DELSAN TRANSPORT LINES, INC. vs. COURT OF APPEALS

DELSAN TRANSPORT LINES, INC. vs. COURT OF APPEALS

G.R. No. 127897 - November 15, 2001

FACTS:

Caltex Philippines entered into a contract of affreightment with the petitioner, Delsan Transport Lines, Inc., for a period of one year whereby the said common carrier agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan Refinery to different parts of the country. Under the contract, petitioner took on board its vessel, MT Maysun, 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 the private respondent, American Home Assurance Corporation.

On August 14, 1986, MT Maysun set sail from Batangas for Zamboanga City. Unfortunately, the vessel sank in the early morning of August 16, 1986 near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil.

Subsequently, private respondent paid Caltex the sum of Five Million Ninety-Six Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven Centavos (P5,096,635.57) representing the insured value of the lost cargo. Exercising its right of subrogation under Article 2207 of the New Civil Code, private respondent demanded of the petitioner the same amount it paid to Caltex. Due to its failure to collect from the petitioner despite prior demand, private respondent filed a complaint with the Regional Trial Court of Makati, Branch 137, for collection of a sum of money. After trial, the trial court rendered a decision on November 29, 1990 dismissing the complaint. The trial court found that the vessel, MT Maysun, was seaworthy and that the incident was caused by unexpected inclement weather condition or force majeure, thus, exempting the common carrier from liability for the loss of its cargo.

The decision of the trial court, however, was reversed, on appeal, by the Court of Appeals. The appellate court ruled that petitioner is liable on its obligation as common carrier to herein private respondent insurance company as subrogee of Caltex. The subsequent motion for reconsideration was denied by the appellate court. Hence, petitioner filed the instant petition before the Supreme Court.

ISSUE:

Whether or not the payment made by private respondent to Caltex amounted to an automatic admission of the vessel’s seaworthiness.

RULING:

No.

The payment made by the private respondent for the insured value of the lost cargo operates as waiver of its (private respondent) 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 vessel’s seaworthiness by the private respondent as to foreclose recourse against the petitioner for any liability under its contractual obligation as a common carrier. The fact of payment grants the private respondent subrogatory right which enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against the petitioner common carrier.