Tabacalera Insurance Co.

v North Front Shipping Services

Facts:

Respondent North Front Shipping Services was contracted to transfer about 20,000 sacks of corn grains
estimated at Php 3.5M consigned to Republic Flour Mills Corporation in Manila. The vessel was
inspected prior to actual loading of representatives of the shipper and was found to be fit to carry the
merchandise. The cargo was covered by tarpaulins and wooden boards. Upon arriving in Manila, the
consignee was advised of its arrival but it did not immediately commence the unloading process for no
valid reason. When the cargo was finally unloaded after 20 days, it was found that theres a shortage of
26 metric tons due to the molds and deterioration of the goods. It was found that the cause of the
deterioration was the contact of the grains with saltwater. Republic Flour then rejected the goods and
demanded payment, which was paid for by the petitioner insurance company. Petitioner now files a
claim for reimbursement against herein respondent. Petitioner claims that the damages were due to the
negligence of the shipping company. Shipping company refuted that it was never negligent as they were
inspected before embarking and was found to be seaworthy, and was issued a permit by the Coast
Guard. The Trial Court dismissed the petition by insurance company and ruled that North Front
exercised ordinary diligence in the care of goods, as there was a charter party agreement between
North Front and Republic Flour. Likewise, CA ruled that a common carrier has to observe a higher
degree of diligence, to which North Front has satisfactorily complied with.

Issue:

Whether or not North Front Shipping Services is a common carrier, and if it observed the due diligence
required of it.

Ruling:

Yes, North Front Shipping is a common carrier. It was resolved by the courts that a common carrier does
not cease to be one by the mere presence of the charter party agreement. If in the said contract of
affreightment it was found that it was only a time charter or a voyage charter, the vessel does not lose
its status as a common carrier. As such, North Front Shipping is required to observe the extraordinary
diligence in the vigilance over the goods it transports. A common carrier is presumed to have been at
fault or to have acted negligently. As such, North Front, did not act with the extraordinary diligence in
the vigilance over the goods assigned to it. It was stated by SC that the extraordinary diligence in the
vigilance over the goods is to avoid the damage or destruction of the goods entrusted to the vessel. As
such, it must be able to render service with the greatest skill and foresight to use all reasonable means
to ascertain the nature and characteristics of goods tendered for shipment. It was shown during trial
that the vessel had rusty bulkheads and wooden boards and tarpaulins that bore heavy concentration of
molds. However, the Court cannot attribute the whole destruction alone to North Front as Republic
Flour Mill was guilty of contributory negligence, sentencing them to shoulder 40% of the loss.