2008

VIII City Railways, Inc. (CRI) provides train services, for a fee, to commuters from Manila to Calamba, Laguna. Commuters are required to purchase tickets and then proceed to designated loading ang unloading facilities to board the train. Ricardo Santos purchased a ticket for Calamba and entered the station. While waiting, he had an altercation with the security guard of CRI leading to a fistfight. Ricardo Santos fell on the railway just as a train was entering the station. Ricardo Santos was run over by the train. He died. In the action for damages filed by the heirs of Ricardo Santos, CRI interposed lack of cause of action, contending that the mishap occurred before Ricardo Santos boarded the train and that it was not guilty of negligence. Decide.(5%) SUGGESTED ANSWER:

The contention of CRI is not tenable. Under the law, the degree of care required of a common carrier is extraordinary diligence or the obligation to carry the passenger safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons with due regard to all the consequences. Thus, in case of death or injury to passengers, the common carrier is presumed negligent and upon him rests the burden of proof of exercise of extraordinary diligence. The duty to exercise extraordinary diligence attaches from the moment the person who purchases the ticket from the carrier presents himself at the proper place and in a proper manner to be transported. In the given case, there is no doubt that CRI is a common carrier for the reason that it is engaged in the business of transporting passengers by land, for compensation, offering its services to the public. As such, it is required to exercise extraordinary diligence and this responsibility attached from the moment Ricardo Santos purchased the ticket and entered the station. When Ricardo died while he was within the premises of CRI, the latter is presumed to be at fault. This is true even if Ricardo has not yet boarded the train, so long as he has presented himself to the carrier at the proper place and in a proper manner. Hence, CRI, as a common carrier, is liable to the heirs of Ricardo Santos.

IX On October 30, 2007, M/V Pacific, a Philippine registered vessel owned by Cebu Shipping Company (CSC), sank on her voyage from Hong Kong to Manila. Empire Assurance Company (Empire) is the insurer of the lost cargoes loaded on board the vessel which were consigned to Debenhams Company. After it

indemnified Debenhams, Empire as subrogee filed an action for damages against CSC.

Assume that the vessel was seaworthy. Before departing, the vessel was advised by the Japanese Meteorological Center that it was safe to travel to its destination. But while at sea, the vessel received a report of a typhoon moving within its general path. To avoid the typhoon, the vessel changed its course. However, it was still at the fringe of the typhoon when it was repeatedly hit by huge waves, foundered and eventually sank. The captain and the crew were saved except three (3) who perished. Is CSC liable to Empire? What principle of maritime law is applicable? Explain. (3%) Assume the vessel was not seaworthy as in fact its hull had leaked, causing flooding in the vessel. Will your answer be the same? Explain. (2%) Assume the facts in question (b). Can the heirs of the three (3) crew members who perished recover from CSC? Explain fully. (3%) SUGGESTED ANSWER:

1. No, CSC is not liable to Empire. The principle of maritime law applicable is the Doctrine of Limited Liability. Under this rule, the exclusively real and hypothecary nature of maritime law operates to limit the liability of the shipowner to the value of the vessel, earned freightage and proceeds of insurance if any. Hence, the phrase "NO VESSEL, NO LIABILITY." Total destruction or sinking of the vessel extinguishes the maritime lien as there is no longer any res to which it can attach. This doctrine is applicable in the case because, as the facts reveal, the ship sank and was totally lost. The exception that the carrier failed to overcome the presumption of negligence is not obtaining as in fact CSC was able to prove that the ship was seaworthy. Moreover, the loss is due to a typhoon -- a fortuitous event, which is one of the exempting circumstances when the carrier can avoid liability. Hence, CSC is not liable under the Doctrine of Limited Liability. 2. No, my answer will not be the same. While as a rule, the shipowner's liability is limited only to the value of the vessel so that loss of the vessel operates to extinguish his liability, the same rule has no application when the carrier failed to overcome the presumption of negligence. Such presumption is only rebutted when the carrier establishes that the vessel is seaworthy. According to the facts of the case, the vessel is not seaworthy. Absent this requirement of seaworthiness of the vessel, CSC has failed to overcome the presumption of negligence.

Hence, the Doctrine of Limited Liability is inapplicable and CSC is liable for the loss. 3. Yes, the heirs of the three (3) crewmembers who perished can recover from CSC. This is because another exception to the applicability of the Limited Liability Rule is Workmen's Compensation Claims. However, in this case, the heirs cannot go after CSC directly since their claim based on workmen's compensation would have be to be filed with the Social Security System (SSS). After paying said claims, the SSS is subrogated to their rights and is thus entitled to go after CSC. In either case, CSC cannot raise the defense that its liability is limited to the value of his vessel.