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G.R.No.149019

TodayisSaturday,August08,2015

RepublicofthePhilippines
SUPREMECOURT
Manila
SECONDDIVISION
G.R.No.149019August15,2006
DELSANTRANSPORTLINES,INC.,Petitioner,
vs.
AMERICANHOMEASSURANCECORPORATION,Respondent.
DECISION
GARCIA,J.:
BythispetitionforreviewoncertiorariunderRule45oftheRulesofCourt,petitionerDelsanTransportLines,Inc.
(Delsan hereafter) assails and seeks to set aside the Decision, 1 dated July 16, 2001, of the Court of Appeals
(CA)inCAG.R.CVNo.40951affirminganearlierdecisionoftheRegionalTrialCourt(RTC)ofManila,Branch
IX,intwoseparatecomplaintsfordamagesdocketedasCivilCaseNo.8529357andCivilCaseNo.8530559.
Thefacts:
Delsan is a domestic corporation which owns and operates the vessel MT Larusan. On the other hand,
respondent American Home Assurance Corporation (AHAC for brevity) is a foreign insurance company duly
licensedtodobusinessinthePhilippinesthroughitsagent,theAmericanInternationalUnderwriters,Inc.(Phils.).
Itisengaged,amongothers,ininsuringcargoesfortransportationwithinthePhilippines.
On August 5, 1984, Delsan received on board MT Larusan a shipment consisting of 1,986.627 k/l Automotive
Diesel Oil (diesel oil) at the Bataan Refinery Corporation for transportation and delivery to the bulk depot in
BacolodCityofCaltexPhils.,Inc.(Caltex),pursuanttoaContractofAfreightment.Theshipmentwasinsuredby
respondentAHACagainstallrisksunderInlandFloaterPolicyNo.AHIF641011549PandMarineRiskNoteNo.
3450936.
On August 7, 1984, the shipment arrived in Bacolod City. Immediately thereafter, unloading operations
commenced.Thedischargingofthedieseloilstartedatabout1:30PMofthesameday.However,atabout10:30
PM,thedischarginghadtobestoppedonaccountofthediscoverythattheportbowmooringofthevesselwas
intentionallycutorstolenbyunknownpersons.Becausetherewasnothingholdingit,thevesseldriftedwestward,
dragged and stretched the flexible rubber hose attached to the riser, broke the elbow into pieces, severed
completely the rubber hose connected to the tanker from the main delivery line at sea bed level and ultimately
causedthedieseloiltospillintothesea.Toavoidfurtherspillage,thevesselscrewtriedwaterflushingtoclear
thelineofthedieseloilbuttonoavail.Inthemeantime,theshoretender,whowaswaitingforthecompletionof
thewaterflushing,wassurprisedwhenthetankersignaleda"redlight"whichmeantstoppumping.Unawareof
whathappened,theshoretender,thinkingthatthevesselwould,atanytime,resumepumping,didnotshutthe
storagetankgatevalve.Asallthegatevalvesremainedopen,thedieseloilthatwasearlierdischargedfromthe
vessel into the shore tank backflowed. Due to nonavailability of a pump boat, the vessel could not send
somebodyashoretoinformthepeopleatthedepotaboutwhathappened.Afteralmostanhour,agaugerandan
assistant surveyor from the Caltexs Bulk Depot Office boarded the vessel. It was only then that they found out
whathadhappened.Thereafter,theduoimmediatelywentashoretoseetoitthattheshoretankgatevalvewas
closed.Thelossofdieseloilduetospillagewasplacedat113.788k/lwhilesome435,081k/lthereofbackflowed
fromtheshoretank.
As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but the latter
refusedtopay.Asinsurer,AHACpaidCaltexthesumofP479,262.57forspillage,pursuanttoMarineRiskNote
No.3450936,andP1,939,575.37forbackflowofthedieseloilpursuanttoInlandFloaterPolicyNo.AH1F64
1011549P.
OnFebruary19,1985,AHAC,asCaltexssubrogee,institutedCivilCaseNo.8529357againstDelsanbeforethe
Manila RTC, Branch 9, for loss caused by the spillage. It likewise prayed that it be indemnified for damages
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sufferedintheamountofP652,432.57pluslegalinterestthereon.
Also,onMay5,1985,intheManilaRTC,Branch31,AHACinstitutedCivilCaseNo.8530559againstDelsanfor
thelosscausedbythebackflow.ItlikewiseprayedthatitbeawardedtheamountofP1,939,575.37fordamages
andreasonableattorneysfees.Ascounterclaiminbothcases,AHACprayedforattorneysfeesintheamountof
P200,000.00andP500.00foreverycourtappearance.
Since the cause of action in both cases arose out of the same incident and involved the same issues, the two
wereconsolidatedandassignedtoBranch9ofthecourt.
OnAugust31,1989,thetrialcourtrendereditsdecision 2infavorofAHACholdingDelsanliableforthelossof
thecargoforitsnegligenceinitsdutyasacommoncarrier.Dispositively,thedecisionreads:
WHEREFORE,judgmentisherebyrendered:
A).InCivilCaseNo.8530559:
(1)Orderingthedefendant(petitionerDelsan)topayplaintiff(respondentAHAC)thesumofP1,939,575.37with
interestthereonatthelegalratefromNovember21,1984untilfullypaidandsatisfiedand
(2)OrderingdefendanttopayplaintiffthesumofP10,000.00asandforattorneysfees.
Forlackofmerit,thecounterclaimisherebydismissed.
B).InCivilCaseNo.8529357:
(1) Ordering defendant to pay plaintiff the sum of P479,262.57 with interest thereon at the legal rate from
February6,1985untilfullypaidandsatisfied
(2)OrderingdefendanttopayplaintiffthesumofP5,000.00asandforattorneysfees.
Forlackofmerit,thecounterclaimisherebydismissed.
Costsagainstthedefendant.
SOORDERED.
Intime,DelsanappealedtotheCAwhereatitsrecoursewasdocketedasCAG.R.CVNo.40951.
Inthehereinchallengeddecision, 3theCAaffirmedthefindingsofthetrialcourt.Insoruling,theCAdeclared
thatDelsanfailedtoexercisetheextraordinarydiligenceofagoodfatherofafamilyinthehandlingofitscargo.
ApplyingArticle1736 4oftheCivilCode,theCAruledthatsincethedischargingofthedieseloilintoCaltexbulk
depothadnotbeencompletedatthetimethelossesoccurred,therewasnoreasontoimplythattherewasactual
deliveryofthecargotoCaltex,theconsignee.WequotethefallooftheCAdecision:
WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court of Manila, Branch 09 in
CivilCaseNos.8529357and8530559isherebyAFFIRMEDwithamodificationthatattorneysfeesawardedin
CivilCaseNos.8529357and8530559areherebyDELETED.
SOORDERED.
DelsanisnowbeforetheCourtraisingsubstantiallythesameissuesprofferedbeforetheCA.
Principally, Delsan insists that the CA committed reversible error in ruling that Article 1734 of the Civil Code
cannot exculpate it from liability for the loss of the subject cargo and in not applying the rule on contributory
negligence against Caltex, the shipperowner of the cargo, and in not taking into consideration the fact that the
lossduetobackflowoccurredwhenthedieseloilwasalreadycompletelydeliveredtoCaltex.
Wearenotpersuaded.
Inresolvingthisappeal,theCourtreiteratestheoftstateddoctrinethatfactualfindingsoftheCA,affirmatoryof
thoseofthetrialcourt,arebindingontheCourtunlessthereisaclearshowingthatsuchfindingsaretaintedwith
arbitrariness,capriciousnessorpalpableerror.5
Delsan would have the Court absolve it from liability for the loss of its cargo on two grounds. First, the loss
throughspillagewaspartlyduetothecontributorynegligenceofCaltexandSecond,thelossthroughbackflow
shouldnotbebornebyDelsanbecauseitwasalreadydeliveredtoCaltexsshoretank.
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Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by
them.Theyarepresumedtohavebeenatfaultortohaveactednegligentlyifthegoodsarelost,destroyedor
deteriorated. 6 To overcome the presumption of negligence in case of loss, destruction or deterioration of the
goods,thecommoncarriermustprovethatitexercisedextraordinarydiligence.Thereare,however,exceptions
tothisrule.Article1734oftheCivilCodeenumeratestheinstanceswhenthepresumptionofnegligencedoesnot
attach:
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the
sameisduetoanyofthefollowingcausesonly:
1)Floodstorm,earthquake,lightning,orothernaturaldisasterorcalamity
2)Actofthepublicenemyinwar,whetherinternationalorcivil
3)Actoromissionoftheshipperorownerofthegoods
4)Thecharacterofthegoodsordefectsinthepackingorinthecontainers
5)Orderoractofcompetentpublicauthority.
BoththetrialcourtandtheCAuniformlyruledthatDelsanfailedtoproveitsclaimthattherewasacontributory
negligence on the part of the owner of the goods Caltex. We see no reason to depart therefrom. As aptly
pointedoutbytheCA,ithadbeenestablishedthattheproximatecauseofthespillageandbackflowofthediesel
oilwasduetotheseveranceoftheportbowmooringlineofthevesselandthefailureoftheshoretendertoclose
the storage tank gate valve even as a check on the drain cock showed that there was still a product on the
pipeline.Tothetwocourtsbelow,theactuationofthegaugerandtheescortsurveyor,bothpersonnelfromthe
CaltexBulkDepot,negatestheallegationthatCaltexwasremissinitsduties.Asweseeit,thecrewofthevessel
shouldhavepromptlyinformedtheshoretenderthattheportmooringlinewascutoff.However,Delsandidnot
do so on the lame excuse that there was no available banca. As it is, Delsans personnel signaled a "red light"
which was not a sufficient warning because such signal only meant that the pumping of diesel oil had been
finished.Neitherdidtheblowingofwhistlesufficeconsideringthedistanceofmorethan2kilometersbetweenthe
vesselandtheCaltexBulkDepot,asidefromthefactthatitwasnottheagreedsignal.Hadthegaugerandthe
escort surveyor from Caltex Bulk Depot not gone aboard the vessel to make inquiries, the shore tender would
havenotknownwhatreallyhappened.Thecrewofthevesselshouldhaveexertedutmostefforttoimmediately
informtheshoretenderthattheportbowmooringlinewassevered.
To be sure, Delsan, as the owner of the vessel, was obliged to prove that the loss was caused by one of the
exceptedcausesifitweretoseekexemptionfromresponsibility. 7Unfortunately,itmiserablyfailedtodischarge
thisburdenbytherequiredquantumofproof.
Delsansargumentthatitshouldnotbeheldliableforthelossofdieseloilduetobackflowbecausethesamehad
alreadybeenactuallyandlegallydeliveredtoCaltexatthetimeitenteredtheshoretankholdsnowater.Ithad
beensettledthatthesubjectcargowasstillinthecustodyofDelsanbecausethedischargingthereofhasnotyet
been finished when the backflow occurred. Since the discharging of the cargo into the depot has not yet been
completed at the time of the spillage when the backflow occurred, there is no reason to imply that there was
actual delivery of the cargo to the consignee. Delsan is straining the issue by insisting that when the diesel oil
enteredintothetankofCaltexonshore,therewaslegally,atthatmoment,acompletedeliverythereoftoCaltex.
Tobesure,theextraordinaryresponsibilityofcommoncarrierlastsfromthetimethegoodsareunconditionally
placedinthepossessionof,andreceivedby,thecarrierfortransportationuntilthesamearedelivered,actuallyor
constructively,bythecarriertotheconsignee,ortoapersonwhohastherighttoreceivethem.8Thedischarging
ofoilproductstoCaltexBulkDepothasnotyetbeenfinished,Delsanstillhasthedutytoguardandtopreserve
thecargo.Thecarrierstillhasinittheresponsibilitytoguardandpreservethegoods,adutyincidenttoitshaving
thegoodstransported.
Torecapitulate,commoncarriers,fromthenatureoftheirbusinessandforreasonsofpublicpolicy,areboundto
observeextraordinarydiligenceinvigilanceoverthegoodsandforthesafetyofthepassengerstransportedby
them,accordingtoallthecircumstancesofeachcase.9Themereproofofdeliveryofgoodsingoodordertothe
carrier,andtheirarrivalintheplaceofdestinationinbadorder,makeoutaprimafaciecaseagainstthecarrier,
so that if no explanation is given as to how the injury occurred, the carrier must be held responsible. It is
incumbentuponthecarriertoprovethatthelosswasduetoaccidentorsomeothercircumstancesinconsistent
withitsliability.10
Alltold,Delsan,beingacommoncarrier,shouldhaveexercisedextraordinarydiligenceintheperformanceofits
duties. Consequently, it is obliged to prove that the damage to its cargo was caused by one of the excepted
causes if it were to seek exemption from responsibility. 11 Having failed to do so, Delsan must bear the
consequences.
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WHEREFORE,petitionisDENIEDandtheassaileddecisionoftheCAisAFFIRMEDintoto.
Costagainstpetitioner.
SOORDERED.
CANCIOC.GARCIA
AssociateJustice
WECONCUR:
REYNATOS.PUNO
AssociateJustice
Chairperson
ANGELINASANDOVALGUTIERREZ
AssociateJustice

RENATOC.CORONA
AssociateJustice

ADOLFOS.AZCUNA
AssociateJustice
ATTESTATION
Iattestthattheconclusionsintheabovedecisionwerereachedinconsultationbeforethecasewasassignedto
thewriteroftheopinionoftheCourtsDivision.
REYNATOS.PUNO
AssociateJustice
Chairperson,SecondDivision
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby
certifiedthattheconclusionsintheabovedecisionwerereachedinconsultationbeforethecasewasassignedto
thewriteroftheopinionoftheCourt.
ARTEMIOV.PANGANIBAN
ChiefJustice

Footnotes
1PennedbyAssociateJusticeBienvenidoL.ReyeswithAssociateJusticesEubuloG.VerzolaandMarina

L.Buzon,concurringRollo,pp.5166.
2Rollo,pp.103107.
3Supranote1.
4 Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are

unconditionallyplacedinthepossessionof,andreceivedbythecarrierfortransportationuntilthesameare
delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to
receivethem,withoutprejudicetotheprovisionsofArticle1738.
5MaximinoFuentesv.TheHon.CourtofAppeals,ThirteenthDivision,andVirgilioUy,Brigido

Saguindang,LeoncioCaligang,etal.,G.R.No.109849,February26,1997,268SCRA703.
6 Asia Lighterage and Shipping, Inc. v. Court of Appeals and Prudential Guarantee And Assurance, Inc.,

G.R.No.147246,August19,2003,403SCRA340.
7MartiniLimitedv.MacondrayandCo.,39Phil.934(1919).
8Article1736,CivilCode.
9Article1733,CivilCode.
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10YnchaustiSteamshipv.Dexter&Unson,41Phil.289(1920).
11Supranote6.
TheLawphilProjectArellanoLawFoundation

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