Edgar Cokaliong Shipping Lines, Inc. v. United Coconut Planters Bank General Insurance Company, Inc.
REITERATIONFacts
The Antecedents: Nestor Angelia and Zosimo Mercado delivered cargo to Edgar Cokaliong Shipping Lines, Inc. (petitioner) for transport from Cebu City to Tandag, Surigao del Sur, under Bills of Lading Nos. 58 and 59, respectively, with declared values of ₱6,500.00 and ₱14,000.00. Feliciana Legaspi insured these cargoes with UCPB General Insurance Co., Inc. (respondent) under Open Policy No. 002/91/254, through Marine Risk Notes Nos. 18409 and 18410, for ₱100,000.00 and ₱50,000.00, respectively. On December 12, 1991, the vessel M/V Tandag caught fire in the engine room after leaving port, resulting in the total loss of the vessel and its cargo. The Captain filed a Marine Protest. Feliciana Legaspi filed claims with respondent for the insured cargo, submitting receipts and order slips. Respondent paid her ₱99,000.00 for the cargo under Bill of Lading No. 59 and ₱49,500.00 for the cargo under Bill of Lading No. 58, after which she executed Subrogation Receipts/Deeds in favor of respondent. On July 14, 1992, respondent, as subrogee, filed a complaint against petitioner for the total amount paid, ₱148,500.00, alleging negligence. Procedural History: The Regional Trial Court (RTC) dismissed the case for lack of merit. The Court of Appeals (CA) reversed the RTC Decision, ordering petitioner to pay respondent ₱148,500.00 with interest. The CA denied petitioner's Motion for Reconsideration. The Petition: Petitioner seeks to set aside the CA Decision and Resolution, arguing that its liability should be limited to the declared value in the bill of lading, that the loss was due to force majeure, and that respondent had no cause of action.
Issue(s)
Whether petitioner is liable for the loss of the goods. If liable, whether petitioner's liability should be based on the declared value in the bill of lading or the actual insured value. Whether the loss was due to force majeure and if petitioner exercised due diligence. Whether respondent has a cause of action against petitioner, including the determination of ownership of the goods and extinguishment of claims.
Ruling
The Petition is partly meritorious. The assailed CA Decision is MODIFIED. Petitioner is ORDERED to pay respondent the sums of ₱14,000 and ₱6,500, representing the value of the goods stated in Bills of Lading Nos. 59 and 58, respectively.
Ratio Decidendi
On Petitioner's Liability for Loss: The Court affirmed the CA's finding that petitioner was liable for the loss of the goods. The Court reiterated that fire is not an act of God unless caused by natural disaster and that a common carrier is presumed negligent if it fails to prove extraordinary diligence. The Court found that the fire originated from an unchecked crack in the fuel oil service tank, which was not a force majeure event. Petitioner failed to present sufficient evidence of measures taken to ensure the seaworthiness of the vessel, such as the frequency of inspections and maintenance of the auxiliary engine fuel oil service tank. Therefore, in accordance with Article 1735 of the Civil Code, petitioner was held responsible for the loss of the goods. On the Extent of Petitioner's Liability: The Court ruled that petitioner's liability should be limited to the value declared in the bills of lading, not the actual insured value. The Court cited Articles 1749 and 1750 of the Civil Code, which sanction stipulations in bills of lading limiting a common carrier's liability to the declared value, provided such stipulations are reasonable, just, and freely agreed upon. The Court found the limiting stipulation in the present case to be reasonable and just, as it gave the shippers the option to declare a higher value by paying extra freight. The Court noted that the shippers/consignees committed fraud by deliberately undervaluing the goods, thus depriving the carrier of its proper fare and exposing it to a risk it could not protect itself from. Between the insurer and the carrier, the Court found it just and equitable for the insurer to bear the loss in excess of the declared value, as the insurer was paid a higher premium for the actual value. Following Aboitiz Shipping Corporation v. Court of Appeals, the Court held that the declaration in the bill of lading should be the basis of the carrier's liability. On Force Majeure and Due Diligence: The Court found that the fire originated from an unchecked crack in the fuel oil service tank, which was not a force majeure event. Petitioner failed to present sufficient evidence of measures taken to ensure the seaworthiness of the vessel, such as the frequency of inspections and maintenance of the auxiliary engine fuel oil service tank. On Ownership of Goods and Extinguishment of Claims: The Court found no reason to disturb the CA's finding that Feliciana Legaspi was the owner of the goods, with Nestor Angelia and Zosimo Mercado merely acting as consignees. Therefore, respondent, as her subrogee, was entitled to compensation for the loss. The Court noted that petitioner did not present evidence of payment to Feliciana Legaspi for the loss of goods under Bill of Lading No. 58. Regarding the claim under Bill of Lading No. 59, petitioner paid ₱14,000.00 to Legaspi Marketing, but there was no convincing proof that Legaspi Marketing was the owner of the goods. Since respondent proved Feliciana Legaspi's ownership, the claim under Bill of Lading No. 59 was not extinguished by payment to a non-entitled party. However, the Court upheld the CA's ruling that compensation for the goods under Bill of Lading No. 58, valued at ₱6,500.00, could not be validly made, implying that the set-off against Nestor Angelia's account was improper.
Main Doctrine
The liability of a common carrier for loss of goods may be limited by stipulation in the bill of lading to the declared value, provided such stipulation is reasonable and just. The insurer's liability is determined by the actual value covered by the insurance policy and premiums paid, not necessarily by the value declared in the bill of lading. A common carrier is presumed negligent if it fails to prove extraordinary diligence, and fire is not an act of God unless caused by natural disaster.