PLANTERS PRODUCTS

HELD:

Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their
business, should observe extraordinary diligence in the vigilance over the goods they carry. 25 In the
case of private carriers, however, the exercise of ordinary diligence in the carriage of goods will
suffice. Moreover, in the case of loss, destruction or deterioration of the goods, common carriers are
presumed to have been at fault or to have acted negligently, and the burden of proving otherwise
rests on them. 26 On the contrary, no such presumption applies to private carriers, for whosoever
alleges damage to or deterioration of the goods carried has the onus of proving that the cause was
the negligence of the carrier.

It is not disputed that respondent carrier, in the ordinary course of business, operates as a common
carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V
"Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner
and therefore continued to be under its direct supervision and control. Hardly then can we charge the
charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the
charterer did not have any control of the means in doing so. This is evident in the present case
considering that the steering of the ship, the manning of the decks, the determination of the course
of the voyage and other technical incidents of maritime navigation were all consigned to the officers
and crew who were screened, chosen and hired by the shipowner. 27

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the
whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only,
as in the case of a time-charter or voyage-charter. It is only when the charter includes both the vessel
and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as
the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in a time or
voyage charter retains possession and control of the ship, although her holds may, for the moment,
be the property of the charterer. 28

Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American Steamship
Agencies, supra, is misplaced for the reason that the meat of the controversy therein was the validity
of a stipulation in the charter-party exempting the shipowners from liability for loss due to the
negligence of its agent, and not the effects of a special charter on common carriers. At any rate, the
rule in the United States that a ship chartered by a single shipper to carry special cargo is not a
common carrier, 29 does not find application in our jurisdiction, for we have observed that the
growing concern for safety in the transportation of passengers and /or carriage of goods by sea
requires a more exacting interpretation of admiralty laws, more particularly, the rules governing
common carriers.

//NO. petition is DISMISSED

When PPI chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were
under the employ of the shipowner and therefore continued to be under its direct supervision and
control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the
duty of caring for his cargo when the charterer did not have any control of the means in doing so

carrier has sufficiently overcome, by clear and convincing proof, the prima facie presumption of
negligence. The hatches remained close and tightly sealed while the ship was in transit as the weight
of the steel covers made it impossible for a person to open without the use of the ship's boom.

bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so,
with a variable weather condition prevalent during its unloading

This is a risk the shipper or the owner of the goods has to face. Clearly, KKKK has sufficiently proved
the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the
inadequacy of its packaging which further contributed to the loss.

On the other hand, no proof was adduced by the petitioner showing that the carrier was remise in the
exercise of due diligence in order to minimize the loss or damage to the goods it carried.

Lintojua Shipping Company Inc VS National Seaman Board and Gregorio P. Candongo

G.R. No. L-51910 August 10, 1989

FACTS

Petitioner is the duly appointed local crewing managing office of the Fairwind Shipping Corporation.

On September 11, 1976 M/V Dufton Bay an ocean-going vessel of foreign registry owned by the R.D.
Mullion ship broking agency under charter by Fairwind, while in the port of Cebu contracted the
services (among others) of Gregorio Candongo as Third Engineer for 12 months with a monthly wage
of US$500.00. The agreement was executed before the Cebu Area Manning Unit of the NSB, after
which respondent boarded the vessel.

On December 28, 1976 before the expiration of contract, respondent was required to disembark at
Port Kilang, Malaysia. Describe in his seamans handbook is the reason by owners arrange.

Condongo filed a complaint against Mullion (Shipping company) for violation of contract and against
Litonjua as agent of shipowner.

On February 1977, NSB rendered a judgment by default for failure of petitioners to appear during the
initial hearing, rendering the same to pay Candongo because there was no sufficient or valid cause for
the respondents to terminate the service of the complainant.

Litonjuas defense:

Contends that the shipowner, nor the charterer, was the employer of private respondent; and that
liability for damages cannot be imposed upon petitioner which was a mere agent of the charterer.
ISSUE

Whether or not Litonjua may be held liable to the private respondent on the contract of
employment?

HELD

YES.

The first basis is the charter party which existed between Mullion, the shipowner, and Fairwind, the
charterer.

It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice
of the vessel, the charterer assuming in large measure the customary rights and liabilities of the
shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the
Master of the vessel is the agent of the charterer and not of the shipowner. The charterer or owner
pro hac vice, and not the general owner of the vessel, is held liable for the expenses of the voyage
including the wages of the seamen

Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it was not such,
we believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held
liable on the contract of employment between the ship captain and the private respondent.

There is a second and ethically more compelling basis for holding petitioner Litonjua liable on the
contract of employment of private respondent. The charterer of the vessel, Fairwind, clearly
benefitted from the employment of private respondent as Third Engineer of the Dufton Bay, along
with the ten (10) other Filipino crewmembers recruited by Captain Ho in Cebu at the same occasion.

In so doing, petitioner Litonjua certainly in effect represented that it was taking care of the crewing
and other requirements of a vessel chartered by its principal, Fairwind.

Last, but certainly not least, there is the circumstance that extreme hardship would result for the
private respondent if petitioner Litonjua, as Philippine agent of the charterer, is not held liable to
private respondent upon the contract of employment.

ABUEG VS SAN DIEGO

FACTS:
In case CA-G. R. No. 773, Dionisia Abueg is the widow of the deceased, Amado Nuez; who was a
machinist on board the M/S San Diego II belonging to the defendant-appellant. In case CA-G. R. NO.
774, plaintiff-appellee, Marciana S. dc Salvacion, is the widow of the deceased, Victoriano Salvacion,
who was a machinist on board the M/S Bartolome S also belonging to the defendant-appellant. In
case CA-G. R. NO. 775, the plaintiff-appellee, Rosario R. Oching is the widow of Francisco Oching who
was captain or patron of the defendant-appellants M/S Bartolome S.

The M/S San Diego II and the M/S Bartolome, while engaged in fishing operations around Mindoro
Island on Oct. 1, 1941 were caught by a typhoon as a consequence of which they were sunk and
totally lost. Amado Nuez, Victoriano Salvacion and Francisco Oching while acting in their capacities
perished in the shipwreck(Appendix A, p. IV).

It is also undisputed that the above-named vessels were not covered by any insurance. (Appendix A, p.
IV.)

Counsel for the appellant cite article 587 of the Code of Commerce which provides that if the vessel
together with all her tackle and freight money earned during the voyage are abandoned, the
agents liability to third persons for tortuous acts of the captain in the care of the goods which the
ship carried is extinguished (Yangco v. Laserna, 73 Phil., 330); article 837 of the same Code which
provides that in cases of collision, the shipowners liability is limited to the value of the vessel with
all her equipment and freight during the voyage (Philippines Shipping Company v. Garcia, 6 Phil.,
281); and article 643 of the same Code which provides that if the vessels and freight are totally lost,
the agents liability for wages of the crew is extinguished. From these premises counsel draw the
conclusion that appellants liability, as owner of the two motor ships lost or sunk as a result of the
typhoon that lashed the island of Mindoro on October 1, 1941, was extinguished.

ISSUE:

HELD:

The real and hypothecary nature of the liability of the shipower or agent embodied in the provisions
of the Maritime Law, Book III, Code of Commerce, had its origin in the prevailing conditions of the
maritime trade and sea voyages during the medieval ages, attended by innumerable hazards and
perils. to offset against these adverse conditions and to encourage shipbuilding and maritime
commerce it was deemed necessary to confine the liability of the owner or agent arising from the
operation of a ship to the vessel, equipment, and freight, or insurance, if any, so that if the shipowner
or agent abandoned the ship, equipment, and freight, his liability was extinguished.

***But the provisions of the Code of Commerce invoked by appellant have no room in the
application of the Workmens Compensation Act which seeks to improve, and aims at the
amelioration of, the condition of laborers and employees. It is not the liability for the damage or loss
of the cargo or injury to, or death of, a passenger by or through the misconduct of the captain or
master of the ship; nor the liability for the loss of the ship as a result of collision; nor the
responsibility for w ages of the crew, but a liability created by a statute to compensate employees
and laborers in cases of injury received by or inflicted upon them, while engaged in the
performance of their work or employment, or the heirs and dependents of such laborers and
employees in the event of death caused by their employment Such Compensation has nothing to do
with the provisions of the Code of Commerce regarding maritime commerce. It is an item in the
costs of production which must be included in the budget of any well-managed industry.

This Court held in that case that "It has been repeatedly stated that the Workmens Compensation
Act was enacted to abrogate the common law and our Civil Code upon culpable acts and omissions,
and that the employer need not be guilty of neglect or fault, in order that responsibility may attach
to him" (pp. 449-450); and that the shipowner was liable to pay compensation provided for in the
Workmens Compensation Act, notwithstanding the fact that the motorboat was totally lost. In the
case of Murillo v. Mendoza, supra, this Court held that "The rights and responsibilities defined in
said Act must be governed by its own peculiar provisions in complete disregard of other similar
provisions of the civil as well as the mercantile law. If an accident is compensable under the
Workmens Compensation Act, it must be compensated even when the workmans right is not
recognized by or is in conflict with other provisions of the Civil Code or of the Code of Commerce.
The reason behind this principle is that the Workmens Compensation Act was enacted by the
Legislature in abrogation of the other existing laws." This quoted part of the decision is in answer to
the contention that it was not the intention of the Legislature to repeal articles 643 and 837 of the
Code of Commerce with the enactment of the Workmens Compensation Act.

VASQUEZ VS CA

FACTS:

When the inter-island vessel MV "Pioneer Cebu" left the Port of Manila in the early morning of May
15, 1966 bound for Cebu, it had on board the spouses Alfonso Vasquez and Filipinas Bagaipo and a
four-year old boy, Mario Marlon Vasquez, among her passengers. The MV "Pioneer Cebu"
encountered typhoon "Klaring" and struck a reef on the southern part of Malapascua Island,
located somewhere north of the island of Cebu and subsequently sunk. The aforementioned
passengers were unheard from since then.

Plaintiffs Pedro Vasquez and Soledad Ortega are the parents of Alfonso Vasquez; plaintiffs Cleto
Bagaipo and Agustina Virtudes are the parents of Filipinas Bagaipo; and plaintiffs Romeo Vasquez and
Maxima Cainay are the parents of the child, Mario Marlon Vasquez. They seek the recovery of
damages due to the loss of Alfonso Vasquez, Filipinas Bagaipo and Mario Marlon Vasquez during
said voyage.

At the pre-trial, the defendant admitted its contract of carriage with Alfonso Vasquez, Filipinas
Bagaipo and Mario Marlon Vasquez, and the fact of the sinking of the MV "Pioneer Cebu". The
issues of the case were limited to the defenses alleged by the defendant that the sinking of the
vessel was caused by force majeure, and that the defendant's liability had been extinguished by the
total loss of the vessel.

The evidence on record as to the circumstances of the last voyage of the MV "Pioneer Cebu" came
mainly, if not exclusively, from the defendant. The MV "Pioneer Cebu" was owned and operated by
the defendant and used in the transportation of goods and passengers in the inter-island shipping.
Scheduled to leave the Port of Manila at 9:00 p.m. on May 14, 1966, it actually left port at 5:00 a.m.
the following day, May 15, 1966. It had a passenger capacity of three hundred twenty-two (322)
including the crew. It undertook the said voyage on a special permit issued by the Collector of
Customs inasmuch as, upon inspection, it was found to be without an emergency electrical power
system. The special permit authorized the vessel to carry only two hundred sixty (260) passengers
due to the said deficiency and for lack of safety devices for 322 passengers (Exh. 2). A headcount
was made of the passengers on board, resulting on the tallying of 168 adults and 20 minors,
although the passengers manifest only listed 106 passengers. It has been admitted, however, that
the headcount is not reliable inasmuch as it was only done by one man on board the vessel.

***When the vessel left Manila, its officers were already aware of the typhoon Klaring building up
somewhere in Mindanao. There being no typhoon signals on the route from Manila to Cebu, and
the vessel having been cleared by the Customs authorities, the MV "Pioneer Cebu" left on its
voyage to Cebu despite the typhoon. When it reached Romblon Island, it was decided not to seek
shelter thereat, inasmuch as the weather condition was still good. After passing Romblon and while
near Jintotolo island, the barometer still indicated the existence of good weather condition continued
until the vessel approached Tanguingui island. Upon passing the latter island, however, the weather
suddenly changed and heavy rains felt Fearing that due to zero visibility, the vessel might hit
Chocolate island group, the captain ordered a reversal of the course so that the vessel could 'weather
out' the typhoon by facing the winds and the waves in the open. Unfortunately, at about noontime on
May 16, 1966, the vessel struck a reef near Malapascua island, sustained leaks and eventually sunk,
bringing with her Captain Floro Yap who was in command of the vessel.

Due to the loss of their children, petitioners sued for damages before the Court of First Instance of
Manila (Civil Case No. 67139). Respondent defended on the plea of force majeure, and the
extinction of its liability by the actual total loss of the vessel.

After proper proceedings, the trial Court awarded damages, thus:

WHEREFORE, judgment is hereby rendered ordering the defendant to paY

ISSUE:

HELD:

Under the circumstances, while, indeed, the typhoon was an inevitable occurrence, yet, having been
kept posted on the course of the typhoon by weather bulletins at intervals of six hours, the captain
and crew were well aware of the risk they were taking as they hopped from island to island from
Romblon up to Tanguingui. They held frequent conferences, and oblivious of the utmost diligence
required of very cautious persons, 9 they decided to take a calculated risk. In so doing, they failed to
observe that extraordinary diligence required of them explicitly by law for the safety of the
passengers transported by them with due regard for an circumstances 10 and unnecessarily
exposed the vessel and passengers to the tragic mishap. They failed to overcome that presumption
of fault or negligence that arises in cases of death or injuries to passengers. 11

While the Board of Marine Inquiry, which investigated the disaster, exonerated the captain from
any negligence, it was because it had considered the question of negligence as "moot and
academic," the captain having "lived up to the true tradition of the profession." While we are
bound by the Board's factual findings, we disagree with its conclusion since it obviously had not
taken into account the legal responsibility of a common carrier towards the safety of the
passengers involved.

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 12 as construed in Yangco vs. Laserna, 73
Phil. 330 [1941], suffice it to state that even in the cited case, it was held that the liability of a
shipowner is limited to the value of the vessel or to the insurance thereon. Despite the total loss of
the vessel therefore, its insurance answers for the damages that a shipowner or agent may be held
liable for by reason of the death of its passengers.

Contrariwise, respondent Appellate Court believed 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.

Upon the evidence and the applicable law, we sustain the trial Court. "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." 1 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. 2 There must be
an entire exclusion of human agency from the cause of injury or loss. 3

Turning to this case, before they sailed from the port of Manila, the officers and crew were aware of
typhoon "Klaring" that was reported building up at 260 kms. east of Surigao. In fact, they had lashed
all the cargo in the hold before sailing in anticipation of strong winds and rough waters. 4 They
proceeded on their way, as did other vessels that day. Upon reaching Romblon, they received the
weather report that the typhoon was 154 kms. east southeast of Tacloban and was moving west
northwest. 5 Since they were still not within the radius of the typhoon and the weather was clear,
they deliberated and decided to proceed with the course. At Jintotolo Island, the typhoon was already
reported to be reaching the mainland of Samar. 6 They still decided to proceed noting that the
weather was still "good" although, according to the Chief Forecaster of the Weather Bureau, they
were already within the typhoon zone. 7 At Tanguingui Island, about 2:00 A.M. of May 16, 1966, the
typhoon was in an area quite close to Catbalogan, placing Tanguingui also within the typhoon zone.
Despite knowledge of that fact, they again decided to proceed relying on the forecast that the
typhoon would weaken upon crossing the mainland of Samar. 8 After about half an hour of navigation
towards Chocolate Island, there was a sudden fall of the barometer accompanied by heavy downpour,
big waves, and zero visibility. The Captain of the vessel decided to reverse course and face the waves
in the open sea but because the visibility did not improve they were in total darkness and, as a
consequence, the vessel ran aground a reef and sank on May 16, 1966 around 12:45 P.M. near
Malapascua Island somewhere north of the island of Cebu.

NEGROS NAVIGATION VS CA

FACTS:

Private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin
tickets. The tickets were for Voyage No. 457-A of the M/V Don Juan, leaving Manila and going to
Bacolod.

Subsequently, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City, an
oil tanker owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and
Transport Corporation (PNOC/STC). As a result, the M/V Don Juan sank. Several of her passengers
perished in the sea tragedy. The bodies of some of the victims were found and brought to shore, but
the four members of private respondents families were never found.

Private respondents filed a complaint against the Negros Navigation, the Philippine National Oil
Company (PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking damages
for the death. Petitioner, however, denied that the four relatives of private respondents actually
boarded the vessel as shown by the fact 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/T Tacloban City.

In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required
of it in the carriage of passengers, both the trial court and the appellate court relied on the findings of
this Court in Mecenas v. Intermediate Appellate Court, which case was brought for the death of other
passengers. In Mecenas, SC found petitioner guilty of negligence in (1) allowing or tolerating the ship
captain and crew members in playing mahjong during the voyage, (2) in failing to maintain the vessel
seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to carry.
Petitioner is, therefore, clearly liable for damages to the full extent.

Petitioner criticizes the lower courts reliance on the Mecenas case, arguing that, although this case
arose out of the same incident as that involved in Mecenas, the parties are different and trial was
conducted separately. Petitioner contends that the decision in this case should be based on the
allegations and defenses pleaded and evidence adduced in it or, in short, on the record of this case.

ISSUE:

HELD:
Second. In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence
required of it in the carriage of passengers, both the trial court and the appellate court relied on the
findings of this Court in Mecenas v. Intermediate Appellate Court,[4] which case was brought for the
death of other passengers. In that case it was found that although the proximate cause of the mishap
was the negligence of the crew of the M/T Tacloban City, the crew of the Don Juan was equally
negligent as it found that the latters master, Capt. Rogelio Santisteban, was playing mahjong at the
time of collision, and the officer on watch, Senior Third Mate Rogelio De Vera, admitted that he failed
to call the attention of Santisteban to the imminent danger facing them. This Court found that Capt.
Santisteban and the crew of the M/V Don Juan failed to take steps to prevent the collision or at least
delay the sinking of the ship and supervise the abandoning of the ship.

Petitioner Negros Navigation was found equally negligent in tolerating the playing of mahjong by
the ship captain and other crew members while on board the ship and failing to keep the M/V Don
Juan seaworthy so much so that the ship sank within 10 to 15 minutes of its impact with the M/T
Tacloban City.

In addition, the Court found that the Don Juan was overloaded. The Certificate of Inspection, dated
August 27, 1979, issued by the Philippine Coast Guard Commander at Iloilo City stated that the total
number of persons allowed on the ship was 864, of whom 810 are passengers, but there were
actually 1,004 on board the vessel when it sank, 140 persons more than the maximum number that
could be safely carried by it.

Taking these circumstances together, and the fact that the M/V Don Juan, as the faster and
better-equipped vessel, could have avoided a collision with the PNOC tanker, this Court held that
even if the Tacloban City had been at fault for failing to observe an internationally-recognized rule
of navigation, the Don Juan was guilty of contributory negligence. Through Justice Feliciano, this
Court held:

The grossness of the negligence of the Don Juan is underscored when one considers the foregoing
circumstances in the context of the following facts: Firstly, the Don Juan was more than twice as fast
as the Tacloban City. The Don Juans top speed was 17 knots; while that of the Tacloban City was 6.3.
knots. Secondly, the Don Juan carried the full complement of officers and crew members specified for
a passenger vessel of her class. Thirdly, the Don Juan was equipped with radar which was functioning
that night. Fourthly, the Don Juans officer on-watch had sighted the Tacloban City on his radar screen
while the latter was still four (4) nautical miles away. Visual confirmation of radar contact was
established by the Don Juan while the Tacloban City was still 2.7 miles away. In the total set of
circumstances which existed in the instant case, the Don Juan, had it taken seriously its duty of
extraordinary diligence, could have easily avoided the collision with the Tacloban City. Indeed, the
Don Juan might well have avoided the collision even if it had exercised ordinary diligence merely.

It is true that the Tacloban City failed to follow Rule 18 of the International Rules of the Road which
requires two (2) power-driven vessels meeting end on or nearly end on each to alter her course to
starboard (right) so that each vessel may pass on the port side (left) of the other. The Tacloban City,
when the two (2) vessels were only three-tenths (0.3) of a mile apart, turned (for the second time)
15o to port side while the Don Juan veered hard to starboard. . . . [But] route observance of the
International Rules of the Road will not relieve a vessel from responsibility if the collision could have
been avoided by proper care and skill on her part or even by a departure from the rules.

In the petition at bar, the Don Juan having sighted the Tacloban City when it was still a long way off
was negligent in failing to take early preventive action and in allowing the two (2) vessels to come to
such close quarters as to render the collision inevitable when there was no necessity for passing so
near to the Tacloban City as to create that hazard or inevitability, for the Don Juan could choose its
own distance. It is noteworthy that the Tacloban City, upon turning hard to port shortly before the
moment of collision, signalled its intention to do so by giving two (2) short blasts with its horn. The
Don Juan gave no answering horn blast to signal its own intention and proceeded to turn hard to
starboard.

We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross
negligence in connection with the collision of the Don Juan and Tacloban City and the sinking of the
Don Juan leading to the death of hundreds of passengers. . . .[5]

ARADA CASE:

FACTS:

Alejandro Arada, herein petitioner, is the proprietor and operator of the firm South Negros
Enterprises which has been organized and established for more than ten (10) years. It is engaged in
the business of small scale shipping as a common carrier, servicing the hauling of cargoes of different
corporations and companies with the five (5) vessels it was operating (Rollo, p. 121).

On March 24, 1982. petitioner entered into a contract with private respondent to safely transport as a
common carrier, cargoes of the latter from San Carlos City, Negros Occidental to Mandaue City using
one of petitioner's vessels, M/L Maya. The cargoes of private respondent consisted of 9,824 cases of
beer empties valued at P176,824.80 On March 24, 1982, petitioner thru its crew master, Mr. Vivencio
Babao, applied for a clearance with the Philippine Coast Guard for M/L Maya to leave the port of San
Carlos City, but due to a typhoon, it was denied clearance by SNI Antonio Prestado PN who was then
assigned at San Carlos City Coast Guard Detachment (Rollo, p. 122).

On March 25, 1982 M/L Maya was given clearance 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 said vessel was buffeted on all its sides by big waves. Its rudder was destroyed and it drifted for
sixteen (16) hours although its engine was running.

On March 27, 1982 at about 4:00 a.m., the vessel sank with whatever was left of its cargoes. The crew
was rescued by a passing pump boat and was brought to Calanggaman Island. Later in the afternoon,
they were brought to Palompon, Leyte, where Vivencio Babao filed a marine protest (Rollo, p. 10).
On the basis of such marine protest, the Board of Marine Inquiry conducted a hearing of the sinking
of M/L Maya wherein private respondent was duly represented. Said Board made its findings and
recommendation dated November 7, 1983, the dispositive portion of which reads as:

WHEREFORE, premises considered, this Board recommends as it is hereby recommended that the
owner/operator, officers and crew of M/L Maya be exonerated or absolved from any administrative
liability on account of this incident (Exh. 1).

The Board's 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 dated December 21, 1984 in SBMI
Adm. Case No. 88-82 exonerating the owner/operator officers and crew of the ill-fated M/L Maya
from any administrative liability on account of said incident (Exh. 2).

On March 25, 1983, Private respondent filed a complaint in the Regional Trial Court its first cause of
action being for the recovery of the value of the cargoes anchored on breach of contract of carriage.
After due hearing, said court rendered a decision dated July 18, 1988, the dispositive portion of which
reads. The RTC ordered defendant to pay plaintiff.

ISSUE:

whether or not petitioner is liable for the value of the lost cargoes.

HELD:

The petition is devoid of merit.

Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water or air, for compensation
offering their services to the public (Art. 1732 of the New Civil Code).

In the case at bar, there is no doubt that petitioner was exercising its function as a common carrier
when it entered into a contract with private respondent to carry and transport the latter's cargoes.
This fact is best supported by the admission of petitioner's son, Mr. Eric Arada, who testified as the
officer-in-charge for operations of South Negros Enterprises in Cebu City.

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. However, the common carrier must exercise
due diligence to prevent or minimize the 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 destruction or deterioration of the goods (Article 1739, New Civil Code).

In the instant case, the appellate court was correct in finding that petitioner failed to observe the
extraordinary diligence over the cargo in question and he or the master in his employ was negligent
previous to the sinking of the carrying vessel. In substance, the decision reads:

... VIVENCIO BABAO, the master of the carrying vessel, knew that there was a typboon coming
before his departure but did not check where it was.

xxx xxx xxx

If only for the fact that he was first denied clearance to depart on March 24, 1982, obviously
because of a typhoon coming, Babao, as master of the vessel, should have verified first where the
typhoon was before departing on March 25, 1982. True, the sea was calm at departure time. But
that might be the calm before the storm. Prudence dictates that he should have ascertained first
where the storm was before departing as it might be on his path. (Rollo, pp. 35-36)

Respondent court's conclusion as to the negligence of petitioner is supported by evidence. It will be

noted that Vivencio Babao knew of the impending typhoon on March 24, 1982 when the Philippine
Coast Guard denied M/L Maya the issuance of a clearance to sail. Less than 24 hours elapsed since the
time of the denial of said clearance and the time a clearance to sail was finally issued on March 25,
1982. Records will show that Babao did not ascertain where the typhoon was headed by the use of his
vessel's barometer and radio (Rorlo, p. 142). Neither did the captain of the vessel monitor and record
the weather conditions everyday as required by Art, 612 of the Code of Commerce (Rollo, pp.
142-143). Had he done so while navigating for 31 hours, he could have anticipated the strong winds
and big waves and taken shelter (Rollo, pp- 36; 145).

CHUA YEK HONG CASE:

Before us is a Motion for Reconsideration of our Decision dated 30 September 1988 affirming the
judgment of the Court of Appeals dismissing the complaint against private respondents and absolving
them from any and all liability arising from the loss of 1000 sacks of copra shipped by petitioner
aboard private respondents' vessel. Private respondents filed an opposition thereto.

Petitioner argues that this Court failed to consider the Trial Court's finding that the loss of the vessel
with its cargo was due to the fault of the shipowner or to the concurring negligence of the shipowner
and the captain.

The Appellate Court Decision, however, mentions only the ship captain as having been negligent in
the performance of his duties (p. 3, Court of Appeals Decision, p. 15, Rollo). This is a factual finding
binding on this Court. For the exception to the limited liability rule (Article 587, Code of Commerce)
to apply, the loss must be due to the fault of the shipowner, or to the concurring negligence of the
shipowner and the captain. As we held, there is nothing in the records showing such negligence (p.
6, Decision.)

The invocation by petitioners of Articles 1733 and 1735 of the Civil Code is misplaced. As was stated
in the Decision sought to be reconsidered, while the primary law governing the instant case is the
Civil Code, in all matters not regulated by said Code, the Code of Commerce and other special laws
shall govern. Since the Civil Code contains no provisions regulating liability of shipowners or agents
in the event of total loss or destruction of the vessel, it is the provisions of the Code of Commerce,
particularly Article 587, that governs.

Petitioner further contends that the ruling laid down in Eastern Shipping Lines vs. IAC, et al. (150 SCRA
464 [1987]) should be made to apply in the instant case. That case, however, involved foreign
maritime trade while the present case involves local

inter-island shipping. The environmental set-up in the two cases, therefore, is not on all fours.

YANGCO VS LASERNA

FACTS:

At about one o'clock in the afternoon of May 26, 1927, the steamer S.S. Negros, belonging to
petitioner here, Teodoro R. Yangco, left the port of Romblon on its retun trip to Manila. Typhoon
signal No. 2 was then up, of which fact the captain was duly advised and his attention thereto called
by the passengers themselves before the vessel set sail. The boat was overloaded as indicated by the
loadline which was 6 to 7 inches below the surface of the water. Baggage, trunks and other
equipments were heaped on the upper deck, the hold being packed to capacity. In addition, the
vessel carried thirty sacks of crushed marble and about one hundred sacks of copra and some lumber.
The passengers, numbering about 180, were overcrowded, the vessel's capacity being limited to only
123 passengers. After two hours of sailing, the boat encountered strong winds and rough seas
between the islands of Banton and Simara, and as the waves splashed the ladies' dresses, the awnings
were lowered. As the sea became increasingly violent, the captain ordered the vessel to turn left,
evidently to return to port, but in the manuever, the vessel was caught sidewise by a big wave which
caused it to capsize and sink. Many of the passengers died in the mishap, among them being Antolin
Aldaa and his son Victorioso, husband and son, respectively, of Emilia Bienvenida who, together with
her other children and a brother-in-law, are respondents in G.R. No. 47447; Casiana Laserna, the
daughter of respondents Manuel Laserna and P.A. de Laserna in G.R. 47448; and Genaro Basaa, son
of Filomeno Basaa, respondent in G.R. No. 47449. These respondents instituted in the Court of First
Instance of Capiz separate civil actions against petitioner here to recover damages for the death of
the passengers aforementioned. The court awarded the heirs of Antolin and Victorioso Aldana the
sum of P2,000; the heirs of Casiana Laserna, P590; and those of Genaro Basana, also P590. After the
rendition of the judgment to this effcet, petitioner, by a verified pleading, sought to abandon th
evessel to the plainitffs in the three cases, together with all its equipments, without prejudice to his
right to appeal. The abandonment having been denied, an appeal was taken to the Court of Appeals,
wherein all the judgmnets were affirmed except that which sums was increased to P4,000. Petitioner,
now deceased, appealed and is here represented by his legal representative.
ISSUE:

the fundamental question here raised is: May the shipowner or agent, notwithstanding the total loss
of the vessel as a result of the negligence of its captain, be properly held liable in damages for the
consequent death of its passengers?

HELD:

the provisions of article 587 of the Code of Commerce. Said article reads:

The agent shall also be civilly liable for the indemnities in favor of third persons which arise from
the conduct of the captain in the care of the goods which the vessel carried; but he may exempt
himself therefrom by abandoning the vessel with all her equipments and the freight he may have
earned during the voyage.

The provisions accords a shipowner or agent the right of abandonment; and by necessary
implication, his liability is confined to that which he is entitled as of right to abandon "the vessel
with all her equipments and the freight it may have earned during the voyage." It is true that the
article appears to deal only with the limited liability of shipowners or agents for damages arising
from the misconduct of the captain in the care of the goods which the vessel carries, but this is a
mere deficiency of language and in no way indicates the true extent of such liability. The consensus
of authorities is to the effect that notwithstanding the language of the aforequoted provision, the
benefit of limited liability therein provided for, applies in all cases wherein the shipowner or agent
may properly be held liable for the negligent or illicit acts of the captain. Dr. Jose Ma. Gonzalez de
Echavarri y Vivanco

A cursory examination will disclose that the principle of liomited liability of a shipowner or agent is
provided for in but three articles of the Code of Commerce article 587 aforequoted and article 590
and 837. Article 590 merely reiterates the principle embodied in article 587, applies the same
principle in cases of collision, and it has been observed that said article is but "a necessary
consequences of the right to abandon the vessel given to the shipowner in article 587 of the Code,
and it is one of the many superfluities contained in the Code." (Lorenzo Benito, Lecciones 352, quoted
in Philippine Shipping Co. vs. Garcia, 6 Phil. 281, 282.) In effect, therefore, only articles 587 and 590
are the provisions conatined in our Code of Commerce on the matter, and the framers of said code
had intended those provisions to embody the universal principle of limited liability in all cases. Thus,
in the "Exposicon de Motivos" of the Code of Commerce, we read:

The present code (1829) does not determine the juridical status of the agent where such agent is not
himself the owner of the vessel. This omission is supplied by the proposed code, which provides in
accordance with the principles of maritime law that by agent it is to be understood the person
intrusted with the provisioning of the vessel, or the one who represents her in the port in which she
happens to be. This person is the only one who represents the vessel that is to say, the only one
who represents the interests of the owner of the vessel. This provision has therefore cleared the
doubt which existed as to the extent of the liability, both of the agent and of the owner of the vessel.
Such liability is limited by the proposed code to the value of the vessel and other things appertaining
thereto.

In Philippine Shipping Co. vs. Garcia (6 Phil., 281, 284-286), we have expressed ourselves in such a
comprehensive manner as to leave no room for doubt on the applicability of our ratio decidendi not
only to cases of collision but also to those of shipwrecks, etc. We said:

This is the difference which exists between the lawful acts and lawful obligations of the captain and
the liability which he incurs on account of any unlawful act committed by him. In the first case, the
lawful acts and obligations of the captain beneficial to the vessel may be enforced as against the
agent for the reason that such obligations arise from te the contract of agency (provided, however,
that the captain does not exceed his authority), while as to any liability incurred by the captain
through his unlawful acts, the ship agent is simply subsidiarily civilly liable. This liability of the agent is
limited to the vessel and it does not extend further. For this reason the Code of Commerce makes the
agent liable to the extent of the value of the vessel, as the codes of the principal maritime nations
provide with the vessel, and not individually. Such is also the spirit of our Code.

STANDARD OIL VS LOPEZ CASTELO

FACTS:

By contract of character dated February 8, 1915, Manuel Lopez Castelo, as owner, let the small
interisland steamer Batangueo for the term of one year to Jose Lim Chumbuque for use in the
conveying of cargo between certain ports of the Philippine Islands. In this contract it was stipulated
that the officers and crew of the Batangueo should be supplied by the owner, and that the charterer
should have no other control over the captain, pilot, and engineers than to specify the voyages that
they should make and to require the owner to discipline or relieve them as soon as possible in case
they should fail to perform the duties respectively assigned to them.

While the boat was being thus used by the charterer in the interisland trade, the standard Oil
Company delivered to the agent of the boat in Manila a quantity of petroleum to be conveyed to the
port of Casiguran, in the Province of Sorsogon. For this consignment a bill of lading of the usual form
was delivered, with the stipulation that freight should be paid at the destination. Said bill of lading
contained no provision with respect to the storage of the petroleum, but it was in fact placed upon
the deck of the ship and not in the hold.

While the boat was on her way to the port mentioned, and off the western coast of Sorsogon, a
violent typhoon passed over that region, and while the storm was at its height the captain was
compelled for the safety of all to jettison the entire consignment of petroleum consisting of two
hundred cases. When the storm abated the ship made port, and thirteen cases of the petroleum were
recovered, but the remainder was wholly lost.
To recover the value of the petroleum thus jettisoned but not recovered, the present action was
instituted by the Standard Oil Company against the owner of the ship in the Court of First Instance of
Manila, where judgment was rendered in favor of the plaintiff. From this judgment the defendant
appealed.

ISSUE:

whether the loss of this petroleum was a general average loss or a particular less to be borne solely
by the owner of the cargo

HELD:

The reason for adopting a more liberal rule with respect to deck cargo on vessels used in the
coastwise trade than upon those used for ordinary ocean borne traffic is to be found of course in the
circumstance that in the coastwise trade the boats are small and voyages are short, with the result
that the coasting vessel can use more circumspection about the condition of the weather at the time
of departure; and if threatening weather arises, she can often reach a port of safety before disaster
overtakes her. Another consideration is that the coastwise trade must as a matter of public policy be
encouraged, and domestic traffic must be permitted under such conditions as are practically possible,
even if not altogether ideal.

From what has been said it is evident that the loss of this petroleum is a general and not a special
average, with the result that the plaintiff is entitled to recover in some way and from somebody an
amount bearing such proportion to its total loss as the value of both the ship and the saved cargo
bears to the value of the ship and entire cargo before the jettison was effected. Who is the person,
or persons, who are liable to make good this loss, and what are the conditions under which the
action can be maintained?

That the owner of the ship is a person to whom the plaintiff in this case may immediately look for
reimbursement to the extent above stated is deducible not only from the general doctrines of
admiralty jurisprudence but from the provisions of the Code of Commerce applicable to the case. It
is universally recognized that the captain is primarily the representative of the owner; and article
586 of the Code of Commerce expressly declares that both the owner of the vessel and the naviero,
or charterer, shall be civil liable for the acts of the master. In this connection, it may be noted that
there is a discrepancy between the meaning of naviero, in articles 586 of the Code of Commerce,
where the word is used in contradistinction to the term "owner of the vessel" ( propietario), and in
article 587 where it is used alone, and apparently in a sense broad enough to include the owner.
Fundamentally the word "naviero" must be understood to refer to the person undertaking the
voyage, who in one case may be the owner and in another the charterer. But this is not vital to the
present discussion. The real point to which we direct attention is that, by the express provision of
the Code, the owner of the vessel is civilly liable for the acts of the captain; and he can only escape
from this civil liability by abandoning his property in the ship and any freight that he may have
earned on the voyage (arts. 587, 588, Code of Comm.).
Now, by article 852 of the Code of Commerce the captain is required to initiate the proceedings for
the adjustment, liquidation, and distribution of any gross average to which the circumstances of the
voyage may have given origin; and it is therefore his duty to take the proper steps to protect any
shipper whose goods may have been jettisoned for the general safety. In ordinary practice this, we
supposed, would be primarily accomplished by requiring the consignees of other cargo, as a
condition precedent to the delivery of their goods to them, to give a sufficient bond to respond for
their proportion of the general average. But it is not necessary here to inquire into details. It is
sufficient to say that the captain is required to take the necessary steps to effect the adjustment,
liquidation, and distribution of the general average. In the case before us the captain of the vessel
did not take those steps; and we are of the opinion that the failure of the captain to take those
steps gave rise to a liability for which the owner of the ship must answer.

. Clearly, for one thing, those provisions are intended to supply the shipowner, acting of cause in the
person of the captain, with a means whereby he may escape bearing the entire burden of the loss and
may distribute it among all the persons who ought to participate in sharing it; but the making of the
liquidation is not a condition precedent to the liability of the shipowner of the shipper whose
property has been jettisoned.

It is true that if the captain does not comply with the article relating to the adjustment, liquidation,
and distribution of the general average, the next article (852) gives to those concerned whether
shipowner (naviero) or shipper the right to maintain an action against the captain for
indemnification for the loss; but the recognition of this right of action does not by any means involve
the suppression of the right of action which is elsewhere recognized in the shipper against the ship's
owner. The shipper may in our opinion go at once upon the owner and the latter, if so minded, may
have his recourse for indemnization against his captain.

***In considering the question now before us it is important to remember that the owner of the
ship ordinarily has vastly more capital embarked upon a voyage than has any individual shipper of
cargo. Moreover, the owner of the ship, in the person of the captain, has complete and exclusive
control of the crew and of the navigation of the ship, as well as of the disposition of the cargo at the
end of the voyage. It is therefore proper that any person whose property may have been cast
overboard by order of the captain should have a right of action directly against the ship's owner for
the breach of any duty which the law may have imposed on the captain with respect to such cargo.
To adopt the interpretation of the law for which the appellant contends would place the shipowner
in a position to escape all responsibility for a general average of this character by means of the
delinquency of his own captain. This cannot be permitted. The evident intention of the Code, taken
in all of its provisions, is to place the primary liability upon the person who has actual control over
the conduct of the voyage and who has most capital embarked in the venture, namely, the owner
of the ship, leaving him to obtain recourse, as it is very easy to do, from other individuals who have
been drawn into the venture as shippers.

It results that the plaintiff is entitled to recover in this action; and the only additional point to be
inquired into is the amount that should be awarded. In this connection it appears that the total
value of the jettisoned cargo, belonging partly to the plaintiff to another shipper, was P880.35, of
which P719.95 represented the value of the plaintiff's petroleum. Upon the apportionment of this
total loss among the different interests involved, to wit, value of ship, value of cargo, and the
earned but lost freight, it appears that the amount of the loss apportionable to the plaintiff is
P11.28. Deducting this from the value of the petroleum, we have as a result, the amount of P708.67,
which is the amount for which judgment should be given.

MANILA STEAMSHIP CASE

FACTS:

Insa Abdulhaman together with his wife and five children boarded M/L Consuelo V in Zamboanga City.
The said ship was bound for Siokon under the command of Faustino Macrohon. On that same night,
M/S Bowline Knot was navigating from Marijoboc towards Zamboanga.

Around 9:30 to 10:00 in the evening of May 4, 1948, while some of the passengers of the M/L
Consuelo V were then sleeping and some lying down awake, a shocking collision suddenly occurred.
The ship that collided was later on identified as the M/V Bowline Knot. M/L Consuelo V capsized that
resulted to the death of 9 passengers and the loss of the cargoes on board.

The Court held the owners of both vessels solidarily liable to plaintiff for damages caused to the latter
under Article 827 of the Code of Commerce but exempted defendant Lim Hong To from liability due
to the sinking and total loss of his vessel. While Manila steamship, owner of the Bowline Knot was
ordered to pay all of plaintiffs damages.

Petitioner Manila Steamship Co. pleads that it is exempt from any liability under Article 1903 of the
Civil Code because it had exercised the diligence of a good father of a family in the selection of its
employees, particularly the officer in command of the M/S Bowline Knot.

ISSUE:

Whether or not petitioner Manila Steamship Co. is exempt from any liability under Art. 1903 of the
Civil Code?

HELD:

***NO. Petitioner is not exempted from liabilities. While it is true that plaintiffs action against
petitioner is based on a tort or quasi delict, the tort in question is not a civil tort under the Civil
Code but a maritime tort resulting in a collision at sea, governed by Articles 826-939 of the Code of
Commerce. Under Art. 827 of the Code of Commerce, in case of collision between two vessels
imputable to both of them, each vessel shall suffer her own damage and both shall be solidarily
liable for the damages occasioned to their cargoes. The shipowner is directly and primarily
responsible in tort resulting in a collision at sea, and it may not escape liability on the ground that
exercised due diligence in the selection and supervision of the vessels officers and crew.

///The responsibility involved in the present action is that derived from the management of the
vessel, which was defective on account of lack of skill, negligence, or fault, either of the captain or
of the crew, for which the captain is responsible to the agent, who in his turn is responsible to the
third party prejudiced or damaged. (Article 618, Code of Commerce).

In fact, it is a general principle, well established maritime law and custom, that shipowners and ship
agents are civilly liable for the acts of the captain (Code of Commerce, Article 586) and for the
indemnities due the third persons (Article 587); chan roblesvirtualawlibraryso that injured parties
may immediately look for reimbursement to the owner of the ship, it being universally recognized
that the ship master or captain is primarily the representative of the owner (Standard Oil Co. vs.
Lopez Castelo, 42 Phil. 256, 260). This direct liability, moderated and limited by the owners right of
abandonment of the vessel and earned freight (Article 587), has been declared to exist, not only in
case of breached contracts, but also in cases of tortious negligence (Yu Biao Sontua vs. Osorio, 43
Phil. 511, 515):chanroblesvirtuallawlibrary

In the second assignment of error, the Appellant contends that the Defendant ought not to be held
liable for the negligence of his agents and employees.

It is proven that the agents and employees, through whose negligence the explosion and fire in
question occurred, were agents, employees and mandatories of the Defendant. Where the vessel is
one of freight, a public concern or public utility, its owner or agents is liable for the tortious acts of his
agents (Articles 587, 613, and 618 Code of Commerce; chan roblesvirtualawlibraryand Article 1902,
1903, 1908, Civil Code). This principle has been repeatedly upheld in various decisions of this court.

The doctrines cited by the Appellant in support of his theory have reference to the relations between
principal and agent in general, but not to the relations between ship agent and his agents and
employees; chan roblesvirtualawlibraryfor this reason they cannot be applied in the present case.

It is easy to see that to admit the defense of due diligence of a bonus paterfamilias (in the selection
and vigilance of the officers and crew) as exempting the shipowner from any liability for their faults,
would render nugatory the solidary liability established by Article 827 of the Code of Commerce for
the greater protection of injured parties. Shipowners would be able to escape liability in practically
every case, considering that the qualifications and licensing of ship masters and officers are
determined by the State, and that vigilance is practically impossible to exercise over officers and crew
of vessels at sea. To compel the parties prejudiced to look to the crew for indemnity and redress
would be an illusory remedy for almost always its members are, from captains down, mere wage
earners.

We, therefore, find no reversible error in the refusal of the Court of Appeals to consider the defense
of the Manila Steamship Co., that it is exempt from liability for the collision with the M/L Consuelo
V due to absence of negligence on its parts in the selection and supervision of the officers and crew
of the M/S Bowline Knot.

ABOITIZ VS NEW INDIA

FACTS:

Societe Francaise Des Colloides loaded a cargo of textiles and auxiliary chemicals from France on
board a vessel owned by Franco-Belgian Services, Inc. The cargo was consigned to General Textile, Inc.,
in Manila and insured by respondent New India Assurance Company, Ltd. While in Hongkong, the
cargo was transferred to M/V P. Aboitiz for transshipment to Manila.[4]

Before departing, the vessel was advised by the Japanese Meteorological Center that it was safe to
travel to its destination.[5] But while at sea, the vessel received a report of a typhoon moving within
its general path. To avoid the typhoon, the vessel changed its course. However, it was still at the
fringe of the typhoon when its hull leaked. On October 31, 1980, the vessel sank, but the captain and
his crew were saved.

On November 3, 1980, the captain of M/V P. Aboitiz filed his Marine Protest, stating that the wind
force was at 10 to 15 knots at the time the ship foundered and described the weather as moderate
breeze, small waves, becoming longer, fairly frequent white horses.[6]

Thereafter, petitioner notified[7] the consignee, General Textile, of the total loss of the vessel and all
of its cargoes. General Textile, lodged a claim with respondent for the amount of its loss. Respondent
paid General Textile and was subrogated to the rights of the latter.[8]

Respondent hired a surveyor, Perfect, Lambert and Company, to investigate the cause of the sinking.
In its report,[9] the surveyor concluded that the cause was the flooding of the holds brought about by
the vessels questionable seaworthiness. Consequently, respondent filed a complaint for damages
against petitioner Aboitiz, Franco-Belgian Services and the latters local agent, F.E. Zuellig, Inc. (Zuellig).
Respondent alleged that the proximate cause of the loss of the shipment was the fault or negligence
of the master and crew of the vessel, its unseaworthiness, and the failure of defendants therein to
exercise extraordinary diligence in the transport of the goods. Hence, respondent added, defendants
therein breached their contract of carriage.[10]

Franco-Belgian Services and Zuellig responded, claiming that they exercised extraordinary diligence in
handling the shipment while it was in their possession; its vessel was seaworthy; and the proximate
cause of the loss of cargo was a fortuitous event. They also filed a cross-claim against petitioner
alleging that the loss occurred during the transshipment with petitioner and so liability should rest
with petitioner.
For its part, petitioner also raised the same defense that the ship was seaworthy. It alleged that the
sinking of M/V P. Aboitiz was due to an unforeseen event and without fault or negligence on its part.
It also alleged that in accordance with the real and hypothecary nature of maritime law, the sinking of
M/V P. Aboitiz extinguished its liability on the loss of the cargoes.[11]

Meanwhile, the Board of Marine Inquiry (BMI) conducted its own investigation to determine whether
the captain and crew were administratively liable. However, petitioner neither informed respondent
nor the trial court of the investigation. The BMI exonerated the captain and crew of any
administrative liability; and declared the vessel seaworthy and concluded that the sinking was due to
the vessels exposure to the approaching typhoon.

On November 20, 1989, the trial court, citing the Court of Appeals decision in General Accident Fire
and Life Assurance Corporation v. Aboitiz Shipping Corporation[12] involving the same incident, ruled
in favor of respondent. It held petitioner liable for the total value of the lost cargo plus legal interest

ISSUE:

WON the limited liability doctrine applies in this case

HELD:

No. Where the shipowner fails to overcome the presumption of negligence, the doctrine of limited
liability cannot be applied.

From the nature of their business and for reasons of public policy, common carriers are bound to
observe extraordinary diligence over the goods they transport according to all the circumstances of
each case. In the event of loss, destruction or deterioration of the insured goods, common carriers
are responsible, unless they can prove that the loss, destruction or deterioration was brought about
by the causes specified in Article 1734 of the Civil Code. In all other cases, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence. Moreover, where the vessel is found unseaworthy, the shipowner is also
presumed to be negligent since it is tasked with the maintenance of its vessel. Though this duty
can be delegated, still, the shipowner must exercise close supervision over its men.

In the present case, petitioner has the burden of showing that it exercised extraordinary diligence
in the transport of the goods it had on board in order to invoke the limited liability doctrine.
Differently put, to limit its liability to the amount of the insurance proceeds, petitioner has the
burden of proving that the unseaworthiness of its vessel was not due to its fault or negligence.

Considering the evidence presented and the circumstances obtaining in this case, we find that
petitioner failed to discharge this burden. Both the trial and the appellate courts, in this case, found
that the sinking was not due to the typhoon but to its unseaworthiness. Evidence on record
showed that the weather was moderate when the vessel sank. These factual findings of the Court
of Appeals, affirming those of the trial court are not to be disturbed on appeal, but must be
accorded great weight. These findings are conclusive not only on the parties but on this Court as
well.