G.R. No. 106999 – PHILIPPINE HOME ASSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS and EASTERN SHIPPING LINES, INC., respondents.
KAPUNAN, J.
Rule Synopsis
Fire is generally not a natural calamity under the Philippine jurisdiction, thus loss by reason of the same is generally deemed to be with the intervention of some negligence. And for a shipper to recover under gross averages, compliance with the formalities under the Code of Commerce is indispensable.
Facts
Various shipments were loaded on board SS Eastern Explorer of Eastern Shipping Lines, Inc. (ESLI). The consignees were William Lines, Inc., Orca’s Company, Pan Oriental Match Company and Ding Velayo. While in transit, the vessel exploded resulting to its constructive total loss. The explosion was traced to a flame detected on the acetylene cylinder located in the accommodation area near the engine room of the vessel. It resulted to the death of and severe injuries to some of the crew members. The whole vessel was also set on fire which led the remaining men to abandon the ship. The vessel was towed by a tugboat and the cargoes were recovered. The consigned goods were transshipped to the consignees albeit delayed, and via a different carrier. ESLI charged the consignees several amounts for the additional freight and salvage charges. The charges were paid by Philippine Home Assurance Corp. under protest (PHAC; insurer of the consignees).
PHAC, as subrogee of the consignees, then filed a case with the RTC against ESLI to recover the sum paid on the ground that the damage was due to the fault, negligence, illegal act and/or breach of contract of ESLI.
ESLI raised the defenses of exercise of due diligence and fortuitous event.
The RTC dismissed PHAC’s complaint. The CA affirmed. The SC reversed; PHAC may recover the sum paid from ESLI.
Issues
- Who, among the carrier, consignee or insurer of the goods, is liable for the additional charges or expenses incurred by the owner of the ship in the salvage operations and in the transshipment of the goods via a different carrier?
- Were the expenses incurred in saving the cargo considered general average?
Ruling and Discussion
Procedural Note: the SC held that it may review the factual findings of the lower courts given that “the findings complained of are totally devoid of support in the records, or that they are so glaringly erroneous as to constitute grave abuse of discretion.”
- Esli, the Shipper, is liable for the additional charges or expenses incurred by the owner of the ship in the salvage operations and in the transshipment of the goods via a different carrier.
In our jurisprudence, fire may not be considered a natural disaster or calamity since it almost always arises from some act of man or by human means. It cannot be an act of God unless caused by lightning or a natural disaster or casualty not attributable to human agency. Thus, in this case, the fire causing the damage cannot be considered a natural calamity, as contended by ESLI and as held by the lower courts, that would exonerate the former from liability. In fact, the explosion causing the fire was due to the negligence of ESLI’s crew.
First, the crew was negligent in placing or storing the fully loaded acetylene cylinders near the engine room where the heat generated therefrom may cause the said explosion by reason of spontaneous combustion. ESLI could have easily foreseen the danger.
Second, storing the acetylene cylinders in the accommodation area unnecessarily exposed the passengers to grave danger and injury.
Third, that the acetylene cylinder was certified as having complied with the safety measure and standards by qualified experts supports the theory that there was negligence in its handling. - Yes. The expenses incurred in saving the cargo were considered general average.
General or gross averages include all damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known risk (Note: under the gross averages, the consignees will be required to contribute to the cost of saving the vessel and its cargoes).
Nevertheless, ESLI failed to comply with the formalities under the Code of Commerce, specifically Arts. 813 and 814. Thus, the consignees may not be held liable.
Dispositive
Judgment reversed and set aside. Respondent ordered to return to petitioner the amount paid under protest in behalf of consignees.