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G.R. No. 74811 September 30, 1988 CHUA YEK vs. INTERMEDIATE APPELLATE COURT, OLIT, respondents.



Respondent is owner of M/V Luzviminda, a common carrier engaged in coastwise trade from the different ports of Oriental Mindoro to the Port of Manila. In October 1977, petitioner loaded 1,000 sacks of copra, valued at P101,227.40 on board M/V Luzviminda for shipment to Manila. Said cargo, however, did not reach Manila because the vessel capsized and sank with all its cargo. Petitioner then instituted a complaint for damages on breach of contract of carriage against private respondent. The trial court rendered a decision in favour of the petitioners. On appeal, the appellate court ruled in favour of the respondents applying article 587 of the Code of Commerce. Unsuccessful in his motion for reconsideration, petitioner filed this petition. Issue: Whether or not the respondent court erred in applying the doctrine of limited liability under Article 587 of the Code of Commerce Held: Article 587 of the Code of Commerce provides: The ship agents shall be civilly liable for the indemnities in favour of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipment and the freight it may have earned during the voyage. Said article is the source of the doctrine of limited liability, which gives the ship agents or owners right of abandonment of the vessel and earned freight and such abandonment provides the cessation of the responsibility of the ship agent/owner. In other words, the ship agent/owners liability is merely co-extensive with his interest in the vessel that a total loss thereof results in its extinction, no vessel, no liability. The limited liability rule, however provides for exceptions: (1) where the injury or death to a passenger is due either to the fault of the ship owner, or to the concurring negligence of the ship owner and the captain (2) where the vessel is insured; and (3) in workmen's compensation claims. In this case, there is nothing in the records to show that the loss of the cargo was due to the fault of the private respondent as ship owners, or to their concurrent negligence with the captain of the vessel and there was no showing that the vessel was insured. Also, the provisions of the Civil Code on common carriers do not apply in this case since the circumstances of the case are not within those that can be regulated by such provisions so the Code of Commerce and other special laws shall apply. In sum, it is held that the respondents are freed from their liabilities applying the limited liability rule for having totally lost the vessel and none of the exceptions apply to them, the liability for the loss of the cargo of the copra must be deemed extinguished.

G.R. No. L-42926 September 13, 1985 PEDRO VASQUEZ, SOLEDAD ORTEGA, CLETO B. BAGAIPO, AGUSTINA VIRTUDES, ROMEO VASQUEZ and MAXIMINA CAINAY, petitioners, vs. THE COURT OF APPEALS and FILIPINAS PIONEER LINES, INC., respondents. Facts: This case involves a claim for damages for the loss at sea of petitioners' respective children after the shipwreck of MV Pioneer Cebu due to typhoon "Klaring" in May of 1966. Respondent defended on the plea of force majeure and the extinction of its liability by the actual total loss of the vessel. The trial court however decided in favour of the petitioners finding the defense of force majeure untenable there being proof that the crew of the vessel were already aware of the typhoon brewing somewhere in the same general direction to which the vessel was going and still proceeded with the voyage. Also, the vessel took a greater risk when it continued the voyage instead of seeking shelter in Romblon until they reach the area where they were hit by the typhoon. The appellate court, in contrary decided in favour of the respondents believing that the calamity was caused solely and proximately by fortuitous event which not even extraordinary diligence of the highest degree could have guarded against; and that there was no negligence on the part of the common carrier in the discharge of its duties. Issue: Whether or not the appellate court is correct in freeing the respondents from liability applying the defense of caso fortuito Held: The Supreme Court maintained the decision of the trial court finding that defense of caso fortuito. "To constitute a caso fortuito that would exempt a person from responsibility, it is necessary that (1) the event must be independent of the human will; (2) the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; and that (3) the obligor must be free of participation in, or aggravation of, the injury to the creditor." In the language of the law, the event must have been impossible to foresee, or if it could be foreseen, must have been impossible to avoid. There must be an entire exclusion of human agency from the cause of injury or loss. While indeed, the typhoon was an inevitable occurrence, the crew failed to observe extraordinary diligence required of them explicitly by law for the safety of the passengers transporter by them with due regard for and unnecessarily exposed the vessel and passengers to the tragic mishap. With respect to private respondent's submission that the total loss of the vessel extinguished its liability pursuant to Article 587 of the Code of Commerce, it does not apply in this case since under the limited liability rule the ship owner or agent maybe held liable for reason of the death of its passengers. Wherefore the appealed decision is reversed and the judgment of the trial court is reinstated.

G.R. No. 110398 November 7, 1997 NEGROS NAVIGATION CO., INC., petitioner, vs. THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE LA VICTORIA, respondents Facts: This case is instituted by the respondents to claim damages for the death of relatives as a result of the sinking of the petitioners vessel, M/V Don Juan, when it collided with M/T Tacloban City, and oil tanker in the evening of April 22, 1980. Several passengers perished in the said tragedy and some of the victims were found and brought to shore, but the four members of private respondents families were never found. In answer, petitioner admitted that the relatives of the private respondents indeed bought tickets and the ticket numbers were listed in the passenger manifest; however denied that the four relatives of respondents actually boarded the vessel as that their bodies were never recovered. Petitioner further averred that the Don Juan was seaworthy and manned by a full and competent crew, and that the collision was entirely due to the fault of the crew of the M/TTacloban City. The trial court ruled in favour of the respondents and awarded damages. The appellate court affirmed the decision of the trial court with modification, hence this petition. Issues: Whether the relatives of the respondents were actually passengers of M/V Don Juan Whether or not the crew members of petitioner were grossly negligent of their duties and whether or not the total loss of the M/V Don Juan extinguished petitioners liability Held: On the first issue, the court decided that it is improper for petitioner to even suggest that private respondents relatives did not board the ill-fated vessel and perish in the accident simply because their bodies were not found. In addition, the private respondents were able to present a witness that their relatives indeed boarded the vessel as he was with them during the voyage. It is also decided that there was grossness in the negligence of the vessel because it was more than twice as fast as the oil tanker, it was carrying full complement and passengers, it is equipped with a working radar that picked up the tankers presence white it was still 2.7 miles away, had it taken seriously its duty of extraordinary diligence, it could have easily avoided the collision. Don Juan might as well have avoided the collision even if it had exercised ordinary diligence. It was also reported that the captain was playing mah-jong at the time of collision and the officer on watch failed to call the attention of the captain to the imminent danger facing them. Lastly, the petitioner is liable to pay damages notwithstanding the total loss of its ship. The rule is that a ship owner maybe held liable for injuries to passengers notwithstanding the exclusively real and hypothecary nature of maritime law if fault be attributed to the ship owner.

G.R. No. 98243 July 1, 1992 ALEJANDRO ARADA, doing business under the name and style "SOUTH NEGROS ENTERPRISES", petitioner, vs. HONORABLE COURT OF APPEALS, respondents. Facts: Alejandro Arada was the proprietor and operator of the firm South Negros Enterprises engaged in the business of small scale shipping as a common carrier. On 24 March 1982, Arada entered into a contract with San Miguel Corporation (SMC) to safely transport cargoes of the latter to Mandaue City using one of Aradas vessels, M/L Maya. On the same day it applied for a clearance with the Philippine Coast Guard for M/L but due to a typhoon, it was denied clearance. M/L Maya was given clearance on the next day as there was no storm and the sea was calm. Hence, said vessel left for Mandaue City. While it was navigating towards Cebu, a typhoon developed and hit the vessel; as a result the vessel sank with whatever was left of its cargoes. The crew was rescued by a passing pump boat. A marine protest was filed by the captain and on the basis of such marine protest; the Board of Marine Inquiry conducted a hearing of the sinking of M/L Maya wherein SMC was duly represented. Said Board made it findings and recommendation absolving the owner/operator, officers and crew of M/L Maya from any administrative liability. The Boards report containing its findings and recommendation was then forwarded to the headquarters of the Philippine Coast Guard for appropriate action. On the basis of such report, the Commandant of the Philippine Coast Guard rendered a decision exonerating the owner/operator officers and crew of the ill-fated vessel from any administrative liability on account of said incident. SMC then filed an action for the recovery of the value of the cargoes anchored in breach of contract of carriage. The trial court held that there was no showing of negligence on the part of the defendant nor did it fail to observe diligence over the cargoes and that the sinking was due to a fortuitous event. The CA decided otherwise, hence this petition. Issue: Whether or not petitioner is liable for the loss of the cargoes Held: Petitioner contends that it was only a private carrier so it need not exercise extraordinary diligence over the care of the respondents cargoes and that and that the factual findings of the Board of Marine Inquiry are binding and conclusive on the court. The SC ruled that that petitioners vessel is a common carrier and should have exercised extraordinary diligence in the vigilance over the ensuring of safety of the cargoes transported by it. In order that it may be exempted from responsibility due to fortuitous events, it must prove that the fortuitous event is the proximate cause and only cause of the loss or destruction of goods and the common carrier must have exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the fortuitous event. Such was not observed by the common carrier, the captain knew that there was a typhoon before it departed, it was given clearance on the departure day but the captain should have checked where the typhoon was headed, neither did the captain of the vessel monitor and record the weather conditions everyday as required by Art, 612 of the Code of Commerce. It was also found that the crew were

unlicensed. The carrier is therefore liable for the damages it caused to the respondents as it failed to observe due diligence. As to the Board decision, it only exonerated the petitioner and the crew and officers of the M/V Maya from administrative liability which is not equal to the exoneration of the petitioners liability as a common carrier for his failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or commissions of his employees. Such is the function of the Court, not the Special Board of Marine Inquiry.