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Transpo October 21 Cases

1. HE Heacock imported twelve (12) 8-day Edmond clocks from New York. It was shipped on board the steamship Bolton
HEACOC Castle and was delivered in Manila to Macondray, the agent of the carrier. The master of the vessel and
K V. Macondray failed to deliver to Heacock the clocks despite demand. The Carrier and Macondray contend that
MACOND according to CLAUSE 1 of the bill of lading they should only pay P76.36 which is the proportionate freight ton
RAY value of the clocks. However, Heacock contends that the CLAUSES ARE VOID and they should be able to recover
P420 which is the market value of the clocks because the two clauses in the bill of lading limiting the liability of the
carrier are void for being contrary to public policy. The lower court ruled in favor of Heacock but applied CLAUSE 9
of the bill of lading in awarding P226.02, being the invoice value of the clocks in question plus the freight,
insurance and interest thereon.
BILL OF LADING contained: CLAUSE 1. It is mutually agreed that the value of the goods receipted for above does
not exceed $500 per freight ton, or, in proportion for any part of a ton, unless the value be expressly stated herein
and ad valorem freight paid thereon. CLAUSE 9. Also, that in the event of claims for short delivery of, or damage
to, cargo being made, the carrier shall not be liable for more than the net invoice price plus freight and insurance
less all charges saved , and any loss or damage for which the carrier may be liable shall be adjusted pro rata on
the said basis. WoN a common carrier, by stipulations in the bill of lading, limit its liability for the loss of or damage
to the cargo to an agreed valuation of the latter? YES.
The stipulations in the bill of lading is valid. If a common carrier gives to a shipper the choice of two rates, the
lower of them conditioned upon his agreeing to a stipulated valuation of his property in case of loss, even by the
carrier's negligence, if the shipper makes the choice understandingly and freely, and names his valuation, he
cannot thereafter recover more than the value which he thus places upon his property.
In this case, since both CLAUSE 1 and 9 of the bill of lading is valid, CLAUSE 1 contains only an implied
undertaking to settle in case of loss on the basis of not exceeding $500 per freight ton, CLAUSE 9 contains an
express undertaking to settle on the basis of the net invoice price plus freight and insurance less all charges
saved. In case of ambiguity in the contract, it would be construed against the maker of the bill of lading which is the
carrier. CLAUSE 9 of the bill of lading will apply.
DOCTRINE: Types of stipulations limiting liability.
The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own
negligence. VOID
The second is one providing for an unqualified limitation of such liability to an agreed valuation. VOID
The third is one limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value
and pays a higher rate of freight. VALID
2. Ong Yiu v. Ong Yiu (OY) was a passenger of PAL from Cebu to Butuan. Upon his arrival at Butuan, his luggage could not be
CA located. It was only the next day that it was located, but several items were missing, such as exhibits, transcripts
and two gift items. (a) Is PAL liable for compensatory damages, moral damages and exemplary damages for
breach of contract?(b)Considering the fact that at the back of OY’s transportation ticket, it is stated that PAL’s
liability in case of loss or delay in delivery of baggages of passengers is limited to P100.00, is OY entitled to other
damages, such as the value of the missing items and attorney’s fee?
(a)PAL is liable only for actual or compensatory damages for breach of contract, but not for moral and exemplary
damages. It must be observed that PAL had not acted in bad faith. Bad faith means a breach of a known duty
through some motive of interest or in ill will. It is undeniable that it was the duty of PAL to look for OYs luggage. It
exerted due diligence in complying with such duty. Consequently, in the absence of a wrongful act or omission, or
of fraud or bad faith, OY is not entitled to moral damages under either Art. 2219 or Art. 2220 of the NCC; neither is
he entitled to exemplary damages under Art. 2232 of the NCC. Normally, therefore, PAL can be held liable only for
the value of the items which were lost.
(b)However, considering the fact that at the back of OY’s transportation ticket, it is stated that PAL’s liability in such
case is limited to P100.00, OY is entitled to an award of P100.00.(Art. 1750, NCC.) While it may be true that OY
had not signed the plane ticket, he is nevertheless bound by the provisions thereof. Such provisions have been
held to be a part of the contract of carriage and valid and binding upon the passenger regardless of the latter’s lack
of knowledge or assent to the regulation. It is what is known as a contract of “adhesion,” in regards of which it has
been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other, as
the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is, in
reality, free to reject it entirely; if he adheres, he gives his consent. Therefore, OY is entitled to an award of only
P100.00.
DOCTRINE: Stipulation in the bill of lading limiting carrier’s liability to the value of goods appearing therein, unless
shipper declares a greater value, is valid and binding.
3. Sealand Consignee Paulino Cue Shipper-Seaborne Trading Company Carrier-Sea Land Service
service v. The carrier contained 8 cartons of goods to be shipped to consignee Paulino. The shipper did not declare the value
IAC of the shipmen and no value was indicated in the bill of lading. However, the goods were stolen. Cue filed a claim
for the value of the lost shipment amounting to Php 179K. However the carrier contended that it is only liable for
the maximum amount of USD 4000 (500 x 8) or Php 30,600 under the package limitation clause stated in the bill of
lading

Issue whether or not the “package limitation clause,” a stipulation limiting the liability of the carrier for loss and
damage to the shipment to the amount fixed in the bill of lading, is valid and binding against the shipper and the
consignee in view of the shipper’s failure to declare the actual value of the shipment.- YES
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ART. 1750 provides A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has
been fairly and freely agreed upon.

Here, the just and reasonable character of the questioned stipulation is implicit from the fact that the shipper or
owner is given the option under Article 1749 of avoiding accrual of liability limitation by simply declaring the nature
and value of the shipment in the bill of lading. The contract of carriage is governed by the laws of the country of
destination and the goods in question were shipped from the US to the Phils. The civil code primarily governs while
the cogsa applies suppletorily. (see Doctrine) , There can be no doubt or equivocation about the validity and
enforceability of freely-agreed -upon stipulations in a contract of carriage or bill of lading limiting the liability of the
carrier to an agreed valuation unless the shipper declares a higher value and inserts it into said contract or bill.

DOCTRINE: Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in
connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United
States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in
other currency, unless the nature and value of such goods have been declared by the shipper before shipment and
inserted in the bill of lading.
4. Citadel Manila Wine Merchants (consignee) shipped 180 cartons of British manufactured cigarettes called “Dunhill
lines v. CA International Filter” and “Dunhill International Menthol”, through Citadel Lines, Inc. (carrier), from England to
Manila. This was evidenced by 2 bills of lading, with a stipulation limiting the liability of the Citadel to $2 per kilo.
When it arrived in Manila, it was received by E. Razon, Inc. (arrastre), but the shipment containing the cigarettes
was not delivered, but was instead palletized. But since there’s no more space in the Special Cargo Coral of the
arrastre, it was just placed in 2 containers, padlocked and sealed by Citadel. The morning after, Citadel’s head-
checker discovered that the 2nd container’s padlock and seal was tampered with, and 90 cases of cigarettes were
missing. When Manila Wine Merchants found out, it filed a claim with Citadel, demanding payment. Citadel said
that it should be the arrastre who was liable, so Manila Wine Merchants filed a claim against the arrastre. This was
denied. The lower court held that Citadel is liable and it was affirmed by the CA. Issue: W/N the loss occurred
while the cargo was in the custody of the arrastre or Citadel? And W/N the stipulation limiting the liability of the
carrier contained in the bill of lading is binding on Manila Wine Merchants?

SC said the loss occurred while the cargo was still in the custody of Citadel, since the containers were not formally
turned over to the arrastre. Also, the stipulation limiting liability to the value of the goods appearing in the BOL is
binding on the consignee, unless the shipper or owner declares a greater value. Thus, Citadel is only liable to $2
per kilo, and in this case, $2,467.60 for 2,233.80 kilos.

DOCTRINE: Basic is the rule, that a stipulation limiting the liability of the carrier to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Further, a contract
fixing the sum that may be recovered by the owner or shipper for the loss, destruction or deterioration of the goods
is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon.
5. Everett Hernandez imported three (3) crates of bus spare parts from Maruman Trading in Japan. The crates were shipped
Steamship on board ADELFAEVERETTE owned by Everett. Upon arrival in Manila, it was discovered that one of the crates
v. CA was missing. Hernandez made a formal claim upon Everett for the value of the lost cargo amounting to
Y1,552,500.00. However, Everett offered to pay only Y100,000.00, the maximum amount stipulated in the bill of
lading. Hernandez rejected the offer and instituted a suit for collection. The RTC ruled in favor of Hernandez. The
CA affirmed the RTC’s findings, with modification.

The following are the issues in this case: (1) W/N the limited liability clause in the bill of lading is valid, and (2) W/N
Hernandez is bound by the stipulations in the bill of lading.

The Court held that the limited liability clause is valid citing Articles 1749 and 1750 of the Civil Code (See Doctrine
for the provisions). The shipper had the option to declare a higher valuation of the cargo but it did not. It thus had
itself only to blame. Moreover, contracts of adhesion are not entirely prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if he adheres to it, then he gives his consent.

As to the second issue, when Hernandez formally claimed reimbursement for the missing goods from Everett and
subsequently filed a case against the latter based on the very same bill of lading, Hernandez accepted the
provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it. Thus,
Hernandez cannot now reject or disregard the carrier’s limited liability stipulation in the bill of lading. In other
words, Hernandez is bound by the whole stipulations in the bill of lading and must respect the same.

DOCTRINE: ART. 1749. A stipulation that the common carrier’s liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

ART. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely and
fairly agreed upon.
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A stipulation in the bill of lading limiting the common carrier’s liability for loss or destruction of a cargo to a certain
sum, unless the shipper or owner declares a greater value, is sanctioned by law, particularly Articles 1749 and
1750 of the Civil Code.
6. Saludo Jr. Crispina Saludo died in Chicago, Illinois. Her body was arranged to be transported from Chicago to SF to MNL to
v. CA Cebu via a Trans World Airlines (TWA) flight to California then a PAL flight until Cebu. Pomierski and Son Funeral
Home of Chicago made arrangements for the shipment, while CMAS made the arrangements for the flights and
transfers. Before the remains were brought to the airport, the Philippine Vice Consul of Chicago sealed the
shipping case containing a hermetically sealed casket that is airtight and waterproof. A PAL Airway Bill was issued
in connection to this.

When the plaintiffs were at the airport in Chicago, they didn’t see any body being brought inside their TWA flight.
Upon asking the TWA counter, they said there was no body in the flight. However, they still took the flight upon
assurance from their cousin that he would look into the matter and inform her about it on the plane or have it
radioed to her. When they landed in San Francisco, Maria went to inquire about the remains, but the TWA counter
said they knew nothing about it. Hence, Maria and Saturnino contacted Pomierski who contacted CMAS. It was
then that they found out that the remains were flown to Mexico instead. It was later on that the body was flown
from Mexico to California. Thus, the Saludo family filed a complaint against TWA and PAL arguing that as common
carriers, they failed to exercise extraordinary diligence when they misdelivered the remains to Mexico. ISSUES:
WoN the delay in the delivery of the casketed remains of petitioners' mother was due to the fault of respondent
airline companies - NO
The SC ruled that PAL and TWA were NOT responsible for the misdelivery. First, as to the PAL Airway Bill issued,
such was not as evidence of receipt of delivery of the cargo, but merely as a confirmation of the booking made for
the San Francisco-Manila flight. Article 1736 of the Civil Code states that the extraordinary responsibility of the
common carrier begins from the time the goods are delivered to the carrier. However, for such duty to commence
there must in fact have been delivery of the cargo subject of the contract of carriage. Only when such fact of
delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the
custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the
carrier under Article 1735 be invoked. In this case, it was discovered later the casketed human remains which was
issued PAL Airway Bill was not the remains of Crispina Saludo. However, it should be noted that, CMAS made all
the necessary arrangements such as flights, transfers, etc. — for shipment of the remains of Crispina Saludo.
When the cargo was received from CMAS at the Chicago airport terminal for shipment, which was supposed to
contain the remains of Crispina Saludo, TWA, had no way of determining its actual contents, since the casket was
hermetically sealed by the Philippine Vice-Consul in Chicago and in an air pouch of CMAS. TWA had to rely on the
information furnished by the shipper regarding the cargo's content. Neither could Air Care International and/or
TWA open the casket for further verification, since they were not only without authority to do so, but even
prohibited. TWA would have no knowledge therefore that the remains of Crispina Saludo were not the ones inside
the casket that was being presented to it for shipment. TWA would have to rely on their presentations of CMAS. In
order that any presumption of assent to a stipulation in a bill of lading limiting the liability of a carrier may arise, it
must appear that the clause containing this exemption from liability plainly formed a part of the contract contained
in the bill of lading. A stipulation printed on the back of a receip or bill of lading or on papers attached to such
receipt will be quite as effective as if printed o its face, if it is shown that the consignor knew of its terms. Thus,
where a shipper accepts receipt which states that its conditions are to be found on the back, such receipt comes
withi the general rule, and the shipper is held to have accepted and to be bound by the condition there to be found.
The switching happened while the cargo was still with CMAS. It wasn’t under the custody of TWA and PAL.
Therefore, TWA and PAL are not liable.
7. MOF v. Hella Trading Co., a company in Korea, shipped second-hand cars and other articles to the PH. Carrier Hanjin
Shin yang Shipping Co prepared a Bill of Lading where it named respondent Shin Yang Brokerage as the consignee and that
Brokerage the shipment was on a “Freight Collect”1 basis. Upon arrival of the goods, MOF Company (agent of Hanjin in the
PH) demanded payment of transportation charges from Shin Yang who refused to pay arguing that it did not cause
the importation of the goods but was a mere consoolidator of the shipment and that the BOL was prepared without
its consent.

MOF then filed for sum of money alleging that Shin yang was a regular client who caused the shipment of goods
and breached its obligation to pay freight and other charges despite being named in the BOL as the consignee and
bound to the “Freight Collect” basis of payment. MOF prayed that it be paid 57K. Shin Yang argued that it was a
mere consolidator or forwarder, and that MOF failed to present other evidence to show that it caused the
importation of the goods.

MTC ruled in favor of MOF and ordered Shin Yang to pay charges due. RTC affirmed this but CA reversed the
same and ruled that while it is true that a BOL delivered and accepted constitutes a contract of carriage, even if not
signed, since acceptance of the BOL manifests acceptance of the contract and all its terms and conditions, Shin
Yang not only refused to accept the BOL bust disowned such and that MOF failed to adduce other evidence than
the BOL to prove that Shin Yang undertook to pay for the freight charges.

ISSUE: W/N Shin Yang who was not the shipper’s agent and did not make any demand for the fuilfillment of the
BOL drawn in its favor is liable to pay the corresponding charges-NO.
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DOCTRINE and RATIO: A consignee, although not a signatory to the contract of carriage between the shipper and
the carrier, becomes a party to the contract by reason of: the relationship of agency between the consignee and
the shipper/ consignor; the unequivocal acceptance of the bill of lading delivered to the consignee, with full
knowledge of its contents or availment of the stipulation pour autrui, i.e., when the consignee, a third person,
demands before the carrier the fulfillment of the stipulation made by the consignor/shipper in the consignee's favor,
specifically the delivery of the goods/cargoes shipped.

Here, Shin Yang consistently denied that it authorized Hella Trading, Co. to ship the goods on its behalf; or that it
got hold of the BOL or that it demanded the release of the cargo. It is a basic rule that burden of proof lies upon
him who asserts it. MOF has the burden to controvert all these denials. MOF failed to meet the required quantum
of proof. Other than presenting the BOL, MOF has not adduced any other credible evidence to strengthen its
cause of action.
8. Aboitiz v. Petitioner Aboitiz owned and operated M/V P. Aboitiz which sank and led to the filing of numerous suits for
General recovery of lost cargo. Respondent GALFAC filed a complaint as subrogee of several cargo consignees whose
Accident cargo sank with the said vessel and which it priorly paid. The Board of Marine Inquiry initially found that the sinking
was due to force majeure and that the vessel was seaworthy. GAFLAC was allowed to prove its claims and the
Court ruled in its favor. This was elevated to the SC, wherein the lower court’s decision was affiemed. However, in
the other suits filed, the Court upheld the conclusion of BMI that the vessel was seaworthy. The Court now has to
reconcile these conflicting decisions. Aboitiz argue that the Limited Liability Rule must be applied to stay the
execution of judgment to prevent impairment of other creditors’ shares.

W/N the Limited Liability Rule shall apply in this case? Yes. The decision in the other cases considered only the
circumstances peculiar to that case, and such circumstances are not relevant in this petition. The Limited Liability
Rule has never been an issue in all prior cases, and the “limited liability” referred to by the lower courts pertained
to the package limitation clauses in the bill of lading, and not the limited liability doctrine arising from the real and
hypothecary nature of maritime trade. The real and hypothecary nature of maritime law simply means that the
liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the guaranty for their settlement. Based on previous
jurisprudence, it has been held that the only time the Limited Liability Rule does not apply is when there is an
actual finding of negligence on the part of the vessel owner or agent. In the other cases filed, there has been no
actual finding of negligence on the part of Aboitiz. The qualified nature of the meaning of "unseaworthiness," under
the peculiar circumstances of this case is underscored by the fact that in the Country Banker's case, arising from
the same sinking, the Court sustained the decision of the Court of Appeals that the sinking of the M/V P. Aboitiz
was due to force majeure. The rights of parties to claim against an agent or owner of a vessel may be compared to
those of creditors against an insolvent corporation whose assets are not enough to satisfy the totality of claims as
against it. In both insolvency of a corporation and the sinking of a vessel, the claimants or creditors are limited in
their recovery to the remaining value of accessible assets. In the case of a lost vessel, these are the insurance
proceeds and pending freightage for the particular voyage. In the instant case, there is a need to collate all claims
preparatory to their satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending
freightage at the time of its loss. No claimant can be given precedence over the others

DOCTRINE: The real and hypothecary nature of maritime law simply means that the liability of the carrier in
connection with losses related to maritime contracts is confined to the vessel, which is hypothecated for such
obligations or which stands as the guaranty for their settlement.
9. Chua Yek Chua Yek Hong loaded 1,000 sacks of copra on board the vessel “M/V Luzvimina I” for shipment from Puerta
Hong v. Galera, Oriental Mindoro, to Manila. Said cargo, however, did not reach Manila because somewhere between
IAC Cape Santiago and Calatagan, Batangas, the vessel capsized and sank with all its cargo. Chua Yek Hong
instituted a case for damages based on breach of contract of carriage against the Guno and Olit (the shipowners)
The trial, appellate, and the SC all held that the shipowners are not liable under the limited liabilty rule.[Insert
Doctrine] Chua Yek Hong filed an MR arguing that 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. Are the shipowners liable? NO. The Appellate Court Decision mentions only the ship captain as
having been negligent in the performance of his duties. 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 held, there is nothing in the
records showing such negligence.
DOCTRINE: Limited liability rule states that the shipowner's or agent's liability is merely co-extensive with his
interest in the vessel such that a total loss thereof results in its extinction. "No vessel, no liability" expresses in a
nutshell the limited liability rule. The total destruction of the vessel extinguishes maritime liens as there is no longer
any res to which it can attach.
The limited liability rule, however, is not without exceptions, namely: (1) where the injury or death to a passenger is
due either to the fault of the shipowner, or to the concurring negligence of the shipowner 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 respondents as shipowners, or to their
concurrent negligence with the captain of the vessel.
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10. Monarch This case is a consolidation of three suits filed by a total of four insurance companies, claiming by subrogation the
Insurance value of the cargo that sank with the Aboitiz ship, M/V P. Aboitiz. In all cases, the claims were granted in the lower
v. CA courts, and issued a writ of execution. However, before such execution, Aboitiz filed appeal with the CA asking for
its annulment, on the ground of limited liability. CA granted the appeal, and nullified the writs of execution against
Aboitiz. Aboitiz claims that the limited liability rule applies to them, as its ship- agent/captain exercised
extraordinary diligence required, and anchoring their defense against negligence on force majeure. The plaintiff-
insurance companies, on the other hand, presented testimonies that deposed the weather had been incelement,
and yet the vessel embarked anyway from Hong Kong to Manila. Despite the notices by PAGASA, and the very
unseaworthiness of the M/V P. Aboitiz, it attempted to sojourn through turbulent waters.
The issue is whether or not the limited liability rule applies. The Court ruled in the negative.
The limited liability rule is rooted in Articles 587, and 590, that provide that should the ship-agent or ship-owner
abandon the vessel, physically or through notary (respectively), there is applicability of the limited liability rule. This
means, as under Article 837, that liability is confined to the value of the vessel lost, and the value of the freightage
served during the voyage. The limited liability rule, however, is not without exception. The following instances
render the rule inapplicable: 1) when the injury or death to a passenger is due either to the fault of the ship-owner
or the concurring negligence of the ship-owner and captain; 2) where the vessel is insured; and 3) in workmen’s
compensation claims. In this case, Aboitiz is said to be negligent, as decided correctly by the lower courts. The
reason for the sinking of the vessel was not the weather as a fortuitous event alone; it was the unseaworthiness of
the ship, and the negligent mismanagement and operation. It is clear here that Aboitiz was wanting in
extraordinary diligence. Thus, as a result, there is no applicability of limited liability rule. Aboitiz is adjudged to pay
the value of the claims of the plaintiff-insurance companies. Finally, due to the scheming in litigating its claimants
singly, it is adjudged as well as liable for moral damages.
DOCTRINE: The limited liability rule applies in case the ship-owner or –agent abandons the ship. The exceptions
to applicability are: 1) negligence of the ship- owner or –agent; 2) vessel is insured; and 3) workmen
compensation’s claims. When there is no application, the carrier has unlimited liability.
11. Philamgen Coca-Cola Bottlers loaded on board MV Asilda (owned by Felman) 7500 cases of 1-liter Coca-Cola soft drinks to
v. CA be transported from Zamboanga City to Cebu City. The shipment was insured with Philamgen. The vessel sank in
Zamboanga del Norte. Coca-Cola filed a claim with Felman for recovery of damages. Felman denied. Coca-cola
filed an insurance claim. Philamgen paid Coca-Cola. Philamgen alleged that the sinking and loss were due to the
vessel's unseaworthiness. That the vessel was improperly manned and its officers were grossly negligent. RTC
dismissed the complaint of Philamgen. CA reversed this saying the vessels was unseaworthy for the cargo for
being top-heavy and that the Coca-Cola bottles were also improperly stored on deck. ISSUE: W/N the vessel was
seaworthy? The vessel was unseaworthy. The proximate cause thru the findings of the Elite Adjusters, Inc., is the
vessel's being top-heavy. Evidence shows that days after the sinking Coca- Cola bottles were found near the
vicinity of the sinking which would mean that the bottles were in fact stowed on deck which the vessel 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.
DOCTRINE: It is settled that carrying a deck cargo raises the presumption of unseaworthiness. Unless it can be
shown that the deck cargo will not interfere with the proper management of the ship
12. Vasquez When the interisland vessel MV 'Pioneer Cebu' left the Port of Manila in the early morning of May 15, 1966 bound
v. CA 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. Due to the loss of their children, petitioners sued
for damages before the Court of First Instance of Manila. Respondent defended on the plea of force majeure, and
the extinction of its liability by the actual total loss of the vessel. RTC awarded the damages. 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. ISSUE: W/N the injury was caused by
fortuitous event – NO. 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, they decided to take a calculated risk.
ISSUE: W/N the liability was extinguished? – NO. 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 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. DOCTRINE: 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
13. Abueg v. Petitioners are widows of officers (machinists and a captain) working for Respondent Bartolome San Diego’s boats
San Diego (M/S San Diego II & M/S Bartolome S). The said motor boats were engaged in fishing operations in Mindoro when
such were caught in a typhoon and sunk together with petitioners’ husbands. The CFI awarded compensation to
the Petitioners pursuant to the Workman’s Compensation Act (WCA). However, San Diego contends that since the
two motor ships were lost, his liability has been extingusihed pursuant to the Code of Commerce (CoC) which
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provides that if the vessel together with all her tackle and freight money earned during the voyage are abandoned,
the agent's liability to third persons for tortious acts of the captain in the care of the goods which the ship carried is
extinguished. W/N the shipowner is liable to the heirs/dependents of the workers who perished in the shipwreck?
YES. Based on Workman’s Compensation Act, NOT based on the Code of Commerce. SC ruled that the
provisions of Code of Commerce invoked San Diego have no room in the application of the WCA, which seeks to
improve condition of laborers and employees. The WCA creates a liability 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. With regard to San Diego’s contention that the motorboats engaged in fishing could not be deemed
to be in the coastwise and interisland trade as contemplated by the WCA. The SC ruled that if such was the case,
then all the more will the CoC will not apply. Also, arguendo such was true, The officers of motor ships engaged in
fishing are industrial employees within the purview of section 39 of the WCA, for industrial employment "includes
all employment or work at a trade, occupation or profession exercised by an employer for the purpose of gain."
The SC ruled that The term "coastwise and interisland trade" does not have such a narrow meaning as to confine it
to the carriage for hire of passengers and/or merchandise on vessels between ports and places in the Philippines,
because while fishing is an industry, if the catch is brought to a port for sale, it is at the same time a trade.
DOCTRINE: Provisions of the Code of Commerce have no room in the application of the WCA, which seeks to
improve the condition of laborers and employees. It is a liability created by 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.
14. Luzon Past 6am, there was a maritime collision in the entrance of the North Harbor, Manila between the tanker LSCO
Stevedorin "Cavite" owned by Luzon Stevedoring Corp. (LSC) and MV "Fernando Escano" a passenger ship owned by.
g v. CA Escano, Inc. as a result of which said passenger ship sunk. CFI Cebu - An action in admiralty was filed by Escano,
Inc. and Domestic Insurance Company of the Philippines against the LSC. The court appointed two commissioners
representing the plaintiffs and defendant to determine the value of the LSCO "CAVITE." = PhP 180,000. LSC
defense - defendant’s liability is limited to the value of the LSCO "Cavite" and freight earned, invoking Art. 837 of
the Code of Commerce. Decision – LSCO “CAVITE” solely to blame for the collision; LSC’s defense not
established, and Art. 837 does not apply here. Appeal to CA– assail: (1) LSC O Cavite at fault, (2) solely and
exclusively to the fault, negligence and lack of skill of the master of the former vessel, (3) civil liability of the
petitioner if any should be limited to the vessel and its appurtenances and freightage; denied. MR CA decision –
legal question on whether under Art. 837 of the Code of Commerce abandonment of vessel at fault is necessary in
order that the liability of owner of said vessel shall be limited only to the extent of the value thereof, its
appurtenances and freightage earned in the voyage; denied. 2nd MR – (1) whether abandonment is required
under Art. 837 of the Code of Commerce, (2) if abandonment is required under Art. 837, when should it be made?,

(3) is the decision in Manila Steamship v. Abdulhaman—that the international rule to the effect that the right
of abandonment of vessels, as a legal limitation of a shipowner’s own fault— applicable in the case at bar?
respondents required to comment, petitioners submitted a reply, respondents submitted a rejoinder. Court gave
due course to the petition for review and considered the respondents’ comment thereto as the Answer. The parties
were required to file their briefs. Both parties having filed their briefs the case is now submitted for decision.

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? In the case now before the Court there is no question that the action arose from a collision and the
fault is laid at the doorstep of LSCO "Cavite" of petitioner. Undeniably petitioner has not abandoned the vessel.
Hence petitioner cannot invoke the benefit of the provisions of Article 837 of the Code of Commerce to limit its
liability to the value of the vessel, all the appurtenances and freightage earned during the voyage. In the light of the
foregoing conclusion, the issue as to when abandonment should be made need not be resolved. DOCTRINE: in
case of collision of vessels, in order to avail of the benefits of Article 837 of the Code of Commerce the shipowner
or agent must abandon the vessel. In such case the civil liability shall be limited to the value of the vessel with all
the appurtenances and freight earned during the voyage. The exception to this rule is when the vessel is totally
lost in which case there is no vessel to abandon so abandonment is not required. Because of such total loss the
liability of the shipowner or agent for damages is extinguished. Nevertheless, the shipowner or agent is personally
liable for claims under the Workmen’s Compensation Act and for repairs of the vessel before its loss. In case of
illegal or tortious acts of the captain the liability of the shipowner and agent is subsidiary. In such instance the
shipowner or agent may avail of the provisions of Article 837 of the Code by abandoning the vessel. However, if
the injury o damage is caused by the shipowner’s fault as where he engages the services of a inexperienced and
unlicensed captain or engineer, he cannot avail of the provisions of Article 837 of the Code by abandoning the
vessel. He is personally liable for the damages arising thereby.
15. Yangco v. The vessel, SS Negros, owned by Yangco, on its trip from Romblon to Manila, sank after 2 hours of sailing
Laserna because of strong winds and rough seas. Before it sailed, the captain was advised that there was a typhoon
(signal No. 3). The boat was also overloaded with baggage and exceeded the allowable number of passengers
(180/123). Right before the ship sank, the captain attempted to return to the port by maneuvering the vessel to turn
left, however 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 Aldaña and his son Victorioso (Aladañas), Laserna, and
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Basaña(collectively “HEIRS”). The Heirs sued Yangco to recover damages before the CFI of Capiz. The lower
court awarded damages to the Heirs. After the rendition of the judgement, Yangco sought to abandon the vessel to
the heirs together with all its equipments, without prejudice to his right to appeal. The abandonment was denied by
the CFI. Upon appeal, the CA affirmed with modifications as to the damages awarded. Upon Yangco’s death, he
was represented by his legal representatives. Hence this case. WON Yangco should be held liable in damages for
the consequent death of its passengers, (notwithstanding the total loss of the vessel as a result of the negligence
of its captain). NO. SC absolved Yangco of all complaints. Applying the limited liability rule, if the shipowner or
agent may in any way be held civilly liable at all for injury to or death of passengers arising from the negligence of
the captain in cases of collisions or shipwrecks, his liability is merely co- extensive with his interest in the vessel
such that a total loss thereof results in its extinction. As a vessel engaged in interisland trade, it is a common
carrier and that the relationship between the Yangco and the passengers who died in the mishap rests on a
contract of carriage. But assuming that Yangco is liable for breach of contract of carriage, the maritime law
operates to limit such liability to the value of the vessel, or to the insurance thereon, if any. The owner is bound
civilly for all delinquencies committed by the captain within the scope of his authority, but he may discharge himself
therefrom by abandoning the ship and freight; and, if they are lost, it suffices for his discharge, to surrender all
claims in respect of the ship and its freight,' such as insurance, etc. In the instant case it does not appear that the
vessel was insured
16. Macondra Canpotex Shipping Services (Shipper), shipped and loaded on board M/V Trade Carrier, 5,000 metric tons of
y v. Standard Grade Muriate of Potash for transport and delivery to Sangi, Toledo City, Cebu, in favor of Atlas Fertilizer
Provident Corp. (Consignee) . When the shipment arrived, Atlas discovered losses of 476.140 metric tons. Provident paid
Insurance and filed a complaint against Macondray. Macondray denied liability over the losses, claiming that it had no
absolute relation with Trade &Transport, the alleged operator of the vessel. Macondray claims to be the local
representative of the Canpotex (Shipper). RTC and CA ruled that Macondray was not the agent of Trade &
Transport. However, the CA ruled that Macondray can still be held liable for the shortages of the shipment, since
Macondray was the ship agent of Canpotex – the shipper and charterer of the vessel M/V Trade Carrier.
W/N Macondray is liable despite the unequivocal fact that it was not a ship agent of Trade and Transport - YES.
The Court found no compelling reason to overturn the CA’s finding that Macondray was not the ship agent of
Trade and Transport. However, Macondray can still be the ship agent of the vessel M/V Trade Carrier.
Macondray was appointed as local agent of the vessel, which duty includes arrangement for the entrance and
clearance of the vessel. Macondray also represented the vessel. It prepared the Notice of Readiness, the
Statement of Facts, the Completion Notice, the Sailing Notice and Custom's Clearance. Among others, these acts
all point to the conclusion that Macondray represented the vessel in the Port of Manila and was the ship agent
within the meaning of Art. 586 of the Code of Commerce.
DOCTRINE: Article 586 of the Code of Commerce states that a ship agent is "the person entrusted with
provisioning or representing the vessel in the port in which it may be found." Hence, whether acting as agent of the
owner of the vessel or agent of the charterer, Macondray will be considered as the ship agent and may be held
liable as such, as long as the latter is the one that provisions/represents the vessel.
17. Phil MV Mahlia sank due to extreme bad weather condition, resulting in the death of its crewmembers. Respondents,
Nippon v. as heirs and beneficiaries, filed separate complaints for death benefits and damages against Phil-Nippon (the
Gudelosa owner of the vessel; a domestic shipping corporation), TMLC (the foreign principal), the insurance company, and
o the manning agency with the NLRC. Upon appeal with the CA, the court ruled that Phil-Nippon is not liable under
the POEA-SEC, but by virtue of its being a shipowner. Thus, petitioner is liable for the injuries to passengers even
without a determination of its fault or negligence. This prompted Phil-Nippon to file a case before the SC, where it
argued that the CA erred in ignoring the fundamental rule in Maritime Law that the shipowner may exempt itself
from liability by abandoning the vessel and freight it may have earned during the voyage, and the proceeds of the
insurance if any. Since the liability of the shipowner is limited to the value of the vessel unless there is insurance,
any claim against Phil-Nippon is limited to the proceeds arising from the insurance policies procured from the
insurance company.
The issue is WON the limited liability rule applies in favor of Phil-Nippon. The Court ruled in the negative. The
limited liability rule is embodied in Articles 587, 590, and 837 of the code of commerce. It is Art. 837 that applies in
cases of collision. Meanwhile, Articles 587 and 590 embody the universal principle of limited liability in all cases
wherein the shipowner or agent may be properly held liable for the negligent or illicit acts of the captain. The
exceptions to the limited liability rule are the ff: It does not apply in cases: (1) where the injury or death to a
passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the
captain; (2) where the vessel is insured; and (3) in workmen's compensation claims. Exception (3) is present in this
case. The limited liability rule does not apply in this case because the liability of the shipowner or agent under the
POEA-SEC has nothing to do with the provisions of the Code of Commerce regarding maritime commerce.
DOCTRINE: The death benefits granted under the POEA-SEC is a liability created by contract between the
seafarers and their employers, but secured through the State's intervention as a matter of constitutional and
statutory duty to protect Filipino overseas workers and to secure for them the best terms and conditions possible,
in order to compensate the seafarers' heirs and dependents in the event of death while engaged in the
performance of their work or employment. The claim for death benefits under the POEA-SEC is the same species
as the workmen's compensation claims under the Labor Code — both of which belong to a different realm from
that of Maritime Law.