ASIA LIGHTERAGE AND SHIPPING, INC.

, petitioner,
vs.
COURT OF APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE, INC.,
respondents.

FACTS:

On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at
US$423,192.35 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. 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.

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 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 protuberance underneath the water. The petitioner filed
a Marine Protest on August 28, 1990. It likewise secured the services of Gaspar Salvaging
Corporation which refloated the barge. The hole was then patched with clay and cement.

The barge was then towed to ISLOFF terminal before it finally headed 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.

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. A second Marine Protest was filed on
September 7, 1990.
On September 14, 1990, a bidding was conducted to dispose of the damaged wheat
retrieved and loaded on the three other barges. The total proceeds from the sale of the
salvaged cargo was P201,379.75.

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. 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. Petitioner filed its
answer with counterclaim.

ISSUES:

(1) Whether or not the petitioner is a common carrier; and,

(2) Whether or not it exercised extraordinary diligence in its care and custody of
the consignee's cargo.

RULING:

(1)

YES.

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.

We disagree.

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 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.

In the case at bar, the principal business of the petitioner is that of lighterage and drayage
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, 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. 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.

(2) NO.

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, 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;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.

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 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.

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.

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 proximate cause of the loss of the cargo; a human factor, i.e., negligence had
intervened.