Smith Bell and Company Phils. v. CA (G.R. No. L-56294)


M/V “Don Carlos,” an inter-island vessel owned and operated by private respondent Go Thong was sailing south bound for Cebu, when it collided with M/S “Yotai Maru,” a merchant vessel of Japanese registry which was approaching the port of Manila coming in from Kobe, Japan. The bow of the “Don Carlos” rammed the left side of the “Yotai Maru” inflicting a gaping hole through which seawater rushed in and flooded the hatch, damaging all the cargo stowed therein. The consignees of the damaged cargo having been paid by their insurance companies, the latter in turn commenced actions against private respondent Go Thong for damages sustained by the various shipments. 2 cases were filed before the RTC. The first case (Smith Bell and Sumitomo Insurance v. Go Thong) reached the SC which ruled in finality that negligence was with the officers and crew of “Don Carlos.” On the contrary, the second case (Smith Bell and Tokyo Insurance v. Go Thong) was decided by the CA holding the officers and crew of “Yotai Maru” at fault in the collision. Hence the present petition.


Whether or not inscrutable fault is present in said collision.

Ruling: NO.

The Court believes that there are three (3) principal factors which are constitutive of negligence on the part of the “Don Carlos,” which negligence was the proximate cause of the collision.

(1) The first of these factors was the failure of the “Don Carlos” to comply with the requirements of Rule 18 (a) of the International Rules of the Road which provides as follows: (a) When two power-driven vessels are meeting end on, or nearly end on, so as to involve risk of collision, each shall alter her course to starboard, so that each may pass on the port side of the other. The evidence on this factor state that “Don Carlos” altered its course by five degrees to the left instead of to the right which maneuver was the error that caused the collision in question. Why it did so is because “Don Carlos” was overtaking another vessel, the “Don Francisco”, and was then at the right side of the aforesaid vessel. It was in the process of overtaking “Don Francisco” that “Don Carlos” was finally brought into a situation where he was meeting end-on or nearly end-on “Yotai Maru, thus involving risk of collision.

(2) The second circumstance constitutive of negligence on the part of the “Don Carlos” was its failure to have on board that night a “proper look-out” as required by Rule I (B) Under Rule 29 of the same set of Rules, all consequences arising from the failure of the “Don Carlos” to keep a “proper look-out” must be borne by the “Don Carlos.” In the case at bar, the failure of the “Don Carlos” to recognize in a timely manner the risk of collision with the “Yotai Maru” coming in from the opposite direction, was at least in part due to the failure of the “Don Carlos” to maintain a proper look-out.

(3) The third factor constitutive of negligence on the part of the “Don Carlos” relates to the fact that Second Mate Benito German was, immediately before and during the collision, in command of the “Don Carlos.” Second Mate German simply did not have the level of experience, judgment and skill essential for recognizing and coping with the risk of collision as it presented itself that early morning when the “Don Carlos,” running at maximum speed and having just overtaken the “Don Francisco” then approximately one mile behind to the right side of the “Don Carlos,” found itself head-on or nearly head on vis-a-vis the “Yotai Maru. ” It is essential to point out that this situation was created by the “Don Carlos” itself.

FOR ALL THE FOREGOING, the Decision of the Court of Appeals is hereby REVERSED and SET ASIDE.

*Inscrutable Fault – where it cannot be determined which of the 2 vessels caused the collision, each vessel shall suffer its own damages, and both shall be solidarily responsible for the losses and damages occasioned to their cargoes.


Mecenas v. CA (G.R. No. 88052)


On the morning of 22 April 1980, the M/T “Tacloban City,” a barge-type oil tanker owned and operated by Philippine National Oil Company (PNOC), having unloaded its cargo of petroleum products, left Negros Occidental and headed towards Bataan. On the same day, the M/V “Don Juan,” an interisland vessel owned and operated by Negros Navigation, left Manila bound for Bacolod with 750 passengers listed in its manifest, and a complete set of officers and crew members. On the evening of the same day, the two vessels became aware of each other’s presence in the area by visual contact at a distance of 6 miles. They were fully aware that if they continued on their course, they will meet head on. Don Juan steered to the right; Tacloban City continued its course to the left. The two vessels thus collided and as a result, the “Don Juan” sank and hundreds of its passengers perished. Petitioners who were the children of the spouses Perfecto and Sofia Mecenas, their parents among the passengers whose bodies were never found, filed a complaint against Negros Navigation and its Captain Roger Santisteban. The trial court ruled that both vessels were at fault in the collision and awarded petitioners actual or compensatory damages, which was reduced on appeal. Petitioners likewise claim for exemplary damages.


Whether or not petitioners herein are also entitled to exemplary damages.

Ruling: YES.

In respect of the petitioners’ claim for exemplary damages, it is only necessary to refer to Article 2232 of the Civil Code:

Article 2332. In contracts and quasi-contracts, the court may exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.

There is, therefore, no question that the “Don Juan” was at least as negligent as the M/T “Tacloban City” in the events leading up to the collision and the sinking of the “Don Juan.” The remaining question is whether the negligence on the part of the “Don Juan” reached that level of recklessness or gross negligence that our Civil Code requires for the imposition of exemplary damages. Our own review of the record in the case at bar requires us to answer this in the affirmative.

M/S Don Juan’s Master, Capt. Rogelio Santisteban, was playing mahjong before and up to the time of collision. Moreover, after the collision, he failed to institute appropriate measures to delay the sinking M/S Don Juan and to supervise properly the execution of his order of abandonship. As regards the officer on watch, Senior 3rd Mate Rogelio Devera, he admitted that he failed or did not call or inform Capt. Santisteban of the imminent danger of collision and of the actual collision itself. Also, he failed to assist his master to prevent the fast sinking of the ship. The record also indicates that Auxiliary Chief Mate Antonio Labordo displayed laxity in maintaining order among the passengers after the collision. There is also evidence that the “Don Juan” was carrying more passengers than she had been certified as allowed to carry.

Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. In requiring compliance with the standard which is in fact that of the highest possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law seeks to compel them to control their employees, to tame their reckless instincts and to force them to take adequate care of human beings and their property. The Court will take judicial notice of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our population is too poor to afford domestic air transportation. So it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds of people continue to travel by sea. This Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy. One of those instruments is the institution of exemplary damages; one of those ends, of special importance in an archipelagic state like the Philippines, is the safe and reliable carriage of people and goods by sea. Considering the foregoing, we believe that an additional award in the amount of P200,000.00 as exemplary damages is quite modest.

Aboitiz Shipping v. CA (G.R. No. 84458)


Anacleto Viana boarded the vessel M/V Antonia owned by petitioner Aboitiz Shipping Corp at the port at San Jose, Occidental Mindoro, bound for Manila. The vessel arrived at Pier 4, North Harbor, Manila and was taken over by Pioneer Stevedoring for the latter to unload the cargoes from the said vessel pursuant to their Memorandum of Agreement. An hour after the passengers and Viana had disembarked the vessel the crane operator began its unloading operation. While the crane was being operated, Viana who had already disembarked the vessel remembered that some of his cargoes were still loaded there. He went back and while he was pointing to the crew where his cargoes were, the crane hit him pinning him between the side of the vessel and the crane resulting to his death. A complaint for damages was filed against petitioner for breach of contract of carriage. Petitioner contends that Viana ceased to be a passenger when he disembarked the vessel and that consequently his presence there was no longer reasonable. CA affirmed the trial court’s order holding Aboitiz liable. Hence the petition.


Whether or not petitioner is still responsible as a carrier to Viana after the latter had already disembarked the vessel.

Ruling: YES.

The rule is that the relation of carrier and passenger continues until the passenger has been landed at the port of destination and has left the vessel owner’s dock or premises. Once created, the relationship will not ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carrier’s conveyance or had a reasonable opportunity to leave the carrier’s premises. All persons who remain on the premises a reasonable time after leaving the conveyance are to be deemed passengers, and what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. The carrier-passenger relationship is not terminated merely by the fact that the person transported has been carried to his destination if, for example, such person remains in the carrier’s premises to claim his baggage.

The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near the petitioner’s vessel. We believe there exists such a justifiable cause. When the accident occurred, the victim was in the act of unloading his cargoes, which he had every right to do, from petitioner’s vessel. As earlier stated, a carrier is duty bound not only to bring its passengers safely to their destination but also to afford them a reasonable time to claim their baggage.

Consequently, under the foregoing circumstances, the victim Anacleto Viana is still deemed a passenger of said carrier at the time of his tragic death.

Ganzon v. CA (G.R. No. L-48757)


Private respondent Tumambing contracted the services of petitioner Ganzon to haul 305 tons of scrap iron from Bataan to the port of Manila on board the lighter LCT “Batman.” Petitioner sent his lighter with its Captain Filomeno to dock at Mariveles, where respondent Tumambing delivered the scrap irons for loading which also begun on the same day. Mayor Advincula arrived at the port and demanded P 5,000 shakedown from respondent. The two ended up in a heated argument where respondent had to be taken to a hospital to be treated of a gunshot wound. After sometime, the loading of the scrap iron was resumed. But now, the Acting Mayor together with 3 policemen ordered Captain Filomeno to dump the scrap iron where the lighter was docked and the rest to be brought to NASSCO compound. Later, the Acting Mayor issued a receipt stating that the Municipality had taken custody of the scrap iron. Respondent instituted an action for damages against petitioner. Respondent Court found in favor for Tumambing.


Whether or not petitioner Ganzon, a common carrier, can be exempt from liability by invoking order of competent authority.

Ruling: NO.

The petitioner has failed to show that the loss of the scraps was due to any of the following causes enumerated in Article 1734 of the Civil Code.

Before the appellee Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. The appellee failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. The fact remains that the order given by the acting mayor to dump the scrap iron into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown the appellant for P5,000.00. The order of the acting mayor did not constitute valid authority for appellee Mauro Ganzon and his representatives to carry out. The petitioner was not duty bound to obey the illegal order to dump into the sea the scrap iron.

Southern Lines v. CA (G.R. No. L-16629)


The City of Iloilo requisitioned for rice from the National Rice and Corn Corporation (NARIC) in Manila. NARIC, pursuant to the order, shipped 1,726 sacks of rice consigned to the City of Iloilo on board the SS “General Wright” belonging to the Southern Lines, Inc.

The City of Iloilo received the shipment and paid the total charged amount. However, it was discovered in the bill of lading that there was shortage equivalent to 41 sacks of rice. The City of Iloilo filed a complaint against NARIC and the Southern Lines, Inc. for the recovery of the amount representing the value of the shortage of the shipment of rice. The lower court absolved NARIC, but held Southern Lines, Inc. liable to pay the shortage. CA affirmed the trial court’s decision, hence, this petition.


(1) W/N Southern Lines is liable for the loss or shortage of the rice shipped;

(2) W/N the action was filed on time.


(1) YES. Under the provisions of Article 361, the defendant-carrier in order to free itself from liability was only obliged to prove that the damages suffered by the goods were “by virtue of the nature or defect of the articles.” Under the provisions of Article 362, the plaintiff, in order to hold the defendant liable, was obliged to prove that the damages to the goods by virtue of their nature, occurred on account of its negligence or because the defendant did not take the precaution adopted by careful persons.

The contention is untenable, for, if the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom. Petitioner itself frankly admitted that the strings that tied the bags of rice were broken; some bags were with holes and plenty of rice were spilled inside the hull of the boat, and that the personnel of the boat collected no less than 26 sacks of rice which they had distributed among themselves. This finding, which is binding upon this Court, shows that the shortage resulted from the negligence of petitioner.

(2) YES. Respondent filed the present action, within a reasonable time after the short delivery in the shipment of the rice was made. It should be recalled that the present action is one for the refund of the amount paid in excess, and not for damages or the recovery of the shortage; for admittedly the respondent had paid the entire value of the 1726 sacks of rice, subject to subsequent adjustment, as to shortages or losses. The bill of lading does not at all limit the time for filing an action for the refund of money paid in excess.