G.R. No. L-74811 - SEPTEMBER 1988 - PHILIPPINE JURISPRUDENCE CASE NUMBERCASE TITLE G.R. No. L-74811September 30, 1988Chua Yek Hong vs. Intermediate Appellate Court G.R. No. L-77032September 30, 1988Excel Agro-Industrial Corporation vs. Juan T. Gochangco G.R. No. L-79488September 30, 1988Republic Planters Bank vs. National Labor Relations Commission G.R. No. L-80040September 30, 1988Ismael Amorganda vs. Court of Appeals, et al. G.R. No. L-81381September 30, 1988Efigenio S. Damasco vs. Hilario L. Laqui G.R. No. L-40218September 30, 1988Republic of the Philippines vs. Alejandro E. Sebastian G.R. No. L-50168September 30, 1988Gavino Sabanal vs. Benjamin K. Gorospe G.R. No. L-65935September 30, 1988Filinvest Credit Corporation vs. Intermediate Appellate Court G.R. No. L-69136September 30, 1988Commisioner of Internal Revenue vs. Mega General Mdsg. Corporation G.R. Nos. L-74610-11September 30, 1988Alga Moher International Placement Services vs. Diego P. Atienza G.R. No. L-70987September 29, 1988Gregorio Y. Limpin vs. Intermediate Appellate Court G.R. No. L-75736September 29, 1988Associated Labor Unions vs. Antonio V. Borromeo G.R. No. L-80737September 29, 1988Philippine Graphic Arts Inc. vs. National Labor Relations Commission G.R. No. L-81760September 29, 1988Edgardo L. Sto. Domingo vs. Sedfrey A. Ordoñez G.R. No. L-82542September 29, 1988Barry John Price vs. United Laboratories G.R. No. L-37079September 29, 1988Zoilo Llido vs. Paulino S. Marquez, et al. G.R. No. L-41322September 29, 1988Mun. of Kapalong, et al. vs. Hon. Felix L. Moya, et al. G.R. No. L-44347September 29, 1988Vicente Tan vs. City of Davao G.R. No. L-49731September 29, 1988Alfredo Sering vs. Restituto Plazo G.R. No. L-80457September 29, 1988People of the Philippines vs. Casiano Rose, Sr. G.R. No. L-75569September 28, 1988Board of Liquidators vs. Court of Appeals G.R. No. L-80380September 28, 1988Carlos Bell Raymond vs. Court of Appeals, et al. G.R. No. L-82173September 28, 1988Edgar S. Asuncion vs. Court of Appeals G.R. No. L-45447September 28, 1988Carlito V. Sembrano vs. Pedro A. Ramirez G.R. No. L-54287September 28, 1988Repubplic Planters Bank vs. Conrado M. Molina G.R. No. L-75880September 27, 1988Bernardo M. Cordial vs. People of the Philippines G.R. No. L-52034September 27, 1988Salvador Lacorte vs. Amado G. Inciong G.R. No. L-60935September 27, 1988Antonio Garcia, Jr. vs. Hon. Santiago Ranada Jr. G.R. No. L-73488September 26, 1988People of the Philippines vs. Teodoro Balares G.R. No. L-73859September 26, 1988Juan De Castro vs. Intermediate Appellate Court G.R. No. L-73876September 26, 1988People of the Philippines vs. Lauro G. Cariño G.R. No. L-75816September 26, 1988People of the Philippines vs. Gavino Aguinaldo G.R. No. L-75877September 26, 1988Santos Bernardo vs. Baltazar R. Dizon G.R. No. L-76132September 26, 1988People of the Philippines vs. Fernando Clavo, Jr. G.R. No. L-76711September 26, 1988People of the Philippines vs. Marvin H. Torres G.R. No. L-77201September 26, 1988Aventino C. Sasan vs. Court of Appeals G.R. No. L-77290September 26, 1988Divina Jaballas vs. Const. & Dev't Corporation of the Philippines(Now Pncc): G.R. No. L-77951September 26, 1988Coop. Rural Bank of Davao City vs. Pura Ferrer-Calleja G.R. No. L-78606September 26, 1988Gelacio V. Samulde vs. Ramon M. Salvani, Jr. G.R. No. L-79891September 26, 1988Aurelio M. De Vera vs. C. F. Sharp & Company, Inc. G.R. No. L-80383September 26, 1988Emmanuel Labajo vs. Pureza V. Alejandro G.R. No. L-81163September 26, 1988Eduardo S. Baranda vs. Hon. Tito Gustilo G.R. No. L-81969September 26, 1988Jocelyn Rulona-Al Awadhi vs. Abdulmajid J. Astih G.R. No. L-82833September 26, 19883m Philippines, Inc. vs. Commissioner of Internal Revenue G.R. No. L-36413September 26, 1988Malayan Insurance vs. Court of Appeals G.R. No. L-39910September 26, 1988Cecilia T. Dayrit vs. Fernando A. Cruz G.R. No. L-49762-64September 26, 1988Ranulfo Pamparo vs. Court of Appeals G.R. No. L-68357September 26, 1988Azcarraga Textile Mkt. vs. Court of Appeals G.R. No. L-68992September 26, 1988People of the Philippines vs. Faustino Pacnis G.R. No. L-68993September 26, 1988People of the Philippines vs. Rudy Domingo G.R. Nos. L-69205-06September 26, 1988Union, Bonanza Restaurant vs. National Labor Relations Commission G.R. No. L-69934September 26, 1988People of the Philippines vs. Marianito Intino G.R. Nos. L-74123-24September 26, 1988People of the Philippines vs. Ronilo L. Pinlac G.R. No. L-80006September 21, 1988Apolonia Bautista vs. Court of Appeals G.R. No. L-80294-95September 21, 1988Catholic Vicar vs. Court of Appeals G.R. No. L-80992September 21, 1988Edwin Reano vs. Court of Appeals G.R. No. L-73418September 20, 1988Pelicula Sabido vs. Intermediate Appellate Court G.R. No. L-32684September 20, 1988Ramon Tumbagahan vs. Court of Appeals, et al. G.R. No. L-59097September 20, 1988People of Philippines vs. Arsenio D. Tolentino G.R. No. L-71142September 19, 1988People of the Philippines vs. Lope Maralit G.R. No. L-73794September 19, 1988Eternal Gardens Memorial Parks vs. Intermediate Appellate Court G.R. No. L-74711September 19, 1988National Steel Corporation vs. National Labor Relations Commission, et al. G.R. No. L-75395September 19, 1988Estelito Bagadiong, et al. vs. Placida Vda. De Abundo G.R. No. L-77210September 19, 1988Marcopper Mining Corporation vs. Liwanag Paras Briones, et al. G.R. No. L-29320September 19, 1988Felipe Segura vs. Nicolas Segura G.R. No. L-44264September 19, 1988Hedy Y. Gan vs. Hon. Court of Appeals, et al. G.R. No. L-45388September 19, 1988Taciana B. Espejo vs. Workmen's Compensation Commission G.R. No. L-47646September 19, 1988People of the Philippines vs. Cesar R. Maravilla G.R. No. L-60764September 19, 1988People of the Philippines vs. Roberto Bardon G.R. Nos. L-48728-29September 19, 1988People of the Philippines vs. Alberto Ramos G.R. Nos. L-78535-36September 19, 1988Manuel Dy vs. Matilde Sacay G.R. No. L-77090September 16, 1988Dioscord Espadera vs. Court of Appeals, et al. G.R. No. L-46881September 15, 1988People of the Philippines vs. Mariano Castañeda Jr. G.R. No. L-47821September 15, 1988Benito Rosales vs. Court of Appeals G.R. No. L-57519September 13, 1988Delfin Orodio vs. Court of Appeals G.R. No. L-76768September 12, 1988Carlos Keng Seng vs. Lorenzo De La Cruz G.R. No. L-80228September 12, 1988People of the Philippines vs. Nestor Fernandez G.R. No. L-31600September 12, 1988Prudential Bank & Trust Company vs. Community Builders Company, Inc., G.R. No. L-48762September 12, 1988Republic of the Philippines vs. Zosa, et al. G.R. No. L-76001September 5, 1988Producers Bank of the Philippines vs. National Labor Relations Commission The Lawphil Project - Arellano Law Foundation, Inc. Chua Yek Hong vs. Intermediate Appellate CourtExcel Agro-Industrial Corporation vs. Juan T. GochangcoRepublic Planters Bank vs. National Labor Relations CommissionIsmael Amorganda vs. Court of Appeals, et al.Efigenio S. Damasco vs. Hilario L. LaquiRepublic of the Philippines vs. Alejandro E. SebastianGavino Sabanal vs. Benjamin K. GorospeFilinvest Credit Corporation vs. Intermediate Appellate CourtCommisioner of Internal Revenue vs. Mega General Mdsg. CorporationAlga Moher International Placement Services vs. Diego P. AtienzaGregorio Y. Limpin vs. Intermediate Appellate CourtAssociated Labor Unions vs. Antonio V. BorromeoPhilippine Graphic Arts Inc. vs. National Labor Relations CommissionEdgardo L. Sto. Domingo vs. Sedfrey A. OrdoñezBarry John Price vs. United LaboratoriesZoilo Llido vs. Paulino S. Marquez, et al.Mun. of Kapalong, et al. vs. Hon. Felix L. Moya, et al.Vicente Tan vs. City of DavaoAlfredo Sering vs. Restituto PlazoPeople of the Philippines vs. Casiano Rose, Sr.Board of Liquidators vs. Court of AppealsCarlos Bell Raymond vs. Court of Appeals, et al.Edgar S. Asuncion vs. Court of AppealsCarlito V. Sembrano vs. Pedro A. RamirezRepubplic Planters Bank vs. Conrado M. MolinaBernardo M. Cordial vs. People of the PhilippinesSalvador Lacorte vs. Amado G. InciongAntonio Garcia, Jr. vs. Hon. Santiago Ranada Jr.People of the Philippines vs. Teodoro BalaresJuan De Castro vs. Intermediate Appellate CourtPeople of the Philippines vs. Lauro G. CariñoPeople of the Philippines vs. Gavino AguinaldoSantos Bernardo vs. Baltazar R. DizonPeople of the Philippines vs. Fernando Clavo, Jr.People of the Philippines vs. Marvin H. TorresAventino C. Sasan vs. Court of AppealsDivina Jaballas vs. Const. & Dev't Corporation of the Philippines(Now Pncc):Coop. Rural Bank of Davao City vs. Pura Ferrer-CallejaGelacio V. Samulde vs. Ramon M. Salvani, Jr.Aurelio M. De Vera vs. C. F. Sharp & Company, Inc.Emmanuel Labajo vs. Pureza V. AlejandroEduardo S. Baranda vs. Hon. Tito GustiloJocelyn Rulona-Al Awadhi vs. Abdulmajid J. Astih3m Philippines, Inc. vs. Commissioner of Internal RevenueMalayan Insurance vs. Court of AppealsCecilia T. Dayrit vs. Fernando A. CruzRanulfo Pamparo vs. Court of AppealsAzcarraga Textile Mkt. vs. Court of AppealsPeople of the Philippines vs. Faustino PacnisPeople of the Philippines vs. Rudy DomingoUnion, Bonanza Restaurant vs. National Labor Relations CommissionPeople of the Philippines vs. Marianito IntinoPeople of the Philippines vs. Ronilo L. PinlacApolonia Bautista vs. Court of AppealsCatholic Vicar vs. Court of AppealsEdwin Reano vs. Court of AppealsPelicula Sabido vs. Intermediate Appellate CourtRamon Tumbagahan vs. Court of Appeals, et al.People of Philippines vs. Arsenio D. TolentinoPeople of the Philippines vs. Lope MaralitEternal Gardens Memorial Parks vs. Intermediate Appellate CourtNational Steel Corporation vs. National Labor Relations Commission, et al.Estelito Bagadiong, et al. vs. Placida Vda. De AbundoMarcopper Mining Corporation vs. Liwanag Paras Briones, et al.Felipe Segura vs. Nicolas SeguraHedy Y. Gan vs. Hon. Court of Appeals, et al.Taciana B. Espejo vs. Workmen's Compensation CommissionPeople of the Philippines vs. Cesar R. MaravillaPeople of the Philippines vs. Roberto BardonPeople of the Philippines vs. Alberto RamosManuel Dy vs. Matilde SacayDioscord Espadera vs. Court of Appeals, et al.People of the Philippines vs. Mariano Castañeda Jr.Benito Rosales vs. Court of AppealsDelfin Orodio vs. Court of AppealsCarlos Keng Seng vs. Lorenzo De La CruzPeople of the Philippines vs. Nestor FernandezPrudential Bank & Trust Company vs. Community Builders Company, Inc.,Republic of the Philippines vs. Zosa, et al.Producers Bank of the Philippines vs. National Labor Relations CommissionThe Lawphil Project - Arellano Law Foundation, Inc.
Manila
SECOND DIVISION
G.R. No. L-74811 September 30, 1988
CHUA YEK HONG,petitioner,
vs.
INTERMEDIATE APPELLATE COURT, MARIANO GUNO, and DOMINADOR OLIT,respondents.
Francisco D. Estrada for petitioner.
Purita Hontanosas-Cortes for private respondents.
MELENCIO-HERRERA,J.:
In this Petition for Review on certiorari petitioner seeks to set aside the Decision of respondent Appellate Court in AC G.R. No. 01375 entitled "Chua Yek Hong vs. Mariano Guno, et al.," promulgated on 3 April 1986, reversing the Trial Court and relieving private respondents (defendants below) of any liability for damages for loss of cargo.
The basic facts are not disputed:
Petitioner is a duly licensed copra dealer based at Puerta Galera, Oriental Mindoro, while private respondents are the owners of the vessel, "M/V Luzviminda I," a common carrier engaged in coastwise trade from the different ports of Oriental Mindoro to the Port of Manila.
In October 1977, petitioner loaded 1,000 sacks of copra, valued at P101,227.40, on board the vessel "M/V Luzviminda I" for shipment from Puerta Galera, Oriental Mindoro, to Manila. Said cargo, however, did not reach Manila because somewhere between Cape Santiago and Calatagan, Batangas, the vessel capsized and sank with all its cargo.
On 30 March 1979, petitioner instituted before the then Court of First Instance of Oriental Mindoro, a Complaint for damages based on breach of contract of carriage against private respondents (Civil Case No. R-3205).
In their Answer, private respondents averred that even assuming that the alleged cargo was truly loaded aboard their vessel, their liability had been extinguished by reason of the total loss of said vessel.
On 17 May 1983, the Trial Court rendered its Decision, the dispositive portion of which follows:
WHEREFORE, in view of the foregoing considerations, the court believes and so holds that the preponderance of evidence militates in favor of the plaintiff and against the defendants by ordering the latter, jointly and severally, to pay the plaintiff the sum of P101,227.40 representing the value of the cargo belonging to the plaintiff which was lost while in the custody of the defendants; P65,550.00 representing miscellaneous expenses of plaintiff on said lost cargo; attorney's fees in the amount of P5,000.00, and to pay the costs of suit. (p. 30, Rollo).
On appeal, respondent Appellate Court ruled to the contrary when it applied Article 587 of the Code of Commerce and the doctrine in Yangco vs. Lasema (73 Phil. 330 [1941]) and held that private respondents' liability, as ship owners, for the loss of the cargo is merely co-extensive with their interest in the vessel such that a total loss thereof results in its extinction. The decretal portion of that Decision1reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the decision appealed from is hereby REVERSED, and another one entered dismissing the complaint against defendants-appellants and absolving them from any and all liabilities arising from the loss of 1,000 sacks of copra belonging to plaintiff-appellee. Costs against appellee.
(p. 19, Rollo).
Unsuccessful in his Motion for Reconsideration of the aforesaid Decision, petitioner has availed of the present recourse.
The basic issue for resolution is whether or not respondent Appellate Court erred in applying the doctrine of limited liability under Article 587 of the Code of Commerce as expounded inYangco vs. Laserna, supra.
Article 587 of the Code of Commerce provides:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipments and the freight it may have earned during the voyage.
The term "ship agent" as used in the foregoing provision is broad enough to include the ship owner (Standard Oil Co. vs. Lopez Castelo, 42 Phil. 256 [1921]).ℒαwρhi৷Pursuant to said provision, therefore, both the ship owner and ship agent are civilly and directly liable for the indemnities in favor of third persons, which may arise from the conduct of the captain in the care of goods transported, as well as for the safety of passengers transportedYangco vs. Laserna, supra;Manila Steamship Co., Inc. vs. Abdulhaman et al., 100 Phil. 32 [1956]).
However, under the same Article, this direct liability is moderated and limited by the ship agent's or ship owner's right of abandonment of the vessel and earned freight. This expresses the universal principle of limited liability under maritime law. The most fundamental effect of abandonment is the cessation of the responsibility of the ship agent/owner (Switzerland General Insurance Co., Ltd. vs. Ramirez, L-48264, February 21, 1980, 96 SCRA 297). It has thus been held that by necessary implication, the ship agent's or ship owner's liability is confined to that which he is entitled as of right to abandon the vessel with all her equipment and the freight it may have earned during the voyage," and "to the insurance thereof if any" (Yangco vs. Lasema,supra). In other words, the ship owner'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 (Govt. Insular Maritime Co. vs. The Insular Maritime, 45 Phil. 805, 807 [1924]).
As this Court held:
If the ship owner 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. (Yangco vs. Laserna, et al.,supra).
The rationale therefor has been explained as follows:
The real and hypothecary nature of the liability of the ship owner 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 ship building 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 ship owner or agent abandoned the ship, equipment, and freight, his liability was extinguished. (Abueg vs. San Diego, 77 Phil. 730 [1946])
— 0 —
Without the principle of limited liability, a ship owner and investor in maritime commerce would run the risk of being ruined by the bad faith or negligence of his captain, and the apprehension of this would be fatal to the interest of navigation." Yangco vs. Lasema,supra).
— 0 —
As evidence of this real nature of the maritime law we have (1) the limitation of the liability of the agents to the actual value of the vessel and the freight money, and (2) the right to retain the cargo and the embargo and detention of the vessel even in cases where the ordinary civil law would not allow more than a personal action against the debtor or person liable. It will be observed that these rights are correlative, and naturally so, because if the agent can exempt himself from liability by abandoning the vessel and freight money, thus avoiding the possibility of risking his whole fortune in the business, it is also just that his maritime creditor may for any reason attach the vessel itself to secure his claim without waiting for a settlement of his rights by a final judgment, even to the prejudice of a third person. (Phil. Shipping Co. vs. Vergara, 6 Phil. 284 [1906]).
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 ship owner, or to the concurring negligence of the ship owner and the captain (Manila Steamship Co., Inc. vs. Abdulhamansupra); (2) where the vessel is insured; and (3) in workmen's compensation claims Abueg vs. San Diego,supra). In this case, there is nothing in the records to show that the loss of the cargo was due to the fault of the private respondent as shipowners, or to their concurrent negligence with the captain of the vessel.
What about the provisions of the Civil Code on common carriers? Considering the "real and hypothecary nature" of liability under maritime law, these provisions would not have any effect on the principle of limited liability for ship owners or ship agents. As was expounded by this Court:
In arriving at this conclusion, the fact is not ignored that the illfated, S.S. Negros, as a vessel engaged in interisland trade, is a common carrier, and that the relationship between the petitioner and the passengers who died in the mishap rests on a contract of carriage. But assuming that petitioner is liable for a breach of contract of carriage, the exclusively 'real and hypothecary nature of maritime law operates to limit such liability to the value of the vessel, or to the insurance thereon, if any. In the instant case it does not appear that the vessel was insured. (Yangco vs. Laserila, et al.,supra).
Moreover, Article 1766 of the Civil Code provides:
Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws.
In other words, the primary law is the Civil Code (Arts. 17321766) and in default thereof, the Code of Commerce and other special laws are applied. Since the Civil Code contains no provisions regulating liability of ship owners or agents in the event of total loss or destruction of the vessel, it is the provisions of the Code of Commerce, more particularly Article 587, that govern in this case.
In sum, it will have to be held that since the ship agent's or ship owner's liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction (Yangco vs. Laserna,supra), and none of the exceptions to the rule on limited liability being present, the liability of private respondents for the loss of the cargo of copra must be deemed to have been extinguished. There is no showing that the vessel was insured in this case.
WHEREFORE,the judgment sought to be reviewed is herebyAFFIRMED.No costs.
SO ORDERED.
Paras, Padilla, Sarmiento and Regalado, JJ., concur.
Footnotes