G.R. No. 91879 - Heirs of Regoso vs. Court of Appeals

On July 25, 1990, Central Shipping Company, Inc. (petitioner) received for transport 376 pieces of Philippine Apitong round logs on board its vessel, M/V Central Bohol, at Puerto Princesa, Palawan, destined for delivery in Manila to Alaska Lumber Co., Inc.
The cargo was insured for P3,000,000.00 under the insurance policy of Insurance Company of North America (respondent).
Upon loading completion, the vessel departed Puerto Princesa and commenced its voyage to Manila.

At about 1:25 a.m. on July 26, 1990, en route to Manila, the vessel listed about 10 degrees starboard due to the shifting of the logs in its hold.
At about 1:28 a.m., the vessel’s list increased to 15 degrees, prompting the captain to order abandonment of the ship. By 1:30 a.m., the vessel sank completely, resulting in the total loss of the cargo.
Respondent alleged that the sinking was caused by petitioner’s and its captain’s negligence, inflicting a loss of P3,000,000.00 to the consignee.

The consignee presented a claim for the cargo’s value to petitioner, but petitioner refused to pay, leading respondent as insurer to pay the claim and pursue subrogation rights against petitioner.
Petitioner admitted the sinking but asserted:

The vessel was fully manned, equipped, seaworthy, and the logs properly loaded and secured.
The captain exercised due diligence to prevent or minimize loss.
The proximate cause was a natural disaster, specifically a tropical storm, unforeseeable to the vessel and captain.

The Regional Trial Court (RTC) rejected petitioner’s claim of fortuitous event; recognized monsoons as foreseeable seasonal weather occurrences.
Held petitioner liable for loss due to failure to exercise extraordinary diligence and improper securing of the cargo.
Awarded damages less salvage value and allowed respondent’s subrogation rights.

Affirmed RTC ruling that the southwestern monsoon was not unforeseeable or a fortuitous storm.
Found that the weather was not sole and proximate cause of sinking; improper stowage causing cargo shift was a concurrent cause.
Held petitioner’s claim of seaworthiness insufficient; certificates not conclusive evidence.
Declined to give weight to factual findings of the Board of Marine Inquiry (BMI), emphasizing court’s role in determining extraordinary diligence.
Concluded doctrine of limited liability did not apply due to petitioner’s negligence.

Whether the weather disturbance that caused the sinking of M/V Central Bohol was a fortuitous event (natural disaster) under Article 1734(1) of the Civil Code.
Whether the investigation report by Claimsmen Adjustment Corporation is inadmissible hearsay under Section 36, Rule 130 of the Rules of Court.
Whether the CA’s finding that the logs shifted due to improper stowage has a valid and factual basis.
Whether M/V Central Bohol was seaworthy.
Whether the CA erred in disregarding the factual findings of the Board of Marine Inquiry (BMI).
Whether the Doctrine of Limited Liability applies to the case.