36.

VIOLETA LALICAN VS INSULAR LIFE ASSURANCE COMPANY

FACTS:

Once upon a time, Eulogio Lalican, husband of plaintiff Violeta, applied for an insurance policy with respondent Insular Life
Assurance Company, through its agent Malaluan. The insurance policy is a 20-Year Endowment Variable Income Package Flexi Plan
worth P500,000.00 with two riders valued at P500,000.00 each. The plaintiff is named as the primary beneficiary of the said policy. In
here, Eulogio is required to pay the premiums on a quarterly basis in the amount of 8,062 of each year until the end of the 20-year
period of the policy. Furthermore, there is a grace period of 31 days for the payment of each premium subsequent to the first. The
policy would be in default if any premium was not paid on or before the due date. Moreover, the policy would automatically lapse and
become void if the premium remained unpaid until the end of the grace period.

During the paying period, Eulogio failed to pay the 3rd premium which was due on January. Moreover, he even failed to pay after
the lapse of the grace period. Therefore, it became void. As a remedy, he filed an Application for Reinstatement, with an amount of
P8,062.00 as premium payment which is due on January 24, 1998. However, this was not processed since there was unpaid interest
which is overdue, amounting to P322.48. Thus, respondent instructed plaintiff to pay the amount of interest. It also requested him to
file another application for reinstatement. Eulogio was advised by his agent to pay the premiums that subsequently became due on
April 24 1998 and July 24 1998 plus interest. On September 17 1998, he submitted his 2nd application for reinstatement in the amount
of 17,500. However, this was received by the husband of their agent since she was on a business trip, with a receipt issued for the
amount deposited by Eulogio.

Suddenly, Eulogio died of cardio-respiratory arrest on Sept 17, 1998. Without knowing of his death, Malaluan forwarded to the
Insular Life the 2nd application of reinstatement and the amount of 17,500. This application was not acted upon anymore since insular
life was already informed by the death on sept 21, 1998. So, Violeta filed with Insular Life a claim for payment of the full proceeds of
the Policy of his husband. However, the respondent asserted that there was failure to reinstate because the policy has already lapsed.
Plaintiff requested for a reconsideration of the disallowance over the claim but it was denied. On August 11, 1999 Insular Life, because
of a demand letter by the plaintiff, replied by conducting a re-evaluation of Violeta’s claim.

During the process, the plaintiff filed a complaint in the RTC for death claim benefit but it was denied. It ruled in favor of respondent
on the ground that the Policy had already lapsed, so it must be reinstated.

ISSUE:

Whether or not there was a reinstatement of the lapsed policy before Eulogio’s death.

HELD:

No. The court said no. There was no reinstatement of the lapsed policy. To reinstate a policy means to restore the same to premium-
paying status after it has been permitted to lapse. However, under the law, the stipulation in a life insurance policy giving the insured
the privilege to reinstate it upon written application does not give the insured absolute right to such reinstatement by the mere filing
of an application. The insurer has the right to deny the reinstatement if it is not satisfied as to the insurability of the insured and if the
latter does not pay all overdue premium and all other indebtedness to the insurer. After the death of the insured the insurance
Company cannot be compelled to entertain an application for reinstatement of the policy because the conditions precedent to
reinstatement can no longer be determined and satisfied. According to the facts, Eulogio’s filing of his Application for Reinstatement
with Insular Life constitutes an admission that Policy had lapsed. Both the Policy Contract and the Application for Reinstatement
provide for specific conditions for the reinstatement of a lapsed policy. The Policy Contract between Eulogio and Insular Life identified
the following conditions for reinstatement should the policy lapse:

The policy may be reinstated at any time within three years after it lapsed if the following conditions are met:

(1) the policy has not been surrendered for its cash value or the period of extension as a term insurance has not expired;
(2) evidence of insurability satisfactory to [Insular Life] is furnished;
(3) overdue premiums are paid with compound interest at a rate not exceeding that which would have been applicable to said premium
and indebtedness in the policy years prior to reinstatement; and
(4) indebtedness which existed at the time of lapsation is paid or renewed.
Furthermore, there were additional conditions for reinstatement of a lapsed policy stated in the Application for Reinstatement which
Eulogio signed and submitted, to wit:

I/We agree that said Policy shall not be considered reinstated until this application is approved by the Company during my/our lifetime
and good health and until all other Company requirements for the reinstatement of said Policy are fully satisfied.

To reinstate a policy means to restore the same to premium-paying status after it has been permitted to lapse. However, it could only
be considered reinstated after the Application for Reinstatement had been processed and approved by Insular Life during Eulogio’s
lifetime and good health. In the instant case, Eulogio’s death rendered impossible full compliance with the conditions for
reinstatement of the Policy.
Furthermore, the authority of insurance agents to modify such policy contract would be limited. Eulogio still has the responsibility to
turn over to Insular Life such proceeds for reinstatement.
THEREFORE, the policy contract lapsed, making it void.
37. Aboitiz Shipping v. CA
569 SCRA 294

Facts:

Respondent Malayan Insurance was the insurer of cargo loaded in the ships owned by Aboitiz. During a typhoon in the middle of the
sea, the cargo was lost hence, respondent paid the proceeds of the claimants. Respondent then sought recovery from Aboitiz and other
respective ship agents the proceeds they paid for the lost cargo before the RTC of Manila. Aboitiz denies liability contending that the
ship was seaworthy and raising the defenses of fortuitous event (typhoon), lack of jurisdiction, lack of cause of action and prescription.
The RTC and the CA held Aboitiz liable finding that the loss of the cargo was due to the negligence of the crew. The lower courts further
held that Aboitiz should pay the declared value of the cargo.

Issue: Whether or not Aboitiz can invoke the real and hypothecary doctrine in maritime law as a basis for limiting its liability.

Held:

The real and hypothecary doctrine in maritime law provides that the shipowner or agent’s liability is merely co-extensive with his interest
in the vessel such that a total loss thereof results in its extinction. In a nutshell, “no vessel, no liability”. If the shipowner abandons the
vessel, or there is no more vessel to abandon, his liability shall be extinguished. However, despite the total loss of the vessel, its insurance
answers for the damages for which a shipowner or agent may be held liable e.g. when the shipowner or the captain was at fault. In this
case, there was a finding that the captain was negligent in failing to take a course that will prevent the ship from sailing into the typhoon
hence, the captain was remiss of observing extraordinary diligence in the transport of the cargo. Finding that there was negligence on
the part of Aboitiz, it shall therefore be liable for the value of the cargo lost, in this case, to Respondent who paid for the proceeds of the
said lost cargo.
38. White Gold Marine Services, Inc., vs. Pioneer Insurance, et.al.
[G.R. No. 154514, July 28, 2005]

FACTS:
White Gold Marine Services, Inc. owns several shipping vessels. It procured a protection and indemnity coverage from Steamship Mutual
through its agent Pioneer Insurance as Steamship had no insurance license in the Philippines.
When White Gold failed to pay its premium in full, Steamship filed a case for collection of sum of money. White Gold then averred that
Steamship Mutual had no license hence it was unauthorized to collect payments. Steamship Mutual insisted it is not conducting
insurance business here but is merely a protection and indemnity club. The Insurance Commission dismissed White Gold’s contentions
and agreed with Steam; the CA affirmed such decision.

ISSUE:
Whether or not Steamship Mutual needs a license to operate in the Philippines

HELD:
Yes. The test to determine if a contract is an insurance contract or not depends on the nature of the promise, the act required to be
performed, and the exact nature of the agreement in the light of the occurrence, contingency, or circumstances under which the
performance becomes requisite. Regardless of whatever the contract is designated as, if it is a contract of indemnity, it must be a
contract of insurance. In fact, a protection and indemnity club is a form of insurance where the members are the insurers and the
insured as such is a mutual insurance company. Hence, Steamship Mutual needs to procure a license from the Insurance Commission
in order to continue operating here.
Pioneer Insurance also needs to secure another license as an insurance broker/agent of Steamship Mutual pursuant to Section 299 of
the Insurance Code.
#39 MARINE INSURANCE
G.R. No. 137775. March 31, 2005
FGU INSURANCE CORPORATION vs. THE COURT OF APPEALS,

FACTS

This is a consolidated case of an action for Breach of Contract of Carriage and Damages filed by SMC against ANCO based on Bill of
Lading with defendant ANCO seeking reimbursement from FGU under Insurance Policy.

ANCO was engaged in the shipping business. It owned the M/T ANCO tugboat and the D/B Lucio barge which were operated as
common carriers. Since the D/B Lucio had no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for it
to move from one place to another. On September 1979, SMC shipped several cases of beer from Mandaue City, Cebu, on board the
D/B Lucio, for towage by M/T ANCO, to Estancia, Iloilo and San Jose, Antique.

When the barge and tugboat arrived at San Jose, Antique, clouds over the area were dark and the waves were already big. The
arrastre workers complained about their difficulty in unloading the cargoes of SMC. Macabuag, the SMC’s District Sales Supervisor,
requested ANCO’s representative to transfer the barge to a safer place because the vessel might not be able to withstand the big
waves.

ANCO’s representative did not heed the request because he was confident that the barge could withstand the waves. Only 10,790
cases of beer were discharged into the custody of the arrastre operator then the crew of D/B Lucio abandoned the vessel because the
barge’s rope attached to the wharf was cut off by the big waves and the cargoes of beer in the barge were swept away. As a result,
ANCO failed to deliver 29,210 cases of beer to SMC’s consignee.

SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO. ANCO on the other hand claimed that it had an
agreement with SMC that ANCO would not be liable for any losses or damages of cargoes by reason of fortuitous event. ANCO further
asserted that SMC agreed to insure the cargoes in Marine Insurance in order to recover indemnity in case of loss. Pursuant to that
agreement, SMC insured 20,000 cases of beer with FGU.

Subsequently, ANCO filed a Third-Party Complaint against FGU. FGU asserted that it is only liable under the policy to Third-party
Plaintiff ANCO and/or Plaintiff SMC in case of total loss of the entire shipment, loss of any case as a result of the sinking of the vessel,
or loss as a result of the vessel being on fire. It also alleged that ANCO and SMC failed to exercise ordinary diligence or the diligence of
a good father of the family in the care and supervision of the cargoes insured to prevent its loss and/or destruction.

The trial court found that while the cargoes were indeed lost due to fortuitous event, there was failure on ANCO’s part, through their
representatives, to observe the degree of diligence required that would exonerate them from liability. Hence, ANCO is liable to pay
the loss and damages to SMC. CA affirmed in toto the decision of the lower court.

ISSUES

Whether or not FGU should be held liable to pay SMC for losses and damages due to fortuitous event under its Marine Insurance
Policy.

RULING

No. SC concurred the decision of lower courts with modification. The Civil Code provides that

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances
of each case.

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of
the following causes only: flood, storm, earthquake, lightning, or other natural disaster or calamity.

However, Art. 1739 states that in order that the common carrier may be exempted from responsibility, the natural disaster must have
been the proximate and only cause of the loss. The common carrier must exercise due diligence to prevent or minimize loss before,
during and after the occurrence of flood, storm, or other natural disaster in order that the common carrier may be exempted from
liability for the loss, destruction, or deterioration of the goods.

While the loss of the cargoes was admittedly caused by the typhoon, ANCO could not escape liability to respondent SMC. There was
blatant negligence on the part of the employees of defendants-appellants when the operator of the tug boat immediately left the
barge at the San Jose, Antique wharf despite the looming bad weather. Negligence was likewise exhibited by the defendants-
appellants’ representative who did not heed Macabuag’s request that the barge be moved to a more secure and safe place.

Given the availing facts, both the trial court and the appellate court had concluded from the evidence that the crewmembers of both
the D/B Lucio and the M/T ANCO were blatantly negligent that it amounts to a wrongful act which must exonerate FGU from liability
under the insurance contract.

Thus, it is a basic rule in insurance that the carelessness and negligence of the insured or his agents constitute no defense on the part of
the insurer. One of the purposes for taking out insurance is to protect the insured against the consequences of his own negligence and
that of his agents. This rule however presupposes that the loss has occurred due to causes which could not have been prevented by the
insured, despite the exercise of due diligence. When the evidence show that the insured’s negligence or recklessness is so gross as to be
sufficient to constitute a willful act, the insurer must be exonerated.
40. [G.R. No. 116940. June 11, 1997]
THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., petitioner, vs.
COURT OF APPEALS and FELMAN SHIPPING LINES, respondents.
BELLOSILLO, J.:
Facts:
This case deals with the liability, if any, of a shipowner for loss of cargo due to its failure to observe the extraordinary diligence required
by Art. 1733 of the Civil Code as well as the right of the insurer to be subrogated to the rights of the insured upon payment of the
insurance claim.

Coca-Cola Bottlers Philippines, Inc., loaded on board MV Asilda, a vessel owned and operated by respondent Felman Shipping Lines
(FELMAN for brevity), 7,500 cases of 1-liter Coca-Cola softdrink bottles to be transported from Zamboanga City to Cebu City for consignee
Coca-Cola Bottlers Philippines, Inc., Cebu. The shipment was insured with petitioner Philippine American General Insurance Co., Inc.
(PHILAMGEN for brevity), under Marine Open Policy No. 100367-PAG.

MV Asilda left the port of Zamboanga in fine weather at eight oclock in the evening of the same day. At around eight forty-five the
following morning, 7 July 1983, the vessel sank in the waters of Zamboanga del Norte bringing down her entire cargo with her including
the subject 7,500 cases of 1-liter Coca-Cola softdrink bottles. On 15 July 1983 the consignee Coca-Cola Bottlers Philippines, Inc., Cebu
plant, filed a 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 prompting the consignee to file an insurance claim with PHILAMGEN which paid its
claim of P755,250.00. Claiming its right of subrogation PHILAMGEN sought recourse against respondent FELMAN which disclaimed any
liability for the loss. Consequently, on 29 November 1983 PHILAMGEN sued the shipowner for sum of money and damages.
In its complaint PHILAMGEN alleged that the sinking and total loss of MV Asilda and its cargo were due to the vessels unseaworthiness
as she was put to sea in an unstable condition. It further alleged that the vessel was improperly manned and that its officers were grossly
negligent in failing to take appropriate measures to proceed to a nearby port or beach after the vessel started to list.

On 15 February 1985 FELMAN filed a motion to dismiss based on the affirmative defense that no right of subrogation in favor of
PHILAMGEN was transmitted by the shipper, and that, in any event, FELMAN had abandoned all its rights, interests and ownership over
MV Asilda together with her freight and appurtenances for the purpose of limiting and extinguishing its liability under Art. 587 of the
Code of Commerce.

Issues:
1. Whether the limited liability under Art. 587 of the Code of Commerce should apply.
2. Whether PHILAMGEN was properly subrogated to the rights and legal actions which the shipper had against FELMAN, the
shipowner.

Ruling:

1. Whether the limited liability under Art. 587 of the Code of Commerce should apply.

No.
Art. 587 of the Code of Commerce is not applicable to the case at bar. Simply put, the ship agent is liable for the negligent acts of the
captain in the care of goods loaded on the vessel. This liability however can be limited through abandonment of the vessel, its equipment
and freightage as provided in Art. 587. Nonetheless, there are exceptional circumstances wherein the ship agent could still be held
answerable despite the abandonment, as where the loss or injury was due to the fault of the shipowner and the captain. The
international rule is to the effect that the right of abandonment of vessels, as a legal limitation of a shipowners liability, does not apply
to cases where the injury or average was occasioned by the shipowners own fault. It must be stressed at this point that Art. 587 speaks
only of situations where the fault or negligence is committed solely by the captain. Where the shipowner is likewise to be blamed, Art.
587 will not apply, and such situation will be covered by the provisions of the Civil Code on common carrier. It was already established
at the outset that the sinking of MV Asilda was due to its unseaworthiness even at the time of its departure from the port of Zamboanga.
It was top-heavy 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 virtue of Art. 587 of the Code of Commerce.
Under Art 1733 of the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to
all the circumstances of each case x x x x" In the event of loss of goods, common carriers are presumed to have acted negligently.
FELMAN, the shipowner, was not able to rebut this presumption.
 2. Whether PHILAMGEN was properly subrogated to the rights and legal actions which the shipper had against FELMAN, the
shipowner.

Yes.
It is generally held that in every marine insurance policy the assured impliedly warrants to the assurer that the vessel is seaworthy and
such warranty is as much a term of the contract as if expressly written on the face of the policy. Thus Sec. 113 of the Insurance Code
provides that (i)n every marine insurance upon a ship or freight, or freightage, or upon anything which is the subject of marine insurance,
a warranty is implied that the ship is seaworthy. Under Sec. 114, a ship is seaworthy when reasonably fit to perform the service, and to
encounter the ordinary perils of the voyage, contemplated by the parties to the policy. Thus it becomes the obligation of the cargo owner
to look for a reliable common carrier which keeps its vessels in seaworthy condition. He may have no control over the vessel but he has
full control in the selection of the common carrier that will transport his goods. He also has full discretion in the choice of assurer that
will underwrite a particular venture. We need not belabor the alleged breach of warranty of seaworthiness by the assured as
painstakingly pointed out by FELMAN to stress that subrogation will not work in this case. In policies where the law will generally imply
a warranty of seaworthiness, it can only be excluded by terms in writing in the policy in the clearest language. And where the policy
stipulates that the seaworthiness of the vessel as between the assured and the assurer is admitted, the question of seaworthiness cannot
be raised by the assurer without showing concealment or misrepresentation by the assured.

The marine policy issued by PHILAMGEN to the Coca-Cola bottling firm in at least two (2) instances has dispensed with the usual warranty
of worthiness. Paragraph 15 of the Marine Open Policy No. 100367-PAG reads (t)he liberties as per Contract of Affreightment the
presence of the Negligence Clause and/or Latent Defect Clause in the Bill of Lading and/or Charter Party and/or Contract of Affreightment
as between the Assured and the Company shall not prejudice the insurance. The seaworthiness of the vessel as between the Assured
and the Assurers is hereby admitted.

The same clause is present in par. 8 of the Institute Cargo Clauses (F.P.A.) of the policy which states (t)he seaworthiness of the vessel as
between the Assured and Underwriters in hereby admitted x x x x" The result of the admission of seaworthiness by the assurer
PHILAMGEN may mean one or two things: (a) that the warranty of the seaworthiness is to be taken as fulfilled; or, (b) that the risk of
unseaworthiness is assumed by the insurance company. The insertion of such waiver clauses in cargo policies is in recognition of the
realistic fact that cargo owners cannot control the state of the vessel. Thus it can be said that with such categorical waiver, PHILAMGEN
has accepted the risk of unseaworthiness so that if the ship should sink by unseaworthiness, as what occurred in this case, PHILAMGEN
is liable. Having disposed of this matter, we move on to the legal basis for subrogation. PHILAMGENs action against FELMAN is squarely
sanctioned by Art. 2207 of the Civil Code which provides:

Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured
against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover
the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.

In Pan Malayan Insurance Corporation v. Court of Appeals, we said that payment by the assurer to the assured operates as an equitable
assignment to the assurer of all the remedies which the assured may have against the third party whose negligence or wrongful act
caused the loss. The right of subrogation is not dependent upon, nor does it grow out of any privity of contract or upon payment by the
insurance company of the insurance claim. It accrues simply upon payment by the insurance company of the insurance claim.

The doctrine of subrogation has its roots in equity. It is designed to promote and to accomplish justice and is the mode which equity
adopts to compel the ultimate payment of a debt by one who in justice, equity and good conscience ought to pay. Therefore, the payment
made by PHILAMGEN to Coca-Cola Bottlers Philippines, Inc., gave the former the right to bring an action as subrogee against FELMAN.
Having failed to rebut the presumption of fault, the liability of FELMAN for the loss of the 7,500 cases of 1-liter Coca-Cola softdrink
bottles is inevitable.
41 Case
G.R. No. 150751; September 20, 2004

CENTRAL SHIPPING COMPANY, INC., Vs. INSURANCE COMPANY OF NORTH AMERICA

THE FACTS: On July 25, 1990 at Puerto Princesa, Palawan, the petitioner (a carrier) received on board its vessel, 376 pieces of logs and
undertook to transport said shipment (logs) to Manila for delivery to F corporation. The cargo (logs) was insured for P3 Million against
total loss under respondent's marine cargo policy. On July 26, 1990, while enroute to Manila, the vessel listed about 10 degrees
starboardside, due to the shifting of the logs in the hold. After the listing of the vessel had increased to 15 degrees, the vessel captain
ordered his men to abandon the vessel and on the same day, the vessel totally sank. Therefore the cargo was totally lost. F
corporation presented a claim for the value of the cargo to the petitioner but it refused to settle the claim, hence respondent being
the INSURER, paid said claim and now seeks reimbursement from the petitioner. The petitioner contended that the only cause of the
sinking was a storm which neither the vessel captain nor the petitioner could have foreseen. The respondent said that the loss was
caused by the fault and negligence of the petitioner and the vessel captain. The RTC, applying the RULE OF PRESUMPTIVE FAULT OR
NEGLIGENCE against the petitioner, held it LIABLE for the loss of the cargo. The RTC did not believe that the loss had been caused by
the weather or any other fortuitous event. It noted that monsoons, which were common occurences, could have been foreseen. The
RTC ordered the petitioner to pay the respondent. The CA affirmed the RTC's ruling. The CA added that the weather was not the sole
and proximate cause of the loss. The loss was also due to the shifting of the logs in the hold due to improper STOWAGE by the
petitioner. Thus the petitioner was negligent.

THE ISSUE: Whether or not the carrier is liable for the loss of the cargo.

THE RULING: A common carrier is presumed to be at fault or negligent. It shall be liable for the loss, destruction or deterioration of its
cargo, unless it can prove that the sole and proximate cause of such event is one of the causes enumerated in Article 1734 of the Civil
Code, or that it exercised extraordinary diligence to prevent or minimize the loss. In the present case, the weather condition
encountered by petitioners vessel was not a storm or a natural disaster comprehended in the law. Given the known weather condition
prevailing during the voyage, the manner of stowage employed by the carrier was insufficient to secure the cargo from the rolling
action of the sea. The carrier took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now disclaim any
liability for the loss. Had the logs not shifted the vessel could have survived and reached at least the nearest port from it.
42. HYOPSUNG MARITIME CO., LTD., v. THE HONORABLE COURT OF APPEALS
G.R. No. 77369, 31 August 1988, SECOND DIVISION (SARMIENTO, J.)

Service of summons or voluntary general appearance confers court jurisdiction over the person of defendant but the voluntary
appearance to be valid must be authorized by the party being represented.

An admiralty case was filed by private respondent Pioneer Insurance & Surety Corp., against Hyopsung Maritime Co., Ltd., Aurelio
Navigation Corp. S.A., and Litonjua Shipping Co., as defendants. Pioneer Insurance & Surety Corp., as subrogee of the consignee, sought
the recovery of the lost or undelivered cargo-consisting of steel billets valued at P5,000,537.48 allegedly shipped on board the vessel
MV "Don Aurelio" plus interest, attorney's fees, litigation expenses, exemplary damages, and costs of the suit.

The said vessel was a member of a Protection & Indemnity Club (P & I Club, for short), which is an association composed of ship owners
in general who band together for the specific purpose of providing insurance cover on a mutual basis against liabilities incidental to ship
owning that the members incur in favor of third parties. Thus, the law firm of Teves, Campos, Hernandez & Lim, as one of the designated
legal representatives of the P & I Club concerned, filed an Answer supposedly on behalf of all the defendants.

Subsequently, however, the new counsel, Ferrer, Valte Mariano & Sangalang law firm, for the defendant Litonjua Shipping Co., alleged
ship agent of the two other defendants, entered its appearance in substitution of Teves, Campos, Hernandez & Lim. Likewise, Atty. Eulalio
A. Ventura filed a special appearance as counsel for the herein petitioner Hyopsung Maritime, alleged charterer of the vessel, and filed
a Motion to Dismiss on the ground that the trial court had no jurisdiction over its person as well as the subject matter of the suit. The
law firm of Teves, Campos, Hernandez & Lim continued to represent the defendant Aurelio Navigation Corp. S.A., the owner of the vessel.

The defendant Aurelio Navigation Corp. S.A., also filed a Motion to Dismiss on the basis of the extinguishment of liability by the sinking
of the vessel. In an Order dated March 4, 1983, the trial court dismissed the complaint against all the defendants but was later set aside.
Consequently, the above order was appealed by the private respondent to the Court of Appeals, and the latter set aside the assailed
decision and remanded the case to the lower court.

ISSUE: Was there a voluntary appearance by the petitioner's counsel that amounted to the assumption of jurisdiction over the petitioner
by the trial court?

RULING: The Supreme Court held that the answer with counterclaim filed by the law firm of Teves, Campos, Hernandez & Lim was never
authorized by Hyopsung Maritime Co. Ltd., evidenced by the admission of the law firm itself through Atty. Jaime Vibar. Thus, as the
Court of Appeals found, the petitioner never appeared voluntarily before the trial court and the answer was mistakenly filed for and on
behalf of the petitioner and the other defendants; and the said law firm had never been engaged to represent, in whatever manner, the
petitioner in the said case.

The Court also held that, the civil case being a personal action, personal or substituted service of summons on the petitioner is necessary
to confer jurisdiction on the court; however, considering that the respondent Court of Appeals accepted the explanation of the president
of the petitioner company that it is not doing business in the Philippines, and no proof to the contrary having been adduced below by
the private respondent, ergo, the petitioner is not amenable to process and the jurisdiction of the local courts.

Moreover, the present suit is for the recovery of damages based on a breach of contract which appears to have been entirely entered
into, executed, and consummated in Korea. The above vessel with its cargo never even docked at Manila or at any other port of entry in
the Philippines; the petitioner did not appoint any ship agent in the Philippines. Hence, the petitioner is beyond the reach of our courts.