Delsan Transport Lines vs CA, American Home Insurance
Otherwise, AHI was not legally liable to
FACTS:
1. CONTRACT OF AFFREIGHTMENT: Delsan agreed to transport
Caltexs industrial fuel oil from the Batangas-Bataan
Refinery to different parts of the country.
2. MT Maysun (vessel of Delsan) took on board 2,277.314
kiloliters of industrial fuel oil of Caltex to be delivered to the
Caltex Oil Terminal in Zamboanga City. The shipment was
insured with American Home Assurance Corporation.
3. 8/16/86: MT Maysun vessel sank in the early morning near
Panay Gulf in the Visayas taking with it the entire cargo of
fuel oil.
4. AHI paid Caltex P5,096,635.57 representing the insured
value of the lost cargo. AHI tried to collect from Delsan but
it did not heed to the demand. Hence, AHI filed a complaint
in RTC Makati.
5. RTC: dismissed the complaint; the vessel was seaworthy to
undertake the voyage as determined by the Philippine
Coast Guard per Survey Certificate Report No. M5-016-MH
at the time of dry-docking. The incident was caused by
unexpected inclement weather condition or force majeure.
6. CA: Reversed RTC; gave credence to the weather report of
PAGASA: the wind speed remained at 10 to 20 knots per
hour while the waves measured from .7 to two (2) meters in
height. No explanation as to the cause of the sinking of the
vessel and that it was improperly manned.
ISSUE: W/N Delsan is liable? YES
HELD:
OTHERS:
DELSAN: When AHI paid Caltex the value of its lost cargo,
it is equivalent to a tacit recognition that the ill-fated vessel
was seaworthy.
Caltex due to the latters breach of implied warranty under
the marine insurance policy that the vessel was seaworthy.
The basis of Delsans argument is Section 113 of the
Insurance Code.
SC: The payment made by AHI for the insured value of
the lost cargo operates as waiver of its right to enforce the
term of the implied warranty against Caltex under the
marine insurance policy. However, the same cannot be
validly interpreted as an automatic admission of the
vessels seaworthiness by AHI as to foreclose
recourse against Delsan for any liability under its
contractual obligation as a common carrier.
DELSAN: CA erred in ruling that (1) it is not seaworthy
because the marine officer who served as the chief
mate of the vessel was allegedly not qualified. It
argued that under Section 116 of the Insurance
Code, (2) the implied warranty of seaworthiness of
the vessel extends to the vessels complement. (3) The
chief mate was qualified to act as the vessels chief officer
under Philippine Merchant Marine Rules and Regulations. All
the crew and officers of MT Maysun were exonerated in the
administrative investigation after the subject accident. (4)
AHI failed to to present the marine cargo insurance policy
during trial
SC: The certificates issued by Philippine Coast Guard
do not necessarily take into account the actual
condition of the vessel at the time of the
commencement of the voyage. The ship may have
appeared fit but that does not negate the
presumption of unseaworthiness triggered by an
unexplained sinking. Seaworthiness relates to a vessels
actual condition.
 The fact of payment grants AHI subrogatory right which
enables it to exercise legal remedies that would otherwise
be available to Caltex as owner. (Art. 2207) The right of
subrogation accrues simply upon payment by the insurance
company of the insurance claim. It also operates as an
equitable assignment to the former of all the remedies
which the latter may have against Delsan.
The exoneration of MT Maysuns officers and crew by the
Board of Marine Inquiry merely concerns their respective
administrative liabilities. It does not in any way operate to
absolve the petitioner common carrier from its civil liability
arising from its failure to observe extraordinary diligence in
the vigilance over the goods it was transporting and for the
negligent acts or omissions of its employees.
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 not only the relationship
of AHI as insurer and Caltex, as the assured shipper but
also the amount paid to settle the claim.