Escobar, Rosaline O.

Obligations of the Parties in Contract of Carriage Transportation of Goods

The Philippine American General Insurance Co., Inc. v. Court of Appeals
Facts:
On July 6, 1983 Coca-Cola Bottlers Philippines, Inc., loaded on board "MV Asilda," a vessel
owned and operated by respondent Felman Shipping Lines, 7,500 cases of 1-liter Coca-Cola
softdrink bottles to be transported from Zamboanga City to Cebu City. The shipment was
insured with petitioner Philippine American General Insurance Co., Inc., under Marine Open. On
July 7, 1983, the vessel sank in the waters of Zamboanga del Norte bringing down her entire
cargo with her including the subject 7,500 cases of 1-liter Coca-Cola softdrink bottles. On
November 29, 1983 PHILAMGEN sued the shipowner for sum of money and damages. On
February 15, 1985 FELMAN filed a motion to dismiss based on the affirmative defense that
FELMAN had abandoned all its rights, interests and ownership over "MV Asilda" together with
her freight and appurtenances for the purpose of limiting and extinguishing its liability under Art.
587 of the Code of Commerce.



Issue:

Whether the Doctrine of Limited Liability applies.

Ruling:

The Court ruled that Art. 587 of the Code of Commerce is not applicable. The ship agent is
liable for the negligent acts of the captain in the care of goods loaded on the vessel. This liability
however can be limited through abandonment of the vessel, its equipment and freightage as
provided in Art. 587. Nonetheless, there are exceptional circumstances wherein the ship agent
could still be held answerable despite the abandonment, as where the loss or injury was due to
the fault of the shipowner and the captain.

The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner's liability, does not apply to cases
where the injury or average was occasioned by the shipowner's own fault. It must be stressed
at this point that Art. 587 speaks only of situations where the fault or negligence is committed
solely by the captain. Where the shipowner is likewise to be blamed, Art. 587 will not apply. It
was already established at the outset that the sinking of "MV Asilda" was due to its
unseaworthiness even at the time of its departure from the port of Zamboanga. Closer
supervision on the part of the shipowner could have prevented this fatal miscalculation. As such,
FELMAN was equally negligent. It cannot therefore escape liability by filing a notice of
abandonment of the vessel by virtue of Art. 587 of the Code of Commerce.





Escobar, Rosaline O.
Obligations of the Parties in Contract of Carriage Transportation of Goods
Central Shipping Company, Inc. v. Insurance Company of North America
Facts:
On July 25, 1990 at Puerto Princesa, Palawan, the petitioner received on board its vessel, the
M/V Central Bohol, 376 pieces of Philippine Apitong Round Logs and undertook to transport
said shipment to Manila for delivery to Alaska Lumber Co., Inc. During the voyage the degree of
the position of the ship changed due to the shifting of the logs inside, eventually at about 15
degrees, the captain ordered everyone to abandon the ship. Respondent alleged that the total
loss of the shipment was caused by the fault and negligence of the petitioner and its captain.
Petitioner interposed the defense that the vessel was fully manned, fully equipped and in all
respects seaworthy, and that all the logs were properly loaded and secured, and that the
vessels master exercised due diligence to prevent or minimize the loss before, during and after
the occurrence of the storm. It raised as its main defense that the proximate and only cause of
the sinking of its vessel and the loss of its cargo was a natural disaster, a tropical storm which
neither the petitioner nor the captain of its vessel could have foreseen. The RTC was
unconvinced that the sinking of M/V Central Bohol had been caused by the weather or any other
caso fortuito. It noted that monsoons, which were common occurrences during the months of
July to December, could have been foreseen and provided for by an ocean-going vessel.
Applying the rule of presumptive fault or negligence against the carrier, the trial court held
petitioner liable for the loss of the cargo. The CA affirmed the trial courts finding that the
southwestern monsoon encountered by the vessel was not unforeseeable. Given the season of
rains and monsoons, the ship captain and his crew should have anticipated the perils of the sea.

Issue:
Whether the Doctrine of Limited Liability applies.

Ruling:
The court ruled that the doctrine of limited liability under Article 587 of the Code of Commerce is
not applicable to the present case. This rule does not apply to situations in which the loss or the
injury is due to the concurrent negligence of the ship-owner and the captain. It has already been
established that the sinking of M/V Central Bohol had been caused by the fault or negligence of
the ship captain and the crew, as shown by the improper stowage of the cargo of logs. Closer
supervision on the part of the shipowner could have prevented this fatal miscalculation. As
such, the shipowner was equally negligent. It cannot escape liability by virtue of the limited
liability rule.