Central Shipping Company, Inc v Insurance Company of North America (Insurance)

[G.R. No. 150751. September 20, 2004]
CENTRAL SHIPPING COMPANY, INC., petitioner, vs. INSURANCE COMPANY OF NORTH AMERICA,
respondent.

FACTS:
On July 25, 1990 at Puerto Princesa, Palawan, Central Shipping Company received on board its vessel, the M/V ‘Central Bohol’, 376 pieces [of] Philippine Apitong Round Logs and undertook to transport said shipment to Manila for delivery to Alaska Lumber Co., Inc.
“The cargo was insured for P3,000,000.00 against total loss under Insurance Company of North America’s Marine Cargo Policy No. MCPB- 00170. The vessel completely sank. Due to the sinking of the vessel, the cargo was totally lost. The consignee, Alaska Lumber Co. Inc., presented a claim for the value of the shipment to Central Shipping but the latter failed and refused to settle the claim, hence Insurance company, being the insurer, paid said claim and now seeks to be subrogated to all the rights and actions of the consignee as against Central Shipping. Central Shipping raised as its main defense that the proximate and only cause of the sinking of its vessel and the loss of its cargo was a natural disaster, a tropical storm which neither Central Shipping nor the captain of its vessel could have foreseen.

DECISION OF LOWER COURTS:
(1) RTC: Central Shipping Liable. RTC was unconvinced that the sinking of M/V Central Bohol had been caused by the weather or any other caso fortuito. It noted that monsoons, which were common occurrences during the months of July to December, could have been foreseen and provided for by an ocean-going vessel.
(2) CA: affirmed RTC. Given the season of rains and monsoons, the ship captain and his crew should have anticipated the perils of the sea. The CA found no merit in petitioner’s assertion of the vessel’s seaworthiness. It held that the Certificates of Inspection and Drydocking were not conclusive proofs thereof. In order to consider a vessel to be seaworthy, it must be fit to meet the perils of the sea.

ISSUES & RULING:
(1) Whether the carrier is liable for the loss of the cargo; and
Yes.
A common carrier is presumed to be at fault or negligent. It shall be liable for the loss, destruction or deterioration of its cargo, unless it can prove that the sole and proximate cause of such event is one of the causes enumerated in Article 1734 of the Civil Code, or that it exercised extraordinary diligence to prevent or minimize the loss. In the present case, the weather condition encountered by petitioner’s vessel was not a “storm” or a natural disaster comprehended in the law. Given the known weather condition prevailing during the voyage, the manner of stowage employed by the carrier was insufficient to secure the cargo from the rolling action of the sea. The carrier took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now disclaim any liability for the loss.
Established is the fact that between 10:00 p.m. on July 25, 1990 and 1:25 a.m. on July 26, 1990, M/V Central Bohol encountered a southwestern monsoon in the course of its voyage. Having made such factual representation in its Note of Marine Protest, petitioner cannot now be allowed to retreat and claim that the southwestern monsoon was a “storm.” Normally expected on sea voyages, however, were such monsoons, during which strong winds were not unusual. 

According to PAGASA, a storm has a wind force of 48 to 55 knots, equivalent to 55 to 63 miles per hour or 10 to 11 in the Beaufort Scale. The second mate of the vessel stated that the wind was blowing around force 7 to 8 on the Beaufort Scale. Consequently, the strong winds accompanying the southwestern monsoon could not be classified as a “storm.” Such winds are the ordinary vicissitudes of a sea voyage.
Also, even if it were a storm, it was not the proximate and only cause of the loss. The loss of the vessel was caused not only by the southwestern monsoon, but also by the shifting of the logs in the hold. Such shifting could been due only to improper stowage.

(2) Whether the doctrine of limited liability is applicable
No. The doctrine of limited liability under Article 587 of the Code of Commerce is not applicable to the present case. This rule does not apply to situations in which the loss or the injury is due to the concurrent negligence of the shipowner and the captain.