Lea Mer Industries, Inc. v. Malayan Insurance Co., Inc.
REITERATIONFacts
The Antecedents: Ilian Silica Mining contracted Lea Mer Industries, Inc. for the shipment of 900 metric tons of silica sand, valued at P565,000, from Palawan to Manila, consigned to Vulcan Industrial and Mining Corporation. The cargo was loaded onto Judy VII, a barge leased by Lea Mer. During the voyage, the vessel sank, resulting in the total loss of the cargo. Malayan Insurance Co., Inc., as the insurer, paid Vulcan the value of the lost cargo and, by right of subrogation, sought reimbursement from Lea Mer. Procedural History: Malayan Insurance Co., Inc. filed a complaint against Lea Mer Industries, Inc. with the Regional Trial Court (RTC) of Manila for the collection of P565,000. The RTC dismissed the complaint, ruling that the loss was due to a fortuitous event (Typhoon Trining) and that Lea Mer had no advance knowledge of the typhoon and had received clearance from the Philippine Coast Guard. Upon appeal, the Court of Appeals (CA) reversed the RTC's decision, finding the vessel unseaworthy and holding Lea Mer liable for the loss. The Petition: Lea Mer Industries, Inc. filed a Petition for Review under Rule 45 of the Rules of Court, assailing the CA's decision and resolution. The petitioner raised issues concerning the admissibility of a survey report, the CA's reversal of the RTC's factual findings regarding the fortuitous event, and the CA's alleged disregard of testimonies regarding the vessel's seaworthiness and the typhoon's path. The core arguments centered on whether the loss was caused by a fortuitous event and whether the petitioner, as a common carrier, exercised extraordinary diligence.
Issue(s)
Whether the survey report of Jesus Cortez, who was not presented as a witness, can be admitted in evidence to prove the facts cited therein. Whether the Court of Appeals validly reversed the finding of fact of the Regional Trial Court that the loss was caused by a fortuitous event for which the petitioner could not be held liable. Whether the Court of Appeals committed serious error and grave abuse of discretion in disregarding the testimony of the MARINA witness regarding the vessel's seaworthiness and the PAG-ASA weather specialist regarding the typhoon's path.
Ruling
The Petition has no merit. The assailed Decision and Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the admissibility of the survey report: The Court partly agreed with the petitioner, stating that because the surveyor, Jesus Cortez, was not presented as a witness, his report was hearsay and inadmissible to prove the truth of its contents. However, the report was used in the testimonies of respondent's witnesses, Charlie M. Soriano and Federico S. Manlapig, in preparing their respective reports. The existence of the holes in the barge was proven by the testimonies of these witnesses, not solely by Cortez's report. The Court reiterated that witnesses must testify based on personal knowledge, and affidavits are hearsay unless the affiant is presented. Nevertheless, the report's admissibility as part of the witnesses' testimonies was correctly ruled upon by the trial court. Even without the report, the petitioner failed to overcome the presumption of fault. On whether the Court of Appeals validly reversed the RTC's finding of fact and whether the loss was caused by a fortuitous event: The Court held that the issue of whether the loss was due to a fortuitous event primarily involves a question of fact, and while generally not reviewable, it is an exception when the factual findings of the appellate and trial courts differ. The Court found no reason to reverse the CA's findings. Petitioner is a common carrier, bound to observe extraordinary diligence. The law presumes common carriers are at fault for loss or damage to goods. This presumption is rebutted only by proof of extraordinary diligence or by showing the loss was due to specific exempting causes, including natural disasters. However, for a fortuitous event to exempt a common carrier, it must be the sole and proximate cause of the loss, and the carrier must have exercised due diligence to prevent or minimize the loss. The Court found petitioner's evidence insufficient. There was no evidence that petitioner attempted to minimize or prevent loss. Furthermore, the alleged fortuitous event was not the sole and proximate cause, as there was a preponderance of evidence that the barge was not seaworthy due to holes in its hull, which likely caused or aggravated the sinking. Petitioner failed to prove it was free from fault or that the holes did not aggravate the sinking. On whether the CA committed grave abuse of discretion in disregarding testimonies regarding seaworthiness and the typhoon: The Court found no grave abuse of discretion. The CA correctly determined that the vessel was not seaworthy. The Philippine Coast Guard's Certificate of Inspection did not conclusively prove seaworthiness, as its regularity is disputably presumed and could be contradicted by competent evidence, which respondent provided. The certificate also did not necessarily reflect the vessel's actual condition at the commencement of the voyage. The CA's reversal of the RTC's findings was based on a preponderance of evidence showing the barge's unseaworthiness, which negated the defense of fortuitous event.
Main Doctrine
Common carriers are presumed negligent for loss or damage to goods and must prove they exercised extraordinary diligence or that the loss was due to an exempting cause. A fortuitous event must be the sole and proximate cause, and the carrier must have exercised due diligence to minimize loss. A vessel's unseaworthiness can negate a defense of fortuitous event.