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The ueceaseu was an inspectoi of the Buieau of Foiestiy stationeu in Bavao. The
uefenuant is engageu in the business of expoiting logs fiom his lumbei concession
in Cotabato. Laia went to saiu concession upon instiuctions of his chief to classify
the logs of uefenuant which weie about to be loaueu on a ship anchoieu in the poit
of Paiang. The woik Laia of lasteu foi six uays uuiing which he contiacteu malaiia
fevei. In the moining of }anuaiy 9, 19S4, Laia who then in a huiiy to ietuin to
Bavao askeu uefenuant if he coulu take him in his pick-up as theie was then no
othei means of tianspoitation, to which uefenuant agieeu, anu in that same
moining the pick-up left Paiang bounu foi Bavao taking along six passengeis,
incluuing Laia. Befoie leaving Paiang, uefenuant inviteu Laia to sit with him on the
fiont seat but Laia ueclineu. It was theii unueistanuing that upon ieaching baiiio
Samoay, Cotabato, the passengeis weie to alight anu take a bus bounu foi Bavao,
but when they aiiiveu at that place, only one of the passengeis alighteu anu the
othei passengeis iequesteu uefenuant to allow them to iiue with him up to Bavao.
Befenuant again accommouateu the passengeis. Laia was seateu on a bag in the
miuule with his aims on a suitcase anu his heau cove ieu by a jacket. 0pon ieaching
Km. 96, baiiio Catiutuan, Laia acciuentally fell fiom the pick-up anu as a iesult he
suffeieu seiious injuiies. They took Laia to St. }oseph's Clinic of Kiuapawan but
when they aiiiveu Laia was alieauy ueau.
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Whethei oi not uefenuant faileu to obseive oiuinaiy caie oi uiligence in
tianspoiting the ueceaseu fiom Paiang to Bavao on the uate in question.
No. Theie is nothing in the facts to inuicate that uefenuant has acteu with negligence
oi without taking piecaution that an oiuinaiy piuuent man woulu have taken unuei
similai ciicumstances. Why.
(1) Laia went to the lumbei concession of uefenuant in answei to a call of uuty which
he was bounu to peifoim because of the iequiiement of his office anu he contiacteu
the malaiia fevei in the couise of the peifoimance of that uuty.
(2) Befenuant was not in uuty bounu to take the ueceaseu in his own pick-up to Bavao
because fiom Paiang to Cotabato theie was a line of tianspoitation that iegulaily
makes tiips foi the public, anu if uefenuant agieeu to take the ueceaseu in his own
cai, it was only to accommouate him consiueiing his feveiish conuition anu his
iequest that he be so accommouateu.
(S) The passengeis who ioue in the pick-up of uefenuant took theii iespective seats
theiein at theii own choice anu not upon inuication of uefenuant with the
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0&3/& 3-?3#.#3'- #&, *,/,.%,* *,/)3-,*. The ieason foi this can only be attiibuteu to
his uesiie to be at the back so that he coulu sit on a bag anu tiavel in a ieclining
position because such was moie convenient foi him uue to his feveiish conuition.
All the ciicumstances theiefoie cleaily inuicate that uefenuant hau uone what a ieasonable
piuuent man woulu have uone unuei the ciicumstances. Theie is eveiy ieason to believe
that the unfoitunate happening was only uue to an unfoieseen acciuent accuseu by the fact
that at the time the ueceaseu was half asleep anu must have fallen fiom the pick-up when it
ian into some stones causing it to jeik consiueiing that the ioau was then bumpy, iough anu
full of stones. The Couit may iathei attiibute the inciuent to lack of caie on the pait of the
ueceaseu consiueiing that the pick-up was open anu he was then in a ciouching position.
Inueeu, the law pioviues that "A passengei must obseive the uiligence of a goou fathei of a
family to avoiu injuiy to himself" (Aiticle 1761, new Civil Coue), which means that if the
injuiy to the passengei has been 92';31.#,): causeu by his own negligence, the caiiiei
cannot be helu liable.

G.R. No. 127897. November 15, 2001
On August 14, 1986, MT Maysun set sail from Batangas for Zamboanga
City. Unfortunately, the vessel sank in the early morning of August 16, 1986 near Panay
Gulf in the Visayas taking with it the entire cargo of fuel oil.
Subsequently, private respondent paid Caltex the sum of Five Million Ninety-Six
Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven Centavos (P5,096,635.57)
representing the insured value of the lost cargo. Exercising its right of subrogation under
Article 2207 of the New Civil Code, the private respondent demanded of the petitioner
the same amount it paid to Caltex.
Due to its failure to collect from the petitioner despite prior demand, private
respondent filed a complaint with the Regional Trial Court of Makati City, Branch 137,
for collection of a sum of money. After the trial and upon analyzing the evidence
adduced, the trial court rendered a decision on November 29, 1990 dismissing the
complaint against herein petitioner without pronouncement as to cost. The trial court
found that the vessel, MT Maysun, was seaworthy to undertake the voyage as determined
by the Philippine Coast Guard per Survey Certificate Report No. M5-016-MH upon
inspection during its annual dry-docking and that the incident was caused by unexpected
inclement weather condition or force majeure, thus exempting the common carrier
(herein petitioner) from liability for the loss of its cargo
Whether or not the payment made by the private respondent to Caltex for the insured
value of the lost cargo amounted to an admission that the vessel was seaworthy, thus
precluding any action for recovery against the petitioner.
No. The payment made by the private respondent for the insured value of the lost
cargo operates as waiver of its (private respondent) right to enforce the term of the
implied warranty against Caltex under the marine insurance policy. However, the same
cannot be validly interpreted as an automatic admission of the vessels seaworthiness by
the private respondent as to foreclose recourse against the petitioner for any liability
under its contractual obligation as a common carrier. The fact of payment grants the
private respondent subrogatory right which enables it to exercise legal remedies that
would otherwise be available to Caltex as owner of the lost cargo against the petitioner
common carrier. Article 2207 of the New Civil Code provides that:
Art. 2207. If the plaintiffs property has been insured, and he has received indemnity
from the insurance company for the injury or loss arising out of the wrong or breach
of contract complained of, the insurance company shall be subrogated to the rights of
the insured against the wrongdoer or the person who has violated the contract. If the
amount paid by the insurance company does not fully cover the injury or loss, the
aggrieved party shall be entitled to recover the deficiency from the person causing
the loss or injury.
The right of subrogation has its roots in equity. It is designed to promote and to
accomplish justice and is the mode which equity adopts to compel the ultimate payment
of a debt by one who in justice and good conscience ought to pay. It is not dependent
upon, nor does it grow out of, any privity of contract or upon written assignment of
claim. It accrues simply upon payment by the insurance company of the insurance claim.
Consequently, the payment made by the private respondent (insurer) to Caltex (assured)
operates as an equitable assignment to the former of all the remedies which the latter may
have against the petitioner.
From the nature of their business and for reasons of public policy, common carriers
are bound to observe extraordinary diligence in the vigilance over the goods and for the
safety of passengers transported by them, according to all the circumstances of each
case. In the event of loss, destruction or deterioration of the insured goods, common
carriers shall be responsible unless the same is brought about, among others, by flood,
storm, earthquake, lightning or other natural disaster or calamity. In all other cases, if the
goods are lost, destroyed or deteriorated, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they observed extraordinary
In order to escape liability for the loss of its cargo of industrial fuel oil belonging to
Caltex, petitioner attributes the sinking of MT Maysun to fortuitous event or force
majeure. From the testimonies of Jaime Jarabe and Francisco Berina, captain and chief
mate, respectively of the ill-fated vessel, it appears that a sudden and unexpected change
of weather condition occurred in the early morning of August 16, 1986; that at around
3:15 oclock in the morning a squall (unos) carrying strong winds with an approximate
velocity of 30 knots per hour and big waves averaging eighteen (18) to twenty (20) feet
high, repeatedly buffeted MT Maysun causing it to tilt, take in water and eventually sink
with its cargo. This tale of strong winds and big waves by the said officers of the
petitioner however, was effectively rebutted and belied by the weather report from the
Philippine Atmospheric, Geophysical and Astronomical Services Administration
(PAGASA), the independent government agency charged with monitoring weather and
sea conditions, showing that from 2:00 oclock to 8:00 oclock in the morning on August
16, 1986, the wind speed remained at ten (10) to twenty (20) knots per hour while the
height of the waves ranged from .7 to two (2) meters in the vicinity of Cuyo East Pass
and Panay Gulf where the subject vessel sank. Thus, as the appellate court correctly
ruled, petitioners vessel, MT Maysun, sank with its entire cargo for the reason that it was
not seaworthy. There was no squall or bad weather or extremely poor sea condition in
the vicinity when the said vessel sank.
The appellate court also correctly opined that the petitioners witnesses, Jaime Jarabe
and Francisco Berina, ship captain and chief mate, respectively, of the said vessel, could
not be expected to testify against the interest of their employer, the herein petitioner
common carrier.
Neither may petitioner escape liability by presenting in evidence certificates that tend
to show that at the time of dry-docking and inspection by the Philippine Coast Guard, the
vessel MT Maysun, was fit for voyage. These pieces of evidence do not necessarily take
into account the actual condition of the vessel at the time of the commencement of the
voyage. As correctly observed by the Court of appeals:
At the time of dry-docking and inspection, the ship may have appeared fit. The
certificates issued, however, do not negate the presumption of unseaworthiness triggered
by an unexplained sinking. Of certificates issued in this regard, authorities are likewise
clear as to their probative value, (thus):
Seaworthiness relates to a vessels actual condition. Neither the granting of
classification or the issuance of certificates establishes seaworthiness. (2-A
Benedict on Admiralty, 7-3, Sec. 62)
And also:
Authorities are clear that diligence in securing certificates of seaworthiness does not
satisfy the vessel owners obligation. Also securing the approval of the shipper of the
cargo, or his surveyor, of the condition of the vessel or her stowage does not establish due
diligence if the vessel was in fact unseaworthy, for the cargo owner has no obligation in
relation to seaworthiness. (Ibid.)
Additionally, the exoneration of MT Maysuns officers and crew by the Board of
Marine Inquiry merely concerns their respective administrative liabilities. It does not in
any way operate to absolve the petitioner common carrier from its civil liability arising
from its failure to observe extraordinary diligence in the vigilance over the goods it was
transporting and for the negligent acts or omissions of its employees, the determination of
which properly belongs to the court. In the case at bar, petitioner is liable for the insured
value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the
presumption of fault or negligence as common carrier occasioned by the unexplained
sinking of its vessel, MT Maysun, while in transit

-.!/01 '2 23!45-56 !5702

FACTS: 0n Becembei 19, 1987, motoi tankei NT vectoi left Limay, Bataan, enioute to
Nasbate, loaueu with 8,8uu baiiels of petioleum piouucts shippeu by petitionei Caltex. NT
vectoi is a tiamping motoi tankei owneu anu opeiateu by vectoi Shipping Coipoiation.
The NT vectoi caiiieu on boaiu gasoline anu othei oil piouucts owneu by Caltex by viitue
of a %89":) +;"#<)# contiact between them.

0n Becembei 2u, 1987, the passengei ship Nv Boa Paz left the poit of Tacloban heaueu
foi Nanila.The Nv Boa Paz is owneu anu opeiateu by Sulpicio Lines, Inc. At about 1u:Su
p.m. of Becembei 2u, 1987, the two vessels colliueu in the open sea within the vicinity of
Bumali Point between Naiinuuque anu 0iiental Ninuoio. All the ciewmembeis of Nv
Boa Paz uieu, while the two suivivois fiom NT vectoi claimeu that they weie sleeping at
the time of the inciuent.

The Nv Boa Paz caiiieu an estimateu 4,uuu passengeis; many inueeu, weie not in the
passengei manifest. 0nly 24 suiviveu the tiageuy aftei having been iescueu fiom the
buining wateis by vessels that iesponueu to uistiess calls. Among those who peiisheu weie
public school teachei Sebastian Caezal (47 yeais olu) anu his uaughtei Coiazon Caezal
(11 yeais olu), both unmanifesteu passengeis but pioveu to be on boaiu the vessel. Teiesita
Caezal anu Soteia E. Caezal, Sebastian Caezal's wife anu mothei iespectively, fileu, a
complaint foi "Bamages Aiising fiom Bieach of Contiact of Caiiiage" against Sulpicio Lines,
Inc. Sulpicio, in tuin, fileu a thiiu paity complaint against Fiancisco Soiiano, vectoi
Shipping Coipoiation anu Caltex (Philippines), Inc. Sulpicio allegeu that Caltex chaiteieu
NT vectoi with gioss anu eviuent bau faith knowing fully well that NT vectoi was
impiopeily manneu, ill-equippeu, unseawoithy anu a hazaiu to safe navigation; as a iesult,
it iammeu against Nv Boa Paz in the open sea setting NT vectoi's highly flammable caigo

ISS0E: W0N CALTEX is liable.

RTC: }uugement is heieby ienueieu in favoi of plaintiffs anu against uefenuant-Siu
paity plaintiff Sulpicio Lines, Inc.
CA: Couit of Appeal mouifieu the tiial couit's iuling anu incluueu petitionei Caltex
as one of the those liable foi uamages

SC: N0. The chaiteiei of a vessel has no obligation befoie tianspoiting its caigo to
ensuie that the vessel it chaiteieu complieu with all legal iequiiements. The uuty iests
upon the common caiiiei simply foi being engageu in "public seivice." The Civil Coue
uemanus uiligence which is iequiieu by the natuie of the obligation anu that which
coiiesponus with the ciicumstances of the peisons, the time anu the place. Bence,
consiueiing the natuie of the obligation between Caltex anu NT vectoi, the liability as founu
by the Couit of Appeals is without basis.

The ielationship between the paities in this case is goveineu by special laws.
Because of the implieu waiianty of seawoithiness, shippeis of goous, when tiansacting with
common caiiieis, aie not expecteu to inquiie into the vessel's seawoithiness, genuineness
of its licenses anu compliance with all maiitime laws. To uemanu moie fiom shippeis anu
holu them liable in case of failuie exhibits nothing but the futility of oui maiitime laws
insofai as the piotection of the public in geneial is conceineu. By the same token, we
cannot expect passengeis to inquiie eveiy time they boaiu a common caiiiei, whethei the
caiiiei possesses the necessaiy papeis oi that all the caiiiei's employees aie qualifieu.
Such a piactice woulu be an absuiuity in a business wheie time is always of the essence.
Consiueiing the natuie of tianspoitation business, passengeis anu shippeis alike
customaiily piesume that common caiiieis possess all the legal iequisites in its opeiation.

Thus, the natuie of the obligation of Caltex uemanus oiuinaiy uiligence like any
othei shippei in shipping his caigoes.

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In April of 1980, private respondent Ramon Miranda purchased from the Negros
Navigation Co., Inc. four special cabin tickets for his wife, daughter, son and niece who
were going to Bacolod City to attend a family reunion. The tickets were for Voyage of the
M/V Don Juan, leaving Manila at 1:00 p.m. on April 22, 1980. The ship sailed from the
port of Manila on schedule. At about 10:30 in the evening of April 22, 1980, the Don
Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City, an oil tanker
owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and
Transport Corporation (PNOC/STC). As a result, the M/V Don Juan sank. Several of her
passengers perished in the sea tragedy. The bodies of some of the victims were found
and brought to shore, but the four members of private respondents families were never
found. Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court
of Manila, Branch 34, against the Negros Navigation, the Philippine National Oil
Company (PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC),
seeking damages for the death of Ardita de la Victoria Miranda, 48, Rosario V. Miranda,
19, Ramon V. Miranda, Jr., 16, and Elfreda de la Victoria, 26.

RTC rendered judgment in favor of plaintiffs. CA affirmed RTC decision.


Whether or not the crew members of petitioner were grossly negligent in the
performance of their duties.


Petitioner Negros Navigation was found equally negligent in tolerating the playing of
mahjong by the ship captain and other crew members while on board the ship and
failing to keep the M/V Don Juan seaworthy so much so that the ship sank within 10 to
15 minutes of its impact with the M/T Tacloban City.

In addition, the Court found that the Don Juan was overloaded. The Certificate of
Inspection, dated August 27, 1979, issued by the Philippine Coast Guard Commander at
Iloilo City stated that the total number of persons allowed on the ship was 864, of whom
810 are passengers, but there were actually 1,004 on board the vessel when it sank,
140 persons more than the maximum number that could be safely carried by it.
Taking these circumstances together, and the fact that the M/V Don Juan, as the faster
and better-equipped vessel, could have avoided a collision with the PNOC tanker, this
Court held that even if the Tacloban City had been at fault for failing to observe an
internationally-recognized rule of navigation, the Don Juan was guilty of contributory

Belgian Overseas Chartering and Shipping N.V., and Jardine Davies Transport
Services, Ince. vs. Philippine First Insurance Co., Inc.
G.R. No. 143133
June 5, 2002
Ponente: Panganiban, J.

Facts: CMC Trading shipped on board petitioners vessel at Hamburg, Germany 242
coils of steel sheets for transportation to Manila, Philippines consigned to Philippine
Steel Trading Corporation (PSTC) insured by respondent. The cargo loaded was
considered in good order despite the notation metal envelopes rust stained and slightly
dented placed on the Bill of Lading (BOL). Representative of the parties involved
prepared and signed an inspection report as to the condition of the good prior to the
unloading of the cargo. However, when the cargo arrived at the port of Manila and was
discharged on July 31, 1990, 4 coils were found to be in bad order. With this, PSTC
declared the same as total loss.

Despite receipt of a formal demand, petitioners refused to submit to PSTCs claims.
Consequently, respondent paid the latter. The Notice of Claim was filed by respondent on
September 18, 1990. Left unheeded, respondent sued petitioners to recover the amount it
paid to consignee on July 25, 1991. The trial court dismissed the complaint, but it was
reversed by the Court of Appeals (CA) on appeal. CA held that petitioners were liable for
the loss, and opined that said notation in BOL had not been the proximate cause of
damage of the 4 coils. Hence, petitioners filed this petition for review.

Issue: (1) Was the abovementioned notation in BOL at the time of loading sufficient to
show pre-shipment damage or to exempt the common carrier from liability?
(2) Should sec. 3, par. 6 of COGSA be applied, that the consignee should file its notice of
loss within three days from delivery?

Ruling: (1) No. Petitioners failed to observe extraordinary diligence and precaution which
the law requires a common carrier to know and follow to avoid damage or destruction or
loss of the goods entrusted to it for safe carriage and delivery.

True, the abovementioned words noted in the BOL; however, there is no showing that
petitioners exercised due diligence to forestall or lessen the loss. Having been in the
service for several years, the master of the vessel should have known at the outset that
metal envelopes in the said state would eventually deteriorate when not properly stored
while in transit. Equipped with the proper knowledge of the nature of steel sheets in coils
and of the proper way of transporting them, said master and his crew should have
undertaken precautionary measures to avoid possible deterioration of the cargo. But none
of these measures were taken. Having failed to discharge the burden of proving that they
exercised extraordinary diligence required by law, petitioners cannot escape liability for
the damage to the 4 coils.

(2) Yes, but the entirety of the said provision must be applied. First, the said provision
provides that notice of claim need not be given if the state of goods, at the time of their
receipt, has been subject to a joint inspection or survey. Prior to unloading of the cargo,
the abovementioned inspection report was prepared and signed by the representatives of
both parties. Second, as stated in the same provision, a failure to file a notice of claim
within 3 days will not bar recovery if it is nonetheless filed within one year. This one-
year prescriptive period also applied to the shipper, consignee, and/or insurer of the
goods or any legal holder of the BOL. In the case at bar, the cargo was discharged on July
31, 1990, while the complaint was filed on July 25, 1991, within the one year prescriptive

Inasmuch as neither Civil Code nor Code of Commerce states a specific prescriptive
period on the matter, COGSA, which provides for the same, may be applied suppletorily.

=)+)*"& %& -.

Facts: MT Tacloban City, a barge-type oil tanker (carrying oil from Negros Occidental to
Bataan, owner: Phil National Oil Co (PNOC)) and MV Don Juan (owner: Negros
Navigation), an inter-island vessel with 750 passengers, officers, and crew collided at
the Talbas Strait near Maestra de Ocampo Island in the vicinity of the island of Mindoro.
When the collision occurred, the sea was calm, the weather fair, and visibility was good.
MV Don Juan sank and the passengers perished. Among the ill-fated passengers were
the parents of petitioners, the spouses Perfecto Mecenas and Sofia Mecenas, whose
bodies were never found. They filed a case before the RTC Quezon City against Negros
Navigation, and Capt. Roger Santisteban, the Captain of Don Juan.

RTC: Jointly and severally liable for damages.
CA: Same, but reduced

Issue: Whether or not Negros Navigation and Captain Santisteban were negligent, and
that petitioners are entitled to damages.


As for Actual and Moral damages:

The RTC considered the action under quasi-delict. The Court believes that it is more
appropriately regarded as grounded on contract contract of carriage between the
Mecenas spouses as regular passengers and Negros Navigation. In an action based upon
a breach of the contract of carriage, the carrier is liable for the death of passengers
arising from the negligence or willful act of the carrier's employees although such
employees may have acted beyond the scope of their authority or even in violation of
the instructions of the carrier, which liability may include liability for moral damages. It
follows that petitioners would be entitled to moral damages so long as the collision with
the "Tacloban City" and the sinking of the "Don Juan" were caused or attended by
negligence on the part of private respondents.

The TC and the Minister of National Defense found out that: Both vessels were at fault in
the collision.

M/ V Don Juan and Tacloban City became aware of each other's presence in the area by
visual contact at a distance of something like 6 miles from each other. 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. There can be no excuse for
them not to realize that, with such maneuvers, they will collide. They executed
maneuvers inadequate, and too late, to avoid collision.

"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."

As for the exemplary damages (requires level of recklessness or gross negligence):

It was found by the Phil Coast Guard that 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 MS Don Juan and to supervise
properly the execution of his order of abandonship.

The Court believes that the behaviour of the captain of the "Don Juan" in tills instance-
playing mahjong "before and up to the time of collision constitutes behaviour that is
simply unacceptable on the part of the master of a vessel to whose hands the lives and
welfare of at least seven hundred fifty (750) passengers had been entrusted. Whether or
not Capt. Santisteban was "off-duty" or "on-duty" at or around the time of actual
collision is quite immaterial; there is, both realistically speaking and in contemplation of
law, no such thing as "off-duty" hours for the master of a vessel at sea that is a common
carrier upon whom the law imposes the duty of extraordinary diligence-
[t]he duty to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with a due regard
for all the circumstances.

The record does not show that was the first or only time that Capt. Santisteban had
entertained himself during a voyage by playing mahjong with his officers and
passengers; Negros Navigation in permitting, or in failing to discover and correct such
behaviour, must be deemed grossly negligent.

There is also evidence that the "Don Juan" was carrying more passengers than she had
been certified as allowed to carry. Persons allowed: 810. Total Passengers: 864.

Grossness of the negligence of the "Don Juan" is underscored when one considers the
foregoing circumstances in the context of the following facts: Firstly, the "Don Juan" was
more than twice as fast as the "Tacloban City." The "Don Juan's" top speed was 17 knots;
while that of the "Tacloban City" was 6.3. knots. Secondly, the "Don Juan" carried the full
complement of officers and crew members specified for a passenger vessel of her class.
Thirdly, the "Don Juan" was equipped with radar which was functioning that night.
Fourthly, the "Don Juan's" officer on-watch had sighted the "Tacloban City" on his radar
screen while the latter was still four (4) nautical miles away. Visual confirmation of radar
contact was established by the "Don Juan" while the "Tacloban City" was still 2.7 miles

The Court concludes that Capt. Santisteban and Negros Navigation are properly held
liable for gross negligence in connection with the collision of the "Don Juan" and
"Tacloban City" and the sinking of the "Don Juan" leading to the death of hundreds of

The Supreme Court restored the award for damages by the TC.