CALALAS V.

CA
G.R. No. 122039. May 31, 2000

FACTS:
Private respondent Eliza Jujeurche G. Sunga took a passenger jeepney owned and operated by petitioner
Vicente Calalas. As the jeepney was already full, Calalas gave Sunga an stool at the back of the door at the
rear end of the vehicle. Along the way, the jeepney stopped to let a passenger off. Sunga stepped down to
give way when an Isuzu truck owned by Francisco Salva and driven by Iglecerio Verena bumped the jeepney.
As a result, Sunga was injured. Sunga filed a complaint against Calalas for violation of contract of carriage.
Calalas filed a third party complaint against Salva. The trial court held Salva liable and absolved Calalas,
taking cognisance of another civil case for quasi-delict wherein Salva and Verena were held liable to Calalas.
The Court of Appeals reversed the decision and found Calalas liable to Sunga for violation of contract of
carriage.

ISSUES:
(1) Whether the decision in the case for quasi delict between Calalas on one hand and Salva and Verena on
the other hand, is res judicata to the issue in this case
(2) Whether Calalas exercised the extraordinary diligence required in the contract of carriage
(3) Whether moral damages should be awarded

HELD:
(1) The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner
of the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore,
the principle of res judicata does not apply. Nor are the issues in Civil Case No. 3490 and in the present case
the same. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-
delict for the damage caused to petitioner's jeepney. On the other hand, the issue in this case is whether
petitioner is liable on his contract of carriage. The first, quasi-delict, also known as culpa aquiliana or culpa
extra contractual, has as its source the negligence of the tortfeasor. The second, breach of contract or culpa
contractual, is premised upon the negligence in the performance of a contractual obligation. Consequently,
in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action,
whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract
and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his
destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common
carriers are presumed to have been at fault or to have acted negligently unless they prove that they
observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily
shifts to the common carrier the burden of proof. It is immaterial that the proximate cause of the collision
between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause
is applicable only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a
device for imputing liability to a person where there is no relation between him and another party. In such
a case, the obligation is created by law itself. But, where there is a pre-existing contractual relation between
the parties, it is the parties themselves who create the obligation, and the function of the law is merely to
regulate the relation thus created.

(2) We do not think so. First, the jeepney was not properly parked, its rear portion being exposed about two
meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle.
Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating capacity
of the jeepney. The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that
to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the
presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows
he was actually negligent in transporting passengers. We find it hard to give serious thought to petitioner's
contention that Sunga's taking an "extension seat" amounted to an implied assumption of risk. It is akin to
arguing that the injuries to the many victims of the tragedies in our seas should not be compensated merely
because those passengers assumed a greater risk of drowning by boarding an overloaded ferry. This is also
true of petitioner's contention that the jeepney being bumped while it was improperly parked constitutes
caso fortuito. A caso fortuito is an event which could not be foreseen, or which, though foreseen, was
inevitable. This requires that the following requirements be present: (a) the cause of the breach is
independent of the debtor's will; (b) the event is unforeseeable or unavoidable; (c) the event is such as to
render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor did not
take part in causing the injury to the creditor. Petitioner should have foreseen the danger of parking his
jeepney with its body protruding two meters into the highway.

(3) As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of
contract for it is not one of the items enumerated under Art. 2219 of the Civil Code. As an exception, such
damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided
in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of
fraud or bad faith, as provided in Art. 2220. In this case, there is no legal basis for awarding moral damages
since there was no factual finding by the appellate court that petitioner acted in bad faith in the performance
of the contract of carriage.

NECESSITO V. PARAS
G.R. NO. L-10605, 30 JUNE 1958, 104 PHIL 75

FACTS:
In 1954, Severina Garces and her one- year old son, Precillano Necesito boarded Philippine Rabbit Bus Lines
(PRBL) in Pangasinan.

After passing a wooden bridge, the front wheels of the truck suddenly swerved to the right such that the
driver lost control, and after wrecking the bridge’s wooden rails, the truck fell on its right side into a creek
where water was breast deep.

The mother, Severina Garces, was drowned; the son, Precillano Necesito, was injured, suffering abrasions
and fracture of the left femur. Consequently, their money, wrist watch and cargo of vegetables were lost.

Later, two actions for damages and attorney’s fees totalling over P85,000 having been filed in the CFI of
Tarlac against the carrier. However, the latter pleaded that the accident was due to “engine or mechanical
trouble” independent or beyond the control of the defendants or of the driver Bandonell. It was found out
that the accident was caused by the fracture of the right steering knuckle.

After trial, the court, holding that the accident was exclusively due to fortuitous event, dismissed the action.

Plaintiffs appealed directly to the SC in view of the amount in controversy. Thus, this case.

ISSUE: Whether or not the carrier is liable for the manufacturing defect of the steering knuckle.
RULING: Yes.
The court ruled that the proximate cause of the accident was the reduced strength of the steering knuckle
of the vehicle caused by defects in casting it.

Under Article 1755 of the Civil Code, a common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard
for all the circumstances.

It is clear that the carrier is not an insurer of the passengers’ safety. His liability rests upon negligence, his
failure to exercise the “utmost” degree of diligence that the law requires, and by Art. 1756 of the Civil Code,
in case of a passenger’s death or injury the carrier bears the burden of satisfying the court that he has duly
discharged the duty of prudence required.

In American jurisprudence, where the carrier is held to the same degree of diligence as under the new Civil
Code, the rule on the liability of carriers for defects of equipment is thus expressed: “The preponderance of
authority is in favor of the doctrine that a passenger is entitled to recover damages from a carrier for an
injury resulting from a defect in an appliance purchased from a manufacturer, whenever it appears that the
defect would have been discovered by the carrier if it had exercised the degree of care which under the
circumstances was incumbent upon it, with regard to inspection and application of the necessary tests.

For the purposes of this doctrine, the manufacturer is considered as being in law the agent or servant of
the carrier, as far as regards the work of constructing the appliance. According to this theory, the good
repute of the manufacturer will not relieve the carrier from liability”

The rationale of the carrier’s liability is the fact that the passenger has neither choice nor control over the
carrier in the selection and use of the equipment and appliances in use by the carrier. Having, no privity
whatever with the manufacturer or vendor of the defective equipment, the passenger has no remedy against
him, while the carrier usually has. It is but logical, therefore, that the carrier, while not an insurer of the safety
of his passengers, should nevertheless be held to answer for the flaws of his equipment if such flaws were
at all discoverable.

If the carrier has contracted with someone else the passenger does not usually know who that person is,
and in no case has he any share in the selection. The liability of the manufacturer must depend on the terms
of the contract between him and the carrier, of which the passenger has no knowledge, and over which he
can have no control, while the carrier can introduce what stipulations and take what securities he may think
proper.

For injury resulting to the carrier himself by the manufacturer’s want of care, the carrier has a remedy against
the manufacturer; but the passenger has no remedy against the manufacturer for damage arising from a
mere breach of contract with the carrier.

The carrier, in consideration of certain well-known and highly valuable rights granted to it by the public,
undertakes certain duties toward the public, among them being to provide itself with suitable and safe cars
and vehicles in which to carry the traveling public. There is no such duty on the manufacturer of the cars.
There is no reciprocal legal relation between him and the public in this respect.
The manufacturer should be deemed the agent of the carrier as respects its duty to select the material out
of which its cars and locomotive are built, as well as in inspecting each step of their construction.

In this case, however, the record is to the effect that the only test applied to the steering knuckle in question
was a purely visual inspection every thirty days, to see if any cracks developed. It nowhere appears that
either the manufacturer or the carrier at any time tested the steering knuckle to ascertain whether its
strength was up to standard, or that it had no hidden flaws that would impair that strength. And yet the
carrier must have been aware of the critical importance of the knuckle’s resistance; that its failure or
breakage would result in loss of balance and steering control of the bus, with disastrous effects upon the
passengers.

No argument is required to establish that a visual inspection could not directly determine whether the
resistance of this critically important part was not impaired. Nor has it been shown that the weakening of
the knuckle was impossible to detect by any known test; on the contrary, there is testimony that it could be
detected.

The court is thus satisfied that the periodical visual inspection of the steering knuckle as practiced by the
carrier’s agents did not measure up to the required legal standard of “utmost diligence of very cautious
persons” — “as far as human care and foresight can provide”, and therefore that the knuckle’s failure cannot
be considered a fortuitous event that exempts the carrier from responsibility.

PHILIPPINE AMERICAN GENERAL INSURANCE v. MGG MARINE SERVICES

G.R. No. 135645, March 8, 2002
(VILLARIN, L.)
Common Carriage- Carriage of Goods

FACTS:
 San Miguel Corporation insured several beer bottle cases with an aggregate value of almost P6M
with petitioner Philippine American General Insurance Company.
 The cargo were loaded on board the M/V Peatheray Patrick-G to be transported from Mandaue
City to Bislig, Surigao del Sur.
 After having been cleared by the Coast Guard Station in Cebu the previous day, the vessel left the
port of Mandaue City for Bislig, Surigao del Sur. The weather was calm when the vessel started its
voyage.
 The following day, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point, Cortes,
Surigao del Sur. As a consequence thereof, the cargo belonging to San Miguel Corporation was
lost.
 Subsequently, San Miguel Corporation claimed the amount of its loss from petitioner.
 The Surveyor’s report stated that the vessel was structurally sound and that he did not see any
damage or crack thereon. He concluded that the proximate cause of the listing and subsequent
sinking of the vessel was the shifting of ballast water from starboard to portside. The said shifting
of ballast water allegedly affected the stability of the M/V Peatheray Patrick-G.
 Petitioner paid SMC the full amount of P5,836,222.80 pursuant to the terms of their insurance
contract.
 Petitioner as subrogee of SMC filed with the Regional Trial Court (RTC) of Makati City a case for
collection against private respondents to recover the amount it paid to San Miguel Corporation for
the loss of the latter's cargo.
  Meanwhile, the Board of Marine Inquiry conducted its own investigation of the sinking of the M/V
Peatheray Patrick-G to determine whether or not the captain and crew of the vessel should be held
responsible for the incident.
 The Board rendered its decision exonerating the captain and crew of the ill-fated vessel for any
administrative liability. It found that the cause of the sinking of the vessel was the existence of
strong winds and enormous waves in Surigao del Sur, a fortuitous event that could not have been
for seen at the time the M/V Peatheray Patrick-G left the port of Mandaue City. It was further held
by the Board that said fortuitous event was the proximate and only cause of the vessel's sinking.
 RTC found private respondents solidarily liable for the loss of SMC’s cargo and ordering them to
pay petitioner the full amount of the lost cargo plus legal interest, attorney's fees and costs of suit.
 Private respondents appealed. CA reversed. It held that private respondents could not be held liable
for the loss of San Miguel Corporation's cargo because said loss occurred as a consequence of a
fortuitous event, and that such fortuitous event was the proximate and only cause of the loss

ISSUE: Whether the loss of the cargo was due to the occurrence of a natural disaster, and if so, whether
such natural disaster was the sole and proximate cause of the loss or whether private respondents were
partly to blame for failing to exercise due diligence to prevent the loss of the cargo?

RULING:
The findings of the Board of Marine Inquiry indicate that the attendance of strong winds and huge waves
while the M/V Peatheray Patrick-G was sailing through Cortes, Surigao del Norte on March 3, 1987 was
indeed fortuitous. A fortuitous event has been defined as one which could not be foreseen, or which though
foreseen, is inevitable. An event is considered fortuitous if the following elements concur:

(a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply
with his obligations, must be independent of human will;
(b) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid; (
c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a
normal manner; and
(d) the obligor must be free from any participation in the aggravation of the injury resulting to the
creditor.

In the case at bar, it was adequately shown that before the M/V Peatheray Patrick-G left the port of Mandaue
City, the Captain confirmed with the Coast Guard that the weather condition would permit the safe travel
of the vessel to Bislig, Surigao del Sur. Thus, he could not be expected to have foreseen the unfavorable
weather condition that awaited the vessel in Cortes, Surigao del Sur. It was the presence of the strong winds
and enormous waves which caused the vessel to list, keel over, and consequently lose the cargo contained
therein. The appellate court likewise found that there was no negligence on the part of the crew of the M/V
Peatheray Patrick-G following the decision of the Board of Marine Inquiry.

It was also proven through sufficient evidence that "LCT Peatheray Patrick-G" was considered seaworthy
vessel at the time she undertook that fateful voyage on March 2, 1987. The vessel was propelled with 3
diesel engines, it had 3 propellers each which were operating satisfactorily and that it was granted SOLAS
clearance by the Phil Coast Guard to depart from Mandawe City for Bislig, Surigao del Sur.

Although the Board of Marine Inquiry ruled only on the administrative liability of the captain and crew of
the M/V Peatheray Patrick-G, it had to conduct a thorough investigation of the circumstances surrounding
the sinking of the vessel and the loss of its cargo in order to determine their responsibility, if any. The results
of its investigation as embodied in its decision on the administrative case clearly indicate that the loss of
the cargo was due solely to the attendance of strong winds and huge waves which caused the vessel
accumulate water, tilt to the port side and to eventually keel over. There was thus no error on the part of
the Court of Appeals in relying on the factual findings of the Board of Marine Inquiry, for such factual
findings, being supported by substantial evidence are persuasive, considering that said administrative body
is an expert in matters concerning marine casualties.

Since the presence of strong winds and enormous waves at Cortes, Surigao del Sur on March 3, 1987 was
shown to be the proximate and only cause of the sinking of the M/V Peatheray Patrick-G and the loss of
the cargo belonging to San Miguel Corporation, private respondents cannot be held liable for the said loss.

PHILIPPINE CHARTER INSURANCE CORPORATION vs. UNKNOWN OWNER OF THE VESSEL M/V
“NATIONAL HONOR,” NATIONAL SHIPPING CORPORATION OF THE PHILIPPINES and
INTERNATIONAL CONTAINER SERVICES, INC.
[G.R. No. 161833. July 8, 2005]

FACTS:
Petitioner Philippine Charter Insurance Corporation (PCIC) is the insurer of a shipment on board the vessel
M/V “National Honor,” represented in the Philippines by its agent, National Shipping Corporation of the
Philippines (NSCP).

The M/V “National Honor” arrived at the Manila International Container Terminal (MICT). The International
Container Terminal Services, Incorporated (ICTSI) was furnished with a copy of the crate cargo list and bill
of lading, and it knew the contents of the crate. The following day, the vessel started discharging its cargoes
using its winch crane. The crane was operated by Olegario Balsa, a winchman from the ICTSI, exclusive
arrastre operator of MICT.

Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor of the ICTSI,
conducted an inspection of the cargo. They inspected the hatches, checked the cargo and found it in
apparent good condition. Claudio Cansino, the stevedore of the ICTSI, placed two sling cables on each end
of Crate No. 1. No sling cable was fastened on the mid-portion of the crate. In Dauz’s experience, this was
a normal procedure. As the crate was being hoisted from the vessel’s hatch, the mid-portion of the wooden
flooring suddenly snapped in the air, about five feet high from the vessel’s twin deck, sending all its contents
crashing down hard, resulting in extensive damage to the shipment.

PCIC paid the damage, and as subrogee, filed a case against M/V National Honor, NSCP and ICTSI. Both
RTC and CA dismissed the complaint.

ISSUE:
Whether or not the presumption of negligence is applicable in the instant case.

HELD: No.
We agree with the contention of the petitioner that common carriers, from the nature of their business and
for reasons of public policy, are mandated to observe extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by them, according to all the circumstances of each case.
he Court has defined extraordinary diligence in the vigilance over the goods as follows:
The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common
carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods
entrusted to it for sale, carriage and delivery. It requires common carriers to render service with the greatest
skill and foresight and “to use all reasonable means to ascertain the nature and characteristic of goods
tendered for shipment, and to exercise due care in the handling and stowage, including such methods as
their nature requires.”

The common carrier’s duty to observe the requisite diligence in the shipment of goods lasts from the time
the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier
for transportation until delivered to, or until the lapse of a reasonable time for their acceptance, by the
person entitled to receive them.] >When the goods shipped are either lost or arrive in damaged condition,
a presumption arises against the carrier of its failure to observe that diligence, and there need not be an
express finding of negligence to hold it liable. To overcome the presumption of negligence in the case of
loss, destruction or deterioration of the goods, the common carrier must prove that it exercised
extraordinary diligence.

However, under Article 1734 of the New Civil Code, the presumption of negligence does not apply 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.

It bears stressing that the enumeration in Article 1734 of the New Civil Code which exempts the common
carrier for the loss or damage to the cargo is a closed list. To exculpate itself from liability for the
loss/damage to the cargo under any of the causes, the common carrier is burdened to prove any of the
aforecited causes claimed by it by a preponderance of evidence. If the carrier succeeds, the burden of
evidence is shifted to the shipper to prove that the carrier is negligent.

“Defect” is the want or absence of something necessary for completeness or perfection; a lack or absence
of something essential to completeness; a deficiency in something essential to the proper use for the
purpose for which a thing is to be used. On the other hand, inferior means of poor quality, mediocre, or
second rate. A thing may be of inferior quality but not necessarily defective. In other words, “defectiveness”
is not synonymous with “inferiority.”

xxx

In the present case, the trial court declared that based on the record, the loss of the shipment was caused by
the negligence of the petitioner as the shipper:

The same may be said with respect to defendant ICTSI. The breakage and collapse of Crate No. 1 and the total
destruction of its contents were not imputable to any fault or negligence on the part of said defendant in
handling the unloading of the cargoes from the carrying vessel, but was due solely to the inherent defect and
weakness of the materials used in the fabrication of said crate.
The crate should have three solid and strong wooden batten placed side by side underneath or on the flooring
of the crate to support the weight of its contents. x x x
LEA MER INDUSTRIES INC VS MALAYAN INSURANCE CO, INC.
GR No. 161745, SEPTEMBER 30, 2005

FACTS:
Ilian Silica Mining entered into a contract of carriage with the petitioner, Lea Mer Industries Inc. for the
shipment of 900 metric tons of silica sand worth P565,000. The cargo was consigned to Vulcan Industrial
and Mining Corporation and was to be shipped from Palawan to Manila. The silica sand was boarded to
Judy VII, the vessel leased by Lea Mer. However, during the course of its voyage, the vessel sank which led
to the loss of the cargo.

Consequently, the respondent, as the insurer, paid Vulcan the value of the lost cargo. Malayan Insurance
Co., Inc. then collected from the petitioner the amount it paid to Vulcan as reimbursement and as its exercise
on the right of subrogation. Lea Mer refused to pay which led Malayan to institute a complaint with the
RTC. The RTC dismissed the complaint stating that the loss was due to a fortuitous event, Typhoon Trining.
Petitioner did not know that a typhoon was coming and that it has been cleared by the Philippine Coast
Guard to travel from Palawan to Manila. The CA reversed the ruling of the trial court for the reason that said
vessel was not seaworthy when it sailed to Manila.

ISSUE: Whether or not the petitioner is liable for the loss of the cargo.

HELD:
CA reversed. Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods, or both — by land, water, or air — when this service is offered
to the public for compensation. Petitioner is clearly a common carrier, because it offers to the public its
business of transporting goods through its vessels. Thus, the Court corrects the trial court's finding that
petitioner became a private carrier when Vulcan chartered it. Charter parties are classified as contracts of
demise (or bareboat) and affreightment, which are distinguished as follows:

"Under the demise or bareboat charter of the vessel, the charterer will generally be considered as owner for
the voyage or service stipulated. The charterer mans the vessel with his own people and becomes, in effect,
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 at all."

The distinction is significant, because a demise or bareboat charter indicates a business undertaking that is
private in character. Consequently, the rights and obligations of the parties to a contract of private carriage
are governed principally by their stipulations, not by the law on common carriers. The Contract in the
present case was one of affreightment, as shown by the fact that it was petitioner's crew that manned the
tugboat M/V Ayalit and controlled the barge Judy VII.

Common carriers are bound to observe extraordinary diligence in their vigilance over the goods and the
safety of the passengers they transport, as required by the nature of their business and for reasons of public
policy. Extraordinary diligence requires rendering service with the greatest skill and foresight to avoid
damage and destruction to the goods entrusted for carriage and delivery.
Common carriers are presumed to have been at fault or to have acted negligently for loss or damage to the
goods that they have transported. This presumption can be rebutted only by proof that they observed
extraordinary diligence, or that the loss or damage was occasioned by 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."

Jurisprudence defines the elements of a "fortuitous event" as follows: (a) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtors to comply with their obligations, must have been
independent of human will; (b) the event that constituted the caso fortuito must have been impossible to
foresee or, if foreseeable, impossible to avoid; (c) the occurrence must have been such as to render it
impossible for the debtors to fulfill their obligation in a normal manner; and (d) the obligor must have been
free from any participation in the aggravation of the resulting injury to the creditor. To excuse the common
carrier fully of any liability, the fortuitous event must have been the proximate and only cause of the loss.
Moreover, it should have exercised due diligence to prevent or minimize the loss before, during and after
the occurrence of the fortuitous event. As required by the pertinent law, it was not enough for the common
carrier to show that there was an unforeseen or unexpected occurrence. It had to show that it was free from
any fault — a fact it miserably failed to prove.

GANZON vs. COURT OF APPEALS and GELACIO E. TUMAMBING

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

FACTS:
On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305 tons
of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman. Pursuant to
that agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it docked in three feet of
water. Gelacio Tumambing delivered the scrap iron to defendant Filomeno Niza, captain of the lighter, for
loading which was actually begun on the same date by the crew of the lighter under the captain's
supervision. When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles,
Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The latter resisted the shakedown and
after a heated argument between them, Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing
who sustained injuries.

After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio
Rub, accompanied by three policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron
where the lighter was docked. The rest was brought to the compound of NASSCO. Later on, Acting Mayor
Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron.

Tumabing sued Ganzon; the latter alleged that the goods have not been unconditionally placed under his
custody and control to make him liable. The trial court dismissed the case but on appeal, respondent Court
rendered a decision reversing the decision of the trial court and ordering Ganzon to pay damages.

ISSUE [1]: Whether or not a contract of carriage has been perfected.

HELD [1]: Yes.
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-carrier's extraordinary responsibility for the loss,
destruction or deterioration of the goods commenced. Pursuant to Art. 1736, such extraordinary
responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or
to the person who has a right to receive them. The fact that part of the shipment had not been loaded on
board the lighter did not impair the said contract of transportation as the goods remained in the custody
and control of the carrier, albeit still unloaded.

Before Ganzon could be absolved from responsibility on the ground that he was ordered by competent
public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to
issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. The
appellee failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order
was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality
of Mariveles. What we have in the record is the stipulation of the parties that the cargo of scrap iron was
accumulated by the appellant through separate purchases here and there from private individuals. The fact
remains that the order given by the acting mayor to dump the scrap iron into the sea was part of the
pressure applied by Mayor Jose Advincula to shakedown Tumambing for P5,000.00. The order of the acting
mayor did not constitute valid authority for Ganzon and his representatives to carry out.

ISSUE [2]: W/N Ganzon should be held liable under the contract of carriage

HELD [2]: YES. Petition is DENIED.

 Ganzon thru his employees, actually received the scraps is freely admitted.
 Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual
or constructive, by the carrier to the consignee, or to the person who has a right to receive them.
 The fact that part of the shipment had not been loaded on board the lighter did not impair the said
contract of transportation as the goods remained in the custody and control of the carrier, albeit
still unloaded.
 failed to show that the loss of the scraps was due to any of the following causes enumerated in
Article 1734 of the Civil Code, namely:

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

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

 Hence, the petitioner is presumed to have been at fault or to have acted negligently.
 By reason of this presumption, the court is not even required to make an express finding of fault or
negligence before it could hold the petitioner answerable for the breach of the contract of carriage.
 exempted from any liability had he been able to prove that he observed extraordinary diligence in
the vigilance over the goods in his custody, according to all the circumstances of the case, or that
the loss was due to an unforeseen event or to force majeure. As it was, there was hardly any attempt
on the part of the petitioner to prove that he exercised such extraordinary diligence.
 We cannot sustain the theory of caso fortuito - "order or act of competent public authority"(Art.
1174 of the Civil Code)
  no authority or power of the acting mayor to issue such an order was given in evidence. Neither
has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles.
 Ganzon was not duty bound to obey the illegal order to dump into the sea the scrap iron.
 Moreover, there is absence of sufficient proof that the issuance of the same order was attended
with such force or intimidation as to completely overpower the will of the petitioner's employees.
The mere difficulty in the fullfilment of the obligation is not considered force majeure.

PEDRO DE GUZMAN V. CA AND ERNESTO CENDANA

G.R. NO. L-47822 DECEMBER 22, 1988

FACTS:
 Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap
metal in Pangasinan which he would bring to Manila for resale. He utilized two (2) 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 differing establishments in Pangasinan. For that service, respondent
charged freight rates which were commonly lower than regular commercial rates.
 Sometime in November 1970, 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 a warehouse of General Milk in Makati, Rizal,
to petitioner's establishment in Urdaneta on or before 4 December 1970.
 Accordingly, respondent loaded in Makati the merchandise on to his trucks: 150 cartons were
loaded on a truck driven by respondent himself, 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.
 De Guzman commenced action against Cendena in the CFI of Pangasinan, demanding payment of
P 22,150 representing 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.
 Cendena 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.
 RTC found private respondent to be a common carrier and held him liable for the value of the
undelivered goods as well as P4K as damages and P 2K as attorney's fees.
 CA reversed the judgment of the trial court and held that respondent had been engaged in
transporting return loads of freight "as a casual occupation — a sideline to his scrap iron business"
and not as a common carrier.

ISSUE/S:
 W/N Cendena may, under the facts presented, be properly characterized as a common carrier?
 W/N Cendena, assuming it is a common carrier, may be held liable for the loss of goods?
RULING:
1. YES. It appears to the Court that private respondent is properly characterized as a common carrier even
though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such
back-hauling was done on a periodic or occasional rather than regular or scheduled manner, and even
though private respondent's principal occupation was not the carriage of goods for others. There is no
dispute that private respondent charged his customers a fee for hauling their goods; that fee frequently fell
below commercial freight rates is not relevant here.

A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers. 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. The specific cause alleged in the instant case — the hijacking of the carrier's truck — does not fall
within any of the five (5) 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.

The duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given additional
specification not only by Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6.

Under Article 1745 (6) above, a common carrier is held responsible —and will not be allowed to divest or
to diminish such responsibility— even for acts of strangers like thieves or robbers, except where such thieves
or robbers in fact acted "with grave or irresistible threat, violence or force."

The limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached where
the goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or
force."

In the instant case, armed men held up the second truck owned by private respondent which carried
petitioner's cargo. The record shows that the accused were charged with willfully and unlawfully taking and
carrying away with them the second truck, driven by Manuel Estrada and loaded with the 600 cartons of
Liberty filled milk destined for delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the trial
court shows that the accused acted with grave, if not irresistible, threat, violence or force. Three (3) of the
five (5) hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but
also kidnapped the driver and his helper, detaining them for several days and later releasing them in another
province (in Zambales). The hijacked truck was subsequently found by the police in Quezon City. CFI
convicted all the accused of robbery, though not of robbery in band.
Thus, 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.

LU DO & LU YM CORPORATION vs I. V. BINAMIRA

G.R. No. L-9840 April 22, 1957

FACTS:
On April 4, 1954, plaintiff filed an action in the Court of First Instance of Cebu against defendant to recover
the sum of P324.63 as value of certain missing shipment, P150 as actual and compensatory damages, and
P600 as moral and pecuniary damages. After trial, the court rendered judgment ordering defendant to pay
plaintiff the sum of P216.84, with legal interest. On appeal, the Court of Appeals affirmed the judgment,
hence the present petition for review.

On August 10, 1951, the Delta Photo Supply Company of New York shipped on board the M/S "FERNSIDE"
at New York, U.S.A., six cases of films and/or photographic supplies consigned to the order of respondent
I. V. Binamira. For this shipment, Bill of Lading No. 29 was issued. The ship arrived at the port of Cebu on
September 23, 1951 and discharged her cargo on September 23, and 24, 1951, including the shipment in
question, placing it in the possession and custody of the arrastre operator of said port, the Visayan Cebu
Terminal Company, Inc.

Petitioner, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. to unload its cargo. During the
discharge, good order cargo was separated from the bad order cargo on board the ship, and a separate list
of bad order cargo was prepared by Pascual Villamor, checker of the stevedoring company.

All the cargo unloaded was received at the pier by the Visayan Cebu Terminal Company Inc, arrastre
operator of the port. This terminal company had also its own checker, Romeo Quijano, who also recorded
and noted down the good cargo from the bad one. The shipment in question, was not included in the report
of bad order cargo of both checkers, indicating that it was discharged from the, ship in good order and
condition.

On September 26, 1951, three days after the goods were unloaded from the ship, respondent took delivery
of his six cases of photographic supplies from the arrastre operator. He discovered that the cases showed
signs of pilferage and, consequently, he hired marine surveyors, R. J. del Pan & Company, Inc., to examine
them. The surveyors examined the cases and made a physical count of their contents in the presence of
representatives of petitioner, respondent and the stevedoring company. The surveyors examined the cases
and made a physical count of their contents in the presence of representatives of petitioner, respondent
and the stevedoring company. The finding of the surveyors showed that some films and photographic
supplies were missing valued at P324.63.

It appears from the evidence that the six cases of films and photographic supplies were discharged from
the ship at the port of Cebu by the stevedoring company hired by petitioner as agent of the carrier. All the
unloaded cargo, including the shipment in question, was received by the Visayan Cebu Terminal Company
Inc., the arrastre operator appointed by the Bureau of Customs. It also appears that during the discharge,
the cargo was checked both by the stevedoring company hired by petitioner as well as by the arrastre
operator of the port, and the shipment in question, when discharged from the ship, was found to be in
good order and condition. But after it was delivered to respondent three days later, the same was examined
by a marine surveyor who found that some films and supplies were missing valued at P324.63.
ISSUE:
WON CA erred in its decision holding the carrier responsible for the loss considering that the same occurred
after the shipment was discharged from the ship and placed in the possession and custody of the customs
authorities?

RULING:
We believe this contention is well taken. It is true that, as a rule, a common carrier is responsible for the
loss, destruction or deterioration of the goods it assumes to carry from one place to another unless the
same is due to any to any of the causes mentioned in Article 1734 on the new Civil Code, and that, if the
goods are lost, destroyed or deteriorated, for causes other that those mentioned, the common carrier is
presumed to have been at fault or to have acted negligently, unless it proves that it has observed
extraordinary diligence in their care (Article 1735, Idem.), and that this extraordinary liability lasts from the
time the goods are placed in the possession of the carrier until they are delivered to the consignee, or "to
the person who has the right to receive them" (Article 1736, Idem.), but these provisions only apply when
the loss, destruction or deterioration takes place while the goods are in the possession of the carrier, and
not after it has lost control of them. The reason is obvious. While the goods are in its possession, it is but
fair that it exercise extraordinary diligence in protecting them from damage, and if loss occurs, the law
presumes that it was due to its fault or negligence. This is necessary to protect the interest the interest of
the owner who is at its mercy. The situation changes after the goods are delivered to the consignee.

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

1. . . . The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or
misdelivery, or loss of or damage to the goods occurring while the goods are not in the actual
custody of the Carrier. . . . (Emphasis ours.)

(Paragraph 1, Exhibit "1")

2. . . . The responsibility of the Carrier in any capacity shall altogether cease and the goods shall
be considered to be delivered and at their own risk and expense in every respect when taken
into the custody of customs or other authorities. The Carrier shall not be required to give any
notification of disposition of the goods. . . . (Emphasis ours.)

(Paragraph 12, Exhibit "1")

3. Any provisions herein to the contrary notwithstanding, goods may be . . . by Carrier at ship's
tackle . . . and delivery beyond ship's tackle shall been tirely at the option of the Carrier and
solely at the expense of the shipper or consignee.
(Paragraph 22, Exhibit "1")

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

Wherefore, the decision appealed from is reversed, without pronouncement as to costs.

Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion, Reyes, J.B.L. Endencia and Felix,
JJ., concur.