Case Summary (G.R. No. 217311)
Key Dates
Collision: July 14, 2002 (around midnight). Trial Court decision (Makati RTC, Branch 149): May 17, 2010. Court of Appeals decision: May 20, 2014 (reconsideration denied Jan. 29, 2015). Supreme Court final decision denying the petition for review: July 15, 2020.
Goods and Insurance
Cargo: 31,250 bags of cement (1,250 metric tons), insured with CGU International Insurance. Insurer paid claim for P3,427,500 and sued owners of both vessels (Candano and Aleson) as subrogee to recover damages.
Factual Background of the Collision
M/V Romeo (Candano) was loading cement at Apo wharf. M/V Aleson (Aleson Shipping) approached the pier from seaward. The front hull of M/V Aleson struck the port side midsection of M/V Romeo, creating a gaping hole and causing M/V Romeo to sink within approximately five minutes. The collision resulted in fatalities, missing crew, and loss of cargo.
Procedural Posture
CGU (plaintiff-subrogee) sued both vessel owners in the Regional Trial Court for damages and attorney’s fees. The RTC found Aleson Shipping solely liable, dismissed the complaint against Candano Shipping under Article 826 of the Code of Commerce, awarded damages with interest and costs, and denied Aleson’s counterclaims. The Court of Appeals affirmed. Aleson petitioned for review to the Supreme Court, which denied the petition and affirmed the lower courts.
Testimony and Evidence at Trial
CGU’s surveyor/investigator (Lopez) collected statements from M/V Romeo’s chief engineer, stevedores, port supervisors, and the tugboat captain; these declarants reported that M/V Aleson was instructed to wait but nevertheless proceeded and struck M/V Romeo. Captain Ramil Fermin Cabeltes (M/V Aleson) admitted several lapses: reliance on relayed radio messages without verification, failure to confirm clearance before entering the pier, inconsistent statements about visibility and prior experience in the channel, failure to sound the horn, and a conscious decision not to maneuver despite conceding there was room to do so because of fear of grounding. Candano’s operations manager (Flores) testified recounting the chief mate’s narration that M/V Aleson failed to wait and that M/V Romeo had the right of way.
Trial Court Findings
The RTC applied Civil Code common-carrier presumptions (Article 1733/Article 1734) and found Aleson Shipping solely liable. The court treated portions of Lopez’s and Flores’s testimonies as admissible under the res gestae exception to the hearsay rule and credited Captain Cabeltes’ admissions of lapses. The complaint against Candano was dismissed by applying Article 826 of the Code of Commerce and by concluding that Candano had exercised the requisite diligence.
Issues Raised on Appeal and in the Petition
Aleson contended (1) the case involved maritime tort (collision) governed by the Code of Commerce rather than contract/common-carrier law, so the presumption of negligence applicable to common carriers should not have been applied; (2) the testimonies of Lopez and Flores were inadmissible hearsay and improperly admitted as res gestae; (3) Captain Cabeltes’ testimony was entitled to full credence and did not support a finding of negligence; and (4) if negligent, liability should be joint under Article 827 of the Code of Commerce.
Res gestae and Admissibility of Testimony
The Supreme Court affirmed the lower courts’ application of the res gestae exception. It reiterated the governing standard: statements made while a startling occurrence is taking place or immediately before/after, concerning the circumstances of the occurrence and made before the declarant had time to contrive, may be admitted. The Court found that the collision and sinking were startling occurrences; the declarants’ statements concerned the incident and were made promptly (interviews conducted the next day, only hours after the event); and the accounts were spontaneous and therefore reliable. Accordingly, Lopez’s and Flores’s evidence qualified as res gestae and were admissible despite being hearsay insofar as they relayed contemporaneous accounts from witnesses to the collision.
Applicable Legal Regime: Contract of Carriage vs. Maritime Tort
The Court reviewed controlling jurisprudence distinguishing actions based on contract of carriage (Civil Code provisions on common carriers) from actions based on tort/quasi-delict arising from maritime collision (Code of Commerce). If the plaintiff’s cause of action derives from a contract of carriage (e.g., claim under a bill of lading), Civil Code rules on common carriers and the extraordinary diligence standard apply, together with the presumption of carrier fault when cargo is lost or damaged. If the action is founded on tort (collision), Articles 826–827 of the Code of Commerce govern, and the required standard is ordinary diligence. The Court concluded that CGU’s action against Aleson, as subrogee, was based on tort (collision) and thus the Code of Commerce applies to Aleson’s liability.
Standard of Diligence under the Code of Commerce and Its Application
Under Articles 826–827 of the Code of Commerce, to exculpate itself a vessel owner must show the exercise of ordinary diligence (the care an ordinarily prudent person would exercise regarding his own property). The Court applied that standard to Captain Cabeltes’ own admissions: he failed to personally verify radio messages about clearance, left confirmation to a duty officer, proceeded despite having been instructed to “standby,” did not sound proper signals, gave inconsistent testimony about positions and prior knowledge, and consciously chose not to maneuver despite admitting there was about 200 meters to effect avoidance. These admissions and the physical evidence of a strong impact that caused M/V Romeo to sink supported the conclusion that Aleson failed to exercise ordinary diligence and was at fault.
Liability of Candano Shipping
The lower courts’ finding that Candano exercised the required diligence as a common carrier (and in any event was not at fault for the collision) was affirmed. Evidence indicated M/V Romeo was seaworthy, properly manned, and that its crew requested Aleson to slow down, asserting its right of way. Thus, Candano was not held liable; th
Case Syllabus (G.R. No. 217311)
Case Caption, Citation and Forum
- Decision of the Supreme Court, Third Division, G.R. No. 217311, July 15, 2020; reported at 877 Phil. 540.
- Parties: ALESON SHIPPING LINES, Petitioner; CGU INTERNATIONAL INS. PLC. and CANDANO SHIPPING LINES, INC., Respondents.
- Decision penned by Justice Leonen; concurrence by Justices Gesmundo, Carandang, Zalameda, and Gaerlan.
- Appeals from: Decision of the Regional Trial Court (Makati City, Branch 149) and Decision and Resolution of the Court of Appeals in CA‑G.R. CV No. 95628.
Factual Background
- In 2002 Candano Shipping Lines, Inc. (Candano Shipping) entered into a time charter agreement with Apo Cement Corporation (Apo Cement) for the use of Candano’s vessel M/V Romeo to deliver cement cargo from Cebu to Albay.
- M/V Romeo was loaded with 31,250 bags of cement, equivalent to 1,250 metric tons; the cargo was insured with CGU International Insurance (CGU Insurance).
- On July 14, 2002, at around midnight, while M/V Romeo was leaving the pier in the Apo channel, it collided with M/V Aleson Carrier 5 (M/V Aleson), owned by Aleson Shipping.
- The front hull of M/V Aleson struck the side (portside) of M/V Romeo, creating a gaping hole in the mid‑section; M/V Romeo sank almost immediately (within about five minutes).
- The sinking resulted in the loss of the cargo valued in the record (one figure given as P3,427,500) and human casualties: the master of M/V Romeo died instantly, 14 crew survived, and two crew remained missing; M/V Romeo was not retrieved due to sea depth while M/V Aleson remained afloat.
Procedural History
- Apo Cement demanded payment from Candano Shipping and Aleson Shipping; payment was not forthcoming, so Apo Cement made an insurance claim with CGU Insurance which was granted.
- CGU Insurance, as subrogee, filed suit against Candano Shipping and Aleson Shipping in the Regional Trial Court seeking actual damages and attorney’s fees.
- Trial Court (Makati RTC, Branch 149) found Aleson Shipping solely liable and ordered Aleson to pay plaintiff P3,368,750.00 with interest, attorney’s fee of P50,000.00, and costs; complaint against Candano dismissed under Article 826 of the Code of Commerce; counterclaims by Aleson against Candano dismissed for insufficiency of evidence.
- Aleson appealed. The Court of Appeals affirmed the RTC decision. Aleson filed motion for reconsideration which the CA denied.
- Aleson then brought a petition for review to the Supreme Court (Rule 45).
Issues Presented to the Supreme Court
- Whether the petition may raise questions of fact under Rule 45 (i.e., whether the issues presented are purely questions of law or require re‑evaluation of facts).
- Whether testimonies of respondents’ witnesses (notably surveyor/investigator Teodoro R. Lopez and Candano’s operations manager Maria Tessie Jadulco Flores) are inadmissible hearsay and improperly admitted under the res gestae exception.
- Whether there is a cause of action against petitioner Aleson Shipping, subsuming:
- whether lower courts erred in applying civil law provisions on common carriers; and
- whether petitioner exercised the degree of diligence required (ordinary diligence under Code of Commerce vs extraordinary diligence for common carriers under the Civil Code).
Parties’ Contentions (as framed in the record)
- Aleson Shipping:
- Denied liability; argued only Candano Shipping should be liable because M/V Romeo was at fault.
- Claimed its officers and crew exercised diligence and care.
- Argued the cause of action is maritime tort (Code of Commerce), not contract/common‑carrier law, because Aleson had no contract of carriage with Apo Cement or CGU; thus no presumption of negligence for common carriers and ordinary diligence standard should apply.
- Contended res gestae was misapplied and that Lopez’s and Flores’ testimonies were hearsay; objected to admission of Flores’ opinion and characterization of Lopez’s secondary information.
- Maintained Captain Cabeltes’ testimony should be credited as first‑hand and that the lower courts misinterpreted it.
- Alternatively argued that if negligent, liability should be joint/solidary with Candano under Article 827 of the Code of Commerce.
- Candano Shipping:
- Asserted M/V Romeo was seaworthy, Candano exercised extraordinary diligence required of a common carrier, and Aleson was at fault.
- Objected that Aleson’s petition raises purely questions of fact; that the lower courts’ liability finding against Aleson is supported by evidence.
- CGU Insurance:
- Argued petition raises only factual questions; lower court factual findings, affirmed by CA, are final and conclusive.
- Emphasized admissions and inconsistencies in Captain Cabeltes’ testimony, and his multiple lapses (failure to verify radio message, failure to sound horn, failure to maneuver despite space).
Evidentiary Record and Key Testimony
- Teodoro R. Lopez (CGU’s surveyor/investigator):
- Testified based on interviews with M/V Romeo’s Chief Engineer, port stevedores, and port supervisors; reported that M/V Aleson hit and caused an opening at the mid‑section of M/V Romeo.
- Reported port authority had instructed M/V Aleson to wait until M/V Romeo cleared the last buoy, but M/V Aleson proceeded; reported M/V Romeo’s captain asked M/V Aleson to slow down and was not heeded.
- Captain Ramil Fermin Cabeltes (captain of M/V Aleson) — Aleson’s witness:
- Admitted sea was calm and that Apo channel could not accommodate two vessels at a time.
- Admitted he failed to verify by radio operator whether he could proceed; he relied on a crew relay that Aleson should “standby for proceeding to port.”
- Initially claimed ignorance of other vessels, later admitted knowing M/V Romeo was loading.
- Admitted he neither contacted nor used his horn, and that there was approx. 200 meters on his vessel’s right side to maneuver to avoid the collision but he did not do so for fear of running aground.
- Claimed M/V Aleson approached slowly (2 knots) from a position some 3,200 meters from the pier, and that he requested port‑to‑port passing which M/V Romeo granted; claimed M/V Romeo was navigating at full speed and failed to maneuver.
- Maria Tessie Jadulco Flores (Candano’s operations manager):
- Testified that by local rule the vessel going out of the wharf has the right of way and vessels entering must wait; opined M/V Aleson should have waited for M/V Romeo to exit.
- Based testimony on narration from M/V Romeo’s chief mate and on facts observed and conveyed immediately a