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SAN MIGUEL CORPORATION v. HEIRS OF SABINIANO INGUITO

FACTS:

a Roberta but there was no response. At around 2:00 a.m. of November 13, 1990, Rico Ouano and Moreno received radio communications from the M/V Doña Roberta that it was in distress. Subsequently, the vessel was reported missing. The next day, a search and rescue operation was conducted, resulting in the recovery of eight bodies and some debris believed to be from the M/V Doña Roberta. The vessel and the remaining crew members were never found. San Miguel Corporation filed an insurance claim for the loss of the vessel with its insurer, FGU Insurance Corporation. FGU Insurance Corporation, in turn, filed a complaint for rescission of the insurance policy and damages against Julius Ouano and J. Ouano Marine Services, alleging that SMC failed to disclose material information regarding the seaworthiness of the vessel. Ouano denied any liability, claiming that the loss of the vessel was due to force majeure or the typhoon.

The case involves the sinking of the M/V Doña Roberta during the height of super typhoon "Ruping" on November 12, 1990. The vessel, owned by Julius Ouano, was chartered by San Miguel Corporation (SMC). At around 10:00 p.m. on November 12, 1990, SMC's marine superintendent, Romeo Moreno, was informed by the Coast Guard that a typhoon was approaching. Moreno immediately made calls to the vessel but was unable to get in touch with anyone on board. At 1:15 a.m. on November 13, 1990, Captain Inguito, the captain of M/V Doña Robert, contacted Moreno and requested him to contact Rico Ouano, Julius Ouano's son, for a helicopter rescue because the crew members were experiencing trouble on the vessel. Rico Ouano then read the distress signal and spoke to the captain, who requested for a helicopter rescue. However, at 2:30 a.m. on November 13, 1990, the M/V Doña Roberta sank. Out of the 25 officers and crew on board, only five survived. After the incident, a Marine Protest was filed by Julius Ouano. The heirs of the deceased captain and crew, as well as the survivors, filed a complaint for tort against SMC and Julius Ouano. The trial court held SMC primarily responsible for the sinking of the vessel, while Julius Ouano cross-claimed against SMC. The trial court ordered SMC to pay various sums to the heirs of the deceased crew members and Julius Ouano. Both SMC and Ouano appealed the decision to the Court of Appeals.

San Miguel Corporation (SMC) chartered the vessel MV Doña Roberta owned by Julian Ouano for the shipment of its products. However, due to the negligence of the ship captain, the vessel and its cargo were lost. The heirs of the officers and crew members of MV Doña Roberta filed a complaint for damages against SMC and Ouano. The trial court ruled in favor of the plaintiffs and held SMC and Ouano jointly and severally liable for the damages. SMC argued that as a charterer, it did not have control of the vessel and that the proximate cause of the loss was the negligence of the ship captain. Ouano, on the other hand, complained of the reduced damages awarded to him by the trial court. The Court of Appeals modified the trial court's decision and held SMC and Ouano jointly and severally liable for reduced amounts of damages. SMC and Ouano filed motions for reconsideration, which were denied.

ISSUES:

  1. Whether San Miguel Corporation (SMC) can be held liable as a tortfeasor.

  2. Whether Ouano is responsible for indemnifying SMC for damages arising from the negligence of his crew.

  3. Whether the charter party in this case was a contract of affreightment or a demise charter.

  4. Whether the charterer, SMC, should be held liable for any loss or damage sustained during the voyage.

  5. Whether Captain Sabiniano Inguito is liable for negligence in failing to take shelter and seek help during the typhoon.

  6. Whether Julio Ouano is vicariously liable for the negligent acts of Captain Inguito.

  7. Whether San Miguel Corporation (SMC) is also liable for the losses suffered.

RULING:

  1. SMC can be held liable as a tortfeasor. The Court of Appeals found that SMC, as the charterer of the vessel, had control and possession of the vessel. The negligence of the ship captain, who was an employee of Ouano, was not the proximate cause of the loss of the vessel and its cargo. Therefore, SMC can be held jointly and severally liable with Ouano.

  2. Ouano is responsible for indemnifying SMC for damages arising from the negligence of his crew. The Court of Appeals found that the Charter Party between SMC and Ouano was a demise charter, meaning that Ouano was responsible for manning the vessel with his own people and became the owner of the ship for the voyage, subject to liability for damages caused by negligence.

  3. The charter party in this case was a contract of affreightment. The Court concurred with the findings of the Court of Appeals that the stipulations in the Time Charter Party Agreement indicated that the charterer, SMC, was not liable to third persons in respect of the ship, and that the crew remained the employees of the owner, Ouano.

  4. The charterer, SMC, should be free from liability for any loss or damage sustained during the voyage, unless it is shown that the same was due to its fault or negligence. In this case, there is no evidence that SMC or its employees were at fault or negligent. The evidence showed that SMC's radio operator advised the captain to take shelter from the typhoon, while the shipowner, Ouano, was unavailable during the entire time the vessel encountered foul weather.

  5. Captain Sabiniano Inguito is liable for negligence in failing to take shelter and seek help during the typhoon. He had sufficient time to secure the vessel and its crew but waited until the vessel was already in distress before seeking help.

  6. Julio Ouano is vicariously liable for the negligent acts of Captain Inguito. Under the Civil Code, owners and managers are responsible for damages caused by the negligence of their employees. Ouano failed to prove that he exercised due diligence in the selection and supervision of Captain Inguito.

  7. San Miguel Corporation (SMC) is not liable for the losses suffered. The contention that the issuance of the sailing order by SMC was the proximate cause of the sinking is untenable. SMC issued the sailing order before the typhoon was first spotted, and there was a previous occasion when the sailing order was cancelled due to a typhoon.

PRINCIPLES:

  • A charter party may either be a bareboat or demise charter or a contract of affreightment.

  • Under a demise or bareboat charter, the charterer becomes, in effect, the owner of the ship for the voyage and is liable for damages caused by negligence.

  • In a contract of affreightment, the ship owner retains possession, command, and navigation of the ship, while the charterer merely has use of the space in the vessel.

  • The proximate cause of an incident is the cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.

  • A charter party can be either a time charter or a voyage charter, and a contract of affreightment falls under the latter category.

  • In a contract of affreightment, the charterer is free from liability to third persons in respect of the ship.

  • The shipowner has the duty to ensure the safe carriage and arrival of goods transported on board its vessel in a contract of affreightment.

  • For a vessel to be seaworthy, it must be adequately equipped and manned. Seaworthiness includes the fitness of the ship for a particular voyage with reference to its physical and mechanical condition, fuel and provisions supply, officers and crew, and adaptability for the proposed time of voyage.

  • The charterer in a contract of affreightment should be held liable for loss or damage during the voyage only if it can be proven that the loss or damage was due to the charterer's fault or negligence.

  • Findings of fact of the Court of Appeals are conclusive and not reviewable by the Supreme Court, unless certain recognized exceptions apply.

  • Owners and managers are presumed to be negligent for damages caused by the negligence of their employees, and this presumption can only be overcome by proving the exercise of due diligence in selection and supervision.

  • Vicarious liability arises when the negligence of an employee causes damages, and the employer is held liable unless the employer can prove the exercise of due diligence in the selection and supervision of the employee.

  • Proximate cause is the direct, immediate, and efficient cause which, in the natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury.