.June 8, 2004
Ponente: Puno, J.
FACTS
1. On November 21, 1987, Mayer Steel Pipe Corporation of Binondo, Manila, loaded 581 bundles of ERW black steel pipes worth US$137,912.84 on board the vessel M/V Lorcon IV, owned by Lorenzo Shipping, for shipment to Davao City. Thereafter, Lorenzo Shipping issued a clean bill of lading for the account of the consignee, Sumitomo Corporation of San Francisco, California, USA, which in turn, insured the goods with Chubb and Sons, Inc.
2. M/V Lorcon IV arrived at the Sasa Wharf in Davao City on December 2, 1987. Transmarine Carriers received the subject shipment which was discharged on December 4, 1987. It discovered seawater in the hatch of M/V Lorcon IV, and found the steel pipes submerged in it.
3. Sumitomo then hired the services of R.J. Del Pan Surveyors to inspect the shipment prior to and subsequent to discharge. Del Pan's Survey Report showed that the subject shipment was no longer in good condition, as in fact, the pipes were found with rust formation on top and/or at the sides. Moreover, the surveyor noted that the cargo hold of the M/V Lorcon IV was flooded with seawater, and the tank top was rusty, thinning, and with several holes at different places.
4. After the survey, Gearbulk loaded the shipment on board its vessel M/V San Mateo Victory, for carriage to the United States. It issued two bills of lading -- one covering 364 bundles of steel pipes to be discharged at Oakland, U.S.A., and, the other covering 217 bundles of steel pipes to be discharged at Vancouver, Washington, U.S.A. All bills of lading were marked ALL UNITS HEAVILY RUSTED.
5. On January 17, 1988, M/V San Mateo Victory arrived at Oakland, California, U.S.A., where it unloaded 364 bundles of the subject steel pipes. It then sailed to Vancouver, Washington on January 23, 1988 where it unloaded the remaining 217 bundles. Toplis and Harding, Inc. of San Franciso, California, surveyed the steel pipes, and also discovered the latter heavily rusted. When the steel pipes were tested with a silver nitrate solution, Toplis and Harding found that they had come in contact with salt water.
6. Due to its heavily rusted condition, the consignee Sumitomo rejected the damaged steel pipes and declared them unfit for the purpose they were intended. It then filed a marine insurance claim with Chubb and Sons, Inc. which the latter settled in the amount of US$104,151.00.
7. On December 2, 1988, Chubb and Sons, Inc. filed a complaint for collection of a sum of money against Lorenzo Shipping, Gearbulk, and Transmarine. Chubb and Sons, Inc. alleged that it is not doing business in the Philippines, and that it is suing under an isolated transaction.
8. Gearbulk and Transmarine argued, among others, that Chubb and Sons, Inc., a foreign insurance company, has no capacity to sue before Philippine courts.
9. Meanwhile, Lorenzo Shipping argued that it was not negligent in the performance of its obligations as carrier of the goods. It also argued that because Chubb and Sons is an insurance company, it was merely subrogated to the rights of its insured, the consignee Sumitomo, after paying the latter's policy claim. Sumitomo, however, is a foreign corporation doing business in the Philippines without a license and does not have capacity to sue before Philippine courts. Since Sumitomo does not have capacity to sue, then it follows that the subrogee Chubb and Sons could also not sue before Philippine courts. In addition, Lorenzo Shipping was contending that since there were two bill of ladings issued, then this negates Chubb and Son's claim that it was suing on an isolated case because "isolated transaction" should only pertain to a single business transaction.
10. The RTC ruled in favor of Chubb and Sons, and ordered Lorenzo Shipping to pay Chubb and Sons the amount of US$104,151.00 or its equivalent in Philippine peso with interest plus costs of the suit. The RTC also dismissed the complaint against Gearbulk and Transmarine for lack of merit. CA affirmed the RTC ruling.
RULING
CA affirmed in toto.
Whether Chubb and Sons has capacity to sue before the Philippine courts. – YES.
1. Lorenzo Shipping failed to raise the defense that Sumitomo is a foreign corporation doing business in the Philippines without a license. As such, it is estopped from litigating the issue on appeal. But assuming arguendo that Sumitomo cannot sue in the Philippines, it does not follow that Chubb and Sons, as subrogee, has also no capacity to sue in our jurisdiction.
2. The rights inherited by the insurer, Chubb and Sons, pertain only to the payment it made to the insured Sumitomo as stipulated in the insurance contract between them, and which amount it now seeks to recover from Lorenzo Shipping which caused the loss sustained by the insured Sumitomo.
3. Capacity to sue is a right personal to its holder. It is conferred by law and not by the parties. Lack of legal capacity to sue means that the plaintiff is not in the exercise of his civil rights, or does not have the necessary qualification to appear in the case, or does not have the character or representation he claims. It refers to a plaintiff's general disability to sue, such as on account of minority, insanity, incompetence, lack of juridical personality, or any other disqualifications of a party.
4. Chubb and Sons, who was plaintiff in the trial court, does not possess any of these disabilities. On the contrary, Chubb and Sons has satisfactorily proven its capacity to sue, after having shown that it is not doing business in the Philippines, but is suing only under an isolated transaction, i.e., under the one (1) marine insurance policy issued in favor of the consignee Sumitomo covering the damaged steel pipes.
5. On foreign corporation's capacity to engage in isolated business transactions: The law does not prohibit foreign corporations from performing single acts of business. In fact, a foreign corporation needs no license to sue before Philippine courts on an isolated transaction.
6. On Lorenzo Shipping's contention that the issuance of two bill of ladings cannot be an isolated.
transaction: The stubborn fact remains that these two (2) bills of lading spawned from the single marine insurance policy that Chubb and Sons issued in favor of the consignee Sumitomo, covering the damaged steel pipes. The execution of the policy is a single act, an isolated transaction.
Whether Lorenzo Shipping was negligent in carrying the subject cargo. – YES.
1. The steel pipes were in good condition when they were loaded at the port of origin (Manila) on board Lorenzo Shipping's M/V Lorcon IV en route to Davao City. Lorenzo Shipping issued clean bills of lading covering the subject shipment. A bill of lading, aside from being a contract and a receipt, is also a symbol of the goods covered by it. A bill of lading which has no notation of any defect or damage in the goods is called a clean bill of lading. A clean bill of lading constitutes prima facie evidence of the receipt by the carrier of the goods as therein described.
2. When the cargo was unloaded from Lorenzo Shipping's vessel at the Sasa Wharf in Davao City, the steel pipes were rusted all over. The two subsequent bill of ladings issued covering the entire shipment were marked ALL UNITS HEAVILY RUSTED.
3. R.J. Del Pan Surveyors found that the cargo hold of the M/V Lorcon IV was flooded with seawater, and the tank top was rusty, thinning and perforated, thereby exposing the cargo to sea water. There can be no other conclusion than that the cargo was damaged while on board the vessel of Lorenzo Shipping, and that the damage was due to the latters negligence. The unpatched holes allowed seawater, reaching up to three (3) inches deep, to enter the flooring of the hatch of the vessel where the steel pipes were stowed, submerging the latter in sea water. The contact with sea water caused the steel pipes to rust.
