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Philamgen V CA Felman
Philamgen V CA Felman
Facts:
July 6, 1983 Coca-cola loaded on board MV Asilda, owned and operated by Felman,
7,500 cases of 1-liter Coca-Cola soft drink bottles to be transported to Zamboanga City
to Cebu. The shipment was insured with Philamgen.
July 7, the vessel sank in Zamboanga del Norte. July 15, cocacola filed a claim with
respondent Felman for recovery of damages. Felman denied thus prompted cocacola to
file an insurance claim with Philamgen. Philamgen later on claimed its right of
subrogation against Felman which disclaimed any liability for the loss.
Philamgen alleged that the sinking and loss were due to the vessel's unseaworthiness,
that the vessel was improperly manned and its officers were grossly negligent. Felman
filed a motion to dismiss saying that there is no right of subrogation in favor of
Philamgen was transmitted by the shipper.
RTC dismissed the complaint of Philamgen. CA set aside the dismissal and remanded
the case to the lower court for trial on the merits. Felman filed a petition for certiorari but
was denied.
RTC rendered judgment in favor of Felman. It ruled that the vessel was seaworthy when
it left the port of Zamboanga as evidenced by the certificate issued by the Phil. Coast
Guard and the ship owner’s surveyor. Thus, the loss is due to a fortuitous event, in
which, no liability should attach unless there is stipulation or negligence.
On appeal, CA rendered judgment finding the vessel unseaworthy for the cargo for
being top-heavy and the cocacola bottles were also improperly stored on deck.
Nonetheless, the CA denied the claim of Philamgen, saying that Philamgen was not
properly subrogated to the rights and interests of the shipper plus the filing of notice of
abandonment had absolved the ship owner from liability under the limited liability rule.
Issues:
(a) Whether the vessel was seaworthy
(b) Whether limited liability rule should apply
(c) Whether Philamgen was properly subrogated to the rights against Felman.
Ruling:
(a) The vessel was unseaworthy. The proximate cause thru the findings of the Elite
Adjusters, Inc., is the vessel's being top-heavy. Evidence shows that days after the
sinking coca-cola bottles were found near the vicinity of the sinking which would mean
that the bottles were in fact stowed on deck which the vessel was not designed to carry
substantial amount of cargo on deck. The inordinate loading of cargo deck resulted in
the decrease of the vessel's metacentric height thus making it unstable.
(b) Art. 587 of the Code of Commerce is not applicable, the agent is liable for the
negligent acts of the captain in the care of the goods. This liability however can be
limited through abandonment of the vessel, its equipment and freightage. Nonetheless,
there are exceptions wherein the ship agent could still be held answerable despite the
abandonment, as where the loss or injury was due to the fault of the ship owner and the
captain. The international rule is that the right of abandonment of vessels, as legal
limitation of liability, does not apply to cases where the injury was occasioned by the
fault of the ship owner. Felman was negligent, it cannot therefore escape liability.
(c) Generally, in marine insurance policy, the assured impliedly warrants to the assurer
that the vessel is seaworthy and such warranty is as much a term of the contract as if
expressly written on the face of the policy. However, the implied warranty of
seaworthiness can be excluded by terms in writing in the policy of the clearest
language. The marine policy issued by Philamgen to cocacola has dispensed that the
"seaworthiness of the vessel as between the assured and the underwriters in hereby
admitted."
The result of the admission of seaworthiness by Philamgen may mean two things: (1)
the warranty of seaworthiness is fulfilled and (2) the risk of unseaworthiness is assumed
by the insurance company. This waiver clause would mean that Philamgen has
accepted the risk of unseaworthiness, therefore Philamgen is liable.