G.R. No. L-6106-07; April 18, 1958
MADRIGAL, TIANGCO and CO., plaintiff-appellant, vs. HANSON, ORTH and STEVENSON, INC., defendant-appellee.

MADRIGAL, TIANGCO and CO., ET AL., plaintiffs-appellants, vs. ROMAN MABANTA, defendant-appellant.
REHABILITATION FINANCE CORPORATION, intervenor.

FACTS

On January 6, 1948, the plaintiffs chartered their motor launch “Isla Verde” to defendant Roman Mabanta for six months at a monthly rental of P1,750, with delivery due on January 20, 1948, in seaworthy condition and with necessary navigation documents. Delivery was not made on the agreed date as the launch was under repair. On January 28, 1948, the launch was at the defendant’s dock, and on January 29, it was put to sea manned by a complement engaged by the defendant. It sank off the coast of Limay, Bataan, on January 30, becoming a total loss. The plaintiffs sued Mabanta to recover the launch’s estimated value (P50,000) and unpaid rental. They also sued their insurer, Hanson, Orth and Stevenson, Inc., to recover the policy amount. The Rehabilitation Finance Corporation intervened to recover a loan from the plaintiffs but did not appeal the judgment dismissing its complaint. The defendant denied liability, claiming the sinking was due to unseaworthiness, and filed a counterclaim for various expenses and unrealized profits. The trial court dismissed the complaints, finding that although there was delivery of the launch, it was unseaworthy. Both the plaintiffs and defendant Mabanta appealed.

ISSUE

1. Whether the defendant is liable for the loss of the motor launch.
2. Whether the plaintiffs can recover from the insurance company under the marine policy.
3. Whether the defendant is entitled to his counterclaim.

RULING

1. No, the defendant is not liable for the loss. The Supreme Court affirmed the trial court’s dismissal of the complaint against Mabanta. While the issue of delivery was contested, the Court found the preponderance of evidence showed the motor launch was unseaworthy at the time it sank. This conclusion was based on the facts that there was no typhoon, only monsoon waves; the launch did not touch bottom or hit anything; and water was seen bubbling in the engine room (indicating a leak in the hull, not merely water entry through the tail shaft). The board of inquiry of the Bureau of Customs exonerated the patron (captain) from negligence, inferring the sinking was due to the vessel’s condition. The Court rejected the plaintiffs’ argument that negligence in loading caused an uneven keel, noting the launch operated for 17 hours without mishap before sinking. Since the loss was due to unseaworthiness and not to the negligence of the defendant’s agents, the defendant is not liable.
2. No, the plaintiffs cannot recover from the insurance company. The Court affirmed the dismissal of the complaint against Hanson, Orth and Stevenson, Inc. The marine hull policy (Annex A to the complaint) exempted the insurer from liability if the vessel was unseaworthy. Since the launch was found unseaworthy, recovery under the policy was precluded.
3. No, the defendant is not entitled to his counterclaim. The Supreme Court agreed with the trial court’s pronouncement on the counterclaim: (a) the P5,000 for unrealized profits cannot be recovered; (b) the P2,500 for equipment purchased by the plaintiffs from the defendant is not refundable; and (c) the costs for repairs and new equipment are not recoverable from the plaintiffs as the charter party was silent on such matters.
The judgments appealed from are AFFIRMED, without pronouncement as to costs.