Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 131621 September 28, 1999
LOADSTAR SHPPNG CO., NC., petitioner,
vs.
COURT O! APPEALS "#$ THE MANLA NSURANCE CO., NC., respondents.

DA%DE, &R., C.J.:
Petitioner oadstar Shippin! "o., Inc. #hereafter O$DST$R%, in this petition for revie&
on certiorari under Rule '( of the )**+ Rules of "ivil Procedure, see,s to reverse and set aside
the follo&in!- #a% the ./ 0anuar1 )**+ decision
1
of the "ourt of $ppeals in "$23.R. "V No.
.4'/), &hich affir5ed the decision of ' October )**)
2
of the Re!ional Trial "ourt of Manila,
6ranch )4, in "ivil "ase No. 7(28*))/, orderin! O$DST$R to pa1 private respondent Manila
Insurance "o. #hereafter MI"% the a5ount of P4,/4+,)+7, &ith le!al interest fro5 the filin! of the
co5pliant until full1 paid, P7,/// as attorne19s fees, and the costs of the suit: and #b% its
resolution of )* Nove5ber )**+,
3
den1in! O$DST$R9s 5otion for reconsideration of said
decision.
The facts are undisputed.1wphi1.nt
On )* Nove5ber )*7', O$DST$R received on board its M;V <"hero,ee< #hereafter, the
vessel% the follo&in! !oods for ship5ent-
a% +/( bales of la&anit hard&ood:
b% 8+ bo=es and crates of tile&ood asse5blies and the others :and
c% '* bundles of 5ouldin!s R > ? #.% $piton! 6olideni@ed.
The !oods, a5ountin! to P4,/4+,)+7, &ere insured for the sa5e a5ount &ith MI" a!ainst
various ris,s includin! <TOT$ OSS 6A TOT$ OF TBC OSS TBC VCSSC.< The vessel, in
turn, &as insured b1 Prudential 3uarantee > $ssurance, Inc. #hereafter P3$I% for P' 5illion. On
8/ Nove5ber )*7', on its &a1 to Manila fro5 the port of Nasipit, $!usan del Norte, the vessel,
alon! &ith its car!o, san, off i5asa&a Island. $s a result of the total loss of its ship5ent, the
consi!nee 5ade a clai5 &ith O$DST$R &hich, ho&ever, i!nored the sa5e. $s the insurer,
MI" paid P4,/+(,/// to the insured in full settle5ent of its clai5, and the latter e=ecuted a
subro!ation receipt therefor.
On ' Februar1 )*7(, MI" filed a co5plaint a!ainst O$DST$R and P3$I, alle!in! that the
sin,in! of the vessel &as due to the fault and ne!li!ence of O$DST$R and its e5plo1ees. It
also pra1ed that P3$I be ordered to pa1 the insurance proceeds fro5 the loss the vessel
directl1 to MI", said a5ount to be deducted fro5 MI"9s clai5 fro5 O$DST$R.
In its ans&er, O$DST$R denied an1 liabilit1 for the loss of the shipper9s !oods and clai5ed
that sin,in! of its vessel &as due to force majeure. P3$I, on the other hand, averred that MI"
had no cause of action a!ainst it, O$DST$R bein! the part1 insured. In an1 event, P3$I &as
later dropped as a part1 defendant after it paid the insurance proceeds to O$DST$R.
$s stated at the outset, the court a quo rendered Dud!5ent in favor of MI", pro5ptin!
O$DST$R to elevate the 5atter to the court of $ppeals, &hich, ho&ever, a!reed &ith the trial
court and affir5ed its decision in toto.
In dis5issin! O$DST$R9s appeal, the appellate court 5ade the follo&in! observations-
)% O$DST$R cannot be considered a private carrier
on the sole !round that there &as a sin!le shipper on
that fateful vo1a!e. The court noted that the charter of
the vessel &as li5ited to the ship, but O$DST$R
retained control over its cre&.
'
8% $s a co55on carrier, it is the "ode of "o55erce,
not the "ivil "ode, &hich should be applied in
deter5inin! the ri!hts and liabilities of the parties.
.% The vessel &as not sea&orth1 because it &as
under5anned on the da1 of the vo1a!e. If it had been
sea&orth1, it could have &ithstood the <natural and
inevitable action of the sea< on 8/ Nove5ber )*7',
&hen the condition of the sea &as 5oderate. The
vessel san,, not because of force majeure, but
because it &as not sea&orth1. O$DST$R9S alle!ation
that the sin,in! &as probabl1 due to the <conver!ence
of the &inds,< as stated b1 a P$3$S$ e=pert, &as not
dul1 proven at the trial. The <li5ited liabilit1< rule,
therefore, is not applicable considerin! that, in this
case, there &as an actual findin! of ne!li!ence on the
part of the carrier.
(
'% 6et&een MI" and O$DST$R, the provisions of the
6ill of adin! do not appl1 because said provisions bind
onl1 the shipper;consi!nee and the carrier. ?hen MI"
paid the shipper for the !oods insured, it &as
subro!ated to the latter9s ri!hts as a!ainst the carrier,
O$DST$R.
6
(% There &as a clear breach of the contract of carria!e
&hen the shipper9s !oods never reached their
destination. O$DST$R9s defense of <dili!ence of a
!ood father of a fa5il1< in the trainin! and selection of
its cre& is unavailin! because this is not a proper or
co5plete defense in culpa contractual.
4% <$rt. .4) #of the "ode of "o55erce% has been
Dudiciall1 construed to 5ean that &hen !oods are
delivered on board a ship in !ood order and condition,
and the shipo&ner delivers the5 to the shipper in bad
order and condition, it then devolves upon the
shipo&ner to both alle!e and prove that the !oods &ere
da5a!ed b1 reason of so5e fact &hich le!all1 e=e5pts
hi5 fro5 liabilit1.< Transportation of the 5erchandise at
the ris, and venture of the shipper 5eans that the latter
bears the ris, of loss or deterioration of his !oods
arisin! fro5 fortuitous events, force majeure, or the
inherent nature and defects of the !oods, but not those
caused b1 the presu5ed ne!li!ence or fault of the
carrier, unless other&ise proved.
)
The errors assi!ned b1 O$DST$R boil do&n to a deter5ination of the follo&in! issues-
#)% Is the M;V <"hero,ee< a private or a co55on
carrierE
#8% Did O$DST$R observe due and;or ordinar1
dili!ence in these pre5ises.
Re!ardin! the first issue, O$DST$R sub5its that the vessel &as a private carrier because it
&as not issued certificate of public convenience, it did not have a re!ular trip or schedule nor a
fi=ed route, and there &as onl1 <one shipper, one consi!nee for a special car!o.<
In refutation, MI" ar!ues that the issue as to the classification of the M;V <"hero,ee< &as not
ti5el1 raised belo&: hence, it is barred b1 estoppel. ?hile it is true that the vessel had on board
onl1 the car!o of &ood products for deliver1 to one consi!nee, it &as also carr1in! passen!ers
as part of its re!ular business. Moreover, the bills of ladin! in this case 5ade no 5ention of an1
charter part1 but onl1 a state5ent that the vessel &as a <!eneral car!o carrier.< Neither &as
there an1 <special arran!e5ent< bet&een O$DST$R and the shipper re!ardin! the ship5ent of
the car!o. The sin!ular fact that the vessel &as carr1in! a particular t1pe of car!o for one
shipper is not sufficient to convert the vessel into a private carrier.
$s re!ards the second error, O$DST$R ar!ues that as a private carrier, it cannot be presu5ed
to have been ne!li!ent, and the burden of provin! other&ise devolved upon MI".
8
O$DST$R also 5aintains that the vessel &as sea&orth1. 6efore the fateful vo1a!e on )*
Nove5ber )*7', the vessel &as alle!edl1 dr1 doc,ed at Feppel Philippines Ship1ard and &as
dul1 inspected b1 the 5ariti5e safet1 en!ineers of the Philippine "oast 3uard, &ho certified that
the ship &as fit to underta,e a vo1a!e. Its cre& at the ti5e &as e=perienced, licensed and
unGuestionabl1 co5petent. ?ith all these precautions, there could be no other conclusion
e=cept that O$DST$R e=ercised the dili!ence of a !ood father of a fa5il1 in ensurin! the
vessel9s sea&orthiness.
O$DST$R further clai5s that it &as not responsible for the loss of the car!o, such loss bein!
due to force majeure. It points out that &hen the vessel left Nasipit, $!usan del Norte, on )*
Nove5ber )*7', the &eather &as fine until the ne=t da1 &hen the vessel san, due to stron!
&aves. M"I9s &itness, 3racelia Tapel, full1 established the e=istence of t&o t1phoons,
<?CFRIN3< and <AOIN3,< inside the Philippine area of responsibilit1. In fact, on 8/
Nove5ber )*7', si!nal no. ) &as declared over Castern Visa1as, &hich includes i5asa&a
Island. Tapel also testified that the conver!ence of &inds brou!ht about b1 these t&o t1phoons
stren!thened &ind velocit1 in the area, naturall1 producin! stron! &aves and &inds, in turn,
causin! the vessel to list and eventuall1 sin,.
O$DST$R !oes on to ar!ue that, bein! a private carrier, an1 a!ree5ent li5itin! its liabilit1,
such as &hat transpired in this case, is valid. Since the car!o &as bein! shipped at <o&ner9s
ris,,< O$DST$R &as not liable for an1 loss or da5a!e to the sa5e. Therefore, the "ourt of
$ppeals erred in holdin! that the provisions of the bills of ladin! appl1 onl1 to the shipper and
the carrier, and not to the insurer of the !oods, &hich conclusion runs counter to the Supre5e
"ourt9s rulin! in the case of St. Paul Fire & Marine Co. v. Macondray & Co., Inc.,
9
and ational
!nion Fire "n#urance Company of Pitt#$ur%h v. Stolt&iel#en Phil#.' "nc.
1*
Finall1, O$DST$R avers that MI"9s clai5 had alread1 prescribed, the case havin! been
instituted be1ond the period stated in the bills of ladin! for institutin! the sa5e H suits based
upon clai5s arisin! fro5 shorta!e, da5a!e, or non2deliver1 of ship5ent shall be instituted &ithin
si=t1 da1s fro5 the accrual of the ri!ht of action. The vessel san, on 8/ Nove5ber )*7': 1et, the
case for recover1 &as filed onl1 on ' Februar1 )*7(.
MI", on the other hand, clai5s that O$DST$R &as liable, not&ithstandin! that the loss of the
car!o &as due toforce majeure, because the sa5e concurred &ith O$DST$R9s fault or
ne!li!ence.
Secondl1, O$DST$R did not raise the issue of prescription in the court belo&: hence, the sa5e
5ust be dee5ed &aived.
Thirdl1, the < li5ited liabilit1 < theor1 is not applicable in the case at bar because O$DST$R
&as at fault or ne!li!ent, and because it failed to 5aintain a sea&orth1 vessel. $uthori@in! the
vo1a!e not&ithstandin! its ,no&led!e of a t1phoon is tanta5ount to ne!li!ence.
?e find no 5erit in this petition.
$nent the first assi!ned error, &e hold that O$DST$R is a co55on carrier. It is not necessar1
that the carrier be issued a certificate of public convenience, and this public character is not
altered b1 the fact that the carria!e of the !oods in Guestion &as periodic, occasional, episodic
or unscheduled.
In support of its position, O$DST$R relied on the )*47 case of (ome "n#urance Co. v.
)merican Steam#hip )%encie#' "nc.,
11
&here this "ourt held that a co55on carrier transportin!
special car!o or charterin! the vessel to a special person beco5es a private carrier that is not
subDect to the provisions of the "ivil "ode. $n1 stipulation in the charter part1 absolvin! the
o&ner fro5 liabilit1 for loss due to the ne!li!ence of its a!ent is void onl1 if the strict polic1
!overnin! co55on carriers is upheld. Such polic1 has no force &here the public at is not
involved, as in the case of a ship totall1 chartered for the use of a sin!le part1. O$DST$R also
cited *alen+uela (ardwood and "ndu#trial Supply' "nc. v. Court of )ppeal#
12
and ational Steel
Corp. v. Court of )ppeal#,
13
both of &hich upheld the Bo5e Insurance doctrine.
These cases invo,ed b1 O$DST$R are not applicable in the case at bar for the si5ple reason
that the factual settin!s are different. The records do not disclose that the M;V <"hero,ee,< on
the date in Guestion, undertoo, to carr1 a special car!o or &as chartered to a special person
onl1. There &as no charter part1. The bills of ladin! failed to sho& an1 special arran!e5ent, but
onl1 a !eneral provision to the effect that the M;V<"hero,ee< &as a <%eneral car%o
carrier.<
1'
Further, the bare fact that the vessel &as carr1in! a particular t1pe of car!o for one
shipper, &hich appears to be purel1 coincidental, is not reason enou!h to convert the vessel
fro5 a co55on to a private carrier, especiall1 &here, as in this case, it &as sho&n that the
vessel &as also carr1in! passen!ers.
Inder the facts and circu5stances obtainin! in this case, O$DST$R fits the definition of a
co55on carrier under $rticle )+.8 of the "ivil "ode. In the case of ,e -u+man v. Court of
)ppeal#,
1(
the "ourt Du=taposed the statutor1 definition of <co55on carriers< &ith the peculiar
circu5stances of that case, vi+.-
The "ivil "ode defines <co55on carriers< in the follo&in! ter5s-
$rt. )+.8. "o55on carriers are persons, corporations,
fir5s or associations en!a!ed in the business of
carr1in! or transportin! passen!ers or !oods or both,
b1 land, &ater, or air for co5pensation, offerin! their
services to the public.
The above article 5a,es no distinction bet&een one
&hose principal business activit1 is the carr1in! of persons or !oods or
both, and one &ho does such carr1in! onl1 as ancillary activit1 #in local
idio5, as <a sideline<. $rticle )+.8 also carefull1 avoids 5a,in! an1
distinction bet&een a person or enterprise offerin! transportation service on
a re%ular or #cheduled $a#i# and one offerin! such service on
an occa#ional' epi#odic or un#cheduled $a#i#. Neither does $rticle )+.8
distin!uish bet&een a carrier offerin! its services to the <!eneral public,< i.e.,
the !eneral co55unit1 or population, and one &ho offers services or solicits
business onl1 fro5 a narro& #e%ment of the !eneral population. ?e thin,
that $rticle )+.. deliberatel1 refrained fro5 5a,in! such distinctions.
=== === ===
It appears to the "ourt that private respondent is properl1 characteri@ed as
a co55on carrier even thou!h he 5erel1 <bac,2hauled< !oods for other
5erchants fro5 Manila to Pan!asinan, althou!h such bac,haulin! &as
done on a periodic or occasional rather than re!ular or scheduled 5anner,
and eventhou!h private respondent9s principal occupation &as not the
carria!e of !oods for others. There is no dispute that private respondent
char!ed his custo5ers a fee for haulin! their !oods: that fee freGuentl1 fell
belo& co55ercial frei!ht rates is not relevant here.
The "ourt of $ppeals referred to the fact that private respondent held no
certificate of public convenience, and concluded he &as not a co55on
carrier. This is palpable error. $ certificate of public convenience is not a
reGuisite for the incurrin! of liabilit1 under the "ivil "ode provisions
!overnin! co55on carriers. That liabilit1 arises the 5o5ent a person or fir5
acts as a co55on carrier, &ithout re!ard to &hether or not such carrier has
also co5plied &ith the reGuire5ents of the applicable re!ulator1 statute and
i5ple5entin! re!ulations and has been !ranted a certificate of public
convenience or other franchise. To e=e5pt private respondent fro5 the
liabilities of a co55on carrier because he has not secured the necessar1
certificate of public convenience, &ould be offensive to sound public polic1:
that &ould be to re&ard private respondent precisel1 for failin! to co5pl1
&ith applicable statutor1 reGuire5ents The business of a co55on carrier
i5pin!es directl1 and inti5atel1 upon the safet1 and &ell bein! and propert1
of those 5e5bers of the !eneral co55unit1 &ho happen to deal &ith such
carrier. The la& i5poses duties and liabilities upon co55on carriers for the
safet1 and protection of those &ho utili@e their services and the la& cannot
allo& a co55on carrier to render such duties and liabilities 5erel1
facultative b1 si5pl1 failin! to obtain the necessar1 per5its and
authori@ations.
Movin! on to the second assi!ned error, &e find that the M;V <"hero,ee< &as not sea&orth1
&hen it e5bar,ed on its vo1a!e on )* Nove5ber )*7'. The vessel &as not even sufficientl1
5anned at the ti5e. <For a vessel to be sea&orth1, it 5ust be adeGuatel1 eGuipped for the
vo1a!e and 5anned &ith a sufficient nu5ber of co5petent officers and cre&. The failure of a
co55on carrier to 5aintain in sea&orth1 condition its vessel involved in a contract of carria!e is
a clear breach of its dut1 prescribed in $rticle )+(( of the "ivil "ode.<
16
Neither do &e a!ree &ith O$DST$R9s ar!u5ent that the <li5ited liabilit1< theor1 should be
applied in this case. The doctrine of li5ited liabilit1 does not appl1 &here there &as ne!li!ence
on the part of the vessel o&ner or a!ent.
1)
O$DST$R &as at fault or ne!li!ent in not
5aintainin! a sea&orth1 vessel and in havin! allo&ed its vessel to sail despite ,no&led!e of an
approachin! t1phoon. In an1 event, it did not sin, because of an1 stor5 that 5a1 be dee5ed
asforce majeure, inas5uch as the &ind condition in the perfor5ance of its duties, O$DST$R
cannot hide behind the <li5ited liabilit1< doctrine to escape responsibilit1 for the loss of the
vessel and its car!o.
O$DST$R also clai5s that the "ourt of $ppeals erred in holdin! it liable for the loss of the
!oods, in utter disre!ard of this "ourt9s pronounce5ents in St. Paul Fire & Marine "n#. Co. v.
Macondray & Co.' "nc.,
18
andational !nion Fire "n#urance v. Stolt&iel#en Phil#.' "nc.
19
It &as
ruled in these t&o cases that after pa1in! the clai5 of the insured for da5a!es under the
insurance polic1, the insurer is subro!ated 5erel1 to the ri!hts of the assured, that is, it can
recover onl1 the a5ount that 5a1, in turn, be recovered b1 the latter. Since the ri!ht of the
assured in case of loss or da5a!e to the !oods is li5ited or restricted b1 the provisions in the
bills of ladin!, a suit b1 the insurer as subro!ee is necessaril1 subDect to the sa5e li5itations
and restrictions. ?e do not a!ree. In the first place, the cases relied on b1 O$DST$R involved
a li5itation on the carrier9s liabilit1 to an a5ount fi=ed in the bill of ladin! &hich the parties 5a1
enter into, provided that the sa5e &as freel1 and fairl1 a!reed upon #$rticles )+'*2)+(/%. On
the other hand, the stipulation in the case at bar effectivel1 reduces the co55on carrier9s liabilit1
for the loss or destruction of the !oods to a de!ree less than e=traordinar1 #$rticles )+'' and
)+'(%, that is, the carrier is not liable for an1 loss or da5a!e to ship5ents 5ade at <o&ner9s
ris,.< Such stipulation is obviousl1 null and void for bein! contrar1 to public polic1.<
2*
It has been
said-
Three ,inds of stipulations have often been 5ade in a bill of ladin!.
The fir#t one e=e5ptin! the carrier fro5 an1 and all liabilit1 for loss or
da5a!e occasioned b1 its o&n ne!li!ence. The second is one providin! for
an unGualified li5itation of such liabilit1 to an a!reed valuation. $nd
the third is one li5itin! the liabilit1 of the carrier to an a!reed valuation
unless the shipper declares a hi!her value and pa1s a hi!her rate of. frei!ht.
$ccordin! to an al5ost unifor5 &ei!ht of authorit1, the first and second
,inds of stipulations are invalid as bein! contrar1 to public polic1, but the
third is valid and enforceable.
21
Since the stipulation in Guestion is null and void, it follo&s that &hen MI" paid the
shipper, it &as subro!ated to all the ri!hts &hich the latter has a!ainst the co55on
carrier, O$DST$R.
Neither is there 5erit to the contention that the clai5 in this case &as barred b1 prescription.
MI"9s cause of action had not 1et prescribed at the ti5e it &as concerned. Inas5uch as neither
the "ivil "ode nor the "ode of "o55erce states a specific prescriptive period on the 5atter, the
"arria!e of 3oods b1 Sea $ct #"O3S$% H &hich provides for a one21ear period of li5itation on
clai5s for loss of, or da5a!e to, car!oes sustained durin! transit H 5a1 be applied suppletoril1
to the case at bar. This one21ear prescriptive period also applies to the insurer of the !oods.
22
In
this case, the period for filin! the action for recover1 has not 1et elapsed. Moreover, a stipulation
reducin! the one21ear period is null and void:
23
it 5ust, accordin!l1, be struc, do&n.
?BCRCFORC, the instant petition is DCNICD and the challen!ed decision of ./ 0anuar1 )**+
of the "ourt of $ppeals in "$23.R. "V No. .4'/) is $FFIRMCD. "osts a!ainst
petitioner.1wphi1.nt
SO ORDCRCD.