G.R. No. 56294 - Smith Bell and Co. , Inc. vs. Court of Appeals

On 3 May 1970 at 0350 hours, a collision occurred on the approaches to the Port of Manila near Caballo Island between the inter-island vessel “Don Carlos” (owned and operated by Carlos A. Go Thong and Company) and the Japanese merchant vessel “Yotai Maru.”
“Don Carlos” was bound for Cebu while “Yotai Maru” was approaching Manila from Kobe, Japan.
The bow of the “Don Carlos” rammed the port side of the “Yotai Maru,” creating a three-centimeter gaping hole near Hatch No. 3, which led to flooding and damage of cargo stowed therein.
The cargo consignees received compensation from their insurance companies, which then, through the doctrine of subrogation, initiated actions against Go Thong.

Civil Case No. 82567 was filed on 13 March 1971 by Smith Bell and Company (Philippines), Inc. and Sumitomo Marine and Fire Insurance Co., Ltd., under Judge Bernardo P. Fernandez.
Civil Case No. 82556 was filed on 15 March 1971 by Smith Bell and Company (Philippines), Inc. and Tokyo Marine and Fire Insurance Company, Inc., under then-Judge (later Associate Justice) Serafin R. Cuevas.

Both cases were tried concurrently with agreed adoption of evidence regarding the collision.
The trial courts found that the negligence of the officers and crew of the “Don Carlos” was the proximate cause of the collision, thereby holding Go Thong liable:

Judge Fernandez awarded damages with interest and attorney’s fees.
Judge Cuevas likewise awarded damages in two separate claims with corresponding attorney’s fees.

The decision of Judge Fernandez (Civil Case No. 82567) was appealed and affirmed by the Court of Appeals through a decision rendered by Reyes, L.B., J. on 8 August 1978.
The decision of Judge Cuevas (Civil Case No. 82556) was also appealed, leading to a reversal by the Court of Appeals on 26 November 1980 through the decision of Sison, P.V., J., which held that the negligence lay with “Yotai Maru.”

In G.R. No. L-48839, the petition for review of Reyes, L.B., J.’s decision was denied by the Supreme Court.
In the present petition for review, the insurance companies challenged the Sison Decision for allegedly disregarding res judicata and misassigning fault in defiance of established maritime rules and prior rulings.

The Sison Decision disregarded the doctrine of res judicata since the Supreme Court’s earlier resolution in G.R. No. L-48839 had made the issue of negligence of “Don Carlos” final and binding.
Sison, P.V., J. erred in accepting Go Thong’s defense that a compromise agreement between the owners of the “Yotai Maru” and the “Don Carlos” settled the question of fault.
Sison, P.V., J. further erred in holding that the “Yotai Maru” was negligent, contrary to the evidence of non-negligence by that vessel.

An investigation by the Board of Marine Inquiry (BMI) and subsequent administrative proceedings by the Philippine Coast Guard (PCG) were conducted.
Various motions for reconsideration and appeals were filed regarding the PCG Commandant’s decision, with later involvement by the Ministry of National Defense and the Office of the President, which compounded the dispute over the finality of decisions.

Whether the prior adjudication of negligence on the part of the “Don Carlos” by Judge Fernandez (affirmed in Reyes, L.B., J.’s decision and subsequently by the Supreme Court) should preclude the re-litigation of the question in the Sison Decision.

Whether the compromise agreement between Sanyo Shipping Company (owner of “Yotai Maru”) and Go Thong admitted fault on the part of the “Yotai Maru” or otherwise affecting the attribution of negligence.

Whether the negligence that led to the collision was attributable solely to the actions of “Don Carlos” (as established in earlier findings) or whether the “Yotai Maru” also bore responsibility.

Whether the conflicting findings in C.A.-G.R. Nos. 61320-R and 61206-R, and the subsequent rejection of prior determinations in the Sison Decision, constitute reversible error in light of established maritime law and previous judicial pronouncements.