G.R. No. L-18965. October 30, 1964.
COMPAÑIA MARITIMA, petitioner, vs. INSURANCE COMPANY OF NORTH AMERICA, respondent.

FACTS

Macleod and Company contracted the services of Compañia Maritima to ship hemp from Davao to Manila for transshipment to Boston. The oral contract was confirmed by a written booking. Pursuant to this, Maritima sent its lighters to Macleod’s private pier, where the hemp was loaded. The patron of LCT No. 1025 issued a carrier’s receipt acknowledging receipt of the cargo in good order for transshipment. The loaded lighter then moored at a government wharf to await the mother vessel. That night, LCT No. 1025 sank, damaging 1,162 bales of hemp.
Macleod’s cargo was insured with Insurance Company of North America (ICNA). ICNA paid Macleod’s claim and was subrogated to Macleod’s rights. ICNA then sued Maritima to recover the amount of the loss. The trial court ruled in favor of ICNA, and the Court of Appeals affirmed. Maritima appealed, raising several issues, including the existence of a contract of carriage, whether the loss was due to a fortuitous event, and ICNA’s capacity to sue.

ISSUE

The core issues were: (1) Was there a valid contract of carriage? (2) Was the carrier liable for the loss, or was it due to a fortuitous event? (3) Could the insurer, as subrogee, maintain the action?

RULING

The Supreme Court affirmed the carrier’s liability. On the first issue, a complete contract of carriage existed upon the shipper’s delivery of the goods to the carrier’s lighter and the carrier’s issuance of a receipt. The fact that the lighter service was initially free and that the cargo had not yet been loaded onto the ocean-going vessel was immaterial. The preparatory lighterage was an integral part of the maritime transport undertaking. By accepting the cargo and issuing a receipt, the carrier assumed the obligations of a common carrier under the law.
On the second issue, the carrier failed to prove that the sinking was due to a fortuitous event. The defense of fortuitous event requires proof that the cause was entirely beyond the carrier’s control and that no negligence or fault could be attributed to it. Maritima merely alleged a storm but presented no conclusive evidence that the storm was the sole and proximate cause of the loss or that its employees exercised the extraordinary diligence required of common carriers. The unseaworthiness of the lighter or negligence in its operation were not ruled out. Consequently, the presumption of fault and negligence against the carrier under Article 1735 of the Civil Code stood unrebutted.
On the third issue, the insurer had the legal personality to sue. Subrogation is a normal incident of indemnity insurance. By paying Macleod’s claim, ICNA was subrogated to all rights and remedies Macleod had against the carrier. The attorney for Maritima also admitted in open court that ICNA was a foreign corporation duly licensed to do business in the Philippines, curing any formal defect regarding its capacity to sue. The Court found no merit in Maritima’s other procedural objections regarding the proof of loss, holding that the evidence on record adequately supported the awarded amount.