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

Sarkies Tours Phils. V. IAC

Facts: On August 31, 1984, Fatima boarded petitioners bus from Manila to Legazpi.
Her belongings consisting of 3 bags were kept at the baggage compartment of the bus,
but during the stopover in Daet, it was discovered that only one remained. The others
might have dropped along the way. Other passengers suggested having the route traced,
but the driver ignored it. Fatima immediately told the incident to her mother, who went
to petitioners office in Legazpi and later in Manila. Petitioner offered P1,000 for each
bag, but she turned it down. Disapointed, she sought help from Philtranco bus drivers
and radio stations. One of the bags was recovered. She was told by petitioner that a team
is looking for the lost luggage. After nine months of fruitless waiting, respondents filed a
case to recover the lost items, as well as moral and exemplary damages, attorneys fees
and expenses of litigation. The trial court ruled in favor of respondents, which decision
was affirmed with modification by the Court of Appeals, deleting moral and exemplary
(1) Whether petitioner is liable for the loss of the luggage
(2) Whether the damages sought should be recovered
(1) The cause of the loss in the case at bar was petitioner's 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 of the luggage was lost, to the prejudice of the paying
(2) There is no dispute that of the three pieces of luggage of Fatima, only one was
recovered. Respondents had to shuttle between Bicol and Manila in their efforts to be
compensated for the loss. During the trial, Fatima and Marisol had to travel from the
United States just to be able to testify. Expenses were also incurred in reconstituting
their lost documents. Under these circumstances, the Court agrees with the Court of
Appeals in awarding P30,000.00 for the lost items and P30,000.00 for the
transportation expenses, but disagrees with the deletion of the award of moral and
exemplary damages which, in view of the foregoing proven facts, with negligence and
bad faith on the fault of petitioner having been duly established, should be granted to
respondents in the amount of P20,000.00 and P5,000.00, respectively.