Prudential Guarantee and Assurance, Inc. vs. Trans-Asia Shipping Lines Inc. (Insurance Law)

 

Prudential Guarantee and Assurance, Inc. vs.

Trans-Asia Shipping Lines Inc.

(Insurance Law)

491 SCRA 411 (G.R. No. 151890 and 151991)

June 20, 2006

 

Petitioners:	Prudential Guarantee and Assurance, Inc. (G.R. No. 151890) / Trans-Asia Shipping Lines, Inc. (G.R. No. 151991)
Respondents:	Prudential Guarantee and Assurance, Inc. (G.R. No. 151991) / Trans-Asia Shipping Lines, Inc. (G.R. No. 151890)

 

J. Chico-Nazario:

 

FACTS:

 

Trans-Asia is the owner of the vessel M/V Asia Korea. In consideration of payment of premiums, PRUDENTIAL Guarantee, insured M/V Asia Korea for loss/damage of the hull and machinery arising from perils inter alia of fire and explosion for the sum of ₱ 40 million, beginning from the period of July 1, 1993 up to July 1, 1994.

 

On October 25, 1993, while the policy was in force, a fire broke out while [M/V Asia-Korea was] undergoing repairs at the port of Cebu. On October 26, 1993 Trans-Asia filed its notice of claim for damaged sustained by the vessel evidenced by a letter/formal claim. TRANS-ASIA reserved its right to subsequently notify PRUDENTIAL to the full amount of the claim upon final survey and determination by Adjuster Richard Hogg (Phil.) of the damaged sustained by reason of fire.

 

TRANS-ASIA executed a document denominated “Loan and Trust Receipt”, a portion of which states that “Received from Prudential Guarantee and Assurance, Inc., the sum of ₱ 3,000,000.00, as a loan without internet under Policy No. MH 93/1353, repayable only in the event and to the extent that any net recovery is made by TRANS-ASIA Shipping Corporation, from any person or persons, corporation or corporation, or other parties, on account of loss by any casualty for which they may be liable occasioned by the 25 October 1993 Fire on Board:

 

PRUDENTIAL later on denied Trans-Asia’s claim in stated in a letter that “After a careful review and evaluation of your claim arising from the above-captioned incident, it has been ascertained that you are in a breach of policy conditions among them “WARRANTED VESSEL CLASSED AND CLASS MAINTAINED.” Accordingly, we regret to advise that your claim is not compensable and hereby DENIED” and asked for the return of the ₱ 3,000,000.00.

 

TRANS-ASIA filed a complaint for sum of money against PRUDENTIAL with the RTC of Cebu worth ₱ 8,395,072.26 balance of the indemnity due the insurance and similarly sought interest.

 

PRUDENTIAL denial the material allegation of the complaint and interposed the defense that TRANS-ASIA breached insurance policy conditions, CLASS AND CLASSED MAINTAINED.

 

Trial Court ruled in favor of Prudential. According to the court, TRANS-ASIA failed to prove compliance of the terms of the warranty the violation thereof entitled PRUDENTIAL to rescind the contract.

 

The Court of Appeals reversed the decision. It ruled PRUDENTIAL, as the party asserting the non-compensability of loss had the burden to prove that TRANS-ASIA breached warranty. It opined that the lack of a certification does not necessarily mean that the warranty was breached by TRANS-ASIA.

 

ISSUE:

 

Whether or not TRANS-ASIA breached the warranty stated in the insurance policy, thus absolving PRUDENTIAL from paying TRANS-ASIA.

 

HELD:

 

No. As found by the Court of Appeals and as supported by the records, Bureau Veritas is a classification society recognized in the marine industry. As it is undisputed that TRANS-ASIA was properly classed at the time the contract of insurance was entered into, thus, it becomes incumbent upon PRUDENTIAL to show evidence that the status of TRANS-ASIA as being properly CLASSED by Bureau Veritas had shifted in violation of the warranty. Unfortunately, PRUDENTIAL failed to support the allegation.

 

It is generally accepted that a warranty is a statement or promise set forth in the policy, or by reference incorporated therein, the untruth or non-fulfillment of which in any respect, and without reference to whether the insurer was in fact prejudiced by such untruth or non-fulfillment, renders the policy voidable by the insurer; For the breach of warranty to avoid a policy, the same must be duly shown by the party alleging the same.—We are not unmindful of the clear language of Sec. 74 of the Insurance Code which provides that, “the violation of a material warranty, or other material provision of a policy on the part of either party thereto, entitles the other to rescind.” It is generally accepted that “[a] warranty is a statement or promise set forth in the policy, or by reference incorporated therein, the untruth or non-fulfillment of which in any respect, and without reference to whether the insurer was in fact prejudiced by such untruth or non-fulfillment, renders the policy voidable by the insurer.” However, it is similarly indubitable that for the breach of a warranty to avoid a policy, the same must be duly shown by the party alleging the same. We cannot sustain an allegation that is unfounded. Consequently, PRUDENTIAL, not having shown that TRANS-ASIA breached the warranty condition, CLASSED AND CLASS MAINTAINED, it remains that TRANSASIA must be allowed to recover its rightful claims on the policy.

 

It was likewise the responsibility of the average adjuster, Richards Hogg International (Phils.), Inc., to secure a copy of such certification, and the alleged breach of TRANS-ASIA cannot be gleaned from the average adjuster’s survey report, or adjustment of particular average per “M/V Asia Korea” of the 25 October 1993 fire on board

 

The Supreme Court is not unmindful of the clear language of Sec. 74 of the Insurance Code which provides that, “the violation of a material warranty, or other material provision of a policy on the part of either party thereto, entitles the other to rescind.” It is generally accepted that “[a] warranty is a statement or promise set forth in the policy, or by reference incorporated therein, the untruth or non-fulfillment of which in any respect, and without reference to whether the insurer was in fact prejudiced by such untruth or non-fulfillment, renders the policy voidable by the insurer.” However, it is similarly indubitable that for the breach of a warranty to avoid a policy, the same must be duly shown by the party alleging the same. We cannot sustain an allegation that is unfounded. Consequently, PRUDENTIAL, not having shown that TRANS-ASIA breached the warranty condition, CLASSED AND CLASS MAINTAINED, it remains that TRANSASIA must be allowed to recover its rightful claims on the policy.

 

Assuming arguendo that TRANS-ASIA violated the policy condition on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED, PRUDENTIAL made a valid waiver of the same.

PRUDENTIAL can be deemed to have made a valid waiver of TRANS-ASIA’s breach of warranty as alleged, ratiocinating, thus: Third, after the loss, Prudential renewed the insurance policy of Trans-Asia for two (2) consecutive years, from noon of 01 July 1994 to noon of 01 July 1995, and then again until noon of 01 July 1996. This renewal is deemed a waiver of any breach of warranty.

 

PRUDENTIAL, in renewing TRANS-ASIA’s insurance policy for two consecutive years after the loss covered by Policy No. MH93/1363, was considered to have waived TRANS-ASIA’s breach of the subject warranty, if any. Breach of a warranty or of a condition renders the contract defeasible at the option of the insurer; but if he so elects, he may waive his privilege and power to rescind by the mere expression of an intention so to do. In that event his liability under the policy continues as before. There can be no clearer intention of the waiver of the alleged breach than the renewal of the policy insurance granted by PRUDENTIAL to TRANS-ASIA in MH94/1595 and MH95/1788, issued in the years 1994 and 1995, respectively.

 

 

 

 

Magellan Mftg. Marketing Corp. vs. Court of Appeals (Insurance Law)

 

Magellan Mftg. Marketing Corp. vs. Court of Appeals

(Insurance Law)

201 SCRA 102 (G.R. No. 95529)

August 22, 1991

 

Petitioners:	Magellan Manufacturing Marketing Corporation
Respondents:	Court of Appeals, Orient Overseas Container Lines and F. E. Zuellig

 

J. Regalado:

 

FACTS:

 

On May 20, 1980, Magellan Manufacturing Marketing Corp. (MMMC) entered into a contract with Choji Co. of Yokohama, Japan to export 136,000 of anahaw fans for consideration of $23,220.00. As payment Magellan (MMMC) received from Choji a letter of credit. Magellan (MMMC) received from Choji a letter of credit. Magellan (MMMC) through its president, James Cu, contracted F. E. Zuellig a shipping agent, through its solicitor, one Mrs. King, to ship the anahaw through Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an on board bill of lading and that transhipment is not allowed under the letter of credit.

 

On June 30, 1980, Magellan paid F.E. Zuellig the freight charges and secured a copy of the bill of lading which was presented to Allied Bank. The bank then credited the amount of US $23,220 covered by the letter of credit to Magellan’s account. However, James Cu, Magellan’s president went back to the bank he was informed that the payment was refused by the buyer allegedly because there was no board bill of lading and there was a transhipment of goods. As a result of the buyer’s refusal, the anahaw fans were shipped back to Manila by the respondent shippers for which demanded from Magellan payment of ₱246,043.43. Petitioner Magellan abandoned the whole cargo and appellees for damages.

 

The lower court decided the case in favor of private respondents. It dismissed the complaint on the ground that Magellan had given its consent to the contents of the bill of lading where it is clearly indicated that there will be transhipment.

 

On Appeal the appellate affirmed the decision of the lower court but modified the liability of the petitioner because private respondents did not timely informed the petitioner that the goods were already in Manila in addition to the fact that private respondent had given petitioner the option of abandoning the goods in exchange for the demurrage.

 

ISSUE:

 

Whether or not there is transhipment when the goods are transferred from one vessel to another which both belong to the same owner.

 

HELD:

 

Transhipment in maritime law is defined as the act of taking cargo out of one ship and loading it in another “or” the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached, “or” the transfer for further transportation from one ship or conveyance to another.

 

Clearly, either in its ordinary or its strictly legal acceptation, there is transhipment whether or not the same person, form or entity owns the vessels. In other words, the fact of transhipment is not dependent upon the ownership of the transporting ships or conveyance or in changer of carriers, as the petitioner seems to suggest, but rather on the fact of actual physical transfer of cargo from one vessel to another.

 

Moreover, it is well known commercial usage that transhipment of freight without legal excuse, however competent and safe the vessel into which the transfer is made, is a violation of the contract and an infringement of the right of the shipper and subjects the carrier to liability if the freight is lost even by a cause otherwise excepted. It is highly improbable to suppose that private respondents having been engaged in the shipping business for so long, would be aware of such a custom of the trade as to have undertaken such transhipment without petitioner’s consent and unnecessarily expose themselves to a possible liability.

 

It is a long-standing jurisprudential rule that a bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and a contract to transport and deliver the same as therein stipulated. As a contract, it names the parties, which includes the consignee, fixes the route, destination and freight rates or charges, and stipulates the rights and obligations assumed by the parties. Being a contract, it is the law between the parties who are bound by its terms and conditions provided that these are not contrary to law, morals, good customs, public order and public policy. A bill of lading usually becomes effective upon its delivery to and acceptance by the shipper. It is presumed that the stipulations of the bill were, in the absence of fraud, concealment or improper conduct, known to the shipper and he is generally bound by his acceptance whether he reads the bill or not.

 

The holding in most jurisdictions has been that a shipper who receives a bill of lading without objection after an opportunity to inspect it, and permits the carrier to act on it by proceeding with the shipment is presumed to have accepted it as correctly stating the contract and to have asserted to its terms. In other words, the acceptance of the bill without dissent raises the presumption that all the terms therein were brought to the knowledge of the shipper and agreed to by him and in, the absence of fraud or mistake, he is estopped from thereafter denying that he asserted to such terms. This rule applies with particular fence where a shipper accepts a bill lading with full knowledge of its contents and acceptance under such circumstances makes it a binding contract.

 

An on board bill of lading is one in which it is stated that the goods have been received on board the vessel which is to carry the goods, whereas received for shipment bill of lading is one in which it is stated that the goods are to be shipped. Received for shipment bills of lading are issued whenever conditions are not normal and there is insufficiency of shipping space. An on board bill of lading is issued when the goods have been actually placed aboard the ship with every reasonable expectation that the shipment is as good as on its way.

 

It will be recalled that petitioner entered in to the contract with Choji Co., Ltd. way back on May 20, 1980 or over a month before the expiry date of the letter of credit on June 30, 1980, thus giving it more than ample time to find a carrier that could comply with the requirements of shipment under the letter of credit. It is conceded that bills of lading constitute a class of contracts of adhesion. However, as ruled in the earlier case of Ong Yui vs. Court of Appeals, et. al. and reiterated in Servando et. al. vs. Philippine Stream Navigation Co., plane tickets as well as bills of lading are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he give consent. The respondent court correctly observed in the present case that “when the appellant received the bill of lading, it was tantamount to appellant’s adherence to the terms and conditions as embodied therein.”

Demurrage, in its strict sense, is the compensation provided for in contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is the claim for damages for failure to accept delivery. In a broad sense, every improper detention of a vessel may be considered a demurrage. Liability for demurrage using the word in its technical sense, exists only when expressly stipulated in the contract. Using the term in its broader sense, damages in the nature of demurrage are recoverable for a breach of the implied obligation to load or unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed and only against one who is a party to the shipping contract.

Roque vs. Intermediate Appellate Court (Insurance Law)

 

Roque vs. Intermediate Appellate Court

(Insurance Law)

139 SCRA 596 (G.R. No. L-66935)

November 11, 1985

 

Petitioners:	Isabela Roque, doing business under the name and style of Isabela Roque Timber Enterprises and Ong Chiong
Respondents:	Intermediate Appellate Court and Pioneer Insurance and Surety Corporation

 

J. Gutieerrez, Jr.:

 

FACTS:

 

Manila Bay Lighterage Corporation (Manila Bay) a common carrier, entered into a contract with the petitioner whereby the former would load and carry on board its barge Mable 10 about 422.18 cubic meters of logs from Malampaya Sound, Palawan to North Harbor, Manila. The Petitioner insured the logs against loss for ₱1,000,000.00 with respondent. Pioneer Insurance and Surety Corporation (Pioneer).

 

The petitioner loaded on the barge, 811 pieces of logs at Malampaya Sound, Palawan, for carriage and delivery to North Harbor, Port of Manila, but the shipment never reached its destination because Mable 10 sank with the 811 pieces of logs somewhere off Cabuli Point in Palawan on its way to Manila. As alleged by the petitioner in their complaint and as found by both the trial and appellate courts, the barge where the logs were loaded was not seaworthy such that it developed a leak. The appellate Court further found that one of the hatches was left open causing water to enter the barge and because the barge was not provided with the necessary cover or tarpaulin, the ordinary splash of sea waves brought more water inside the barge.

 

Respondent ignored the petitioners demand for payment of ₱150,000.00 for the loss of the shipment plus ₱100,000.00 as unrealized profits.

 

Respondent Pioneer denied the claim of petitioner for the full amount of ₱100,000.00 on the ground that its liability depended upon the total loss by total loss of vessel only.

 

The trial court decided in favor of the plaintiff (petitioner)

 

The appellate court modified the trial courts decision and absolved Pioneer from liability after finding that there was a breach of implied warranty of seaworthiness on the part of the petitioners and that the loss of the insured cargo, was caused by the “perils of the ship and not by the “perils of the sea.” It ruled that the loss is not covered by the marine insurance policy.

 

ISSUE:

 

Whether or not the implied warranty of seaworthiness in marine insurance attaches to the shipper who is not the shipowner.

 

HELD:

 

Yes. Section 113 of the Insurance Code provides:

 

“In every marine insurance upon a ship or freight or freightage, or upon anything which is the subject of marine insurance, a warranty is implied that the ship is seaworthy”

 

Section 99 of the same Code also provides in part.

Marine insurance includes:

 

1.  Insurance against loss or damage to:

a)   Vessel, craft, aircraft, vehicles, goods, freights, cargoes, merchandise

 

From the above-quoted provisions, there can be no mistaking the fact that the term “cargo” can be the subject of marine insurance and that once it is so made, the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo whether he be the shipowner or not.

 

Moreover, the fact that the unseaworthiness of the ship was unknown to the insured is immaterial in ordinary marine insurance and may not be used by him as a defense in order to recover on the marine insurance policy.

 

Since the law provides for an implied warranty of seaworthiness in every contract of ordinary marine insurance, it becomes the obligation of a cargo owner to look for a reliable common carrier which keeps its vessels in seaworthy condition. The shipper of cargo may have no control over the vessel but he has full control in the choice of the common carrier that will transport his goods. On the cargo owner mat enter into a control of insurance which specifically provides that the insurer answers not only for the perils of the sea but also provides for coverage of perils of the ship.

 

There is no doubt that the term perils of the sea extends only to losses caused by sea damage, or by the violence of the elements and does not embrace all losses happening at sea. They insure against losses from extraordinary occurrence only such as stress of weather, winds and waves, lightning, tempests, rocks and the like. These are understood as “perils of the sea” referred in the policy, and not those ordinary perils which every vessel must encounter. Perils of the sea has been said to include only such losses as are extraordinary nature, or arise from some overwhelming power, which cannot be guarded against by the ordinary exertion of human skill and diligence (prudence). Damage done to a vessel by perils of the sea includes every species of damages done to a vessel at sea as distinguished from the ordinary wear and tear of the voyage and distinct from injuries suffered by the vessel in consequence of her not being seaworthy at the outset of her voyage (as in this case). It is also the general rule that everything which happens thru the inherent vice of the thing, or by the act of the owners, master or shipper, shall be reputed a peril, if not otherwise borne in the policy.

 

On the contention of the petitioners that the trial court found that the loss was occasioned by the perils of the sea characterized by the “storm and waves” which buffeted the vessel, the records show that the court ruled otherwise. It stated: “xxx The other affirmative defense of defendant Lighterage, that the supposed loss of the logs was occasioned by force majeure was not supposed by the evidence. At the time Mable 10 sank, there was not a typhoon but ordinary strong wind and waves, a condition which is natural and normal in the open sea. The evidence shows that the sinking of Mable 10 was due to improper loading of the logs on one side and for that it did not navigate on even keel; that it was no longer seaworthy that was why it developed leaked; that the personnel of the tugboat east of Cabuli point where it was buffeted by storm and waves, while the tugboat proceeded to west of Cabuli point where it was protected by the mountain side from the storm and waves coming from the east direction, xxx.”

 

It must be considered to be settled, furthermore, that a loss which, in the ordinary course of events, results from the natural and inevitable action of the sea, from the ordinary wear and tear of the ship, or from the negligent failure of the ship’s owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions, is not a peril of the sea. Such a loss is rather due to what has been aptly called the “perils of the ship.” The insurer undertakes to insure against perils of the sea and similar perils not against perils of the ship. As was, well said by Lord Herschell in Wilson, Sans & Co. vs. Owners of Cargo per the Xanthro ([1887] 12 A.C., 503, 509) there must, in order to make the insurer liable, be some casualty, something which could not be foreseen as one of the necessary incidents of the adventure. The purpose of the policy is to secure an indemnity against accidents which may happen not against events which must happen.

 

Barratry as defined in American Insurance Law is any willful misconduct on the part of master or crew in pursuance of some unlawful or fraudulent purpose without the consent of the owners, and to the prejudice of the owner’s interest,” (Sec. 171, U.S. Insurance Law, quoted in Vance, Handbook on Law of Insurance, 1951, p. 929.) Barratry necessarily requires a willful and intentional act in its commission. No honest error of judgment or mere negligence, unless criminally gross, can be barratry. (See Vance on Law of Insurance, p. 929 and case cited therein.)

 

In the case at bar, there is no finding that the loss was occasioned by the willful or fraudulent acts of the vessel’s crew. There was only simple negligence or lack of skill. Hence, the second assignment of error must likewise be dismissed.

Delsan Transport Inc. vs. Court of Appeals (Insurance Law)

 

Delsan Transport Inc. vs. Court of Appeals

(Insurance Law)

369 SCRA 24 (G.R. No. 127897)

November 15, 2001

 

Petitioners:	Delsan Transport Lines, Inc.
Respondents:	Court of Appeals and American Home Assurance Corporation

 

J. De Leon, Jr.:

 

FACTS:

 

Caltex Philippines (Caltex for brevity) 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 the Petitioner took on board its vessel, MT Maysun 2, 277.314 kilolitres 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.

 

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, AHA paid Caltex the sum of ₱5,096,635.67 representing the insured value of the lost cargo. Exercising its right of subrogation under Article 2207 of the New Civil Code, AH demanded of the petitioner the same amount it paid to Caltex.

 

Due to its failure to collect, AHA filed a complaint with the RTC of Makati, Branch137 for collection of sum of money. The trial court dismissed the complaint on the ground that the vessel was seaworthy as determined by PCG per Survey Certificate Report No. M5-016-MH upon inspection during its annual drydocking and that the incident was caused by unexpected inclement weather condition or force majeure, thus exempting DELSAN (Petitioner) from liability for the loss of the cargo.

 

On appeal, the Court of Appeals reversed the trial courts decision, giving credence to the weather report issued by the PAGASA which showed that from 2:00 o’clock to 8:00 o’clock in the morning on August 16, 1986, the wind speed remained at 10 to 20 knots per hour while the waves measured from 7 to 2 meters in height only in the vicinity of the Panay Gulf where the subject vessel sank, in contrast to herein petitioners allegations that the waves were twenty (20) feet high. In the absence of any explanation as to what may have caused the sinking of the vessel coupled with the finding that the same was improperly manned, the appellate court ruled that the petitioner is liable on its obligation as common carrier to herein private respondent insurance company as subrogee of Caltex.

 

Hence this petition for review on certiorari.

 

ISSUE:

 

1.  Whether or not the payment made by the private respondent to Caltex for the insured value of the lost cargo amounted to an admission that the vessel was seaworthy, thus precluding any action for recovery against the petitioner.

 

2.  Whether or not the non-representation of the marine insurance policy bars the complaint for recovery of sum of money for lack of cause of action.

 

HELD:

 

1.  Yes. 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 respondents 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 of 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.

 

The right of subrogation has its roots in equity. It is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice and good conscience ought to pay. It is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment by the insurance company of the insurance claim. Consequently, the payment made by the private respondent (insurer) to Caltex (assured) operates as an equitable assignment to the former of all the remedies which the latter may have against the petitioner.

 

From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence in the vigilance of their own goods and for the safety of passengers transported by them according to all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods, common carrier shall be responsible unless the same is brought about, among others, by flood, storm, earthquake, lightning or other natural disaster or calamity. In all other cases, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.

 

Neither may petitioner escape liability by presenting in evidence certificates that tend to show that at the time of dry-docking and inspection by the Philippine Coast Guard, the vessel MT Maysun was fit for voyage. These pieces of evidence do not necessarily take into account the actual condition of the vessel at the time of the commencement of the voyage. As correctly observed by the Court of Appeals. At the time of drydocking and inspection, the ship may have appeared fit. The certificates issued in this regard, authorities are likewise clear as to their probative value, (thus) Seaworthiness relates to a vessel’s actual condition. Neither the granting of classification or the issuance of certificates establishes seaworthiness. (2-A Benedict on Admiralty, 7 – 3, Sec. 62) And also: Authorities are clear that diligence in securing certificates of seaworthiness does not satisfy the vessel’s owner’s obligation. Also securing the approved of the shipper of the cargo, or his surveyor, of the condition of the vessel or her stowage does not establishes due diligence if the vessel was in unseaworthy, for the cargo owner has no obligation in relation to seaworthiness.

 

Additionally, the exoneration of MT Maysuns officer’s 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, the determination of which properly belongs to the courts. In the case at bar, petitioner is liable for the insured value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the presumption of fault or negligence as common carrier occasioned by the unexplained sinking of its vessel, MT Maysun, while in transit.

 

2.  No. Anent the second issue, it is our view and so hold that the presentation in evidence of the marine insurance policy is not indispensable in this case before the insurer may recover from 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 herein private respondent as insurer and Caltex, as the assured shipper of the lost cargo in the exercise of its subrogatory receipt, by itself, is sufficient to establish not only the relationship of herein private respondent as insurer and Caltex, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance claim. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim.