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DELSAN TRANSPORT LINES v. CA

FACTS:

Caltex Philippines (Caltex) entered into a contract of affreightment with Delsan Transport Lines, Inc. (petitioner) to transport Caltex's industrial fuel oil. Petitioner's vessel, MT Maysun, carried 2,277.314 kiloliters of fuel oil from Batangas to Zamboanga City. However, the vessel sank near Panay Gulf, causing the loss of the cargo. Private respondent, American Home Assurance Corporation, insured the shipment and paid Caltex the insured value of the lost cargo. As the insurer, private respondent demanded reimbursement from petitioner through subrogation. When petitioner failed to comply, private respondent filed a complaint for collection of a sum of money. The trial court dismissed the complaint, ruling that the sinking of the vessel was due to force majeure and exempted petitioner from liability. However, the Court of Appeals reversed the decision, finding that the sinking was caused by improper manning of the vessel and held petitioner liable. Petitioner filed a petition for review on certiorari, raising as issues the alleged admission of the vessel's seaworthiness by private respondent's payment to Caltex and the non-presentation of the marine insurance policy.

ISSUES:

  1. Whether 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, thereby precluding any action for recovery against the petitioner.

  2. Whether the non-presentation of the marine insurance policy bars the complaint for recovery of a sum of money for lack of cause of action.

RULING:

  1. The Court ruled that the payment by the private respondent for the insured value of the lost cargo does not amount to an automatic admission of the vessel's seaworthiness. The fact of payment grants the private respondent subrogatory rights enabling it to pursue remedies against the petitioner.

  2. The Court held that the non-presentation of the marine insurance policy does not bar the complaint for recovery of a sum of money. The subrogation receipt is sufficient to establish the insurer's right to recover from the common carrier, and the insurance policy is not indispensable for enforcing this right.

PRINCIPLES:

  1. The right of subrogation under Article 2207 of the New Civil Code.

  2. The standard of extraordinary diligence required of common carriers.

  3. The presumption of unseaworthiness triggered by an unexplained sinking.

  4. Subrogation rights accrued upon payment by the insurance company.

  5. The sufficiency of subrogation receipts over the necessity of presenting the insurance policy.