ARTICLE 1732 I. Common Carrier : Definition First Philippine Industrial Corporation vs.

CA Based on Article 1732 NCC, there is no doubt that petitioner is a common carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier. (De Guzman Ruling upheld). Respondents argument that the term common carrier as used in Section 133(j) of the Local Government Code refers only to common carriers transporting goods and passengers through moving vehicles or vessels either by land, sea or water is erroneous. The definition of common carriers in NCC makes no distinction as to the means of transporting as long as it is by land, water or air. It does not provide that the transporting of the passengers or goods should be by motor vehicle. FIRST PHILIPPINE INDUSTRIAL CORPORATION vs. COURT OF APPEALS Facts: Petitioner is a grantee of a pipeline concession under RA 387 to contract, install and operate oil pipelines. The first pipeline concession was granted in 1967 and was renewed by the ERB in 1992. In 1995, petitioner applied for a Mayors permit in Batangas City. Respondent treasurer required petitioner to pay a local tax based on its gross receipts for the fiscal year in 1993 pursuant to the Local Government Code. To avoid hampering its operations, petitioner paid the amount of tax for the first quarter under protest. Petitioner argued that as a pipeline operator with a government concession engaged in transporting petroleum products via pipeline it is exempted from payment of tax based on gross receipts. Respondent refused to make reimbursement on the ground that petitioner is not a common carrier engaged in transportation business by land, water or air. Issue: Whether or not petitioner is liable to pay a local tax based on gross receipts since it is not a common carrier. Held: No. Based on Article 1732 NCC, there is no doubt that petitioner is a common carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier. (De Guzman Ruling upheld) Respondents argument that the term common carrier as used in Section 133(j) of the Local Government Code refers only to common carriers transporting goods and passengers through moving vehicles or vessels either by land, sea or water is erroneous. The definition of common carriers in NCC makes no distinction as to the means of transporting as long as it is by land, water or air. It does not provide that the transporting of the passengers or goods should be by motor vehicle. It is clear that the legislative intent in excluding from the taxing power of the local government unit the imposition of business tax against common carriers is to prevent a duplication of the so-called "common carrier's tax." Petitioner is already paying 3% common carrier's tax on its gross sales/earnings under the National Internal Revenue Code. To tax petitioner again on its gross receipts in its transportation of petroleum business would defeat the purpose of the Local Government Code.

I.

Test of a Common Carrier VLASONS SHIPPING, INC vs. CA and NATIONAL STEEL CORPORATION [G.R. No. 112350. December 12, 1997] NATIONAL STEEL CORPORATION vs. CA and VLASONS SHIPPING, INC. [G.R. No. 112287. December 12, 1997]

Facts: National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract of Voyage Charter Hire (Affreightment) whereby NSC hired VSIs vessel, the MV VLASONS I to make one (1) voyage to load steel products at Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods only for those it chose under a special contract of charter party. The vessel arrived with the cargo in Manila, but when the vessels three (3) hatches containing the shipment were opened, nearly all the skids of tin plates and hot rolled sheets were allegedly found to be wet and rusty. NSC filed its complaint against defendant before the CFI wherein it claimed that it sustained losses as a result of the act, neglect and default of the master and crew in the management of the vessel as well as the want of due diligence on the part of the defendant to make the vessel seaworthy -- all in violation of defendants undertaking under their Contract of Voyage Charter Hire. In its answer, defendant denied liability for the alleged damage claiming that the MV VLASONS I was seaworthy in all respects for the carriage of plaintiffs cargo; that said vessel was not a common carrier inasmuch as she was under voyage charter contract with the plaintiff as charterer under the charter party. The trial court ruled in favor of VSI; it was affirmed by the CA on appeal. Issue: Whether or not Vlazons is a private carrier. Held: Yes.

At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as a private carrier. The resolution of this preliminary question determines the law, standard of diligence and burden of proof applicable to the present case. Article 1732 of the Civil Code defines a common carrier 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. It has been held that the true test of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to avail themselves of its transportation service for a fee. A carrier which does not qualify under the above test is deemed a private carrier. Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. The most typical, although not the only form of private carriage, is the charter party, a maritime contract by which the charterer, a party other than the shipowner, obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages. In the instant case, it is undisputed that VSI did not offer its services to the general public. As found by the Regional Trial Court, it carried passengers or goods only for those it chose under a special contract of charter party. As correctly concluded by the Court of Appeals, the MV Vlasons I was not a common but a private carrier. Consequently, the rights and obligations of VSI and NSC, including their respective liability for damage to the cargo, are determined primarily by stipulations in their contract of private carriage or charter party. Recently, in Valenzuela

Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation, the Court ruled: x x x [I]n a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers. Valenzuela Hardwood & Industrial Supply vs. Court of Appeals In a contract of private carriage, the parties may validly stipulate that responsibility for the cargo rests solely on the charterer, exempting the shipowner from liability for loss of or damage to the cargo caused even by the negligence of the ship captain. Pursuant to Article 1306 17 of the Civil Code, such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law, morals, good customs, public order, or public policy. Indeed, their contract of private carriage is not even a contract of adhesion. We stress that in a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers. VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC. vs. CA Facts: Valenzuela hardwood entered into an agreement with Seven Brother Shipping Corporation whereby the latter undertook to load on board its vessel M/V Seven Ambassador the formers lauan round logs numbering 940 at the port of Isabela for shipment to Manila. Petitioner insured the logs against loss and/or damage with South Sea Surety and Insurance Company. The said vessel sank resulting on the loss of plaintiffs insured bags. Both respondent and insurer denied liability. After trial, the court held that the proximate cause of the los is the negligence of the captain and the stipulation in the charter party limiting respondents liability is void being against public policy citing Article 1745 of the Civil Code. The Court of Appeals affirmed in part the RTC judgment by sustaining the liability of South Surety and Insurance Company, but modified it by holding that Seven Brothers was not liable for the lost of the cargo. Issue: Whether or not the stipulation in the charter party exempting the ship-owner from liability for the loss of the cargo arising from the negligence of its captain valid. Held : The stipulation in the instant case is valid. In a contract of private carriage, the parties may validly stipulate that responsibility for the cargo rests solely on the charterer, exempting the ship-owner from liability for the loss of or damage to the cargo caused even by the negligence of the ship captain. Pursuant to Article 1306 of the Civil Code, such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law, morals, good customs, public order or public policy. In the case at bar, the charter party between the petitioner and private respondent stipulated that the owners shall not be responsible for loss, split, short landing, breakages and any kind of damages to the cargo. This stipulation is deemed valid as it is undisputed that private respondent acted as a private carrier in transporting

petitioners lauan logs. Thus, Article 1745 and other Civil Code provisions on common carriers which were cited by the petitioner may not be applied unless expressly stipulated by the parties in their charter party. The petition is denied by the Court. ARTICLE 1733 Loadstar Shipping Co., Inc. vs. CA Loadstar submits that the vessel was a private carrier because it was not issued a CPC; it did not have a regular trip or schedule nor a fixed route; and there was only one shipper, one consignee for a special cargo. The SC held that Loadstar is a common carrier. It is not necessary that the carrier be issued a CPC, and this character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. LOADSTAR SHIPPING CO., INC. vs. COURT OF APPEALS Facts: On November 19, 1984, LOADSTAR received on board its M/V Cherokee goods(certain types of wood) for shipment. The goods were insured with Manila Insurance Co.(MIC) against various risks including TO TAL LOSS BY TOTAL LOSS OF THE VESSEL. The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc.(PGAI) for P4 Million. On November 20, 1984, on its way to Manila from Nasipit, Agusan del Norte, the vessel sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with LOADSTAR which, however ignored the same. As the insurer, MIC paid the insured in full settlement of its claim. On February 4, 1985, MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of the vessel was due to the fault and negligence of Loadstar and its employees. Loadstar claimed force majeur. PGAI averred that MIC has no cause of action against it, Loadstar being the party insured. PGAI was later dropped as a party defendant after it paid the insurance proceeds to Loadstar. The trial court rendered judgment for MIC, prompting Loadstar to go to the CA which affirmed the decision. Issue: Whether or not Loadstar is a private carrier. Held: No. Loadstar submits that the vessel was a private carrier because it was not issued a CPC; it did not have a regular trip or schedule nor a fixed route; and there was only one shipper, one consignee for a special cargo. The SC held that Loadstar is a common carrier. It is not necessary that the carrier be issued a CPC, and this character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. In support of its position Loadstar relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies, where the Court held that a common carrier transporting special cargo or chartering the vessel to a special person becomes a private carrier that is not subject to the provisions of the Civil Code. This case however is not applicable in the case at bar for the simple reason that the actual settings are different. The records do not disclose that the M/V Cherokee, on the date in question, undertook to carry a special cargo or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V Cherokee was a general cargo carrier. Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common carrier to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers. Under the facts and circumstances obtaining in this case, Loadstar fits the definition of a common carrier under Article 1732 of the NCC. The doctrine enunciated in the case of De Guzman v. CA was also mentioned. CA decision is hereby affirmed.

SABENA BELGIAN WORLD AIRLINES v. CA G.R. No. 104685 | March 14, 1996 | J. VITUG Doctrine: - Art. 1733 of the [Civil] Code provides that from the very nature of their business and by reasons of public policy, common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. - Art. 1735 establishes the presumption that if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they had observed extraordinary diligence as required in Article 1733. - The Warsaw Convention denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to willful misconduct, or if the damage is (similarly) caused x x x by any agent of the carrier acting within the scope of his employment. Facts: Plaintiff Ma. Paula San Agustin, herein private respondent, was a passenger on board Flight SN 284 of defendant airline originating from Casablanca to Brussels, Belgium on her way back to Manila. She checked in her luggage which contained her valuables, namely: jewelries valued at $2,350.00; clothes $1,500.00; shoes/bag $150; accessories $75; luggage itself $10.00; or a total of $4,265.00, for which she was issued Tag No. 71423. She stayed overnight in Brussels and her luggage was left on board Flight SN 284. She arrived at Manila International Airport and immediately submitted her Tag No. 71423 but her luggage was missing. She was advised to accomplish and submit a property Irregularity Report which she submitted and filed on the same day but when her luggage could not be found, she filed a formal complaint with defendants Local Manager. Subsequently, plaintiff was furnished copies of telexes of defendants Brussels Office that the latter found her luggage and that they have broken the locks for identification. Plaintiff was assured by the defendant that it has notified its Manila Office that the luggage will be shipped to Manila. But unfortunately plaintiff was informed that the luggage was lost for the second time. Plaintiff demanded from the defendant the money value of the luggage and its contents or its exchange value, but defendant refused to settle the claim. Defendant asserts in its Answer and its evidence tend to show that while it admits that the plaintiff was a passenger with a piece of checked in luggage, the loss of the luggage was due to plaintiffs sole if not contributory negligence. Petitioner airline company, in contending that the alleged negligence of private respondent should be considered the primary cause for the loss of her luggage, avers that, despite her awareness that the flight ticket had been confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists that private respondent, being a seasoned international traveler, must have likewise been familiar with the standard provisions contained in her flight ticket that items of value are required to be hand-carried by the passenger and that the liability of the airline or loss, delay or damage to baggage would be limited, in any event, to only US$20.00 per kilo unless a higher value is declared in advance and corresponding additional charges are paid thereon. At the Casablanca International Airport, private respondent, in checking in her luggage, evidently did not declare its contents or value, pursuant to Section 5(c), Article IX, of the General Conditions of Carriage, which states that: Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable papers, securities or other valuables. The trial court rendered judgment ordering Sabena Belgian World Airlines to pay private respondent. Sabena appealed but the CA affirmed in toto the trial courts judgment, hence the present petition for review. Issue: W/N the airline is liable for the lost luggage

Held: Yes. Fault or negligence consists in the omission of that diligence which is demanded by the nature of an obligation and corresponds with the circumstances of the person, of the time, and of the place. When the source of an obligation is derived from a contract, the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor. This rule is not different in the case of common carriers in the carriage of goods which, indeed, are bound to observe not just the due diligence of a good father of a family but that of extraordinary care in the vigilance over the goods. The only exceptions to the foregoing extraordinary responsibility of the common carrier is when the loss, destruction, or deterioration of the goods is due to any of the following causes: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Not one of the above excepted causes obtains in this case. The airline cannot invoke the tort doctrine of proximate cause because the private respondents luggage was lost while it was in the custody of petitioner. The loss of said baggage not only once by twice, said the appellate court, underscores the wanton negligence and lack of care on the part of the carrier. The above findings foreclose whatever rights petitioner might have had to the possible limitation of liabilities enjoyed by international air carriers under the Warsaw Convention. In Alitalia vs. Intermediate Appellate Court, the Court held that the Warsaw Convention however denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to wilful misconduct, or if the damage is (similarly) caused x x x by any agent of the carrier acting within the scope of his employment. The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely, and declaring the stated limits of liability not applicable if it is proved that the damage resulted from an act or omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result. The same deletion was effected by the Montreal Agreement of 1966, with the result that a passenger could recover unlimited damages upon proof of wilful misconduct. The Convention does not thus operate as an exclusive enumeration of the instances of an airlines liability, or as an absolute limit of the extent of that liability. It should be deemed a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. Decision appealed from AFFIRMED. ARTICLE 1734

PHILAMGEM VS. PKS SHIPPING COMPANY

Facts: Davao Union Marketing Corporation (DUMC) contracted the services of respondent KS Shipping Company (PKS Shipping) for the shipment to Tacloban City of seventy-five thousand (75,000) bags of cement worth Three Million Three Hundred Seventy-Five Thousand Pesos (P3,375,000.00). DUMC insured the goods for its full value with petitioner Philippine American General Insurance Company (Philamgen). During the transport, the barge where the bags of cement were loaded, sank. Upon demand of payment by DUMC, PhilAmGen immediately paid them. Hence, it sought reimbursement from PKS Shipping but the latter refused. Issue: (1) Whether PKS Shipping is a common carrier or a private carrier; and (2) WON PKS Shipping exercised the required diligence over the goods they carry. or, WON PKS Shipping is liable. Held: (1) PKS Shipping is a common carrier. PKS Shipping has engaged itself in the business of carrying goods for others, although for a limited clientele, undertaking to carry such goods for a fee. The regularity of its activities in this area indicates more than just a casual activity on its part. Neither can the concept of a common carrier change merely because individual contracts are executed or entered into with patrons of the carrier. (2) PKS Shipping is not liable. The vessel was suddenly tossed by waves of extraordinary height of six (6)to eight (8) feet and buffeted by strong winds of 1.5 knots resulting in the entry of water into the barges hatches. The official Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness of Limar I. As such, under Art. 1733, NCC, common carriers are exempt from liability for loss, destruction, or deterioration of the goods due to any of the following causes, among others:(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity x x x TABACALERA INSURANCE CO., etc. vs. NORTH FRONT SHIPPING SERVICES, INC., and COURT OF APPEALS [G.R. No. 119197. May 16, 1997] Facts: Petitioners are insurers of a shipment of sacks of corn grains consigned to Republic Flour Mills Corporation in Manila. The cargo was shipped by North Front Shipping Services, Inc. The consignee was advised of its arrival but the unloading was delayed for six days for unknown reason, and the merchandise was already moldy, rancid and deteriorating. The moisture content and the wetting was due to contact with salt water but the mold growth was only incipient and not sufficient to make the corn grains toxic and unfit for consumption. In fact the mold growth could still be arrested by drying. However, Republic Flour rejected the entire cargo which therefore forced the petitioners to pay the former. Now, as subrogees, they lodged a complaint for damages against respondents claiming that the loss was exclusively attributable to the fault and negligence of the carrier. The Marine Cargo Adjusters hired by the insurance companies conducted a survey and found cracks in the bodega of the barge and heavy concentration of molds on the tarpaulins and wooden boards. They did not notice any seals in the hatches. The tarpaulins were not brand new as there were patches on them, contrary to the claim of North Front Shipping Services, Inc., thus making it possible for water to seep in. They also discovered that the bulkhead of the barge was rusty. The trial court dismissed the complaint and ruled that the contract entered into between North Front Shipping Services, Inc., and Republic Flour Mills Corporation was a charter-party agreement. As such, only ordinary diligence in the care of goods was required. On the other hand, the Court of Appeals ruled that as a common carrier required

to observe a higher degree of diligence North Front 777 satisfactorily complied with all the requirements hence was issued a Permit to Sail after proper inspection. Issue: Whether or not a charter-party agreement between P and R requires extraordinary diligence. Held: Yes. 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. xxx North Front Shipping Services, Inc., is a corporation engaged in the business of transporting cargo and offers its services indiscriminately to the public. It is without doubt a common carrier. As such it is required to observe extraordinary diligence in its vigilance over the goods it transports. When goods placed in its care are lost or damaged, the carrier is presumed to have been at fault or to have acted negligently. North Front Shipping Services, Inc., therefore has the burden of proving that it observed extraordinary diligence in order to avoid responsibility for the lost cargo. However, we cannot attribute the destruction, loss or deterioration of the cargo solely to the carrier. We find the consignee Republic Flour Mills Corporation guilty of contributory negligence. It was seasonably notified of the arrival of the barge but did not immediately start the unloading operations. No explanation was proffered by the consignee as to why there was a delay of six (6) days. Had the unloading been commenced immediately the loss could have been completely avoided or at least minimized. As testified to by the chemist who analyzed the corn samples, the mold growth was only at its incipient stage and could still be arrested by drying. The corn grains were not yet toxic or unfit for consumption. ARTICLE 1735 Sarkies Tours Phils vs. Court of Appeals Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them, and this liability 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 person who has a right to receive them, unless the loss is due to any of the excepted causes under Article 1734 thereof. Where the common carrier accepted its passenger's baggage for transportation and even had it placed in the vehicle by its own employee, its failure to collect the freight charge is the common carrier's own lookout. It is responsible for the consequent loss of the baggage. In the instant case, defendant appellant's employee even helped Fatima Minerva Fortades and her brother load the luggages/baggages in the bus' baggage compartment, without asking that they be weighed, declared, receipted or paid for. Neither was this required of the other passengers. SARKIES TOURS PHILIPPINES vs. COURT OF APPEALS Facts: On August 31, 1984, Fatima boarded petitioners De luxe bus in Manila on her way to Legaspi City . Her brother helped her load three pieces of luggage containing all of her optometry review books, materials and equipment, trial contact lenses, passport and visa. Her belongings were kept in the baggage compartment and during the stopover at Daet, it was discovered that only one bag had remained in the baggage compartment. Some of the passengers suggested retracing the route to try to recover the items, but the driver ignored them and proceeded to Legaspi City.

Fatima reported the loss to her mother, who went to petitioners office. Petitioner merely offered her one thousand pesos for each piece of luggage lost, which she turned down. Fatima asked the help of radio stations and even from Philtranco bus drivers who plied the same route. Thus, one of Fatimas bags was recovered. Respondents, through counsel, demanded satisfaction of their complaint from petitioner. Petitioner apologized through a letter. After more than nine months of fruitless waiting, respondents decided to file the case. The trial court ruled in favor of respondents. On appeal, the appellate court affirmed the trial courts judgment. Issue: Whether or not petitioner is liable for the lost baggages of Fatima. Held: The petitioner is liable for the lost baggages. Under the Civil Code, common carriers from the nature of their business and for reasons of public policy are bound to observe extraordinary diligence and vigilance over goods transported by the, and this liability last 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 person who has a right to receive them, unless the loss is due to any of the excepted cau ses under Article 1734 thereof. In the case at bar, the cause of the loss was petitioners negligence in not ensuring that the doors of the baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all the baggage was lost to the prejudice of the paying passengers. Thus, petitioner is held liable. The Court affirmed the decision of the Court of Appeals with modification. Coastwise Lighterage Corp. vs. CA (GR 114167, 12 July 1995) Francisco R. (J) Facts: Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corp., using the latters dumb barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila Bay, while approaching Pier 18, one of the barges, Coastwise 9, struck an unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in through a hole 2 inches wide and 22 inches long. As a consequence, the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. This prompted the consignee, Pag-asa Sales, Inc. to reject the shipment of molasses as a total loss. Thereafter, Pag-asa Sales, Inc. filed a formal claim with the insurer of its lost cargo, Philippine General Insurance Company (PhilGen) and against the carrier, Coastwise Lighterage. Coastwise Lighterage denied the claim and it was PhilGen which paid the consignee, Pag-asa Sales the amount of P700,000.00 representing the value of the damaged cargo of molasses. In turn, PhilGen then filed an action against Coastwise Lighterage before the RTC of Manila, seeking to recover the amount of P700,000.00 which it paid to Pag-asa Sales for the latters lost cargo PhilGen now claims to be subrogated to all the contractual rights and claims which the consignee may have against the carrier, which is presumed to have violated the contract of carriage. The RTC (Branch 35) awarded the amount prayed for by PhilGen, i.e. the principal amount of P700,000.00 plus interest thereon at the legal rate computed from 29 March 1989, the date the complaint was filed until fully paid and another sum of P100,000.00 as attorneys fees and costs. On Coastwise Lighterages appeal to the Court of Appeals, the award was affirmed on 17December 1993. Hence, this petition for review. The Supreme Court denied the petition, and affirmed the appealed decision. 1. Liability of shipowner in contract of affreightment over vessels, as common carrier, remains in the absence of the stipulation When the charter party contract is one of affreightment over the whole vessels, rather than ademise, the liability of the shipowner for acts or negligence of its captain and crew, wouldremain in the absence of stipulation. Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment on account of the distinctions between a contract of affreightment and a bareboat charter. Herein, Pagasa Sales only leased three of Coastwise Lighterages vessels, in order to carry cargo from one point to another, but

the possession, command mid navigation of the vessels remained with Coastwise Lighterage. The contract thus entered into with the consignee was one of affreightment. 2. Demise or bareboat charter of the vessel; Puromines vs. CA Under the demise or bareboat charter of the vessel, the charterer will generally be regarded as the owner for the voyage or service stipulated. The charterer mans the vessel with his own people and becomes the owner pro hac vice, subject to liability to others for damages caused by negligence. To create a demise, the owner of a vessel must completely and exclusively relinquish possession, command and navigation thereof to the charterer anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party all. 3. Contract of affreightment; Puromines vs. CA A contract of affreightment is one in which the owner of the vessel leases part or all of its space to haul goods for others. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner 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 or the charter hire. An owner who retains possession of the ship though the hold is the property of the charterer, remains liable as carrier and must answer for any breach of duty as to the care, loading and unloading of the cargo . . . 4. Presumption of negligence 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 Coastwise Lighterage. This presumption, which is overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in the present case. As a common carrier, Coastwise Lighterage 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. 5. Article 609 of the Code of Commerce Article 609 of the Code of Commerce, which subsidiarily governs common carriers (which are primarily governed by the provisions of the Civil Code) provides that captains, masters, or patrons of vessels must be Filipinos, have legal capacity to contract in accordance with this code, and prove the skill capacity and qualifications necessary to command and direct the vessel, as established by marine and navigation laws, ordinances or regulations, and must not be disqualified according to the same for the discharge of the duties of the position. 6. Carrier remised in observance of duties; Unlicensed patron presumes lack of skill and lack of familiarity to usual and safe routes taken by seasoned and authorized ones Far from having rendered service with the greatest skill and outmost foresight, and being free from fault, the carrier was culpably remiss in the observance of its duties. For one, Jesus R. Constantino, the patron of the vessel Coastwise 9 admitted that he was not licensed. Clearly, Coastwise Lighterages embarking on a voyage with an unlicensed patron violates Article 609 of the Code of Commerce. It 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 vessels hitting the sunken derelict ship that lay on their way to Pier 18. 7. Article 2207, NCC Article 2207 of the Civil Code provides that If the plaintiffs property has been insured, and he has received indemnity from the insurance company for the injury or loses arising out of the wrong or breach of contract

complained of the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who violated the contract. 8. Principle of subrogation explained Article 2207 NCC containing the equitable principle of subrogation has been applied in a long line of cases including Compania Maritima v. Insurance Company of North America; Firemans Fund Insurance Company v. Jamilla & Company, Inc., and Pan Malayan Insurance Corporation v. Court of Appeals, wherein the Court explained that 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. Herein, Coastwise Lighterage was liable for breach of the contract of carriage it entered into with the Pag-asa Sales. However, for the damage sustained by the loss of the cargo which the carrier was transporting, it was not the carrier which paid the value thereof to Pag-asa Sales but the latters insurer, PhilGen. Upon payment by insurer PhilGen of the amount of P700,000.00 to Pag-asa Sales, the consignee of the cargo of molasses totally damaged while being transported by Coastwise Lighterage, the former was, subrogated into all the rights which Pag-asa Sales may have had against the carrier, Coastwise Lighterage. ARTICLE 1736 Macam vs. CA The extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to receive them was proper. The real issue is whether respondents are liable to petitioner for releasing the goods to GPC without the bills of lading or bank guarantee. From the testimony of petitioner, we gather that he has been transacting with GPC as buyer/importer for around two (2) or three (3) years already. When mangoes and watermelons are in season, his shipment to GPC using the facilities of respondents is twice or thrice a week. The goods are released to GPC. It has been the practice of petitioner to request the shipping lines to immediately release perishable cargoes such as watermelons and fresh mangoes through telephone calls by himself or his "people." In transactions covered by a letter of credit, bank guarantee is normally required by the shipping lines prior to releasing the goods. But for buyers using telegraphic transfers, petitioner dispenses with the bank guarantee because the goods are already fully paid. In his several years of business relationship with GPC and respondents, there was not a single instance when the bill of lading was first presented before the release of the cargoes. MACAM vs. COURT OF APPEALS Facts: Petitioner Benito Macam shipped on board the vessel Nen Jiang, through local agent respondent Wallem Philippines Shipping, Inc. watermelons valued at US$5,950.00 and fresh mangoes valued at US$14,273.46. The shipment was bound for Hong Kong with Pakistan Bank as consignee and Great Prospect Company of Kowloon,

Hong Kong as notify party. Petitioners depository bank, Consolidated Banking Corporation (SOLIDBANK) paid petitioner in advance the total value of the shipment of US$20,223.46. Upon arrival in Hong Kong, the shipment was delivered by respondent WALLEM directly to GPC, not to Pakistan Bank, and without the required bill of lading having been surrendered. Subsequently, GPC failed to pay Pakistan Bank such that the latter, still in possession of the original bills of lading, refused to pay petitioner through SOLIDBANK. Since SOLIDBANK already pre-paid petitioner the value of the shipment, it demanded payment from respondent WALLEM but was refused. Petitioner returned the amount involved to SOLIDBANK, and then demanded payment from respondent WALLEM in writing but to no avail. Hence petitioner sought collection of the value of the shipment if US$20,223.46 from respondents before the RTC of Manila, bases on delivery of the shipment to GPC without presentation of the bills of lading and bank guarantee. Issue: Whether or not respondents are liable to petitioner for releasing the goods to GPC without the bills of lading or bank guarantee? Held: Under Art. 1736 of the Civil Code, the extraordinary responsibility of the common carrier lasts until actual or constructive delivery of the cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was notifying party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to receive them was proper. The real issue is whether respondents are liable to petitioner for releasing the goods to GPC without the bills of lading or bank guarantee. From the testimony of petitioner, we gather that he has been transacting with GPC as buyer/importer for around 2 to 3 years already. When mangoes and watermelons are in season, his shipment to GPC using the facilities of respondents is twice or thrice a week. The goods are released to GPC. It has been the practice of petitioner to request the shipping lines to immediately release perishable cargoes such as watermelons and fresh mangoes through telephone calls by himself or his people. In transactions covered by a letter of credit, bank guarantee is normally required by the shipping lines prior to releasing the goods. But for buyers using telegraphic transfers, petitioner dispenses with the bank guarantee because the goods are already fully paid. In his several years of business relationship with GPC and respondents, there was not a single instance when the bill of lading was first presented before the release of the cargoes. Samar Mining Company, Inc. vs. Nordeutscher Lloyd The validity of stipulations in bills of lading exempting the carrier from liability for loss or damage to the goods when the same are not in its actual custody has been upheld. There is no doubt that Art. 1738 finds no applicability to the instant case. The said article contemplates a situation where the goods had already reached their place of destination and are stored in the warehouse of the carrier. The subject goods were still awaiting transshipment to their port of destination, and were stored in the warehouse of a third party when last seen and/or heard of. Article 1736 is applicable to the instant suit. Under said article, the carrier may be relieved of the responsibility for loss or damage to the goods upon actual or constructive delivery of the same by the carrier to the consignee, or to the person who has a right to receive them. In sales, actual delivery has been defined as the ceding of corporeal possession by the seller, and the actual apprehension of corporeal possession by the buyer or by some person authorized by him to receive the goods as his representative for the purpose of custody or disposal. By the same token, there is actual delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods. The court a quo found that there was actual delivery to the consignee through its duly authorized agent, the carrier.

SAMAR MINING COMPANY, INC. vs. NORDEUTSCHER LLOYD Facts: The case arose from an importation made by plaintiff, SAMAR of one crate Optima welded wedge wire sieves through the M/S SCHWABENSTEIN a vessel owned by defendant NORDEUTSCHER LLOYD, (represented in the Philippines by its agent, C.F. SHARP & CO., INC.), which shipment is covered by Bill of Lading No. 18 duly issued to consignee SAMAR MINING COMPANY, INC. Upon arrival of the aforesaid vessel at the port of Manila, the importation was unloaded and delivered in good order and condition to the bonded warehouse of AMCYL. The goods were however never delivered to, nor received by, the consignee at the port of destinationDavao. Bill of lading, No. 18 sets forth in the page 2 thereof that the goods were received by NORDEUTSCHER LLOYD at the port of loading at Bremen, Germany, while the freight had been prepaid up to the port of destination or the port of discharge of goodsDavao. The carrier undertook to transport the goods in its vessel, M/S SHWABENSTEIN, only up to the port of discharge from shipManila. Thereafter, the goods were to be transhipped by the carrier to the port of destination or port of discharge of goods. Section 1, paragraph 3 of Bill of Lading No. 18, states: The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage occurring before the goods enter ships tackle to be loaded or after the goods leave ships tackle to be discharged, transhipped or forwarded. xxx The trial court rendered judgment in favor of plaintiff, hence the appeal. Issue: Whether or not the various clauses and stipulations in the Bill of lading is valid. Held: Yes. The validity of stipulations in bills of lading exempting the carrier from liability for loss or damage to the goods when the same are not in its actual custody has been upheld in PHOENIX ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22 SCRA 674 (1968). The stipulations in the bill of lading in the PHOENIX case which are substantially the same as the subject stipulations provides: The carrier shall not be liable in any capacity whatsoever for any loss or damage to the goods while the goods are not in its actual custody. (Par. 2, last subpar.) The carrier or master, in making arrangements with any person for or in connection with all transshipping or forwarding of the goods or the use of any means of transportation or forwarding of goods not used or operated by the carrier, shall be considered solely the agent of the shipper and consignee and without any other responsibility whatsoever or for the cost thereof. (Par. 16) Finding the above stipulations not contrary to law, morals, good customs, public order or public policy their validity was sustained. A careful perusal of the provisions of the New Civil Code on common carriers was looked into by the Court particularly, Article 1736 and 1738. There is no doubt that Art. 1738 finds no applicability to the instant case. The said article contemplates a situation where the goods had already reached their place of destination and are stored in the warehouse of the carrier. The subject goods were still awaiting transshipment to their port of destination, and were stored in the warehouse of a third party when last seen and/or heard of. Article 1736 is applicable to the instant suit. Under said article, the carrier may be relieved of the responsibility for loss or damage to the goods upon actual or constructive delivery of the same by the carrier to the consignee, or to the person who has a right to receive them. In sales, actual delivery has been defined as the ceding of corporeal possession by the seller, and the actual apprehension of corporeal possession by the buyer or by some

person authorized by him to receive the goods as his representative for the purpose of custody or disposal. By the same token, there is actual delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods. The court a quo found that there was actual delivery to the consignee through its duly authorized agent, the carrier. Two undertakings appeared embodied and/or provided for in the Bill of Lading in question. The first is FOR THE TRANSPORT OF GOODS from Bremen, Germany to Manila. The second, THE TRANSSHIPMENT OF THE SAME GOODS from Manila to Davao, with appellant acting as agent of the consignee. At the hiatus between these two undertakings of appellant which is the moment when the subject goods are discharged in Manila, its personality changes from that of carrier to that of agent of the consignee. Thus, the character of appellant's possession also changes, from possession in its own name as carrier, into possession in the name of consignee as the latter's agent. Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from that point onwards. This is the full import of Article 1736, as applied to the case. The actions of appellant carrier and of its representative in the Philippines being in full faith with the lawful stipulations of Bill of Lading No. 18 and in conformity with the provisions of the New Civil Code on common carriers, agency and contracts, they incur no liability for the loss of the goods in question. Appealed decision is REVERSED. Plaintiff-appellee's complaint is DISMISSED. ARTICLE 1738 Servando vs. Phil. Steam The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment therein the following stipulation: Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ... We sustain the validity of the above stipulation; there is nothing therein that is contrary to law, morals or public policy. Appellees would contend that the above stipulation does not bind them because it was printed in fine letters on the back-of the bills of lading; and that they did not sign the same. This argument overlooks the pronouncement of this Court in Ong Yiu vs. Court of Appeals, where the same issue was resolved in this wise: While it may be true that petitioner had not signed the plane ticket, he is nevertheless bound by the provisions thereof. 'Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the regulation'. It is what is known as a contract of 'adhesion', in regards which it has been said that contracts of adhesion wherein one party imposes a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent." SERVANDO vs. PHILIPPINE STEAM NAVIGATION CO.

Facts: Clara UY Bico and Amparo Servando loaded on board the Philippine Steam Navigation vessel, FS-176, for carriage from Manila to Pulupundan, Negros Occidental, cargoes of rice and colored paper as evidenced by the corresponding bills of lading issued by the carrier. Upon arrival of the vessel at Pulupandan in the morning of November 18, 1963, the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs. About 2:00 p.m. of the same day, said warehouse was razed by a fire of unknown origin, destroying Servandos cargoes. Issue: Whether or not the stipulations in the bill of lading limiting the liability of carrier is valid. Held: The court a quo held that the delivery of the shipment on question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. However, that in the bills of lading issued for the cargoes in question, parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation. Clause 14. Carrier shall not be responsible for loss or damage to shipments billed owners risk unless such damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage cause by force majeure, dangers or accidents of the sea or other waters; war; public enemies, xxx fire xxx. We sustain the validity of the above stipulation; there is nothing therein that is contrary to law, morals or public policy. Appellees would contend that the above stipulation does not bind them because it was printed in fine letters on the back of the bills of lading; and that they did not sign the same. This argument overlooks the pronouncement of this Court in Ong Yiu vs. Court of Appeals. While it may be true that petitioner had not signed the plane ticket, he is nevertheless bound by the provisions thereof. Such provisions have been held to be part of the contract of carriage and valid and binding upon the passenger regardless of the latters lack of knowledge or assent to the regulation. There is nothing in the record to show that appellant carrier in delay in the performance of its obligation nor that was the cause of the fire that broke out in the Customs warehouse in anyway attributable to the negligence of the appellant or its employees. ARTICLE 1740

Maersk Line vs. CA

While it is true that common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation to deliver at a given date or time, delivery of shipment or cargo should at least be made within a reasonable time. While there was no special contract entered into by the parties indicating the date of arrival of the subject shipment, petitioner nevertheless, was very well aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself. In this regard, there arises no need to execute another contract for the purpose as it would be a mere superfluity. In the case before us, we find that a delay in the delivery of the goods spanning a period of two months and seven days falls was beyond the realm of reasonableness. MAERSK LINE vs. COURT OF APPEALS Facts: Private respondent (consignee) ordered from Eli Lilly. Inc. (shipper) 600,000 empty gelatin capsules for the manufacture of his pharmaceutical products. The Memorandum of Shipment provides that the shipper advised the consignee that the goods were already shipped on board the vessel of petitioner for shipment to the Philippines via Oakland, California. The specified date of arrival was April 3, 1977. For reasons unknown, said cargo of capsules were mishipped and diverted to Richmond, Virginia, USA and then transported back to Oakland, California. The

goods finally arrived in the Philippines on June 10, 1977 or after two months from the date specified. The consignee refused to take delivery of the goods. Private respondent alleging gross negligence and undue delay in the delivery of the goods, filed an action for rescission of contract with damages against petitioner and shipper. Petitioner alleged that the goods were transported in accordance with the bill of lading(..the Carrier does not undertake that the goods shall arrive at the port of discharge or the place of delivery at any particular time..) and that its liability under the law attaches only in case of loss, destruction or deterioration of the goods as provided for in Article 1734 NCC. The shipper alleged that the mis-shipment was due solely to the gross negligence of petitioner. The RTC dismissed the complaint against the shipper and ruled in favor of the consignee. RTC ruled that the stipulation in the BOL is in the nature of contract of adhesion and therefore void. CA affirmed said decision, hence the present petition. Issue: Whether or not respondent is entitled to damages resulting from delay in the delivery of the shipment in the absence in the bill of lading of a stipulation on the period of delivery. Held: Yes. While it is true that common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation to deliver at a given date or time, delivery of shipment or cargo should at least be made within a reasonable time. An examination of the subject bill of lading shows that the subject shipment was estimated to arrive in Manila on April 3, 1977. While there was no special contract entered into by the parties indicating the date of arrival of the subject shipment, petitioner nevertheless, was very well aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself. In this regard, there arises no need to execute another contract for the purpose as it would be a mere superfluity. In the case before us, we find that a delay in the delivery of the goods spanning a period of two months and seven days falls was beyond the realm of reasonableness. With respect to the ruling that contracts of adhesion are void, SC said that it was necessarily so and that it is a settled rule that bills of lading are contracts not entirely prohibited. ARTICLE 1742

SOUTHERN LINES INC. vs. CA and CITY OF ILOILO

If the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom. FACTS: - The City of Iloilo requisitioned for rice from the National Rice and Corn Corporation (NARIC). - NARIC shipped 1,726 sacks of rice consigned to the City of Iloilo on board of SS General Wright belong to Southern Lines. - The City of Iloilo received the shipment and paid the amount stated in the bill of lading (around Php 63K). - However, at the bottom of the bill of lading, it was noted that City of Iloilo received the merchandise in the same condition as when shipped, except that it received only 1,685 sacks. - Upon actual weighing, it was discovered that the shortage was equal to 41 sacks of rice. - Thus, the City of Iloilo filed a complaint against NARIC and Southern Lines for the recovery of the value of the shortage of the shipment of rice (P 6,486.35). - The lower court absolved NARIC but sentenced Southern Lines to pay the amount. - CA affirmed. - Hence, this petition for review. - Southern Lines claims exemption from liability by contending that the shortage in the shipment of rice was due to such factors as shrinkage, leakage or spillage of the rice on account of the bad condition of the sacks at the time it received the same and negligence of the agents of City of Iloilo in receiving the shipment. ISSUES: - Whether Southern Lines is liable for the loss or shortage of the rice shipped. (YES)

- Whether the City of Iloilo is precluded from filing an action for damages on account of its failure to present a claim within 24 hours from receipt of the shipment as stated in the bill of lading. (NO) HELD: - YES. The SC held that the contention of Southern Lines with respect to the improper packing is untenable. Under Art. 361 of the Code of Commerce, the carrier, in order to free itself from liability, was only obliged to prove that the damages suffered by the goods were by virtue of the nature or defect of the articles. Under Art. 362, the plaintiff, in order to hold the defendant liable, was obliged to prove that the damages to the goods is by virtue of their nature, occurred on account of its negligence or because the defendant did not take the precaution adopted by careful persons.It held that if the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom. - NO. The SC noted that Southern Lines failed to plead this defense in its answer to City of Iloilos complaint and, therefore, the same is deemed waived and cannot be raised for the first time. The SC also cited the finding of the CA that City of Iloilo filed the action within a reasonable time; that the action is one for the refund of the amount paid in excess, and not for damages or the recovery of shortage; the bill of lading does not at all limit the time for the filing of action for the refund of money paid in excess. CALVO vs. UCPB GENERAL INSURANCE G.R. No. 148496 March 19, 2002 Facts: Petitioner Virgines Calvo, owner of Transorient Container Terminal Services, Inc. (TCTSI), and a custom broker, entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the port area to the Tabacalera Compound, Ermita, Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc. On July 14, 1990, contained in 30 metal vans, arrived in Manila on board M/V Hayakawa Maru. After 24 hours, they were unloaded from vessel to the custody of the arrastre operator, Manila Port Services, Inc. From July 23 to 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from the arrastre operator and delivered it to SMCs warehouse in Manila. On July 25, the goods were inspected by Marine Cargo Surveyors, reported that 15 reels of the semi-chemical fluting paper were wet/stained/torn and 3 reels of kraft liner board were also torn. The damages cost P93,112.00. SMC collected the said amount from respondent UCPB under its insurance contract. Respondent on the other hand, as a subrogee of SMC, brought a suit against petitioner in RTC, Makati City. On December 20, 1995, the RTC rendered judgment finding petitioner liable for the damage to the shipment. The decision was affirmed by the CA. Issue: Whether or not Calvo is a common carrier? Held: In this case the contention that the petitioner is not a common carrier but a private carrier, has no merit.

Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as ancillary activity. Article 1732 also carefully avoids making any distinction 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. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinction. (De Guzman v. CA, 68 SCRA 612)

The concept of common carrier under Article 1732 coincide with the notion of public service, under the Public Service Act which partially supplements the law on common carrier. Under Section 13, paragraph (b) of the Public Service Act, it includes: x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public services. x x x ARTICLE 1743

Ganzon vs. CA

Petitioner Ganzon failed to show that the loss of the scrap iron due to any cause enumerated in Art. 1734. The order of the acting Mayor did not constitute valid authority for petitioner to carry out. In any case, the intervention of the municipal officials was not of a character that would render impossible the fulfillment by the carrier of its obligation. The petitioner was not duly bound to obey the illegal order to dump into the sea the scrap of 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 petitioners employees. By the delivery made during Dec. 1, 1956, the scraps were unconditionally placed in the possession and control of the common carrier, and upon their receipt by the carrier of transportation, the contract of carriage was deemed perfected. Consequently, Ganzons extraordinary responsibility for the loss, destruction or deterioration of the goods commenced. According to Art 1738, such extraordinary responsibility would cease only upon the delivery by the carrier to the consignee or persons with right to receive them. The fact that part of the shipment had not been loaded on board did not impair the contract of transportation as the goods remained in the custody & control of the carrier. GANZON vs. CA Facts: In 1965, private respondent Tumambing contracted the services of petitioner Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan on board the latters lighter. Pursuant to their agreement, private respondent delivered the scrap iron to the captain for loading. When half of the scrap iron was loaded, Mayor Advincula demanded P5,000.00 from private respondents, which the latter refused to give, prompting the Mayor to draw his gun and shoot at him. The gunshot was not fatal but he had to be taken to a hospital. Thereafter, the loading of the scrap iron was resumed. The Acting Mayor, accompanied by three policemen, ordered the captain and his crew to dump the scrap iron, with the rest brought to Nassco Compound. A receipt was issued stating that the Municipality of Mariveles had taken custody of the scrap iron. Issue: Whether or not petitioner is guilty of breach of contract of transportation and in imposing a liability against him commencing from the time the scrap iron was placed in his custody and control have no basis in fact and in law. Held: Yes, petitioner is guilty of breach of the contract of transportation. By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common carrier, and upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected. Consequently, the petitioner- carriers extraordinary

responsibility for the loss, destruction or deterioration of the goods commenced. Pursuant to Article 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 headed 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. The Court ruled that the petition is DENIED. ARTICLE 1745 DE GUZMAN vs. COURT OF APPEALS Facts: Respondent Ernesto Cendaa is a junk dealer who was engaged in buying up used bottles and scrap metal in Pangasinan. Upon gathering sufficient quantities of such scrap material, respondent would bring such material to Manila for resale. He utilized two six-wheeler trucks which he owned for hauling the material to Manila. On the return trip to Pangasinan, respondent would load his vehicles with cargo which various merchants wanted delivered to different establishments in Pangasinan. For that service, respondent charged freight rates which were commonly lower than regular commercial rates. Petitioner Pedro de Guzman a merchant and authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted with respondent for the hauling of 750 cartons of Liberty filled milk from its warehouse in Makati to petitioner's establishment in Urdaneta. 150 cartons were loaded on a truck driven by respondent, while 600 cartons were placed on board the other truck which was driven by Manuel Estrada, respondent's driver and employee. Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached petitioner, since the truck which carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and the cargo. Petitioner commenced action against private respondent demanding payment of P22,150.00, the claimed value of the lost merchandise, plus damages and attorney's fees. Petitioner argued that private respondent, being a common carrier, and having failed to exercise the extraordinary diligence required of him by the law, should be held liable for the value of the undelivered goods. Private respondent denied that he was a common carrier and argued that he could not be held responsible for the value of the lost goods, such loss having been due to force majeure. The RTC ruled that private respondent was a common carrier. CA reversed the decision and held that respondent had been engaged in transporting return loads of freight "as a casual occupation, a sideline to his scrap iron business. Issue: 1. Whether or not respondent is a common carrier. 2. Whether or not respondent is liable. Held: 1. Yes. Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local Idiom as "a sideline"). Article 1732 also carefully avoids making any distinction 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. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. The Court of Appeals referred to the fact that private respondent held no certificate of public convenience. A certificate of public convenience is not a requisite for the incurring of liability. That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations and has been granted a certificate of public convenience or other franchise. To exempt private respondent from the liabilities of a common carrier because

he has not secured the necessary certificate of public convenience, would be offensive to sound public policy; that would be to reward private respondent precisely for failing to comply with applicable statutory requirements. 2. No. Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or deterioration of the goods which they carry, "unless the same is due to any of the following causes only: (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; and (5) Order or act of competent public authority. Article 1735 also provides as follows: In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733. The hijacking of the carrier's truck does not fall within any of the five categories of exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of the carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the private respondent as common carrier is presumed to have been at fault or to have acted negligently. This presumption, however, may be overthrown by proof of extraordinary diligence on the part of private respondent. Petitioner argues that in the circumstances of this case, private respondent should have hired a security guard presumably to ride with the truck carrying the 600 cartons of Liberty filled milk. We do not believe, however, that in the instant case, the standard of extraordinary diligence required private respondent to retain a security guard to ride with the truck and to engage brigands in a firelight at the risk of his own life and the lives of the driver and his helper. Article 1745 provides in relevant part: Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: (6) that the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished. In the instant case, armed men held up the second truck owned by private respondent which carried petitioner's cargo. Accused acted with grave, if not irresistible, threat, violence or force. In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary diligence. Bascos v. CA and Cipriano Facts: Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latters 2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE subcontracted with petitioner Estrellita Bascos to transport and deliver the 400 sacks of soya beans. Petitioner failed to deliver the cargo, and as a consequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract. Cipriano demanded reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage. Petitioner denied that there was no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force majeure. The trial court ruled against petitioner. Issues:

(1) Was petitioner a common carrier? (2) Was the hijacking referred to a force majeure? Held: (1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or association 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." 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 this case, petitioner herself has made the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same. (2) Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. There are very few instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption. The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the presumption conclusive against her.

ARTICLE 1750 Everett Steamship Corp. vs. CA In the bill of lading, the carrier made it clear that all claims for which it may be liable shall be adjusted and settled on the basis of the shipper's net invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier be liable for any loss of possible profits or any consequential loss. Its liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. The commercial Invoice does not in itself sufficiently and convincingly show that the common carrier has knowledge of the value of the cargo as contended by the shipper. EVERETT STEAMSHIP CORPORATION vs. COURT OF APPEALS Facts: Private respondent Hernandez Trading Co. imported three crates of bus spare parts from Japan from its supplier Maruman Trading based there. The crates were shipped from Japan to Manila on board a vessel owned by petitioners principal, Everett Orient Lines. Upon arrival at the port of Manila, it was discovered that one of the crater was missing. Respondent made a formal claim for the recovery of the actual value of the lost spare parts contained in the missing crates. The trial court rendered judgment in favor of private respondent, ordering petitioner to pay Y1,552,500.00. An appeal was brought by petitioner only 100,000 yen was offered by petitioner, the maximum amount stipulated in clause 18 of the BOL. The Court of Appeals deleted the award of attorney's fees but affirmed the trial court's findings with the additional observation that private respondent can not be bound by the terms and conditions of the bill of lading because it was not privy to the contract of carriage. Petitioner now comes to SC arguing that the Court of Appeals erred (1) in ruling that the consent of the consignee to the terms and conditions of the bill of lading is necessary to make such stipulations binding upon it; (2) in holding that the carrier's limited package liability as stipulated in the bill of lading

does not apply in the instant case; and (3) in allowing private respondent to fully recover the full alleged value of its lost cargo. Issue: Whether or not the petitioner is liable for the actual value and not the maximum value recoverable under the bill of lading. Held: No. A stipulation in the bill of lading limiting the liability of the common carrier for the loss, damages of cargo to a certain sum, unless the shipper declares or a higher value is sanctioned by law, particularly Articles 1749 and 1750 of the Civil Code. Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common carrier's liability for loss must be "reasonable and just under the circumstances, and has been freely and fairly agreed upon." The bill of lading subject of the present controversy specifically provides, among others: 18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of the shipper's net invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier be liable for any loss of possible profits or any consequential loss. The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an amount exceeding One Hundred thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in any other currency per package or customary freight unit (whichever is least) unless the value of the goods higher than this amount is declared in writing by the shipper before receipt of the goods by the carrier and inserted in the Bill of Lading and extra freight is paid as required. The above stipulations are, to our mind, reasonable and just. In the bill of lading, the carrier made it clear that its liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. To defeat the carrier's limited liability, the aforecited Clause 18 of the bill of lading requires that the shipper should have declared in writing a higher valuation of its goods before receipt thereof by the carrier and insert the said declaration in the bill of lading, with extra freight paid. These requirements in the bill of lading were never complied with by the shipper, hence, the liability of the carrier under the limited liability clause stands. The commercial Invoice does not in itself sufficiently and convincingly show that petitioner has knowledge of the value of the cargo as contended by private respondent. ARTICLE 1753

Eastern Shipping Lines vs. Intermediate Appellate Court

1) The law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. As the cargoes in question were transported from Japan to the Philippines, the liability of Petitioner Carrier is governed primarily by the Civil Code. However, in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code. (2) Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over goods, according to all the circumstances of each case. 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; Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase "natural disaster or calamity. However, the Court said that fire may not be considered a natural disaster or calamity. This

must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier. As the peril of the fire is not comprehended within the exception in Article 1734, supra, Article 1735 of the Civil Code provides that all cases than those mention in Article 1734, the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law. And even if fire were to be considered a "natural disaster" within the meaning of Article 1734 of the Civil Code, it is required under Article 1739 of the same Code that the "natural disaster" must have been the "proximate and only cause of the loss," and that the carrier has "exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster. This Petitioner Carrier has also failed to establish satisfactorily. Eastern Shipping Lines vs. Court of Appeals The heavy seas and rains referred to in the masters report were not caso fortuito but normal occurrences that an ocean-going vessel, particularly in the month of September which, in our area, is a month of rains and heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a voyage. That rain water (not sea water) found its way into the holds of the Jupri Venture is a clear indication that care and foresight did not attend the closing of the ship's hatches so that rain water would not find its way into the cargo holds of the ship. Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or negligence on the part of the carrier applies; and the carrier must present evidence that it has observed the extraordinary diligence required by Article 1733 of the Civil Code in order to escape liability for damage or destruction to the goods that it had admittedly carried in this case. No such evidence exists of record. Thus, the carrier cannot escape liability. EASTERN SHIPPING LINES, INC. vs. INTERMEDIATE APPELLATE COURT Facts: In G.R. No. 69044, sometime in or prior to June, 1977, the M/S ASIATICA, a vessel operated by petitioner loaded at Kobe, Japan for transportation to Manila, 5,000 pieces of calorized lance pipes consigned to Philippine Blooming Mills Co., Inc., and 7 cases of spare parts valued consigned to Central Textile Mills, Inc. Both sets of goods were insured against marine risk for with respondent. In G.R. No. 71478, during the same period, the same vessel took on board 128 cartons of garment fabrics and accessories consigned to Mariveles Apparel Corporation, and two cases of surveying instruments consigned to Aman Enterprises and General Merchandise. The 128 cartons were insured for their stated value by respondent Nisshin and the 2 cases by respondent Dowa. En route for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective respondent Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured. Respondents filed a claim for reimbursement from petitioner. The RTC ruled in their favor to which the petitioner appealed. Issue: (1) Which law should govern the Civil Code provisions on Common carriers or the Carriage of Goods by Sea Act? and (2) who has the burden of proof to show negligence of the carrier? Held: (1) The law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. As the cargoes in question were transported from Japan to the Philippines, the liability of Petitioner Carrier is governed primarily by the Civil Code. However, in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce

and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code. (2) Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over goods, according to all the circumstances of each case. 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; Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase "natural disaster or calamity. However, the Court said that fire may not be considered a natural disaster or calamity. This must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier. As the peril of the fire is not comprehended within the exception in Article 1734, supra, Article 1735 of the Civil Code provides that all cases than those mention in Article 1734, the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law. In this case, the respective Insurers. as subrogees of the cargo shippers, have proven that the transported goods have been lost. Petitioner Carrier has also proved that the loss was caused by fire. The burden then is upon Petitioner Carrier to proved that it has exercised the extraordinary diligence required by law, which it failed to do. And even if fire were to be considered a "natural disaster" within the meaning of Article 1734 of the Civil Code, it is required under Article 1739 of the same Code that the "natural disaster" must have been the "proximate and only cause of the loss," and that the carrier has "exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster. This Petitioner Carrier has also failed to establish satisfactorily. Nor may Petitioner Carrier seek refuge from liability under the Carriage of Goods by Sea Act, It is provided therein that: Sec. 4(2). Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (b) Fire, unless caused by the actual fault or privity of the carrier. Both the Trial Court and the Appellate Court, in effect, found, as a fact, that there was "actual fault" of the carrier shown by "lack of diligence" in that when the smoke was noticed, the fire was already big; that the fire must have started 24 hours before the same was noticed; and that after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage. The foregoing suffices to show that the circumstances under which the fire originated and spread are such as to show that Petitioner Carrier or its servants were negligent in connection therewith. Consequently, the complete defense afforded by the COGSA when loss results from fire is unavailing to Petitioner Carrier.