Asia Lighterage and Shipping, Inc. vs. Court of Appeals PDF

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SUPREME COURT REPORTS ANNOTATED VOLUME 409
340
SUPREME COURT REPORTS ANNOTATED
Asia Lighterage and Shipping, Inc. vs. Court of Appeals

*
G.R. No. 147246. August 19, 2003.
ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, vs.

COURT OF APPEALS and PRUDENTIAL GUARANTEE
AND ASSURANCE, INC., respondents.
Civil Law; Contracts; Common Carriers; Definition.The
definition 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 offering transportation
service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Further,
we ruled that Article 1732 does not distinguish between a carrier
offering its services to the general public, and one who offers
services or solicits business only from a narrow segment of the
general population.
Same; Same; Same; Determination of a common carrier.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.
Same; Same; Same; Presumption of Negligence; Common
carriers are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated.
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, 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
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instances when the presumption of negligence does not attach.
PETITION for review on certiorari of a decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Soo, Gutierrez, Leogardo & Lee for petitioner.
_______________
*
THIRD DIVISION.
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VOL. 409, AUGUST 19, 2003
341
Linsangan, Linsangan & Linsangan Law Offices for

private respondent.
PUNO, J.:
1
On appeal is the Court of Appeals May 11, 2000 Decision

in CA-G.R.
CV No. 49195 and February 21, 2001
2
Resolution
affirming with modification the April 6, 1994
3
Decision of the Regional Trial Court of Manila which found
petitioner liable to pay private respondent the amount of
indemnity and attorneys fees.
First, the facts.
On June 13, 1990, 3,150 metric tons of Better Western
4
White Wheat in bulk, valued at US$423,192,35 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 Corporation5
in Manila, evidenced by Bill of Lading No. PTD/Man-4.
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
6
RN 11859/90.
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 consignees warehouse at Bo. Ugong,
Pasig City.
On August 15, 1990, 900 metric tons of the shipment
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was loaded on barge

PSTSI III, evidenced by Lighterage
7
Receipt No. 0364 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 off Baseco to seek
shelter from the approaching typhoon. PSTSI III was tied
down to other barges which arrived
_______________
1
Rollo, pp. 49-59.
Id., at p. 61.
Id., at pp. 71-73.
Exhibit B, Records, p. 91.
Exhibit A, id., p. 90.
Exhibits I and I-1, id., pp. 107-108.
Exhibit C, id., at p. 92.

342
342
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 protuberance
underneath the water. The 8petitioner filed a Marine
Protest on August 28, 1990. It likewise secured the
services of 9Gaspar Salvaging Corporation which refloated
the barge. The hole was then patched with clay and
cement.
The barge was then towed to ISLOFF terminal before it
finally headed towards the consignees 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 10portion of the goods was
transferred to three other barges.
The next day, September 6, 1990, the towing bits of the
barge broke. It sank completely,
resulting in the total loss
11
of the remaining cargo.
A second Marine Protest was filed
12
on September 7, 1990.
On September 14, 1990, a bidding was conducted to
dispose of the damaged wheat retrieved and loaded on the
13
three other barges. The total proceeds from the sale of the
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13
three other barges. The total proceeds

from the sale of the
14
salvaged cargo was P201,379.75.
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
indemnified 15the
consignee
in
the
amount
of
P4,104,654.22. Thereafter, as subrogee, it sought recovery
of said amount from the petitioner, but to no avail.
On July 3, 1991, the private respondent filed a
complaint against the petitioner for recovery of the amount
of indemnity,
_______________
8
Exhibit 4, id., p. 144.
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.

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VOL. 409, AUGUST 19, 2003
343

16
attorneys fees and17cost of suit. Petitioner filed its answer

with counterclaim.
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 plaintiff Prudential Guarantee & Assurance Co., Inc.
the sum of P4,104,654.22 with interest from the date complaint
was filed on July 3, 1991 until fully satisfied plus 10% of the
amount awarded as and for attorneys fees. Defendants
counterclaim is hereby DISMISSED. With costs against
18
defendant.
Petitioner appealed to the Court of Appeals insisting that it

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is not a common carrier. The appellate court affirmed the

decision of the trial court with modification. The dispositive
portion of its decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED
with modification 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.
Petitioners 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
19
errors allegedly committed by the appellate court, viz:
(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.
OF TFIE 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 COM
_______________
16
Id., at pp. 1-4.
17
Id., at pp. 21-22.
18
Id., at p. 172.
19
Rollo, p. 22.
344
344
MON CARRIERS, THE LOSS OF THE CARGO

IS, THEREFORE, BORNE BY THE CARRIER IN
ALL CASES EXCEPT IN THE FIVE (5) CASES
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ENUMERATED.
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 CONSIGNEES
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 consignees cargo.
On the first issue, we rule that petitioner is a common
carrier.
Article 1732 of the Civil Code defines common carriers
as 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.
Petitioner contends that it is not a common carrier but a
private carrier. Allegedly, it has no fixed 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
20
services to the general public.
We disagree.
21
In De Guzman vs. Court of Appeals, we held that the
definition 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 offering transportation service on a regular or
scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Further, we
ruled that Article 1732 does not distinguish between a
carrier offering its services to the
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_______________
20
Id., at pp. 147-150.
21
G.R. No. L-47822, 22 December 1988, 168 SCRA 612.

345
VOL. 409, AUGUST 19, 2003
345
general public, and one who offers services or solicits

business only from a narrow segment of the general
population.
In the case at bar, the principal business
of the
22
petitioner is that of lighterage and drayage and it offers
its barges to the public for carrying or transporting goods
by water for compensation. Petitioner
is clearly a common
23
carrier. In De Guzman, supra, 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 fixed and publicly known
routes. Neither does it have to maintain terminals or issue
tickets.
To be sure, petitioner fits the test of a common
carrier as
24
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
25
business transacted. In the case at bar, the petitioner
admitted that
it is engaged in the business of shipping and
26
lighterage, offering its barges to the public, despite its
limited clientele for carrying
or transporting goods by
27
water for compensation.
On the second issue, we uphold the findings of the lower
courts that petitioner failed to exercise extraordinary
diligence in its care and custody of the consignees goods.
Common carriers are bound to observe extraordinary
diligence
in the vigilance over the goods transported by
28
them. They are
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_______________
22
Rollo, p. 127.
23
See note 21.
24
G.R. No. 101089, 07 April 1993, 221 SCRA 318.
25
Id., at pp. 323-324.
26
Rollo, p. 14.
27
Id., at 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.
346
346
presumed to have been at fault or to have acted negligently

29
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, 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.
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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
30
occurrence of the typhoon to prevent or minimize the loss.
The evidence show that, even before the towing bits of the
_______________
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
347
VOL. 409, AUGUST 19, 2003
347
barge broke, it had already previously sustained damage

when it hit a sunken object while docked at the
Engineering Island. It even suffered a hole. Clearly, this
could not be solely attributed to the typhoon. The partly-
submerged vessel was refloated 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 cross-examination of Alfredo Cunanan, cargo-
surveyor of Tan-Gatue Adjustment Co., Inc., states:
31
CROSS-EXAMINATION BY ATTY. DONN LEE:
x x x x x x x x x
Q Can you tell us what else transpired after that incident?

A After the first accident, through the initiative of the
barge owners, they tried to pull out the barge from the
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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 consignees warehouse, now
while on route another accident occurred, now this time
the barge totally hitting something in the course.
Q You said there was another accident; can you tell the
court the nature of the second accident?
A The sinking, sir.
Q Can you tell the nature . . . can you tell the court, if you
know what caused the sinking?
A Mostly it was related to the first accident because there
was already a hole (sic) on the bottom part of the barge.
x x x x x x x x x
This is not all. Petitioner still headed to the consignees

wharf despite knowledge of an incoming typhoon. During
the time that the barge was heading towards the
consignees wharf on September 5, 1990, typhoon Loleng
has already entered the Philippine
_______________
after the occurrence of flood, 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.

348
348

32
area of responsibility. A part of the testimony of Robert

Boyd, Cargo Operations Supervisor of the petitioner,
reveals:
33
DIRECT-EXAMINATION BY ATTY. LEE:
x x x x x x x x x
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?
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A Since that time that the Barge was refloated, 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.
Q And this is the reason why you towed the Barge as you
did?
A Yes, sir.
x x x x x x x x x
34
CROSS-EXAMINATION BY ATTY. IGNACIO:
x x x x x x x x x
Q And then from ISLOFF Terminal you proceeded to the

premises of the GMC? Am I correct?
A The next day, in the morning, we hired for additional
two (2) tugboats, as I have stated.
Q Despite of the threats of an incoming typhoon as you
testified a while ago?
A 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.
Q But the fact is, the typhoon was incoming? Yes or no?
A Yes.
Q And yet as a standard operating procedure of your
Company, you have to secure a sort of Certification to
determine the weather condition, am I correct?
A Yes, sir.
Q So, more or less, you had the knowledge of the incoming
typhoon, right?
_______________
32
Certification 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., at pp. 76-77.

349
VOL. 409, AUGUST 19, 2003

349
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A Yes, sir.
Q And yet you proceeded to the premises of the GMC?
A 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 officers/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 affected 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 arc hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Panganiban and Sandoval-Gutierrez, JJ., concur.
Corona and Carpio-Morales, JJ., On Official Leave.
Petition denied, judgment and resolution affirmed.
Note.The general rule is that if the master is injured
by the negligence of a third person and by the concurring
contributory negligence of his own servant or agent, the
latters negligence is imputed to his superior and will
defeat the superiors action against the third person,
assuming of course that the contributory negligence was
the proximate cause of the injury of which complaint is
made (Philippine Commercial and International Bank vs.
Court of Appeals, 350 SCRA 446 [2001])
o0o
350
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SUPREME COURT REPORTS ANNOTATED VOLUME 409

SUPREME COURT REPORTS ANNOTATED