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G.R. No. 147246

August 19, 2003

ASIA
LIGHTERAGE
AND
SHIPPING,
INC., petitioner,
vs.
COURT OF APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE,
INC., respondents.
PUNO, J.:
On appeal is the Court of Appeals' May 11, 2000 Decision 1 in CA-G.R. CV No.
49195 and February 21, 2001 Resolution2 affirming with modification the
April 6, 1994 Decision3 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$423,192.354 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-4.5The 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 off 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 protuberance underneath the water. The petitioner filed a

Marine Protest on August 28, 1990. 8 It likewise secured the services of
Gaspar Salvaging Corporation which refloated the barge. 9 The hole was then
patched with clay and cement.
The barge was then towed to ISLOFF terminal before it finally 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 indemnified the consignee in
the amount of P4,104,654.22.15Thereafter, 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, 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
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

TRANSPO| ASS2-ADDITIONAL |2

and for attorney's fees. Defendant's counterclaim

DISMISSED. With costs against defendant.18

is

hereby

Petitioner appealed to the Court of Appeals insisting that it 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.

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.

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

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 services to the general public. 20
We disagree.
In De Guzman vs. Court of Appeals,21 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 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 petitioner is that of lighterage
and drayage22 and it offers its barges to the public for carrying or
transporting goods by water for compensation. Petitioner is clearly a common

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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.

(2) Act of the public enemy in war, whether international or

civil;

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.

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

the containers;

To be sure, petitioner fits 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 offering its barges to the public, despite its limited clientele for
carrying or transporting goods by water for compensation. 27

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 suffered a
hole. Clearly, this could not be solely attributed to the typhoon. The partlysubmerged 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:

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 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;

(3) Act or omission of the shipper or owner of the goods;

(5) Order or act of competent public authority.

CROSS-EXAMINATION BY ATTY. DONN LEE:31

xxx
q

xxx

xxx

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 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.

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

xxx

xxx

xxx

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

The sinking, sir.

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

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

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

q
Despite of the threats of an incoming typhoon as you
testified a while ago?

xxx

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.

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

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

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?

xxx
a

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?
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?

Yes, sir.

xxx

xxx

xxx

CROSS-EXAMINATION BY ATTY. IGNACIO:34

Yes, sir.

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

Yes, sir.

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

TRANSPO| ASS2-ADDITIONAL |5

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.

G.R. No. L-31379 August 29, 1988

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.

Rafael Dinglasan for petitioner.

COMPAIA
MARITIMA, petitioner,
vs.
COURT OF APPEALS and VICENTE CONCEPCION, respondents.

Benjamin J. Molina for private respondent.

SO ORDERED.
FERNAN, C.J.:
Petitioner Compaia Maritima seeks to set aside through this petition for
review on certiorari the decision 1 of the Court of Appeals dated December 5,
1965, adjudging petitioner liable to private respondent Vicente E. Concepcion
for damages in the amount of P24,652.97 with legal interest from the date
said decision shall have become final, for petitioner's failure to deliver safely
private respondent's payloader, and for costs of suit. The payloader was
declared abandoned in favor of petitioner.
The facts of the case are as follows:
Private respondent Vicente E. Concepcion, a civil engineer doing business
under the name and style of Consolidated Construction with office address at
Room 412, Don Santiago Bldg., Taft Avenue, Manila, had a contract with the
Civil Aeronautics Administration (CAA) sometime in 1964 for the construction
of the airport in Cagayan de Oro City Misamis Oriental.
Being a Manila based contractor, Vicente E. Concepcion had to ship his
construction equipment to Cagayan de Oro City. Having shipped some of his
equipment through petitioner and having settled the balance of P2,628.77
with respect to said shipment, Concepcion negotiated anew with petitioner,
thru its collector, Pacifico Fernandez, on August 28, 1964 for the shipment to
Cagayan de Oro City of one (1) unit payloader, four (4) units 6x6 Reo trucks
and two (2) pieces of water tanks. He was issued Bill of Lading 113 on the
same date upon delivery of the equipment at the Manila North Harbor. 2

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These equipment were loaded aboard the MV Cebu in its Voyage No. 316,
which left Manila on August 30, 1964 and arrived at Cagayan de Oro City in
the afternoon of September 1, 1964. The Reo trucks and water tanks were
safely unloaded within a few hours after arrival, but while the payloader was
about two (2) meters above the pier in the course of unloading, the swivel
pin of the heel block of the port block of Hatch No. 2 gave way, causing the
payloader to fall. 3 The payloader was damaged and was thereafter taken to
petitioner's compound in Cagayan de Oro City.
On September 7, 1964, Consolidated Construction, thru Vicente E.
Concepcion, wrote Compaia Maritima to demand a replacement of the
payloader which it was considering as a complete loss because of the extent
of damage. 4 Consolidated Construction likewise notified petitioner of its
claim for damages. Unable to elicit response, the demand was repeated in a
letter dated October 2, 1964. 5
Meanwhile, petitioner shipped the payloader to Manila where it was weighed
at the San Miguel Corporation. Finding that the payloader weighed 7.5 tons
and not 2.5 tons as declared in the B-111 of Lading, petitioner denied the
claim for damages of Consolidated Construction in its letter dated October 7,
1964, contending that had Vicente E. Concepcion declared the actual weight
of the payloader, damage to their ship as well as to his payloader could have
been prevented. 6
To replace the damaged payloader, Consolidated Construction in the
meantime bought a new one at P45,000.00 from Bormaheco Inc. on
December 3, 1964, and on July 6, 1965., Vicente E. Concepcion filed an
action for damages against petitioner with the then Court of First Instance of
Manila, Branch VII, docketed as Civil Case No. 61551, seeking to recover
damages in the amount of P41,225.00 allegedly suffered for the period of 97
days that he was not able to employ a payloader in the construction job at
the rate of P450.00 a day; P34,000.00 representing the cost of the damaged
payloader; Pl 1, 000. 00 representing the difference between the cost of the
damaged payloader and that of the new payloader; P20,000.00 representing
the losses suffered by him due to the diversion of funds to enable him to buy
a new payloader; P10,000.00 as attorney's fees; P5,000.00 as exemplary
damages; and cost of the suit. 7
After trial, the then Court of First Instance of Manila, Branch VII, dismissed
on April 24, 1968 the complaint with costs against therein plaintiff, herein
private respondent Vicente E. Concepcion, stating that the proximate cause

of the fall of the payloader was Vicente E. Concepcion's act or omission in

having misrepresented the weight of the payloader as 2.5 tons instead of its
true weight of 7.5 tons, which underdeclaration was intended to defraud
Compaia Maritima of the payment of the freight charges and which likewise
led the Chief Officer of the vessel to use the heel block of hatch No. 2 in
unloading the payloader. 8
From the adverse decision against him, Vicente E. Concepcion appealed to
the Court of Appeals which, on December 5, 1965 rendered a decision, the
dispositive portion of which reads:
IN VIEW WHEREOF, judgment must have to be as it is hereby
reversed; defendant is condemned to pay unto plaintiff the
sum in damages of P24,652.07 with legal interest from the
date the present decision shall have become final; the
payloader is declared abandoned to defendant; costs against
the latter. 9
Hence, the instant petition.
The principal issue in the instant case is whether or not the act of private
respondent Vicente E. Concepcion in furnishing petitioner Compaia Maritima
with an inaccurate weight of 2.5 tons instead of the payloader's actual weight
of 7.5 tons was the proximate and only cause of the damage on the Oliver
Payloader OC-12 when it fell while being unloaded by petitioner's crew, as
would absolutely exempt petitioner from liability for damages under
paragraph 3 of Article 1734 of the Civil Code, which provides:
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:
xxx xxx xxx
(3) Act or omission of the shipper or owner of the goods.
Petitioner claims absolute exemption under this provision upon the reasoning
that private respondent's act of furnishing it with an inaccurate weight of the
payloader constitutes misrepresentation within the meaning of "act or
omission of the shipper or owner of the goods" under the above- quoted

TRANSPO| ASS2-ADDITIONAL |7

article. It likewise faults the respondent Court of Appeals for reversing the
decision of the trial court notwithstanding that said appellate court also found
that by representing the weight of the payloader to be only 2.5 tons, private
respondent had led petitioner's officer to believe that the same was within
the 5 tons capacity of the heel block of Hatch No. 2. Petitioner would thus
insist that the proximate and only cause of the damage to the payloader was
private respondent's alleged misrepresentation of the weight of the
machinery in question; hence, any resultant damage to it must be borne by
private respondent Vicente E. Concepcion.
The general rule under Articles 1735 and 1752 of the Civil Code is that
common carriers are presumed to have been at fault or to have acted
negligently in case the goods transported by them are lost, destroyed or had
deteriorated. To overcome the presumption of liability for the loss,
destruction or deterioration of the goods under Article 1735, the common
carriers must prove that they observed extraordinary diligence as required in
Article 1733 of the Civil Code. The responsibility of observing extraordinary
diligence in the vigilance over the goods is further expressed in Article 1734
of the same Code, the article invoked by petitioner to avoid liability for
damages.
Corollary is the rule that mere proof of delivery of the goods in good order to
a common carrier, and of their arrival at the place of destination in bad order,
makes out prima facie case against the common carrier, so that if no
explanation is given as to how the loss, deterioration or destruction of the
goods occurred, the common carrier must be held responsible. 10 Otherwise
stated, it is incumbent upon the common carrier to prove that the loss,
deterioration or destruction was due to accident or some other circumstances
inconsistent with its liability.
In the instant case, We are not persuaded by the proferred explanation of
petitioner alleged to be the proximate cause of the fall of the payloader while
it was being unloaded at the Cagayan de Oro City pier. Petitioner seems to
have overlooked the extraordinary diligence required of common carriers in
the vigilance over the goods transported by them by virtue of the nature of
their business, which is impressed with a special public duty.
Thus, Article 1733 of the Civil Code provides:
Art. 1733. Common carriers, from the nature of their
business and for reason 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 the vigilance over the goods
is further expressed in Articles 1734, 1735 and 1745, Nos. 5,
6 and 7, ...
The extraordinary diligence in the vigilance over the goods tendered for
shipment requires the common carrier to know and to follow the required
precaution for avoiding damage to, or destruction of the goods entrusted to it
for safe carriage and delivery. It requires common carriers to render service
with the greatest skill and foresight and "to use all reasonable means to
ascertain the nature and characteristic of goods tendered for shipment, and
to exercise due care in the handling and stowage including such methods as
their nature requires." 11 Under Article 1736 of the Civil Code, the
responsibility to observe extraordinary diligence commences and lasts from
the time the goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to the person
who has the right to receive them without prejudice to the provisions of
Article 1738.
Where, as in the instant case, petitioner, upon the testimonies of its own
crew, failed to take the necessary and adequate precautions for avoiding
damage to, or destruction of, the payloader entrusted to it for safe carriage
and delivery to Cagayan de Oro City, it cannot be reasonably concluded that
the damage caused to the payloader was due to the alleged
misrepresentation of private respondent Concepcion as to the correct and
accurate weight of the payloader. As found by the respondent Court of
Appeals, the fact is that petitioner used a 5-ton capacity lifting apparatus to
lift and unload a visibly heavy cargo like a payloader. Private respondent has,
likewise, sufficiently established the laxity and carelessness of petitioner's
crew in their methods of ascertaining the weight of heavy cargoes offered for
shipment before loading and unloading them, as is customary among careful
persons.
It must be noted that the weight submitted by private respondent
Concepcion appearing at the left-hand portion of Exhibit 8 12 as an addendum
to the original enumeration of equipment to be shipped was entered into the
bill of lading by petitioner, thru Pacifico Fernandez, a company collector,

TRANSPO| ASS2-ADDITIONAL |8

without seeing the equipment to be shipped. 13 Mr. Mariano Gupana, assistant

traffic manager of petitioner, confirmed in his testimony that the company
never checked the information entered in the bill of lading. 14 Worse, the
weight of the payloader as entered in the bill of lading was assumed to be
correct by Mr. Felix Pisang, Chief Officer of MV Cebu. 15

the payloader was loaded aboard the MV Cebu at the Manila North Harbor on
August 28, 1964 by means of a terminal crane. 21 Even if petitioner chose not
to take the necessary precaution to avoid damage by checking the correct
weight of the payloader, extraordinary care and diligence compel the use of
the "jumbo" lifting apparatus as the most prudent course for petitioner.

The weights stated in a bill of lading are prima facie evidence of the amount
received and the fact that the weighing was done by another will not relieve
the common carrier where it accepted such weight and entered it on the bill
of lading. 16 Besides, common carriers can protect themselves against
mistakes in the bill of lading as to weight by exercising diligence before
issuing the same. 17

While the act of private respondent in furnishing petitioner with an inaccurate

weight of the payloader cannot successfully be used as an excuse by
petitioner to avoid liability to the damage thus caused, said act constitutes a
contributory circumstance to the damage caused on the payloader, which
mitigates the liability for damages of petitioner in accordance with Article
1741 of the Civil Code, to wit:

While petitioner has proven that private respondent Concepcion did furnish it
with an inaccurate weight of the payloader, petitioner is nonetheless liable,
for the damage caused to the machinery could have been avoided by the
exercise of reasonable skill and attention on its part in overseeing the
unloading of such a heavy equipment. And circumstances clearly show that
the fall of the payloader could have been avoided by petitioner's crew.
Evidence on record sufficiently show that the crew of petitioner had been
negligent in the performance of its obligation by reason of their having failed
to take the necessary precaution under the circumstances which usage has
established among careful persons, more particularly its Chief Officer, Mr.
Felix Pisang, who is tasked with the over-all supervision of loading and
unloading heavy cargoes and upon whom rests the burden of deciding as to
what particular winch the unloading of the payloader should be
undertaken. 18 While it was his duty to determine the weight of heavy
cargoes before accepting them. Mr. Felix Pisang took the bill of lading on its
face value and presumed the same to be correct by merely "seeing"
it. 19 Acknowledging that there was a "jumbo" in the MV Cebu which has the
capacity of lifting 20 to 25 ton cargoes, Mr. Felix Pisang chose not to use it,
because according to him, since the ordinary boom has a capacity of 5 tons
while the payloader was only 2.5 tons, he did not bother to use the "jumbo"
anymore. 20

Art. 1741. If the shipper or owner merely contributed to the

loss, destruction or deterioration of the goods, the proximate
cause thereof being the negligence of the common carrier,
the latter shall be liable in damages, which however, shall be
equitably reduced.

In that sense, therefore, private respondent's act of furnishing petitioner with

an inaccurate weight of the payloader upon being asked by petitioner's
collector, cannot be used by said petitioner as an excuse to avoid liability for
the damage caused, as the same could have been avoided had petitioner
utilized the "jumbo" lifting apparatus which has a capacity of lifting 20 to 25
tons of heavy cargoes. It is a fact known to the Chief Officer of MV Cebu that

We find equitable the conclusion of the Court of Appeals reducing the

recoverable amount of damages by 20% or 1/5 of the value of the payloader,
which at the time the instant case arose, was valued at P34,000. 00, thereby
reducing the recoverable amount at 80% or 4/5 of P34,000.00 or the sum of
P27,200.00. Considering that the freight charges for the entire cargoes
shipped by private respondent amounting to P2,318.40 remained unpaid..
the same would be deducted from the P27,000.00 plus an additional
deduction of P228.63 representing the freight charges for the undeclared
weight of 5 tons (difference between 7.5 and 2.5 tons) leaving, therefore, a
final recoverable amount of damages of P24,652.97 due to private
respondent Concepcion.
Notwithstanding the favorable judgment in his favor, private respondent
assailed the Court of Appeals' decision insofar as it limited the damages due
him to only P24,652.97 and the cost of the suit. Invoking the provisions on
damages under the Civil Code, more particularly Articles 2200 and 2208,
private respondent further seeks additional damages allegedly because the
construction project was delayed and that in spite of his demands, petitioner
failed to take any steps to settle his valid, just and demandable claim for
damages.

TRANSPO| ASS2-ADDITIONAL |9

We find private respondent's submission erroneous. It is well- settled that an

appellee, who is not an appellant, may assign errors in his brief where his
purpose is to maintain the judgment on other grounds, but he may not do so
if his purpose is to have the judgment modified or reversed, for, in such case,
he must appeal. 22 Since private respondent did not appeal from the
judgment insofar as it limited the award of damages due him, the reduction
of 20% or 1/5 of the value of the payloader stands.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of
the Court of Appeals is hereby AFFIRMED in all respects with costs against
petitioner. In view of the length of time this case has been pending, this
decision is immediately executory.

G.R. No. 150403

January 25, 2007

CEBU
SALVAGE
CORPORATION, Petitioner,
vs.
PHILIPPINE HOME ASSURANCE CORPORATION, Respondent.

TRANSPO| ASS2-ADDITIONAL |10

DECISION
CORONA, J.:
May a carrier be held liable for the loss of cargo resulting from the sinking of
a ship it does not own?
This is the issue presented for the Courts resolution in this petition for review
on certiorari1 assailing the March 16, 2001 decision 2 and September 17, 2001
resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 40473 which in
turn affirmed the December 27, 1989 decision 4 of the Regional Trial Court
(RTC), Branch 145, Makati, Metro Manila.5
The pertinent facts follow.
On November 12, 1984, petitioner Cebu Salvage Corporation (as carrier) and
Maria Cristina Chemicals Industries, Inc. [MCCII] (as charterer) entered into
a voyage charter6 wherein petitioner was to load 800 to 1,100 metric tons of
silica quartz on board the M/T Espiritu Santo 7 at Ayungon, Negros Occidental
for transport to and discharge at Tagoloan, Misamis Oriental to consignee
Ferrochrome Phils., Inc.8
Pursuant to the contract, on December 23, 1984, petitioner received and
loaded 1,100 metric tons of silica quartz on board the M/T Espiritu Santo
which left Ayungon for Tagoloan the next day.9 The shipment never reached
its destination, however, because the M/T Espiritu Santo sank in the
afternoon of December 24, 1984 off the beach of Opol, Misamis Oriental,
resulting in the total loss of the cargo.10
MCCII filed a claim for the loss of the shipment with its insurer, respondent
Philippine Home Assurance Corporation.11 Respondent paid the claim in the
amount of P211,500 and was subrogated to the rights of MCCII. 12 Thereafter,
it filed a case in the RTC13 against petitioner for reimbursement of the
amount it paid MCCII.
After trial, the RTC rendered judgment in favor of respondent. It ordered
petitioner to pay respondent P211,500 plus legal interest, attorneys fees
equivalent to 25% of the award and costs of suit.
On appeal, the CA affirmed the decision of the RTC. Hence, this petition.

Petitioner and MCCII entered into a "voyage charter," also known as a

contract of affreightment wherein the ship was leased for a single voyage for
the conveyance of goods, in consideration of the payment of freight. 14 Under
a voyage charter, the shipowner retains the possession, command and
navigation of the ship, the charterer or freighter merely having use of the
space in the vessel in return for his payment of freight. 15 An owner who
retains possession of the ship remains liable as carrier and must answer for
loss or non-delivery of the goods received for transportation. 16
Petitioner argues that the CA erred when it affirmed the RTC finding that the
voyage charter it entered into with MCCII was a contract of carriage. 17 It
insists that the agreement was merely a contract of hire wherein MCCII hired
the vessel from its owner, ALS Timber Enterprises (ALS). 18 Not being the
owner of the M/T Espiritu Santo, petitioner did not have control and
supervision over the vessel, its master and crew. 19 Thus, it could not be held
liable for the loss of the shipment caused by the sinking of a ship it did not
own.
We disagree.
Based on the agreement signed by the parties and the testimony of
petitioners operations manager, it is clear that it was a contract of carriage
petitioner signed with MCCII. It actively negotiated and solicited MCCIIs
account, offered its services to ship the silica quartz and proposed to utilize
the M/T Espiritu Santo in lieu of the M/T Seebees or the M/T Shirley (as
previously agreed upon in the voyage charter) since these vessels had
broken down.20
There is no dispute that petitioner was a common carrier. At the time of the
loss of the cargo, it was engaged in the business of carrying and transporting
goods by water, for compensation, and offered its services to the public. 21
From the nature of their business and for reasons of public policy, common
carriers are bound to observe extraordinary diligence over the goods they
transport according to the circumstances of each case. 22 In the event of loss
of the goods, common carriers are responsible, unless they can prove that
this was brought about by the causes specified in Article 1734 of the Civil
Code.23 In all other cases, common carriers are presumed to be at fault or to
have acted negligently, unless they prove that they observed extraordinary
diligence.24

TRANSPO| ASS2-ADDITIONAL |11

Petitioner was the one which contracted with MCCII for the transport of the
cargo. It had control over what vessel it would use. All throughout its
dealings with MCCII, it represented itself as a common carrier. The fact that it
did not own the vessel it decided to use to consummate the contract of
carriage did not negate its character and duties as a common carrier. The
MCCII (respondents subrogor) could not be reasonably expected to inquire
about the ownership of the vessels which petitioner carrier offered to utilize.
As a practical matter, it is very difficult and often impossible for the general
public to enforce its rights of action under a contract of carriage if it should
be required to know who the actual owner of the vessel is. 25 In fact, in this
case, the voyage charter itself denominated petitioner as the
"owner/operator" of the vessel. 26
Petitioner next contends that if there was a contract of carriage, then it was
between MCCII and ALS as evidenced by the bill of lading ALS issued. 27
Again, we disagree.
The bill of lading was merely a receipt issued by ALS to evidence the fact that
the goods had been received for transportation. It was not signed by MCCII,
as in fact it was simply signed by the supercargo of ALS. 28 This is consistent
with the fact that MCCII did not contract directly with ALS. While it is true
that a bill of lading may serve as the contract of carriage between the
parties,29 it cannot prevail over the express provision of the voyage charter
that MCCII and petitioner executed:
[I]n cases where a Bill of Lading has been issued by a carrier covering goods
shipped aboard a vessel under a charter party, and the charterer is also the
holder of the bill of lading, "the bill of lading operates as the receipt for the
goods, and as document of title passing the property of the goods, but not as
varying the contract between the charterer and the shipowner." The Bill of
Lading becomes, therefore, only a receipt and not the contract of carriage in
a charter of the entire vessel, for the contract is the Charter Party, and is the
law between the parties who are bound by its terms and condition provided

that these are not contrary to law, morals, good customs, public order and
public policy. 30
Finally, petitioner asserts that MCCII should be held liable for its own loss
since the voyage charter stipulated that cargo insurance was for the
charterers account.31 This deserves scant consideration. This simply meant
that the charterer would take care of having the goods insured. It could not
exculpate the carrier from liability for the breach of its contract of carriage.
The law, in fact, prohibits it and condemns it as unjust and contrary to public
policy.32
To summarize, a contract of carriage of goods was shown to exist; the cargo
was loaded on board the vessel; loss or non-delivery of the cargo was
proven; and petitioner failed to prove that it exercised extraordinary diligence
to prevent such loss or that it was due to some casualty or force majeure.
The voyage charter here being a contract of affreightment, the carrier was
answerable for the loss of the goods received for transportation. 33
The idea proposed by petitioner is not only preposterous, it is also
dangerous. It says that a carrier that enters into a contract of carriage is not
liable to the charterer or shipper if it does not own the vessel it chooses to
use. MCCII never dealt with ALS and yet petitioner insists that MCCII should
sue ALS for reimbursement for its loss. Certainly, to permit a common carrier
to escape its responsibility for the goods it agreed to transport (by the
expedient of alleging non-ownership of the vessel it employed) would
radically derogate from the carrier's duty of extraordinary diligence. It would
also open the door to collusion between the carrier and the supposed owner
and to the possible shifting of liability from the carrier to one without any
financial capability to answer for the resulting damages. 34
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.