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DIGEST, SY 2016-2017 Transport Atty.

Norianne Tan
ation Law

PHILIPPINE AMERICAN GENERAL INSURANCE v. MGG MARINE SERVICES
(VILLARIN, L.)
G.R. No. 135645, March 8, 2002
(Common Carriage- Carriage of Goods)

FACTS

San Miguel Corporation (SMC) insured several beer bottle cases with an aggregate value of P5,836,222.80
with petitioner Philippine American General Insurance Company. The cargos were loaded on board the M/V
Peatheray PatrickG to be transported from Mandaue City to Bislig, Surigao del Sur. 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 on March 2, 1987. The weather was calm when the vessel started its voyage. The
following day, March 3, 1987, M/V Peatheray PatrickG listed and subsequently sunk off Cawit Point, Cortes,
Surigao del Sur. As a consequence thereof, the cargo belonging to San Miguel Corporation was lost.

SMC claimed the amount of the loss from Philam Gen (petitioner). Petitioner sent a surveyor to investigate
the circumstances surrounding the loss of the cargo. The surveyor found that the vessel was structurally
sound and that he did not see any damage or crack thereon. He concluded that the proximate cause of the
listing and subsequent sinking of the vessel was the shifting of ballast water from starboard to portside. The
said shifting of ballast water allegedly affected the stability of the M/V Peatheray PatrickG. Hence, petitioner
paid SMC the amount of P5,836,222.80 and was subrogated the rights of SMC.

Petitioner filed a case for collection against respondents and obtained a favourable decision.

Meanwhile, the Board of Marine Inquiry conducted its own investigation of the sinking of the M/V Peatheray
PatrickG and found that the captain and crew should be exonerated from liability. It found that the proximate
and only 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 foreseen at the time.

Private respondents filed an appeal and the CA reversed the RTC’s decision.

ISSUE/S

Whether respondent is liable for the loss of the cargo. – NO

HELD

Common carriers, as a general rule, are presumed to have been at fault or negligent if the goods transported
by them are lost, destroyed or if the same deteriorated. The exceptions, as provided in Article 1734 of the
Civil Code, are the following:

(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether 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.

In this case, the Court finds no reason to reverse the CA’s ruling.

The Board of Marine Inquiry confirmed that good weather condition was present when the ship left the port of
Cebu and that the sudden experience of 6-10 feet waves coupled with strong winds that increased from 5
knots to 15 knots within an hour was a fortuitous event. The board found that “along the port side platings, a
small hole and two separate cracks were found at about midship.” This caused water to ingress and resulted
into an imbalance of the ship. Despite the efforts of the captain and crew to pump all the water out, the ship
still continued to sink and they were left with no choice but to abandon ship.

Arcaina ♠ Austria ♠ Bañadera ♠ Cheng ♠ Coloquio ♠ Diploma ♠ Fajardo ♠ Layno ♠ Lim, J. ♠ Villarin, L. ♠ Villarin,1

Arcaina ♠ Austria ♠ Bañadera ♠ Cheng ♠ Coloquio ♠ Diploma ♠ Fajardo ♠ Layno ♠ Lim. ♠ Villarin. Norianne Tan ation Law There was thus no error on the part of the Court of Appeals in relying on the factual findings of the Board of Marine Inquiry. SY 2016-2017 Transport Atty. ♠ Villarin. L. DIGEST. considering that said administrative body is an expert in matters concerning marine casualties. for such factual findings. J.2 . being supported by substantial evidence are persuasive.