Title
F.F. Cruz and Co., Inc. vs. Philippine Iron Construction and Marine Works, Inc.
Case
G.R. No. 188144
Decision Date
Aug 30, 2017
DPWH contractor F.F. Cruz sued AMC for damages after AMC's vessels allegedly caused allision during Typhoon Welpring. SC affirmed AMC's liability but reduced damages due to F.F. Cruz's contributory negligence in securing barges. BMI findings deemed non-binding.
liability for damages
vessels
typhoon

Case Summary (G.R. No. 188144)

Factual Background

F.F. Cruz arranged for its marine equipment to support the pier construction work at Brooke’s Point, Palawan in September 1988. These included the tugboat M/T “Imma”, Barge 609, Barge 1001, and the Barge Piling Rig “Pilipino” (Pilipino). On November 4, 1988, tugboat M/T “Jasaan” (Jasaan) docked at Brooke’s Point to tow Barge “Florida” (Florida). AMC owned Florida and leased Jasaan from PICMW through a bareboat charter agreement.

That evening, typhoon Welpring struck Brooke’s Point. Barge 609 and Pilipino sank, while Barge 1001 collided with the driven piles at the construction site. Jasaan then towed Florida to a safer place after Florida’s anchor line was cut off. During the towing, the rudder cable snapped and both Jasaan and Florida drifted toward the seashore.

The following day, the master of Imma, Antonio Bundal (Bundal), filed a marine protest. Bundal alleged that Jasaan and Florida were responsible for damage to F.F. Cruz’s vessels and the driven piles. He claimed there was an allision between Jasaan and Barge 1001, which caused Barge 1001 to hit the driven piles. He further alleged that Florida bumped Barge 609, leading to its eventual sinking. He also alleged that Pilipino likewise hit the concrete piles due to the allision.

Capt. Daniel Pino (Capt. Pino), the master of Jasaan, filed a separate marine protest. He reported that both Jasaan and Florida were pushed ashore by the typhoon, resulting in damages to both vessels.

Marine Inquiry, Administrative Findings, and RTC Ruling

The Board of Marine Inquiry (BMI) absolved PICMW, AMC, Capt. Pino, and Florida’s patron, Fausto dela Riarte, of administrative liability. The BMI found that Jasaan and Florida maintained a safe distance of 800 to 900 meters from F.F. Cruz’s vessels. It recommended that Bundal and the patrons of Barge 609, Barge 1001, and Pilipino be at fault for failing to transfer their barges to a safe distance from the driven piles.

The Philippine Coast Guard affirmed the BMI’s recommendations. Thereafter, F.F. Cruz filed a complaint for damages with the RTC of Quezon City against AMC and PICMW. The RTC held that there was “clear, positive and credible evidence” that Jasaan and Florida bumped and hit F.F. Cruz’s vessels. It also ruled PICMW solidarily liable because Jasaan was allegedly not seaworthy, citing the lack of a functioning radio equipment and a defective rudder. The RTC ordered AMC and PICMW to pay solidarily P6,168,028.50 as actual damages and P500,000.00 as attorney’s fees and litigation expenses, plus costs of suit.

Proceedings Before the Court of Appeals

Both AMC and PICMW filed separate notices of appeal. AMC argued that the BMI findings should control and that no allision occurred, thus it should be absolved of civil liability. PICMW disputed the RTC finding that Jasaan was not seaworthy.

In its Decision dated February 25, 2009, the CA examined the parties’ evidence closely. The CA ruled that Jasaan and Florida could not have maintained a safe distance of 800 to 900 meters because the captain of Jasaan himself caused Jasaan to move in order to tow Florida to a safer place after Florida’s anchor line was cut off. The CA also noted that the testimonies presented by F.F. Cruz’s witnesses were consistent with one another and supported the contents of Imma’s master’s marine protest.

At the same time, the CA concurred with the BMI’s finding that F.F. Cruz failed to properly secure Barge 609 and Barge 1001 during the typhoon, resulting in those vessels being located too near the driven piles. Accordingly, the CA held F.F. Cruz should share equally in bearing the damages caused to Pilipino and the driven piles.

Finally, the CA absolved PICMW from liability on the ground that under the bareboat charter arrangement, AMC was effectively considered the owner for the duration of the voyage.

Both F.F. Cruz and AMC filed motions for reconsideration, which the CA denied. F.F. Cruz filed a petition for review docketed as G.R. No. 188144, and AMC filed a petition docketed as G.R. No. 188301. The Supreme Court consolidated the two petitions on October 26, 2009.

Issues Raised in the Petitions

The petitions principally challenged the CA’s factual findings. In G.R. No. 188144, F.F. Cruz contested the finding that it was guilty of contributory negligence. In G.R. No. 188301, AMC questioned its liability for actual damages, including the CA’s determination that AMC’s vessels were the immediate and proximate cause of the allision and resulting damages.

Parties’ Contentions on the Governing Standard of Review and the BMI Findings

The Supreme Court underscored that under Section 1 of Rule 45 of the Rules of Court, a petition for review on certiorari is limited to questions of law. The Court reiterated that factual questions are not properly reviewable under Rule 45, and that it reviews errors of law only. It recognized narrow exceptions allowing review of findings of fact when, for example, the CA’s findings are contrary to those of the trial court due to gross or extraordinary misperception or manifest bias, among others. It also stressed that before it assumes this function, the petitioner must clearly show that manifestly correct findings were unwarrantedly rejected or reversed, and that there was gross or extraordinary misperception or manifest bias apparent from the record.

On the substantive legal dispute, the Court addressed how the CA treated the BMI report. The Court observed that the CA partly relied on the BMI report when it held F.F. Cruz liable for contributory negligence, but it disregarded certain parts of the BMI report when exonerating AMC.

Legal Basis and Reasoning of the Supreme Court

The Supreme Court held that both petitions failed to meet the required standard for disturbing the CA’s factual determinations. It found no showing of gross or extraordinary misperception or manifest bias in the CA’s treatment of the evidence.

With respect to the evidentiary role of BMI findings, the Court clarified the rule from Aboitiz Shipping Corporation v. New India Assurance Company, Ltd. that the findings of BMI are not deemed always binding on the courts. The Court explained that BMI’s exoneration of vessel officers and crew concerns administrative liabilities only, and it does not, by itself, absolve a common carrier from civil liabilities arising from failure to exercise the extraordinary diligence required by law. The Court then harmonized this with the instances where BMI findings are persuasive and binding.

The Court relied on Philippine American General Insurance Co., Inc. v. MGG Marine Services, Inc., where it had sustained the CA’s reliance on BMI factual findings. There, the Court noted that BMI had conducted a thorough investigation to determine responsibility for the loss of cargo and that its factual conclusions—supported by substantial evidence—were persuasive because BMI is an expert in matters concerning marine casualties.

Applying the framework to the case at bar, the Supreme Court held that the CA properly relied on the BMI report in finding F.F. Cruz guilty of contributory negligence. The pertinent portions of the BMI report described how F.F. Cruz’s barges were not individually or separately well secured at the time typhoon Welpring was hitting Brooke’s Point, and how the mooring lines and anchors of Barge 609 and Barge 1001 were subject to undue tension and snapping, which led to bumping/ramming against driven piles. The BMI also observed that the F.F. Cruz vessels were located very near the driven piles and that the crew did not move the barges to keep away from the piles despite the impending typhoon.

The Supreme Court held that because the BMI identified a clear evidentiary basis for its negligence conclusion, the CA could not be faulted for using the BMI’s factual findings since they were supported by substantial evidence.

On AMC’s liability, however, the Supreme Court foun

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