THIRD DIVISION

[G.R. No. 147246. August 19, 2003.]

ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, vs. COURT

OF APPEALS and PRUDENTIAL GUARANTEE AND
ASSURANCE, INC., respondents.

Soo Gutierrez Leogardo & Lee for petitioner.

Linsangan Linsangan & Linsangan Law Offices for respondent.

SYNOPSIS

Petitioner was contracted as carrier by a corporation from Portland,

Oregon to deliver a cargo to the consignee's warehouse at Pasig City. The
cargo, however, never reached the consignee as the barge that carried the
cargo sank completely, resulting in damage to the cargo. Private respondent,
as insurer, indemnified the consignee for the lost cargo and thus, as subrogee,
sought recovery from petitioner. Both the trial court and the appellate court
ruled in favor of private respondent.
The Court ruled in favor of private respondent. Whether or not petitioner
is a common carrier, the Court ruled in the affirmative. The principal business
of petitioner is that of lighterage and drayage, offering its barges to the public,
although for limited clientele, for carrying or transporting goods by water for
compensation. Whether or not petitioner failed to exercise extraordinary
diligence in its care and custody of the consignee's goods, the Court also ruled
in the affirmative. The barge completely sank after its towing bits broke,
resulting in the loss of the cargo. Petitioner failed to prove that the typhoon was
the proximate and only cause of the loss and that it has exercised due diligence
before, during and after the occurrence.

SYLLABUS

1. CIVIL LAW; SPECIAL CONTRACTS; COMMON CARRIERS; DEFINITION;

ELUCIDATED. — Article 1732 of the Civil Code defines common carriers 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. Petitioner contends that it
is not a common carrier but a private carrier. Allegedly, it has no fixed and
publicly known route, maintains no terminals, and issues no tickets. It points
out that it is not obliged to carry indiscriminately for any person. It is not bound
to carry goods unless it consents. In short, it does not hold out its services to
the general public. In De Guzman vs. Court of Appeals, we held that the
definition of common carriers in Article 1732 of the Civil Code makes no
distinction between one whose principal business activity is the carrying of
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 persons or goods or both, and one who does such carrying only as an ancillary
activity. We also did not distinguish 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. Further, we ruled that
Article 1732 does not distinguish between a carrier offering its services to the
general public, and one who offers services or solicits business only from a
narrow segment of the general population.
2. ID.; ID.; ID.; HOW DETERMINED. — Petitioner is a common carrier
whether its carrying of goods is done on an irregular rather than scheduled
manner, and with an only limited clientele. A common carrier need not have
fixed and publicly known routes. Neither does it have to maintain terminals or
issue tickets. To be sure, petitioner fits the test of a common carrier as laid
down in Bascos vs. Court of Appeals. 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 the case at bar, the
petitioner admitted that it is engaged in the business of shipping and
lighterage, offering its barges to the public, despite its limited clientele for
carrying or transporting goods by water for compensation.
3. ID.; ID.; ID.; REQUIRED TO OBSERVE EXTRAORDINARY DILIGENCE;
PRESUMPTION OF NEGLIGENCE IN CASE OF LOSS, DESTRUCTION OR
DETERIORATION OF GOODS; EXCEPTIONS. — Common carriers are bound to
observe extraordinary diligence in the vigilance over the goods transported by
them. They are presumed to have been at fault or to have acted negligently if
the goods are lost, destroyed or deteriorated. To overcome the presumption of
negligence in the case of loss, destruction or deterioration of the goods,
deterioration of the goods, the common carrier must prove that it exercised
extraordinary diligence. There are, however, exceptions to this rule. Article
1734 of the Civil Code enumerates the instances when the presumption of
negligence does not attach: Art. 1734. 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; (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.
4. ID.; ID.; ID.; ID.; ID.; ID.; TYPHOON; NOT APPRECIATED IN THE
ABSENCE OF PROOF THAT IT WAS THE PROXIMATE AND ONLY CAUSE OF LOSS
AND DUE DILIGENCE EXERCISED BEFORE, DURING AND AFTER THE TYPHOON.
— In the case at bar, the barge completely sank after its towing bits broke,
resulting in the total loss of its cargo. Petitioner claims that this was caused by
a typhoon, hence, it should not be held liable for the loss of the cargo.
However, petitioner failed to prove that the typhoon is the proximate and only
cause of the loss of the goods, and that it has exercised due diligence before,
during and after the occurrence of the typhoon to prevent or minimize the loss.
The evidence show that, even before the towing bits of the barge broke, it had
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 already previously sustained damage when it hit a sunken object while docked
at the Engineering Island. It even suffered a hole. Clearly, this could not be
solely attributed to the typhoon. The partly-submerged vessel was refloated but
its hole was patched with only clay and cement. The patch work was merely a
provisional remedy, not enough for the barge to sail safely. Thus, when
petitioner persisted to proceed with the voyage, it recklessly exposed the cargo
to further damage.

DECISION

PUNO, J : p

On appeal is the Court of Appeals' May 11, 2000 Decision 1 in CA-G.R. CV

No. 49195 and February 21, 2001 Resolution 2 affirming with modification the
April 6, 1994 Decision 3 of the Regional Trial Court of Manila which found
petitioner liable to pay private respondent the amount of indemnity and
attorney's fees.

First, the facts.

On June 13, 1990, 3,150 metric tons of Better Western White Wheat in
bulk, valued at US$423,192.35 4 was shipped by Marubeni American
Corporation of Portland, Oregon on board the vessel M/V NEO CYMBIDIUM V-26
for delivery to the consignee, General Milling Corporation in Manila, evidenced
by Bill of Lading No. PTD/Man-4. 5 The shipment was insured by the private
respondent Prudential Guarantee and Assurance, Inc. against loss or damage
for P14,621,771.75 under Marine Cargo Risk Note RN 11859/90. 6
On July 25, 1990, the carrying vessel arrived in Manila and the cargo was
transferred to the custody of the petitioner Asia Lighterage and Shipping, Inc.
The petitioner was contracted by the consignee as carrier to deliver the cargo
to consignee's warehouse at Bo. Ugong, Pasig City.
On August 15, 1990, 900 metric tons of the shipment was loaded on
barge PSTSI III, evidenced by Lighterage Receipt No. 0364 7 for delivery to
consignee. The cargo did not reach its destination.
It appears that on August 17, 1990, the transport of said cargo was
suspended due to a warning of an incoming typhoon. On August 22, 1990, the
petitioner proceeded to pull the barge to Engineering Island off Baseco to seek
shelter from the approaching typhoon. PSTSI III was tied down to other barges
which arrived ahead of it while weathering out the storm that night. A few days
after, the barge developed a list because of a hole it sustained after hitting an
unseen protruberance underneath the water. The petitioner filed a Marine
Protest on August 28, 1990. 8 It likewise secured the services of Gaspar
Salvaging Corporation which refloated the barge. 9 The hole was then patched
with clay and cement.
The barge was then towed to ISLOFF terminal before it finally headed
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 towards the consignee's wharf on September 5, 1990. Upon reaching the Sta.
Mesa spillways, the barge again ran aground due to strong current. To avoid
the complete sinking of the barge, a portion of the goods was transferred to
three other barges. 10
The next day, September 6, 1990, the towing bits of the barge broke. It
sank completely, resulting in the total loss of the remaining cargo. 11 A second
Marine Protest was filed on September 7, 1990. 12
On September 14, 1990, a bidding was conducted to dispose of the
damaged wheat retrieved and loaded on the three other barges. 13 The total
proceeds from the sale of the salvaged cargo was P201,379.75. 14

On the same date, September 14, 1990, consignee sent a claim letter to
the petitioner, and another letter dated September 18, 1990 to the private
respondent for the value of the lost cargo.

On January 30, 1991, the private respondent indemnified the consignee in

the amount of P4,104,654.22. 15 Thereafter, as subrogee, it sought recovery of
said amount from the petitioner, but to no avail.
On July 3, 1991, the private respondent filed a complaint against the
petitioner for recovery of the amount of indemnity, attorney's fees and cost of
suit. 16 Petitioner filed its answer with counterclaim. 17
The Regional Trial Court ruled in favor of the private respondent. The
dispositive portion of its Decision states:
WHEREFORE, premises considered, judgment is hereby rendered
ordering defendant Asia Lighterage & Shipping, Inc. liable to pay
plaintiff Prudential Guarantee & Assurance Co., Inc. the sum of
P4,104,654.22 with interest from the date complaint was filed on July 3,
1991 until fully satisfied plus 10% of the amount awarded as and for
attorney's fees. Defendant's counterclaim is hereby DISMISSED. With
costs against defendant. 18

Petitioner appealed to the Court of Appeals insisting that it is not a

common carrier. The appellate court affirmed the decision of the trial court with
modification. The dispositive portion of its decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED
with modification in the sense that the salvage value of P201,379.75
shall be deducted from the amount of P4,104,654.22. Costs against
appellant.
SO ORDERED.

Petitioner's Motion for Reconsideration dated June 3, 2000 was likewise

denied by the appellate court in a Resolution promulgated on February 21,
2001.
Hence, this petition. Petitioner submits the following errors allegedly
committed by the appellate court, viz: 19

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 (1) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A
WAY NOT IN ACCORD WITH LAW AND/OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
HELD THAT PETITIONER IS A COMMON CARRIER.

(2) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A

WAY NOT IN ACCORD WITH LAW AND/OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
AFFIRMED THE FINDING OF THE LOWER COURT A QUO THAT
ON THE BASIS OF THE PROVISIONS OF THE CIVIL CODE
APPLICABLE TO COMMON CARRIERS, "THE LOSS OF THE
CARGO IS, THEREFORE, BORNE BY THE CARRIER IN ALL
CASES EXCEPT IN THE FIVE (5) CASES ENUMERATED ."
(3) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A
WAY NOT IN ACCORD WITH LAW AND/OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
EFFECTIVELY CONCLUDED THAT PETITIONER FAILED TO
EXERCISE DUE DILIGENCE AND/OR WAS NEGLIGENT IN ITS
CARE AND CUSTODY OF THE CONSIGNEE'S CARGO.
The issues to be resolved are:

(1) Whether the petitioner is a common carrier; and,

(2) Assuming the petitioner is a common carrier, whether it exercised
extraordinary diligence in its care and custody of the consignee's cargo.

On the first issue, we rule that petitioner is a common carrier.

Article 1732 of the Civil Code defines common carriers 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.

Petitioner contends that it is not a common carrier but a private carrier.

Allegedly, it has no fixed and publicly known route, maintains no terminals, and
issues no tickets. It points out that it is not obliged to carry indiscriminately for
any person. It is not bound to carry goods unless it consents. In short, it does
not hold out its services to the general public. 20

We disagree.
I n De Guzman vs. Court of Appeals, 21 we held that the definition of
common carriers in Article 1732 of the Civil Code 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. We also did
not distinguish 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. Further, we ruled that Article 1732 does not
distinguish between a carrier offering its services to the general public, and one
who offers services or solicits business only from a narrow segment of the
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 general population.

In the case at bar, the principal business of the petitioner is that of

lighterage and drayage 22 and it offers its barges to the public for carrying or
transporting goods by water for compensation. Petitioner is clearly a common
carrier. In De Guzman, supra, 23 we considered private respondent Ernesto
Cendaña to be a common carrier even if his principal occupation was not the
carriage of goods for others, but that of buying used bottles and scrap metal in
Pangasinan and selling these items in Manila.

We therefore hold that petitioner is a common carrier whether its carrying

of goods is done on an irregular rather than scheduled manner, and with an
only limited clientele. A common carrier need not have fixed and publicly known
routes. Neither does it have to maintain terminals or issue tickets.

To be sure, petitioner fits the test of a common carrier as laid down in

Bascos vs. Court of Appeals. 24 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." 25 In the case at bar,
the petitioner admitted that it is engaged in the business of shipping and
lighterage, 26 offering its barges to the public, despite its limited clientele for
carrying or transporting goods by water for compensation. 27

On the second issue, we uphold the findings of the lower courts that
petitioner failed to exercise extraordinary diligence in its care and custody of
the consignee's goods.
Common carriers are bound to observe extraordinary diligence in the
vigilance over the goods transported by them. 28 They are presumed to have
been at fault or to have acted negligently if the goods are lost, destroyed or
deteriorated. 29 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. There are, however, exceptions to this rule.
Article 1734 of the Civil Code enumerates the instances when the presumption
of negligence does not attach:
Art. 1734. 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;
(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.
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 In the case at bar, the barge completely sank after its towing bits broke,
resulting in the total loss of its cargo. Petitioner claims that this was caused by
a typhoon, hence, it should not be held liable for the loss of the cargo.
However, petitioner failed to prove that the typhoon is the proximate and only
cause of the loss of the goods, and that it has exercised due diligence before,
during and after the occurrence of the typhoon to prevent or minimize the loss.
30 The evidence show that, even before the towing bits of the barge broke, it

had already previously sustained damage when it hit a sunken object while
docked at the Engineering Island. It even suffered a hole. Clearly, this could not
be solely attributed to the typhoon. The partly-submerged vessel was refloated
but its hole was patched with only clay and cement. The patch work was
merely a provisional remedy, not enough for the barge to sail safely. Thus,
when petitioner persisted to proceed with the voyage, it recklessly exposed the
cargo to further damage. A portion of the cross-examination of Alfredo
Cunanan, cargo-surveyor of Tan-Gatue Adjustment Co., Inc., states:
CROSS-EXAMINATION BY ATTY. DONN LEE: 31

xxx xxx xxx

q Can you tell us what else transpired after that incident?
a After the first accident, through the initiative of the barge owners,
they tried to pull out the barge from the place of the accident,
and bring it to the anchor terminal for safety, then after deciding
if the vessel is stabilized, they tried to pull it to the consignee's
warehouse, now while on route another accident occurred, now
this time the barge totally hitting something in the course.
q You said there was another accident, can you tell the court
nature of the second accident?
a The sinking, sir.
q Can you tell the nature . . . can you tell the court, if you know
what caused the sinking?
a Mostly it was related to the first accident because there was
already a whole (sic ) on the bottom part of the barge.
xxx xxx xxx

This is not all. Petitioner still headed to the consignee's wharf despite
knowledge of an incoming typhoon. During the time that the barge was
heading towards the consignee's wharf on September 5, 1990, typhoon
"Loleng" has already entered the Philippine area of responsibility. 32 A part of
the testimony of Robert Boyd, Cargo Operations Supervisor of the petitioner,
reveals:
DIRECT-EXAMINATION BY ATTY. LEE: 33

xxx xxx xxx

q Now, Mr. Witness, did it not occur to you it might be safer to just
allow the Barge to lie where she was instead of towing it?
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 a Since that time that the Barge was refloated, GMC (General
Milling Corporation, the consignee) as I have said was in a hurry
for their goods to be delivered at their Wharf since they needed
badly the wheat that was loaded in PSTSI-3. It was needed badly
by the consignee.
q And this is the reason why you towed the Barge as you did?
a Yes, sir.

xxx xxx xxx

CROSS-EXAMINATION BY ATTY. IGNACIO: 34
xxx xxx xxx
q And then from ISLOFF Terminal you proceeded to the premises of
the GMC? Am I correct?
a The next day, in the morning, we hired for additional two (2)
tugboats as I have stated.
q Despite of the threats of an incoming typhoon as you testified a
while ago?
a It is already in an inner portion of Pasig River. The typhoon would
be coming and it would be dangerous if we are in the vicinity of
Manila Bay.
q But the fact is, the typhoon was incoming? Yes or no?
a Yes.
q And yet as a standard operating procedure of your Company, you
have to secure a sort of Certification to determine the weather
condition, am I correct?
a Yes, sir.
q So, more or less, you had the knowledge of the incoming
typhoon, right?
a Yes, sir.
q And yet you proceeded to the premises of the GMC?
a ISLOFF Terminal is far from Manila Bay and anytime even with the
typhoon if you are already inside the vicinity or inside Pasig
entrance, it is a safe place to tow upstream.

Accordingly, the petitioner cannot invoke the occurrence of the typhoon

as force majeure to escape liability for the loss sustained by the private
respondent. Surely, meeting a typhoon head-on falls short of due diligence
required from a common carrier. More importantly, the officers/employees
themselves of petitioner admitted that when the towing bits of the vessel broke
that caused its sinking and the total loss of the cargo upon reaching the Pasig
River, it was no longer affected by the typhoon. The typhoon then is not the
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 proximate cause of the loss of the cargo; a human factor, i.e ., negligence had
intervened.
IN VIEW THEREOF, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. CV No. 49195 dated May 11, 2000 and its Resolution dated
February 21, 2001 are hereby AFFIRMED. Costs against petitioner. HIEAcC

SO ORDERED.
Panganiban and Sandoval-Gutierrez, JJ ., concur.
Corona and Carpio Morales, JJ ., on official leave.

Footnotes
1. Rollo , pp. 49-59.
2. Id., p. 61.
3. Id., pp. 71-73.
4. Exhibit "B", Records, p. 91.
5. Exhibit "A", id., p. 90.
6. Exhibits "I" and "I-1", id., pp. 107-108.
7. Exhibit "C", id., p. 92.

8. Exhibit "4", id., p. 144.

9. Exhibits "G-1" and "1-A," id., p. 100.
10. Exhibits "G-2" and "1-B," id., p. 101.
11. Ibid.
12. Exhibit "5", Records, p. 145.

13. Supra note 10.

14. Exhibits "G-3" and "1-C", Records, p. 102.
15. Exhibit "L", id., p. 110.
16. Id., pp. 1-4.
17. Id., pp. 21-22.
18. Id., p. 172.
19. Rollo , p. 22.
20. Id., pp. 147-150.
21. G.R. No. L-47822, 22 December 1988.

22. Rollo , p. 127.

23. See note 21.
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 24. G.R. No. 101089, 07 April 1993, 221 SCRA 318.
25. Id., pp. 323-324.
26. Rollo , p. 14.
27. Id., pp. 148-150.
28. Article 1733, 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 and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Such extraordinary diligence in vigilance over the goods is further expressed
in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary
diligence for the safety of the passengers is further set forth in Articles 1755
and 1756.
29. Article 1735, Civil Code. In all cases other than those mentioned in Nos. 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.
30. Article 1739, Civil Code. In order that the common carrier may be
exempted from responsibility, the natural disaster must have been the
proximate and only cause of the loss. However, the common carrier must
exercise due diligence to prevent or minimize the loss before, during and
after the occurrence of flood, storm or other natural disaster in order that the
common carrier may be exempted from liability for the loss, destruction, or
deterioration of the goods. The same duty is incumbent upon the common
carrier in case of an act of the public enemy referred to in Article 1734, no. 2.
31. TSN, 04 March 1993, pp. 12-13.
32. Certification dated 02 August 1991 issued by the Philippine Atmospheric
Geophysical & Astronomical Services Administration (PAGASA) Exhibit "7",
Records, p. 147.

33. TSN, 09 March 1993, pp. 70-71.

34. Id., pp. 76-77.

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