De Guzman v.
CA carefully avoids making any distinction between a person or
Facts:
Respondent Ernesto Cendana was a junk dealer. He buys scrap
materials and brings those that he gathered to Manila for resale
using 2 six-wheeler trucks. On the return trip to Pangasinan,
respondent would load his vehicle with cargo which various
merchants wanted delivered, charging fee lower than the commercial
rates. Sometime in November 1970, petitioner Pedro de Guzman
contracted with respondent for the delivery of 750 cartons of Liberty
Milk. On December 1, 1970, respondent loaded the cargo. Only 150
boxes were delivered to petitioner because the truck carrying the
boxes was hijacked along the way. Petitioner commenced an action
claiming the value of the lost merchandise. Petitioner argues that
respondent, being a common carrier, is bound to exercise
extraordinary diligence, which it failed to do. Private respondent
denied that he was a common carrier, and so he could not be held
liable for force majeure. The trial court ruled against the respondent,
but such was reversed by the Court of Appeals.
Issues:
(1) Whether or not private respondent is a common carrier
(2) Whether private respondent is liable for the loss of the goods
Held:
(1) Article 1732 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. Article 1732 also
enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish 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 narrow segment of the general population. It
appears to the Court that private respondent is properly
characterized as a common carrier even though he merely "back-
hauled" goods for other merchants from Manila to Pangasinan,
although such backhauling was done on a periodic or occasional
rather than regular or scheduled manner, and even though private
respondent's principal occupation was not the carriage of goods for
others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here. A certificate of public
convenience is not a requisite for the incurring of liability under the
Civil Code provisions governing common carriers.
(2) Article 1734 establishes the general rule 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 disaster or
calamity;
b. Act of the public enemy in war, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. The character of the goods or defects in the packing or in the
containers; and
e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five
(5) categories of exempting causes listed in Article 1734. 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. 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." we hold
that 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.
Delsan v. American Home
FACTS:
Caltex entered into a contract with Delsan Transport Lines to
transport its petroleum goods from BatangasBataan Refinery to
Zamboanga City. The shipment was insured by private
respondentAmerican Home Assurance Corp. MT Maysum set sail
from Batangas for Zamboanga City. Unfortunately, the vessel sank in
the early morning of August 16, 1986 near Panay Gulf in the Visayas
taking with it the entire cargo of fuel oil. Subsequently, private
respondent paid Caltex the sum of(P5,096,635.67) representing the
insured value of the lost cargo. Exercising its right of subrogation, the
private respondent demanded of the petitioner the same amount it
paid to Caltex. Delsan failed to pay its obligation the American Home
Assurance Corp. Hence, the latter institutes an action to recover the
amount paid. The regional trial court ruled in favor of petitioner
stating that MT Maysum, was seaworthy as certified by Philippine
Coastguard and the incident was caused by unexpected inclement
weather condition or force majeure. I the court of appeals, it reversed
the trial courts decision by giving credence to the weather report
issued by the PAG-ASA that the sea was calm during the voyage.
ISSUE:
W/N petitioner should be held liable for damages.
RULING:
YES. From the nature of their business and for reasons of public
policy, common carriers are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of
passengers transported by them, according to all the circumstance of
each case. In the event of loss, destruction or deterioration of the
insured goods, common carriers shall be responsible unless the
same is brought about, among others, by flood, storm, earthquake,
lightning or other natural disaster or calamity. In all other cases, 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. The tale of
strong winds and big waves by the said officers of the petitioner
however, was effectively rebutted and belied by the weather report
from the PAGASA, showing that from 2:00 oclock to 8:00 oclock in
the morning on August 16, 1986, the wind speed remained at ten
(10) to twenty (20) knots per hour while the height of the waves
ranged from .7 to two (2) meters in the vicinity of Cuyo East Pass
and Panay Gulf where the subject vessel sank. Thus, as the
appellate court correctly ruled, petitioners vessel, MT Maysun, sank
with its entire cargo for the reason that it was not seaworthy. There
was no squall or bad weather or extremely poor sea condition in the
vicinity when the said vessel sank. Thus not having overturned the
evidence presented, (that it observed extraordinary diligence) the
presumption of negligence stands, and therefore it is but right and
proper to rule that petitioner should be held liable for damages
Transportation Case Digest: CIA Maritima V. Insurance Co. Of
North America (1964)
FACTS:
October, 1952: Macleod and Company of the Philippines
(Macleod) contracted by telephone the services of the
Compaia Maritima (CM), a shipping corporation, for:
shipment of 2,645 bales of hemp from the Macleod's Sasa
private pier at Davao City to Manila
subsequent transhipment to Boston, Massachusetts, U.S.A.
on board the S.S. Steel Navigator.
This oral contract was later on confirmed by a formal and
written booking issued by Macleod's branch office in Sasa
and handcarried to CM's branch office in Davao in
compliance with which the CM sent to Macleod's private
wharf LCT Nos. 1023 and 1025 on which the loading of the
hemp was completed on October 29, 1952.
The 2 lighters were manned each by a patron and an
assistant patron.
The patrons of both barges issued the corresponding
carrier's receipts and that issued by the patron of Barge No.
1025 reads in part:
Received in behalf of S.S. Bowline Knot in good order and
condition from MACLEOD AND COMPANY OF
PHILIPPINES, Sasa Davao, for transhipment at Manila onto
S.S. Steel Navigator.
FINAL DESTINATION: Boston.
Early hours of October 30: LCT No. 1025 sank, resulting in
the damage or loss of 1,162 bales of hemp loaded therein
Macleod promptly notified the carrier's main office in Manila
and its branch in Davao advising it of its liability
The damaged hemp was brought to Odell Plantation in
Madaum, Davao, for cleaning, washing, reconditioning, and
redrying.
total loss adds up to P60,421.02
All abaca shipments of Macleod were insured with the
Insurance Company of North America against all losses and
damages
Macleod filed a claim for the loss it suffered with the
insurance company and was paid P64,018.55
subrogation agreement between Macleod and the insurance
company wherein the Macleod assigned its rights over the
insured and damaged cargo
October 28, 1953.: failing to recover from the carrier
P60,421.02 (amount supported by receipts), the insurance
company instituted the present action
CA affirmed RTC: ordering CM to pay the insurance co.
ISSUE: W/N there was a contract of carriage bet. CM (carrier) and
Macleod (shipper)
HELD: YES. Affirmed
receipt of goods by the carrier has been said to lie at the foundation
of the contract to carry and deliver, and if actually no goods are
received there can be no such contract
The liability and responsibility of the carrier under a contract for the
carriage of goods commence on their actual delivery to, or receipt
by, the carrier or an authorized agent. ... and delivery to a lighter in
charge of a vessel for shipment on the vessel, where it is the custom
to deliver in that way
Whenever the control and possession of goods passes to the carrier
and nothing remains to be done by the shipper, then it can be said
with certainty that the relation of shipper and carrier has been
established
As regards the form of the contract of carriage it can be said that
provided that there is a meeting of the minds and from such meeting
arise rights and obligations, there should be no limitations as to form
The bill of lading is not essential
Even where it is provided by statute that liability commences with the
issuance of the bill of lading, actual delivery and acceptance are
sufficient to bind the carrier
marine surveyors, attributes the sinking of LCT No. 1025 to the 'non-
water-tight conditions of various buoyancy compartments.
Ynchausti Steamship v. Dexter
Facts:
The Government of the Philippine Islands, acting by and through the
respondent Insular Purchasing Agent, employed the services of
Ynchausti Steamship Co. for the transportation from Manila to
Cagayan of a consignment of merchandise consisting of cases of
mineral oil. The goods were delivered to the carrier, which
accordingly received by them and the parties executed the
Government bill of lading. Upon delivery of the said shipment, the
consignee claimed that two cases were delivered empty. Ynchausti
said that the shortages were due to causes entirely unknown to it,
and were not due to any fault or negligence on its part. The Acting
Insular Purchasing Agent notified Ynchausti that after
investigation, the Insular Auditor found that the leakages were due to
its negligence and that the deduction of the invoice value of the good
lost had been authorized. Ynchausti demanded that it be paid the full
amount due for the transportation of the shipments of merchandise.
ISSUE: w/n the Insular Auditor is entitled to withhold, from the
amount admittedly due to the petitioner for the freight charges, a sum
sufficient to cover the value of the oil lost in transit.
HELD: YES
When Government property is transported by common carrier, it is
the duty of the consignee to make notation of any loss, shortage or
damage upon the bill of lading, or receipt, before accomplishing it. It
is admitted by petitioner that the consignee, at the time the oil was
delivered, noted the loss upon the two respective bills of lading. The
notation of these losses is competent evidence to show that the
shortage in fact existed. As the petitioner admits that the oil was
received by it for carriage and inasmuch as the fact of loss is proved,
it results that there is a presumption that the petitioner was to blame
for the loss; and it was incumbent upon the petitioner in order to
entitle it to relief to rebut that presumption by proving that the loss
was not due to its fault or negligence.
The mere proof of delivery of goods in good order to a carrier, and of
their arrival at the place of destination in bad order, makes out a
due prima facie case against the carrier, so that if no explanation is given
as to how the injury occurred, the carrier must be held responsible. It
is incumbent upon the carrier to prove that the loss was due to
accident or some other circumstance inconsistent with its liability.
In the absence of proof showing that the carrier was not at fault, the
Insular Auditor is entitled to withhold, from the amount admittedly
due to the petitioner for the freight charges, a sum sufficient to cover
the value of the oil lost in transit.
MIRASOL V. THE ROBERT DOLLAR CO. (G.R. NO. L-29721) by reason of some fact which exempted it from liability. As to how the
boxes were damaged, when or where, was a matter peculiarly and
Facts: exclusively within the knowledge of the defendant and in the very
Plaintiff Mirasol alleges that he is the the owner and consignee of nature of things could not be in the knowledge of the plaintiff. To
two cases of books, shipped in good order and condition at New require the plaintiff to prove as to when and how the damage was
York, U.S.A., on board the defendants steamship President Garfield, caused would force him to call and rely upon the employees of the
for transport and delivery to him in the City of Manila, all freight defendants ship, which in legal effect would be to say that he could
charges paid. The two cases arrived in bad order and damaged not recover any damage for any reason. That is not the law.
condition, resulting in the total loss of one case and a partial loss of
the other. He filed claims but defendant refused and neglected to Shippers who are forced to ship goods on an ocean liner or any
pay, giving as its reason that the damage in question was caused by other ship have some legal rights, and when goods are delivered on
sea water. The lower court rendered judgment for the plaintiff from board ship in good order and condition, and the shipowner delivers
which both parties appealed. them to the shipper in bad order and condition, it then devolves upon
the shipowner to both allege and prove that the goods were
Issue: damaged by the reason of some fact which legally exempts him from
Whether or not defendant Dollar may be held liable. liability; otherwise, the shipper would be left without any redress, no
matter what may have caused the damage.
Ruling: YES.
The defendant having received the two boxes in good condition, its
legal duty was to deliver them to the plaintiff in the same condition in
which it received them. From the time of their delivery to the
defendant in New York until they are delivered to the plaintiff in
Manila, the boxes were under the control and supervision of the
defendant and beyond the control of the plaintiff. The defendant
having admitted that the boxes were damaged while in transit and in
its possession, the burden of proof then shifted, and it devolved upon
the defendant to both allege and prove that the damage was caused
Tan Chiong v. Inchausti
FACTS:
Three bill of lading were executed.
To this end 3 bills of lading were executed (38, 39, and 76). The
steamer Sorsogo arrived at the port of Gubat on 28 November 1908
and as the lorcha Pilar the other vessel to which the merchandise
was to be transshipped for its transportation to Samar was not yet
there. The cargo was unloaded and stored in the defendant
companys warehouses at that port. The lorcha Pilar arrived several
days later and the merchandise owned by Sip and other goods were
transported to Catarman, Samar.
On 5 December 1908, however, before the Pilar could leave for its
destination a heavy and strong wind caused the lorcha to wrecked
and its cargo including Sips package were scattered. Workmen of
Inchausti tried to save the merchandize but it is already futile so they
proceeded to have it sold at public auction before a notary for the
sum of P1,693.67
A complaint was filed against Inchausti because the same neither
carried nor delivered his merchandise to Ong Bieng Sip, in
Catarman, but unjustly and negligently failed to do so, with the result
that the said merchandise was almost totally lost, and thus claimed
the value of the merchandise which was P20,000, legal interest
thereon from 25 November 1908, and the cost of the suit.
*include the lower court and appellate decision and ratio if applicable
*include as well the respective contentions/ allegations of the
petitioner(s) and respondent(s)
ISSUE(S): WON Inchausti is liable for the shipwreck?
HELD: NO.
RTC- infavor of the Chinese man
SC- The Supreme Court reversed the judgment appealed from, and
absolved Inchausti & Co., without special finding as to costs; holding
that Inchausti is not liable for the loss and damage of the goods
shipped on the lorcha Pilar by the Chinaman, Ong Bieng Sip, in
asmuch as such loss and damage were the result of a fortuitous
event or force majeure, and there was no negligence or lack of care
and diligence on the part of Inchausti or its agents.
RATIO:
NO. . Wreck of lorcha due to fortuitous event; Loss cannot be
attributed to Inchausti or its agents
From the moment that it is held that the loss of the said lorcha was
due to force majeure, a fortuitous
event, with no conclusive proof of negligence or of the failure to take
the precautions such as diligent and careful persons usually adopt to
avoid the loss of the boat and its cargo, it is neither just nor proper to
attribute the loss or damage of the goods in question to any fault,
carelessness, or negligence on the part of Inchausti and its agents
and, especially, the patron of the lorcha Pilar.
Inchausti took all measures for he salvage of goods recoverable after shall have been proven that they occurred through his own fault or
the accident. negligence or by his failure to take the same precautions usually
Herein, subsequent to the wreck, Inchaustis agent took all the adopted by diligent and careful persons.
requisite measures for the salvage of
such of the goods as could be recovered after the accident, which he
did with the knowledge of the shipper, Ong Bieng Sip, and, in
effecting their sale, he endeavored to secure all possible advantage
to the Chinese shipper; in all these proceedings, he acted in
obedience to the law

Article 1601 of the Civil Code prescribes that Carriers of goods by

land or by water shall be subject with regard to the keeping and
preservation of the things entrusted to them, to the same obligations
as determined for innkeepers by articles 1783 and 1784. The
provisions of this article shall be understood
without prejudice to what is prescribed by the Code of Commerce
with regard to transportation by sea and land.

The general rule established in Article 840 is that the loss of the
vessel and of its cargo, as the result
of shipwreck, shall fall upon the respective owners thereof, save for
the exceptions specified in the second of the said articles. These
legal provisions are in harmony with those of articles 361 and 362 of
the Code of Commerce, and are applicable whenever it is proved
that the loss of, or damage to, the goods was the result of a
fortuitous event or of force majeure; but the carrier shall be liable for
the loss or the damage arising from the causes aforementioned, if it
GOVERNMENT V. YNCHAUSTI (G.R. NO. 14191) tiles were loaded, stowed, and discharged in a careful and diligent
manner. In this jurisdiction there is no presumption of negligence on
Facts: the part of the carriers in case like the present. The plaintiff, not
Plaintiff shipped cargo of roofing tiles from Manila to Iloilo on a having proved negligence on the part of the defendant, is not entitled
vessel belonging to the defendant. The tiles were delivered by the to recover damages.
defendant to the consignee of the plaintiff. Upon delivery it was found
that some of the tiles had been damaged. Plaintiff moved to recover
the sum amount equivalent to the damages but the lower court
rendered judgment against it and in favor of defendant absolving the
latter from all liability.

Issue:
Whether or not defendant may be held liable

Ruling: NO.
Finding as we do that the tiles in question were shipped at the
owners risk, under the law in this jurisdiction, the carrier is only liable
where the evidence shows that he was guilty of some negligence
and that the damages claimed were the result of such negligence. As
was said above, the plaintiff offered no proof whatever to show
negligence on the part of the defendant.

The defendant herein proved, and the plaintiff did not attempt to
dispute, that the tiles in question were of a brittle and fragile nature
and that they were delivered by the plaintiff to the defendant without
any packing or protective covering. The defendant also offered proof
to show that there was no negligence on its part, by showing that the
SOUTHERN LINES INC vs CA and CITY OF ILOILO
DOCTRINE:If the fact of improper packing is known to the carrier or
his servants, or apparent upon ordinary observation, but it accepts
the goods notwithstanding such condition, it is not relieved of liability
for loss or injury resulting therefrom.
FACTS:
- The City of Iloilo requisitioned for rice from the National Rice and
Corn Corporation (NARIC).
- NARIC shipped 1,726 sacks of rice consigned to the City of Iloilo
on board of SS General Wright belong to Southern Lines.
- The City of Iloilo received the shipment and paid the amount
stated in the bill of lading (around Php 63K).
- However, at the bottom of the bill of lading, it was noted that City
of Iloilo received the merchandise in the same condition as when
shipped, except that it received only 1,685 sacks.
- Upon actual weighing, it was discovered that the shortage was
equal to 41 sacks of rice.
- Thus, the City of Iloilo filed a complaint against NARIC and
Southern Lines for the recovery of the value of the shortage of the
shipment of rice (Php 6,486.35).
- The lower court absolved NARIC but sentenced Southern Lines
to pay the amount.
- CA affirmed.
- Hence, this petition for review.
- Southern Lines claims exemption from liability by contending that
the shortage in the shipment of rice was due to such factors as
shrinkage, leakage or spillage of the rice on account of the bad
condition of the sacks at the time it received the same and
negligence of the agents of City of Iloilo in receiving the shipment.
ISSUES:
- Whether Southern Lines is liable for the loss or shortage of the
rice shipped.YES
- Whether the City of Iloilo is precluded from filing an action for
damages on account of its failure to present a claim within 24 hours
from receipt of the shipment as stated in the bill of lading.NO
HELD:
- YES. The SC held that the contention of Southern Lines with
respect to the improper packing is untenable.Under Art. 361 of the
Code of Commerce, the carrier, in order to free itself from liability,
was only obliged to prove that the damages suffered by the goods
were by virtue of the nature or defect of the articles. Under Art. 362,
the plaintiff, in order to hold the defendant liable, was obliged to
prove that the damages to the goods is by virtue of their nature,
occurred on account of its negligence or because the defendant did
not take the precaution adopted by careful persons.It held that if the
fact of improper packing is known to the carrier or his servants, or
apparent upon ordinary observation, but it accepts the goods
notwithstanding such condition, it is not relieved of liability for loss or
injury resulting therefrom.
- NO. The SC noted that Southern Lines failed to plead this
defense in its answer to City of Iloilos complaint and, therefore, the
same is deemed waived and cannot be raised for the first time.The
SC also cited the finding of the CA that City of Iloilo filed the action
within a reasonable time; that the action is one for the refund of the
amount paid in excess, and not for damages or the recovery of
shortage; the bill of lading does not at all limit the time for the filing of
action for the refund of money paid in excess.
Ganzon v. CA
Facts
Tumambing contracted the services of Ganzon for the latter to haul
305 tons of scrap iron from Mariveles, Bataan to the port of Manila
on board the lighter LCT Batman. Accordingly, Ganzon sent his
lighter Batman to Mariveles. Tumambing then delivered the scrap
iron for loading to Filomeno Niza, the lighters captain. However,
when about half of the scrap iron was being loaded, Mayor Advincula
of Mariveles, Bataan, demanded P5,000 from Tumambing. The latter
refused, an altercation started, until Mayor Advincula fired his gun at
Tumambing, who was later brought to a hospital in Balanga, Bataan.
After sometime, the loading of the scrap iron resumed. However,
Acting Mayor Basilio Rub, accompanied by 3 policemen, ordered
Captain Niza and its crew to dump the scrap iron where the lighter
was docked. The remaining scrap iron was confiscated and brought
to the compound of NASSCO. A receipt was issued by the Acting
Mayor stating that he had taken custody of the scrap iron.
Hence, Tumambing filed an action against Ganzon for damages
based on culpa contractual. Ganzon claims that he should not be
liable because the scrap iron has not been unconditionally placed
under his custody and control.
Issue
Whether or not Ganzon is liable for Tumambings loss.
Ruling
Yes, Ganzon is liable.
Ratio Decidendi
There is no dispute that the scrap iron was already delivered to
Ganzons carrier and received by Captain Niza and the crew. By the
said act of delivery, the scrap iron was already deemed to be
unconditionally placed in the possession and control of the common
carrier and upon their receipt, the contract of carriage was deemed
perfected. Consequently, petitioner-carriers extraordinary
responsibility for the loss or deterioration of the goods commenced.
According to Art 1736 of the NCC, such responsibility will only cease
upon the actual or constructive delivery to the consignee or any
person who has a right to receive the goods. However, in this case,
the same is not true since the scrap iron remained in the custody and
control of the carrier, albeit still unloaded.
Ganzon may be exempt from liability if the loss of the scrap iron was
due to any of the causes enumerated under Art. 1734 of the NCC.
However, Ganzon was not able to prove the same. Art 1743 provides
as follows:
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 of 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.

Lastly, the SC cannot sustain Ganzons claim that the cause of the
loss was a caso fortuito considering that in the courts below, his
defense was that the loss of the scrap iron was due to an order or
act of a competent public authority. Such change in theory on
appeal cannot be allowed. In any case, the intervention of the
municipal officials is not of such character as would render the
fulfilment of Ganzons obligation impossible. According to the SC, the
scrap iron could have still been delivered in accordance with the
contract of carriage after the dispute has been settled.
LEA MER INDUSTRIES INC VS MALAYAN INSURANCE CO, INC.
FACTS:
Ilian Silica Mining entered into a contract of carriage with the
petitioner, Lea Mer Industries Inc. for the shipment of 900 metric tons
of silica sand worth P565,000. The cargo was consigned to Vulcan
Industrial and Mining Corporation and was to be shipped from
Palawan to Manila. The silica sand was boarded to Judy VII, the
vessel leased by Lea Mer. However, during the course of its voyage,
the vessel sank which led to the loss of the cargo.
Consequently, the respondent, as the insurer, paid Vulcan the value
of the lost cargo. Malayan Insurance Co., Inc. then collected from the
petitioner the amount it paid to Vulcan as reimbursement and as its
exercise on the right of subrogation. Lea Mer refused to pay which
led Malayan to institute a complaint with the RTC. The RTC
dismissed the complaint stating that the loss was due to a fortuitous
event, Typhoon Trining. Petitioner did not know that a typhoon was
coming and that it has been cleared by the Philippine Coast Guard to
travel from Palawan to Manila. The CA reversed the ruling of the trial
court for the reason that said vessel was not seaworthy when it
sailed to Manila.
ISSUE:
Whether or not the petitioner is liable for the loss of the cargo.
HELD:
CA reversed. 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 when this
service is offered to the public for compensation. Petitioner is clearly
a common carrier, because it offers to the public its business of
transporting goods through its vessels. Thus, the Court corrects the
trial court's finding that petitioner became a private carrier when
Vulcan chartered it. Charter parties are classified as contracts of
demise (or bareboat) and affreightment, which are distinguished as
follows:
"Under the demise or bareboat charter of the vessel, the charterer
will generally be considered as owner for the voyage or service
stipulated. The charterer mans the vessel with his own people and
becomes, in effect, the owner pro hac vice, subject to liability to
others for damages caused by negligence. To create a demise, the
owner of a vessel must completely and exclusively relinquish
possession, command and navigation thereof to the charterer;
anything short of such a complete transfer is a contract of
affreightment (time or voyage charter party) or not a charter party at
all."
The distinction is significant, because a demise or bareboat charter
indicates a business undertaking that is private in character.
Consequently, the rights and obligations of the parties to a contract
of private carriage are governed principally by their stipulations, not
by the law on common carriers. The Contract in the present case
was one of affreightment, as shown by the fact that it was petitioner's
crew that manned the tugboat M/V Ayalit and controlled the barge
Judy VII.
Common carriers are bound to observe extraordinary diligence in
their vigilance over the goods and the safety of the passengers they
transport, as required by the nature of their business and for reasons
of public policy. Extraordinary diligence requires rendering service
with the greatest skill and foresight to avoid damage and destruction
to the goods entrusted for carriage and delivery.
Common carriers are presumed to have been at fault or to have
acted negligently for loss or damage to the goods that they have
transported. This presumption can be rebutted only by proof that
they observed extraordinary diligence, or that the loss or damage
was occasioned by any of the following causes:
"(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."
failure of the debtors to comply with their obligations, must have
been independent of human will; (b) the event that constituted the
caso fortuito must have been impossible to foresee or, if foreseeable,
impossible to avoid; (c) the occurrence must have been such as to
render it impossible for the debtors to fulfill their obligation in a
normal manner; and (d) the obligor must have been free from any
participation in the aggravation of the resulting injury to the creditor.
To excuse the common carrier fully of any liability, the fortuitous
event must have been the proximate and only cause of the loss.
Moreover, it should have exercised due diligence to prevent or
minimize the loss before, during and after the occurrence of the
fortuitous event. As required by the pertinent law, it was not enough
for the common carrier to show that there was an unforeseen or
unexpected occurrence. It had to show that it was free from any fault
a fact it miserably failed to prove.

Jurisprudence defines the elements of a "fortuitous event" as follows:

(a) the cause of the unforeseen and unexpected occurrence, or the
LU DO & LU YM CORPORATION vs BINAMIRA
FACTS:
Parties:
Delta Photo Supply Company of NY - Supplier
Lu Do and Lu Ym Corp Petitioners-DEFENDANT, Agent of
Common Carrier
Binamira Respondent, consignee
Cebu Stevedoring Company Stevedore, tasked to unload cargo
Visayan Cebu Terminal Company Inc arrastre operator of the port,
appointed by the Bureau of Customs
- Merchandise (photo supplies) shipped on board M/S
Fernside at NY USA to be sent to Cebu
- During discharge in Cebu, the stevedore separated the good
and bad cargo
- All cargo was received at the pier by the arrastre, double
checked by both arrastre and terminal company
- Merchandise was not in the list of bad cargo so therefore, it
was received in good condition
- Consignee discovers that the goods had signs of pilfirage
upon delivery, surveyors assess missing supplies at P324.
ISSUE/S:
Is the carrier responsible for the loss considering that it occurred
after the shipment was DISCHARGED from the ship and placed in
the possession and custody of customs authority?
HELD:
CA decision reversed, carrier is NOT LIABLE. CA made the wrong
interpretation of the law and ignored stipulations in the Bill of Lading
regarding limitation of liability while cargo is still under the carriers
custody and control ONLY. There are very clear stipulations in the
Bill of Lading quoted in the decision.
- A common carrier is responsible for the loss, destruction or
deterioration of the goods it assumes to carry from one place to
another unless the same is due to any to any of the causes
mentioned in Article 1734 on the new Civil Code, and that, if the
goods are lost, destroyed or deteriorated, for causes other that those
mentioned, the common carrier is presumed to have been at fault or
to have acted negligently, unless it proves that it has observed
extraordinary diligence in their care (Article 1735) and that this
extraordinary liability lasts from the time the goods are placed in the
possession of the carrier until they are delivered to the consignee, or
"to the person who has the right to receive them" (Article 1736), but
these provisions only apply when the loss, destruction or
deterioration takes place while the goods are in the possession of
the carrier, and not after it has lost control of them. The reason is
obvious. While the goods are in its possession, it is but fair that it
exercise extraordinary diligence in protecting them from damage,
and if loss occurs, the law presumes that it was due to its fault or
negligence. This is necessary to protect the interest the interest of
the owner who is at its mercy. The situation changes after the goods
are delivered to the consignee.