G.R. No. 157481 ; January 24, 2006
LOADSTAR SHIPPING CO., INC., Petitioner, vs. PIONEER ASIA INSURANCE CORP., Respondent.

FACTS

Petitioner Loadstar Shipping Co., Inc., owner of M/V Weasel, entered into a voyage-charter to transport cement from Iligan City to Manila. The shipment was insured by respondent Pioneer Asia Insurance Corp. with the consignee. During the voyage, the vessel’s captain ordered it to be forced aground, resulting in the total loss of the cargo due to seawater exposure. Respondent insurer paid the consignee and was subrogated to its rights. It then filed a complaint against Loadstar, alleging unseaworthiness and negligence.
Loadstar defended by claiming it was a private carrier under the voyage-charter, thus not subject to the presumption of negligence applicable to common carriers. It further argued the loss was due to force majeure, specifically tropical storm “Asiang,” and that it had exercised due diligence. The Regional Trial Court ruled for respondent, finding Loadstar liable as a common carrier that failed to overcome the presumption of negligence. The Court of Appeals affirmed with modification on attorney’s fees.

ISSUE

The primary issues were: (1) whether Loadstar was a common carrier; (2) if so, whether it was negligent and liable for the loss; and (3) the propriety of awarding attorney’s fees.

RULING

The Supreme Court denied the petition, affirming the Court of Appeals. On the first issue, the Court held Loadstar was a common carrier under Article 1732 of the Civil Code. The determination hinges on the activity undertaken, not the mode of charter. Loadstar held itself out for hire, offering its vessel for carrying goods generally, which defines a common carrier. The voyage-charter did not convert it into a private carrier, as it remained engaged in public service for compensation.
On the second issue, the Court ruled Loadstar failed to prove it exercised extraordinary diligence. As a common carrier, it is presumed negligent upon loss of cargo under Article 1735. The defense of force majeure was unavailing. Evidence from PAG-ASA showed tropical storm “Asiang” had moved away, and weather conditions were slight and smooth at the time of the incident. The loss was attributable to the captain’s decision to force the vessel aground, indicating negligence in navigation, not a fortuitous event. Loadstar’s failure to present the captain or the ship’s logbook further weakened its claim of due diligence.
Regarding attorney’s fees, the Court found the award justified. Loadstar’s unwarranted refusal to pay the valid claim compelled respondent to litigate. However, the Court of Appeals correctly reduced the award to 10% of the claim, deeming it just and equitable under the circumstances. Thus, Loadstar was correctly held liable for the insured value of the lost cargo.