FACTS
On 21 May 1996, M/V Meryem Ana received a shipment of Prilled Urea Fertilizer from Helm Duengemittel GMBH at Odessa, Ukraine. The shipment was covered by two separate bills of lading and consigned to Fertiphil for delivery to two ports - one in Poro Point, San Fernando, La Union; and the other in Tabaco, Albay. Fertiphil insured the cargo against all risks under Marine Risk Note issued by respondent.
The present controversy involves only this second delivery. When the cargo was subsequently weighed, it was discovered that there is an alleged shortage of 349.65 metric tons. In line with this, Fertiphil filed a claim with respondent for P1,617,527.37 which was found compensable. After paying the claim of Fertiphil, respondent demanded reimbursement from petitioner based on the right of subrogation. The claim was denied, prompting respondent to file a Complaint with the RTC for recovery of sum of money. In support of its claim, respondent presented a Report of Survey and a Certification from David Cargo Survey Services to prove the shortage. In the report, the adjuster also stated that the shortage was attributable to the melting of the fertilizer while inside the hatches, when the vessel took on water because of the bad weather experienced at sea.
The RTC ruled in favor of respondent and ordered petitioner to pay the claim based on the reason that there was indeed a shortage in the cargo delivered, for which the common carrier must be held responsible under Article 1734 of the Civil Code. To excuse a common carrier fully of any liability, Article 1739 of the Civil Code requires that the fortuitous event must have been the proximate and only cause of the loss. Moreover, it should have exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the fortuitous event.
Petitioner appealed to the Court of Appeals but was denied and it affirmed the ruling of the RTC. In the present case, defendants-appellants did not present proof that the "bad weather" they encountered was a "storm" as contemplated by Article 1734(1). Petitioner moved for reconsideration of the CA Decision, but the motion was denied. Hence this petition.
ISSUES
1. Whether the transaction is governed by the provisions of the Civil Code on common carriers or by the provisions of Carriage of Goods at Sea Act (COGSA)
2. Whether petitioner is liable for the loss or damage sustained by the cargo because of bad weather.
RATIO
1. The provision of the Civil Code governs. Supreme Court upholds the ruling of the CA with respect to the applicable law. As expressly provided in Article 1753 of the Civil Code, "[t]he law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration." Since the cargo in this case was transported from Odessa, Ukraine, to Tabaco, Albay, the liability of petitioner for the alleged shortage must be determined in accordance with the provisions of the Civil Code on common carriers.
2. Yes,petitioner is liable for the shortage incurred by the shipment. petitioner failed to prove the existence of a storm or a peril of the sea within the context of Article 1734(1) of the Civil Code or Section 4(2)(c) of COGSA. Furthermore, there was no sufficient proof that the damage to the shipment was solely and proximately caused by bad weather. It must be emphasized that not all instances of bad weather may be categorized as "storms" or "perils of the sea" within the meaning of the provisions of the Civil Code and COGSA on common carriers. To be considered absolutory causes under either statute, bad weather conditions must reach a certain threshold of severity. Nonetheless, to our mind it would not be enough to categorize the weather condition at the time as a "storm" within the absolutory causes enumerated in the law. Significantly, no typhoon was observed within the Philippine area of responsibility during that period.
In this case, the documentary and testimonial evidence cited by petitioner indicates that M/V Meryem Ana faced winds of only up to 40 knots while at sea. This wind force clearly fell short of the 48 to 55 knots required for "storms" under Article 1734(1) of the Civil Code based on the threshold established by PAGASA. Petitioner also failed to prove that the inclement weather encountered by the vessel was unusual, unexpected, or catastrophic. In particular, the strong winds and waves, which allegedly assaulted the ship, were not shown to be worse than what should have been expected in that particular location during that time of the year. Consequently, this Court cannot consider these weather conditions as "perils of the sea" that would absolve the carrier from liability. The Supreme Court emphasized that common carriers are automatically presumed to have been at fault or to have acted negligently if the goods they were transporting were lost, destroyed or damaged while in transit. Therefore, the Court cannot absolve petitioner from liability for the shortage incurred by the shipment.
FALLO
WHEREFORE, the Petition is DENIED. The Court of Appeals Decision and Resolution dated 27 August 2009 and 10 November 2009, respectively, are hereby AFFIRMED.
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