MA. FLORINA G. GUZMAN-CUREG ATTY. NICOLAS E.

LAPUZ
LAW 3-A1
MANILA LAW COLLEGE TRANSPORTATION LAW AND PUBLIC SERVICE LAW

case#14
Asia Lighterage and Shipping Inc. v. CA
GR. NO. 147246, AUGUST 19, 2003

FACTS:

Petitioner was contracted as carrier by a corporation from Portland, Oregon to deliver

a cargo to the consignee's warehouse at Pasig City. The cargo, however, never
reached the consignee as the barge that carried the cargo sank completely, resulting
in damage to the cargo. Private respondent, as insurer, indemnified the consignee for
the lost cargo and thus, as subrogee, sought recovery from petitioner. Both the trial
court and the appellate court ruled in favor of private respondent.
The Court ruled in favor of private respondent. Whether or not petitioner is a common
carrier, the Court ruled in the affirmative. The principal business of petitioner is that of
lighterage and drayage, offering its barges to the public, although for limited clientele,
for carrying or transporting goods by water for compensation. Whether or not petitioner
failed to exercise extraordinary diligence in its care and custody of the consignee's
goods, the Court also ruled in the affirmative. The barge completely sank after its
towing bits broke, resulting in the loss of the cargo. Petitioner failed to prove that the
typhoon was the proximate and only cause of the loss and that it has exercised due
diligence before, during and after the occurrence.

ISSUE: Whether or not the petitioner is a common carrier.

RULING: YES.

Petitioner is a common carrier whether its carrying of goods is done on an irregular

rather than scheduled manner, and with an only limited clientele. A common carrier
need not have fixed and publicly known routes. Neither does it have to maintain
terminals or issue tickets. To be sure, petitioner fits the test of a common carrier as laid
down in Bascos vs. Court of Appeals. The test to determine a common carrier is
"whether the given undertaking is a part of the business engaged in by the carrier which
he has held out to the general public as his occupation rather than the quantity or
extent of the business transacted." In the case at bar, the petitioner admitted that it is
engaged in the business of shipping and lighterage, offering its barges to the public,
despite its limited clientele for carrying or transporting goods by water for
compensation.

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.
In De Guzman vs. Court of Appeals, we held that the definition of common carriers in
Article 1732 of the Civil Code makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity. We also did not distinguish between a person or
enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Further, we ruled
that Article 1732 does not distinguish between a carrier offering its services to the
general public, and one who offers services or solicits business only from a narrow
segment of the general population.

Common carriers are bound to observe extraordinary diligence in the vigilance over
the goods transported by them. They are presumed to have been at fault or to have
acted negligently if the goods are lost, destroyed or deteriorated. To overcome the
presumption of negligence in the case of loss, destruction or deterioration of the goods,
deterioration of the goods, the common carrier must prove that it exercised

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MA. FLORINA G. GUZMAN-CUREG ATTY. NICOLAS E. LAPUZ
LAW 3-A1
MANILA LAW COLLEGE TRANSPORTATION LAW AND PUBLIC SERVICE LAW
extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the
Civil Code enumerates the instances when the presumption of negligence does not
attach:
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of
the goods, unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.

In the case at bar, the barge completely sank after its towing bits broke, resulting in the
total loss of its cargo. Petitioner claims that this was caused by a typhoon, hence, it
should not be held liable for the loss of the cargo. However, petitioner failed to prove
that the typhoon is the proximate and only cause of the loss of the goods, and that it
has exercised due diligence before, during and after the occurrence of the typhoon to
prevent or minimize the loss. 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 partly-submerged vessel was refloated but its
hole was patched with only clay and cement. The patch work was merely a provisional
remedy, not enough for the barge to sail safely. Thus, when petitioner persisted to
proceed with the voyage, it recklessly exposed the cargo to further damage.

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MA. FLORINA G. GUZMAN-CUREG ATTY. NICOLAS E. LAPUZ
LAW 3-A1
MANILA LAW COLLEGE TRANSPORTATION LAW AND PUBLIC SERVICE LAW

case#41
LU DO & LU YM CORPORATION vs. I. V . BINAMIRA
GR. NO. L-9840 April 22, 1957

FACTS:

On August 10, 1951, the Delta Photo Supply Company of New York shipped on board
the M/S "FERNSIDE" at New York, U.S.A., six cases of films and/or photographic supplies
consigned to the order of respondent I. V. Binamira. The ship arrived at the port of Cebu
and discharged her cargo including the shipment in question, placing it in the
possession and custody of the arrastre operator of said port, the Visayan Cebu Terminal
Company, Inc.

Petitioner hired a stevedoring company, Cebu Stevedoring Company, Inc. to unload its
cargo. During the discharge, good order cargo was separated from the bad order
cargo on board the ship, and a separate list of bad order cargo was prepared by the
checker of the stevedoring company. All the cargo unloaded was received at the pier
by the arrastre operator of the port. The terminal company had also its own checker,
Romeo Quijano, who also recorded and noted down the good cargo from the bad
one.

Three days after the goods were unloaded from the ship, respondent took delivery of
his six cases of photographic supplies from the arrastre operator. He discovered that the
cases showed signs of pilferage and, consequently, he hired marine surveyors, R. J. del
Pan & Company, Inc., to examine them. The surveyors examined the cases and made
a physical count of their contents in the presence of representatives of petitioner,
respondent and the stevedoring company. The surveyors examined the cases and
made a physical count of their contents in the presence of representatives of
petitioner, respondent and the stevedoring company. The finding of the surveyors
showed that some films and photographic supplies were missing valued at P324.63.

Respondent hired marine surveyors, to examine them. The surveyors examined the
cases and made a physical count of their contents in the presence of representatives
of petitioner, respondent and the stevedoring company. The finding of the surveyors
showed that some films and photographic supplies were missing valued at P324.63

The Trial Court ruled and the Court of Appeals found for the affirmative making on this
point the following comment:

In this jurisdiction, a common carrier has the legal duty to deliver goods to a consignee
in the same condition in which it received them. Except where the loss, destruction or
deterioration of the merchandise was due to any of the cases enumerated in Article
1734 of the new Civil Code, a carrier is presumed to have been at fault and to have
acted negligently, unless it could prove that it observed extraordinary diligence in the
care and handling of the goods (Article 1735). Such presumption and the liability of the
carrier attach until the goods are delivered actually or constructively, to the consignee,

or to the person who has a right to receive them (Article 1736), and we believe delivery
to the customs authorities is not the delivery contemplated by Article 1736, in
connection with second paragraph of Article 1498, because, in such a case, the goods
are then still in the hands of the Government and their owner could not exercise
dominion whatever over them until the duties are paid. In the case at bar, the
presumption against the carrier, represented appellant as its agent, has not been
successfully rebutted.

ISSUE: Is the carrier responsible for the loss considering that the same occurred after
the shipment was discharged from the ship and placed in the possession and custody
of the customs authorities?

RULING:

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MA. FLORINA G. GUZMAN-CUREG ATTY. NICOLAS E. LAPUZ
LAW 3-A1
MANILA LAW COLLEGE TRANSPORTATION LAW AND PUBLIC SERVICE LAW

It is true that, as a rule, 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, Idem.), 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, Idem.),
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.

While we agree with the Court of Appeals that while delivery of the cargo to the
consignee, or to the person who has a right to receive them", contemplated in Article
1736, because in such case the goods are still in the hands of the Government and the
owner cannot exercise dominion over them, we believe however that the parties may
agree to limit the liability of the carrier considering that the goods have still to through
the inspection of the customs authorities before they are actually turned over to the
consignee. This is a situation where we may say that the carrier losses control of the
goods because of a custom regulation and it is unfair that it be made responsible for
what may happen during the interregnum. And this is precisely what was done by the
parties herein. In the bill of lading that was issued covering the shipment in question,
both the carrier and the consignee have stipulated to limit
the responsibility of the carrier for the loss or damage that may because to the goods
before they are actually delivered by insert in therein.

It therefore appears clear that the carrier does not assume liability for any loss or
damage to the goods once they have been "taken into the custody of customs or other
authorities", or when they have been delivered at ship's tackle. These stipulations are
clear. They have been adopted precisely to mitigate the responsibility of the carrier
considering the present law on the matter, and we find nothing therein that is contrary
to morals or public policy that may justify their nullification. The Court is therefore
persuaded to conclude that the carrier is not responsible for the loss in question, it
appearing that the same happened after the shipment had been delivered to the
customs authorities.

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MA. FLORINA G. GUZMAN-CUREG ATTY. NICOLAS E. LAPUZ
LAW 3-A1
MANILA LAW COLLEGE TRANSPORTATION LAW AND PUBLIC SERVICE LAW

case #71
JUAN YSMAEL & CO., INC. vs. GA BINO BARRETTO & CO., LTD., ET AL., defendants.
ANDRES H. LIMGENGCO and VICENTE JAVIER
GR NO. L-28028 November 25, 1927

FACTS:

Juan Ysmael & Co. Inc., a domestic corporation, seeks to recover from Gabino Barretto,
et. al. P9,940.95, the alleged value of four cases of merchandise which it delivered to
the steamship Andres on 25 October 1922, at Manila to be shipped to Surigao, but
which were never delivered to Salomon Sharuff, the consignee, or returned to Juan
Ysmael & Co. Juan Ysmael made its claim of loss within 7 days after receipt of
information that 160 cases only were delivered. Its second claim was made on 29
December 1922, in which it said that, if the claim was not paid before 3 January 1923, it
would be placed in the hands of attorneys for collection. On 3 January 1923, Gabino
Barretto & Company advised Juan Ysmael that it would not pay the claim. The original
complaint was filed on 17 April 1923, or a little less than 6 months after the shipment was
made, and was later amended to include Gabino Barretto and P. E. Soon as members
of the limited partnership of Gabino Barretto & Co., Ltd. In their amended answers
Barretto, et. al. make a specific denial of all of the material allegations of the
complaint, and as a special defense allege that the four cases of merchandise in
question were never delivered to them, and that under the provisions of paragraph 7 of
the printed conditions appearing on the back of the bill of lading, Juan Ysmael’s right
of action is barred for the reason that it was not brought within 60 days from the time
the cause of action accrued.

The evidence was taken upon such issues, and the lower court rendered judgment for
Juan Ysmael for the full amount of its claim, from which Andres H. Limgengco and
Vicente Javier appealed.

Issue: Whether or not the stipulation in the bill of lading limiting the liability of defendant
of not more than P300 is valid.

RULING:

No, the stipulation is not valid. A common carrier cannot lawfully stipulate for exemption
from liability, unless such exemption is just and reasonable and the contract is freely and
fairly made.

A common carrier cannot lawfully stipulate for the exemption from liability, unless such
exemption is just and reasonable. The carrier cannot limit its liability for injury to or loss
of goods shipped if such was caused by its own negligence.

Based upon the findings of fact of the trial court which are sustained by the evidence,
the plaintiff delivered to the defendants 164 cases of silk consigned and to be delivered
by the defendants to Salomon Sharuff in Surigao. Four of such cases were never
delivered to the consignee, and the evidence shows that their value is alleged in the
complaint. Also, the goods in question were shipped from Manila on October 25, 1922,
to be delivered to Salomon Sharuff in Surigao, Plaintiff's original complaint was filed on
April 17, 1923, or a little less than six months after the shipment was made. The lower
court also points out that the conditions in question "are not printed on the triplicate
copies which were delivered to the plaintiff," and that by reason thereof they "are not
binding upon the plaintiff." The clause in question provides that the carrier shall not be
liable for loss or damage from any cause or for any reason to an amount in excess of
P300 "for any single package of silk or other valuable cargo."

The evidence shows that 164 "cases" were shipped, and that the value of each case
was very near P2,500. In this situation, the limit of defendants' liability for each case of
silk "for loss or damage from any cause or for any reason" would put it in the power of
the defendants to have taken the whole cargo of 164 cases of silk at a valuation of
P300 for each case, or less than one-eight of its actual value. If that rule of law should

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MA. FLORINA G. GUZMAN-CUREG ATTY. NICOLAS E. LAPUZ
LAW 3-A1
MANILA LAW COLLEGE TRANSPORTATION LAW AND PUBLIC SERVICE LAW
be sustained, no silk would ever be shipped from one island to another in the
Philippines. Such a limitation of value is unconscionable and void as against public
policy. There is no merit in the appeal. The judgment of the lower court is affirmed.

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