Caltex (Phils.) Inc. v.
Sulpicio Lines, 315 SCRA 709 (1999) (digest
ponente, Haulo)
TICKLER: When MT Vector left the port of Limay, Bataan, on
December 19, 1987 carrying petroleum products of Caltex
(Philippines), Inc. (hereinafter Caltex) no one could have guessed that
it would collide with MV Doña Paz, killing almost all the passengers
and crew members of both ships, and thus resulting in one of the
country's worst maritime disasters. HELD: Caltex Not liable for
damages.
DOCTRINE:
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.—The carriers are deemed to warrant impliedly the
seaworthiness of the ship. 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. The failure of a common
carrier to maintain in seaworthy condition the vessel involved in its
contract of carriage is a clear breach of its duty prescribed in Article
1755 of the Civil Code.
The charterer of a vessel has no obligation before transporting its
cargo to ensure that the vessel it chartered complied with all legal
requirements.—The charterer of a vessel has no obligation before
transporting its cargo to ensure that the vessel it chartered complied
with all legal requirements. The duty rests upon the common carrier
simply for being engaged in “public service.” The Civil Code demands
diligence which is required by the nature of the obligation and that
which corresponds with the circumstances of the persons, the time
and the place. Hence, considering the nature of the obligation
between Caltex and MT Vector, the liability as found by the Court of
Appeals is without basis.
Because of the implied warranty of seaworthiness, shippers of goods,
when transacting with common carriers, are not expected to inquire
into the vessel’s seaworthiness.—The relationship between the
parties in this case is governed by special laws. Because of the implied
warranty of seaworthiness, shippers of goods, when transacting with
common carriers, are not expected to inquire into the vessel’s
seaworthiness, genuineness of its licenses and compliance with all
maritime laws. To demand more from shippers and hold them liable
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
same token, we cannot expect passengers to inquire every time they
board a common carrier, whether the carrier possesses the necessary
papers or that all the carrier’s employees are qualified. Such a
practice would be an absurdity in a business where time is always of
the essence. Considering the nature of transportation business,
passengers and shippers alike customarily presume that common
carriers possess all the legal requisites in its operation.
FACTS:
1. On December 19, 1987, motor tanker MT Vector left Limay,
Bataan, at about 8:00 p.m., enroute to Masbate, loaded with 8,800
barrels of petroleum products shipped by petitioner Caltex.
MT Vector is a tramping motor tanker owned and operated
by Vector Shipping Corporation, engaged in the business of
transporting fuel products such as gasoline, kerosene, diesel and
crude oil.
During that particular voyage, the MT Vector carried on
board gasoline and other oil products owned by Caltex by virtue of a
charter contract between them.
2. On December 20, 1987, at about 6:30 a.m., the passenger
ship MV Doña Paz left the port of Tacloban headed for Manila with a
complement of 59 crew members and passengers totaling 1,493 as
indicated in the Coast Guard Clearance.
 The MV Doña Paz is a passenger and cargo vessel owned and
operated by Sulpicio Lines, Inc.
3. At about 10:30 p.m. of December 20, 1987, the two vessels
collided in the open sea within the vicinity of Dumali Point between
Marinduque and Oriental Mindoro. All the crewmembers of MV Doña
Paz died, while the two survivors from MT Vector claimed that they
were sleeping at the time of the incident.
4. The MV Doña Paz carried an estimated 4,000 passengers;
many indeed, were not in the passenger manifest.
Only 24 survived the tragedy after having been rescued from
the burning waters by vessels that responded to distress calls.
Among those who perished were public school teacher
Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal
(11 years old), both unmanifested passengers but proved to be on
board the vessel.
5. On March 22, 1988, the board of marine inquiry in BMI Case
No. 659-87 after investigation found that the MT Vector, its
registered operator Francisco Soriano, and its owner and actual
operator Vector Shipping Corporation, were at fault and responsible
for its collision with MV Doña Paz.
6. On February 13, 1989, Teresita Cañezal and Sotera E.
Cañezal, Sebastian Cañezal's wife and mother respectively, filed with
the Regional Trial Court, Branch 8, Manila, a complaint for "Damages
Arising from Breach of Contract of Carriage" against Sulpicio Lines,
Inc. (hereafter Sulpicio). Sulpicio, in turn, filed a third party complaint
against Francisco Soriano, Vector Shipping Corporation and Caltex
(Philippines), Inc. Sulpicio alleged that Caltex chartered MT Vector
with gross and evident bad faith knowing fully well that MT Vector
was improperly manned, ill-equipped, unseaworthy and a hazard to
safe navigation; as a result, it rammed against MV Doña Paz in the
open sea setting MT Vector's highly flammable cargo ablaze.
ISSUE: Is the charterer of a sea vessel liable for damages resulting
from a collision between the chartered vessel and a passenger ship?
NO. See third discussion.
HELD:
First: The charterer has no liability for damages under Philippine
Maritime laws.
1. Petitioner and Vector entered into a contract of
affreightment, also known as a voyage charter.
2. A charter party is a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a
specified time or use; a contract of affreightment is one by which the
owner of a ship or other vessel lets the whole or part of her to a
merchant or other person for the conveyance of goods, on a
particular voyage, in consideration of the payment of freight.
3. A contract of affreightment may be either
time charter, wherein the leased vessel is leased to the
charterer for a fixed period of time, or
voyage charter, wherein the ship is leased for a single voyage.
In both cases, the charter-party provides for the hire of the
vessel only, either for a determinate period of time or for a single or
consecutive voyage, the ship owner to supply the ship's store, pay for
the wages of the master of the crew, and defray the expenses for the
maintenance of the ship.
4. Under a demise or bareboat charter on the other hand, the
charterer mans the vessel with his own people and becomes, in
effect, the owner for the voyage or service stipulated, subject to
liability for damages caused by negligence.
5. If the charter is a contract of affreightment, which leaves the
general owner in possession of the ship as owner for the voyage, the
rights and the responsibilities of ownership rest on the owner. The
charterer is free from liability to third persons in respect of the ship.
Second: MT Vector is a common carrier
6. In this case, the charter party agreement did not convert the
common carrier into a private carrier. The parties entered into a
voyage charter, which retains the character of the vessel as a
common carrier.
7. A common carrier is a person or corporation whose regular
business is to carry passengers or property for all persons who may
choose to employ and to remunerate him.
8. MT Vector fits the definition of a common carrier under
Article 1732 of the Civil Code. In Guzman vs. Court of Appeals
Art. 1732. Common carriers are persons, corporations, firms
or associations engaged in the business of carrying or transporting
passengers for passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.
The above article makes no distinction between one
whose principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as an ancillary
activity (in local idiom, as "a sideline").
Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on
a regular or scheduled basis and one offering such services on
anoccasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier
offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We
think that Article 1733 deliberately refrained from making such
distinctions.
9. Under the Carriage of Goods by Sea Act :
Sec. 3. (1) The carrier shall be bound before and at the
beginning of the voyage to exercise due diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
10. Thus, the carriers are deemed to warrant impliedly the
seaworthiness of the ship.
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.
The failure of a common carrier to maintain in seaworthy
condition the vessel involved in its contract of carriage is a clear
breach of its duty prescribed in Article 1755 of the Civil Code.
11. The provisions owed their conception to the nature of the
business of common carriers. This business is impressed with a
special public duty.
The public must of necessity rely on the care and skill of
common carriers in the vigilance over the goods and safety of the
passengers, especially because with the modern development of
science and invention, transportation has become more rapid, more
complicated and somehow more hazardous.
For these reasons, a passenger or a shipper of goods is under
no obligation to conduct an inspection of the ship and its crew, the
carrier being obliged by law to impliedly warrant its seaworthiness.
Third: Is Caltex liable for damages under the Civil Code?
Sulpicio argues that Caltex negligently shipped its highly combustible
fuel cargo aboard an unseaworthy vessel such as the MT Vector when
Caltex:
a. Did not take steps to have M/T Vector's certificate of
inspection and coastwise license renewed;
b. Proceeded to ship its cargo despite defects found by Mr.
Carlos Tan of Bataan Refinery Corporation;
c. Witnessed M/T Vector submitting fake documents and
certificates to the Philippine Coast Guard.
d. The master of M/T Vector did not posses the required Chief
Mate license to command and navigate the vessel;
e. The second mate, Ronaldo Tarife, had the license of a Minor
Patron, authorized to navigate only in bays and rivers when
 the subject collision occurred in the open sea;
f. The Chief Engineer, Filoteo Aguas, had no license to operate
the engine of the vessel;
g. The vessel did not have a Third Mate, a radio operator and
lookout; and
h. The vessel had a defective main engine.
12. We rule that it is not.
13. The charterer of a vessel has no obligation before
transporting its cargo to ensure that the vessel it chartered complied
with all legal requirements.
The duty rests upon the common carrier simply for being
engaged in "public service."
The Civil Code demands diligence which is required by the
nature of the obligation and that which corresponds with the
circumstances of the persons, the time and the place.
Hence, considering the nature of the obligation between
Caltex and MT Vector, liability as found by the Court of Appeals is
without basis.
14. The relationship between the parties in this case is governed
by special laws.
Because of the implied warranty of seaworthiness, shippers
of goods, when transacting with common carriers, are not expected
to inquire into the vessel's seaworthiness, genuineness of its licenses
and compliance with all maritime laws.
To demand more from shippers and hold them liable 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 same token, we cannot expect passengers to inquire
every time they board a common carrier, whether the carrier
possesses the necessary papers or that all the carrier's employees are
qualified. Such a practice would be an absurdity in a business where
time is always of the essence.
Considering the nature of transportation business,
passengers and shippers alike customarily presume that common
carriers possess all the legal requisites in its operation.
15. Thus, the nature of the obligation of Caltex demands ordinary
diligence like any other shipper in shipping his cargoes.
16. A cursory reading of the records convinces us that Caltex had
reasons to believe that MT Vector could legally transport cargo that
time of the year.
Caltex and Vector Shipping Corporation had been doing
business since 1985, or for about two years before the tragic incident
occurred in 1987. Past services rendered showed no reason for Caltex
to observe a higher degree of diligence.
Clearly, as a mere voyage charterer, Caltex had the right to
presume that the ship was seaworthy as even the Philippine Coast
Guard itself was convinced of its seaworthiness. All things
considered, we find no legal basis to hold petitioner liable for
damages.
17. What is negligence?
The Civil Code provides:
Art. 1173. The fault or negligence of the obligor
consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of
the persons, of the time and of the place. When negligence shows
bad faith, the provisions of Article 1171 and 2201 paragraph 2, shall
apply.
If the law does not state the diligence which is to be observed
in the performance, that which is expected of a good father of a
family shall be required.
SAN MIGUEL CORPORATION, petitioner, vs. HEIRS OF SABINIANO
INGUITO, and JULIUS OUANO, respondents.
G.R. No. 141716. July 4, 2002.J.Ynares-Santiago
JULIUS C. OUANO, petitioner, vs. THE COURT OF APPEALS, SAN
MIGUEL CORPORATION and THE HEIRS OF SABINIANO INGIUTO,
FELIPE PUSA, ABUNDIO GALON, ISIDRO CELETARIA, GILBERT
GONZAGA, HENRY CABIGAS, RAFAEL MACAIRAN, ROGELIO MORENO,
PETER ABAYON, SIMEON ASENTISTA, NORMAN LOON, EUGENIO
GESTOPA, CHRISTOPHER SAVELLON, GEORGE BASILGO, RAMIL
PABAYO, FLAVIANO WABENA,
NESTOR GESTOPA, respondents.
G.R. No. 142025. July 4, 2002. J.Ynares-Santiago
(Bon)
SMC entered into a Time Charter party Agreement with Julius Ouano.
In the said agreement, among the warranties provided were
seaworthiness, no employer-employee relationship between
Charterer and the crew members and damages in case of loss. The
vessel left but later on a typhoon was spotted. The radio controller of
SMC contacted the captain twice, advising him to take shelter. The
captain did not heed to the advise. The vessel sank leaving only five
of the crew alive. Now there is a contention of whether the vessel is
indeed seaworthy and whether this is a contract of affreightment or
a demise charter. The Court finds that the proximate cause of the
accident was the lack of seaworthiness. 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. In the assailed
decision, the Court of Appeals found that the proximate cause of the
sinking of the vessel was the negligence of Captain Sabiniano Inguito.
It
appears that the proximate cause of the sinking of the vessel was the
gross failure of the captain of the vessel to observe due care and to
heed SMC’s advices to take shelter. Also this is a contract of
affreightment. In a contract of affreightment, the owner of the vessel
leases part or all of its space to haul goods for others. It is a contract
for special service to be rendered by the owner of the vessel. Under
such contract the ship owner retains the possession, command and
navigation of the ship, the charterer or freighter merely having use of
the space in the vessel in return for his payment of the charter hire.
It appearing that Ouano was the employer of the captain and crew of
the M/V Doña Roberta during the term of the charter, he therefore
had command and control over the vessel. His son, Rico Ouano, even
testified that during the period that the vessel was under charter to
SMC, the Captain thereof had control of the navigation of all voyages.
Under the foregoing definitions, as well as the clear terms of the
Charter Party Agreement between the parties, the charterer, SMC,
should be free from liability for any loss or damage sustained during
the voyage, unless it be shown that the same was due to its fault or
negligence.
Doctrine: 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; Presumption of vicarious liability may
be overcome only by satisfactorily showing that the employer
exercised the care and the diligence of a good father of a family in
the selection and the supervision of its employee; A charter party is
a contract by virtue of which the owner or the agent of a vessel binds
himself to transport merchandise or persons for a fixed price; In a
contract of affreightment, the owner of the vessel leases part or all
of its space to haul goods for others.
Facts:
1) San Miguel Corporation entered into a Time Charter Party
Agreement with Julius Ouano, doing business under the name
and style J. Ouano Marine Services.
2) Under the terms of the agreement, SMC chartered the M/V Doña
Roberta owned by Julius Ouano for a period of two years, from
June 1, 1989 to May 31, 1991, for the purpose of transporting
SMC’s beverage products from its Mandaue City plant to various
points in Visayas and Mindanao.
3) Among the warranties of the Owner are as follows:
4) That there is no employee-employer relationship between the
charterer and the crew of the vessel.
5) OWNER warrants that the vessel is seaworthy and in proper,
useful and operational condition and in the event that
CHARTERER finds any defect in the vessel with regards to its
working order, condition and function, CHARTERER shall
immediately notify OWNER of this fact;
6) The OWNER shall undertake to pay all compensation of all the
vessel’s crew, including the benefits, premia and protection
7) The OWNER shall be responsible to and shall indemnify the
CHARTERER for damages and losses arising from the
incompetence and/or negligence of, and/or the failure to
observe the required extraordinary diligence by the crew.
8) During the term of the charter, SMC issued sailing orders to the
Master of the M/V Doña Roberta, Captain Sabiniano Inguito,
instructing him of the time of arrival and departure.
9) In accordance with the sailing orders, Captain Inguito obtained
the necessary sailing clearance from the Philippine Coast Guard.3
Loading of the cargo on the M/V Doña Roberta was completed at
8:30 p.m. of November 11, 1990. However, the vessel did not
leave Mandaue City until 6:00 a.m. of the following day,
November 12, 1990.
10) Meanwhile, at 4:00 a.m. of November 12, 1990, typhoon Ruping
was spotted .
11) At 7:00 a.m., November 12, 1990, one hour after the M/V Doña
Roberta departed from Mandaue City and while it was abeam
Cawit Island off Cebu, SMC Radio Operator Rogelio P. Moreno
contacted Captain Inguito through the radio and advised him to
take shelter. Captain Inguito replied that they will proceed since
the typhoon was far away from them, and that the winds were in
their favor.
12) Moreno communicated with Captain Inguito twice and advised
him to take shelter. The captain responded that they can
manage.
13) At 1:15 a.m., November 13, 1990, Captain Inguito called Moreno
over the radio and requested him to contact Rico Ouano, son of
14) Julius Ouano, because they needed a helicopter to rescue them.
The vessel was about 20 miles west of Sulauan Point.
15) At 2:30 a.m. of November 13, 1990, the M/V Doña Roberta sank.
Out of the 25 officers and crew on board the vessel, only five
survived, namely, Fernando Bucod, Rafael Macairan, Chenito
Sugabo, Ramil Pabayo and Gilbert Gonzaga.15
16) On November 24, 1990, shipowner Julius Ouano, in lieu of the
captain who perished in the sea tragedy, filed a Marine Protest.
17) The heirs of the deceased captain and crew, as well as the
survivors,17 of the ill-fated M/V Doña Roberta filed a complaint
for tort against San Miguel Corporation and Julius Ouano.
18) Julius Ouano filed an answer with cross-claim, alleging that the
proximate cause of the loss of the vessel and its officers and crew
was the fault and negligence of SMC, which had complete control
and disposal of the vessel as charterer and which issued the
sailing order for its departure despite being forewarned of the
impending typhoon.
19) Thus, he prayed that SMC indemnify him for the cost of the vessel
and the unrealized rentals and earnings thereof.
20) In its answer to the complaint and answer to the cross-claim, SMC
countered that it was Ouano who had the control, supervision
and responsibilities over the navigation of the vessel.
a. This notwithstanding, and despite
his knowledge of the incoming
typhoon, Ouano never bothered to
initiate contact with his vessel.
b. Contrary to his allegation, SMC
argued that the proximate cause of
the sinking was Ouano’s breach of
 his obligation to provide SMC with a
seaworthy vessel duly manned by
competent crew members. SMC
interposed counterclaims against
Ouano for the value of the cargo lost
in the sea tragedy.
21) After trial, the court a quo rendered judgment finding that the
proximate cause of the loss of the M/V Doña Roberta was
attributable to SMC.
22) Both SMC and Ouano appealed to the Court of Appeals
a) SMC argued that as mere charterer, it did not have control of
the vessel and that the proximate cause of the
23) loss of the vessel and its cargo was the negligence of the ship
captain.
a) For his part, Ouano complained of the reduced damages
awarded to him by the trial court.
24) Court of Appleas modified the decision declaring defendant-
appellants San Miguel Corporation and Julian C. Ouano jointly
and severally liable to plaintiffs-appellees, except to the heirs of
Capt. Sabiniano Inguito.
25) SMC and Ouano filed separate motions for reconsideration,
which were denied by the Court of Appeals for lack of merit.
Issue:
1. Is the lack of seaworthiness the cause of the accident? YES
2. Is the contract a demise charter or a contract of
affreightment? CONTRACT OF AFFREIGHTMENT
Held:
1. YES. 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.
2) Seaworthiness is defined as the sufficiency of the vessel in materials,
construction, equipment, officers, men, and outfit, for the trade or
service in which it is employed.
3) It includes the fitness of a ship for a particular voyage with reference
to its physical and mechanical condition, the extent of its fuel and
provisions supply, the quality of its officers and crew, and its
adaptability for the time of voyage proposed.35
4) In the assailed decision, the Court of Appeals found that the
proximate cause of the sinking of the vessel was the negligence of
Captain Sabiniano Inguito
a) It appears that the proximate cause of the sinking of the vessel was
the gross failure of the captain of the vessel to observe due care and
to heed SMC’s advices to take shelter.
5) Lepanto is vicariously liable
a) Under Articles 2176 and 2180 of the Civil Code, owners and managers
are responsible for damages caused by the negligence of a servant or
an employee, the master or employer is presumed to be negligent
either in the selection or in the supervision of that employee.
b) This presumption may be overcome only by satisfactorily showing
that the employer exercised the care and the diligence of a good
father of a family in the selection and the supervision of its employee.
 Failed to be proven by Lepanto
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
the M/V Doña Roberta.
7) Hence, he is vicariously liable for the loss of lives and property
occasioned by the lack of care and negligence of his employee.
8) The contention that it was the issuance of the sailing order by SMC
which was the proximate cause of the sinking is untenable.
a) The fact that there was an approaching typhoon is of no moment. It
appears that on one previous occasion, SMC issued a sailing order to
the captain of the M/V
b) Doña Roberta, but the vessel cancelled its voyage due to typhoon.40
Likewise, it appears from the records that SMC issued the sailing
 order on November 11, 1990, before typhoon “Ruping” was first
spotted at 4:00 a.m. of November 12, 1990
1. It is a contract of affreightment
9) Demise charter vs. Contract of affreightment
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
10) for the voyage or service stipulated, subject to liability for damages
caused by negligence.
a) In a contract of affreightment, on the other hand, the owner of the
vessel leases part or all of its space to haul goods for others. It is a
contract for special service to be rendered by the owner of the vessel.
Under such contract the ship owner retains the possession,
command and navigation of the ship, the charterer or freighter
merely having use of the space in the vessel in return for his payment
of the charter hire.
11) Why argue whether demise charter or contract of affreightment?
a) If the charter is a contract of affreightment, which leaves the general
owner in possession of the ship as owner for the voyage, the rights
and the responsibilities of ownership rest on the owner. The
charterer is free from liability to third persons in respect of the ship.
12) IN THE CASE AT BAR:
a) It appearing that Ouano was the employer of the captain and crew of
the M/V Doña Roberta during the term of the charter, he therefore
had command and control over the vessel. His son, Rico Ouano, even
testified that during the period that the vessel was under charter to
SMC, the Captain thereof had control of the navigation of all voyages.
b) Under the foregoing definitions, as well as the
i) Radio Operator, Rogelio P. Moreno, who was tasked to monitor every
shipment of its cargo, contacted Captain Inguito as early as 7:00 a.m.,
one hour after the M/V Doña Roberta departed from Mandaue, and
advised him to take shelter from typhoon Ruping.
ii) This advice was reiterated at 2:00 p.m.
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
take shelter and stressed the danger of venturing into the open sea.
iv) The Captain insisted that he can handle the situation.
13) Decision: (Basically Ouano was the only one ordered to pay)
WHEREFORE, in view of the foregoing, the decision of the Court of
Appeals in CA-G.R. CV No. 48296 is MODIFIED as follows: Julius C.
Ouano is ordered to pay each of the deceased officers and crew of
the M/V Doña Roberta, except Captain Sabinano Inguito, death
indemnity in the amount of P50,000.00 and damages for loss of
earnings in the amounts awarded by the trial court. Further, Julius C.
Ouano is ordered to pay each deceased officer and crew members,
except Captain Sabiniano Inguito, including Gilbert Gonzaga,
P100,000.00 as moral damages, P50,000.00 as exemplary damages
and P300,000.00 as attorney’s fees. Finally, Julius C. Ouano is ordered
to pay San Miguel Corporation the sums of P10,278,542.40 as actual
damages.
14) clear terms of the Charter Party Agreement
15) between the parties, the charterer, SMC, should be free from liability
for any loss or damage sustained during the voyage, unless it be
shown that the same was due to its fault or negligence.
a) The evidence does not show that SMC or its employees were amiss
in their duties.
THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY INC v.
CA
(FELMAN SHIPPING LINES) 273 SCRA 226 June 11, 1997
BELLOSILLO, J (bry)
Doctrine: The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner’s
liability, does not apply to
cases where the injury or average was occasioned by the shipowner’s
own fault.
Facts:
6-7-83: Coca Cola Bottlers Philippines Inc. loaded on board
the “MV Asilda” owned by FELMAN 7,500 cases of 1L coke soft drinks.
Said shipment was insured under Philippine American
General Insurance Company under Marine Open Policy No. 100376
PAG.
Said ship left the port of Zamboanga at 8pm of the same day
under fine weather conditions.
It sank the following morning at around 8:45am taking all the
coke onboard with it to the bottom of the sea.
7-15-83: Coca Cola Bottlers Phil. Inc., Cebu Plant filed a claim
for damages with FELMAN for the lost cargo.
Of course FELMAN denied this, so Coke went to file an
insurance claim with PHILAMGEN who paid 755,250.00 php.
Claiming its right of subrogation, Petitioner then sought
recourse against respondent, who again denied any liability for the
loss.
11-29-83: Petitioner sued respondent for sum of money and
damages.
It claims that the MV Asilda was not sea worthy, it was
improperly manned and that its officers were negligent.
Respondent then filed a motion to dismiss on the grounds
that no right of subrogation was transferred to petitioner.
Respondent has also abandoned all rights, interests and
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
commerce.
Initially the case was dismissed to which PHILAMGEN
appealed, CA ordered it back to the lower court for trial on the merits
to which the court ruled in favour of FELMAN.
Respondent was able to show that the ship was indeed sea
worthy by the certificates issued by the Coast Guard and its own
surveyor.
It was thus held that the loss of the ship was due to a
fortuitous event and in accordance no liability should attach unless it
is proven that the officers and crew were negligent or that it was
stipulated.
The lower court further ruled that assuming "MV Asilda" was
unseaworthy, still PHILAMGEN could not recover from FELMAN since
the assured (Coca-Cola Bottlers Philippines, Inc.) had breached its
implied warranty on the vessel's seaworthiness. Resultantly, the
payment made by PHILAMGEN to the assured was an undue, wrong
and mistaken payment. Since it was not legally owing, it did not give
PHILAMGEN the right of subrogation so as to permit it to bring an
action in court as a subrogee.
CA however reversed this decision of the Lower Court, Saying
that the ship was indeed unseaworthy for being top heavy with 2.5k
cases of softdrinks onboard. (In short while the ship may have been
A-OK, it was carrying way more than it should be).
Nonetheless, the appellate court denied the claim of
PHILAMGEN on the ground that the assured's implied warranty of
seaworthiness was not complied with.
PHILAMGEN was not properly subrogated to the rights and
interests of the shipper.
Respondent court held that the filing of notice of
abandonment had absolved the ship owner/agent from liability
under the limited liability rule.
Issues
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
Commerce apply?
-> No
HELD
On the first issue:
• The “MV Asilda” was unseaworthy when it left the port of
Zamboanga. We subscribe to the findings of the Elite Adjusters, Inc.,
and the Court of Appeals that the proximate cause of the sinking of
“MV Asilda” was its being top-heavy. Contrary to the ship captain’s
allegations, evidence shows that approximately 2,500 cases of
softdrink bottles were stowed on deck. Several days after “MV
Asilda” sank, an estimated 2,500 empty Coca-Cola plastic cases were
recovered near the vicinity of the sinking.
• Considering that the ship’s hatches were properly secured,
the
• The ship agent is liable for the negligent acts of the captain in
the care of goods loaded on the vessel.
• Such liability however can be limited through abandonment
of the vessel, its equipment and freightage as provided in Art. 587.
Nonetheless, there are exceptional circumstances wherein the ship
agent could still be held answerable despite the abandonment, as
where the loss or injury was due to the fault of the shipowner and
the captain. The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner’s
liability, does not apply to cases where the injury or average was
occasioned by the shipowner’s own fault.
CALTEX VS SULPICIO
DEKSAN VS CA
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: