Abueg vs. San Diego

The Workmen's Compensation Act creates a statutory liability independent of, and superior to, the maritime liability provisions of the Code of Commerce, such that a shipowner must pay compensation for the death of crew members even when the vessel is totally lost and uninsured. The hypothecary nature of maritime liability under the Code of Commerce does not apply to claims arising under the Workmen's Compensation Act, which was enacted in abrogation of conflicting existing laws.

Bartolome San Diego was the owner of two motor ships, the M/S San Diego II and the M/S Bartolome S, which he operated as fishing vessels around Mindoro Island. The three deceased crew members—Amado Nuñez, Victoriano Salvacion, and Francisco Oching—were employed on board these vessels as machinists and captain, respectively. Their widows—Dionisia Abueg, Marciana de Salvacion, and Rosario Oching—filed separate claims for compensation under the Workmen's Compensation Act (Commonwealth Act No. 3428, as amended by Act No. 3812). The vessels were not covered by any insurance. The cases were originally decided by the Court of First Instance of Manila, which awarded compensation to the plaintiffs; the records were forwarded to the Court of Appeals and then to the Supreme Court, as no question of fact was involved. The appeal was interrupted by the Pacific War, during which the records were destroyed, and subsequently reconstituted after liberation.

Bartolome San Diego was the owner of two motor ships, the M/S San Diego II and the M/S Bartolome S, which he operated for fishing operations around Mindoro Island. Amado Nuñez served as machinist on board the M/S San Diego II, while Victoriano Salvacion served as machinist and Francisco Oching as captain or patron on board the M/S Bartolome S. On October 1, 1941, both vessels were caught in a typhoon while engaged in fishing operations around Mindoro Island. As a consequence, the ships were sunk and totally lost, and Nuñez, Salvacion, and Oching perished in the shipwreck while acting in their respective capacities. The vessels were not covered by any insurance.

The widows of the three deceased crew members—Dionisia Abueg (widow of Nuñez), Marciana de Salvacion (widow of Salvacion), and Rosario Oching (widow of Oching)—filed separate claims for compensation under the Workmen's Compensation Act. The Court of First Instance of Manila rendered judgment awarding the plaintiffs the compensation provided for in the Act. The records were forwarded to the Court of Appeals, which, finding no question of fact involved, forwarded them to the Supreme Court. The appeal was pending when the Pacific War broke out and remained pending until after liberation, as the records had been destroyed during the battle for liberation. The records were subsequently reconstituted as provided by law.

• Extinction of Liability Under the Code of Commerce: Appellant argued that under Article 587 of the Code of Commerce, if the vessel together with all her tackle and freight money earned during the voyage are abandoned, the agent's liability to third persons is extinguished; under Article 837, in cases of collision, the shipowner's liability is limited to the value of the vessel with all her equipment and freight; and under Article 643, if the vessel and freight are totally lost, the agent's liability for wages of the crew is extinguished. From these premises, appellant concluded that his liability as owner of the two motor ships lost or sunk as a result of the typhoon was extinguished.
• Fishing Vessels Not in Coastwise and Interisland Trade: In a memorandum, appellant raised a new point not relied upon in the court below, contending that motorboats engaged in fishing could not be deemed to be in the coastwise and interisland trade as contemplated in Section 38 of the Workmen's Compensation Act, because a craft engaged in the coastwise and interisland trade is one that carries passengers and/or merchandise for hire between ports and places in the Philippine Islands.

• Applicability of Code of Commerce Maritime Liability Provisions: Whether the provisions of the Code of Commerce regarding the limitation and extinction of a shipowner's liability upon total loss of the vessel apply to claims for compensation under the Workmen's Compensation Act.
• Classification of Fishing Vessels Under the Workmen's Compensation Act: Whether motor ships engaged in fishing operations fall within the meaning of "coastwise and interisland trade" as contemplated in Section 38 of the Workmen's Compensation Act, and if not, whether the deceased crew members are nevertheless covered as "industrial employees" under Section 39(d) of the Act.

• Applicability of Code of Commerce Maritime Liability Provisions: No. The provisions of the Code of Commerce invoked by appellant have no application to claims under the Workmen's Compensation Act, which creates a distinct statutory liability for the compensation of employees and laborers injured or killed in the course of employment, unrelated to maritime commerce provisions.
• Classification of Fishing Vessels Under the Workmen's Compensation Act: Yes, the crew members are covered. Even assuming the fishing vessels were not engaged in "coastwise and interisland trade" under Section 38, the deceased officers were "industrial employees" under Section 39(d), as their employment was exercised by the employer for the purpose of gain. The Court further held that "coastwise and interisland trade" is not confined to carriage for hire of passengers and/or merchandise, since fishing is simultaneously an industry and a trade when the catch is brought to port for sale.

• Applicability of Code of Commerce Maritime Liability Provisions: The real and hypothecary nature of maritime liability under the Code of Commerce originated in the hazards of medieval sea voyages, designed to encourage shipbuilding and maritime commerce by confining the shipowner's liability to the vessel, equipment, freight, and insurance. However, the Workmen's Compensation Act was enacted to improve and ameliorate the condition of laborers and employees. The liability it creates is not liability for damage or loss of cargo, injury or death of passengers, collision, or crew wages—it is a statutory liability to compensate employees and laborers for injuries or death caused by their employment. Such compensation is an item in the cost of production included in the budget of any well-managed industry. The Court relied on Enciso vs. Dy-Liacco, which held that the Workmen's Compensation Act abrogated the common law and Civil Code on culpable acts and omissions, and that the employer need not be guilty of neglect or fault for responsibility to attach; and on Murillo vs. Mendoza, which held that rights and responsibilities under the Act must be governed by its own peculiar provisions in complete disregard of other similar mercantile law, and that if an accident is compensable under the Act, it must be compensated even when the workman's right is not recognized by or conflicts with other provisions of the Civil Code or Code of Commerce.

• Classification of Fishing Vessels Under the Workmen's Compensation Act: Appellant's new contention that fishing vessels are not in coastwise and interisland trade is inconsistent with its first argument, because if the vessels were not engaged in interisland and coastwise trade, the Code of Commerce provisions on limitation of shipowner's liability could not apply either, as held in Lopez vs. Duruelo. Regardless, even if the vessels were not in coastwise and interisland trade under Section 38, the deceased crew members were "industrial employees" under Section 39(d), which defines industrial employment as "all employment or work at a trade, occupation or profession exercised by an employer for the purpose of gain." The only exceptions recognized by the Act are agriculture, charitable institutions, and domestic service. The Court further rejected the narrow construction of "coastwise and interisland trade" as confined to carriage for hire of passengers and/or merchandise, holding that while fishing is an industry, if the catch is brought to a port for sale, it is at the same time a trade.

• Supremacy of the Workmen's Compensation Act over the Code of Commerce — The Workmen's Compensation Act was enacted in abrogation of existing laws, including the Civil Code and the Code of Commerce. If an accident is compensable under the Act, it must be compensated even when the workman's right is not recognized by or is in conflict with other provisions of the Civil Code or Code of Commerce. The rights and responsibilities defined in the Act must be governed by its own peculiar provisions in complete disregard of other similar mercantile law. Applied here to hold that the Code of Commerce's hypothecary liability provisions (Articles 587, 643, 837) do not extinguish a shipowner's liability for workmen's compensation when the vessel is totally lost.

• Employer's Statutory Liability Without Fault — Under the Workmen's Compensation Act, the employer need not be guilty of neglect or fault for responsibility to attach. The Act abrogated the common law and Civil Code provisions on culpable acts and omissions. Applied here to hold the shipowner liable for compensation despite the loss being caused by a typhoon, an event involving no demonstrated employer negligence.

• Broad Construction of "Industrial Employment" — Industrial employment under Section 39(d) of the Workmen's Compensation Act "includes all employment or work at a trade, occupation or profession exercised by an employer for the purpose of gain." The only exceptions are agriculture, charitable institutions, and domestic service. Applied here to hold that crew members of fishing vessels are industrial employees even if the vessels are not engaged in coastwise and interisland trade under Section 38.

• "But the provisions of the Code of Commerce invoked by appellant have no room in the application of the Workmen's Compensation Act which seeks to improve, and aims at the amelioration of, the condition of laborers and employees." — This passage states the ratio decidendi: the Code of Commerce's maritime liability provisions are inapplicable to workmen's compensation claims, which serve a distinct social purpose.

• "If an accident is compensable under the Workmen's Compensation Act, it must be compensated even when the workman's right is not recognized by or is in conflict with other provisions of the Civil Code or the Code of Commerce. The reason behind this principle is that the Workmen's Compensation Act was enacted by the Legislature in abrogation of the other existing laws." — Quoted from Murillo vs. Mendoza, this formulation articulates the doctrine of the Act's supremacy over conflicting codal provisions, frequently cited in subsequent labor jurisprudence.

• "Such compensation has nothing to do with the provisions of the Code of Commerce regarding maritime commerce. It is an item in the cost of production which must be included in the budget of any well-managed industry." — This passage characterizes workmen's compensation as a cost of production rather than a maritime liability, reinforcing the conceptual separation between the two legal regimes.

• Enciso vs. Dy-Liacco, 57 Phil. 446 — Controlling precedent directly on point. The Court held that the Workmen's Compensation Act applied to a master or patron who perished when his motorboat sank, and that the shipowner was liable to pay compensation notwithstanding the total loss of the vessel. The Court rejected appellant's assertion that the extinction-of-liability issue was not fully discussed in this case.

• Murillo vs. Mendoza, 66 Phil. 689 — Controlling precedent. The Court held that rights and responsibilities under the Workmen's Compensation Act must be governed by its own provisions in complete disregard of other mercantile law, and that the Act was enacted in abrogation of other existing laws, including Articles 643 and 837 of the Code of Commerce.

• Yangco vs. Laserna, 73 Phil. 330 — Cited by appellant for the proposition that abandonment of the vessel extinguishes the agent's liability to third persons. Distinguished by the Court as involving maritime liability for tortious acts of the captain, not workmen's compensation.

• Lopez vs. Duruelo, 52 Phil. 229 — Cited to show that appellant's two arguments were inconsistent: if the fishing vessels were not in coastwise and interisland trade, the Code of Commerce provisions on limitation of shipowner's liability could not apply.

• Philippine Shipping Company vs. Garcia, 6 Phil. 281 — Cited by appellant for the rule that in collision cases, shipowner's liability is limited to the value of the vessel, equipment, and freight. Not directly addressed by the Court in its reasoning.

• Francisco vs. Consing, 63 Phil. 354 — Cited for the proposition that even employees engaged in agriculture for the operation of mechanical implements are entitled to the benefits of the Workmen's Compensation Act, illustrating the broad coverage of the Act.

• Article 587, Code of Commerce — Provides that if the vessel together with all her tackle and freight money earned during the voyage are abandoned, the agent's liability to third persons for tortious acts of the captain in the care of goods is extinguished. The Court held this provision has no application to workmen's compensation claims.
• Article 837, Code of Commerce — Provides that in cases of collision, the shipowner's liability is limited to the value of the vessel with all her equipment and freight earned during the voyage. The Court held this provision has no application to workmen's compensation claims.
• Article 643, Code of Commerce — Provides that if the vessel and freight are totally lost, the agent's liability for wages of the crew is extinguished. The Court held this provision has no application to workmen's compensation claims.
• Section 38, Workmen's Compensation Act (Commonwealth Act No. 3428, as amended by Act No. 3812) — Covers employment in coastwise and interisland trade. The Court held that "coastwise and interisland trade" is not confined to carriage for hire of passengers and/or merchandise, and that fishing, when the catch is brought to port for sale, is simultaneously an industry and a trade.
• Section 39(d), Workmen's Compensation Act (as amended) — Defines "industrial employment" as including "all employment or work at a trade, occupation or profession exercised by an employer for the purpose of gain." The Court applied this provision as an alternative basis for coverage, holding that the deceased crew members were industrial employees even if the vessels were not in coastwise and interisland trade. The only exceptions recognized by the Act are agriculture, charitable institutions, and domestic service.

Justices Moran, Bengzon (C.J.), Paras, Feria, Pablo, Perfecto, Hilado, Briones, and Tuazon concurred.