GR 106999; (June, 1996) (Digest)
G.R. No. 106999 June 20, 1996
PHILIPPINE HOME ASSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS and EASTERN SHIPPING LINES, INC., respondents.
FACTS
Eastern Shipping Lines, Inc. (ESLI) carried various cargoes from Japan to the Philippines aboard the SS Eastern Explorer. During the voyage, an acetylene cylinder exploded, causing a fire that rendered the vessel a constructive total loss and forced its abandonment. The cargoes saved were later transshipped to their destinations. ESLI subsequently charged the consignees additional freight and salvage charges, which were paid under protest by Philippine Home Assurance Corporation (PHAC) as the consignees’ insurer.
PHAC, as subrogee, filed a complaint against ESLI to recover these payments, alleging they resulted from ESLI’s fault, negligence, or breach of contract. ESLI defended itself by asserting it exercised due diligence, the fire was a fortuitous event, the additional freight was contractually due under the bills of lading, and the salvage charges were legally collectible under the Salvage Law ( Act No. 2616 ). The trial court dismissed PHAC’s complaint, a decision affirmed by the Court of Appeals.
ISSUE
Whether ESLI can legally collect from the consignees the additional freight and salvage charges incurred after the fire and transshipment of the cargo.
RULING
The Supreme Court denied the petition, affirming the rulings of the lower courts. On the issue of liability for the fire, the Court found that ESLI exercised the required diligence. The acetylene cylinder was properly tested and certified before loading, and the crew immediately undertook firefighting efforts. The explosion was an unforeseen event, constituting a fortuitous event that exempted ESLI from liability for the loss of the vessel under Article 1734 of the Civil Code.
Regarding the charges, the Court upheld their validity. The additional freight charges were recoverable under the express terms of the bills of lading, which stipulated that all extra expenses incurred for the cargo’s conveyance would be payable by the consignee. The salvage charges were also properly assessed. The elements for a valid salvage claim—marine peril, voluntary service, and success—were present. Under Section 13 of the Salvage Law, such expenses constitute a charge upon the salvaged property. Since the cargo was saved and delivered, the consignees, as beneficiaries of the salvage operation, were obligated to contribute proportionately to the salvage costs. Therefore, PHAC, as subrogee, was not entitled to reimbursement.