Luzon Stevedoring Corp. v.

Escano, 156 SCRA 169

Luzon Stevedoring Corporation vs. Court of Appeals
(156 SCRA 169)
Facts: A maritime collision occurred between the tanker CAVITE owned by LSCO and MV
Fernando Escano (a passenger ship) owned by Escano, as a result the passenger ship
sunk. An action in admiralty was filed by Escano against Luzon. The trial court held that
LSCO Cavite was solely to blame for the collision and held that Luzons claim that its liability
should be limited under Article 837 of the Code of Commerce has not been established. The
Court of Appeals affirmed the trial court. The SC also affirmed the CA. Upon two motions for
reconsideration, the Supreme Court gave course to the petition.
Issue: Whether or not in order to claim limited liability under Article 837 of the Code of
Commerce, it is necessary that the owner abandon the vessel
Held: Yes, abandonment is necessary to claim the limited liability wherein it shall be limited
to the value of the vessel with all the appurtenances and freightage earned in the voyage.
However, if the injury was due to the ship owners fault, the ship owner may not avail of his
right to avail of limited liability by abandoning the vessel.
The real nature of the liability of the ship owner or agent is embodied in the Code of
Commerce. Articles 587, 590 and 837 are intended to limit the liability of the ship owner,
provided that the owner or agent abandons the vessel. Although Article 837 does not
specifically provide that in case of collision there should be abandonment, to enjoy such
limited liability, said article is a mere amplification of the provisions of Articles 587 and 590
which makes it a mere superfluity.
The exception to this rule in Article 837 is when the vessel is totally lost in which case there
is no vessel to abandon, thus abandonment is not required. Because of such loss, the
liability of the owner or agent is extinguished. However, they are still personally liable for
claims under the Workmens Compensation Act and for repairs on the vessel prior to its
loss.
In case of illegal or tortious acts of the captain, the liability of the owner and agent is
subsidiary. In such cases, the owner or agent may avail of Article 837 by abandoning the
vessel. But if the injury is caused by the owners fault as where he engages the services of
an inexperienced captain or engineer, he cannot avail of the provisions of Article 837 by
abandoning the vessel. He is personally liable for such damages.
In this case, the Court held that the petitioner is a t fault and since he did not abandon the
vessel, he cannot invoke the benefit of Article 837 to limit his liability to the value of the
vessel, all appurtenances and freightage earned during the voyage.