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
Americas 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 petitioners assertion of the vessels
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 petitioners
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.

Insurance; presentation of policy as a condition for recovery by insurance company. The presentation in
evidence of the marine insurance policy is not indispensable before the insurer may recover from the
common carrier the insured value of the lost cargo in the exercise of its subrogatory right. The
subrogation receipt, by itself, is sufficient to establish the amount paid to settle the insurance claim. The
right of subrogation accrues simply upon payment by the insurance company of the insurance claim. In
International Container Terminal Services, Inc. v. FGU Insurance Corporation, the Supreme Court
explained:
Indeed, jurisprudence has it that the marine insurance policy needs to be presented in evidence before
the trial court or even belatedly before the appellate court. In Malayan Insurance Co., Inc. v. Regis
Brokerage Corp., the Court stated that the presentation of the marine insurance policy was necessary, as
the issues raised therein arose from the very existence of an insurance contract between Malayan
Insurance and its consignee, ABB Koppel, even prior to the loss of the shipment. In Wallem Philippines
Shipping, Inc. v. Prudential Guarantee and Assurance, Inc., the Court ruled that the insurance contract
must be presented in evidence in order to determine the extent of the coverage. This was also the ruling
of the Court in Home Insurance Corporation v. Court of Appeals.
However, as in every general rule, there are admitted exceptions. In Delsan Transport Lines, Inc. v. Court
of Appeals, the Court stated that the presentation of the insurance policy was not fatal because the loss of
the cargo undoubtedly occurred while on board the petitioners vessel, unlike in Home Insurance in which
the cargo passed through several stages with different parties and it could not be determined when the
damage to the cargo occurred, such that the insurer should be liable for it.
As in Delsan, there is no doubt that the loss of the cargo in the present case occurred while in petitioners
custody. Moreover, there is no issue as regards the provisions of Marine Open Policy No. MOP-12763,
such that the presentation of the contract itself is necessary for perusal, not to mention that its existence
was already admitted by petitioner in open court. And even though it was not offered in evidence, it still
can be considered by the court as long as they have been properly identified by testimony duly recorded
and they have themselves been incorporated in the records of the case.
Similarly, in this case, the presentation of the insurance contract or policy was not necessary. Asian
Terminals, Inc. v. Malayan Insurance, Co., Inc., G.R. No. 171406, April 4, 2011.