Arada v. CA, G.R. No. 98243.

July 1, 1992

Facts:
Alejandro Arada was the proprietor and operator of the firm South Negros
Enterprises engaged in the business of small scale shipping as a common carrier. On 24 March 1982, Arada entered
into a contract with San Miguel Corporation (SMC) to safely transport cargoes of the latter to Mandaue City using one
of Arada’s vessels, M/L Maya. On the same day it applied for a clearance with the Philippine Coast Guard for M/L but
due to a typhoon, it was denied clearance. M/L Maya was given clearance on the next day as there was no storm
and the sea was calm. Hence, said vessel left for Mandaue City. While it was navigating towards Cebu, a typhoon
developed and hit the vessel; as a result the vessel sank with whatever was left of its cargoes. The crew was rescued
by a passing pump boat. A marine protest was filed by the captain and on the basis of such marine protest; the
Board of Marine Inquiry conducted a hearing of the sinking of M/L Maya wherein SMC was duly represented. Said
Board made it findings and recommendation absolving the owner/operator, officers and crew of M/L Maya from any
administrative liability. The Board’s report containing its findings and recommendation was then forwarded to the
headquarters of the Philippine Coast Guard for appropriate action. On the basis of such report, the Commandant of
the Philippine Coast Guard rendered a decision exonerating the owner/operator officers and crew of the ill-
fated vessel from any administrative liability on account of said incident.
SMC then filed an action for the recovery of the value of the cargoes anchored in breach of contract of
carriage. The trial court held that there was no showing of negligence on the part of the defendant nor did it fail to
observe diligence over the cargoes and that the sinking was due to a fortuitous event. The CA decided otherwise,
hence this petition.

Issue:
Whether or not petitioner is liable for the loss of the cargoes

Held:
Petitioner contends that it was only a private carrier so it need not exercise extraordinary diligence over the
care of the respondent’s cargoes and that and that the factual findings of the Board of Marine Inquiry are binding
and conclusive on the court.
The SC ruled that that petitioner’s vessel is a common carrier and should have exercised extraordinary
diligence in the vigilance over the ensuring of safety of the cargoes transported by it. In order that it may be
exempted from responsibility due to fortuitous events, it must prove that the fortuitous event is the proximate cause
and only cause of the loss or destruction of goods and the common carrier must have exercised due diligence to
prevent or minimize the loss before, during and after the occurrence of the fortuitous event. Such was not observed
by the common carrier, the captain knew that there was a typhoon before it departed, it was given clearance on the
departure day but the captain should have checked where the typhoon was headed, neither did the captain of the
vessel monitor and record the weather conditions everyday as required by Art, 612 of the Code of Commerce. It was
also found that the crew were unlicensed. The carrier is therefore liable for the damages it caused to the
respondents as it failed to observe due diligence.
As to the Board decision, it only exonerated the petitioner and the crew and officers of the M/V Maya from
administrative liability which is not equal to the exoneration of the petitioner’s liability as a common carrier for his
failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent
acts or commissions of his employees. Such is the function of the Court, not the Special Board of Marine Inquiry.