Sample Dont Delete: Transportation Law Case Digest Compilation (#)

TRANSPORTATION LAW CASE DIGEST COMPILATION [#]
SAMPLE DONT DELETE
AUTHORSHIP INFORMATION
Digest Author [Surname], [Given Name]
Topic [Topic] [Sub-Topic]
CASE INFORMATION
Petitioner(s)
Respondent(s)
Reference GR No. [date]
Ponente
DOCTRINE(S)
CASE SUMMARY
Pertinent
Facts
Procedural History
[Court] ●
[Court] ●
Relevant 1. [Phrase as a question answerable by yes or no]
Issue(s) 2. [Phrase as a question answerable by yes or no]
Analysis
Ruling(s) & 1. [YES/NO]. [Explain Court’s reasoning]
Rationale 2. [YES/NO]. [Explain Court’s reasoning]
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1
Digest Author Fernandez, Jhonna
Maritime Law Real and Hypothecary Nature -
Topic Maritime Lien
Limited Liability Rule - Abandonment
CASE INFORMATION
Petitioner(s) The Philippine Shipping Company, et al.
Respondent(s) Francisco Garcia Vergara
Reference GR No. 1600 June 1, 1906
Ponente Arellano, C.J.
DOCTRINE(S)
Real and Hypothecary Nature
As evidence of this "real" nature of the maritime law we have (1) Limit of Liability - the limitation
of the liability of the agents to the actual value of the vessel and the freight money, and (2)
Maritime Lien - the right to retain the cargo and the embargo and detention of the vessel even
cases where the ordinary civil law would not allow more than a personal action against the
debtor or person liable.
Abandonment
In case of collision, the abandonment of the vessel is necessary in order to limit the liability of
the shipowner or the agent to the value of the vessel, its appurtenances and freightage earned
in the voyage in accordance with Article 837 of the Code of Commerce. The only instance
where such abandonment is dispensed with is when the vessel was entirely lost. In which case,
the obligation is extinguished.
CASE SUMMARY
● Petitioner owns steamship Nuestra Sra. de Lourdes (“Lourdes”) and
claims an indemnification of P44,000.00 for the loss of the said ship as a
result of a collision
Pertinent
● Respondent is the owner of steamship Navarra which collided with the
Facts
Lourdes
● Petitioner claims that Respondent should be liable for the loss of the
Lourdes in the amount of its value at the time of loss or P18,000.00
Procedural History
CFI ● Ruled that Lourdes was sailing in accordance with the law but Navarra
was not
● Found that both ships and their cargoes were entirely lost
Page 2
● Held that Respondent was not liable to Petitioner for the value of
steamship Lourdes
Relevant 1. Is Respondent liable to for the indemnification arising out of the collision?
Issue(s)
The Respondent is liable for the indemnification arising out of the collision as
in line with Article 837 of the Code of Commerce. However, considering that
Analysis
the vessel over which a maritime lien (Navarra) could be held was entirely
lost, the liability of the agent is extinguished.
1. YES, however, Respondent is not required to pay the indemnification due
to the loss of Navarra.
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 cases where the ordinary civil law would not allow more than
a personal action against the debtor or person liable.
If the agent is only liable with the vessel and freight money and both may be
Ruling(s) &
lost through the accidents of navigation it is only just that the maritime
Rationale
creditor have some means of obviating this precarious nature of his rights by
detaining the ship, his only security, before it is lost.
The [Respondent] is liable for the indemnification to which the plaintiff is

entitled by reason of the collision, but he is not required to pay such
indemnification of the reason that the obligation thus incurred has been
extinguished on account of the loss of the thing bound for the payment
thereof, and in this respect the judgment of the court below is affirmed
except in so far as it requires the plaintiff to pay the costs of this action,
which is not exactly proper.
Page 3
Digest Author Florencio, Mayoree Rozene F.
Topic Maritime Law Maritime Lien
CASE INFORMATION
Petitioner(s) Daniel Harmer
Respondent(s) William Errington Bell and Others
Reference 13 E.R. 884 December 16, 1850; May 16 and December

10, 1851
Ponente
DOCTRINE(S)
“A maritime lien is the foundation of the proceeding in rem , a process to make perfect
a right inchoate from the moment the lien attaches; and whilst it must be admitted that where
such a lien exists, a proceeding in rem may be had, it will be found to be equally true, that in
all cases where a proceeding in rem is the proper course, there a maritime lien exists, which
gives a privilege or claim upon the thing, to be carried into effect by legal process. This claim
or privilege travels with the thing, into whosesoever possession it may come.”
CASE SUMMARY
Pertinent ● A Scotch steamer ran down an English vessel in the Humber. An

Facts action was commenced in the Court of Admiralty in England, by the
owners of the English vessel, against the owners of the steamer, and a
warrant of arrest issued against the ship. However, before the ship
could be arrested, the Scotch streamer had sailed for Scotland.
● A suit was then commenced by the owners of the English vessel
against the owner of the steamer, in the Court of Session in Scotland,
for the damage, and the steamer was arrested under process of that
Court, but subsequently released upon bail.
● Afterwards, the steamer was sold, without notice to the purchaser of
this unsatisfied claim against her.
● The owner of the steamer appeared under protest in the Admiralty
Court, and pleaded, first, lis alibi pendens; and, secondly, that he was
Page 4
a purchaser for value without notice.
Procedural History
Judicial ● First, that the plea of lis alibi pendens was without merit, as the suit in
Committee Scotland was, in personam, the proceedings being commenced by
process against the persons of the owners of the vessel, and the arrest
of the steamer only collateral to secure the debt, while the proceedings
in the Admiralty Court in England were in rem, against the vessel, and,
therefore, the two suits being in their nature different, the pendency of
one suit could not be pleaded in suspension of the other.
● Secondly, a maritime lien does not include or require possession, but
being the foundation of proceedings in rem, such lien travels with the
thing into whosesoever possession it may come, and when carried into
effect by a proceeding in rem, relates back to the period when it first
attached; the steamer was liable for the damage committed by her,
though in the hands of a purchaser without notice of the damage, or the
proceedings instituted against her.
Relevant 1. Whether the maritime line requires possession of the thing?

Issue(s)
Analysis A maritime lien does not include or require possession. Having its
origin in this rule of the Civil Law, a maritime lien is well defined to mean, a
claim or privilege upon a thing to be carried into effect by legal process. It is
inchoate from the moment the claim or privilege attaches, and when carried
into effect by legal process, by a proceeding in rem, relates back to the
period when it first attached.
Ruling(s) & 1. NO. It is not necessary to say that the lien is indelible, and may not
Rationale be lost by negligence or delay where the rights of third parties may
be compromised; but where reasonable diligence is used, and the
proceedings are had in good faith, the lien may be enforced, into
whosesoever possession the thing may come.
The pleadings show that the proceedings in Scotland were commenced by

process against the persons of the Defendants, and that the seizure of the
vessel was collateral to that proceeding, for the mere purpose of securing
the debt. It is already explained that a proceeding in rem differs from one in
personam, and it follows, that the two suits being in their nature different,
the pendency of the one cannot be pleaded in suspension of the other.
Page 5
Digest Author Geradila, Josef Alec
Maritime Law Nature of Maritime Law/ Limited
Topic
Liability Rule
CASE INFORMATION
Petitioner(s) Aboitiz Shipping Corporation
Respondent(s) General Accident Fire and Life Assurance Corp. Ltd.
Reference GR No. 100446 21 January 1993
Ponente Melo, J.
DOCTRINE(S)
The liability of the ship owner in the sinking of a vessel is limited only as to its interest in
said vessel. The claims of interested parties are likewise limited only to their
commensurate share in the insurance from the lost vessel and pending freightage.
CASE SUMMARY
● Petitioner is owner of M/V P. Aboitiz which sank during a voyage from
Hong Kong to Manila.
● Respondent is a subrogee of a shipper whose cargo was lost in the
sinking of the petitioner’s vessel.
Pertinent
● Respondent claims the full value of the cargo lost against the
Facts
petitioner.
● Petitioner argues that the respondent’s claim against them is limited
under the real and hypothecary nature of maritime law as applied to
the present case.
Procedural History
● The RTC ruled in favor of the respondent and issued a writ of execution
RTC
in full.
● The CA modified the RTC ruling applying the limited liability rule on the
[Court]
claims of the respondent.
Relevant 1. Whether or not the petitioner is liable for the loss?
Issue(s) 2. Whether or not the limited liability rule applies in this case?
Analysis The reality of Maritime Law, which is sourced from Anglo-American tradition,
differentiates between the obligation of the vessel owner as to the
seaworthiness of the vessel, its cargo, and other ancillaries, and as to its
crew and the ship’s captain. In this case, while the court said that the vessel
was lost due to the unseaworthiness of the same, it cannot be attributed to
Page 6
any negligence of the vessel owner but to the negligence of the captain and
crew. As such, the liability of shippers and their subrogees are akin to the
rights of creditors against a bankrupt corporation.
1. YES. The Court affirmed their earlier ruling that the Ship Owner is liable
in their capacity as owner-operator of the common carrier in as much as
they are similarly situated in the facts of the case.
2. YES. The Court also upheld the validity of the application of the Limited
Ruling(s) &
Liability Rule in this case as Maritime Law confines the liability of the
Rationale
owner of the vessel to the vessel, its insurance, and pending freightage
only. As such, the claims by the shippers and their subrogees are also
necessarily limited only to the proportionate share of the said liability of
the ship owner and not necessarily to the full value of the cargo lost.
Page 7
4
Digest Author Gonzales, Francis John
Limited Liability Rule: No Vessel, No Rationale
Topic
Liability
CASE INFORMATION
Monarch Insurance Co., Inc. and Tabacalera Insurance Co. Inc.; Allied
Petitioner(s)
Guarantee Insurance Company; Equitable Insurance Corp.
Respondent(s) Court of Appeals and Aboitiz Shipping Corporation
Reference GR No. 92735; 94867; 95578 June 8, 2000
Ponente De Leon, Jr., J.
DOCTRINE(S)
This doctrine is based on the real and hypothecary nature of maritime law which has 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 shipbuilding 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.
CASE SUMMARY
Pertinent All three cases arose from the loss of cargoes of various shippers when the
Facts MV Aboitiz sank on her voyage from HK to Manila.
Petitioners Monarch and Tabacalera are insurance companies of lost

cargoes. They indemnified the shippers and were consequently subrogated
to their rights, interests and actions against Aboitiz, the cargo carrier.
Because Aboitiz refused to compensate Monarch, the latter filed two
complaints against Aboitiz which were consolidated and jointly tried.
Aboitiz rejected responsibility for the claims on the ground that the sinking of
its cargo vessels was due to force majeure or an act of God. Aboitiz was
subsequently declared as in default and allowed Monarch and Tabacalera to
present evidence ex-parte.
The trial court rendered judgment against Aboitiz. Aboitiz filed an MR of the
decision and/or for a new trial to lift the order of default. The Court denied
motion. Appeal was dismissed for its failure to file appellant’s brief. It
immediately filed for MR with prayer for the admission of the attached
Page 8
appellant’s brief, which was also denied for lack of merit.
Consequently, Monarch and Tabacalera moved for execution of judgment.

Procedural History
● (Monarch vs Aboitiz) After receiving Monarchs and Tabacaleras evidence,
the trial court found that the complete loss of the shipment on board the
M/V P. Aboitiz when it sank was neither due to a fortuitous event nor a
storm or natural cause. For Aboitiz’ failure to present controverting
evidence, the trial court also upheld petitioners' allegation that the M/V P.
Aboitiz was unseaworthy.
● (Equitable vs. CA) the sinking of the M/V P. Aboitiz was not due to an act
RTC of God or force majeure. It added that the evidence presented by the
petitioner Equitable demonstrated the negligence of Aboitiz Shipping
Corporation in the management and operation of its vessel M/V P.
Aboitiz.
● (Allied vs. CA) M/V P. Aboitiz was not lost due to a fortuitous event or
force majeure, and that Aboitiz had failed to satisfactorily establish that it
had observed extraordinary diligence in the vigilance over the goods
transported by it.
CA ● Reversed the ruling of RTCs.
(Monarch vs CA) that the unseaworthiness of the M/V P. Aboitiz was not a
fault directly attributable to Aboitiz but to the captain, and that Aboitiz is
entitled to the benefit of the limited liability rule for having abandoned its ship.
The Court of Appeals brushed aside the issue of Aboitiz negligence and/or
fault and proceeded to allow the application of the limited liability rule "to
accomplish the aims of justice." It elaborated thus: "To execute the judgment
in this case would prejudice the substantial right of other claimants who have
filed suits to claim their cargoes that were lost in the vessel that sank and
also against the petitioner to be ordered to pay more than what the law
requires.
"x x x, even if she (M/V P. Aboitiz) was found to be unseaworthy, this fault
(distinguished from civil liability) cannot be laid on the ship owner's door.
Such a fault was directly attributable to the captain. This is so, because under
Art. 612 of the Code of Commerce, among the inherent duties of a captain,
are to examine the vessel before sailing and to comply with the laws on
Page 9
navigation."[56]; and that:
"x x x although the ship owner may be held civilly liable for the captains fault
x x x having abandoned the vessel in question, even if the vessel was
unseaworthy due to the captain's fault, Aboitiz is still entitled to the benefit
under the rule of limited liability accorded to shipowners by the Code of
Commerce."
Is the limited liability rule in maritime law applicable in the consolidated
Relevant petitions so as to favor Aboitiz in order to stay the execution of the judgments
Issue(s) for full indemnification of the losses suffered by the petitioners as a result of
the sinking MV P. Aboitiz?
Exceptions to the doctrine of limited liability:
1. Repairs and provisioning of the vessel before the loss of the vessel;
(Art. 586)
2. Insurance proceeds. If the vessel is insured, the proceeds will go to the
persons entitled to claim from the shipowner; (Vasquez v. CA, G.R. No.
L-42926, Sept. 13, 1985)
3. Workmen’s Compensation cases (now Employees’ Compensation
Analysis
under the Labor Code); (Oching v. San Diego, G.R. No. 775, Dec. 17,
1946)
4. When the shipowner is guilty of fault or negligence; Note: But if the
captain is the one who is guilty, doctrine may still be invoked, hence,
abandonment is still an option.
5. Private carrier; or
6. Voyage is not maritime in character.
Ruling(s) & YES.
Rationale
The failure of Aboitiz to present sufficient evidence to exculpate itself from
fault and/or negligence in the sinking of its vessel in the face of the foregoing
expert testimony constrains us to hold that Aboitiz was concurrently at fault
and/or negligent with the ship captain and crew of the M/V P. Aboitiz.
This is in accordance with the rule that in cases involving the limited liability
of shipowners, the initial burden of proof of negligence or unseaworthiness
rests on the claimants. However, once the vessel owner or any party asserts
the right to limit its liability, the burden of proof as to lack of privity or
knowledge on its part with respect to the matter of negligence or
unseaworthiness is shifted to it. This burden, Aboitiz had unfortunately failed
to discharge.
Page 10
That Aboitiz failed to discharge the burden of proving that the

unseaworthiness of its vessel was not due to its fault and/or negligence
should not however mean that the limited liability rule will not be applied to
the present cases. The peculiar circumstances here demand that there
should be no strict adherence to procedural rules on evidence lest the just
claims of shippers/insurers be frustrated. The rule on limited liability should
be applied in accordance with the latest ruling in Aboitiz Shipping
Corporation v. General Accident Fire and Life Assurance Corporation, Ltd.,]
promulgated on January 21, 1993, that claimants be treated as "creditors in
an insolvent corporation whose assets are not enough to satisfy the totality of
claims against it."
Page 11
Digest Author Grefal, Jordan Angelli
Topic Maritime Law Coverage of Limited Liability
CASE INFORMATION
Petitioner(s) Leonardo Guison
Respondent(s) Philippine Fish Company
Reference GR No. 46846 February 3, 1940
Ponente Avaceña, J.
DOCTRINE(S)
The Supreme Court applied Article 837 of the Code of Commerce, limiting the liability of the
agent to the value of the vessel.
CASE SUMMARY
● Plaintiff Leonardo Guison owns steamboat “Marta” and defendant
Philippine Fish Company owns the motorboat “Manila X.”
Pertinent ● The two boats had a collision, which resulted in steamboat “Marta”
Facts sinking, causing the plaintiff P10,197.24 in damages.
● The plaintiff filed an action against the defendant for the collection of
the P10,197.24.
Procedural History
● The Court reached the conclusion that the collision was due to the
recklessness and negligence of the skipper of the boat “Manila X”
without any contributory negligence on the part of the skipper of “Marta”
Court and ordered the plaintiff to pay damages.
● Upon reconsideration of the defendant, the court modified its decision to
limit the responsibility of the defendant to the value of the boat “Manila
X” in accordance with Article 837 of the Commercial Code.
Relevant Is the defendant’s liability limited to the value of the boat?
Issue(s)
Article 837 provides that the civil liability contracted by the shipowners shall
be understood as limited to the value of the vessel with all her appurtenances
Analysis and all the freight earned during the voyage. The Manila X boat is a vessel in
contemplation of this provision. Hence, the liability is limited to the value of
the boat.
Ruling(s) & YES.
Page 12
Article 837 of the Commercial Code declares it strictly. Maritime law is of an

exclusively real nature and limits the liability of the shipowner to the value of
the ship. The "Manila X" boat, which is a vessel used to navigate fresh or
saltwater, suitable for receiving and transporting people or things, falls under
the general concept of the word vessel used in Article 837 of the Commercial
Code. No mention is made in the appealed decision of any circumstance that
Rationale excludes the boat "Manila" from this concept.
Moreover, the “Manila X” boat continued in the possession of the defendant

for more than ten months after the collision, which had diminished in value.
This would have been avoided if the plaintiff seized the boat immediately after
the collision, whose real character gave him a right to it.
*Note: Original text was in Spanish. Case digest was written based on a translation through Google
Translate.
Page 13
6
Digest Author Jalandoni, Chloe
Limited liability rule: no vessel, no Coverage of limited liability
Topic
liability
CASE INFORMATION
Petitioner(s) TEODORO R. YANGCO, ETC.
Respondent(s) MANUEL LASERNA, ET AL.
Reference GR No. L-47447-47449 October 29, 1941
Ponente J. MORAN
DOCTRINE(S)
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.
CASE SUMMARY
● At about one o’clock in the afternoon of May 26, 1927, the steamer S.
S. Negros, belonging to petitioner here, Teodoro R. Yangco, left the
port of Romblon on its return trip to Manila
● Typhoon signal No. 2 was raised, of which fact the captain was duly
advised and his attention thereto called by the passengers themselves
before the vessel set sail.
● The boat was overloaded as indicated by the load line which was 6 to
7 inches below the surface of the water.
● Baggage, trunks, and other equipment were heaped on the upper
Pertinent deck, the hold being packed to capacity. In addition, the vessel carried
Facts thirty sacks of crushed marble and about one hundred sacks of copra,
and some lumber.
● The passengers, numbering about 180, were overcrowded, vessel’s
capacity is limited to only 123 passengers.
● As the sea became increasingly violent, the captain ordered the vessel
to turn left, evidently to return to port, but in the maneuver, the vessel
was caught sidewise by a big wave which caused it to capsize and
sink.
● Many of the passengers died.
● Respondents are heirs of some of the passengers who died.
Procedural History
CFI ● . The court awarded the heirs of Antolin and Victorioso Aldana the sum of
Page 14
P2,000; the heirs of Casiana Laserna, P590; and those of Genaro

Basana, also P590.
● After the rendition of the judgment to this effect, the petitioner, by a
verified pleading, sought to abandon the vessel to the plaintiffs in the
three cases, together with all its equipment, without prejudice to his right
to appeal.
● The abandonment was denied
● All the judgments were affirmed except that which sums were increased
CA
to P4,000.
May the shipowner or agent, notwithstanding the total loss of the vessel as a
Relevant
result of the negligence of its captain, be properly held liable in damages for
Issue(s)
the consequent death of its passengers?
This is controlled by Art 587 of the Code of Commerce which states: "The
agent shall also be civilly liable for the indemnities in favor of third persons
which arise from the conduct of the captain in the care of the goods which
the vessel carried; but he may exempt himself therefrom by abandoning the
Analysis vessel with all her equipments and the freight he may have earned during the
voyage."The provision accords a shipowner or agent the right of
abandonment; and by necessary implication, his liability is confined to that
which he is entitled as of right to abandon - "the vessel with all her
equipments and the freight it may have earned during the voyage."
NO. In arriving at this conclusion, the fact is not ignored that the ill-fated 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
Ruling(s) & the mishap rests on a contract of carriage. But assuming that petitioner is
Rationale 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.
Page 15
7
Digest Author Jimenez, Bethany
Topic Limited Liability Rule Exception
CASE INFORMATION
Petitioner(s) Government Of The Philippine Islands
Respondent(s) The Insular Maritime Co.
Reference GR No. 21495 March 18, 1924
Ponente MALCOLM, J.
DOCTRINE(S)
The total destruction of the vessel does not affect the liability of the owners for repairs on the
vessel completed before its loss.
CASE SUMMARY
● On October 29, 1919, The Insular Maritime Company asked the
Bureau of Commerce and Industry to perform certain repairs on the
Insular.
● The Government consented and terminated said repairs on November
29 of the same year. Subsequently, on April 15, 1920, the Insular
suffered a total loss by fire.
● The bill prepared by the Bureau for work done on the motor ship
Pertinent
Insular in the amount of P30,437.91, was dated July 31, 1920.
Facts
Collection of the claim was attempted pursuant to formal demand
made by the Acting Insular Auditor of date April 30, 1921.
● It must be noted that no steps were taken by the Government to
secure payment for the repairs until after the loss of the vessel Insular.
● The Government seeks to recover from Insular the sum of P30, 437.91
for repairs made by the Bureau of Commerce and Industry on the
motor ship Insular.
Procedural History
● The trial judge further found in effect, as a legal conclusion, that the loss
of the vessel Insular extinguished the obligation. The Attorney-General
Trial challenges the correctness of this view.
Court ● The decision was predicated on the judge’s understanding of the
provisions of article 591 of the Code of Commerce in relation with other
articles of the same Code.
?
Relevant Whether the loss of the vessel extinguished the obligation?
Page 16
Issue(s)
The Court ruled that Article 591 of the Code of Commerce does not apply in
this case because there is nothing in the language to denote that the liability
of the owners of a vessel is wiped out by the loss of that vessel. In this case,
Analysis there is a contractual relation which remains unaffected by the loss of the
thing concerned in the contract and which is governed principally by the
provisions of the Civil Code. Therefore, Insular is still liable to pay the
Government.
NO, the loss of the vessel does not extinguish the obligation.
Article 591 of the Code of Commerce does not apply in this case because
there is nothing in the language to denote that the liability of the owners of a
vessel is wiped out by the loss of that vessel.
Ruling(s) & The rights and liabilities of owners of ships are in many respects essentially
Rationale the same as in the case of other owners of things. As a general rule, the
owners of a vessel and the vessel itself are liable for necessary repairs.
Naturally the total destruction of the vessel extinguishes a maritime lien, as
there is no longer any res to which it can attach. But the total destruction of
the vessel does not affect the liability of the owners for repairs on the vessel
completed before its loss.
8
Digest Author Maulion, Christine Joice
Limited Liability Rule: No Vessel, No Negligence of shipowner and agent
Topic
Liability
CASE INFORMATION
Petitioner(s) MANILA STEAMSHIP CO., INC.
Respondent(s) INSA ABDULHAMAN (MORO) and LIM HONG TO
Reference GR No. L-9534 September 29, 1956
Ponente REYES, J. B. L.
DOCTRINE(S)
Shipowners and ship agents are civilly liable for acts of the captain and for the indemnities do to third
persons, thus injured parties may seek reimbursement directly to the owner of the ship.
CASE SUMMARY
Pertinent On the evening of May 4, 1948, Plaintiff Insa Abdulhaman, his wife Carimla Mora and
Facts their 5 children were passengers of the vessel M/L Consuelo V, which left the port of
Page 17
Zamboanga City bound for Siokon. During the start of the trip, the weather was good
and fair. On the same night, M/S Bowline Knot was navigating towards Zamboanga.
Later that night, it started raining heavily for about an hour, although it eventually
cleared out and the weather went back to being fair.
Further later that evening, M/L Consuelo V collided with M/S Bowline Knot which
caused M/L Consuelo V to capsize. 9 passengers died, including the 5 children of
Plaintiff.Before the collision, there was no warning as to the possibility of collision of
the vessels to the passengers.
Plaintiff INSA ABDULHAMAN filed this complaint before CFI Zamboanga to recover
damages for the death of his children as a result of the collision.
Petitioner, owner of Manila Steamship Co. argues that it is exempt from any liability
under Article 1903 of the Civil Code because it had exercised the diligence of a good
father of a family in the selection of its employees, specifically with the officer in
command of its vessels.
Procedural History
Board of ● found that both the commanding officers of M/L Consuelo V and M/S
Marine Bowline Knot were negligent in operating the vessels
Inquiry
CA ● affirmed the finding of Board of Marine Inquiry
Relevant 1. Is the petitioner exempt from liability for damages asked by the plaintiff?
Issue(s)
Article 827 of the Code of Commerce provides that in case of collision between two
vessels, which is imputable to both of them, each vessel shall suffer her own damage
and both vessels shall be solidarily liable for the damages incurred to their cargoes.
Analysis Under the maritime law, the solidary liability highlights the direct nature of the
responsibilities on account of the collision incurred by the shipowner. This direct
responsibility is realized in Article 618 of the Code of Commerce stating that the
captain shall be civilly liable to the ship agent, and the latter is the one liable to third
persons
1. NO. The tort in this case is not of civil nature, but a maritime tort. SC
ruled that maritime torts resulting in a collision at sea is governed by the
Ruling(s) &
Code of Commerce, specifically Articles 826-939. Following Article 827
Rationale
of the Code of Commerce, since both vessels are at fault, they are
solidarily liable for damages to the plaintiff.
Page 18
9
Digest Author Navea-Huff, Kali
Topic Limited Liability Rule XPN: Doesn’t Apply to Insurance Claims
CASE INFORMATION
VAQUEZ (Pedro Vasquez, Soledad Ortega, Cleto B. Bagaipo, Agustina
Petitioner(s)
Virtudes, Romeo Vasquez & Maxima Cainay)
Respondent(s) CA (Court of Appeals & Filipinas Pioneer Lines Inc.
Reference GR No. L-42926 September 13, 1985
Ponente Melencio-Herrera
DOCTRINE(S)
Total loss of vessel does NOT extinguish liability of carrier’s insurer. Insurance answers for
damage that a shipowner or agent may be held liable for by reason of death of passengers.
To constitute a caso fortuito that would exempt someone from liability, it should show: 1) event
independent of human will; 2) occurrence should render it impossible for debtor to fulfill
obligation in normal manner; 3) obligor must be free of participation in, or aggravation of, injury
to creditor.
CASE SUMMARY
Pertinent had on board Sps (Alfonso Vasquez & Filipinas Bagaipo) and a 4 yr old Mario
Facts Vasquez, and other passengers. The vessel encountered typhoon “Klaring”
and struck a reef north of Cebu & sunk. Passengers haven’t been heard from.
Plaintiffs Pedro & Soledad are parents of Alfonso. Plaintiffs Cleto & Agustina
are parents of Filipinas. Plaintiffs Romeo & Maxima are parents of 4 y/o
Mario. (They all seek recovery of damages due to the loss of the 3.
Defendant admitted its contract of carriage w/ the 3 and the fact that the
vessel sunk.
Evidence on record shows: Vessel left 8hrs later than it was supposed to,
permit showed that there was no emergency electrical power system, & the
permit allowed 260 passengers compared to usual 3222 because there was
not enough safety devices. However only 188 people on board via headcount
that isn’t reliable.
When vessel left Manila, officers were aware of Typhoon Klaring building up
in Mindanao. There being no typhoon signals on the route from Manila to
Cebu, and the vessel having been cleared by the Customs authorities, the
MV 'Pioneer Cebu' left on its voyage to Cebu despite the typhoon. When it
reached Romblon Island, it was decided not to seek shelter thereat,
Page 19
inasmuch as the weather condition was still good.

After passing Romblon, the barometer still indicated the existence of good
weather condition continued until the vessel approached Tanguingui island.
Upon passing the latter island, however, the weather suddenly changed and
heavy rains fell. Fearing that due to zero visibility, the vessel might hit
Chocolate island group, the captain ordered a reversal of the course so that
the vessel could 'weather out' the typhoon by facing the winds and the
waves in the open. However, the vessel struck a reef near Malapascua island,
sustained leaks and eventually sunk, bringing with her Captain Floro Yap who
was in command of the vessel.
Due to the loss of their children, petitioners sued for damages before the CFI
Manila.
Defendant position: sinking of vessel was caused by force majeure and
defendant’s liability had been extinguished by total loss of the vessel.
Procedural History
● CFI awarded damages ordering defendant to pay all plaintiffs for
CFI
damages.
CA ● CA reversed CFI & absolved respondent from any/all liability
Relevant Is respondent liable for damages for presumptive death of Petitioner’s
Issue(s) children?
Being AWARE of the typhoon, showing that you took measures (not enough
Analysis measures) to protect against it (here they lashed down all cargo), and having
conferences shows that this is not a case of force majeure.
Ruling(s) & YES.
Rationale CFI found defense of caso fortuito untenable: “even before the vessel left on
its last voyage, its officers and crew were already aware of the typhoon
brewing somewhere in the same general direction to which the vessel was
going. The crew of the vessel took a calculated risk when it proceeded
despite the typhoon advisory. This is quite evident from the fact that the
officers of the vessel had to conduct conferences amongst themselves to
decide whether or not to proceed. The crew assumed a greater risk when,
instead of seeking shelter in Romblon and other islands the vessel passed
enroute, they decided to take a change on the expected continuation of the
good weather the vessel was encountering, and the possibility that the
typhoon would veer to some other directions. The eagerness of the crew of
the vessel to proceed on its voyage and to arrive at its destination is readily
understandable. It is undeniably lamentable, however, that they did so at the
risk of the lives of the passengers on board."
But CA believed calamity was caused solely by fortuitous event which not
even extraordinary diligence of highest degree could have prevented so no
Page 20
negligence on part of common carrier.

SC sustained CFI.
To constitute a caso fortuito that would exempt someone from liability, it

should show: 1) event independent of human will; 2) occurrence should
render it impossible for debtor to fulfill obligation in normal manner; 3) obligor
must be free of participation in, or aggravation of, injury to creditor.
In this case, the officers & crew of the vessel were AWARE of the typhoon
(they even lashed all cargo in hold before sailing because they knew about
strong winds & waters). In Romblon, they had weather report that typhoon
was 154 kms east of Tacloban & moving west. Since they weren’t within
radius & weather was clear, they decided to proceed with course. Even when
they reached Jintotolo, and typhoon was reaching near, they still proceeded
because weather was “good”. When they were at Tanguingui the typhoon
was in the area but they still proceeded.
Though the typhoon was an inevitable occurrence, they were informed of

course of typhoon over 6 hours and were aware of risk as they hopped from
island to island. They also held frequent conferences & oblivious of utmost
diligence required of cautious persons & took a calculated risk.
In so doing, they failed to observe that extraordinary diligence required of

them explicitly by law for the safety of the passengers transported by them
with due regard for all circumstances and unnecessarily exposed the vessel
and passengers to the tragic mishap. They failed to overcome that
presumption of fault or negligence that arises in cases of death or injuries to
passengers.
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, 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
Page 21
10
Digest Author Noel, Miguel
LIMITED LIABILITY RULE: NO Workmen’s Compensation
Topic
VESSEL, NO LIABILITY
CASE INFORMATION
Dionisa Abueg
Petitioner(s) Marciana De Salvacion (2nd case)
Rosario Oching (3rd Case)
Respondent(s) Bartolome San Diego
Reference GR No. L-773, L-774, L-775 December 17, 1946
Ponente Padilla, J.
DOCTRINE(S)
The rights and responsibilities defined in the law must be governed by its own peculiar
provisions in complete disregard of other similar mercantile law. If an accident is
compensable under the Workmen's Compensation Act, it must be compensated even when the
workman's right is not recognized by or is in conflict with other provisions of the Civil Code or
the Code of Commerce.
CASE SUMMARY
Pertinent Bartolome was the owner of the motor ships San Diego II and Bartolome S.
Facts Plaintiffs are widows of deceased workers (machinists, captain/patron) on
board the vessels. The M/S San Diego II and the M/S Bartolome, while
engaged in fishing operations around Mindoro Island on Oct. 1, 1941 were
caught by a typhoon as a consequence of which they were sunk and totally
lost. Plaintiffs are widows of deceased workers (machinists, captain/patron)
on board the vessels who perished in the shipwreck.
The petitioners are now trying to recover based on claims under the
workmen’s compensation act.
Respondent cites article 587 of the Code of Commerce which 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. Article 837 provides that in cases of collision, the ship owners'
liability is limited to the value of the vessel with all her equipment and
Page 22
freight earned during the voyage. Article 643 says that if the vessel and
freight are totally lost, the agent's liability for wages of the crew is
extinguished. They therefore claim that their liability to the deceased
persons, was extinguished due to the ship being sunk by the typhoon.
Procedural History
CFI ● Awarded the compensation provided for in the Act
Manila
CA ● No question of fact raised, case forwarded to the SC
Relevant 1. Is the owner liable for compensation under the Act?
Issue(s)
The real and hypothecary nature of the liability of the shipowner or agent
embodied in the provisions of the Maritime Law, in the Code of Commerce,
had its origin in the hazards and perils of the maritime trade and sea voyages
during the medieval ages. To offset these adverse conditions and encourage
maritime commerce, it was necessary to limit the liability of the owner or
Analysis
agent to the vessel, equipment, and freight, or insurance, if any, so that if the
shipowner or agent abandoned the ship, equipment, and freight, his liability
was extinguished.
The liability however under the Workmen’s Compensation Act is completely
separate from that under the Code of Commerce.
Ruling(s) & 1. YES The provisions of the Code of Commerce invoked by Respondent
Rationale have no room in the application of the Workmen's Compensation Act, a
law which seeks to improve, and aims at the amelioration of, the
condition of laborers and employees.
The liability under the law does not contemplate any misconduct of the
captain, or the liability due to a collision, which results in the loss of the ship
or death of a crew.
It is a liability created by a 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 and 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. It is
an item in the cost of production which must be included in the budget of any
well-managed industry.
The rights and responsibilities defined in the law must be governed by

its own peculiar provisions in complete disregard of other similar
mercantile law. If an accident is compensable under the Workmen's
Page 23
Compensation Act, it must be compensated even when the workman's right

is not recognized by or is in conflict with other provisions of the Civil Code or
the Code of Commerce.
Page 24
11
Digest Author Perico, Bryan
Maritime Law, General Abandonment
Topic
Concepts
CASE INFORMATION
Petitioner(s) Ohta Development Co.
Respondent(s) Steamship Pompey
Reference GR No. 24658 31 March 1926
Ponente Avancena, C.J.
DOCTRINE(S)
Article 587 of the Code of Commerce authorizes the shipowner to abandon the ship with
all its tackle and freight earned during the voyage in order to answer for his liability to third
persons.
CASE SUMMARY
Ohta Development Co’s ship was the owner of a pier in Davao. When
Steamship Pompey docked, the workers unloaded the flour and rice to the
Pertinent Facts warehouse of Ohta. The unloading was done in a hurry that a large portion of
cargo accumulated on the dock which resulted to the pier sinking with all the
merchandise.
Procedural History
● Sentenced Steamship Pompey to pay Ohta Development Co. damages
Trial Court
for the destruction of its pier and loss of its merchandise.
Relevant 1. Whether Steamship Pompey is liable for damages?
Issue(s) 2. Whether Article 587 and 837 of the Code of Commerce is applicable?
The delivery of the cargo at the port of discharge that terminates the captain’s
responsibility as to the cargo. The captain shall be answerable for the cargo
Analysis from the moment that it is delivered to him at the wharf or alongside the ship
in the harbor of embarkation until delivered on the shore or wharf of the port
of discharge.
Ruling(s) & 1. YES. When the merchandise was lost on account of the sinking of the
Rationale dock, it had not yet been delivered and consequently it was under the
responsibility of the captain. Herein, the National Coal Company, as the
operator, is responsible for the indemnities arising from the lack of skill or
negligence of the captain.
2. NO. It cannot be said the liability of the other defendants is subsidiary
and limited to what the steamship Pompey may answer for. Such
Page 25
argument, seemingly based upon article 587 of the Code of Commerce

which authorizes the shipowner to abandon the ship with all its tackle and
freight earned during the voyage in order to answer for his liability to third
persons, is inapplicable, for the reason that there was no abandonment of
the ship. The Court does not believe that Steamship Pompey, et.al. based
their contention upon article 837 which refers to collisions, because that
is not the case here.
Page 26
12
Digest Author Puaso, Aaron James Puaso
LIMITED LIABILITY RULE: No Vessel Procedure for Enforcement
Topic
No Liability
CASE INFORMATION
Petitioner(s) SPOUSES ROMEO LIPANA and MILAGROS LIPANA
Respondent(s) DEVELOPMENT BANK OF RIZAL
Reference GR No. 73884 September 24, 1987
Ponente Paras, J.
DOCTRINE(S)
The assets of the insolvent banking institution are held in trust for the equal benefit of all
creditors, and after its insolvency, one cannot obtain an advantage or a preference over another
by an attachment, execution or otherwise.
CASE SUMMARY
Herein petitioners opened and maintained both time and savings deposits with
the Development Bank of Rizal all in the aggregate amount of P939,737.32.
Pertinent When some of the Time Deposit Certificates matured, petitioners were not
Facts able to cash them but instead were issued a manager's check which was
dishonored upon presentment. Demands for the payment of both time and
savings deposits failed.
Procedural History
● Filed a Complaint With Prayer For Issuance of a Writ of Preliminary
Attachment for collection of a sum of money with damages.
● Judgement in favor of Petitioners
RTC
● Writ of execution was issued.
● Order to stay execution filed by Bank was issued.
● Court denied the motion to lift the stay order.
Relevant Can the RTC Judge legally issue a stay order for the execution?
Issue(s)
The rule that once a decision becomes final and executory, it is the ministerial
duty of the court to order its execution, admits of certain exceptions as in
cases of special and exceptional nature where it becomes imperative in the
higher interest of justice to direct the suspension of its execution (Vecine vs.
Analysis
Geronimo, 59 O.G. 579); whenever it is necessary to accomplish the aims of
justice (Pascual vs. Tan, 85 Phil. 164); or when certain facts and
circumstances transpired after the judgment became final which could render
the execution of the judgment unjust.
Page 27
YES. In the instant case, the stay of the execution of judgment is warranted
by the fact that respondent bank was placed under receivership. To execute
the judgment would unduly deplete the assets of respondent bank to the
obvious prejudice of other depositors and creditors, since, as aptly stated in
Ruling(s) & Central Bank of the Philippines vs. Morfe (63 SCRA 114), after the Monetary
Rationale Board has declared that a bank is insolvent and has ordered it to cease
operations, the Board becomes the trustee of its assets for the equal benefit
of all the creditors, including depositors. The assets of the insolvent banking
institution are held in trust for the equal benefit of all creditors, and after its
insolvency, one cannot obtain an advantage or a preference over another by
an attachment, execution or otherwise.
Page 28
13
Digest Author Quijano, Feleo
Topic Maritime Law Admiralty Jurisdiction
CASE INFORMATION
Petitioner(s) INTERNATIONAL HARVESTER COMPANY OF THE PHILIPPINES
CRISANTO ARAGON, Judge of Municipal Court of Manila, and YARAS and
Respondent(s)
COMPANY, FAR EAST
Reference GR No. L-2372 August 26, 1949
Ponente Paras, J.
DOCTRINE(S)
Admiralty has jurisdiction over all maritime contracts, in whatever form, wherever they were
executed or are to be performed, but not over non-maritime contracts. Whether or not a
contract is maritime depends not on the place where the contract is made and is to be
executed, making the locality the test, but on the subject-matter of the contract, making the
true criterion a maritime service or a maritime transaction.
CASE SUMMARY
Yaras and Company, Far East, filed a complaint in Municipal Court of Manila
against Manila Terminal Co., Inc., and International Harvester Company of the
Philippines. The complaint alleges that Manila Terminal Co., Inc., is in charge
of the custody and delivery to the respective owners of cargoes discharged
at the piers in Manila.
The S/S Belle of the Sea took on board at Los Angeles, California, U. S. A.,
goods for shipment to Manila, Philippines, and covered by Bill of Lading No.
Pertinent 105 The S/S Belle of the Sea discharged her cargo at the piers under the
Facts supervision and custody of the Manila Terminal Co., Inc. Out of the goods
covered by Bill of Lading No. 105, one carton of assorted samples with a
stipulated value of P200 was not delivered to Yaras and Company; and said
merchandise was lost through the negligence either of the Manila Terminal
Co., Inc., or of the International Harvester Company of the Philippines.
International Harvester of the Philippines filed a motion to dismiss, on the

ground that the Municipal Court of Manila had no jurisdiction to try case
because the action involves admiralty or maritime jurisdiction
Procedural History
CFI After trial, the Court of First Instance of Manila rendered judgment favor of the
Page 29
petitioners, International Harveter Company of the Philippines, ordering the

respondent judge of the municipal court to desist from taking cognizance of
civil case
Relevant Whether the CFI has jurisdiction over the case? YES.
Issue(s)
1. The contention of the respondent Yaras and Company that admirally
jurisdiction is not involved herein because the contract in question was
made upon land and to be terminated upon land, merely reflects the
English rule which had long been rejected in the United States. It is
now settled in the latter country that "the jurisdiction of admiralty in
matters of contract depends upon the subject-matter, i.e., the nature
and character of the contract, and that the English rule which
conceded jurisdiction (with few exceptions) only to contracts made
upon and the to be performed upon navigable waters, is inadmissable,
the true criterion being that the contract has reference to maritime
service or maritime transaction."
2. We choose to adopt the sound American rule. Even in England the
English rule was not without protest. Lord Kenyon, in Menetone vs.
Ruling(s) & Gibbons, had expressed the following criticism: "if the admiralty has
Rationale jurisdiction over the subject-matter, to say that it is necessary for the
parties to go upon the sea to execute the instrument borders upon
absurdity.
3. The Yaras and Company cannot invoke the rule against multiplicity of
suits, for the simple reason that said rule has to be subservient to the
superior requirement that the court must have jurisdiction. In view of
our conclusion that the cause of action of said respondent against
International Harvester Company of the Philippines involves admiralty
over which the courts of first instance have original jurisdiction (Par. 4,
Sec. 56, Act No. 136 of the Philippine Commission, as reproduced in
sec. 43 [d] of Republic Act No. 296), and to which the jurisdiction of
the justice of the peace courts (including municipal courts) does not
extend, the respondent judge was properly restrained from further
proceeding with civil case No. IV-262
14.
Digest Author Ricasio, Lawrence
Topic Preferred Claims Tests to Determine the Presence of
Page 30
Lien
CASE INFORMATION
Petitioner(s) CRESCENT PETROLEUM, LTD
M/V "LOK MAHESHWARI," THE SHIPPING CORPORATION OF INDIA, and
Respondent(s)
PORTSERV LIMITED and/or TRANSMAR SHIPPING, INC
Reference GR No. 155014 November 11, 2005
Ponente Puno, J.
DOCTRINE(S)
It is well-settled that a party whose cause of action or defense depends upon a foreign law has
the burden of proving the foreign law. Such foreign law is treated as a question of fact to be
properly pleaded and proved. Petitioner Crescent’s insistence on enforcing a maritime lien
before our courts depended on the existence of a maritime lien under the proper law. By
erroneously claiming a maritime lien under Philippine law instead of proving that a maritime lien
exists under Canadian law, petitioner Crescent failed to establish a cause of action.
CASE SUMMARY
Pertinent - Respondent M/V "Lok Maheshwari" (Vessel) is an oceangoing vessel
Facts of Indian registry that is owned by respondent Shipping Corporation of
India (SCI), a corporation organized and existing under the laws of
India and principally owned by the Government of India. It was time-
chartered by respondent SCI to Halla Merchant Marine Co. Ltd. (Halla),
a South Korean company. Halla, in turn, sub-chartered the Vessel
through a time charter to Transmar Shipping, Inc. (Transmar).
Transmar further sub-chartered the Vessel to Portserv Limited
(Portserv). Both Transmar and Portserv are corporations organized and
existing under the laws of Canada.
- On or about November 1, 1995, Portserv requested petitioner
Crescent Petroleum, Ltd. (Crescent), a corporation organized and
existing under the laws of Canada that is engaged in the business of
selling petroleum and oil products for the use and operation of
oceangoing vessels, to deliver marine fuel oils (bunker fuels) to the
Vessel. Petitioner Crescent granted and confirmed the request through
an advice via facsimile dated November 2, 1995. As security for the
payment of the bunker fuels and related services, petitioner Crescent
received two (2) checks in the amounts of US$100,000.00 and
US$200,000.00. Thus, petitioner Crescent contracted with its supplier,
Marine Petrobulk Limited (Marine Petrobulk), another Canadian
corporation, for the physical delivery of the bunker fuels to the Vessel.
Page 31
- On or about November 4, 1995, Marine Petrobulk delivered the bunker

fuels amounting to US$103,544 inclusive of barging and demurrage
charges to the Vessel at the port of Pioneer Grain, Vancouver, Canada.
The Chief Engineer Officer of the Vessel duly acknowledged and
received the delivery receipt. Marine Petrobulk issued an invoice to
petitioner Crescent for the US$101,400.00 worth of the bunker fuels.
Petitioner Crescent issued a check for the same amount in favor of
Marine Petrobulk, which check was duly encashed.
- Having paid Marine Petrobulk, petitioner Crescent issued a revised
invoice dated November 21, 1995 to "Portserv Limited, and/or the
Master, and/or Owners, and/or Operators, and/or Charterers of M/V
‘Lok Maheshwari’" in the amount of US$103,544.00 with instruction to
remit the amount on or before December 1, 1995. The period lapsed
and several demands were made but no payment was received. Also,
the checks issued to petitioner Crescent as security for the payment of
the bunker fuels were dishonored for insufficiency of funds. As a
consequence, petitioner Crescent incurred additional expenses of
US$8,572.61 for interest, tracking fees, and legal fees.
- On May 2, 1996, while the Vessel was docked at the port of Cebu City,
petitioner Crescent instituted before the RTC of Cebu City an action
"for a sum of money with prayer for temporary restraining order and
writ of preliminary attachment" against respondents Vessel and SCI,
Portserv and/or Transmar.
- On May 3, 1996, the trial court issued a writ of attachment against the
Vessel with bond at P2,710,000.00. Petitioner Crescent withdrew its
prayer for a temporary restraining order and posted the required bond.
- On May 18, 1996, summonses were served to respondents Vessel and
SCI, and Portserv and/or Transmar through the Master of the Vessel.
On May 28, 1996, respondents Vessel and SCI, through Pioneer
Insurance and Surety Corporation (Pioneer), filed an urgent ex-parte
motion to approve Pioneer’s letter of undertaking, to consider it as
counter-bond and to discharge the attachment. On May 29, 1996, the
trial court granted the motion; thus, the letter of undertaking was
approved as counter-bond to discharge the attachment.
Procedural History
RTC ● Action for sum of money
● issued writ of attachment against the vessel, Petitioner Crescent posted
required bond
● Respondents filed an urgent ex-parte motion to approve Pioneer’s letter
of undertaking, to consider it as counter-bond
Page 32
● RTC granted the motion

o Undertaking was approved as counter-bond to discharge
attachment
● RTC declared respondents in default - rendered decision in favor of
petitioner Creschent
● CA reversed and set aside RTC
CA
● dismissed the case for want of jurisdiction
Should the Philippine court has or will exercise jurisdiction and entitled to
Relevant
maritime lien under our laws on foreign vessel docked on Philippine port and
Issue(s)
supplies furnished to a vessel in a foreign port? (NO)
It is well-settled that a party whose cause of action or defense depends upon
a foreign law has the burden of proving the foreign law. Such foreign law is
treated as a question of fact to be properly pleaded and proved. Petitioner
Crescent’s insistence on enforcing a maritime lien before our courts
Analysis
depended on the existence of a maritime lien under the proper law. By
erroneously claiming a maritime lien under Philippine law instead of proving
that a maritime lien exists under Canadian law, petitioner Crescent failed to
establish a cause of action.
Ruling(s) &
Rationale I.
The various tests used in the U.S. to determine whether a maritime lien exists
are the following:
One. "In a suit to establish and enforce a maritime lien for supplies furnished
to a vessel in a foreign port, whether such lien exists, or whether the court
has or will exercise jurisdiction, depends on the law of the country where the
supplies were furnished, which must be pleaded and proved.”
Two. The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced such

single-factor methodologies as the law of the place of supply.
- Lauritzen v Larsen - The following factors were considered: (1) place of
the wrongful act; (2) law of the flag; (3) allegiance or domicile of the
injured; (4) allegiance of the defendant shipowner; (5) place of contract;
(6) inaccessibility of foreign forum; and (7) law of the forum.
- Romero v International Shipping - factors first announced in the case
of Lauritzen were applicable not only to personal injury claims arising
under the Jones Act but to all matters arising under maritime law in
general.
- Hellenic Lines v Rhoditis - of the seven factors listed in the Lauritzen
test, four were in favor of the shipowner and against jurisdiction.
Page 33
-
Three. The factors provided in Restatement (Second) of Conflicts of Law
have also been applied, especially in resolving cases brought under the
Federal Maritime Lien Act. Their application suggests that in the absence of
an effective choice of law by the parties, the forum contacts to be considered
include: (a) the place of contracting; (b) the place of negotiation of the
contract; (c) the place of performance; (d) the location of the subject matter of
the contract; and (e) the domicile, residence, nationality, place of
incorporation and place of business of the parties.
II.
Based on the previous decisions, the court cannot sustain the application of
PD 1521 (Ship Mortgage Decree)
First. Out of the seven basic factors listed in the case of Lauritzen, Philippine
law only falls under one – the law of the forum. All other elements are foreign
– Canada is the place of the wrongful act, of the allegiance or domicile of the
injured and the place of contract; India is the law of the flag and the
allegiance of the defendant shipowner. Balancing these basic interests, it is
inconceivable that the Philippine court has any interest in the case that
outweighs the interests of Canada or India for that matter.
Second. P.D. No. 1521 or the Ship Mortgage Decree of 1978 is inapplicable
following the factors under Restatement (Second) of Conflict of Laws. Like
the Federal Maritime Lien Act of the U.S., P.D. No. 1521 or the Ship Mortgage
Decree of 1978 was enacted primarily to protect Filipino suppliers and was
not intended to create a lien from a contract for supplies between foreign
entities delivered in a foreign port.
Third. Applying P.D. No. 1521 or the Ship Mortgage Decree of 1978 and rule
that a maritime lien exists would not promote the public policy behind the
enactment of the law to develop the domestic shipping industry. Opening up
our courts to foreign suppliers by granting them a maritime lien under our
laws even if they are not entitled to a maritime lien under their laws will
encourage forum shopping.
Finally. The submission of petitioner is not in keeping with the reasonable

expectation of the parties to the contract. Indeed, when the parties entered
into a contract for supplies in Canada, they could not have intended the laws
Page 34
of a remote country like the Philippines to determine the creation of a lien by

the mere accident of the Vessel’s being in Philippine territory
III.
The basis of the claim based on a maritime lien should have been established
under Canadian Law.
In light of the interests of the various foreign elements involved, it is clear that
Canada has the most significant interest in this dispute. The injured party is a
Canadian corporation, the sub-charterer which placed the orders for the
supplies is also Canadian, the entity which physically delivered the bunker
fuels is in Canada, the place of contracting and negotiation is in Canada, and
the supplies were delivered in Canada.
The arbitration clause contained in the Bunker Fuel Agreement which states
that New York law governs the "construction, validity and performance" of
the contract is only a factor that may be considered in the choice-of-law
analysis but is not conclusive. As in the cases of Gulf Trading and Swedish
Telecom, the lien that is the subject matter of this case arose by operation of
law and not by contract because the shipowner was not a party to the
contract under which the goods were supplied.
It is worthy to note that petitioner Crescent never alleged and proved

Canadian law as basis for the existence of a maritime lien. To the end, it
insisted on its theory that Philippine law applies. Petitioner contends that
even if foreign law applies, since the same was not properly pleaded and
proved, such foreign law must be presumed to be the same as Philippine law
pursuant to the doctrine of processual presumption.
Page 35

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The [Respondent] is liable for the indemnification to which the plaintiff is

Digest Author Florencio, Mayoree Rozene F.

Topic Maritime Law Maritime Lien

Petitioner(s) Daniel Harmer

Respondent(s) William Errington Bell and Others

Reference 13 E.R. 884 December 16, 1850; May 16 and December

Pertinent ● A Scotch steamer ran down an English vessel in the Humber. An

a purchaser for value without notice.

Relevant 1. Whether the maritime line requires possession of the thing?

The pleadings show that the proceedings in Scotland were commenced by

Petitioners Monarch and Tabacalera are insurance companies of lost

appellant’s brief, which was also denied for lack of merit.

Consequently, Monarch and Tabacalera moved for execution of judgment.

navigation."[56]; and that:

That Aboitiz failed to discharge the burden of proving that the

Article 837 of the Commercial Code declares it strictly. Maritime law is of an

Moreover, the “Manila X” boat continued in the possession of the defendant

P2,000; the heirs of Casiana Laserna, P590; and those of Genaro

inasmuch as the weather condition was still good.

negligence on part of common carrier.

To constitute a caso fortuito that would exempt someone from liability, it

Though the typhoon was an inevitable occurrence, they were informed of

In so doing, they failed to observe that extraordinary diligence required of

It is a liability created by a statute to compensate employees and

The rights and responsibilities defined in the law must be governed by

Compensation Act, it must be compensated even when the workman's right

argument, seemingly based upon article 587 of the Code of Commerce

International Harvester of the Philippines filed a motion to dismiss, on the

petitioners, International Harveter Company of the Philippines, ordering the

- On or about November 4, 1995, Marine Petrobulk delivered the bunker

● RTC granted the motion

Two. The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced such

Finally. The submission of petitioner is not in keeping with the reasonable

of a remote country like the Philippines to determine the creation of a lien by

It is worthy to note that petitioner Crescent never alleged and proved

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