FIRST DIVISION 2. ID.; ID.; ID.; ID.; WHEN PRESUMPTION DOES NOT ARISE.

— However,
this presumption of fault or negligence does not arise in the cases enumerated
[G.R. No. 135645. March 8, 2002.] under Article 1734 of the Civil Code: Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless the same is due to any of
THE PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC., the following causes only: (1) Flood, storm, earthquake, lightning or other
petitioner, v s . MCG MARINE SERVICES, INC. and DOROTEO natural disaster or calamity; (2) Act of the public enemy in war, whether
GAERLAN, respondents. international or civil; (3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers; (5)
Order or act of competent public authority.
Leaño & Leaño Law Office for petitioner.
3. ID.; ID.; ID.; ID.; FORTUITOUS EVENT; MUST BE THE PROXIMATE AND
Virgilio Y. Morales for private respondent. ONLY CAUSE OF THE LOSS. — In order that a common carrier may be absolved
from liability where the loss, destruction or deterioration of the goods is due to
SYNOPSIS a natural disaster or calamity, it must further be shown that such natural
disaster or calamity was the proximate and only cause of the loss; there must
Petitioner insurance company insured the cargo belonging to San Miguel be "an entire exclusion of human agency from the cause of the injury of the
Corporation and loaded on M/V Peatheray Patrick-G, owned by respondents, to loss."
be transported from Mandaue City to Bislig, Surigao del Sur. The ship sunk, and 4. ID.; ID.; ID.; ID.; DILIGENCE REQUIRED IN NATURAL DISASTER TO
petitioner paid the amount insured to San Miguel Corporation. Petitioner sued PREVENT OR MINIMIZE LOSS. — Moreover, even in cases where a natural
respondent for collection to recover the amount it paid on the insured cargo. disaster is the proximate and only cause of the loss, a common carrier is still
The trial court rendered judgment in favor of petitioner finding respondents required to exercise due diligence to prevent or minimize loss before, during
solidarily liable for the loss. The Court of Appeals, in rendering its decision and after the occurrence of the natural disaster, for it to be exempt from
reversing the judgment of the trial court, relied on the findings of the Board of liability under the law for the loss of the goods. If a common carrier fails to
Marine Inquiry that the loss of the cargo was due solely to the attendance of exercise due diligence — or that ordinary care which the circumstances of the
strong winds and huge waves, a fortuitous event, which caused the vessel to particular case demand — to preserve and protect the goods carried by it on
accumulate water, tilt to the port side and to eventually keel over. the occasion of a natural disaster, it will be deemed to have been negligent,
Common carriers are required to observe extraordinary diligence in the and the loss will not be considered as having been due to a natural disaster
vigilance over the goods transported by them and are presumed to be at fault under Article 1734(1).
or negligent if the goods are lost, destroyed or damaged. This presumption 5. ID.; ID.; ID.; ID.; FORTUITOUS EVENT, DEFINED. — A fortuitous event
does not arise where the proximate and only cause of the loss is a fortuitous has been defined as one which could not be foreseen, or which though
event. In the case at bar, the Court of Appeals did not err in relying on the foreseen, is inevitable. An event is considered fortuitous if the following
factual findings, supported by substantial evidence, of the Board of Marine elements concur: . . . (a) the cause of the unforeseen and unexpected
Inquiry, an administrative body which is an expert in matters concerning occurrence, or the failure of the debtor to comply with his obligations, must be
marine casualties. The assailed decision of the Court of Appeals was affirmed. independent of human will; (b) it must be impossible to foresee the event which
EaDATc

constitutes the caso fortuito, or if it can be foreseen, it must be impossible to

avoid; (c) the occurrence must be such as to render it impossible for the debtor
SYLLABUS
to fulfill his obligation in a normal manner; and (d) the obligor must be free
from any participation in the aggravation of the injury resulting to the creditor. .
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; COMMON CARRIERS; ..
PRESUMED AT FAULT OR NEGLIGENT IF GOODS TRANSPORTED ARE LOST,
DESTROYED OR DAMAGED. — Common carriers, from the nature of their 6. ID.; ID.; ID.; ID.; LOSS OF CARGO IN CASE AT BAR CAUSED BY
business and for reasons of public policy, are mandated to observe FORTUITOUS EVENT. — In the case at bar, it was adequately shown that before
extraordinary diligence in the vigilance over the goods and for the safety of the the M/V Peatheray Patrick-G left the port of Mandaue City, the Captain
passengers transported by them. Owing to this high degree of diligence confirmed with the Coast Guard that the weather condition would permit the
required of them, common carriers, as a general rule, are presumed to have safe travel of the vessel to Bislig, Surigao del Sur. Thus, he could not be
been at fault or negligent if the goods transported by them are lost, destroyed expected to have foreseen the unfavorable weather condition that awaited the
or if the same deteriorated. vessel in Cortes, Surigao del Sur. It was the presence of the strong winds and
enormous waves which caused the vessel to list, keel over, and consequently
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 lose the cargo contained therein. The appellate court likewise found that there Meanwhile, the Board of Marine Inquiry conducted its own investigation of
was no negligence on the part of the crew of the M/V Peatheray Patrick-G. the sinking of the M/V Peatheray Patrick-G to determine whether or not the
captain and crew of the vessel should be held responsible for the incident. 3 On
May 11, 1989, the Board rendered its decision exonerating the captain and
DECISION crew of the ill-fated vessel for any administrative liability. It found that the
cause of the sinking of the vessel was the existence of strong winds and
enormous waves in Surigao del Sur, a fortuitous event that could not have been
KAPUNAN, J : p foreseen at the time the M/V Peatheray Patrick-G left the port of Mandaue City.
It was further held by the Board that said fortuitous event was the proximate
This petition for review seeks the reversal of the Decision, dated and only cause of the vessel's sinking.
September 23, 1998, of the Court of Appeals in CA-G.R. CV No. 43915, 1 which
absolved private respondents MCG Marine Services, Inc. and Doroteo Gaerlan of On April 15, 1993, the RTC of Makati City, Branch 134, promulgated its
any liability regarding the loss of the cargo belonging to San Miguel Corporation Decision finding private respondents solidarily liable for the loss of San Miguel
due to the sinking of the M/V Peatheray Patrick-G owned by Gaerlan with MCG Corporation's cargo and ordering them to pay petitioner the full amount of the
Marine Services, Inc. as agent. lost cargo plus legal interest, attorney's fees and costs of suit. 4

On March 1, 1987, San Miguel Corporation insured several beer bottle Private respondents appealed the trial court's decision to the Court of
cases with an aggregate value of P5,836,222.80 with petitioner Philippine Appeals. On September 23, 1998, the appellate court issued the assailed
American General Insurance Company. 2 The cargo were loaded on board the Decision, which reversed the ruling of the RTC. It held that private respondents
M/V Peatheray Patrick-G to be transported from Mandaue City to Bislig, Surigao could not be held liable for the loss of San Miguel Corporation's cargo because
del Sur. said loss occurred as a consequence of a fortuitous event, and that such
fortuitous event was the proximate and only cause of the loss. 5
After having been cleared by the Coast Guard Station in Cebu the
previous day, the vessel left the port of Mandaue City for Bislig, Surigao del Sur Petitioner thus filed the present petition, contending that:
on March 2, 1987. The weather was calm when the vessel started its voyage.
(A)
The following day, March 3, 1987, M/V Peatheray Patrick-G listed and IN REVERSING AND SETTING ASIDE THE DECISION OF RTC BR. 134 OF
subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a consequence MAKATI CITY ON THE BASIS OF THE FINDINGS OF THE BOARD OF
thereof, the cargo belonging to San Miguel Corporation was lost. MARINE INQUIRY, APPELLATE COURT DECIDED THE CASE AT BAR NOT
IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE
Subsequently, San Miguel Corporation claimed the amount of its loss from HONORABLE COURT;
petitioner. IEDHAT

(B)
Upon petitioner's request, on March 18, 1987, Mr. Eduardo Sayo, a
surveyor from the Manila Adjusters and Surveyors Co., went to Taganauan IN REVERSING THE TRIAL COURT'S DECISION, THE APPELLATE COURT
Island, Cortes, Surigao del Sur where the vessel was cast ashore, to investigate GRAVELY ERRED IN CONTRADICTING AND IN DISTURBING THE
FINDINGS OF THE FORMER;
the circumstances surrounding the loss of the cargo. In his report, Mr. Sayo
stated that the vessel was structurally sound and that he did not see any (C)
damage or crack thereon. He concluded that the proximate cause of the listing
THE APPELLATE COURT GRAVELY ERRED IN REVERSING THE DECISION
and subsequent sinking of the vessel was the shifting of ballast water from
OF THE TRIAL COURT AND IN DISMISSING THE COMPLAINT. 6
starboard to portside. The said shifting of ballast water allegedly affected the
stability of the M/V Peatheray Patrick-G. Common carriers, from the nature of their business and for reasons of
public policy, are mandated to observe extraordinary diligence in the vigilance
Thereafter, petitioner paid San Miguel Corporation the full amount of
over the goods and for the safety of the passengers transported by them. 7
P5,836,222.80 pursuant to the terms of their insurance contract.
Owing to this high degree of diligence required of them, common carriers, as a
On November 3, 1987, petitioner as subrogee of San Miguel Corporation general rule, are presumed to have been at fault or negligent if the goods
filed with the Regional Trial Court (RTC) of Makati City a case for collection transported by them are lost, destroyed or if the same deteriorated. 8
against private respondents to recover the amount it paid to San Miguel
However, this presumption of fault or negligence does not arise in the
Corporation for the loss of the latter's cargo.
cases enumerated under Article 1734 of the Civil Code:

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 Common carriers are responsible for the loss, destruction, or of Mandawe, Cebu for Bislig, Surigao del Sur on March 2, 1987, the
deterioration of the goods, unless the same is due to any of the Captain had observed the fair atmospheric condition of the area of the
following causes only: pier and confirmed this good weather condition with the Coast Guard
Detachment of Mandawe City. However, on March 3, 1987 at about
(1) Flood, storm, earthquake, lightning or other natural disaster or 10:00 o'clock in the evening, when the vessel had already passed
calamity; Surigao Strait, the vessel started to experience waves as high as 6 to 7
(2) Act of the public enemy in war, whether international or civil; feet and that the Northeasterly wind was blowing at about five (5) knot
velocity. At about 11:00 o'clock P.M. when the vessel was already
(3) Act or omission of the shipper or owner of the goods; about 4.5 miles off Cawit Point, Cortes, Surigao del Sur, the vessel was
discovered to be listing 15 degrees to port side and that the strength of
(4) The character of the goods or defects in the packing or in the the wind had increased to 15 knots and the waves were about ten (10)
containers; feet high [Ramilo TSN 10-27-87 p. 32). Immediately thereafter,
emergency measures were taken by the crew. The officers had
(5) Order or act of competent public authority.
suspected that a leak or crack might had developed at the bottom hull
In order that a common carrier may be absolved from liability where the particularly below one or two of the empty wing tanks at port side
loss, destruction or deterioration of the goods is due to a natural disaster or serving as buoyancy tanks resulting in ingress of sea water in the tanks
calamity, it must further be shown that such natural disaster or calamity was was confirmed when the Captain ordered to use the cargo pump. The
suction valves to the said tanks of port side were opened in order to
the proximate and only cause of the loss; 9 there must be "an entire exclusion
suck or draw out any amount of water that entered into the tanks. The
of human agency from the cause of the injury or the loss." 10 suction pressure of the pump had drawn out sea water in large
Moreover, even in cases where a natural disaster is the proximate and quantity indicating therefore, that a leak or crack had developed in the
hull as the vessel was continuously batted and pounded by the huge
only cause of the loss, a common carrier is still required to exercise due
waves. Bailing out of the water through the pump was done
diligence to prevent or minimize loss before, during and after the occurrence of continuously in an effort of the crew to prevent the vessel from sinking.
the natural disaster, for it to be exempt from liability under the law for the loss But then efforts were in vain. The vessel still continued to list even
of the goods. 11 If a common carrier fails to exercise due diligence — or that more despite the continuous pumping and discharging of sea water
ordinary care which the circumstances of the particular case demand 12 — to from the wing tanks indicating that the amount of the ingress of sea
preserve and protect the goods carried by it on the occasion of a natural water was greater in volume than that was being discharged by the
disaster, it will be deemed to have been negligent, and the loss will not be pump. Considering therefore, the location of the suspected source of
considered as having been due to a natural disaster under Article 1734(1). the ingress of sea water which was a crack or hole at the bottom hull
below the buoyancy tank's port side which was not acessible (sic) for
In the case at bar, the issues may be narrowed down to whether the loss the crew to check or control the flow of sea water into the said tank.
of the cargo was due to the occurrence of a natural disaster, and if so, whether The accumulation of sea water aggravated by the continuous
such natural disaster was the sole and proximate cause of the loss or whether pounding, rolling and pitching of the vessel against huge waves and
private respondents were partly to blame for failing to exercise due diligence to strong northeasterly wind, the Captain then had no other recourse
except to order abandonship to save their lives. 13
prevent the loss of the cargo.
The presence of a crack in the ill-fated vessel through which water seeped
The parties do not dispute that on the day the M/V Peatheray Patrick-G
in was confirmed by the Greutzman Divers who were commissioned by the
sunk, said vessel encountered strong winds and huge waves ranging from six to
private respondents to conduct an underwater survey and inspection of the
ten feet in height. The vessel listed at the port side and eventually sunk at
vessel to determine the cause and circumstances of its sinking. In its report,
Cawit Point, Cortes, Surigao del Sur.
Greutzman Divers stated that "along the port side platings, a small hole and
The Court of Appeals, citing the decision of the Board of Marine Inquiry in two separate cracks were found at about midship." 14
the administrative case against the vessel's crew (BMI-646-87), found that the
The findings of the Board of Marine Inquiry indicate that the attendance of
loss of the cargo was due solely to the existence of a fortuitous event,
strong winds and huge waves while the M/V Peatheray Patrick-G was sailing
particularly the presence of strong winds and huge waves at Cortes, Surigao del
through Cortes, Surigao del Norte on March 3, 1987 was indeed fortuitous. A
Sur on March 3, 1987:
fortuitous event has been defined as one which could not be foreseen, or which
xxx xxx xxx though foreseen, is inevitable. 15 An event is considered fortuitous if the
following elements concur: HaAIES

III. WHAT WAS THE PROXIMATE CAUSE OF SINKING?

. . . (a) the cause of the unforeseen and unexpected occurrence,
Evidence shows that when "LCT Peatheray Patrick-G" left the port
or the failure of the debtor to comply with his obligations, must be
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 independent of human will; (b) it must be impossible to foresee the To be seaworthy, a vessel must not only be staunch and fit in the
event which constitutes the caso fortuito, or if it can be foreseen, it hull for the voyage to be undertaken but also must be properly
must be impossible to avoid; (c) the occurrence must be such as to equipped and for that purpose there is a duty upon the owner to
render it impossible for the debtor to fulfill his obligation in a normal provide a competent master and a crew adequate in number and
manner; and (d) the obligor must be free from any participation in the competent for their duty and equal in disposition and seamanship to
aggravation of the injury resulting to the creditor. . . . 16 the ordinary in that calling. (Ralph 299 F-52, 1924 AMC 942).
(American President 2td v. Ren Fen Fed 629. AMC 1723 LCA 9 CAL
In the case at bar, it was adequately shown that before the M/V Peatheray 1924). 17
Patrick-G left the port of Mandaue City, the Captain confirmed with the Coast
Guard that the weather condition would permit the safe travel of the vessel to Overloading was also eliminated as a possible cause of the sinking of the
Bislig, Surigao del Sur. Thus, he could not be expected to have foreseen the vessel, as the evidence showed that its freeboard clearance was
unfavorable weather condition that awaited the vessel in Cortes, Surigao del substantially greater than the authorized freeboard clearance. 18
Sur. It was the presence of the strong winds and enormous waves which caused
Although the Board of Marine Inquiry ruled only on the administrative
the vessel to list, keel over, and consequently lose the cargo contained therein.
liability of the captain and crew of the M/V Peatheray Patrick-G, it had to
The appellate court likewise found that there was no negligence on the part of
conduct a thorough investigation of the circumstances surrounding the sinking
the crew of the M/V Peatheray Patrick-G, citing the following portion of the
of the vessel and the loss of its cargo in order to determine their responsibility,
decision of the Board of Marine Inquiry:
if any. The results of its investigation as embodied in its decision on the
I. WAS LCT PEATHERAY PATRICK-G SEAWORTHY WHEN SHE administrative case clearly indicate that the loss of the cargo was due solely to
LEFT THE PORT OF MANDAWE, CEBU AND AT THE TIME OF SINKING? attendance of strong winds and huge waves which caused the vessel to
accumulate water, tilt to the port side and to eventually keel over. There was
Evidence clearly shows that the vessel was propelled with three
thus no error on the part of the Court of Appeals in relying on the factual
(3) diesel engines of 250 BHP each or a total of 750 BHP. It had three
(3) propellers which were operating satisfactorily from the time the
findings of the Board of Marine Inquiry, for such factual findings, being
vessel left the port of Mandawe up to the time when the hull on the supported by substantial evidence are persuasive, considering that said
double bottom tank was heavily floaded (sic) by uncontrollable entry of administrative body is an expert in matters concerning marine casualties. 19
sea water resulting in the stoppage of engines. The vessel was also
equipped with operating generator pumps for emergency cases. This
Since the presence of strong winds and enormous waves at Cortes,
equipment was also operating satisfactorily up to the time when the Surigao del Sur on March 3, 1987 was shown to be the proximate and only
engine room was heavily floaded (sic) with sea water. Further, the cause of the sinking of the M/V Peatheray Patrick-G and the loss of the cargo
vessel had undergone emergency drydocking and repair before the belonging to San Miguel Corporation, private respondents cannot be held liable
accident occurred (sic) on November 9, 1986 at Trigon Shipyard, San for the said loss.
Fernando, Cebu as shown by the billing for the Drydocking and Repair
and certificate of Inspection No. 2588-86 issued by the Philippine coast WHEREFORE , the assailed Decision of the Court of Appeals is hereby
Guard on December 5, 1986 which expired on November 8, 1987. AFFIRMED and the petition is hereby DENIED.

LCT Peatheray Patrick-G was skippered by Mr. Manuel P. Ramilo, SO ORDERED.

competent and experienced licensed Major Patron who had been in
command of the vessel for more than three (3) years from July 1984 up Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.
to the time of sinking March 3, 1987. His Chief Mate Mr. Mariano Alalin
also a licensed Major Patron had been the Chief Mate of "LCT Peatheray
Patrick-G" for one year and three months at the time of the accident. Footnotes
Further Chief Mate Alalin had commanded a tanker vessel named M/T
Mercedes of MGM Corporation for almost two (2) years from 1983-1985 1. The Philippine American General Insurance Co., Plaintiff-Appellee, vs. MCG
(Alalin TSN-4-13-88 pp. 32-33). Marine Services and Doroteo Gaerlan, Defendants-Appellants.

That the vessel was granted SOLAS clearance by the Philippine 2. The terms and conditions of the contract of insurance are set forth in Marine
Coast Guard on March 1, 1987 to depart from Mandawe City for Bislig, Risk Note No. 0322788 issued by petitioner in favor of San Miguel
Surigao del Sur as evidenced by a certification issued to D.C. Gaerlan Corporation.
Oil Products by Coast Guard Station Cebu dated December 23, 1987. 3. The administrative case against the vessel's crew was docketed as case no.
Based on the foregoing circumstances, "LCT Peatheray Patrick-G" BMI-646-87.
should be considered seaworthy vessel at the time she undertook that 4. Decision dated April 15, 1993 of the Regional Trial Court of Makati City,
fateful voyage on March 2, 1987. Branch 134, in Civil Case No. 18197, pp. 3-4; Rollo , pp. 31-32.
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