PHIL-NIPPON KYOEI v. ROSALIA T. GUDELOSAO, GR No.

181375, 2016-07-13
Facts:
Phil-Nippon Kyoei, Corp.
a domestic shipping corporation
,... purchased a "Ro-Ro" passenger/cargo vessel "MV Mahlia" in Japan in February 2003.
For the vessel's one month conduction voyage from Japan to the Philippines, petitioner, as local
principal, and Top Ever Marine Management Maritime Co., Ltd. (TMCL), as foreign principal, hired
Edwin C. Gudelosao, Virgilio A. Tancontian, and six other crewmembers.
They were hired through the local manning agency of TMCL, Top Ever Marine Management
Philippine Corporation (TEMMPC). TEMMPC, through their president and general manager, Capt.
Oscar Orbeta (Capt. Orbeta), and the eight crewmembers signed separate contracts of
employment. Petitioner secured a Marine Insurance Policy (Maritime Policy No. 00001) from SSSICI
over the vessel for P10,800,000.00 against loss, damage, and third party liability or expense, arising
from the occurrence of the perils of the sea for the voyage of the vessel from Onomichi, Japan to
Batangas, Philippines. This Marine Insurance Policy included Personal Accident Policies for the eight
crewmembers for P3,240,000.00 each in case of accidental death or injury.
On February 24, 2003, while still within Japanese waters, the vessel sank due to extreme bad
weather condition. Only Chief Engineer Nilo Macasling survived the incident while the rest of the
crewmembers, including Gudelosao and Tancontian, perished.
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed separate complaints for
death benefits and other damages against peti... tioner, TEMMPC, Capt. Orbeta, TMCL, and SSSICI,
with the Arbitration Branch of the National Labor Relations Commission (NLRC).
Labor Arbiter
Magat rendered a Decision... finding solidary liability among petitioner, TEMMPC, TMCL and Capt.
Orbeta.
The LA also found SSSICI liable to the respondents for the proceeds of the Personal Accident Policies
and attorney's fees. The LA, however, ruled that the liability of petitioner shall be deemed
extinguished only upon SSSICI's payment of the insurance proceeds.
On appeal, the NLRC modified the LA Decision in a Resolution
The NLRC absolved petitioner, TEMMPC and TMCL and Capt. Orbeta from any liability based on the
limited liability rule.
It, however, affirmed SSSICI's liability after finding that the Personal Accident Policies answer for the
death benefit claims under the Philippine Overseas Employment Administration Standard
Employment Contract (POEA-SEC)
The CA found that the NLRC erred when it ruled that the obligation of petitioner, TEMMPC and
TMCL for the payment of death benefits under the POEA-SEC was ipso facto transferred to SSSICI
upon the death of the seafarers
TEMMPC and TMCL cannot raise the defense of the total loss of the ship because its liability under
POEA-SEC is separate and distinct from the liability of the shipowner.
To disregard the contract, which has the force of law between the parties, would defeat the
purpose of the Labor Code and the rules and regulations issued by the Department of Labor and
Employment (DOLE) in setting the minimum terms and conditions of employment for the protection
of Filipino seamen.
The CA noted that the benefits being claimed are not dependent upon whether there is total loss of
the vessel, because the liability attaches even if the vessel did not sink.
Thus, it was error for the NLRC to absolve TEMMPC and TMCL on the basis of the limited liability
rule.
Significantly though, the CA ruled that petitioner is not liable under the POEA-SEC, but by virtue of
its being a shipowner.
hus, petitioner is liable for the injuries to passengers even without a determination of its fault or
negligence. It is for this reason that petitioner obtained insurance from SSSICI - to protect itself
against the consequences of a total loss of the vessel caused by the perils of the sea.
onsequently, SSSICI's liability as petitioner's insurer directly arose from the contract of insurance
against liability
The CA then ordered that petitioner's liability will only be extinguished upon payment by SSSICI of
the insurance proceeds.
Issues:
Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
I. Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Ruling:
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590
embody the universal principle of limited liability in all cases wherein the shipowner or agent may
be properly held liable for the negligent or illicit acts of the captain.[
These articles precisely intend to limit the liability of the shipowner or agent to the value of the
vessel, its appurtenances and freightage earned in the voyage, provided that the owner or agent
abandons the vessel.
When the vessel is totally lost, in which case abandonment is not required because there is no
vessel to abandon, the liability of the shipowner or agent for damages is extinguished.
Nonetheless, the limited liability rule is not absolute and is without exceptions. It does not apply in
cases: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and the captain; (2) where the vessel is insured; and (3)
in workmen's compensation claims.
In Abueg v. San Diego,... we ruled that the limited liability rule found in the Code of Commerce is
inapplicable in a liability created by statute to compensate employees and laborers, or the heirs and
dependents, in cases of injury received by or inflicted upon them while engaged in the performance
of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or agent embodied in the
provisions of the Maritime Law, Book III, Code of Commerce, had 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, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability was
extinguished.
But the provisions of the Code of Commerce invoked by appellant have no room in the application
of the Workmen's Compensation Act 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 a 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 of such laborers and employees in the event of death
caused by their employment.
We see no reason why the above doctrine should not apply here.
Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen's
compensation claims under the Labor Code - both of which belong to a different realm from that of
Maritime Law. Therefore, the limited liability rule does not apply to petitioner's liability under the
POEA-SEC.
PHIL-NIPPON KYOEI v. ROSALIA T. GUDELOSAO, GR No. 181375, 2016-07-13
Facts:
Phil-Nippon Kyoei, Corp.
a domestic shipping corporation
,... purchased a "Ro-Ro" passenger/cargo vessel "MV Mahlia" in Japan in February 2003.
For the vessel's one month conduction voyage from Japan to the Philippines, petitioner, as local
principal, and Top Ever Marine Management Maritime Co., Ltd. (TMCL), as foreign principal, hired
Edwin C. Gudelosao, Virgilio A. Tancontian, and six other crewmembers.
They were hired through the local manning agency of TMCL, Top Ever Marine Management
Philippine Corporation (TEMMPC). TEMMPC, through their president and general manager, Capt.
Oscar Orbeta (Capt. Orbeta), and the eight crewmembers signed separate contracts of
employment. Petitioner secured a Marine Insurance Policy (Maritime Policy No. 00001) from SSSICI
over the vessel for P10,800,000.00 against loss, damage, and third party liability or expense, arising
from the occurrence of the perils of the sea for the voyage of the vessel from Onomichi, Japan to
Batangas, Philippines. This Marine Insurance Policy included Personal Accident Policies for the eight
crewmembers for P3,240,000.00 each in case of accidental death or injury.
On February 24, 2003, while still within Japanese waters, the vessel sank due to extreme bad
weather condition. Only Chief Engineer Nilo Macasling survived the incident while the rest of the
crewmembers, including Gudelosao and Tancontian, perished.
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed separate complaints for
death benefits and other damages against peti... tioner, TEMMPC, Capt. Orbeta, TMCL, and SSSICI,
with the Arbitration Branch of the National Labor Relations Commission (NLRC).
Labor Arbiter
Magat rendered a Decision... finding solidary liability among petitioner, TEMMPC, TMCL and Capt.
Orbeta.
The LA also found SSSICI liable to the respondents for the proceeds of the Personal Accident Policies
and attorney's fees. The LA, however, ruled that the liability of petitioner shall be deemed
extinguished only upon SSSICI's payment of the insurance proceeds.
On appeal, the NLRC modified the LA Decision in a Resolution
The NLRC absolved petitioner, TEMMPC and TMCL and Capt. Orbeta from any liability based on the
limited liability rule.
It, however, affirmed SSSICI's liability after finding that the Personal Accident Policies answer for the
death benefit claims under the Philippine Overseas Employment Administration Standard
Employment Contract (POEA-SEC)
The CA found that the NLRC erred when it ruled that the obligation of petitioner, TEMMPC and
TMCL for the payment of death benefits under the POEA-SEC was ipso facto transferred to SSSICI
upon the death of the seafarers
TEMMPC and TMCL cannot raise the defense of the total loss of the ship because its liability under
POEA-SEC is separate and distinct from the liability of the shipowner.
To disregard the contract, which has the force of law between the parties, would defeat the
purpose of the Labor Code and the rules and regulations issued by the Department of Labor and
Employment (DOLE) in setting the minimum terms and conditions of employment for the protection
of Filipino seamen.
The CA noted that the benefits being claimed are not dependent upon whether there is total loss of
the vessel, because the liability attaches even if the vessel did not sink.
Thus, it was error for the NLRC to absolve TEMMPC and TMCL on the basis of the limited liability
rule.
Significantly though, the CA ruled that petitioner is not liable under the POEA-SEC, but by virtue of
its being a shipowner.
hus, petitioner is liable for the injuries to passengers even without a determination of its fault or
negligence. It is for this reason that petitioner obtained insurance from SSSICI - to protect itself
against the consequences of a total loss of the vessel caused by the perils of the sea.
onsequently, SSSICI's liability as petitioner's insurer directly arose from the contract of insurance
against liability
The CA then ordered that petitioner's liability will only be extinguished upon payment by SSSICI of
the insurance proceeds.
Issues:
Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
I. Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Ruling:
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590
embody the universal principle of limited liability in all cases wherein the shipowner or agent may
be properly held liable for the negligent or illicit acts of the captain.[
These articles precisely intend to limit the liability of the shipowner or agent to the value of the
vessel, its appurtenances and freightage earned in the voyage, provided that the owner or agent
abandons the vessel.
When the vessel is totally lost, in which case abandonment is not required because there is no
vessel to abandon, the liability of the shipowner or agent for damages is extinguished.
Nonetheless, the limited liability rule is not absolute and is without exceptions. It does not apply in
cases: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and the captain; (2) where the vessel is insured; and (3)
in workmen's compensation claims.
In Abueg v. San Diego,... we ruled that the limited liability rule found in the Code of Commerce is
inapplicable in a liability created by statute to compensate employees and laborers, or the heirs and
dependents, in cases of injury received by or inflicted upon them while engaged in the performance
of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or agent embodied in the
provisions of the Maritime Law, Book III, Code of Commerce, had 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, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability was
extinguished.
But the provisions of the Code of Commerce invoked by appellant have no room in the application
of the Workmen's Compensation Act 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 a 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 of such laborers and employees in the event of death
caused by their employment.
We see no reason why the above doctrine should not apply here.
Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen's
compensation claims under the Labor Code - both of which belong to a different realm from that of
Maritime Law. Therefore, the limited liability rule does not apply to petitioner's liability under the
POEA-SEC.
PHIL-NIPPON KYOEI v. ROSALIA T. GUDELOSAO, GR No. 181375, 2016-07-13
Facts:
Phil-Nippon Kyoei, Corp.
a domestic shipping corporation
,... purchased a "Ro-Ro" passenger/cargo vessel "MV Mahlia" in Japan in February 2003.
For the vessel's one month conduction voyage from Japan to the Philippines, petitioner, as local
principal, and Top Ever Marine Management Maritime Co., Ltd. (TMCL), as foreign principal, hired
Edwin C. Gudelosao, Virgilio A. Tancontian, and six other crewmembers.
They were hired through the local manning agency of TMCL, Top Ever Marine Management
Philippine Corporation (TEMMPC). TEMMPC, through their president and general manager, Capt.
Oscar Orbeta (Capt. Orbeta), and the eight crewmembers signed separate contracts of
employment. Petitioner secured a Marine Insurance Policy (Maritime Policy No. 00001) from SSSICI
over the vessel for P10,800,000.00 against loss, damage, and third party liability or expense, arising
from the occurrence of the perils of the sea for the voyage of the vessel from Onomichi, Japan to
Batangas, Philippines. This Marine Insurance Policy included Personal Accident Policies for the eight
crewmembers for P3,240,000.00 each in case of accidental death or injury.
On February 24, 2003, while still within Japanese waters, the vessel sank due to extreme bad
weather condition. Only Chief Engineer Nilo Macasling survived the incident while the rest of the
crewmembers, including Gudelosao and Tancontian, perished.
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed separate complaints for
death benefits and other damages against peti... tioner, TEMMPC, Capt. Orbeta, TMCL, and SSSICI,
with the Arbitration Branch of the National Labor Relations Commission (NLRC).
Labor Arbiter
Magat rendered a Decision... finding solidary liability among petitioner, TEMMPC, TMCL and Capt.
Orbeta.
The LA also found SSSICI liable to the respondents for the proceeds of the Personal Accident Policies
and attorney's fees. The LA, however, ruled that the liability of petitioner shall be deemed
extinguished only upon SSSICI's payment of the insurance proceeds.
On appeal, the NLRC modified the LA Decision in a Resolution
The NLRC absolved petitioner, TEMMPC and TMCL and Capt. Orbeta from any liability based on the
limited liability rule.
It, however, affirmed SSSICI's liability after finding that the Personal Accident Policies answer for the
death benefit claims under the Philippine Overseas Employment Administration Standard
Employment Contract (POEA-SEC)
The CA found that the NLRC erred when it ruled that the obligation of petitioner, TEMMPC and
TMCL for the payment of death benefits under the POEA-SEC was ipso facto transferred to SSSICI
upon the death of the seafarers
TEMMPC and TMCL cannot raise the defense of the total loss of the ship because its liability under
POEA-SEC is separate and distinct from the liability of the shipowner.
To disregard the contract, which has the force of law between the parties, would defeat the
purpose of the Labor Code and the rules and regulations issued by the Department of Labor and
Employment (DOLE) in setting the minimum terms and conditions of employment for the protection
of Filipino seamen.
The CA noted that the benefits being claimed are not dependent upon whether there is total loss of
the vessel, because the liability attaches even if the vessel did not sink.
Thus, it was error for the NLRC to absolve TEMMPC and TMCL on the basis of the limited liability
rule.
Significantly though, the CA ruled that petitioner is not liable under the POEA-SEC, but by virtue of
its being a shipowner.
hus, petitioner is liable for the injuries to passengers even without a determination of its fault or
negligence. It is for this reason that petitioner obtained insurance from SSSICI - to protect itself
against the consequences of a total loss of the vessel caused by the perils of the sea.
onsequently, SSSICI's liability as petitioner's insurer directly arose from the contract of insurance
against liability
The CA then ordered that petitioner's liability will only be extinguished upon payment by SSSICI of
the insurance proceeds.
Issues:
Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
I. Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Ruling:
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590
embody the universal principle of limited liability in all cases wherein the shipowner or agent may
be properly held liable for the negligent or illicit acts of the captain.[
These articles precisely intend to limit the liability of the shipowner or agent to the value of the
vessel, its appurtenances and freightage earned in the voyage, provided that the owner or agent
abandons the vessel.
When the vessel is totally lost, in which case abandonment is not required because there is no
vessel to abandon, the liability of the shipowner or agent for damages is extinguished.
Nonetheless, the limited liability rule is not absolute and is without exceptions. It does not apply in
cases: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and the captain; (2) where the vessel is insured; and (3)
in workmen's compensation claims.
In Abueg v. San Diego,... we ruled that the limited liability rule found in the Code of Commerce is
inapplicable in a liability created by statute to compensate employees and laborers, or the heirs and
dependents, in cases of injury received by or inflicted upon them while engaged in the performance
of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or agent embodied in the
provisions of the Maritime Law, Book III, Code of Commerce, had 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, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability was
extinguished.
But the provisions of the Code of Commerce invoked by appellant have no room in the application
of the Workmen's Compensation Act 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 a 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 of such laborers and employees in the event of death
caused by their employment.
We see no reason why the above doctrine should not apply here.
Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen's
compensation claims under the Labor Code - both of which belong to a different realm from that of
Maritime Law. Therefore, the limited liability rule does not apply to petitioner's liability under the
POEA-SEC.
PHIL-NIPPON KYOEI v. ROSALIA T. GUDELOSAO, GR No. 181375, 2016-07-13
Facts:
Phil-Nippon Kyoei, Corp.
a domestic shipping corporation
,... purchased a "Ro-Ro" passenger/cargo vessel "MV Mahlia" in Japan in February 2003.
For the vessel's one month conduction voyage from Japan to the Philippines, petitioner, as local
principal, and Top Ever Marine Management Maritime Co., Ltd. (TMCL), as foreign principal, hired
Edwin C. Gudelosao, Virgilio A. Tancontian, and six other crewmembers.
They were hired through the local manning agency of TMCL, Top Ever Marine Management
Philippine Corporation (TEMMPC). TEMMPC, through their president and general manager, Capt.
Oscar Orbeta (Capt. Orbeta), and the eight crewmembers signed separate contracts of
employment. Petitioner secured a Marine Insurance Policy (Maritime Policy No. 00001) from SSSICI
over the vessel for P10,800,000.00 against loss, damage, and third party liability or expense, arising
from the occurrence of the perils of the sea for the voyage of the vessel from Onomichi, Japan to
Batangas, Philippines. This Marine Insurance Policy included Personal Accident Policies for the eight
crewmembers for P3,240,000.00 each in case of accidental death or injury.
On February 24, 2003, while still within Japanese waters, the vessel sank due to extreme bad
weather condition. Only Chief Engineer Nilo Macasling survived the incident while the rest of the
crewmembers, including Gudelosao and Tancontian, perished.
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed separate complaints for
death benefits and other damages against peti... tioner, TEMMPC, Capt. Orbeta, TMCL, and SSSICI,
with the Arbitration Branch of the National Labor Relations Commission (NLRC).
Labor Arbiter
Magat rendered a Decision... finding solidary liability among petitioner, TEMMPC, TMCL and Capt.
Orbeta.
The LA also found SSSICI liable to the respondents for the proceeds of the Personal Accident Policies
and attorney's fees. The LA, however, ruled that the liability of petitioner shall be deemed
extinguished only upon SSSICI's payment of the insurance proceeds.
On appeal, the NLRC modified the LA Decision in a Resolution
The NLRC absolved petitioner, TEMMPC and TMCL and Capt. Orbeta from any liability based on the
limited liability rule.
It, however, affirmed SSSICI's liability after finding that the Personal Accident Policies answer for the
death benefit claims under the Philippine Overseas Employment Administration Standard
Employment Contract (POEA-SEC)
The CA found that the NLRC erred when it ruled that the obligation of petitioner, TEMMPC and
TMCL for the payment of death benefits under the POEA-SEC was ipso facto transferred to SSSICI
upon the death of the seafarers
TEMMPC and TMCL cannot raise the defense of the total loss of the ship because its liability under
POEA-SEC is separate and distinct from the liability of the shipowner.
To disregard the contract, which has the force of law between the parties, would defeat the
purpose of the Labor Code and the rules and regulations issued by the Department of Labor and
Employment (DOLE) in setting the minimum terms and conditions of employment for the protection
of Filipino seamen.
The CA noted that the benefits being claimed are not dependent upon whether there is total loss of
the vessel, because the liability attaches even if the vessel did not sink.
Thus, it was error for the NLRC to absolve TEMMPC and TMCL on the basis of the limited liability
rule.
Significantly though, the CA ruled that petitioner is not liable under the POEA-SEC, but by virtue of
its being a shipowner.
hus, petitioner is liable for the injuries to passengers even without a determination of its fault or
negligence. It is for this reason that petitioner obtained insurance from SSSICI - to protect itself
against the consequences of a total loss of the vessel caused by the perils of the sea.
onsequently, SSSICI's liability as petitioner's insurer directly arose from the contract of insurance
against liability
The CA then ordered that petitioner's liability will only be extinguished upon payment by SSSICI of
the insurance proceeds.
Issues:
Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
I. Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Ruling:
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590
embody the universal principle of limited liability in all cases wherein the shipowner or agent may
be properly held liable for the negligent or illicit acts of the captain.[
These articles precisely intend to limit the liability of the shipowner or agent to the value of the
vessel, its appurtenances and freightage earned in the voyage, provided that the owner or agent
abandons the vessel.
When the vessel is totally lost, in which case abandonment is not required because there is no
vessel to abandon, the liability of the shipowner or agent for damages is extinguished.
Nonetheless, the limited liability rule is not absolute and is without exceptions. It does not apply in
cases: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and the captain; (2) where the vessel is insured; and (3)
in workmen's compensation claims.
In Abueg v. San Diego,... we ruled that the limited liability rule found in the Code of Commerce is
inapplicable in a liability created by statute to compensate employees and laborers, or the heirs and
dependents, in cases of injury received by or inflicted upon them while engaged in the performance
of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or agent embodied in the
provisions of the Maritime Law, Book III, Code of Commerce, had 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, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability was
extinguished.
But the provisions of the Code of Commerce invoked by appellant have no room in the application
of the Workmen's Compensation Act 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 a 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 of such laborers and employees in the event of death
caused by their employment.
We see no reason why the above doctrine should not apply here.
Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen's
compensation claims under the Labor Code - both of which belong to a different realm from that of
Maritime Law. Therefore, the limited liability rule does not apply to petitioner's liability under the
POEA-SEC.
PHIL-NIPPON KYOEI v. ROSALIA T. GUDELOSAO, GR No. 181375, 2016-07-13
Facts:
Phil-Nippon Kyoei, Corp.
a domestic shipping corporation
,... purchased a "Ro-Ro" passenger/cargo vessel "MV Mahlia" in Japan in February 2003.
For the vessel's one month conduction voyage from Japan to the Philippines, petitioner, as local
principal, and Top Ever Marine Management Maritime Co., Ltd. (TMCL), as foreign principal, hired
Edwin C. Gudelosao, Virgilio A. Tancontian, and six other crewmembers.
They were hired through the local manning agency of TMCL, Top Ever Marine Management
Philippine Corporation (TEMMPC). TEMMPC, through their president and general manager, Capt.
Oscar Orbeta (Capt. Orbeta), and the eight crewmembers signed separate contracts of
employment. Petitioner secured a Marine Insurance Policy (Maritime Policy No. 00001) from SSSICI
over the vessel for P10,800,000.00 against loss, damage, and third party liability or expense, arising
from the occurrence of the perils of the sea for the voyage of the vessel from Onomichi, Japan to
Batangas, Philippines. This Marine Insurance Policy included Personal Accident Policies for the eight
crewmembers for P3,240,000.00 each in case of accidental death or injury.
On February 24, 2003, while still within Japanese waters, the vessel sank due to extreme bad
weather condition. Only Chief Engineer Nilo Macasling survived the incident while the rest of the
crewmembers, including Gudelosao and Tancontian, perished.
Respondents, as heirs and beneficiaries of Gudelosao and Tancontian, filed separate complaints for
death benefits and other damages against peti... tioner, TEMMPC, Capt. Orbeta, TMCL, and SSSICI,
with the Arbitration Branch of the National Labor Relations Commission (NLRC).
Labor Arbiter
Magat rendered a Decision... finding solidary liability among petitioner, TEMMPC, TMCL and Capt.
Orbeta.
The LA also found SSSICI liable to the respondents for the proceeds of the Personal Accident Policies
and attorney's fees. The LA, however, ruled that the liability of petitioner shall be deemed
extinguished only upon SSSICI's payment of the insurance proceeds.
On appeal, the NLRC modified the LA Decision in a Resolution
The NLRC absolved petitioner, TEMMPC and TMCL and Capt. Orbeta from any liability based on the
limited liability rule.
It, however, affirmed SSSICI's liability after finding that the Personal Accident Policies answer for the
death benefit claims under the Philippine Overseas Employment Administration Standard
Employment Contract (POEA-SEC)
The CA found that the NLRC erred when it ruled that the obligation of petitioner, TEMMPC and
TMCL for the payment of death benefits under the POEA-SEC was ipso facto transferred to SSSICI
upon the death of the seafarers
TEMMPC and TMCL cannot raise the defense of the total loss of the ship because its liability under
POEA-SEC is separate and distinct from the liability of the shipowner.
To disregard the contract, which has the force of law between the parties, would defeat the
purpose of the Labor Code and the rules and regulations issued by the Department of Labor and
Employment (DOLE) in setting the minimum terms and conditions of employment for the protection
of Filipino seamen.
The CA noted that the benefits being claimed are not dependent upon whether there is total loss of
the vessel, because the liability attaches even if the vessel did not sink.
Thus, it was error for the NLRC to absolve TEMMPC and TMCL on the basis of the limited liability
rule.
Significantly though, the CA ruled that petitioner is not liable under the POEA-SEC, but by virtue of
its being a shipowner.
hus, petitioner is liable for the injuries to passengers even without a determination of its fault or
negligence. It is for this reason that petitioner obtained insurance from SSSICI - to protect itself
against the consequences of a total loss of the vessel caused by the perils of the sea.
onsequently, SSSICI's liability as petitioner's insurer directly arose from the contract of insurance
against liability
The CA then ordered that petitioner's liability will only be extinguished upon payment by SSSICI of
the insurance proceeds.
Issues:
Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
I. Whether the doctrine of real and hypothecary nature of maritime law (also known as the limited
liability rule) applies in favor of petitioner.
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Ruling:
Doctrine of limited liability is not applicable to claims under POEA-SEC.
Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590
embody the universal principle of limited liability in all cases wherein the shipowner or agent may
be properly held liable for the negligent or illicit acts of the captain.[
These articles precisely intend to limit the liability of the shipowner or agent to the value of the
vessel, its appurtenances and freightage earned in the voyage, provided that the owner or agent
abandons the vessel.
When the vessel is totally lost, in which case abandonment is not required because there is no
vessel to abandon, the liability of the shipowner or agent for damages is extinguished.
Nonetheless, the limited liability rule is not absolute and is without exceptions. It does not apply in
cases: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and the captain; (2) where the vessel is insured; and (3)
in workmen's compensation claims.
In Abueg v. San Diego,... we ruled that the limited liability rule found in the Code of Commerce is
inapplicable in a liability created by statute to compensate employees and laborers, or the heirs and
dependents, in cases of injury received by or inflicted upon them while engaged in the performance
of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or agent embodied in the
provisions of the Maritime Law, Book III, Code of Commerce, had 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, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability was
extinguished.
But the provisions of the Code of Commerce invoked by appellant have no room in the application
of the Workmen's Compensation Act 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 a 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 of such laborers and employees in the event of death
caused by their employment.
We see no reason why the above doctrine should not apply here.
Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen's
compensation claims under the Labor Code - both of which belong to a different realm from that of
Maritime Law. Therefore, the limited liability rule does not apply to petitioner's liability under the
POEA-SEC.