Bascos v.

CA

G.R. No. 101089. April 7, 1993.

Facts:

Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair
Shipping Agency Corporation whereby the former bound itself to haul the latter’s
2000m/tons of soya bean meal from Del Pan, Manila to the warehouse of Purefoods
Corporation in Calamba, Laguna. CIPTRADE subcontracted with petitioner Estrellita
Bascos to transport and deliver the 400 sacks of soya bean meal worth P156,404.00.
Petitioner failed to deliver the cargo, and as a consequence, Cipriano paid Jibfair the
amount of goods lost in accordance with their contract. Such agreement clearly stated
that CIPTRADE shall be held liable and answerable for any loss in bags due to hijacking,
among other events. Cipriano demanded reimbursement from petitioner but the latter
refused to pay. Cipriano filed a complaint for breach of contract of carriage.

Petitioner denied that there was no contract of carriage since CIPTRADE leased her
cargo truck, and that the hijacking was a force majeure. To further empasize her
contention, petitioner narrated how the truck carrying the cargo was hijacked on
October 21, 1988, that she immediately reported the situation to CIPTRADE, and that
she exerted, together with the police, exerted all efforts to locate the cargo. The trial
court ruled against petitioner, with the decision affirmed by the Court of Appeals.

Issues:

(1) Was petitioner a common carrier?

(2) Was the hijacking referred to a force majeure?

Held:
(1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation
or firm, or association engaged in the business of carrying or transporting passengers
or goods or both, by land, water or air, for compensation, offering their services to the
public." The test to determine a common carrier is "whether the given undertaking is a
part of the business engaged in by the carrier which he has held out to the general
public as his occupation rather than the quantity or extent of the business transacted."
In this case, petitioner herself has made the admission that she was in the trucking
business under the name A.M. Bascos Trucking, with Cipriano presenting a number of
proofs that petitioner was indeed a common carrier. The trial and appellate courts
appreciated the following facts: the driver, Maximo Sanglay, received the cargo for
delivery from Manila to Calamba, with a cargo receipt signed by him as evidence; the
truck helper, Juanito Morden, was employed by petitioner; and that the cargonwas put
in the petitioner's care.

Petitioner argued that her contract with CIPTRADE was one of lease and that she was
not catering to the general public. Nevertheless, as stated in De Guzman vs. Court of
Appeals, Article 1732 makes no distinction between one whose principal business
activity was carrying goods and persons and one whose activity was only ancillary (as a
sideline). It also makes no distinction between one who caters to the "general public"
and one who offers its services to a narrow segment of the population, as long as it
does not discriminate and holds itself out as ready to carry persons or goods. As
regards the contract of "lease", the Court reiterated that a contract is whatthe law
defines it to be and not what the contracting parties call it. Upon careful checking, the
Court found it to be a contract of carriage. The petitioner had the burden of proving
otherwise; since she only offered the contract itself as her evidence and that Cipriano
offered a number of proofs to support CIPTRADE's claim, it was only in accordance with
the rule of law to side with the latter.

(2) Common carriers are obliged to observe extraordinary diligence in the vigilance over
the goods transported by them. Accordingly, they are presumed to have been at fault
or to have acted negligently if the goods are lost, destroyed or deteriorated. There are
very few instances when the presumption of negligence does not attach and these
instances are enumerated in Article 1734. In those cases where the presumption is
applied, the common carrier must prove that it exercised extraordinary diligence in
order to overcome the presumption. In this case, petitioner averred that there was no
negligence on her part due to force majeure, which was the hijacking of the truck
carrying the cargo in question. She denied having incurred liability through negligence,
but in De Guzman vs. Court of Appeals, it was ruled that since hijacking is not one of
those contemplated under the provisions of Article 1734 so as to free petitioner from
responsibility, it has to be dealt with under the provisions of Article 1735, which states
in all other cases not mentioned in the preceding article, the common carrier is
presumed to be at fault and to have acted negligently, unless it exercised extraordinary
diligence. Moreover, as stated in Article 1745, such stipulation, or anything of similar
effect, is considered unreasonabke, unjust and contrary to public policy: "(6) That the
common carrier's liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violences or force, is dispensed with or diminished."

As ruled, only instances of theft and robbery with grave or irresistible threat, violence or
force can be considered force majeure. Petitioner, in support of her claim of the
hijacking constituting such, presented affidavits of the truck helper Morden, Jesus
Bascos, and the petitioner herself, but the Court reiterated that it resolves questions of
law and generaly does not determine the probative value of evidence. Notwithstanding
such fact, the Court noticed that the affidavits were from the affiants themselves. In
addition, petitioner did not have first-hand account of the event, and therefore, the
evidence did not carry enough weight to warrant a reversion of decision of the trial and
appellate courts.

CALVO vs. UCPB GENERAL INSURANCE CO.,INC.

G.R. No. 148496, March 19, 2002

CASE:

Calvo operates as a customs broker. She entered into contract with SMC for the transfer
of chemical fluting paper and kraft liner from Port Area of Manila to to SMC’s warehouse
in Ermita, Manila. The goods were insured by UCPB. After 24 hours from the arrival of
the shipment, the arrastre operator removed the goods from the ship. Subsequently,
petitioner withdrew the cargo and proceeded to deliver it to SMC’s warehouse. Upon
inspection, it was discovered that some of the goods were damaged. SMC collected the
amount from UCPB, and now UCPB, by virtue of subrogation, claims from Calvo.
Petitioner contends that she is not common carrier and denies liability for the damage
incurred by SMC. There are two issues in this case: WoN Calvo is a common carrier and
WoN she is liable.

The Court rules in the AFFIRMATIVE for both issues. Art. 1732 which defines who a
common carrier is, did not make any distinction (see sub-bullets under bullet #2, issue
1). The concept of common carrier coincides with the notion of public service under the
Public Service Act. On the issue on her liability, the Court ruled that petitioner, being a
common carrier is expected to exercise extraordinary diligence in the performance of
her obligations under the contract and that merely showing the possibility that some
other party could be responsible for the damage does not suffice. She must prove that
she used all reasonable means to ascertain the nature and charateristics of goods
tendered for transport, and it should exercise due care in the handling thereof. In this,
petitioner failed.

FACTS:

• Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services,

Inc. (TCTSI), a sole proprietorship customs broker.

• Petitioner entered into a contract with San Miguel Corporation (SMC) for the
transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board
from the Port Area in Manila to SMC's warehouse at the Tabacalera Compound,
Romualdez St., Ermita, Manila. The cargo was insured by respondent UCPB General
Insurance Co., Inc.

• The shipment arrived in Manila on board "M/V Hayakawa Maru" and, after 24
hours, were unloaded from the vessel to the custody of the arrastre operator, Manila
Port Services, Inc. From July 23 to July 25, 1990, petitioner withdrew the cargo from
the arrastre operator and delivered it to SMC's warehouse in Ermita, Manila. On July 25,
1990, the goods were inspected by Marine Cargo Surveyors, who found that 15 reels of
the semi-chemical fluting paper were "wet/stained/torn" and 3 reels of kraft liner board
were likewise torn. The damage was placed at P93,112.00.

• SMC collected payment from respondent UCPB under its insurance contract. In
turn, respondent, as subrogee of SMC, brought suit against petitioner.
• Petitioner contends that she is not a common carrier but a private carrier
because, as a customs broker and warehouseman, she does not indiscriminately hold
her services out to the public but only offers the same to select parties with whom she
may contract in the conduct of her business.

ISSUE:

1) Whether or not Calvo is a common carrier.

2) Whether or not Calvo is liable.

HELD & RATIO:

1) YES.

• Applicable Provision:

“Article 1732. Common carriers are persons, corporations, firms or associations

engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air for compensation, offering their services to the public.”

• The abovementioned provision did not make any distinction:

o between one whose principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as an ancillary activity.

o between a person or enterprise offering transportation service on aregular or

scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis.

o between a carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from a
narrowsegment of the general population. We think that Article 1732 deliberately
refrained from making such distinctions.

• The concept of "common carrier" under Article 1732 may be seen to coincide
neatly with the notion of "public service," under the Public Service Act (Commonwealth
Act No. 1416, as amended) which at least partially supplements the law on common
carriers set forth in the Civil Code.
• There is greater reason for holding petitioner to be a common carrier because
the transportation of goods is an integral part of her business. To uphold petitioner's
contention would be to deprive those with whom she contracts the protection which the
law affords them notwithstanding the fact that the obligation to carry goods for her
customers, as already noted, is part and parcel of petitioner's business.

2) YES.

• Applicable Provision:

“Art. 1733. Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them, according to all the
circumstances of each case. . . .”

• Petitioner’s Contention: She denies liability for the damage to the cargo and
claims that the "spoilage or wettage" took place while the goods were in the custody of
either the carrying vessel "M/V Hayakawa Maru," which transported the cargo to
Manila, or the arrastre operator, to whom the goods were unloaded and who allegedly
kept them in open air for nine days from July 14 to July 23, 1998 notwithstanding the
fact that some of the containers were deformed, cracked, or otherwise damaged.

• To prove the exercise of extraordinary diligence, petitioner must do more than

merely show the possibility that some other party could be responsible for the damage.
It must prove that it used "all reasonable means to ascertain the nature and
characteristic of goods tendered for [transport] and that [it] exercise[d] due care in the
handling [thereof]." Petitioner failed to do this.

• Another contention: She denies liabilty by invoking Art. 1734 (4) which provides
that: “Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only: . . . .

(4) The character of the goods or defects in the packing or in the containers.

• For this provision to apply, the rule is that if the improper packing or, in this
case, the defect/s in the container, is/are known to the carrier or his employees or
apparent upon ordinary observation, but he nevertheless accepts the same without
protest or exception notwithstanding such condition, he is not relieved of liability for
damage resulting therefrom. In this case, petitioner accepted the cargo without
exception despite the apparent defects in some of the container vans. Hence, for failure
of petitioner to prove that she exercised extraordinary diligence in the carriage of goods
in this case or that she is exempt from liability, the presumption of negligence as
provided under Art. 1735 holds.

Pedro de Guzman v. Court of Appeals

G.R. No. L-47822, December 22, 1988

PARTIES:
Pedro de Guzman, petitioner
Court of Appeals and Ernesto Cendana, respondents

BRIEF STATEMENT OF THE CASE:

Breach of the contract to carry
Extraordinary diligence needed over common carriers

BRIEF STATEMENT OF THE FACTS:

Ernesto Cendana was engaged in buying up used bottles and scrap metal in
Pangasinan. Upon gathering sufficient quantities of such scrap material, respondent
would bring such material to Manila for resale. He utilized (2) two six-wheeler trucks
which he owned for the purpose. Upon returning to Pangasinan, he would load his
vehicle with cargo belonging to different merchants to different establishments in
Pangasisnan which respondents charged a freight fee for. Sometime in November 1970,
herein petitioner Pedro de Guzman, a merchant and dealer of General Milk Company
Inc. in Pangasinan contracted with respondent for hauling 750 cartons of milk.
Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by
hijackers along Marcos Highway. Hence, petitioners commenced an action against
private respondent. In his defense, respondent argued that he cannot be held liable due
to force majuere, and that he is not a common carrier and hence is not required to
exercise extraordinary diligence. On appeal before the Court of Appeals, Cendana urged
that the trial court had erred in considering him a common carrier; in finding that he
had habitually offered trucking services to the public; in not exempting him from liability
on the ground of force majeure; and in ordering him to pay damages and attorney’s
fees. The Court of Appeals reversed the judgment of the trial court and held that
Cendana had been engaged in transporting return loads of freight “as a casual
occupation — a sideline to his scrap iron business” and not as a common carrier. De
Guzman came to the Supreme Court by way of a Petition for Review.
ISSUES:
1. Is respondent a common carrier?
2. Is the respondent liable for the loss of the cartons of milk due to force majeure?

ARGUMENTS:
1. Herein respondent is considered as a common carrier.

Article 1732 of the New Civil Code avoids any distinction between one whose principal
business activity is the carrying of persons or goods or both and one who does such
carrying only as an ancillary activity. It also avoids a distinction between a person or
enterprise offering transportation services on a regular or scheduled basis and one
offering such services on an occasional, episodic, and unscheduled basis.

2. Respondent is not liable for the value of the undelivered merchandise .

Article 1734 of the Civil Code- The general rule is established by the article that
common carriers are responsible for the loss, destruction or deterioration of the goods
which they carry, unless the same is due to any of the following causes only:
a. Flood, storm, earthquake, lightning or other natural disasters;
b. Act of the public enemy, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. Character of the goods or defects in the packing;
e. Order or act of competent public authority.

Applying the above article, we note firstly that the specific cause alleged in the instant
case — the hijacking of the carrier's truck — does not fall within any of the five (5)
categories of exempting causes listed in Article 1734. It would follow; therefore, that
the hijacking of the carrier's vehicle must be dealt with under the provisions of Article
1735, in other words, the private respondent as common carrier is presumed to have
been at fault or to have acted negligently. This presumption, however, may be
overthrown by proof of extraordinary diligence on the part of private respondent.

Article 1745: Any of the following or similar stipulations shall be considered

unreasonable, unjust and contrary to public policy:

xxx xxx xxx

(5) that the common carrier shall not be responsible for the
acts or omissions of his or its employees;

(6) that the common carrier's liability for acts committed by

thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or
diminished; and
 (7) that the common carrier shall not responsible for the
loss, destruction or deterioration of goods on account of the
defective condition of the car vehicle, ship, airplane or other
equipment used in the contract of carriage. (Emphasis
supplied)

Under Article 1745 (6) above, a common carrier is held responsible — and will not be
allowed to divest or to diminish such responsibility — even for acts of strangers like
thieves or robbers, except where such thieves or robbers in fact acted "with grave or
irresistible threat, violence or force." We believe and so hold that the limits of the duty
of extraordinary diligence in the vigilance over the goods carried are reached where the
goods are lost as a result of a robbery which is attended by "grave or irresistible threat,
violence or force."

The decision of the trial court shows that the armed men who held up the second truck
owned by private respondent acted with grave, if not irresistible, threat, violence or
force, which is an exception of the general rule of Article 1745 (6).

RULING:
The Petition for Review on certiorari is hereby DENIED and the Decision of the Court of
Appeals dated 3 August 1977 is AFFIRMED.

The occurrence of the loss must reasonably be regarded as quite beyond the control of
the common carrier and properly regarded as a fortuitous event. It is necessary to
recall that even common carriers are not made absolute insurers against all risks of
travel and of transport of goods, and are not held liable for acts or events which cannot
be foreseen or are inevitable, provided that they shall have complied with the rigorous
standard of extraordinary diligence.

We, therefore, agree with the result reached by the Court of Appeals that private
respondent Cendana is not liable for the value of the undelivered merchandise which
was lost because of an event entirely beyond private respondent's control.

Eastern Shipping Lines, Inc. v. CA and The First Nationwide Assurance Corp.
G.R. No. 97412 July 12, 1994

FACTS:
 13 coils of uncoated 7-wire stress relieved wire strand for pre-stressed concrete were
shipped on board a vessel owned and operated by Eastern Shipping Lines at Kobe,
Japan, for delivery to Stresstek Post-Tensioning Phils., Inc. in Manila
 while en route from Kobe to Manila, the carrying vessel encountered very rough seas
and stormy weather; the coils wrapped in burlap cloth and cardboard paper were
stored in the lower hold of the hatch of the vessel which was flooded with water; the
water entered the hatch when the vessel encountered heavy weather en route to
Manila; upon request, a survey of bad order cargo was conducted at the pier in the
presence of the representatives of the consignee and E. Razon, Inc. and it was found
that 7 coils were rusty on one side each; upon survey conducted at the consignee’s
warehouse it was found that the wetting of the cargo was caused by fresh water that
entered the hatch when the vessel encountered heavy weather; all 13 coils were
extremely rusty and totally unsuitable for the intended purpose
 The First Nationwide Assurance Corp. indemnified the consignee in the amount of
P171,923.00 for damage and loss to the insured cargo

ISSUE: WON Eastern Shipping Lines is liable

HELD: Yes.
 under Art. 1733, common carriers are bound to observe extra-ordinary vigilance over
goods according to all circumstances of each case
 Art. 1735: In all cases other than those mentioned in Art. 1734, if the goods are lost,
destroyed or deteriorated, common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed extraordinary diligence
 Since the carrier has failed to establish any caso fortuito, the presumption by law of
fault or negligence on the part of the carrier applies; and the carrier must present
evidence that it has observed the extraordinary diligence required by Article 1733 of
the Civil Code in order to escape liability for damage or destruction to the goods that
it had admittedly carried in this case. But no evidence was presented; hence, the
carrier cannot escape liability.

Equitable Leasing Corporation vs. Lucita Suyom, Marissa Enano, Myrna

Tamayo and Felix Oledan

[G.R. No. 143360, 5 September 2002, 388 SCRA 445]

Facts: A tractor driven by Raul Tutor rammed into a house-cum-store in Tondo,

Manila. Part of the house was destroyed. Two people died and four were
injured. Tutor was convicted of reckless imprudence resulting in multiple
homicide and multiple physical injuries.

Verification with the Land Transportation Office revealed that the

registered owner of the tractor was Equitable Leasing Corporation who
 leased it to Edwin Lim. The relatives of the victims filed a civil case for
damages.

The Regional Trial Court ruled against Equitable and ordered it to pay
damages to the victims’ relatives.

Upon Equitable’s appeal, the Court of Appeals sustained the RTC.

Equitable filed a petition for review with the Supreme Court.

Issue: Whether Equitable Leasing is liable for damages

Held/Ratio: Yes, Equitable Leasing is liable. The petition is denied and the CA decision
is affirmed.

As the registered owner of the tractor, Equitable Leasing is liable for the
acts of Raul Tutor even if he was actually the employee of Equitable’s
former lessee, Ecatine Corporation, who became the actual owner of the
tractor by virtue of a deed of sale not registered with the LTO.

Regardless of sales made of a motor vehicle, the registered owner is the

lawful operator insofar as the public and third persons are concerned;
consequently, it is directly and primarily responsible for the consequences
of its operation. In the eyes of the law, the owner/operator of record is
the employer of the driver, the actual owner/operator being considered as
merely the agent of the registered owner/operator. The principle applies
even if the registered owner of any vehicle does not use it for public
service.

The main aim of motor vehicle registration is to identify the owner so that
if any accident happens, or any damage or injury is caused by the vehicle,
responsibility can be fixed on a definite individual, the registered owner.

Failure to register the deed of sale should not prejudice victims, who have
the right to rely on the principle that the registered owner is liable for
damages caused by the negligence of the driver.

Equitable Leasing can’t hide behind the allegation that Tutor was Ecatine
Corp’s employee, because it will prevent victims from recovering their loss
on the basis of Equitable’s inaction in failing to register the sale. The non-
registration is Equitable’s fault, which should face the legal consequences
thereof.
FGU Insurance Corp. vs. GP Sarmiento Trucking Corp. and Lambert M. Eroles

Facts

Respondent GP Sarmiento Trucking Company (GTS) undertook to transport

cargoes for Concepcion Industries Inc. when it collided with an unidentified truck,
causing damage to the cargoes. Petitioner, FGU, insurer of the shipment, paid to
Concepcion Industries the value of the covered cargoes. Then, as subrogee of
Concepcion Industries Inc., petitioner FGU sued GPS for breach of contract of carriage
for reimbursement. Instead of filing an answer, GPS filed a demurrer to evidence,
claiming that it could not be held liable as a common carrier because it was only a
private carrier, being the exclusive hauler only of Concepcion Industries Inc. since 1988.

The lower court granted the motion, ruling that plaintiff FGU failed to prove that
GPS was a common carrier. The CA affirmed the trial court's order.

Issue

Whether or not GPS is considered a common carrier and may be presumed

negligent and therefore liable for damages.

Ruling

The Supreme Court held that GPS cannot be considered a common carrier as it
renders service exclusively to Concepcion Industries; that notwithstanding, GPS cannot
escape from liability since in culpa contractual, mere proof of the existence of the
contract and the failure of its compliance justify prima facie a corresponding right of
relief. Respondent driver, however, who is not a party to the contract of carriage, may
not be held liable under the agreement without concrete proof of his negligence or
fault.

Hence, the Supreme Court affirmed the assailed order of the trial court and the
CA insofar as the respondent driver was concerned, but GPS trucking company was
ordered to pay the petitioner FGU the value of the damaged and lost cargoes.
First Philippine Industrial Corp. vs. CA

Facts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime
in January 1995, petitioner applied for mayor’s permit in Batangas. However, the
Treasurer required petitioner to pay a local tax based on gross receipts amounting to
P956,076.04. In order not to hamper its operations, petitioner paid the taxes for the
first quarter of 1993 amounting to P239,019.01 under protest. On January 20, 1994,
petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt from
local tax since it is engaged in transportation business. The respondent City Treasurer
denied the protest, thus, petitioner filed a complaint before the Regional Trial Court of
Batangas for tax refund. Respondents assert that pipelines are not included in the term
“common carrier” which refers solely to ordinary carriers or motor vehicles. The trial
court dismissed the complaint, and such was affirmed by the Court of Appeals.

Issue:

Whether a pipeline business is included in the term “common carrier” so as to entitle

the petitioner to the exemption

Held:

Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation,
firm or association engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation, offering their services to the
public."

The test for determining whether a party is a common carrier of goods is:
(1) He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of
goods for person generally as a business and not as a casual occupation;

(2) He must undertake to carry goods of the kind to which his business is confined;

(3) He must undertake to carry by the method by which his business is conducted and
over his established roads; and

(4) The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a
common carrier. It is engaged in the business of transporting or carrying goods, i.e.
petroleum products, for hire as a public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who choose to employ its services, and
transports the goods by land and for compensation. The fact that petitioner has a
limited clientele does not exclude it from the definition of a common carrier.

LOADSTAR SHIPPING CO., INC., petitioner,

vs. COURT OF APPEALS and THE MANILA INSURANCE CO., INC., respondents.

Facts:

On 19 November 1984, LOADSTAR received on board a) 705 bales of lawanit

hardwood; b) 27 boxes and crates of tilewood assemblies and the others ;and c) 49
bundles of mouldings R & W (3) Apitong Bolidenized. On its way to Manila from the port
of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off Limasawa Island.
As a result of the total loss of its shipment, the consignee made a claim with LOADSTAR
which, however, ignored the same. MIC filed a complaint against LOADSTAR and PGAI,
alleging that the sinking of the vessel was due to the fault and negligence of LOADSTAR
and its employees. LOADSTAR denied any liability for the loss of the shipper’s goods
and claimed that sinking of its vessel was due to force majeure. LOADSTAR submits
that the vessel was a private carrier because it was not issued certificate of public
convenience, it did not have a regular trip or schedule nor a fixed route, and there was
only “one shipper, one consignee for a special cargo.

Issues:

(1) Is the M/V “Cherokee” a private or a common carrier?

(2) Did LOADSTAR observe due and/or ordinary diligence in these premises.

Held:

Petition is dismissed:

SC hold that LOADSTAR is a common carrier. It is not necessary that the carrier be
issued a certificate of public convenience, and this public character is not altered by the
fact that the carriage of the goods in question was periodic, occasional, episodic or
unscheduled. The bills of lading failed to show any special arrangement, but only a
general provision to the effect that the M/V”Cherokee” was a “general cargo carrier.” 14
Further, the bare fact that the vessel was carrying a particular type of cargo for one
shipper, which appears to be purely coincidental, is not reason enough to convert the
vessel from a common to a private carrier, especially where, as in this case, it was
shown that the vessel was also carrying passengers. Under Article 1732 of the Civil
Code the Civil Code defines “common carriers” in the following terms:

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or goods or both, by land, water, or
air for compensation, offering their services to the public.
On to the second assigned error, we find that the M/V “Cherokee” was not seaworthy
when it embarked on its voyage on 19 November 1984. The vessel was not even
sufficiently manned at the time. “For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a sufficient number of competent officers
and crew. The failure of a common carrier to maintain in seaworthy condition its vessel
involved in a contract of carriage is a clear breach of its duty.

MARITIME COMPANY OF THE PHILIPPINES, petitioner,

vs. COURT OF APPEALS and RIZAL SURETY & INSURANCE CO., respondents.

In the Court of First Instance of Manila, Rizal Surety & Insurance Co. (hereafter, simply
Rizal Surety) sued the National Development Company (NDC) and Maritime Co. of the
Philippines (hereafter simply Maritime Co.) for the recovery of a sum of money paid by
it as insurer for the value of goods lost in transit on board vessel known as the SS Doña
Nati . 1 After due proceedings and trial, the complainant was "dismissed with costs
against plaintiff ." 2 The Trial Court's judgment was founded upon the following findings
and conclusions, to wit:

1. Rizal Surety 'was the insurer of 800 packages of PVC compound loaded on the
SS Doña Nati at Yokohama and consigned to the Acme Electrical Manufacturing
Company."

2. " The SS Doña Nati was owned by the National Development Company whereas he
Maritime Company of the Philippines was its Agent. This appears indubitably in the Bill
of Lading. Exhibit D."

3. The goods were never delivered to the consignee (Acme Electrical, etc., supra)
so that x x (Rizal) as Insurer, paid x x (said) consignee the sum of P38,758.50."
4. The cause of the non-delivery of the goods, from the evidence presented by both
Defendants is that in Nagoya Bay, while the SS Doña Nati was being piloted by a
Japanese pilot, the SS Doña Nati was rammed by M/V Yasushima Maru, causing
damage to the hull of the SS Doña Nati and the resultant flooding of the holds damaged
beyond repair the goods of the consignee in question."

5. There is no doubt that under our Code of Commerce, it would be the vessel at
fault in this collision, that would be responsible for the damage to the cargo. And the
evidence of both Defendants, which has not been rebutted, is that the M/V Yasushima
Maru was at fault in the collision, so that the cause of action of plaintiff should be
directed to the owners of the negligent vessel. However, as Plaintiff has brought this
action in good faith, attorney's fees are not recoverable."

Rizal Surety elevated the case to the Court of Appeals. 3 That Court found merit in its
appeal. It thus rendered judgment, 4 setting aside that of the Trial Court and 'ordering
defendants-appellees (NDC and Maritime Co.) jointly and severally to pay jointly and
severally to plaintiff-appellant (Rizal Surety) the sum of P38,758.50 with legal rate of
interest from the filing of the complaint ." 5

This judgment of the Appellate Tribunal was in turn appealed by Maritime Company. To
that Court Maritime Co. attributes the following errors, in a bid to have its judgment
reversed by this Court, viz:

1) holding that it was a ship agent under the Code of Commerce instead of merely
an agent under the Civil Code;

2) not holding that under the Bill of Lading sued upon, Rizal Surety had no cause of
action against either impleaded defendant;

3) not holding that the collision between the SS Doña Nati and the M/V Yasushima
Maru which caused the loss of the insured goods was due solely to the fault or
negligence of the complement of the Yasushima Maru, as well as the character of the
goods themselves and the defect in their packing, and

4) not holding that Rizal Surety's cause of action was barred by prescription as well
as Stipulation No. 19 of the Bill of Lading.

The evidence establishes that NDC had appointed petitioner Maritime Co., as its agent
to manage and operate three vessels owned by it, including the SS Doña Nati for and in
its behalf and account, and for a determinable period (i.e., until full reimbursement of
all moneys advanced and/or full relief from or payment of all guarantees made by
Maritime Co. for account of the vessels). Under their written agreement, Maritime Co.
was bound to "provision and victual" the SS Doña Nati and the other two vessels, and
to render a complete report of the operations of the vessels within 60 days after
conclusion of each voyage; it was also authorized to appoint sub-agents at any ports or
places that it might deem necessary, remaining however responsible to the shipowner
(NDC) for the timely and satisfactory performance of said sub-agents. These facts
preponderantly demonstrate the character of Maritime Co. as ship agent under the
Code of Commerce, a ship agent, accordingly to that Code, being "the person entrusted
with provisioning or representing the vessel in the port in which it may be found." 6

Maritime Co. however insists that it was not the ship agent of NDC in Japan but "the
Fuji Asano Co., Ltd., which supplied her with provisions, and represented her therein
and which issued the bill of lading for the owner NDC The claim is belied by the bill of
lading referred to. 7 The letterhead of the bill of lading is in two (2) parts, and is
printed in the following manner:

PHILIPPINE NATIONAL LINES

NATIONAL DEVELOPMENT COMPANY

MARITIME COMPANY OF THE PHILIPPINES

AGENT

PHILIPPINES-HONGKONG, JAPAN, U.S. PACIFIC

COAST-GULF PORTS

HONGKONG-COSMOS DEVELOPMENT COMPANY

* JAPAN-FUJI ASANO KAIUN CO, LTD.

* U.S.A-NORTH AMERICAN MARITIME AGENCIES

As will be observed, in what may be described as the main letterhead, Maritime Co. is
indicated as "Agent" for the (1) Philippines, (2) "Hongkong, (3) Japan, and the (4) U.S.
Pacific Coast-Gulf Ports. Underneath this main letterhead is a sort of secondary sub-
head: "Hongkong-Cosmos Development Company; Japan-Fuji ASANO Kaiun Co., Ltd.,
U.SA-North American Maritime Agencies." The necessary connotation is that the firms
thus named are sub-agents or secondary representatives of Maritime Co., Fuji ASANO
Kaiun Co., Ltd., particularly, being the representative of NDC and Maritime Co. in Japan,
as distinguished from the Maritime Co., which is described as AGENT not only in Japan
but also in other places: the Philippines, Hongkong, U.S. Pacific Coast, and the Gulf
Ports. Moreover, the bill shows on its face that it was issued 'FOR THE MASTER' by
"Maritime Company of the Philippines, Agent."

Equally unacceptable is the contention that Acme Electrical Manufacturing, Manila," was
not the consignee of the goods described in the bill of lading and therefore, payment to
it for the loss of said goods did not operate to make Rizal Surety its subrogee. The
contention is in the first place belied by the bill of lading which states that if the goods
are "consigned to the Shipper's Order"-and the bill is so consigned: "to the order of
China Banking Corporation, Manila, or assigns"-the "Acme Electrical Manufacturing,
Manila," shall be notified. This shows, in the context of the other documents hereafter
adverted to, that Acme was the importer and China Banking Corporation the financing
agency. The contention is also confuted by the Commercial Invoice of the shipper 8
which recites that it was "by order and for account of Messrs. Acme Electrical
Manufacturing, Manila" that the 800 bags of PVC compound were shipped from
Yokohama to Manila. It is also disaproved by the fact that it was Acme that insured the
goods with Rizal Surety and the latter did insure them 9 on the strength of the former's
Marine Risk Note, 10 long before the goods were lost at sea, and it was Acme, thru its
broker, that claimed the proceeds for the loss. 11 The contention is finally discredited
by Maritime Co.'s own certification which states that the "800 packages of PVC
Compound ... consigned to Acme Electrical Manufacturing was 'carried away' to sea as a
result of the accident and same was unrecovered .. . 12

There is thus no question of the entitlement of Acme Electrical Manufacturing to the

proceeds of the insurance against loss of the goods in question, nor about the fact that
it did receive such proceeds from the Rizal Surety, as insurer, which made payment
upon due ascertainment of the actuality of the loss. The legal effect is inescapable.
Rizal Surety was subrogated to Acme's rights against the shipowner and the ship agent
arising from the loss of the goods. 13

Now, according to the Court of Appeals, Acme's rights are to be determined by the Civil
Code, not the Code of Commerce. This conclusion derives from Article 1753 of the Civil
Code to the effect that it is the "law of the country to which the goods are to be
transported (which) shall govern the liability of the common carrier for their loss,
destruction or deterioration." It is only in "matters not regulated by x x (the Civil)
Code," according to Article 1766, that "the rights and obligations of common carriers
shall be governed by the Code of Commerce and by special laws." Since there are
indeed specific provisions regulating the matter of such liability in the Civil Code, these
being embodied in Article 1734, as well as prescribing the period of prescription of
actions, it follows that the Code of Commerce, or the Carriage of Goods by Sea Act, has
no relevancy in the determination of the carrier's liability in the instant case. In
American President Lines v. Klepper, 14 for instance, we ruled that in view of said
Articles 1753 and 1766, the provisions of the Carriage of Goods by Sea Act are merely
suppletory to the Civil Code.
Under the established facts, and in accordance with Article 1734 above mentioned,
petitioner Maritime Co. and NDC, as "common carriers," are liable to Acme for "the loss,
destruction or deterioration of the goods," and may be relieved of responsibility if the
loss, etc., "is due to any of the following causes only: 15

1. Flood, storm, earthquakes, 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.'

Since none of the specified absolutory causes is present, the carrier's liability is
palpable.

The petitioner's other claim that the loss of the goods was due entirely to the fault of
the Japanese vessel, Yasushima Maru, which rammed into the Doña Nati cannot be
sustained. The Appellate Tribunal found, as a fact, after a review and study of the
evidence, that the Doña Nati "did not exercise even due diligence to avoid the collision.'
In line with the familiar axiom that factual conclusions of the Court of Appeals are
conclusive and may not be reviewed, the petitioners attempt to shift the blame to the
Japanese vessel is futile. Having failed to exercise extraordinary diligence to avoid any
loss of life and property, as commanded by law, not having in fact exercised "even due
diligence to avoid the collision,' it must be held responsible for the loss of the goods in
question. Besides, as remarked by the Court of Appeals, "the principal cause of action is
not derived from a maritime collision, but rather, from a contract of carriage, as
evidenced by the bill of lading."
SCHMITZ TRANSPORT & BROKERAGE CORPORATION,
petitioner, vs. TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE
COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL now
INCHCAPE SHIPPING SERVICES, respondents.

FACTS:
SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board
M/V "Alexander Saveliev" (a vessel of Russian registry and owned by Black Sea)
545 hot rolled steel sheets in coil. The cargoes, which were to be discharged at
the port of Manila in favor of the consignee, Little Giant Steel Pipe Corporation
(Little Giant), were insured against all risks with Industrial Insurance Company
Ltd. (Industrial Insurance). Little Giant Steel Pipe Corporation (Little Giant) hired
Schmitz Transport, to secure the requisite clearances, to receive the cargoes—
hot rolled steel sheets in coil, from the shipside, and to deliver them to its
warehouse. Little Giant also engaged the services of Transport Venture Inc.,
(TVI) to send a barge and tugboat at shipside. During which the weather
condition had become inclement due to an approaching storm, the unloading
unto the barge of the 37 coils was accomplished. No tugboat pulled the barge
back to the pier, however. Due to strong waves, the crew of the barge
abandoned it and transferred to the vessel. The barge pitched and rolled with
the waves and eventually capsized, washing the 37 coils into the sea. After a
while, a tugboat finally arrived to pull the already empty and damaged barge
back to the pier. Earnest efforts on the part of both the consignee Little Giant
and Industrial Insurance to recover the lost cargoes proved futile. Little Giant
thus filed a formal claim against Industrial Insurance. Little Giant thereupon
executed a subrogation receipt in favor of Industrial Insurance. Industrial
Insurance later filed a complaint against Schmitz Transport, TVI, and Black Sea
through its representative Inchcape before the RTC of Manila, for the recovery of
the amount it paid to Little Giant plus adjustment fees, attorney’s fees, and
litigation expenses. Industrial Insurance faulted the defendants for undertaking
the unloading of the cargoes while typhoon signal No. 1 was raised in Metro
Manila.

ISSUES:
(1) Whether the loss of the cargoes was due to a fortuitous event, independent
of any act of negligence on the part of petitioner Black Sea and TVI, and
(2) If there was negligence, whether liability for the loss may attach to Black
Sea, petitioner and TVI.

HELD:
(1) NO, the loss of the cargoes was not due to a fortuitous event. In
order, to be considered a fortuitous event, however, (1) the cause of the
unforeseen and unexpected occurrence, or the failure of the debtor to comply
with his obligation, must be independent of human will; (2) it must be impossible
to foresee the event which constitute the caso fortuito,or if it can be foreseen it
must be impossible to avoid; (3) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in any manner; and (4) the
obligor must be free from any participation in the aggravation of the injury
resulting to the creditor. [T]he principle embodied in the act of God doctrine
strictly requires that the act must be occasioned solely by the violence of nature.
Human intervention is to be excluded from creating or entering into the cause of
the mischief. When the effect is found to be in part the result of the participation
of man, whether due to his active intervention or neglect or failure to act, the
whole occurrence is then humanized and removed from the rules applicable to
the acts of God. The appellate court, in affirming the finding of the trial court
that human intervention in the form of contributory negligence by all the
defendants resulted to the loss of the cargoes, held that unloading outside the
breakwater, instead of inside the breakwater, while a storm signal was up
constitutes negligence. It thus concluded that the proximate cause of the loss
was Black Sea’s negligence in deciding to unload the cargoes at an unsafe place
and while a typhoon was approaching.

(2) Petitioner and TVI are solidarily liable for the loss of the cargoes but
no liability may attach to Black Sea. TVI’s failure to promptly provide a
tugboat did not only increase the risk that might have been reasonably
anticipated during the shipside operation, but was the proximate cause of the
loss. A man of ordinary prudence would not leave a heavily loaded barge floating
for a considerable number of hours, at such a precarious time, and in the open
sea, knowing that the barge does not have any power of its own and is totally
defenseless from the ravages of the sea. That it was nighttime and, therefore,
the members of the crew of a tugboat would be charging overtime pay did not
excuse TVI from calling for one such tugboat. As for petitioner, for it to be
relieved of liability, it should, following Article 1739 of the Civil Code, prove that
it exercised due diligence to prevent or minimize the loss, before, during and
after the occurrence of the storm in order that it may be exempted from liability
for the loss of the goods. While petitioner sent checkers and a supervisor on
board the vessel to counter-check the operations of TVI, it failed to take all
available and reasonable precautions to avoid the loss. After noting that TVI
failed to arrange for the prompt towage of the barge despite the deteriorating
sea conditions, it should have summoned the same or another tugboat to extend
help, but it did not. As for Black Sea, its duty as a common carrier extended only
from the time the goods were surrendered or unconditionally placed in its
possession and received for transportation until they were delivered actually or
constructively to consignee Little Giant. The delivery of the goods to the
consignee was not from "pier to pier" but from the shipside of "M/V Alexander
Saveliev" and into barges, for which reason the consignee contracted the
services of petitioner. Since Black Sea had constructively delivered the cargoes to
Little Giant, through petitioner, it had discharged its duty.