G.R. No. L-773, L-774, L-775; December 17, 1946
DIONISIA ABUEG, ET AL., plaintiffs-appellees, vs. BARTOLOME SAN DIEGO, defendant-appellant. (Consolidated with Marciana de Salvacion, et al. vs. Bartolome San Diego and Rosario Oching, et al. vs. Bartolome San Diego)

FACTS

The defendant-appellant, Bartolome San Diego, was the owner of the motor ships San Diego II and Bartolome S. On October 1, 1941, while engaged in fishing operations around Mindoro Island, both vessels were caught by a typhoon, sunk, and totally lost. The deceased employees—Amado Nuñez (a machinist on the M/S San Diego II), Victoriano Salvacion (a machinist on the M/S Bartolome S), and Francisco Oching (the captain/patron of the M/S Bartolome S)—perished in the shipwreck. The vessels were not insured. The widows of the deceased filed claims for compensation under the Workmen’s Compensation Act. The Court of First Instance of Manila awarded compensation to the plaintiffs-appellees. The defendant-appellant appealed, arguing that his liability was extinguished under the Maritime Law (Code of Commerce) due to the total loss of the vessels.

ISSUE

Whether the defendant-appellant’s liability to pay compensation under the Workmen’s Compensation Act to the heirs of the deceased employees is extinguished by the total loss of the vessels, pursuant to the real and hypothecary nature of liability under the Code of Commerce.

RULING

The Supreme Court affirmed the judgment of the lower court, holding the defendant-appellant liable for compensation under the Workmen’s Compensation Act. The Court ruled that the provisions of the Code of Commerce regarding the limitation or extinction of a shipowner’s liability (such as Articles 587, 837, and 643) are not applicable to claims arising under the Workmen’s Compensation Act. The Workmen’s Compensation Act is a social legislation designed to ameliorate the condition of laborers and employees, creating a statutory liability for compensation in cases of injury or death arising from employment, independent of fault. This liability is an item in the cost of production and is not governed by maritime commercial laws. The Court cited precedents (Enciso vs. Dy-Liaco and Murillo vs. Mendoza) establishing that the Workmen’s Compensation Act operates in abrogation of other laws, including the Civil Code and Code of Commerce, on compensable accidents. The Court also addressed an alternative argument that the vessels were not engaged in “coastwise and interisland trade” under the Act, finding that the deceased were industrial employees under the Act’s broad definition, which includes all work for gain, excluding only agriculture (with exceptions), charitable institutions, and domestic service. The appeal was dismissed, with costs against the appellant.