PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., PETITIONER, VS. COURT OF APPEALS AND TRANSPACIFIC TOWAGE, INC., RESPONDENTS.

In this petition for review on certiorari, Philippine
American General Insurance Company, Incorporated assails the decision*
of the Court of Appeals, dated 31 July 1991, rendered in CA-G.R. CV. No. 21252,
which reversed and set aside the decision of the Regional Trial Court of
Manila, Branch 16^[1]
and entered a new one dismissing the petitioner’s complaint which sought to
collect the sum of P1,511,210.00 from the private respondent.

The facts of the case, as
found by the Court of Appeals,^[2] are
as follows:

“On September 4, 1985 the Davao Union Marketing Corporation of
Davao City shipped on board the vessel M/V “Crazy Horse” operated by
the Transpacific Towage, Inc. cargo consisting of 9,750 sheets of union brand
GI sheets with a declared value
of P1,086,750.00 and 86,860 bags of union Pozzolan and union Portland Cement
with a declared value of
P4,300,000.00. The cargo was consigned
to the Bicol Union Center of Pasacao, Camarines Sur, with a certain Pedro Olivan as the
“Notify-Party”.

The cargo was insured by the Philippine American General Insurance
Co., Inc. under Marine Note No. 023408 covering 86,000 of Union Pozzolan and
Portland cement for the amount of P3,440,000.00.

The
vessel M/V “Crazy Horse” arrived on September 7, 1985 as
scheduled at the port of Pasacao, Camarines Sur. Upon arrival the shipmaster notified the consignee’s
“Notify-Party” that the vessel was already (sic) to discharge the
cargo. The discharging, could not be
effected immediately and continuously because of certain reasons. First, the buoys were installed only on
September 11, 1985; second, the discharge permit was secured by the consignee
only on September 13, 1985; third a wooden catwalk had to be installed and
extension of the wharf had to be made, which was completed only on September
26, 1985; fourth, the discharging was not continuous because there were
intermittent rains and the stevedores supplied by the consignee did not work
during the town fiesta. (Underscoring
ours)

On October 16, 1985, a super typhoon code named “Saling”
entered the Philippine area of responsibility and was felt in the eastern coast
of the country on October 17, 1985. It had a strength of 240
KPH and Pasacao was placed under Storm Signal No. 3. The discharging of the cargo had to be suspended at 11:40 A.M.
on October 17, 1985 due to the heavy downpour, strong winds, and turbulent sea. To prevent damage to the cargo all hatches
of the vessel were closed and secured. (Underscoring ours)

At the time the discharging of the cargo was suspended, a total of 59,625 bags of cement and
26 crates of GI sheets had already been discharged.

In further preparation for the typhoon the vessel was loaded with
22 tons of fresh water and 3,000 liters of fuel. The shipmaster ordered the vessel to be moved about 300 meters
seaward in order that it would not hit the catwalk or the wooden bridge or the
wharf, or the rocks. The vessel was
ready for any maneuver that may have to be made.

According to the shipmaster who was plotting the typhoon’s path in a chart, the radius was so wide that
there was no way the typhoon could be evaded. From 8:00 P.M. of October 17, 1985 to 8:00 P.M. of October 18, 1985 the
typhoon raged in the area. It was at
about 5:20 A.M. of October 18, 1985 when the shipmaster ordered the maneuvering
of the vessel but it could not be steered on account of the strong winds and
rough seas. The vessel’s lines snapped,
causing her to be dragged against the rocks, and the anchor chain stopper gave
way. The vessel sustained holes in the
engine room and there was a power
failure in the vessel. Water started to
fill the engine room and at about 6:15 A.M. the engine broke down.

The shipmaster had no choice but to order the ship to be
abandoned. He told the crew to secure
the vessel while he went to the Municipal Mayor of Pasacao to request for
police assistance to prevent pilferage of the vessel and its cargo. He was, however, unable to get any
assistance. When he returned to the
vessel he found that it was being continuously pounded by the strong sea waves
against the rocks. This caused the
vessel to break into two (2) parts and to sink partially. The shipmaster reported the incident to the
Philippine Coast Guard but inspite the presence of three (3) coast guards,
nothing could be done about the pilferage done on the vessel and its
cargo. Almost the whole barrio came to
loot the vessel and its cargo and because there were so many of them the crew
and the guards were helpless to stop the pilferage and looting. As a result of the incident the cargo of
cement was damaged while the GI sheets were looted and nothing was left of the
undischarged pieces.

The total number of cement bags damaged and/or lost was 26,424
costing P1,056,960.00 while there were 4,000 pieces of the GI sheets
unrecovered, the cost of which was P454,250.00.

Because the cargo was insured by it the Philippine American General
Insurance Co., Inc. paid the shipper Davao Union Marketing Corporation the sum
of P1,511,210.00. Thereafter, the said
insurer made demands upon the Transpacific Towage, Inc. for the payment of said
amount as subrogee of the insured, claiming that the loss of the cargo was
directly and exclusively brought about by the fault and negligence of the
shipmaster and the crew of M/V “Crazy Horse”. Because the latter refused to pay the amount
of P1,511,210.00 demanded, the Philippine American General Insurance Co., Inc.
filed the present complaint.

The lower court found that although the immediate cause of the loss
may have been due to an act of God, the defendant carrier had exposed the property
to the accident. The court also found
the plaintiff guilty of contributory negligence and mitigated the plaintiff’s
claim to three-fourths (3/4) of its value. Thus the lower court, in its Decision, ordered the defendant:

“1) To pay
plaintiff the mitigated amount of P1,133,408.00 plus 12% legal interest per
annum computed from the date of the filing of herein complaint on May 15, 1986,
until fully paid;

2)     
To pay P8,000.00 as attorney’s fees; and

3)     
To pay costs of suit.

SO ORDERED.”

In its now assailed decision, respondent Court of Appeals reversed
the decision of the trial court and ruled instead that private respondent, as a
common carrier, is not responsible for the loss of the insured cargo involved in the case at bar, as said
loss was due solely to a fortituous event.

Petitioner in the present petition contends that respondent
appellate court erred in not holding private respondent liable for the loss of
the said insured cargo.

We affirm the decision of the Court of Appeals.

It is not disputed that private respondent is a common carrier as
defined in Article 1732 of the Civil Code.^[3] The
following facts are also not contested: (1) that the cargo-carrying vessel was wrecked and partially sank on 18
October 1985 due to typhoon “Saling”; (2) that typhoon “Saling” was a fortuitous event; and (3) that at
the time said vessel sank, the remaining undischarged cargo, consisting of
26,424 cement bags and 4,000 pieces of G.I. sheets, were still on board the
vessel.

However, the Court notes the fact that as of 17 October 1985, the
time when the Pasacao area was placed under storm signal No. 3 due to
“Saling”, the unloading of the cargo from the vessel was still
unfinished, notwithstanding the lapse of forty (40) days from the time the
vessel arrived in Pasacao on 7 September 1985, or the lapse of thirty-four (34)
days from the time actual discharge of the cargo commenced on 13 September
1985.

In the opinion of the trial court, this lapse of thirty four (34)
days with private respondent not having completed the unloading of the goods, is
tantamount to unreasonable delay, which delay exposed the unloaded cargo to
accident. The trial court held private
respondent liable for the loss of goods under Article 1740 of the Civil Code
which provides that if the common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not free the carrier from
responsibility.

On the other hand, the appellate court ruled out any negligence
committed by private respondent and held that the delay in fully unloading the
cargo from the vessel “was occasioned by causes that may not be attributed
solely to human factors, among which were the natural conditions of the port
where the M/V “Crazy Horse” had docked, the customs of the place and
the weather conditions.”^[4]

The appellate court in exempting private respondent from
liability applied Article 1739 of the Civil Code which provides as follows:

“In order that the common carrier may be exempted from
responsibility, the natural disaster must have been the proximate and only
cause of the loss. However, the common
carrier must exercise due diligence to prevent or minimize loss before, during
and after the occurrence of flood, storm,
or other natural disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or deterioration of the
goods.”

The appellate court ruled that the loss of cargo in the present
case was due solely to typhoon “Saling” and that private respondent
had shown that it had observed due diligence before, during and after the
occurrence of “Saling”; hence, it should not be liable under Article
1739.

Considering the undisputed fact that there really was delay in
completing the unloading of the goods from the vessel, the Court believes that
the real issue at bar centers on the application of Article 1740 of the Civil Code. In short, the principal question, in determining which of the
parties in the present case should bear the loss of the goods, is whether the
delay involved in the unloading of the goods is deemed negligently incurred in,
so as not to free private respondent from liability, notwith­standing the fact
that the ultimate cause of the loss of the goods was the sinking of the vessel
brought about by typhoon “Saling.”

Indeed, from the time the vessel arrived at port Pasacao on 7
September 1985 up to 17 October 1985 when the Pasacao area was placed under
storm signal No. 3 due to typhoon “Saling”, forty (40) days had
passed. Under normal conditions, a
period of forty (40) days is undoubtedly more than enough time within which the
unloading of the cargo (given its nature) from the vessel could be
completed. Hence, the question boils
down further to which party should be faulted for this delay.

Private respondent argues that its duty to unload ceased on 7
September 1985 when the shipmaster notified the consignee’s
“Notify-Party” that the vessel was ready to discharge the cargo. On the other hand, petitioner contends that
the duty to unload the cargo from the vessel continued to remain with private
respondent. Respondent appellate court,
however, ruled that the question as to which party had the task to discharge
the cargo is actually immaterial under the circumstances, as the delay could
not be attributed to any of the parties, but to several causes such as the
natural conditions of the Pasacao port, the customs of the place and the
weather conditions obtaining at the time. The appellate court made the following observations:

“x x x                            x x x

To our mind whichever of the parties had the obligation to unload
the cargo is not material. For,
analyzing the causes for the delay in such unloading, we find that such delay
was not due to the negligence of any party but was occasioned by causes that
may not be attributed solely to human factors, among which were the natural
conditions of the port where the M/V “Crazy Horse” had docked, the
customs of the place, and the weather conditions.

The wharf where the vessel had to dock was shallow and rocky, hence
it had to drop anchor some distance away in a private port. Buoys had to be constructed in order that
the vessel may be properly moored. After the buoys were installed a wooden stage had to be constructed so
that the stevedores could reach the vessel. For this they needed a floating crane which was not immediately
available. The barges that were to load
the cargo from the vessel could not go near the wharf because of the shallow
and rocky condition. A catwalk had to
be installed between the barge and the wharf. This necessitated the dismantling of the wooden stage previously
installed.

Apart from these preparations and constuctions that had to be made,
the weather was not cooperative. Even
before the typhoon struck there were intermittent rains, hence the unloading
was not continuous. The actual
unloading started on September 13, 1985 and could have been finished in 4 or 5 days but because of the rains
it was delayed. Another factor that
caused further delay was the fact that the fiesta of the Virgin of Penafrancia
was celebrated and for the length of time that the celebrations were held, the
stevedores who were from the place refused to work.

x x x                           
x x x.”^[5]

The Court of Appeals summarized the reasons which adversely
affected the completion of the unloading of the cargo from the time the vessel
arrived at the Pasacao area on 7 September 1985, namely: first, the buoys were installed only
on 11 September 1985; second, the consignee secured the discharge permit
only on 13 September 1985; third, a wooden catwalk had to be installed
and the extension of the wharf had to be made, which was completed only on 16
September 1985; fourth, there were intermittent rains and the stevedores
supplied by the consignee did not work during the town fiesta of the Virgin of
Penafrancia, hence, the unloading was not continuous.

We respect the above-mentioned factual findings of the appellate
court as to the natural
conditions of the port of Pasacao where the vessel was docked, and several
other factors which harshly affected the completion of the discharge of the
cargo, as these findings of fact are substantially supported by evidence.^[6]

While it is true that there was indeed delay in discharging the
cargo from the vessel, we agree with the Court of Appeals that neither of the
parties herein could be faulted for such delay, for the same (delay) was due
not to negligence, but to several factors earlier discussed. The cargo having been lost due to typhoon
“Saling”, and the delay incurred in its unloading not being due to
negligence, private respondent is exempt from liability for the loss of the
cargo, pursuant to Article 1740 of the Civil Code.

The records also show that before, during and after the
occurrence of typhoon “Saling”, private respondent through its
shipmaster exercised due diligence to prevent or minimize the loss of the
cargo, as shown by the following facts: (1) at 5:20 a.m. of 18 October 1985, as typhoon “Saling”
continued to batter the Pasacao area, the shipmaster tried to maneuver the
vessel amidst strong winds and rough seas; (2) when water started to enter the
engine room and later the engine broke down, the shipmaster ordered the ship to
be abandoned, but he sought police assistance to prevent pilferage of the
vessel and its cargo; (3) after the vessel broke into two (2) parts and sank
partially, the shipmaster
reported the incident to the Philippine Coast Guard, but unfortunately, despite
the presence of three (3) coast guards, nothing could be done to stop the
pilferage as almost the entire barrio folk came to loot the vessel and its
cargo, including the G.I. sheets.

The diligence exercised by the shipmaster further supports the
exemption of private respondent from liability for the loss of the cargo, in
accordance with Article 1739 of the Civil Code.

Although we find private respondent free from liability for the
loss of the cargo, we disagree with its contention that the doctrine of res
judicata applies in the case at bar, because the Board of Marine Inquiry
rendered a decision dated 11 April 1988 (acting on the marine protest filed on
19 October 1985 by the shipmaster of M/V “Crazy Horse”) holding that
said shipmaster was not guilty of “negligence as the proximate cause of
the grounding and subsequent wreckage of M/S “Crazy Horse”, hence,
recommending that the captain, his officers and crew be absolved from any adminis­trative
liability arising out of the subject incident.”^[7]

The resolution of the present case is not barred by the judgment
of the Board of Marine Inquiry. One of
the requisites of the principle of res judicata is that there
must be, among other things, identity of subject matters and causes of action
between a first and second case in order that the judgment in the prior case
may bar that in the subsequent case.^[8]

The cause of action in the marine protest was to enforce the
administrative liability of the shipmaster/captain of M/V “Crazy
Horse”, its officers and crew for the wreckage and sinking of the subject
vessel. On the other hand, the cause of
action at bar is to enforce the civil liability of private respondent, a common
carrier, for its failure to unload the subject cargo within a period of time
considered unreasonably long by the petitioner. While it may be true that the Court is bound to accord great
weight to factual findings of the Board,^[9] we
hold that the protest filed before it and the present case assert different
causes of action and seek different reliefs.

All told, we find private respondent not legally liable for the
loss of the insured cargo involved in the present case.

WHEREFORE, the petition is DENIED. The appealed decision of the Court of
Appeals, dated 31 July 1991, rendered in CA-G.R. CV No. 21252, is hereby
AFFIRMED.

SO ORDERED.

Narvasa, C.J., (Chairman), Regalado, and Nocon, JJ., concur.

*
Penned by Mme. Justice Salome A. Montoya with the concurrence of Justices
Eduardo R. Bengzon and Celso L. Magsino

^[1]
Rollo, p. 4

^[2]
Ibid, pp. 49-51

^[3]
ART. 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, offering their services to the public.

^[4]
Ibid, p. 53

^[5]
Rollo, pp. 53-54

^[6]
Republic vs. Intermediate Appellate Court, G.R. No. 70594, 10 October
1986 144 SCRA 705

^[7]
Rollo, p. 142

^[8]
Delfin vs. Inciong, G.R. No. 50661, 10 December 1990, 192 SCRA 151

^[9]
Vasquez vs. Court of Appeals, G.R. No. 42926,
September 13, 1985, 138 SCRA 553