1

1st week Digest of Transportation Law

Bascos v. CA

Facts:

Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation
whereby the former bound itself to haul the latter’s 2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE
subcontracted with petitioner Estrellita Bascos to transport and deliver the 400 sacks of soya beans. Petitioner failed to
deliver the cargo, and as a consequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract.
Cipriano demanded reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint for breach of
contract of carriage. Petitioner denied that there was no contract of carriage since CIPTRADE leased her cargo truck, and
that the hijacking was a force majeure. The trial court ruled against petitioner.

Issues:

(1) Was petitioner a common carrier?

(2) Was the hijacking referred to a force majeure?

Held:

(1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or association 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." 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 this case, petitioner herself has made the admission that she was in the trucking business,
offering her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove
the same.

(2) Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them.
Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when the presumption of negligence does not attach, and these instances are
enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome the presumption. The presumption of negligence was raised against
petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent need not introduce
any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the
presumption conclusive against her.

Calvo v. UCPB General Insurance

G.R. No. 148496 March 19, 2002

Facts: Petitioner Virgines Calvo, owner of Transorient Container Terminal Services, Inc. (TCTSI), and a custom broker,
entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and
124 reels of kraft liner board from the port area to the Tabacalera Compound, Ermita, Manila. The cargo was insured by
respondent UCPB General Insurance Co., Inc.

On July 14, 1990, contained in 30 metal vans, arrived in Manila on board “M/V Hayakawa Maru”. After 24 hours, they were
unloaded from vessel to the custody of the arrastre operator, Manila Port Services, Inc. From July 23 to 25, 1990, petitioner,
pursuant to her contract with SMC, withdrew the cargo from the arrastre operator and delivered it to SMC’s warehouse in
Manila. On July 25, the goods were inspected by Marine Cargo Surveyors, reported that 15 reels of the semi-chemical
fluting paper were “wet/stained/torn” and 3 reels of kraft liner board were also torn. The damages cost P93,112.00.

SMC collected the said amount from respondent UCPB under its insurance contract. Respondent on the other hand, as a
subrogee of SMC, brought a suit against petitioner in RTC, Makati City. On December 20, 1995, the RTC rendered judgment
finding petitioner liable for the damage to the shipment. The decision was affirmed by the CA.

Issue: Whether or not Calvo is a common carrier?

Held: In this case the contention of the petitioner, that he is not a common carrier but a private carrier, has no merit.

Article 1732 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 ancillary activity. Article 1732 also carefully avoids making any distinction 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. Neither does Article 1732 distinguish between a carrier offering its services to
 2

the "general public," i.e., the general community or population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinction.
(De Guzman v. CA, 68 SCRA 612)

Te concept of “common carrier” under Article 1732 coincide with the notion of “public service”, under the Public Service Act
which partially supplements the law on common carrier. Under Section 13, paragraph (b) of the Public Service Act, it
includes:

“ x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation,
with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes,
any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both,
with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or
both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric
light, heat and power, water supply and power petroleum, sewerage system, wire or wireless communications systems,
wire or wireless broadcasting stations and other similar public services. x x x”

De Guzman v. CA

Facts: Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he gathered to
Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan, respondent would load his vehicle with cargo
which various merchants wanted delivered, charging fee lower than the commercial rates. Sometime in November 1970,
petitioner Pedro de Guzman contracted with respondent for the delivery of 750 cartons of Liberty Milk. On December 1,
1970, respondent loaded the cargo. Only 150 boxes were delivered to petitioner because the truck carrying the boxes was
hijacked along the way. Petitioner commenced an action claiming the value of the lost merchandise. Petitioner argues that
respondent, being a common carrier, is bound to exercise extraordinary diligence, which it failed to do. Private respondent
denied that he was a common carrier, and so he could not be held liable for force majeure. The trial court ruled against the
respondent, but such was reversed by the Court of Appeals.

Issues:

(1) Whether or not private respondent is a common carrier

(2) Whether private respondent is liable for the loss of the goods

Held:

(1) Article 1732 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. Article 1732 also carefully avoids making any distinction
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. Neither does Article 1732 distinguish between a carrier offering its
services to the "general public," i.e., the general community or population, and one who offers services or solicits business
only from a narrow segment of the general population. 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 backhauling 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.

(2) Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or deterioration
of the goods which they carry, "unless the same is due to any of the following causes only:

a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;

b. Act of the public enemy in war, whether international or civil;

c. 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; and

e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting causes listed in Article
1734. Private respondent as common carrier is presumed to have been at fault or to have acted negligently. This
 3

presumption, however, may be overthrown by proof of extraordinary diligence on the part of private respondent. We believe
and so hold that 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." we hold that
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.

Eastern Shipping Lines, Inc. v. Court of Appeals

G.R. No. 94151, 30 April 1991, 196 SCRA 570

FACTS:

The carrier in this case is Eastern Shipping Lines Inc while the shipper/consignee is Stresstek Post Tensioning Philippines
Inc. The insurer is the First Nationwide Assurance Corporation while the Arrastre Operator is E. Razon Inc.

Eastern Shipping Lines Inc shipped uncoated 7-wire stress relieved wire strand for prestressed concrete were shipped on
board the vessel “Japri Venture,”. Upon arrival at the port of Manila, it discharged the cargo to the custody of the defendant
E. Razon, Inc. from whom the consignee’s customs broker received it for delivery to the consignee’s warehouse. First
Nationwide Assurance, indemnified the consignee in the amount of P171,923.00 for damage and loss to the insured cargo,
whereupon the former was subrogated for the latter. The insurer now seeks to recover from the defendants what it has
indemnified the consignee. The petitioner protested alleging that it should not be held liable to answer for damages for the
event that caused the rusting of the goods was due to the “encountered very rough seas and stormy weather” classified as
force majeure, hence relieving them of any liability. Aggrieved, respondent filed a case against petitioner.

The RTC dismissed the case but the CA set aside the RTC’s decision and ordered petitioner to pay respondent.

ISSUE:

Whether or not petitioner was negligent and should be held liable for the payment of damages.

HELD:

YES. Plainly, the heavy seas and rains referred to in the master’s report were not caso fortuito, but normal occurrences that
an ocean-going vessel, particularly in the month of September which, in our area, is a month of rains and heavy seas would
encounter as a matter of routine. They are neither unforeseen nor unforeseeable. These are conditions that ocean-going
vessels would encounter and provide for, in the ordinary course of a voyage. That rain water (not sea water) found its way
into the holds of the Japri Venture is a clear indication that care and foresight did not attend the closing of the ship’s hatches
so that rainwater would not find its way into the cargo holds of the ship.

Moreover, under Article 1733 of the Civil Code, common carriers are bound to observe “extra-ordinary vigilance over goods
. . . .according to all circumstances of each case,” and Article 1735 of the same Code states, to wit:

Art. 1735. 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.

Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or negligence on the part of the
carrier applies; and the carrier must present evidence that it has observed the extraordinary diligence required by Article
1733 of the Civil Code in order to escape liability for damage or destruction to the goods that it had admittedly carried in
this case. No such evidence exists of record. Thus, the carrier cannot escape liability.

The presumption, therefore, that the cargo was in apparent good condition when it was delivered by the vessel to the
arrastre operator by the clean tally sheets has been overturned and traversed. The evidence is clear to the effect that the
damage to the cargo was suffered while aboard petitioner’s vessel.

Equitable Leasing Corporation vs Suyom

388 SCRA 445 (2002)

Facts:
On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed into the house cum store of Myrna Tamayo in Tondo,
Manila. A portion of the house was destroyed which caused death and injury. Tutor was charged with and later convicted
of reckless imprudence resulting in multiple homicide and multiple physical injuries.
 4

Upon verification with the Land Transportation Office, it was known that the registered owner of the tractor was Equitable
Leasing Corporation/leased to Edwin Lim. On April 15, 1995, respondents filed against Raul Tutor, Ecatine Corporation
(Ecatine) and Equitable Leasing Corporation (Equitable) a Complaint for damages.

The petitioner alleged that the vehicle had already been sold to Ecatine and that the former was no longer in possession
and control thereof at the time of the incident. It also claimed that Tutor was an employee, not of Equitable, but of Ecatine.

Issue:
Whether or not the petitioner was liable for damages based on quasi delict for the negligent acts.

Held:
The Lease Agreement between petitioner and Edwin Lim stipulated that it is the intention of the parties to enter into a
finance lease agreement. Ownership of the subject tractor was to be registered in the name of petitioner, until the value of
the vehicle has been fully paid by Edwin Lim.

Lim completed the payments to cover the full price of the tractor. Thus, a Deed of Sale over the tractor was executed by
petitioner in favor of Ecatine represented by Edwin Lim. However, the Deed was not registered with the LTO.

Petitioner is liable for the deaths and the injuries complained of, because it was the registered owner of the tractor at the
time of the accident.The Court has consistently ruled that, regardless of sales made of a motor vehicle, the registered owner
is the lawful operator insofar as the public and third persons are concerned.

Since Equitable remained the registered owner of the tractor, it could not escape primary liability for the deaths and the
injuries arising from the negligence of the driver.

FGU Insurance Corp. vs. GP Sarmiento Trucking Corp. and Lambert M. Eroles

Facts:
Respondent GP Sarmiento Trucking Company (GTS) undertook to transport cargoes for Concepcion Industries Inc. when
it collided with an unidentified truck, causing damage to the cargoes. Petitioner, FGU, insurer of the shipment, paid to
Concepcion Industries the value of the covered cargoes. Then, as subrogee of Concepcion Industries Inc., petitioner FGU
sued GPS for breach of contract of carriage for reimbursement. Instead of filing an answer, GPS filed a demurrer to
evidence, claiming that it could not be held liable as a common carrier because it was only a private carrier, being the
exclusive hauler only of Concepcion Industries Inc. since 1988.
The lower court granted the motion, ruling that plaintiff FGU failed to prove that GPS was a common carrier. The CA affirmed
the trial court's order.

Issue:
Whether or not GPS is considered a common carrier and may be presumed negligent and therefore liable for damages.

Ruling:
The Supreme Court held that GPS cannot be considered a common carrier as it renders service exclusively to Concepcion
Industries; that notwithstanding, GPS cannot escape from liability since in culpa contractual, mere proof of the existence of
the contract and the failure of its compliance justify prima facie a corresponding right of relief. Respondent driver, however,
who is not a party to the contract of carriage, may not be held liable under the agreement without concrete proof of his
negligence or fault.
Hence, the Supreme Court affirmed the assailed order of the trial court and the CA insofar as the respondent driver was
concerned, but GPS trucking company was ordered to pay the petitioner FGU the value of the damaged and lost cargoes.

First Philippine Industrial Corp. vs. CA

Facts:
Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995, petitioner applied
for mayor’s permit in Batangas. However, the Treasurer required petitioner to pay a local tax based on gross receipts
amounting to P956,076.04. In order not to hamper its operations, petitioner paid the taxes for the first quarter of 1993
amounting to P239,019.01 under protest. On January 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming
that it is exempt from local tax since it is engaged in transportation business. The respondent City Treasurer denied the
protest, thus, petitioner filed a complaint before the Regional Trial Court of Batangas for tax refund. Respondents assert
that pipelines are not included in the term “common carrier” which refers solely to ordinary carriers or motor vehicles. The
trial court dismissed the complaint, and such was affirmed by the Court of Appeals.

Issue:
Whether a pipeline business is included in the term “common carrier” so as to entitle the petitioner to the exemption

Held:
 5

Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association 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."

The test for determining whether a party is a common carrier of goods is:

(1) He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as
ready to engage in the transportation of goods for person generally as a business and not as a casual occupation;

(2) He must undertake to carry goods of the kind to which his business is confined;

(3) He must undertake to carry by the method by which his business is conducted and over his established roads; and

(4) The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is engaged in the
business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry
for all persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and
for compensation. The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier.

Loadstar Shipping vs. Court of Appeals

FACTS:

Loadstar Shipping Co. Inc. received on board its M/V “Cherokee” goods, amounting to P6,067,178, which were insured for
the same amount with the respondent Manila Insurance Co. (MIC) against various risks including “total loss by total loss of
the vessel.” The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (PGAI) for P4 million. On its way
to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result
of the total loss of its shipment, the consignee made a claim with Loadstar which, however, ignored the same. As the
insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation receipt
therefor.

MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of the vessel was due to the fault and negligence
of Loadstar and its employees. PGAI was later dropped as a party defendant after it paid the insurance proceeds to
Loadstar. Loadstar submits that the vessel was a private carrier because it was not issued a certificate of public
convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one consignee
for a special cargo. The trial court rendered judgment in favor of MIC. Loadstar elevated the matter to the Court of Appeals,
which affirmed the RTC’s decision in toto.

ISSUE:

Whether or not Loadstar is a common carrier.

HELD:

Yes.

x x x [W]e hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public
convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic,
occasional, episodic or unscheduled.

In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies,
Inc., where this Court held that a common carrier transporting special cargo or chartering the vessel to a special person
becomes a private carrier that is not subject to the provisions of the Civil Code. Any stipulation in the charter party absolving
the owner from liability for loss due to the negligence of its agent is void only if the strict policy governing common carriers
is upheld. Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for
the use of a single party. LOADSTAR also cited Valenzuela Hardwood and Industrial Supply, Inc. v. Court of Appeals and
National Steel Corp. v. Court of Appeals, both of which upheld the Home Insurance doctrine.

These cases invoked by LOADSTAR are not applicable in the case at bar for simple reason that the factual settings are
different. The records do not disclose that the M/V "Cherokee," on the date in question, undertook to carry a special cargo
or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special
arrangement, but only a general provision to the effect that the M/V "Cherokee" was a "general cargo carrier."14 ["A general
ship carrying goods for hire, whether employed in internal, in coasting, or in foreign commerce is a common carrier." (Baer,
Senior & Co.’s Successors v. La Compania Maritima, 6 Phil. 215, 217-218, quoting Liverpool Steamship Co. v. Phoenix
 6

Ins. Co., 129 U.S. 397, 437), cited in 3 TEODORICO C. MARTIN, PHILIPPINE COMMERCIAL LAWS 118 (Rev. Ed. 1989).]
Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely
coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as in this
case, it was shown that the vessel was also carrying passengers.

Maritime Co. of the Philippines vs. CA (GR 47004, 8 March 1989)

Facts: Rizal Surety & Insurance Co. “was the insurer of 800 packages of PVC compound loaded on the SS Doña Nati at
Yokohama and consigned to the Acme Electrical Manufacturing Company. The SS Doña Nati was owned by the National
Development Company (NDC) whereas the Maritime Company of the Philippines was its Agent. The goods were never
delivered to the consignee (Acme Electrical, etc., supra) so that Rizal Surety, as Insurer, paid said consignee the sum of
P38,758.50. The cause of the non-delivery of the goods is that in Nagoya Bay, while the SS Doña Nati was being piloted
by a Japanese pilot, the SS Doña Nati was rammed by M/V Yasushima Maru, causing damage to the hull of the SS Doña
Nati and the resultant flooding of the holds damaged beyond repair the goods of the consignee in question. It appeared
that the M/V Yasushima Maru was at fault in the collision.

In the CFI of Manila, Rizal Surety sued the NDC and Maritime Co. for the recovery of a sum of money paid by it as insurer
for the value of goods lost in transit on board vessel known as the SS Doña Nati. After due proceedings and trial, the
complainant was dismissed, with costs against Rizal Surety.

Rizal Surety elevated the case to the Court of Appeals. That Court found merit in its appeal. It thus rendered judgment,
setting aside that of the Trial Court and ordering NDC and Maritime Co. jointly and severally to pay jointly and severally to
Rizal Surety the sum of P38,758.50 with legal rate of interest from the filing of the complaint. This judgment of the
Appellate Tribunal was in turn appealed by Maritime Company.

The Supreme Court affirmed the Decision of the Court of Appeals subject of the petition for review, with costs against
Maritime Co.

1. Nature of the principal cause of action

The principal cause of action is not derived from a maritime collision, but rather, from a contract of carriage, as evidenced
by the bill of lading.

2. Maritime Co. is the ship agent of NDC

NDC had appointed Maritime Co., as its agent to manage and operate three vessels owned by it, including the SS Doña
Nati, for and in its behalf and account, and for a determinable period (i.e., until full reimbursement of all moneys advanced
and/or full relief from or payment of all guarantees made by Maritime

Co. for account of the vessels). Under their written agreement, Maritime Co. was bound to “provision and victual” the SS
Doña Nati and the other two vessels, and to render a complete report of the operations of the vessels within 60 days after
conclusion of each voyage; it was also authorized to appoint sub-agents at any ports or places that it might deem necessary,
remaining however responsible to the ship owner (NDC) for the timely and satisfactory performance of said sub-agents.
These facts preponderantly demonstrate the character of Maritime Co. as ship agent under the Code of Commerce, a ship
agent, accordingly to that Code, being “the person entrusted with provisioning or representing the vessel in the port in which
it may be found.”

3. Maritime Co. not a shipagent of Fuji Asano Co. Ltd.

The letterhead of the bill of lading is in 2 parts. In what may be described as the main letterhead, Maritime Co. is indicated
as “Agent” for the (1) Philippines, (2) Hongkong, (3) Japan, and the (4) U.S. Pacific

Coast-Gulf Ports. Underneath this main letterhead is a sort of secondary sub-head: “Hongkong-Cosmos

Development Company; Japan-Fuji Asano Kaiun Co., Ltd., U.S.A-North American Maritime Agencies.” The necessary
connotation is that the firms thus named are sub-agents or secondary representatives of Maritime Co., Fuji Asano Kaiun
Co., Ltd., particularly, being the representative of NDC and Maritime Co. in Japan, as distinguished from the Maritime Co.,
which is described as AGENT not only in Japan but also in other places: the Philippines, Hongkong, U.S. Pacific Coast,
and the Gulf Ports. Moreover, the bill shows on its face that it was issued ‘FOR THE MASTER’ by “Maritime Company of
the Philippines, Agent.”
 7

4. Acme Electrical Manufacturing, Manila was the consignee of the goods

The bill of lading which states that if the goods are “consigned to the Shipper’s Order” — and the bill is so consigned: “to
the order of China Banking Corporation, Manila, or assigns” — the “Acme Electrical Manufacturing, Manila,” shall be notified.
This shows, in the context of the other documents adverted to, that Acme was the importer and China Banking Corporation
the financing agency. Further, the Commercial Invoice of the shipper recites that it was “by order and for account of Messrs.
Acme Electrical Manufacturing, Manila” that the 800 bags of PVC compound were shipped from Yokohama to Manila.
Furthermore, it was Acme that insured the goods with Rizal Surety and the latter did insure them on the strength of the
former’s Marine Risk Note, long before the goods were lost at sea, and it was Acme, thru its broker, that claimed the
proceeds for the loss. Maritime Co.’s own certification states that the “800 packages of PVC Compound consigned to Acme
Electrical Manufacturing was ‘carried away’ to sea as a result of the accident and same was unrecovered.

5. Rizal Surety was subrogated to Acme’s rights against shipowner and the ship agent

There is no question of the entitlement of Acme Electrical Manufacturing to the proceeds of the insurance against loss of
the goods in question, nor about the fact that it did receive such proceeds from the Rizal Surety, as insurer, which made
payment upon due ascertainment of the actuality of the loss. The legal effect is inescapable. Rizal Surety was subrogated
to Acme’s rights against the shipowner and the ship agent arising from the loss of the goods.

6. Law of destination; Acme’s rights are to be determined by the Civil Code, not the Code of Commerce

This conclusion derives from Article 1753 of the Civil Code to the effect that it is the “law of the country to which the goods
are to be transported (which) shall govern the liability of the common carrier for their loss, destruction or deterioration.” It
is only in “matters not regulated by the Civil Code,” according to Article 1766, that “the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws.” Since there are indeed specific provisions
regulating the matter of such liability in the Civil Code, these being embodied in Article 1734, as well as prescribing the
period of prescription of actions, it follows that the Code of Commerce, or the Carriage of Goods by Sea Act, has no
relevancy in the determination of the carrier’s liability in the present case.

7. COGSA merely suppletory to the Civil Code

In American President Lines v. Klepper, the Court ruled that in view of said Articles 1753 and 1756, the provisions of the
Carriage of Goods by Sea Act are merely suppletory to the Civil Code.

8. Liability of common carriers; Excepting circumstances

Under the established facts, and in accordance with Article 1734, Maritime Co. and NDC, as “common carriers,” are
liable to Acme for “the loss, destruction or deterioration of the goods,” and may be relieved of responsibility if the loss, etc.,
“is due to any of the following causes only: (1) Flood, storm, earthquakes, 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; and (5) Order or act of competent public
authority.” Herein, since none of the specified absolutory causes is present, the carrier’s liability is palpable.

9. Factual conclusions of the appellate court conclusive

The appellate court found, after a review and study of evidence, that Doña Nati “did not exercise even due diligence to
avoid the collision.” In line with the familiar axiom that factual conclusions of the Court of Appeals are conclusive and may
not be reviewed, Maritime Co.’s attempt to shift the blame to the Japanese vessel is futile. Having failed to exercise
extraordinary diligence to avoid any loss of life and property, as commanded by law, not having in fact exercised “even due
diligence to avoid the collision,” it must be held responsible for the loss of the goods in question.

SCHMITZ TRANSPORT & BROKERAGE CORPORATION, PETITIONER, VS. TRANSPORT VENTURE, INC.,
INDUSTRIAL INSURANCE COMPANY, LTD., AND BLACK SEA SHIPPING AND DODWELL NOW INCHCAPE
SHIPPING SERVICES, RESPONDENTS.

FACTS:

SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V "Alexander Saveliev" (a vessel of
Russian registry and owned by Black Sea) 545 hot rolled steel sheets in coil. The cargoes, which were to be discharged at
the port of Manila in favor of the consignee, Little Giant Steel Pipe Corporation (Little Giant), were insured against all risks
with Industrial Insurance Company Ltd. (Industrial Insurance). Little Giant Steel Pipe Corporation (Little Giant) hired Schmitz
Transport, to secure the requisite clearances, to receive the cargoes—hot rolled steel sheets in coil, from the shipside, and
 8

to deliver promote the common good,them to its warehouse. Little Giant also engaged the services of Transport Venture
Inc., (TVI) to send a barge and tugboat at shipside. During which the weather condition had become inclement due to an
approaching storm, the unloading unto the barge of the 37 coils was accomplished. No tugboat pulled the barge back to
the pier, however. Due to strong waves, the crew of the barge abandoned it and transferred to the vessel. The barge pitched
and rolled with the waves and eventually capsized, washing the 37 coils into the sea. After a while, a tugboat finally arrived
to pull the already empty and damaged barge back to the pier. Earnest efforts on the part of both the consignee Little Giant
and Industrial Insurance to recover the lost cargoes proved futile. Little Giant thus filed a formal claim against Industrial
Insurance. Little Giant thereupon executed a subrogation receipt in favor of Industrial Insurance. Industrial Insurance later
filed a complaint against Schmitz Transport, TVI, and Black Sea through its representative Inchcape before the RTC of
Manila, for the recovery of the amount it paid to Little Giant plus adjustment fees, attorney’s fees, and litigation expenses.
Industrial Insurance faulted the defendants for undertaking the unloading of the cargoes while typhoon signal No. 1 was
raised in Metro Manila.

ISSUES:

(1) Whether the loss of the cargoes was due to a fortuitous event, independent of any act of negligence on the part of
petitioner Black Sea and TVI, and

(2) If there was negligence, whether liability for the loss may attach to Black Sea, petitioner and TVI.

HELD:

(1) NO, the loss of the cargoes was not due to a fortuitous event. In order, to be considered a fortuitous event, however, (1)
the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligation, must be
independent of human will; (2) it must be impossible to foresee the event which constitute the caso fortuito,or if it can be
foreseen it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill
his obligation in any manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting
to the creditor. [T]he principle embodied in the act of God doctrine strictly requires that the act must be occasioned solely
by the violence of nature. Human intervention is to be excluded from creating or entering into the cause of the mischief.
When the effect is found to be in part the result of the participation of man, whether due to his active intervention or neglect
or failure to act, the whole occurrence is then humanized and removed from the rules applicable to the acts of God. The
appellate court, in affirming the finding of the trial court that human intervention in the form of contributory negligence by all
the defendants resulted to the loss of the cargoes, held that unloading outside the breakwater, instead of inside the
breakwater, while a storm signal was up constitutes negligence. It thus concluded that the proximate cause of the loss was
Black Sea’s negligence in deciding to unload the cargoes at an unsafe place and while a typhoon was approaching.

(2) Petitioner and TVI are solidarily liable for the loss of the cargoes but no liability may attach to Black Sea. TVI’s failure to
promptly provide a tugboat did not only increase the risk that might have been reasonably anticipated during the shipside
operation but was the proximate cause of the loss. A man of ordinary prudence would not leave a heavily loaded barge
floating for a considerable number of hours, at such a precarious time, and in the open sea, knowing that the barge does
not have any power of its own and is totally defenseless from the ravages of the sea. That it was nighttime and, therefore,
the members of the crew of a tugboat would be charging overtime pay did not excuse TVI from calling for one such tugboat.
As for petitioner, for it to be relieved of liability, it should, following Article 1739 of the Civil Code, prove that it exercised due
diligence to prevent or minimize the loss, before, during and after the occurrence of the storm in order that it may be
exempted from liability for the loss of the goods. While petitioner sent checkers and a supervisor on board the vessel to
countercheck the operations of TVI, it failed to take all available and reasonable precautions to avoid the loss. After noting
that TVI failed to arrange for the prompt towage of the barge despite the deteriorating sea conditions, it should have
summoned the same or another tugboat to extend help, but it did not. As for Black Sea, its duty as a common carrier
extended only from the time the goods were surrendered or unconditionally placed in its possession and received for
transportation until they were delivered actually or constructively to consignee Little Giant. The delivery of the goods to the
consignee was not from "pier to pier" but from the shipside of "M/V Alexander Saveliev" and into barges, for which reason
the consignee contracted the services of petitioner. Since Black Sea had constructively delivered the cargoes to Little Giant,
through petitioner, it had discharged its duty.