
bring his victims to the hospital. As the 18-wheeler truck is registered under the name of PCI
Leasing, repeated demands were made by plaintiff-appellee for the payment of the aforesaid
amounts. However, no payment was made. PCI Leasing and Finance ,Inc., (petitioner)
interposed the defense that it could not be held liable for the collision, since the driver,
Gonzaga, was not its employee, but that of its co-defendant SUGECO. In fact, it was
SUGECO, that was the actual operator of the truck, pursuant to a Contract of Lease signed
by petitioner and SUGECO. Petitioner, however, admitted that it was the owner of the truck
in question. RTC rendered judgment in favour of UCPB General Insurance and ordered PCI
Leasing and Gonzaga, to pay jointly and severally the former. CA affirmed with the lower
courts decision.
ISSUES:
1) Whether petitioner, as registered owner of a motor vehicle that figured in a
quasi-delict
may be held liable, jointly and severally, with the driver thereof, for the damages caused to
third parties.
2) Whether petitioner, as a financing company, is absolved from liability by the enactment of
Republic Act (R.A.) No.8556, or the Financing Company Act of 1998.
RULING:
1) YES. The principle of holding the registered owner of a vehicle liable for quasidelicts resulting from its use is well-established in jurisprudence. As explained in the case of
Erezo v. Jepte, thus:Registration is required not to make said registration the operative act
by which ownership in vehicles is transferred, as in land registration cases, because the
administrative proceeding of registration does not bear any essential relation to the contract
of sale between the parties (Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit
the use and operation of the vehicle upon any public highway (section 5 [a], Act No. 3992,
as amended.) The main aim of motor vehicle registration is to identify the owner so that if
any accident happens, or that any damage or injury is caused by the vehicle on the public
highways, responsibility therefor can be fixed on a definite individual, the registered
owner. Instances are numerous where vehicles running on public highways caused accidents
or injuries to pedestrians or other vehicles without positive identification of the owner or
drivers, or with very scant means of identification. It is to forestall these circumstances, so
inconvenient or prejudicial to the public, that the motor vehicle registration is primarily
ordained, in the interest of the determination of persons responsible for damages or injuries
caused on public highways
2) NO. The new law, R.A. No. 8556, notwithstanding developments in foreign jurisdictions, do
not supersede or repeal the law on compulsory motor vehicle registration. No part of the law
expressly repeals Section 5(a) and (e) of R.A. No.4136, as amended, otherwise known as the
Land Transportation and Traffic Code. Thus, the rule remains the same: asale, lease, or
financial lease, for that matter, that is not registered with the Land Transportation Office, still
does not bindthird persons who are aggrieved in tortious incidents, for the latter need only
to rely on the public registration of amotor vehicle as conclusive evidence of ownership. A
lease such as the one involved in the instant case is anencumbrance in contemplation of
law, which needs to be registered in order for it to bind third parties. Under thispolicy, the

evil sought to be avoided is the exacerbation of the suffering of victims of tragic vehicular
accidents in notbeing able to identify a guilty party. A contrary ruling will not serve the ends
of justice. The failure to register a lease,sale, transfer or encumbrance, should not benefit
the parties responsible, to the prejudice of innocent victims.
Lim & Gunnaban vs. CA & Gonzales
Facts:
Gonzales purchased an Isuzu passenger jeepney from Vallarta. Vallarta remained as the holder of a certificate of
public convenience and the registered owner of the jeepney. Subsequently, the jeepney collided with a ten-wheeler
truck owned by Lim, driven by Gunnaban which resulted in the death of 1 passenger and injuries to all others.
Failure to arrive to a settlement with Lim for the repair of the jeepney, Gonzales brought an action for damages
against Lim & Gunnaban. Lim denied liability asserting that Vallarte, and not Gonzales, is the real party in interest
being the registered owner of the jeepney. He further asserts that an operator of the vehicle continues to be its
operator as he remains the operator of record; and that to recognize an operator under the kabit system as the real
party in interest and to countenance his claim for damages is utterly subversive of public policy.
Issue: WON Gonzales, an operator under the kabit system (considering that he is not the registered owner of the
jeepney), may sue for damages against Lim. Or, WON Gonzales is a real party in interest.
Held: Yes, Gonzales may sue.
The evil sought to be prevented in enjoining the kabit system* does not exist.
1 Neither of the parties to the pernicious kabit system is being held liable for damages.
2 The case arose from the negligence of another vehicle in using the public road to whom no representation, or
misrepresentation, as regards the ownership and operation of the passenger jeepney was made and to whom no such
representation, or misrepresentation, was necessary. Thus it cannot be said that Gonzales and the registered owner of
the jeepney were in stoppels for leading the public to believe that the jeepney belonged to the registered owner.
3 The riding public was not bothered nor inconvenienced at the very least by the illegal arrangement. On the
contrary, it was private respondent himself who had been wronged and was seeking compensation for the damage
done to him. Certainly, it would be the height of inequity to deny him his right. Thus, it is evident that private
respondent has the right to proceed against petitioners for the damage caused on his passenger jeepney as well as on
his business.
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 operate them under his license, sometimes for a fee or percentage
of the earnings. Although the parties to such an agreement are not outrightly penalized by law, thekabit system is
invariably recognized as being contrary to public policy and therefore void and inexistent under Art. 1409 of the
Civil Code.
Teja Marketing v. Intermediate Appellate Court
(148 SCRA 347)
Facts: Pedro Nale bought from Teja Marketing a motorcycle with complete accessories and a sidecar. A
chattel mortgage was constituted as a security for the payment of the balance of the purchase price. The

records of the Land Transportation Commission show that the motorcycle sold to the defendant was first
mortgaged to the Teja Marketing by Angel Jaucian though the Teja Marketing and Angel Jaucian are one
and the same, because it was made to appear that way only as the defendant had no franchise of his own
and he attached the unit to the plaintiff's MCH Line. The agreement also of the parties here was for the
plaintiff to undertake the yearly registration of the motorcycle with the Land Transportation Commission.
The plaintiff, however failed to register the motorcycle on that year on the ground that the defendant failed
to comply with some requirements such as the payment of the insurance premiums and the bringing of
the motorcycle to the LTC for stenciling, the plaintiff said that the defendant was hiding the motorcycle
from him. Lastly, the plaintiff also explained that though the ownership of the motorcycle was already
transferred to the defendant, the vehicle was still mortgaged with the consent of the defendant to the
Rural Bank of Camaligan for the reason that all motorcycle purchased from the plaintiff on credit was
rediscounted with the bank.
Teja Marketing made demands for the payment of the motorcycle but just the same Nale failed to comply,
thus forcing Teja Marketing to consult a lawyer and file an action for damage before the City Court of
Naga in the amount of P546.21 for attorney's fees and P100.00 for expenses of litigation. Teja Marketing
also claimed that as of 20 February 1978, the total account of Nale was already P2, 731, 05 as shown in
a statement of account; includes not only the balance of P1, 700.00 but an additional 12% interest per
annum on the said balance from 26 January 1976 to 27 February 1978; a 2% service charge; and
P546.21 representing attorney's fees. On his part, Nale did not dispute the sale and the outstanding
balance of P1,700.00 still payable to Teja Marketing; but contends that because of this failure of Teja
Marketing to comply with his obligation to register the motorcycle, Nale suffered damages when he failed
to claim any insurance indemnity which would amount to no less than P15,000.00 for the more than 2
times that the motorcycle figured in accidents aside from the loss of the daily income of P15.00 as
boundary fee beginning October 1976 when the motorcycle was impounded by the LTC for not being
registered. The City Court rendered judgment in favor of Teja Marketing, dismissing the counterclaim, and
ordered Nale to pay Teja Marketing On appeal to the Court of First Instance of Camarines Sur, the
decision was affirmed in toto. Nale filed a petition for review with the Intermediate Appellate Court. On 18
July 1983, the appellate court set aside the decision under review on the basis of doctrine of "pari delicto,"
and accordingly, dismissed the complaint of Teja Marketing, as well as the counterclaim of Nale; without
pronouncements as to costs. Hence, the petition for review was filed by Teja Marketing and/or Angel
Jaucian.
Issue: Whether the defendant can recover damages against the plaintiff?
Held: Unquestionably, the parties herein operated under an arrangement, commonly known as the "kabit
system" whereby a person who has been granted a certificate of public convenience allows another
person who owns motor vehicles to operate under such franchise for a fee. A certificate of public
convenience is a special privilege conferred by the government. 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 corruption
in the government transportation offices. Although not out rightly penalized as a criminal offense, the kabit
system is invariably recognized as being contrary to public policy and, therefore, void and in existent
under Article 1409 of the Civil Code. It is a fundamental principle that the court will not aid either party to
enforce an illegal contract, but will leave both where it finds then. Upon this premise it would be error to
accord the parties relief from their predicament.
LITA ENTERPRISES, INC., vs.INTERMEDIATE APPELLATE COURT,
[G.R. No. L-64693 April 27, 1984]
FACTS:
Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia, herein private respondents,
purchased in installment from the Delta Motor Sales Corporation five (5) Toyota Corona Standard cars to
be used as taxicabs. Since they had no franchise to operate taxicabs, they contracted with petitioner Lita
Enterprises, Inc., through its representative, Manuel Concordia, for the use of the latter's certificate of
public convenience in consideration of an initial payment of P1,000.00 and a monthly rental of P200.00
per taxicab unit. To effectuate Id agreement, the aforesaid cars were registered in the name of petitioner
Lita Enterprises, Inc, Possession, however, remained with tile spouses Ocampo who operated and
maintained the same under the name Acme Taxi, petitioner's trade name.
About a year later one of said taxicabs driven by their employee, Emeterio Martin, collided with a
motorcycle whose driver, one Florante Galvez, died from the head injuries sustained therefrom. A criminal
case was eventually filed against the driver Emeterio Martin, while a civil case for damages was instituted
by Rosita Sebastian Vda. de Galvez, heir of the victim, against Lita Enterprises, Inc., as registered owner
of the taxicab in the latter case. Petitioner Lita Enterprises, Inc. was adjudged liable for damages by the
CFI.
This decision having become final, a writ of execution was issued. Two of the vehicles of respondent
spouses were levied upon and sold at public auction.
Thereafter, Nicasio Ocampo decided to register his taxicabs in his name. He requested the manager of
petitioner Lita Enterprises, Inc. to turn over the registration papers to him, but the latter allegedly refused.
Hence, he and his wife filed a complaint against Lita Enterprises, Inc., Mrs. de Galvez and the Sheriff of
Manila for reconveyance of motor vehicles with damages.
ISSUE: Whether or not petitioner has a cause of action against defendants.
HELD:

No.
Unquestionably, the parties herein operated under an arrangement, commonly known as the "kabit
system", whereby a person who has been granted a certificate of convenience allows another person who
owns motors vehicles to operate under such franchise for a fee. A certificate of public convenience is a
special privilege conferred by the government . 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 corruption in the government transportation offices. In the words of Chief Justice Makalintal, "this is a
pernicious system that cannot be too severely condemned. It constitutes an imposition upon the goo faith
of the government.
Although not outrightly penalized as a criminal offense, the "kabit system" is invariably recognized as
being contrary to public policy and, therefore, void and inexistent under Article 1409 of the Civil Code, It is
a fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave
them both where it finds them. Upon this premise, it was flagrant error on the part of both the trial and
appellate courts to have accorded the parties relief from their predicament. Article 1412 of the Civil Code
denies them such aid. It provides:
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:
(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 other's undertaking.
Having entered into an illegal contract, neither can seek relief from the courts, and each must bear the
consequences of his acts.
The defect of inexistence of a contract is permanent and incurable, and cannot be cured by ratification or
by prescription. As this Court said in Eugenio v. Perdido, "the mere lapse of time cannot give efficacy to
contracts that are null void."
The principle of in pari delicto is well known not only in this jurisdiction but also in the United States where
common law prevails. Under American jurisdiction, the doctrine is stated thus: "The proposition is
universal that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its
specific performance, or to recover the property agreed to be sold or delivered, or damages for its
property agreed to be sold or delivered, or damages for its violation. 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 against the other." Although certain exceptions to the rule are provided by
law, We see no cogent reason why the full force of the rule should not be applied in the instant case.

FACTS
Petitioner Maersk Line is engaged in the transportation of goods by sea, doing business
in the Philippines through its general agent Compania de Tabacos de Filipinas, while
private respondent Efren Castillo is the proprietor of Ethegal Laboratories, a firm
engaged in the manufacture of pharmaceutical products.
On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico 600,000 empty gelatin
capsules for the manufacture of his pharmaceutical products. The capsules were placed in 6
drums of 100,000 capsules each valued at US$1,668.71. Shipper Eli Liily,Inc. advised Castillo
through a Memorandum of Shipment that the products were already shipped on board MV
Anders Maesrkline and date of arrival to be April 3, 1977.
However, for unknown reasons, said cargoes of capsules were diverted to Richmond, VA and
then transported back to Oakland, CA and with the goods finally arriving in the PI on June 10,
1977. Consignee Castillo refused to take delivery of the goods on account of its failure to
arrive on time, and filed an action for rescission of contract with damages against Maersk
and Eli Lilly alleging gross negligence and undue delay.
Maersk contends that it is liable only in case of loss, destruction or deterioration of goods
under Art 1734 NCC while Eli Lilly in its cross claim argued that the delay was due solely to
the negligence of Maersk Line. Trial Court dismissed the complaint against Eli Lilly and the
latter withdrew cross claim but TC still held Maersk liable and CA affirmed with modifications.
ISSUES
1. W/N a cause of action exists against Maersk Line given that there was a dismissal of
the complaint against Eli Lilly? Yes, but not under the cross claim rather
because Maersk was an original party.
2. W/N Castillo is entitled to damages resulting from delay in the delivery of the
shipment in the absence in the bill of lading of a stipulation on the delivery of goods?
Yes.
RULING
The complaint was filed originally against Eli Lilly, Inc. as shipper-supplier and petitioner as
carrier. Petitioner Maersk Line being an original party defendant upon whom the delayed
shipment is imputed cannot claim that the dismissal of the complaint against Eli Liily inured
to its benefit.
Petitioner contends as well that it cannot be held liable because there was no special
contract under which the carrier undertook to deliver the shipment on or before a specific
date and that the Bill of Lading provides that The Carrier does not undertake that the Goods
shall arrive at port of discharge or the place of delivery at any particular time. However,
although the SC stated that a bill of lading being a contract of adhesion will not be voided on
that basis alone, it did declare that the questioned provision to be void because it has the
effect of practically leaving the date of arrival of the subject shipment on the sole
determination and will of the carrier. It is established that without any stipulated date, the
delivery of shipment or cargo should be made within a reasonable time. In the case at hand,
the SC declared that a delay in the delivery of the goods spanning a period of 2 months and
7 days falls way beyond the realm of reasonableness.

Trans-Asia Shipping Lines vs. CA

(GR 118126, 4 March 1996)
FACTS:
Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein petitioner for the voyage of
M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991.
At around 5:30 in the evening of November 12, 1991, respondent boarded the M/V Asia Thailand vessel
during which he noticed that some repairs were being undertaken on the engine of the vessel. The vessel
departed at around 11:00 in the evening with only one (1) engine running.
After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After
half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City
for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded to
their request and thus the vessel headed back to Cebu City.
In Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City,
were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Petitioner, the next
day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant.
On account of this failure of defendant to transport him to the place of destination on November 12, 1991,
respondent Arroyo filed before the trial court an action for damage arising from bad faith, breach of
contract and from tort, against petitioner. The trial court ruled only for breach of contract. The CA
reversed and set aside said decision on appeal.
ISSUE:
Whether or not the petitioner Trans-Asia was negligent?
HELD:
Yes.
Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of
one of the vessels engines. But even before it could finish these repairs, it allowed the vessel to leave the
port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine
was not in perfect condition as sometime after it had run its course, it conked out. This caused the vessel
to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor.
Plainly, the vessel was unseaworthy even before the voyage began. For a vessel to be seaworthy, it must
be adequately equipped for the voyage and manned with a sufficient number of competent officers and
crew.[21] The failure of a common carrier to maintain in seaworthy condition its vessel involved in a
contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil Code.