61. FRANCISCO ORTIGAS, JR. v.

LUFTHANSA GERMAN AIRLINES

G.R. No. L-28773; June 30, 1975

Facts:
Francisco Ortigas, and defendant Lufthansa German Airlines, appealed from the
decision of the Court of First Instance of Manila, condemning the defendant to pay
plaintiff an indemnity for the former's failure to "comply with its obligation to give first
class accommodation to a Filipino passenger holding a first class ticket," This was due to
giving of the space instead to a Belgian and the improper conduct of its agents in dealing
with him which was filled with discrimination.
During the trial, there were several postponements of the trial from both sides. Three
hearings were postponed on the request of the plaintiffs, 4 on the request of both
parties, and 10 on the request of respondents.
Due to so many postponements made by the respondent, including the no-show of their
European employees as witnesses, the case tilted out of their favor. One of their
witnesses was stricken from the list due to his non-appearance in the day that the cross-
exam on him was to be finished and the judge moved for a finality regarding the
postponements (ie. no postponements were to be made again)
Ortigas claimed that while in Rome, the discrimination against him took place.
Moreover, when he asked for a seat change to first class during the stop overs, he wasnt
given any. He was only given the option when he was already in Hong Kong, about 3
hours only from Manila.

Issues:
1. WON the lower court acted in grave abuse of discretion when it denied the
defendants motion for postponement on Sept 24, 1966.
2. WON the lower court erred in striking out the testimony of one of the defendants
witnesses even if his testimony was not finished
3. WON the lower court erred in making the defendant pay indemnities.

Held: No to all. Judgment modified raising damages from 100k to 150k.

Ratio:
1. The case had been pending for about three years and had actually suffered during that
period even more than the usually permissible number of continuances, quite often to
suit the convenience of defendant's counsel. Notice of the September 28, 1966 schedule
had been served on counsel the month previous. It must be assumed that due
preparations and arrangements were to be made since the receipt of that notice to
insure the presence in Manila for the expected witnesses on the date set. Under the
circumstances, the excuse given by defendant that the witnesses could not leave their
respective stations and places of work to attend the trial is plainly unacceptable. There
was enough time and opportunity for defendant to have made the corresponding
adjustments in the assignments of its personnel so as to enable its witnesses to be in
court.
As it is, there was actually no basis at all for the exercise of discretion on the part of the
trial judge in a manner favorable to it. Trials may be postponed because of the absence
of evidence only when such absence is justified. Mere absence is not a justification in
itself. Section 4 of Rule 22 is sufficiently clear on this point. It provides that "A motion
to postpone a trial on the ground of absence of evidence can be granted only upon
affidavit showing the materiality of evidence expected to be obtained, and that due
diligence has been used to procure it." This means that it must be shown to the court
that due diligence had been exercised in either securing the presence of the evidence
(witnesses) or preventing the absence thereof.
Indeed, even if such reason were given earlier on September 24, 1966 the court would
have been as well justified in denying the requested postponement. We cannot see any
reason why, despite its having knowledge of the date of the hearing about a month
before, defendant did not see to it that its expected witnesses were not assigned to do
duty on the day they were supposed to appear in court. We cannot believe Lufthansa
could be so undermanned that such a simple adjustment of its personnel had to be
"impossible."
2. The right of a party to cross-examine the witnesses of his adversary is invaluable as it
is inviolable in civil cases, no less than the right of the accused in criminal cases. The
express recognition of such right of the accused in the Constitution does not render the
right of parties in civil cases less constitutionally based, for it is an indispensable part of
the due process guaranteed by the fundamental law. Subject to appropriate supervision
by the judge in order to avoid unnecessary delays on account of its being unduly
protracted and to needed injunctions protective of the right of the witness against self-
incrimination and oppressive and unwarranted harassment and embarrassment, a party
is absolutely entitled to a full cross-examination as prescribed in Section 8 of Rule 132
thus: "Upon the termination of the direct examination, the witness may be cross-
examined by the adverse party as to any matters stated in the direct examination, or
connected therewith, with sufficient fullness and freedom to test his accuracy and
truthfulness and freedom from interest or bias, or the reverse, and to elicit all important
facts bearing upon the issue." Until such cross-examination has been finished, the
testimony of the witness cannot be considered as complete and may not, therefore, be
allowed to form part of the evidence to be considered by the court in deciding the case.
Oral testimony may be taken into account only when it is complete, that is, if the witness
has been wholly cross-examined by the adverse party or the right to cross-examine is
lost wholly or in part thru the fault of such adverse party. But when cross-examination is
not and cannot be done or completed due to causes attributable to the party offering the
witness, the uncompleted testimony is thereby rendered incompetent.
In the case at bar, however, the Supreme Court has not opted not to rely exclusively on
the foregoing considerations. In order to satisfy as to whether or not defendant stands to
be irreparably prejudiced by the impugned action of the trial court relative to the
testimony of Lazzari, the justices have just the same gone over the transcript thereof.
After considering the same, they claimed that even his direct testimony, without taking
into account anymore his answers to the cross-examination questions of counsel for
plaintiff, cannot be of much weight in establishing the defenses in defendant's answer.
However, the trial court's action cannot be categorized as arbitrary or oppressive or as
amounting to a grave abuse of discretion. To be sure, this second order was but a logical
consequence of the previous order denying defendant's motion for postponement. With
such denial, the next thing in order was to declare the presentation of evidence of the
defendant terminated. Accordingly, it was necessary to determine what evidence could
be considered to be for the defendant. And so when counsel for plaintiff asked the court
to strike out the testimony so far given by Lazarri, there was practically no alternative
for the court but to grant the same. Indeed, defendant's counsel could not and did not
offer any objection thereto.
3. In the light of all the foregoing, there can be no doubt as to the right of Ortigas to
damages, both moral and exemplary. Precedents We have consistently adhered to so
dictate.
Lopez- According to the Court, such omission placed plaintiffs in a predicament that
enabled the company to keep the plaintiffs as their passengers in the tourist class,
thereby retaining the business and promoting the company's self-interest at the expense
of, embarrassment, discomfort and humiliation on the part of the plaintiffs.
These precedents, as may be seen, apply four-square to herein plaintiffs case.
Defendant's liability for willful and wanton breach of its contract of carriage with
plaintiff is, therefore, indubitable.
62. CENTRAL SHIPPING CO. v. INSURANCE CO. OF NORTH AMERICA
G.R. No. 150751; September 20, 2004

Facts:
July 25, 1990, Central Shipping received on board its vessel 276 pieces of round logs and
undertook to transport said shipment to Manila for delivery to Alaska Lumber Co. The
cargo was insured for P3m against total loss. While on voyage, the vessel completely
sank.

Insurance Company alleged that the total loss of the shipment was caused by the fault
and negligence of the petitioner. The consignee, Alaska presented a claim for the value
of the shipment against the petitioner but the latter failed and refused to settle the
claim, hence being the insurer, Insurance company paid and now seeks to be subrogated
by the shipping company.

The shipping company argues that the ship was seaworthy and properly manned,
putting defense that the proximate cause of the sinking vessel and the loss was a natural
disaster which could have not been foreseen. RTC was unconvinced and favoured the
insurance company.

CA affirmed the RTC finding that the south western monsoon encountered by the vessel
was not unforeseeable.

Issues:
(1) Whether the carrier is liable for the loss of the cargo; and (2) whether the doctrine of
limited liability is applicable. These issues involve a determination of factual questions
of whether the loss of the cargo was due to the occurrence of a natural disaster; and if so,
whether its sole and proximate cause was such natural disaster or whether petitioner
was partly to blame for failing to exercise due diligence in the prevention of that loss.

Ruling:
Petition is devoid of merit.

(1) Liability for lost cargo: From the nature of their business and for reasons of public
policy, common carriers are bound to observe extraordinary diligence over the goods
they transport, according to all the circumstances of each case. In the event of loss,
destruction or deterioration of the insured goods, common carriers are responsible; that
is, unless they can prove that such loss, destruction or deterioration was brought about
-- among others -- by flood, storm, earthquake, lightning or other natural disaster or
calamity. In all other cases not specified under Article 1734 of the Civil Code, common
carriers are presumed to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence.

In the present case, petitioner has not given the Court sufficient cogent reasons to
disturb the conclusion of the CA that the weather encountered by the vessel was not a
storm as contemplated by Article 1734(1). Established is the fact that between 10:00
p.m. on July 25, 1990 and 1:25 a.m. on July 26, 1990, M/V Central Bohol encountered a
south western monsoon in the course of its voyage.

(2) Doctrine of Limited Liability: 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 ship owner could have prevented this fatal miscalculation. As such, the ship owner
was equally negligent. It cannot escape liability by virtue of the limited liability rule.
63. MONARCH INSURANCE CO. v. COURT OF APPEALS
G.R. No. 92735; June 8, 2000

Facts:
Monarch and Tabacalera are insurance carriers 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, it 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
vessel 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.

Issue:
Whether or not the doctrine of limited liability applies in the instant case.

Held:
Yes.
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.] 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."
64. AUGUSTO LOPEZ v. JUAN DURUELO
G.R. No. 29166; October 22, 1928

Facts:
On February 10, 1927, plaintiff Augusto Lopez was desirous of embarking upon the
interisland steamer San Jacinto in order to go to Cebu, the plaintiff embarked at the
landing in the motorboat Jison which was engaged in conveying passengers and luggage
back and forth from the landing to the boats at anchor.

As the motorboat approached San Jacinto in a perfectly quiet sea, it came too near to the
stern of the ship, and as the propeller of the ship had not yet ceased to turn, the blades
of the propeller struck the motorboat and sank it at once. As it sank, the plaintiff was
thrown into the water against the propeller, and the revolving blades inflicted various
injuries upon him. The plaintiff was hospitalized. He filed a complaint seeking to
recover damages from the defendant. The defendant however alleged that the complaint
does not have a right of action, a demurrer was submitted directed to the fact that the
complaint does not allege that the protest had been presented by the plaintiff, within
twenty-four hours after the occurrence to the competent authority at the port where the
accident occurred as provided for Article 835 of the Code of Commerce.

Issue:
Whether the motorboat Jison is a vessel provided for by Article 835 of the Code of
Commerce?

Held:
The word vessel as used in the third section of tile IV, Book III of the Code of Commerce,
dealing with collisions, does not include all ships, craft or floating structures of any kind
without limitation. The said section does not apply to minor craft engaged in a river and
bay traffic. Therefore, a passenger on boat like the Jison, is not required to make protest
as a condition precedent to his right of action for the injury suffered by him in the
collision described in the complaint. Article 835 of the Code of Commerce does not
apply.
65. RUBISO v. RIVERA
G.R. No. L-11407; October 30, 1917

Facts:
Gelito & Co. was owned by Bonifacio Gelito and Chinaman Sy Qui. One of the properties
of the company was a pilot ship/merchant vessel called Valentina, whose ownership is at
question here.

A series of sales had taken place:

First, Gelito had sold is 2/3 share to Chinaman Sy Qui.

When Sy Qui acquired full ownership of the company, he sold Valentina to
Florentino Rivera for P2,500 on January 4, 1915. The sale was registered in the
Bureau of Customs over two months later on March 17, 1915.
Shorty after the sale to Rivera, a suit was brought against Sy Qui to enforce
payment of a certain sum of money. Valentina was placed at a public auction and
was purchased by Sy Quis creditor, Fausto Rubiso. He bought the vessel for
P55.45. The sale was registered in the Office of the Collector of Customs on
January 27, 1915 and in the commercial registry on March 14, 1925.

The first buyer, Florentino Rivera, contends that he had lost the ship when it got
stranded somewhere in Batangas. He claims that Rubiso took possession of the vessel
without his knowledge or consent. Rivera seeks to be indemnified for the profits he
could have collected from the vessels voyages had Rivera not taken it. But, does he have
the right to the vessel?

Issue:
Who is the rightful owner of the merchant vessel--Rivera or Rubiso?

Ruling:
Rubiso. It is true that the sale to Rivera had taken place prior to the public auction
where Rubiso bought the vessel, but the same was entered in the customs registry only
on March 17, 1915. Rubiso, however, had acted more swiftly by registering the property
much earlier in the Office of the Collector Customs and in the commercial registry in the
same month. Although the sale to Rivera had taken place first, the registration made by
Rubiso was made earlier.

Rubiso did the smart thing by registering the property at the commercial registry.
Pursuant to Article 573 of the Code of Commerce, the acquisition of a vessel must be
registered at the commercial registry in order to bind third parties. Such registration is
necessary and indispensible in order that the purchasers rights may be maintained
against a claim filed by third persons.

With respect to the rights of two purchasers, whichever of them first registered his
acquisition of the vessel is the one entitled to enjoy the protection of the law. By first
registration, he becomes the absolute owner of the boat and is freed from all
encumbrances and claims by strangers.
66. LUZON STEVEDORING v. COURT OF APPEALS
G.R. No. L-58897; December 3, 1987

Facts:
A maritime collision occurred between the tanker CAVITE owned by LSCO and MV
Fernando Escano (a passenger ship) owned by Escano, as a result the passenger ship
sunk. An action in admiralty was filed by Escano against Luzon. The trial court held that
LSCO Cavite was solely to blame for the collision and held that Luzons claim that its
liability should be limited under Article 837 of the Code of Commerce has not been
established. The Court of Appeals affirmed the trial court. The SC also affirmed the CA.
Upon two motions for reconsideration, the Supreme Court gave course to the petition.

Issue:
Whether or not in order to claim limited liability under Article 837 of the Code of
Commerce, it is necessary that the owner abandon the vessel

Held:
Yes, abandonment is necessary to claim the limited liability wherein it shall be limited to
the value of the vessel with all the appurtenances and freightage earned in the voyage.
However, if the injury was due to the ship owners fault, the ship owner may not avail of
his right to avail of limited liability by abandoning the vessel.

The real nature of the liability of the ship owner or agent is embodied in the Code of
Commerce. Articles 587, 590 and 837 are intended to limit the liability of the ship
owner, provided that the owner or agent abandons the vessel. Although Article 837 does
not specifically provide that in case of collision there should be abandonment, to enjoy
such limited liability, said article is a mere amplification of the provisions of Articles 587
and 590 which makes it a mere superfluity.

The exception to this rule in Article 837 is when the vessel is totally lost in which case
there is no vessel to abandon, thus abandonment is not required. Because of such loss,
the liability of the owner or agent is extinguished. However, they are still personally
liable for claims under the Workmens Compensation Act and for repairs on the vessel
prior to its loss.

In case of illegal or tortious acts of the captain, the liability of the owner and agent is
subsidiary. In such cases, the owner or agent may avail of Article 837 by abandoning the
vessel. But if the injury is caused by the owners fault as where he engages the services of
an inexperienced captain or engineer, he cannot avail of the provisions of Article 837 by
abandoning the vessel. He is personally liable for such damages.
In this case, the Court held that the petitioner is a t fault and since he did not abandon
the vessel, he cannot invoke the benefit of Article 837 to limit his liability to the value of
the vessel, all appurtenances and freightage earned during the voyage.
67. TEODORO YANGCO v. LASERNA
G.R. No. L-47447-47449; October 29, 1941

Facts:
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 then up, 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. The passengers, numbering about 180, were
overcrowded, the vessel's capacity being 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 in the mishap. Separate civil
actions were filed against petitioner to recover damages for the death of the passengers.

Issue:
May the shipowner or agent, notwithstanding the total loss of the vessel as a result of
the negligence of its captain, be properly held liable in damages for the consequent
death of its passengers?

Held:
No. This question is controlled by the provisions of article 587 of the Code of Commerce.
Said article reads:

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 vessel with all her equipments
and the freight he may have earned during the voyage.

The provisions 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 equipment and the freight it may have earned during
the voyage."

Lawful acts and obligations of the captain beneficial to the vessel may be enforced as
against the agent for the reason that such obligations arise from the contract of agency
while as to any liability incurred by the captain through his unlawful acts, the ship agent
is simply subsidiarily civilly liable. This liability of the agent is limited to the vessel and
it does not extend further. For this reason the Code of Commerce makes the agent liable
to the extent of the value of the vessel, as the codes of the principal maritime nations
provide with the vessel, and not individually.

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.

Assuming that petitioner is liable for a breach of contract of carriage, the exclusively
"real and hypothecary nature" of maritime law operates to limit such liability to the
value of the vessel, or to the insurance thereon, if any. In the instant case it does not
appear that the vessel was insured. Whether the abandonment of the vessel sought by
the petitioner in the instant case was in accordance with law of not, is immaterial. The
vessel having totally perished, any act of abandonment would be an idle ceremony.

Yangco is therefore absolved from the complaints.

68. ABUEG v. SAN DIEGO
G.R. No. L-443; December 17, 1946

Facts:
1. Dionisia, Marciana and Rosario are widows of machinists working in the motor
ships/fishing boats (San Diego II and Bartolome S), who perished when the boats
sank (they were caught in a typhoon on Oct. 1, 1941 while around Mindoro Island,
filed a case against the owner, San Diego for compensation.
2. CFI Manila granted the petition, and awarded compensation provided for in the
Workmens Compensation Act. San Diego appealed.
3. CA forwarded to SC, since there were no questions of fact.
4. Claims of the owner:
a. Article 587-Code of Commerce =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 (Yangco vs. Laserna, 73 Phil., 330).
b. Article 837- CoC= in cases of collision, the ship owners' liability is limited to
the value of the vessel with all her equipment and freight earned during the
voyage (Philippine Shipping Company vs. Garcia, 6 Phil., 281).
c. Article 643-CoC= if the vessel and freight are totally lost, the agent's liability
for wages of the crew is extinguished

Issue:
W/N the owner of the ships which sank as a result of a typhoon is liable for
compensation?

Held:
YES.
Provisions of the Code of Commerce invoked have no room in the application of the
Workmen's Compensation Act (WCA) which seeks to improve, and aims at the
amelioration of, the condition of laborers and employees.

It is not the liability for the damage or loss of the cargo or injury to, or death of, a
passenger by or through the misconduct of the captain or master of the ship; nor the
liability for the loss of the ship as result of collision; nor the responsibility for wages of
the crew, but 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.
69. ABOITIZ SHIPPING v. GENERAL ACCIDENT FIRE AND LIFE
G.R. No. 100446; January 21, 1993

Facts:
Petitioner is a corporation engaged in the business of maritime trade as a carrier. As
such, it owned and operated the M/V P/ ABOITIZ, a common carrier that sank on
voyage from Hong Kong to Manila. Private respondent GAFLAC is a foreign insurance
company pursuing its remedy as a subrogee of several cargo consignees whose
respective cargo sank with the said vessel and for which it has priory paid. The sinking
of vessel gave rise to filing of suit to recover the lost cargo either by shippers, their
successors-in-interest, or the cargo insurers like GAFLAC as subrogees. The sinking was
initially investigated by the Board of Marine Inquiry, which found that such sinking was
due to fortuitous event.

Issue:
Whether or not the doctrine of limited liability is applicable to the case.

Held:
Rights of the parties to claim against an agent or owner of vessel may be compared to
those of creditors against an insolvent corporation whose assets are not enough to
satisfy the totality of claims against it. Creditors must limit their recovery to what is left
in the name of the corporation. In the sinking of a vessel, the claimants of creditors are
limited in their recovery to the remaining value of accessible assets. In the case of lost
vessel, these assets are the insurance proceeds and pending freightage for the particular
voyage.