Agan vs Piatco en banc G.R. No. 155001.

May 5, 2003 En Banc [Non-legislative power of

Congress; Police Power; Delegation of emergency powers]

FACTS:
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the
DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT III).

DOTC constituted the Prequalification Bids and Awards Committee (PBAC) for the
implementation of the project and submitted with its endorsement proposal to the NEDA, which
approved the project.

On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an
invitation for competitive or comparative proposals on AEDCs unsolicited proposal, in
accordance with Sec. 4-A of RA 6957, as amended.

On September 20, 1996, the consortium composed of Peoples Air Cargo and Warehousing Co.,
Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security
Bank) (collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC.
PBAC awarded the project to Paircargo Consortium. Because of that, it was incorporated into
Philippine International Airport Terminals Co., Inc.

AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its
objections as regards the prequalification of PIATCO.

On July 12, 1997, the Government and PIATCO signed the Concession Agreement for the Build-
Operate-and-Transfer Arrangement of the NAIA Passenger Terminal III (1997 Concession
Agreement). The Government granted PIATCO the franchise to operate and maintain the said
terminal during the concession period and to collect the fees, rentals and other charges in
accordance with the rates or schedules stipulated in the 1997 Concession Agreement. The
Agreement provided that the concession period shall be for twenty-five (25) years commencing
from the in-service date, and may be renewed at the option of the Government for a period not
exceeding twenty-five (25) years. At the end of the concession period, PIATCO shall transfer the
development facility to MIAA.

Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA
Terminals I and II, had existing concession contracts with various service providers to offer
international airline airport services, such as in-flight catering, passenger handling, ramp and
ground support, aircraft maintenance and provisions, cargo handling and warehousing, and
other services, to several international airlines at the NAIA.

On September 17, 2002, the workers of the international airline service providers, claiming that
they would lose their job upon the implementation of the questioned agreements, filed a petition
for prohibition. Several employees of MIAA likewise filed a petition assailing the legality of the
various agreements.

During the pendency of the cases, PGMA, on her speech, stated that she will not honor
(PIATCO) contracts which the Executive Branchs legal offices have concluded (as) null and
void.

ISSUE: Whether or not the State can temporarily take over a business affected with public
interest.

RULING:

Yes. PIATCO cannot, by mere contractual stipulation, contravene the Constitutional

provision on temporary government takeover and obligate the government to pay
reasonable cost for the use of the Terminal and/or Terminal Complex.

Article XII, Section 17 of the 1987 Constitution provides:

Section 17. In times of national emergency, when the public interest so requires, the State may,
during the emergency and under reasonable terms prescribed by it, temporarily take over or
direct the operation of any privately owned public utility or business affected with public
interest.

The above provision pertains to the right of the State in times of national emergency, and in the
exercise of its police power, to temporarily take over the operation of any business affected with
public interest. The duration of the emergency itself is the determining factor as to how long the
temporary takeover by the government would last. The temporary takeover by the government
extends only to the operation of the business and not to the ownership thereof. As such the
government is not required to compensate the private entity-owner of the said
business as there is no transfer of ownership, whether permanent or temporary. The
private entity-owner affected by the temporary takeover cannot, likewise, claim just
compensation for the use of the said business and its properties as the temporary takeover by
the government is in exercise of its police power and not of its power of eminent domain.

Article XII, section 17 of the 1987 Constitution envisions a situation wherein the exigencies of
the times necessitate the government to temporarily take over or direct the operation of any
privately owned public utility or business affected with public interest. It is the welfare and
interest of the public which is the paramount consideration in determining whether or not to
temporarily take over a particular business. Clearly, the State in effecting the temporary
takeover is exercising its police power. Police power is the most essential, insistent, and
illimitable of powers. Its exercise therefore must not be unreasonably hampered nor its exercise
be a source of obligation by the government in the absence of damage due to arbitrariness of its
exercise. Thus, requiring the government to pay reasonable compensation for the reasonable
use of the property pursuant to the operation of the business contravenes the Constitution.

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

COMPAIA MARITIMA vs. COURT OF APPEALS and VICENTE CONCEPCION

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

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 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, 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 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 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

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 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.

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:

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.

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.
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.

PHILIPPINE AMERICAN GENERAL INSURANCE v. MGG MARINE SERVICES G.R. No.

135645, March 8, 2002

FACTS

San Miguel Corporation (SMC) insured several beer bottle cases with an aggregate value of
P5,836,222.80 with petitioner Philippine American General Insurance Company. The cargos were
loaded on board the M/V Peatheray PatrickG to be transported from Mandaue City to Bislig,
Surigao del Sur. After having been cleared by the Coast Guard Station in Cebu the previous day,
the vessel left the port of Mandaue City for Bislig, Surigao del Sur on March 2, 1987. The
weather was calm when the vessel started its voyage. The following day, March 3, 1987, M/V
Peatheray PatrickG listed and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a
consequence thereof, the cargo belonging to San Miguel Corporation was lost.

SMC claimed the amount of the loss from Philam Gen (petitioner). Petitioner sent a surveyor to
investigate the circumstances surrounding the loss of the cargo. The surveyor found that the
vessel was structurally sound and that he did not see any damage or crack thereon. He
concluded that the proximate cause of the listing and subsequent sinking of the vessel was the
shifting of ballast water from starboard to portside. The said shifting of ballast water allegedly
affected the stability of the M/V Peatheray PatrickG. Hence, petitioner paid SMC the amount of
P5,836,222.80 and was subrogated the rights of SMC.

Petitioner filed a case for collection against respondents and obtained a favourable decision.

Meanwhile, the Board of Marine Inquiry conducted its own investigation of the sinking of the M/V
Peatheray PatrickG and found that the captain and crew should be exonerated from liability. It
found that the proximate and only cause of the sinking of the vessel was the existence of strong
winds and enormous waves in Surigao del Sur, a fortuitous event that could not have been
foreseen at the time.

Private respondents filed an appeal and the CA reversed the RTCs decision.

ISSUE/S Whether respondent is liable for the loss of the cargo. NO

HELD

Common carriers, as a general rule, are presumed to have been at fault or negligent if the goods
transported by them are lost, destroyed or if the same deteriorated. The exceptions, as provided
in Article 1734 of the Civil Code, are the following:

(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 this case, the Court finds no reason to reverse the CAs ruling.

The Board of Marine Inquiry confirmed that good weather condition was present when the ship
left the port of Cebu and that the sudden experience of 6-10 feet waves coupled with strong
winds that increased from 5 knots to 15 knots within an hour was a fortuitous event. The board
found that along the port side platings, a small hole and two separate cracks were found at
about midship. This caused water to ingress and resulted into an imbalance of the ship. Despite
the efforts of the captain and crew to pump all the water out, the ship still continued to sink and
they were left with no choice but to abandon ship.

*** An event is considered fortuitous if the following elements concur:

(a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to
comply with his obligations, must be independent of human will;

(b) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid;

(c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation
in a normal manner; and

(d) the obligor must be free from any participation in the aggravation of the injury resulting to
the creditor.

In the case at bar, it was adequately shown that before the M/V Peatheray Patrick-G left the port
of Mandaue City, the Captain confirmed with the Coast Guard that the weather condition would
permit the safe travel of the vessel to Bislig, Surigao del Sur. Thus, he could not be expected to
have foreseen the unfavorable weather condition that awaited the vessel in Cortes, Surigao del
Sur. It was the presence of the strong winds and enormous waves which caused the vessel to
list, keel over, and consequently lose the cargo contained therein.

There was thus no error on the part of the Court of Appeals in relying on the factual findings of
the Board of Marine Inquiry, for such factual findings, being supported by substantial evidence
are persuasive, considering that said administrative body is an expert in matters concerning
marine casualties.

G.R. No. L-48757 May 30, 1988

GANZON VS CA

FACTS: Gelacio > Ganzon (via Capt. Niza) > Lighter Batman (common carrier) (loaded half)

November 28, 1956: Gelacio Tumambing (Gelacio) contracted the services of of Mauro B.
Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on
board the light LCT Batman

December 1, 1956: Gelacio delivered the scrap iron to Filomeno Niza, captain of the
lighter, for loading which was actually begun on the same date by the crew of the lighter
under the captains supervisor.

When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles,
Bataan arrived and demanded P5000 from Gelacio

o Upon resisting, the Mayor fired at Gelacio so he had to be taken to the hospital

o Loading of the scrap iron was resumed

December 4, 1956: Acting Mayor Basilio Rub (Rub), accompanied by 3 policemen, ordered
captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked

o Later on Rub had taken custody of the scrap iron

RTC: in favor of Gelacio and against Ganzon

ISSUE: W/N Ganzon should be held liable under the contract of carriage

HELD: YES. Petition is DENIED.

Ganzon thru his employees, actually received the scraps is freely admitted.
 Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the
delivery, actual or constructive, by the carrier to the consignee, or to the person who has
a right to receive them.

The fact that part of the shipment had not been loaded on board the lighter did not impair
the said contract of transportation as the goods remained in the custody and control of
the carrier, albeit still unloaded.

failed to show that the loss of the scraps was due to any of the following causes
enumerated in Article 1734 of the Civil Code, namely:

(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.
Hence, the petitioner is presumed to have been at fault or to have acted negligently.

By reason of this presumption, the court is not even required to make an express finding
of fault or negligence before it could hold the petitioner answerable for the breach of the
contract of carriage.

o exempted from any liability had he been able to prove that he observed
extraordinary diligence in the vigilance over the goods in his custody, according to
all the circumstances of the case, or that the loss was due to an unforeseen event
or to force majeure. As it was, there was hardly any attempt on the part of the
petitioner to prove that he exercised such extraordinary diligence.

We cannot sustain the theory of caso fortuito - "order or act of competent public
authority"(Art. 1174 of the Civil Code)

o no authority or power of the acting mayor to issue such an order was given in
evidence. Neither has it been shown that the cargo of scrap iron belonged to the
Municipality of Mariveles.

Ganzon was not duty bound to obey the illegal order to dump into the sea
the scrap iron.

Moreover, there is absence of sufficient proof that the issuance of the same
order was attended with such force or intimidation as to completely
overpower the will of the petitioner's employees. The mere difficulty in the
fullfilment of the obligation is not considered force majeure.

TABACALERA INSURANCE CO., PRUDENTIAL GUARANTEE & ASSURANCE, INC., and

NEW ZEALAND INSURANCE CO., LTD., vs.NORTH FRONT SHIPPING SERVICES, INC.,
and COURT OF APPEALS,
G.R. No. 119197. May 16, 1997

Facts:
Sacks of grains were loaded on board a vessel owned by North Front Shipping (common carrier);
the consignee: Republic Floor Mills. The vessel was inspected by representatives of the shipper
prior to the transport and was found fitting to carry the cargo; it was also issued a Permit to
Sail. The goods were successfully delivered but it was not immediately unloaded by the
consignee. There were a shortage of 23.666 metric tons and some of the merchandise was
already moldy and deteriorating. Hence, the consignee rejected all the cargo and demanded
payment of damages from the common carrier. Upon refusal, the insurance companies
(petitioners) were obliged to pay. Petitioners now allege that there was negligence on the part of
the carrier. The trial court ruled that only ordinary diligence was required since the charter-party
agreement converted North Front Shipping into a private carrier.
Issues: WON North Front Shipping is a common carrier. If indeed, did it fail to exercise the
required diligence and thus should be held liable?
Held:
North Front Shipping is a common carrier. Thus, it has the burden of proving that it
observed extraordinary diligence in order to avoid responsibility for the lost cargo.
The charter-party agreement between North Front Shipping Services, Inc., and Republic Flour
Mills Corporation did not in any way convert the common carrier into a private carrier. A
charter-party is defined as a contract by which an entire ship, or some principal part thereof, is
let by the owner to another person for a specified time or usex x x
Having been in the service since 1968, the master of the vessel would have known at the outset
that corn grains that were farm wet and not properly dried would eventually deteriorate when
stored in sealed and hot compartments as in hatches of a ship. Equipped with this knowledge,
the master of the vessel and his crew should have undertaken precautionary measures to avoid
or lessen the cargos possible deterioration as they were presumed knowledgeable about the
nature of such cargo.
But none of such measures was taken.
It did not even endeavor to establish that the loss, destruction or deterioration of the goods was
due to the following: (a) flood, storm, earthquake, lightning, or other natural disaster or
calamity; (b) act of the public enemy in war, whether international or civil; 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; (e) order or act of competent public authority. This is a closed list. If the cause
of destruction, loss or deterioration is other than the enumerated circumstances, then the carrier
is rightly liable therefor.
However, the destruction, loss or deterioration of the cargo cannot be attributed solely to the
carrier. The consignee Republic Flour Mills Corporation is guilty of contributory negligence. It was
seasonably notified of the arrival of the barge but did not immediately start the unloading
operations.

Coastwise Lighterage Corporation v. CA

Facts:

Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to
Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb
barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by
Coastwise. Upon reaching Manila Bay, one of the barges, "Coastwise 9", struck an unknown
sunken object. The forward buoyancy compartment was damaged, and water gushed in through
a hole "two inches wide and twenty-two inches long". As a consequence, the molasses at the
cargo tanks were contaminated. Pag-asa filed a claim against Philippine General Insurance
Company, the insurer of its cargo. Philgen paid P700,000 for the value of the molasses lost.

Philgen then filed an action against Coastwise to recover the money it paid, claiming to be
subrogated to the claims which the consignee may have against the carrier. Both the trial court
and the Court of Appeals ruled against Coastwise.

Issues: (1) Whether Coastwise was transformed into a private carrier by virtue of the contract it
entered into with Pag-asa, and whether it exercised the required degree of diligence. (2)
Whether Philgen was subrogated into the rights of the consignee against the carrier

Held:

(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one
point to another, but the possession, command mid navigation of the vessels remained with
petitioner Coastwise Lighterage. Coastwise Lighterage, by the contract of affreightment, was not
converted into a private carrier, but remained a common carrier and was still liable as such. The
law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in
good order to a carrier and the subsequent arrival of the same goods at the place of destination
in bad order makes for a prima facie case against the carrier. It follows then that the
presumption of negligence that attaches to common carriers, once the goods it is sports are lost,
destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by
proof of the exercise of extraordinary diligence, remained unrebutted in this case. Jesus R.
Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed.
Coastwise Lighterage cannot safely claim to have exercised extraordinary diligence, by placing a
person whose navigational skills are questionable, at the helm of the vessel which eventually
met the fateful accident. It may also logically, follow that a person without license to navigate,
lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes
taken by seasoned and legally authorized ones. Had the patron been licensed he could be
presumed to have both the skill and the knowledge that would have prevented the vessel's
hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner
is liable for breach of the contract of carriage, having failed to overcome the presumption of
negligence with the loss and destruction of goods it transported, by proof of its exercise of
extraordinary diligence.

(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the
insured property is destroyed or damaged through the fault or negligence of a party other than
the assured, then the insurer, upon payment to the assured will be subrogated to the rights of
the assured to recover from the wrongdoer to the extent that the insurer has been obligated to
pay. Payment by the insurer to the assured operated as an equitable assignment to the former
of all remedies which the latter may have against the third party whose negligence or wrongful
act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any
private of contract or upon written assignment of, claim. It accrues simply upon payment of the
insurance claim by the insurer.