THIRD DIVISION

[G.R. No. 147246. August 19, 2003.]

ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, vs. COURT OF
APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE, INC.,
respondents.

Soo Gutierrez Leogardo & Lee for petitioner.

Linsangan Linsangan & Linsangan Law Offices for respondent.
SYNOPSIS
Petitioner was contracted as carrier by a corporation from Portland, Oregon to
deliver a cargo to the consignee's warehouse at Pasig City. The cargo, however,
never reached the consignee as the barge that carried the cargo sank completely,
resulting in damage to the cargo. Private respondent, as insurer, indemnied the
consignee for the lost cargo and thus, as subrogee, sought recovery from petitioner.
Both the trial court and the appellate court ruled in favor of private respondent.
The Court ruled in favor of private respondent. Whether or not petitioner is a
common carrier, the Court ruled in the armative. The principal business of
petitioner is that of lighterage and drayage, oering its barges to the public,
although for limited clientele, for carrying or transporting goods by water for
compensation. Whether or not petitioner failed to exercise extraordinary diligence
in its care and custody of the consignee's goods, the Court also ruled in the
armative. The barge completely sank after its towing bits broke, resulting in the
loss of the cargo. Petitioner failed to prove that the typhoon was the proximate and
only cause of the loss and that it has exercised due diligence before, during and after
the occurrence.
SYLLABUS
1.
CIVIL LAW; SPECIAL CONTRACTS; COMMON CARRIERS; DEFINITION;
ELUCIDATED. Article 1732 of the Civil Code denes common carriers as persons,
corporations, rms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation..
oering their services to the public. Petitioner contends that it is not a common
carrier but a private carrier. Allegedly, it has no xed and publicly known route,
maintains no terminals, and issues no tickets. It points out that it is not obliged to
carry indiscriminately for any person. It is not bound to carry goods unless it
consents. In short, it does not hold out its services to the general public. In De
Guzman vs. Court of Appeals, we held that the denition of common carriers in
Article 1732 of the Civil Code makes no 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. We also did not distinguish between a person
or enterprise oering transportation service on a regular or scheduled basis and one
oering such service on an occasional, episodic or unscheduled basis. Further, we
ruled that Article 1732 does not distinguish between a carrier oering its services to
t h e general public, and one who oers services or solicits business only from a
narrow segment of the general population.
2.
ID.; ID.; ID.; HOW DETERMINED. Petitioner is a common carrier whether its
carrying of goods is done on an irregular rather than scheduled manner, and with an
only limited clientele. A common carrier need not have xed and publicly known
routes. Neither does it have to maintain terminals or issue tickets. To be sure,
petitioner ts the test of a common carrier as laid down in Bascos vs. Court of
Appeals. 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 the case at bar, the petitioner admitted that it is engaged in the
business of shipping and lighterage, oering its barges to the public, despite its
limited clientele for carrying or transporting goods by water for compensation.
3.
ID.; ID.; ID.; REQUIRED TO OBSERVE EXTRAORDINARY DILIGENCE;
PRESUMPTION OF NEGLIGENCE IN CASE OF LOSS, DESTRUCTION OR
DETERIORATION OF GOODS; EXCEPTIONS. Common carriers are bound to
observe extraordinary diligence in the vigilance over the goods transported by them.
They are presumed to have been at fault or to have acted negligently if the goods
are lost, destroyed or deteriorated. To overcome the presumption of negligence in
the case of loss, destruction or deterioration of the goods, deterioration of the goods,
the common carrier must prove that it exercised extraordinary diligence. There are,
however, exceptions to this rule. Article 1734 of the Civil Code enumerates the
instances when the presumption of negligence does not attach: Art. 1734. 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: (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.
4.
ID.; ID.; ID.; ID.; ID.; ID.; TYPHOON; NOT APPRECIATED IN THE ABSENCE OF
PROOF THAT IT WAS THE PROXIMATE AND ONLY CAUSE OF LOSS AND DUE
DILIGENCE EXERCISED BEFORE, DURING AND AFTER THE TYPHOON. In the case
at bar, the barge completely sank after its towing bits broke, resulting in the total
loss of its cargo. Petitioner claims that this was caused by a typhoon, hence, it
should not be held liable for the loss of the cargo. However, petitioner failed to
prove that the typhoon is the proximate and only cause of the loss of the goods, and
that it has exercised due diligence before, during and after the occurrence of the
typhoon to prevent or minimize the loss. The evidence show that, even before the
towing bits of the barge broke, it had already previously sustained damage when it
hit a sunken object while docked at the Engineering Island. It even suered a hole.

Clearly, this could not be solely attributed to the typhoon. The partly-submerged
vessel was reoated but its hole was patched with only clay and cement. The patch
work was merely a provisional remedy, not enough for the barge to sail safely.
Thus, when petitioner persisted to proceed with the voyage, it recklessly exposed
the cargo to further damage.
DECISION
PUNO, J :
p

On appeal is the Court of Appeals' May 11, 2000 Decision 1 in CA-G.R. CV No. 49195
and February 21, 2001 Resolution 2 arming with modication the April 6, 1994
Decision 3 of the Regional Trial Court of Manila which found petitioner liable to pay
private respondent the amount of indemnity and attorney's fees.
First, the facts.
On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk,
valued at US$423,192.35 4 was shipped by Marubeni American Corporation of
Portland, Oregon on board the vessel M/V NEO CYMBIDIUM V-26 for delivery to the
consignee, General Milling Corporation in Manila, evidenced by Bill of Lading No.
PTD/Man-4. 5 The shipment was insured by the private respondent Prudential
Guarantee and Assurance, Inc. against loss or damage for P14,621,771.75 under
Marine Cargo Risk Note RN 11859/90. 6
On July 25, 1990, the carrying vessel arrived in Manila and the cargo was
transferred to the custody of the petitioner Asia Lighterage and Shipping, Inc. The
petitioner was contracted by the consignee as carrier to deliver the cargo to
consignee's warehouse at Bo. Ugong, Pasig City.
On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III,
evidenced by Lighterage Receipt No. 0364 7 for delivery to consignee. The cargo did
not reach its destination.
It appears that on August 17, 1990, the transport of said cargo was suspended due
to a warning of an incoming typhoon. On August 22, 1990, the petitioner proceeded
to pull the barge to Engineering Island o Baseco to seek shelter from the
approaching typhoon. PSTSI III was tied down to other barges which arrived ahead
of it while weathering out the storm that night. A few days after, the barge
developed a list because of a hole it sustained after hitting an unseen protruberance
underneath the water. The petitioner led a Marine Protest on August 28, 1990. 8 It
likewise secured the services of Gaspar Salvaging Corporation which reoated the
barge. 9 The hole was then patched with clay and cement.
The barge was then towed to ISLOFF terminal before it nally headed towards the
consignee's wharf on September 5, 1990. Upon reaching the Sta. Mesa spillways,
the barge again ran aground due to strong current. To avoid the complete sinking of

the barge, a portion of the goods was transferred to three other barges. 10
The next day, September 6, 1990, the towing bits of the barge broke. It sank
completely, resulting in the total loss of the remaining cargo. 11 A second Marine
Protest was filed on September 7, 1990. 12
On September 14, 1990, a bidding was conducted to dispose of the damaged wheat
retrieved and loaded on the three other barges. 13 The total proceeds from the sale
of the salvaged cargo was P201,379.75. 14
On the same date, September 14, 1990, consignee sent a claim letter to the
petitioner, and another letter dated September 18, 1990 to the private respondent
for the value of the lost cargo.
On January 30, 1991, the private respondent indemnied the consignee in the
amount of P4,104,654.22. 15 Thereafter, as subrogee, it sought recovery of said
amount from the petitioner, but to no avail.
On July 3, 1991, the private respondent led a complaint against the petitioner for
recovery of the amount of indemnity, attorney's fees and cost of suit. 16 Petitioner
filed its answer with counterclaim. 17
The Regional Trial Court ruled in favor of the private respondent. The dispositive
portion of its Decision states:
WHEREFORE, premises considered, judgment is hereby rendered ordering
defendant Asia Lighterage & Shipping, Inc. liable to pay plainti Prudential
Guarantee & Assurance Co., Inc. the sum of P4,104,654.22 with interest
from the date complaint was led on July 3, 1991 until fully satised plus
10% of the amount awarded as and for attorney's fees. Defendant's
counterclaim is hereby DISMISSED. With costs against defendant. 18

Petitioner appealed to the Court of Appeals insisting that it is not a common carrier.
The appellate court armed the decision of the trial court with modication. The
dispositive portion of its decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED with
modication in the sense that the salvage value of P201,379.75 shall be
deducted from the amount of P4,104,654.22. Costs against appellant.
SO ORDERED.

Petitioner's Motion for Reconsideration dated June 3, 2000 was likewise denied by
the appellate court in a Resolution promulgated on February 21, 2001.
Hence, this petition. Petitioner submits the following errors allegedly committed by
the appellate court, viz: 19
(1)

THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY

NOT IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE

DECISIONS OF THE SUPREME COURT WHEN IT HELD THAT
PETITIONER IS A COMMON CARRIER.
(2)

THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY

NOT IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT WHEN IT AFFIRMED THE
FINDING OF THE LOWER COURT A QUO THAT ON THE BASIS OF
THE PROVISIONS OF THE CIVIL CODE APPLICABLE TO COMMON
CARRIERS, "THE LOSS OF THE CARGO IS, THEREFORE, BORNE
BY THE CARRIER IN ALL CASES EXCEPT IN THE FIVE (5) CASES
ENUMERATED."

(3)

THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY

NOT IN ACCORD WITH LAW AND/OR WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT WHEN IT EFFECTIVELY
CONCLUDED THAT PETITIONER FAILED TO EXERCISE DUE
DILIGENCE AND/OR WAS NEGLIGENT IN ITS CARE AND
CUSTODY OF THE CONSIGNEE'S CARGO.

The issues to be resolved are:

(1)

Whether the petitioner is a common carrier; and,

(2)
Assuming the petitioner is a common carrier, whether it exercised
extraordinary diligence in its care and custody of the consignee's cargo.
On the first issue, we rule that petitioner is a common carrier.
Article 1732 of the Civil Code denes common carriers as persons, corporations,
rms or associations engaged in the business of carrying or transporting passengers
or goods or both, by land, water, or air, for compensation, oering their services to
the public.
Petitioner contends that it is not a common carrier but a private carrier. Allegedly, it
has no xed and publicly known route, maintains no terminals, and issues no
tickets. It points out that it is not obliged to carry indiscriminately for any person. It
is not bound to carry goods unless it consents. In short, it does not hold out its
services to the general public. 20
We disagree.
I n De Guzman vs. Court of Appeals, 21 we held that the denition of common
carriers in Article 1732 of the Civil Code makes no 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. We also did not distinguish between
a person or enterprise oering transportation service on a regular or scheduled basis
and one oering such service on an occasional, episodic or unscheduled basis.
Further, we ruled that Article 1732 does not distinguish between a carrier oering

its services to the general public, and one who oers services or solicits business
only from a narrow segment of the general population.
In the case at bar, the principal business of the petitioner is that of lighterage and
drayage 22 and it oers its barges to the public for carrying or transporting goods by
water for compensation. Petitioner is clearly a common carrier. In De Guzman,
supra, 23 we considered private respondent Ernesto Cendaa to be a common carrier
even if his principal occupation was not the carriage of goods for others, but that of
buying used bottles and scrap metal in Pangasinan and selling these items in
Manila.
We therefore hold that petitioner is a common carrier whether its carrying of goods
is done on an irregular rather than scheduled manner, and with an only limited
clientele. A common carrier need not have xed and publicly known routes. Neither
does it have to maintain terminals or issue tickets.
To be sure, petitioner ts the test of a common carrier as laid down in Bascos vs.
Court of Appeals. 24 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." 25 In the case at bar, the petitioner admitted that it is engaged
in the business of shipping and lighterage, 26 oering its barges to the public,
despite its limited clientele for carrying or transporting goods by water for
compensation. 27
On the second issue, we uphold the ndings of the lower courts that petitioner
failed to exercise extraordinary diligence in its care and custody of the consignee's
goods.
Common carriers are bound to observe extraordinary diligence in the vigilance over
the goods transported by them. 28 They are presumed to have been at fault or to
have acted negligently if the goods are lost, destroyed or deteriorated. 29 To
overcome the presumption of negligence in the case of loss, destruction or
deterioration of the goods, the common carrier must prove that it exercised
extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of
the Civil Code enumerates the instances when the presumption of negligence does
not attach:
Art. 1734.
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:
(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 the case at bar, the barge completely sank after its towing bits broke, resulting in
the total loss of its cargo. Petitioner claims that this was caused by a typhoon,
hence, it should not be held liable for the loss of the cargo. However, petitioner
failed to prove that the typhoon is the proximate and only cause of the loss of the
goods, and that it has exercised due diligence before, during and after the
occurrence of the typhoon to prevent or minimize the loss. 30 The evidence show
that, even before the towing bits of the barge broke, it had already previously
sustained damage when it hit a sunken object while docked at the Engineering
Island. It even suered a hole. Clearly, this could not be solely attributed to the
typhoon. The partly-submerged vessel was reoated but its hole was patched with
only clay and cement. The patch work was merely a provisional remedy, not enough
for the barge to sail safely. Thus, when petitioner persisted to proceed with the
voyage, it recklessly exposed the cargo to further damage. A portion of the crossexamination of Alfredo Cunanan, cargo-surveyor of Tan-Gatue Adjustment Co., Inc.,
states:
CROSS-EXAMINATION BY ATTY. DONN LEE: 31
xxx xxx xxx
q

Can you tell us what else transpired after that incident?

After the rst accident, through the initiative of the barge owners, they
tried to pull out the barge from the place of the accident, and bring it
to the anchor terminal for safety, then after deciding if the vessel is
stabilized, they tried to pull it to the consignee's warehouse, now while
on route another accident occurred, now this time the barge totally
hitting something in the course.

You said there was another accident, can you tell the court nature of
the second accident?

The sinking, sir.

Can you tell the nature . . . can you tell the court, if you know what
caused the sinking?

Mostly it was related to the rst accident because there was already a
whole (sic) on the bottom part of the barge.
xxx xxx xxx

This is not all. Petitioner still headed to the consignee's wharf despite knowledge of
an incoming typhoon. During the time that the barge was heading towards the
consignee's wharf on September 5, 1990, typhoon "Loleng" has already entered the
Philippine area of responsibility. 32 A part of the testimony of Robert Boyd, Cargo
Operations Supervisor of the petitioner, reveals:

DIRECT-EXAMINATION BY ATTY. LEE: 33

xxx xxx xxx
q

Now, Mr. Witness, did it not occur to you it might be safer to just allow
the Barge to lie where she was instead of towing it?

Since that time that the Barge was reoated, GMC (General Milling
Corporation, the consignee) as I have said was in a hurry for their
goods to be delivered at their Wharf since they needed badly the
wheat that was loaded in PSTSI-3. It was needed badly by the
consignee.

And this is the reason why you towed the Barge as you did?

Yes, sir.
xxx xxx xxx

CROSS-EXAMINATION BY ATTY. IGNACIO: 34

xxx xxx xxx
q

And then from ISLOFF Terminal you proceeded to the premises of the
GMC? Am I correct?

The next day, in the morning, we hired for additional two (2) tugboats
as I have stated.

Despite of the threats of an incoming typhoon as you testied a while

ago?

It is already in an inner portion of Pasig River. The typhoon would be

coming and it would be dangerous if we are in the vicinity of Manila
Bay.

But the fact is, the typhoon was incoming? Yes or no?

Yes.

And yet as a standard operating procedure of your Company, you

have to secure a sort of Certication to determine the weather
condition, am I correct?

Yes, sir.

So, more or less, you had the knowledge of the incoming typhoon,
right?

Yes, sir.

And yet you proceeded to the premises of the GMC?

ISLOFF Terminal is far from Manila Bay and anytime even with the
typhoon if you are already inside the vicinity or inside Pasig entrance, it
is a safe place to tow upstream.

Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force
majeure to escape liability for the loss sustained by the private respondent. Surely,
meeting a typhoon head-on falls short of due diligence required from a common
carrier. More importantly, the ocers/employees themselves of petitioner admitted
that when the towing bits of the vessel broke that caused its sinking and the total
loss of the cargo upon reaching the Pasig River, it was no longer aected by the
typhoon. The typhoon then is not the proximate cause of the loss of the cargo; a
human factor, i.e., negligence had intervened.
IN VIEW THEREOF, the petition is DENIED. The Decision of the Court of Appeals in
CA-G.R. CV No. 49195 dated May 11, 2000 and its Resolution dated February 21,
2001 are hereby AFFIRMED. Costs against petitioner.
HIEAcC

SO ORDERED.

Panganiban and Sandoval-Gutierrez, JJ ., concur.

Corona and Carpio Morales, JJ ., on official leave.
Footnotes
1.

Rollo, pp. 49-59.

2.

Id., p. 61.

3.

Id., pp. 71-73.

4.

Exhibit "B", Records, p. 91.

5.

Exhibit "A", id., p. 90.

6.

Exhibits "I" and "I-1", id., pp. 107-108.

7.

Exhibit "C", id., p. 92.

8.

Exhibit "4", id., p. 144.

9.

Exhibits "G-1" and "1-A," id., p. 100.

10.

Exhibits "G-2" and "1-B," id., p. 101.

11.

Ibid.

12.

Exhibit "5", Records, p. 145.

13.

Supra note 10.

14.

Exhibits "G-3" and "1-C", Records, p. 102.

15.

Exhibit "L", id., p. 110.

16.

Id., pp. 1-4.

17.

Id., pp. 21-22.

18.

Id., p. 172.

19.

Rollo, p. 22.

20.

Id., pp. 147-150.

21.

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

22.

Rollo, p. 127.

23.

See note 21.

24.

G.R. No. 101089, 07 April 1993, 221 SCRA 318.

25.

Id., pp. 323-324.

26.

Rollo, p. 14.

27.

Id., pp. 148-150.

28.

Article 1733, Civil Code. 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.
Such extraordinary diligence in vigilance over the goods is further expressed in
Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence
for the safety of the passengers is further set forth in Articles 1755 and 1756.

29.

Article 1735, Civil Code. In all cases other than those mentioned in Nos. 1, 2, 3, 4,
and 5 of the preceding article, 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 as required in Article
1733.

30.

Article 1739, Civil Code. In order that the common carrier may be exempted from
responsibility, the natural disaster must have been the proximate and only cause
of the loss. However, the common carrier must exercise due diligence to prevent
or minimize the loss before, during and after the occurrence of ood, storm or
other natural disaster in order that the common carrier may be exempted from
liability for the loss, destruction, or deterioration of the goods. The same duty is
incumbent upon the common carrier in case of an act of the public enemy
referred to in Article 1734, no. 2.

31.

TSN, 04 March 1993, pp. 12-13.

32.

Certication dated 02 August 1991 issued by the Philippine Atmospheric

Geophysical & Astronomical Services Administration (PAGASA) Exhibit "7",
Records, p. 147.

33.

TSN, 09 March 1993, pp. 70-71.

34.

Id., pp. 76-77.