GR 116940; (June, 1997) (Digest)
G.R. No. 116940 June 11, 1997
THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., petitioner, vs. COURT OF APPEALS and FELMAN SHIPPING LINES, respondents.
FACTS
On July 6, 1983, Coca-Cola Bottlers Philippines, Inc., loaded 7,500 cases of 1-liter Coca-Cola softdrink bottles on board “MV Asilda,” a vessel owned and operated by respondent Felman Shipping Lines (FELMAN), for transport from Zamboanga City to Cebu City. The shipment was insured with petitioner Philippine American General Insurance Co., Inc. (PHILAMGEN). The vessel left port in fine weather but sank the following morning, July 7, 1983, resulting in the total loss of the cargo. The consignee filed a claim with FELMAN, which was denied, prompting a claim with PHILAMGEN, which paid P755,250.00. PHILAMGEN, claiming subrogation rights, sued FELMAN for the amount. PHILAMGEN alleged the sinking was due to the vessel’s unseaworthiness, being put to sea in an unstable condition, improper manning, and negligence of its officers. FELMAN moved to dismiss, arguing no right of subrogation was transmitted and that it had abandoned the vessel to limit liability under Article 587 of the Code of Commerce. The trial court initially dismissed the complaint but, on remand after appeal, ruled in favor of FELMAN, finding the vessel seaworthy and the loss due to a fortuitous event or crew negligence, and also holding that PHILAMGEN was not properly subrogated due to a breach of implied warranty of seaworthiness by the assured. The Court of Appeals found the vessel unseaworthy due to improper stowage (2,500 cases on deck making it top-heavy) but still denied PHILAMGEN’s claim, upholding the breach of implied warranty and the application of the limited liability rule due to the abandonment.
ISSUE
1. Whether “MV Asilda” was seaworthy when it left the port of Zamboanga.
2. Whether the limited liability under Article 587 of the Code of Commerce should apply.
3. Whether PHILAMGEN was properly subrogated to the rights of the shipper against FELMAN.
RULING
1. No, “MV Asilda” was unseaworthy. The proximate cause of its sinking was its top-heavy condition due to the improper stowage of approximately 2,500 cases of cargo on deck. The vessel was not designed to carry substantial deck cargo, which decreased its metacentric height and rendered it unstable. The weather conditions encountered were ordinary vicissitudes of a sea voyage and merely contributed to the already unstable condition. The findings of the Elite Adjusters, Inc., adopted by the Court of Appeals, were affirmed.
2. No, Article 587 of the Code of Commerce on limited liability through abandonment does not apply. The right of abandonment does not apply when the loss is due to the fault of the shipowner. The unseaworthiness of the vessel at the time of departure constitutes fault attributable to the shipowner. Therefore, the situation is governed by the Civil Code provisions on common carriers, which require extraordinary diligence.
3. Yes, PHILAMGEN was properly subrogated to the rights of the shipper. The implied warranty of seaworthiness in marine insurance is not applicable to the shipper/consignee (the assured) who is not the shipowner. The warranty applies only to the shipowner, not to a cargo owner who has no control over the vessel. Payment by PHILAMGEN to the assured was valid and conferred upon it the right of subrogation. As a common carrier, FELMAN is presumed to be at fault for the loss of the cargo, and having failed to rebut this presumption, it is liable.
The petition was GRANTED. Respondent FELMAN SHIPPING LINES was ordered to pay petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC., P755,250.00 plus legal interest from the date of judicial demand.