Transpo Finals - Digest3

THIRD DIVISION
[G.R. No. 112287. December 12, 1997]
NATIONAL STEEL CORPORATION, petitioner,

vs. COURT OF APPEALS AND VLASONS
SHIPPING, INC., respondents.
[G.R. No. 112350. December 12, 1997]
VLASONS SHIPPING, INC., petitioner, vs.

COURT OF APPEALS AND NATIONAL STEEL
CORPORATION, respondents.
DECISION
PANGANIBAN, J.:
The Court finds occasion to apply the rules on the

seaworthiness of a private carrier, its owners responsibility
for damage to the cargo and its liability for demurrage and
attorneys fees. The Court also reiterates the well-known rule
that findings of facts of trial courts, when affirmed by the
Court of Appeals, are binding on this Court.
The Case
Before us are two separate petitions for review filed by
National Steel Corporation (NSC) and Vlasons Shipping, Inc.
(VSI), both of which assail the August 12, 1993 Decision of
the Court of Appeals.
The Court of Appeals
modified the decision of the Regional Trial Court of Pasig,
Metro Manila, Branch 163 in Civil Case No. 23317. The RTC
disposed as follows:
WHEREFORE,judgmentisherebyrenderedinfavorofdefendant
andagainsttheplaintiffdismissingthecomplaintwithcostagainst
plaintiff,andorderingplaintifftopaythedefendantonthe
counterclaimasfollows:
[if !supportFootnotes][1][endif]
1. The sum of P75,000.00 as unpaid freight and P88,000.00 as

demurrage with interest at the legal rate on both amounts from
April 7, 1976 until the same shall have been fully paid;
2. Attorneys fees and expenses of litigation in the sum of
P100,000.00; and
3. Cost of suit.
SOORDERED.
On the other hand, the Court of Appeals ruled:
WHEREFORE,premisesconsidered,thedecisionappealedfromis
modifiedbyreducingtheawardfordemurragetoP44,000.00and
deletingtheawardforattorneysfeesandexpensesoflitigation.
Exceptasthusmodified,thedecisionisAFFIRMED.Thereisno
pronouncementastocosts.
SOORDERED.
The Facts
The MV Vlasons I is a vessel which renders tramping service
and, as such, does not transport cargo or shipment for the
general public. Its services are available only to specific
persons who enter into a special contract of charter party
with its owner. It is undisputed that the ship is a private
carrier. And it is in this capacity that its owner, Vlasons
Shipping, Inc., entered into a contract of affreightment or
contract of voyage charter hire with National Steel
Corporation.
The facts as found by Respondent Court of Appeals are as
follows:
(1)OnJuly17,1974,plaintiffNationalSteelCorporation(NSC)as
ChartereranddefendantVlasonsShipping,Inc.(VSI)asOwner,
enteredintoaContractofVoyageCharterHire(ExhibitB;also
Exhibit1)wherebyNSChiredVSIsvessel,theMVVLASONSI
tomakeone(1)voyagetoloadsteelproductsatIliganCityand
dischargethematNorthHarbor,Manila,underthefollowingterms
andconditions,viz:
1.xxxxxx.
2.Cargo:Fullcargoofsteelproductsofnotlessthan2,500MT,
10%moreorlessatMastersoption.
3.xxxxxx
4.Freight/Payment:P30.00/metricton,FIOSTbasis.Payment
uponpresentationofBillofLadingwithinfifteen(15)days.
[if!supportFootnotes][2][endif]
5.Laydays/Cancelling:July26,1974/Aug.5,1974.
6.Loading/DischargingRate:750tonsperWWDSHINC.
(WeatherWorkingDayof24consecutivehours,Sundaysand
HolidaysIncluded).
7.Demurrage/Dispatch:P8,000.00/P4,000.00perday.
8.xxxxxx
9.CargoInsurance:Charterersand/orShippersmustinsurethe
cargoes.Shipownersnotresponsibleforlosses/damagesexcepton
provenwillfulnegligenceoftheofficersofthevessel.
10.Otherterms:(a)Allterms/conditionsofNONYAZAIC/P[sic]
orotherinternationallyrecognizedCharterPartyAgreementshall
formpartofthisContract.
xxxxxxxxx
ThetermsF.I.O.S.T.whichisusedintheshippingbusinessisa
standardprovisionintheNANYOZAICharterPartywhichstands
forFreightInandOutincludingStevedoringandTrading,which
meansthatthehandling,loadingandunloadingofthecargoesare
theresponsibilityoftheCharterer.UnderParagraph5ofthe
NANYOZAICharterParty,itstates,Chartererstoload,stowand
dischargethecargofreeofriskandexpensestoowners.xxx
(Underscoringsupplied).
Underparagraph10thereof,itisprovidedthat(o)wnersshall,
beforeandatthebeginningofthevoyage,exerciseduediligence
tomakethevesselseaworthyandproperlymanned,equippedand
suppliedandtomaketheholdsandallotherpartsofthevesselin
whichcargoiscarried,fitandsafeforitsreception,carriageand
preservation.Ownersshallnotbeliableforlossofordamageof
thecargoarisingorresultingfrom:unseaworthinessunlesscaused
bywantofduediligenceonthepartoftheownerstomakethe
vesselseaworthy,andtosecurethatthevesselisproperlymanned,
equippedandsuppliedandtomaketheholdsandallotherpartsof
thevesselinwhichcargoiscarried,fitandsafeforitsreception,
carriageandpreservation;xxx;perils,dangersandaccidentsofthe
seaorothernavigablewaters;xxx;wastageinbulkorweightor
anyotherlossordamagearisingfrominherentdefect,qualityor
viceofthecargo;insufficiencyofpacking;xxx;latentdefectsnot
discoverablebyduediligence;anyothercausearisingwithoutthe
actualfaultorprivityofOwnersorwithoutthefaultoftheagents
orservantsofowners.
Paragraph12ofsaidNANYOZAICharterPartyalsoprovidesthat
(o)wnersshallnotberesponsibleforsplit,chafingand/orany
damageunlesscausedbythenegligenceordefaultofthemaster
andcrew.
(2)OnAugust6,7and8,1974,inaccordancewiththeContractof
VoyageCharterHire,theMVVLASONSIloadedatplaintiffspier
atIliganCity,theNSCsshipmentof1,677skidsoftinplatesand
92packagesofhotrolledsheetsoratotalof1,769packageswitha
totalweightofabout2,481.19metrictonsforcarriagetoManila.
Theshipmentwasplacedinthethree(3)hatchesoftheship.Chief
MateGonzaloSabando,actingasagentofthevessel[,]
acknowledgedreceiptofthecargoonboardandsignedthe
correspondingbilloflading,B.L.P.P.No.0233(ExhibitD)on
August8,1974.
(3)ThevesselarrivedwiththecargoatPier12,NorthHarbor,
Manila,onAugust12,1974.Thefollowingday,August13,1974,
whenthevesselsthree(3)hatchescontainingtheshipmentwere
openedbyplaintiffsagents,nearlyalltheskidsoftinplatesandhot
rolledsheetswereallegedlyfoundtobewetandrusty.Thecargo
wasdischargedandunloadedbystevedoreshiredbytheCharterer.
UnloadingwascompletedonlyonAugust24,1974afterincurring
adelayofeleven(11)daysduetotheheavyrainwhichinterrupted
theunloadingoperations.(ExhibitE)
(4)Todeterminethenatureandextentofthewettingandrusting,
NSCcalledforasurveyoftheshipmentbytheManilaAdjusters
andSurveyorsCompany(MASCO).InalettertotheNSCdated
March17,1975(ExhibitG),MASCOmadeareportofitsocular
inspectionconductedonthecargo,bothwhileitwasstillonboard
thevesselandlaterattheNDCwarehouseinPurezaSt.,Sta.Mesa,
Manilawherethecargowastakenandstored.MASCOreported
thatitfoundwettingandrustingofthepackagesofhotrolled
sheetsandmetalcoversofthetinplates;thattarpaulinhatchcovers
werenotedtornatvariousextents;thatcontainer/metalcasingsof
theskidswererustingallover.MASCOventuredtheopinionthat
rustingofthetinplateswascausedbycontactwithSEAWATER
sustainedwhilestillonboardthevesselasaconsequenceofthe
heavyweatherandroughseasencounteredwhileenrouteto
destination(ExhibitF).ItwasalsoreportedthatMASCOs
surveyorsdrewatrandomsamplesofbadorderpackingmaterials
ofthetinplatesanddeliveredthesametotheM.I.T.Testing
Laboratoriesforanalysis.OnAugust31,1974,theM.I.T.Testing
LaboratoriesissuedReportNo.1770(ExhibitI)whichinpart,
states,Theanalysisofbadordersamplesofpackingmaterialsxxx
showsthatwettingwascausedbycontactwithSEAWATER.
(5)OnSeptember6,1974,onthebasisoftheaforesaidReportNo.
1770,plaintifffiledwiththedefendantitsclaimfordamages
sufferedduetothedowngradingofthedamagedtinplatesinthe
amountofP941,145.18.ThenonOctober3,1974,plaintiff
formallydemandedpaymentofsaidclaimbutdefendantVSI
refusedandfailedtopay.Plaintifffileditscomplaintagainst
defendantonApril21,1976whichwasdocketedasCivilCaseNo.
23317,CFI,Rizal.
(6)Initscomplaint,plaintiffclaimedthatitsustainedlossesinthe
aforesaidamountofP941,145.18asaresultoftheact,neglectand
defaultofthemasterandcrewinthemanagementofthevesselas
wellasthewantofduediligenceonthepartofthedefendantto
makethevesselseaworthyandtomaketheholdsandallother
partsofthevesselinwhichthecargowascarried,fitandsafefor
itsreception,carriageandpreservationallinviolationof
defendantsundertakingundertheirContractofVoyageCharter
Hire.
(7)Initsanswer,defendantdeniedliabilityfortheallegeddamage
claimingthattheMVVLASONSIwasseaworthyinallrespects
forthecarriageofplaintiffscargo;thatsaidvesselwasnota
commoncarrierinasmuchasshewasundervoyagecharter
contractwiththeplaintiffaschartererunderthecharterparty;that
inthecourseofthevoyagefromIliganCitytoManila,theMV
VLASONSIencounteredveryroughseas,strongwindsand
adverseweathercondition,causingstrongwindsandbigwavesto
continuouslypoundagainstthevesselandseawatertooverflowon
itsdeckandhatchcovers;thatundertheContractofVoyage
CharterHire,defendantshallnotberesponsibleforlosses/damages
exceptonprovenwillfulnegligenceoftheofficersofthevessel,
thattheofficersofsaidMVVLASONSIexercisedduediligence
andproperseamanshipandwerenotwillfullynegligent;that
furthermoretheVoyageCharterPartyprovidesthatloadingand
dischargingofthecargowasonFIOSTtermswhichmeansthatthe
vesselwasfreeofriskandexpenseinconnectionwiththeloading
anddischargingofthecargo;thatthedamage,ifany,wasdueto
theinherentdefect,qualityorviceofthecargoortothe
insufficientpackingthereofortolatentdefectofthecargonot
discoverablebyduediligenceortoanyothercausearisingwithout
theactualfaultorprivityofdefendantandwithoutthefaultofthe
agentsorservantsofdefendant;consequently,defendantisnot
liable;thatthestevedoresofplaintiffwhodischargedthecargoin
Manilawerenegligentanddidnotexerciseduecareinthe
dischargeofthecargo;andthatthecargowasexposedtorainand
seawaterspraywhileonthepierorintransitfromthepierto
plaintiffswarehouseafterdischargefromthevessel;andthat
plaintiffsclaimwashighlyspeculativeandgrosslyexaggerated
andthatthesmallstainmarksorsweatmarksontheedgesofthe
tinplatesweremagnifiedandconsideredtotallossofthecargo.
Finally,defendantclaimedthatithadcompliedwithallitsduties
andobligationsundertheVoyageCharterHireContractandhad
noresponsibilitywhatsoevertoplaintiff.Inturn,itallegedthe
followingcounterclaim:
(a)Thatdespitethefullandproperperformancebydefendantofits
obligationsundertheVoyageCharterHireContract,plaintiff
failedandrefusedtopaytheagreedcharterhireofP75,000.00
despitedemandsmadebydefendant;
(b)ThatundertheirVoyageCharterHireContract,plaintiffhad
agreedtopaydefendantthesumofP8,000.00perdayfor
demurrage.Thevesselwasondemurrageforeleven(11)daysin
Manilawaitingforplaintifftodischargeitscargofromthevessel.
Thus,plaintiffwasliabletopaydefendantdemurrageinthetotal
amountofP88,000.00.
(c)Forfilingaclearlyunfoundedcivilactionagainstdefendant,
plaintiffshouldbeorderedtopaydefendantattorneysfeesandall
expensesoflitigationintheamountofnotlessthanP100,000.00.
(8)Fromtheevidencepresentedbybothparties,thetrialcourt
cameoutwiththefollowingfindingswhichweresetforthinits
decision:
(a)TheMVVLASONSIisavesselofPhilippineregistryengaged
inthetrampingserviceandisavailableforhireonlyunderspecial
contractsofcharterpartyasinthisparticularcase.
(b)ThatforpurposesofthevoyagecoveredbytheContractof
VoyageCharterHire(Exh.1),theMVVLASONSIwascovered
bytherequiredseaworthinesscertificatesincludingthe
CertificationofClassificationissuedbyaninternational
classificationsociety,theNIPPONKAIJIKYOKAI(Exh.4);
CoastwiseLicensefromtheBoardofTransportation(Exh.5);
InternationalLoadlineCertificatefromthePhilippineCoastGuard
(Exh.6);CargoShipSafetyEquipmentCertificatealsofromthe
PhilippineCoastGuard(Exh.7);ShipRadioStationLicense(Exh.
8);CertificateofInspectionbythePhilippineCoastGuard(Exh.
12);andCertificateofApprovalforConversionissuedbythe
BureauofCustoms(Exh.9).Thatbeingavesselengagedinboth
overseasandcoastwisetrade,theMVVLASONSIhasahigher
degreeofseaworthinessandsafety.
(c)BeforeitproceededtoIliganCitytoperformthevoyagecalled
forbytheContractofVoyageCharterHire,theMVVLASONSI
underwentdrydockinginCebuandwasthoroughlyinspectedby
thePhilippineCoastGuard.Infact,subjectvoyagewasthevessels
firstvoyageafterthedrydocking.TheevidenceshowsthattheMV
VLASONSIwasseaworthyandproperlymanned,equippedand
suppliedwhenitundertookthevoyage.Ithadalltherequired
certificatesofseaworthiness.
(d)Thecargo/shipmentwassecurelystowedinthree(3)hatchesof
theship.Thehatchopeningswerecoveredbyhatchboardswhich
wereinturncoveredbytwoordoubletarpaulins.Thehatchcovers
werewatertight.Furthermore,underthehatchboardsweresteel
beamstogivesupport.
(e)Theclaimoftheplaintiffthatdefendantviolatedthecontractof
carriageisnotsupportedbyevidence.TheprovisionsoftheCivil
Codeoncommoncarrierspursuanttowhichthereexistsa
presumptionofnegligenceincaseoflossordamagetothecargo
arenotapplicable.Astothedamagetothetinplateswhichwas
allegedlyduetothewettingandrustingthereof,thereisunrebutted
testimonyofwitnessVicenteAngliongtothattinplatessweatby
themselveswhenpackedevenwithoutbeingincontract(sic)with
waterfromoutsideespeciallywhentheweatherisbadorraining.
Therustcausedbysweatormoistureonthetinplatesmaybe
consideredasalossordamagebutthen,defendantcannotbeheld
liableforitpursuanttoArticle1734oftheCivilCasewhich
exemptsthecarrierfromresponsibilityforlossordamagearising
fromthecharacterofthegoodsxxx.Allthe1,769skidsofthe
tinplatescouldnothavebeendamagedbywaterasclaimedby
plaintiff.Itwasshownasclaimedbyplaintiffthatthetinplates
themselveswerewrappedinkraftpaperliningandcorrugated
cardboardscouldnotbeaffectedbywaterfromoutside.
(f)Thestevedoreshiredbytheplaintifftodischargethecargoof
tinplateswerenegligentinnotclosingthehatchopeningsofthe
MVVLASONSIwhenrainsoccurredduringthedischargingof
thecargothusallowingrainwatertoenterthehatches.Itwas
proventhatthestevedoresmerelysetuptemporarytentstocover
thehatchopeningsincaseofrainsothatitwouldbeeasyforthem
toresumeworkwhentherainsstoppedbyjustremovingthetentor
canvas.Becauseofthisimpropercoveringofthehatchesbythe
stevedoresduringthedischargingandunloadingoperationswhich
wereinterruptedbyrains,rainwaterdriftedintothecargothrough
thehatchopenings.Pursuanttoparagraph5oftheNANYOSAI
[sic]CharterPartywhichwasexpresslymadepartoftheContract
ofVoyageCharterHire,theloading,stowinganddischargingof
thecargoisthesoleresponsibilityoftheplaintiffchartererand
defendantcarrierhasnoliabilityforwhateverdamagemayoccur
ormaybe[sic]causedtothecargointheprocess.
(g)Itwasalsoestablishedthatthevesselencounteredroughseas
andbadweatherwhileenroutefromIliganCitytoManilacausing
seawatertosplashontheshipsdeckonaccountofwhichthe
masterofthevessel(Mr.AntonioC.Dumlao)filedaMarine
ProtestonAugust13,1974(Exh.15)whichcanbeinvokedby
defendantasaforcemajeurethatwouldexemptthedefendant
fromliability.
(h)Plaintiffdidnotcomplywiththerequirementprescribedin
paragraph9oftheVoyageCharterHirecontractthatitwasto
insurethecargobecauseitdidnot.Hadplaintiffcompliedwiththe
requirement,thenitcouldhaverecovereditslossordamagefrom
theinsurer.Plaintiffalsoviolatedthecharterpartycontractwhenit
loadednotonlysteelproducts,i.e.steelbars,angularbarsandthe
likebutalsotinplatesandhotrolledsheetswhicharehighgrade
cargocommandingahigherfreight.Thusplaintiffwasabletoship
highgradecargoatalowerfreightrate.
(I)Asregardsdefendantscounterclaim,thecontractofvoyage
charterhireunderparagraph4thereof,fixedthefreightatP30.00
permetrictonpayabletodefendantcarrieruponpresentationofthe
billofladingwithinfifteen(15)days.Plaintiffhasnotpaidthe
totalfreightdueofP75,000.00despitedemands.Theevidencealso
showedthattheplaintiffwasrequiredandboundunderparagraph
7ofthesameVoyageCharterHirecontracttopaydemurrageof
P8,000.00perdayofdelayintheunloadingofthecargoes.The
delayamountedtoeleven(11)daystherebymakingplaintiffliable
topaydefendantfordemurrageintheamountofP88,000.00.
Appealing the RTC decision to the Court of Appeals, NSC
alleged six errors:
I
The trial court erred in finding that the MV VLASONS I was

seaworthy, properly manned, equipped and supplied, and
that there is no proof of willful negligence of the vessels
officers.
II
The trial court erred in finding that the rusting of NSCs

tinplates was due to the inherent nature or character of the
goods and not due to contact with seawater.
III
The trial court erred in finding that the stevedores hired by

NSC were negligent in the unloading of NSCs shipment.
IV
The trial court erred in exempting VSI from liability on the

ground of force majeure.
V
The trial court erred in finding that NSC violated the contract
of voyage charter hire.
VI
The trial court erred in ordering NSC to pay freight,

demurrage and attorneys fees, to VSI.
As earlier stated, the Court of Appeals modified the decision
of the trial court by reducing the demurrage from P88,000.00
to P44,000.00 and deleting the award of attorneys fees and

expenses of litigation. NSC and VSI filed separate motions
for reconsideration. In a Resolution
dated
October 20, 1993, the appellate court denied both motions.
Undaunted, NSC and VSI filed their respective petitions for
review before this Court. On motion of VSI, the Court
ordered on February 14, 1994 the consolidation of these
petitions.
The Issues
In its petition
and memorandum,
NSC raises the following questions of law and fact:
Questions of Law
1. Whether or not a charterer of a vessel is liable for demurrage

due to cargo unloading delays caused by weather interruption;
2. Whether or not the alleged seaworthiness certificates (Exhibits
3, 4, 5, 6, 7, 8, 9, 11 and 12) were admissible in evidence and
constituted evidence of the vessels seaworthiness at the
beginning of the voyages; and
3. Whether or not a charterers failure to insure its cargo exempts
the shipowner from liability for cargo damage.
Questions of Fact
1. Whether or not the vessel was seaworthy and cargo-worthy;
2. Whether or not vessels officers and crew were negligent in
handling and caring for NSCs cargo;
3. Whether or not NSCs cargo of tinplates did sweat during the
voyage and, hence, rusted on their own; and
(4) Whether or not NSCs stevedores were negligent and caused
the wetting[/]rusting of NSCs tinplates.
In its separate petition,

VSI submits for the
consideration of this Court the following alleged errors of the
CA:
A.TherespondentCourtofAppealscommittedanerroroflawin
reducingtheawardofdemurragefromP88,000.00toP44,000.00.
B.TherespondentCourtofAppealscommittedanerroroflawin
deletingtheawardofP100,000forattorneysfeesandexpensesof
litigation.
Amplifying the foregoing, VSI raises the following issues in
its memorandum:
I.WhetherornottheprovisionsoftheCivilCodeofthe
Philippinesoncommoncarrierspursuanttowhichthereexist[s]a
presumptionofnegligenceagainstthecommoncarrierincaseof
lossordamagetothecargoareapplicabletoaprivatecarrier.
II.WhetherornotthetermsandconditionsoftheContractof
VoyageCharterHire,includingtheNanyozaiCharter,arevalid
andbindingonbothcontractingparties.
The foregoing issues raised by the parties will be discussed
under the following headings:
1. Questions of Fact
2. Effect of NSCs Failure to Insure the Cargo
3. Admissibility of Certificates Proving Seaworthiness
4. Demurrage and Attorneys Fees.
The Courts Ruling

The Court affirms the assailed Decision of the Court of
Appeals, except in respect of the demurrage.
Preliminary Matter: Common Carrier or Private Carrier?
At the outset, it is essential to establish whether VSI
contracted with NSC as a common carrier or as a private
carrier. The resolution of this preliminary question
determines the law, standard of diligence and burden of
proof applicable to the present case.
Article 1732 of the Civil Code defines a common carrier 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. It has been held that the true test of a
common carrier is the carriage of passengers or goods,
provided it has space, for all who opt to avail themselves of
its transportation service for a fee.
A carrier
which does not qualify under the above test is deemed a
private carrier. Generally, private carriage is undertaken by
special agreement and the carrier does not hold himself out
to carry goods for the general public. The most typical,
although not the only form of private carriage, is the charter
party, a maritime contract by which the charterer, a party
other than the shipowner, obtains the use and service of all
or some part of a ship for a period of time or a voyage or
voyages.
In the instant case, it is undisputed that VSI did not offer its
services to the general public. As found by the Regional Trial
Court, it carried passengers or goods only for those it chose
under a special contract of charter party.
As
correctly concluded by the Court of Appeals, the MV Vlasons
I was not a common but a private carrier.
Consequently, the rights and obligations of VSI and NSC,
including their respective liability for damage to the cargo,
are determined primarily by stipulations in their contract of
private carriage or charter party.
Recently, in
Valenzuela Hardwood and Industrial Supply, Inc., vs. Court
of Appeals and Seven Brothers Shipping Corporation,
the Court ruled:
xxxinacontractofprivatecarriage,thepartiesmayfreely
stipulatetheirdutiesandobligationswhichperforcewouldbe
bindingonthem.Unlikeinacontractinvolvingacommoncarrier,
privatecarriagedoesnotinvolvethegeneralpublic.Hence,the
stringentprovisionsoftheCivilCodeoncommoncarriers
protectingthegeneralpubliccannotjustifiablybeappliedtoaship
transportingcommercialgoodsasaprivatecarrier.Consequently,
thepublicpolicyembodiedthereinisnotcontravenedby
stipulationsinacharterpartythatlessenorremovetheprotection
givenbylawincontractsinvolvingcommoncarriers.
Extent of VSIs Responsibility and Liability Over NSCs
Cargo
It is clear from the parties Contract of Voyage Charter Hire,
dated July 17, 1974, that VSI shall not be responsible for
[if !
supportFootnotes][16][endif]
losses except on proven willful negligence of the officers of

the vessel. The NANYOZAI Charter Party, which was
incorporated in the parties contract of transportation, further
provided that the shipowner shall not be liable for loss of or
damage to the cargo arising or resulting from
unseaworthiness, unless the same was caused by its lack of
due diligence to make the vessel seaworthy or to ensure that
the same was properly manned, equipped and supplied, and
to make the holds and all other parts of the vessel in which
cargo [was] carried, fit and safe for its reception, carriage
and preservation.
The NANYOZAI Charter
Party also provided that [o]wners shall not be responsible for
split, chafing and/or any damage unless caused by the
negligence or default of the master or crew.
Burden of Proof
In view of the aforementioned contractual stipulations, NSC
must prove that the damage to its shipment was caused by
VSIs willful negligence or failure to exercise due diligence in
making MV Vlasons I seaworthy and fit for holding, carrying
and safekeeping the cargo. Ineluctably, the burden of proof
was placed on NSC by the parties agreement.
This view finds further support in the Code of Commerce
which pertinently provides:
Art.361.Merchandiseshallbetransportedattheriskandventure
oftheshipper,ifthecontraryhasnotbeenexpresslystipulated.
Therefore,thedamageandimpairmentsufferedbythegoods
duringthetransportation,duetofortuitousevent,forcemajeure,or
thenatureandinherentdefectofthethings,shallbefortheaccount
andriskoftheshipper.
Theburdenofproofoftheseaccidentsisonthecarrier.
Art.362.Thecarrier,however,shallbeliablefordamagesarising
fromthecausementionedintheprecedingarticleifproofsagainst
himshowthattheyoccurredonaccountofhisnegligenceorhis
omissiontotaketheprecautionsusuallyadoptedbycareful
persons,unlesstheshippercommittedfraudinthebilloflading,
makinghimtobelievethatthegoodswereofaclassorquality
differentfromwhattheyreallywere.
Because the MV Vlasons I was a private carrier, the
shipowners obligations are governed by the foregoing
provisions of the Code of Commerce and not by the Civil
Code which, as a general rule, places the prima facie
presumption of negligence on a common carrier. It is a
hornbook doctrine that:
Inanactionagainstaprivatecarrierforlossof,orinjuryto,cargo,
theburdenisontheplaintifftoprovethatthecarrierwasnegligent
orunseaworthy,andthefactthatthegoodswerelostordamaged
whileinthecarrierscustodydoesnotputtheburdenofproofon
thecarrier.
Sincexxxaprivatecarrierisnotaninsurerbutundertakesonlyto
exerciseduecareintheprotectionofthegoodscommittedtoits
care,theburdenofprovingnegligenceorabreachofthatduty
restsonplaintiffandproofoflossof,ordamageto,cargowhilein
thecarrierspossessiondoesnotcastonittheburdenofproving
propercareanddiligenceonitspartorthatthelossoccurredfrom
anexceptedcauseinthecontractorbilloflading.However,in
dischargingtheburdenofproof,plaintiffisentitledtothebenefit
ofthepresumptionsandinferencesbywhichthelawaidsthe
bailorinanactionagainstabailee,andsincethecarrierisina
betterpositiontoknowthecauseofthelossandthatitwasnotone
involvingitsliability,thelawrequiresthatitcomeforwardwith
theinformationavailabletoit,anditsfailuretodosowarrantsan
inferenceorpresumptionofitsliability.However,suchinferences
andpresumptions,whiletheymayaffecttheburdenofcoming
forwardwithevidence,donotaltertheburdenofproofwhich
remainsonplaintiff,and,wherethecarriercomesforwardwith
evidenceexplainingthelossordamage,theburdenofgoing
forwardwiththeevidenceisagainonplaintiff.
Wheretheactionisbasedontheshipownerswarrantyof
seaworthiness,theburdenofprovingabreachthereofandthat
suchbreachwastheproximatecauseofthedamagerestson
plaintiff,andproofthatthegoodswerelostordamagedwhilein
thecarrierspossessiondoesnotcastonittheburdenofproving
seaworthiness.xxxWherethecontractofcarriageexemptsthe
carrierfromliabilityforunseaworthinessnotdiscoverablebydue
diligence,thecarrierhasthepreliminaryburdenofprovingthe
exerciseofduediligencetomakethevesselseaworthy.
[if!supportFootnotes][20]
[endif]
In the instant case, the Court of Appeals correctly found that

NSC has not taken the correct position in relation to the
question of who has the burden of proof. Thus, in its brief
(pp. 10-11), after citing Clause 10 and Clause 12 of the
NANYOZAI Charter Party (incidentally plaintiff-appellants
[NSCs] interpretation of Clause 12 is not even correct), it
argues that a careful examination of the evidence will show
that VSI miserably failed to comply with any of these
obligations as if defendant-appellee [VSI] had the burden of
proof.
First Issue: Questions of Fact
Based on the foregoing, the determination of the following
factual questions is manifestly relevant: (1) whether VSI
exercised due diligence in making MV Vlasons I seaworthy
for the intended purpose under the charter party; (2) whether
the damage to the cargo should be attributed to the willful
negligence of the officers and crew of the vessel or of the
stevedores hired by NSC; and (3) whether the rusting of the
tinplates was caused by its own sweat or by contact with
seawater.
These questions of fact were threshed out and decided by
the trial court, which had the firsthand opportunity to hear the
parties conflicting claims and to carefully weigh their
respective evidence. The findings of the trial court were
subsequently affirmed by the Court of Appeals. Where the
factual findings of both the trial court and the Court of

Appeals coincide, the same are binding on this Court.
We stress that, subject to some exceptional
instances,
only questions of law -- not questions
of fact -- may be raised before this Court in a petition for
review under Rule 45 of the Rules of Court. After a thorough
review of the case at bar, we find no reason to disturb the
lower courts factual findings, as indeed NSC has not
successfully proven the application of any of the aforecited
exceptions.
Was MV Vlasons I Seaworthy?
In any event, the records reveal that VSI exercised due
diligence to make the ship seaworthy and fit for the carriage
of NSCs cargo of steel and tinplates. This is shown by the
fact that it was drydocked and inspected by the Philippine
Coast Guard before it proceeded to Iligan City for its voyage
to Manila under the contract of voyage charter hire.
The vessels voyage from Iligan to Manila was the
vessels first voyage after drydocking. The Philippine Coast
Guard Station in Cebu cleared it as seaworthy, fitted and
equipped; it met all requirements for trading as cargo vessel.
The Court of Appeals itself sustained the
conclusion of the trial court that MV Vlasons I was
seaworthy. We find no reason to modify or reverse this
finding of both the trial and the appellate courts.
Who Were Negligent: Seamen or Stevedores?
As noted earlier, the NSC had the burden of proving that the
damage to the cargo was caused by the negligence of the
officers and the crew of MV Vlasons I in making their vessel
seaworthy and fit for the carriage of tinplates. NSC failed to
discharge this burden.
Before us, NSC relies heavily on its claim that MV Vlasons I
had used an old and torn tarpaulin or canvas to cover the
hatches through which the cargo was loaded into the cargo
hold of the ship. It faults the Court of Appeals for failing to
[if !
[if !supportFootnotes]
[24][endif]
consider such claim as an uncontroverted fact

and denies that MV Vlasons I was equipped with new
canvas covers in tandem with the old ones as indicated in
the Marine Protest xxx.
We disagree.
The records sufficiently support VSIs contention that the ship
used the old tarpaulin, only in addition to the new one used
primarily to make the ships hatches watertight. The foregoing
are clear from the marine protest of the master of the MV
Vlasons I, Antonio C. Dumlao, and the deposition of the
ships boatswain, Jose Pascua. The salient portions of said
marine protest read:
xxxThattheM/VVLASONSIdepartedIliganCityororabout
0730hoursofAugust8,1974,loadedwithapproximately2,487.9
tonsofsteelplatesandtinplatesconsignedtoNationalSteel
Corporation;thatbeforedeparture,thevesselwasrigged,fully
equippedandclearedbytheauthorities;thatonoraboutAugust9,
1974,whileinthevicinityofthewesternpartofNegrosand
Panay,weencounteredveryroughseasandstrongwindsand
Manilaofficewasadvisedbytelegramoftheadverseweather
conditionsencountered;thatinthemorningofAugust10,1974,
theweatherconditionchangedtoworseandstrongwindsandbig
wavescontinuedpoundingthevesselatherportsidecausingsea
watertooverflowondeckandhatch(sic)coversandwhichcaused
thefirstlayerofthecanvasscoveringtogivewaywhilethenew
canvasscoveringstillholdingon;
ThattheweatherconditionimprovedwhenwereachedDumali
PointprotectedbyMindoro;thatweresecuredthecanvass
coveringbacktoposition;thatintheafternoonofAugust10,1974,
whileenteringMaricabanPassage,wewereagainexposedto
moderateseasandheavyrains;thatwhileapproachingFortune
Island,weencounteredagainroughseas,strongwindsandbig
waveswhichcausedthesamecanvasstogivewayandleavingthe
newcanvassholdingon;
xxx xxx xxx
And the relevant portions of Jose Pascuas deposition are as

follows:
Q: What is the purpose of the canvas cover?
A: So that the cargo would not be soaked with water.
A: And will you describe how the canvas cover was secured on
the hatch opening?
WITNESS
A: It was placed flat on top of the hatch cover, with a little canvas
flowing over the sides and we place[d] a flat bar over the canvas
on the side of the hatches and then we place[d] a stopper so that
the canvas could not be removed.
ATTY DEL ROSARIO
Q: And will you tell us the size of the hatch opening? The length
and the width of the hatch opening.
A: Forty-five feet by thirty-five feet, sir.
xxxxxxxxx
Q: How was the canvas supported in the middle of the hatch
opening?
A: There is a hatch board.
ATTY DEL ROSARIO
Q: What is the hatch board made of?
A: It is made of wood, with a handle.
Q: And aside from the hatch board, is there any other material
there to cover the hatch?
A: There is a beam supporting the hatch board.
Q: What is this beam made of?
A: It is made of steel, sir.
Q: Is the beam that was placed in the hatch opening covering the
whole hatch opening?
A: No, sir.
Q: How many hatch beams were there placed across the
opening?
A: There are five beams in one hatch opening.
ATTY DEL ROSARIO
Q: And on top of the beams you said there is a hatch board. How
many pieces of wood are put on top?
A: Plenty, sir, because there are several pieces on top of the
hatch beam.
Q: And is there a space between the hatch boards?
A: There is none, sir.
Q: They are tight together?
A: Yes, sir.
Q: How tight?
A: Very tight, sir.
Q: Now, on top of the hatch boards, according to you, is the
canvas cover. How many canvas covers?
A: Two, sir. [if !supportFootnotes][29][endif]
That due diligence was exercised by the officers and the

crew of the MV Vlasons I was further demonstrated by the
fact that, despite encountering rough weather twice, the new
tarpaulin did not give way and the ships hatches and cargo
holds remained waterproof. As aptly stated by the Court of
Appeals, xxx we find no reason not to sustain the conclusion
of the lower court based on overwhelming evidence, that the
MV VLASONS I was seaworthy when it undertook the
voyage on August 8, 1974 carrying on board thereof plaintiffappellants shipment of 1,677 skids of tinplates and 92
packages of hot rolled sheets or a total of 1,769 packages
from NSCs pier in Iligan City arriving safely at North Harbor,
Port Area, Manila, on August 12, 1974; xxx.
Indeed, NSC failed to discharge its burden to show
negligence on the part of the officers and the crew of MV
Vlasons I. On the contrary, the records reveal that it was the
stevedores of NSC who were negligent in unloading the
cargo from the ship.
The stevedores employed only a tent-like material to cover
the hatches when strong rains occasioned by a passing
typhoon disrupted the unloading of the cargo. This tent-like
covering, however, was clearly inadequate for keeping rain
and seawater away from the hatches of the ship. Vicente
Angliongto, an officer of VSI, testified thus:
ATTY ZAMORA:
Q: Now, during your testimony on November 5, 1979, you stated

on August 14 you went on board the vessel upon notice from the
National Steel Corporation in order to conduct the inspection of
the cargo. During the course of the investigation, did you chance
to see the discharging operation?
WITNESS:
A: Yes, sir, upon my arrival at the vessel, I saw some of the
tinplates already discharged on the pier but majority of the
tinplates were inside the hall, all the hatches were opened.
Q: In connection with these cargoes which were unloaded,
where is the place.
A: At the Pier.
Q: What was used to protect the same from weather?
ATTY LOPEZ:
We object, your Honor, this question was already asked. This
particular matter . . . the transcript of stenographic notes shows
the same was covered in the direct examination.
ATTY ZAMORA:
Precisely, your Honor, we would like to go on detail, this is the
serious part of the testimony.
COURT:
All right, witness may answer.
ATTY LOPEZ:
Q: What was used in order to protect the cargo from the
weather?
A: A base of canvas was used as cover on top of the tin plates,
and tents were built at the opening of the hatches.
Q: You also stated that the hatches were already opened and
that there were tents constructed at the opening of the hatches
to protect the cargo from the rain. Now, will you describe [to] the
Court the tents constructed.
A: The tents are just a base of canvas which look like a tent of an
Indian camp raise[d] high at the middle with the whole side
separated down to the hatch, the size of the hatch and it is soaks
[sic] at the middle because of those weather and this can be
used only to temporarily protect the cargo from getting wet by
rains.
Q: Now, is this procedure adopted by the stevedores of covering

tents proper?
A: No, sir, at the time they were discharging the cargo, there was
a typhoon passing by and the hatch tent was not good enough to
hold all of it to prevent the water soaking through the canvas and
enter the cargo.
Q: In the course of your inspection, Mr. Anglingto [sic], did you
see in fact the water enter and soak into the canvas and
tinplates.
A: Yes, sir, the second time I went there, I saw it.
Q: As owner of the vessel, did you not advise the National Steel
Corporation [of] the procedure adopted by its stevedores in
discharging the cargo particularly in this tent covering of the
hatches?
A: Yes, sir, I did the first time I saw it, I called the attention of the
stevedores but the stevedores did not mind at all, so, I called the
attention of the representative of the National Steel but nothing
was done, just the same. Finally, I wrote a letter to them. [if !
NSC attempts to discredit the testimony of Angliongto by

questioning his failure to complain immediately about the
stevedores negligence on the first day of unloading, pointing
out that he wrote his letter to petitioner only seven days later.
The Court is not persuaded. Angliongtos candid
answer in his aforequoted testimony satisfactorily explained
the delay. Seven days lapsed because he first called the
attention of the stevedores, then the NSCs representative,
about the negligent and defective procedure adopted in
unloading the cargo. This series of actions constitutes a
reasonable response in accord with common sense and
ordinary human experience. Vicente Angliongto could not be
blamed for calling the stevedores attention first and then the
NSCs representative on location before formally informing
NSC of the negligence he had observed, because he was
not responsible for the stevedores or the unloading
operations. In fact, he was merely expressing concern for
NSC which was ultimately responsible for the stevedores it

had hired and the performance of their task to unload the
cargo.
We see no reason to reverse the trial and the appellate
courts findings and conclusions on this point, viz:
IntheTHIRDassignederror,[NSC]claimsthatthetrialcourt
erredinfindingthatthestevedoreshiredbyNSCwerenegligentin
theunloadingofNSCsshipment.Wedonotthinkso.Such
negligenceaccordingtothetrialcourtisevidentinthestevedores
hiredby[NSC],notclosingthehatchofMVVLASONSIwhen
rainsoccurredduringthedischargingofthecargothusallowing
rainwaterandseawaterspraytoenterthehatchesandtodriftto
andfallonthecargo.Itwasproventhatthestevedoresmerelyset
uptemporarytentsorcanvastocoverthehatchopeningswhenit
rainedduringtheunloadingoperationssothatitwouldbeeasier
forthemtoresumeworkaftertherainsstoppedbyjustremoving
saidtentsorcanvass.IthasalsobeenshownthatonAugust20,
1974,VSIPresidentVicenteAngliongtowrote[NSC]calling
attentiontothemannerthestevedoreshiredby[NSC]were
dischargingthecargoonrainydaysandtheimproperclosingof
thehatcheswhichallowedcontinuousheavyrainwatertoleak
throughanddriptothetinplatescoversand[VicenteAngliongto]
alsosuggestingthatduetofour(4)dayscontinuosrainswith
strongwindsthatthehatchesbetotallycloseddownandcovered
withcanvasandthehatchtentslowered.(Exh13).Thisletterwas
receivedby[NSC]on22August1974whiledischarging
operationswerestillgoingon(Exhibit13A).
The fact that NSC actually accepted and proceeded to
remove the cargo from the ship during unfavorable weather
will not make VSI liable for any damage caused thereby. In
passing, it may be noted that the NSC may seek
indemnification, subject to the laws on prescription, from the
stevedoring company at fault in the discharge operations. A
stevedore company engaged in discharging cargo xxx has
the duty to load the cargo xxx in a prudent manner, and it is

liable for injury to, or loss of, cargo caused by its negligence
xxx and where the officers and members and crew of the
vessel do nothing and have no responsibility in the discharge
of cargo by stevedores xxx the vessel is not liable for loss of,
or damage to, the cargo caused by the negligence of the
stevedores xxx
as in the instant case.
Do Tinplates Sweat?
The trial court relied on the testimony of Vicente Angliongto
in finding that xxx tinplates sweat by themselves when
packed even without being in contact with water from outside
especially when the weather is bad or raining xxx.
The Court of Appeals affirmed the trial courts finding.
A discussion of this issue appears inconsequential and
unnecessary. As previously discussed, the damage to the
tinplates was occasioned not by airborne moisture but by
contact with rain and seawater which the stevedores
negligently allowed to seep in during the unloading.
Second Issue: Effect of NSCs Failure to Insure the
Cargo
The obligation of NSC to insure the cargo stipulated in the
Contract of Voyage Charter Hire is totally separate and
distinct from the contractual or statutory responsibility that
may be incurred by VSI for damage to the cargo caused by
the willful negligence of the officers and the crew of MV
Vlasons I. Clearly, therefore, NSCs failure to insure the cargo
will not affect its right, as owner and real party in interest, to
file an action against VSI for damages caused by the latters
willful negligence. We do not find anything in the charter
party that would make the liability of VSI for damage to the
cargo contingent on or affected in any manner by NSCs
obtaining an insurance over the cargo.
Third Issue: Admissibility of Certificates Proving
Seaworthiness
NSCs contention that MV Vlasons I was not seaworthy is
[if !supportFootnotes][35]
[endif]
anchored on the alleged inadmissibility of the certificates of

seaworthiness offered in evidence by VSI. The said
certificates include the following:
1. Certificate of Inspection of the Philippine Coast Guard at Cebu
2. Certificate of Inspection from the Philippine Coast Guard
3. International Load Line Certificate from the Philippine Coast
Guard
4. Coastwise License from the Board of Transportation
5. Certificate of Approval for Conversion issued by the Bureau of
Customs. [if !supportFootnotes][36][endif]
NSC argues that the certificates are hearsay for not having
been presented in accordance with the Rules of Court. It
points out that Exhibits 3, 4 and 11 allegedly are not written
records or acts of public officers; while Exhibits 5, 6, 7, 8, 9,
11 and 12 are not evidenced by official publications or
certified true copies as required by Sections 25 and 26, Rule
132, of the Rules of Court.
After a careful examination of these exhibits, the Court rules
that Exhibits 3, 4, 5, 6, 7, 8, 9 and 12 are inadmissible, for
they have not been properly offered as evidence. Exhibits 3
and 4 are certificates issued by private parties, but they have
not been proven by one who saw the writing executed, or by
evidence of the genuineness of the handwriting of the maker,
or by a subscribing witness. Exhibits 5, 6, 7, 8, 9, and 12 are
photocopies, but their admission under the best evidence
rule have not been demonstrated.
We find, however, that Exhibit 11 is admissible under a wellsettled exception to the hearsay rule per Section 44 of Rule
130 of the Rules of Court, which provides that (e)ntries in
official records made in the performance of a duty by a public
officer of the Philippines, or by a person in the performance
of a duty specially enjoined by law, are prima facie evidence
of the facts therein stated.
Exhibit 11 is an
original certificate of the Philippine Coast Guard in Cebu
issued by Lieutenant Junior Grade Noli C. Flores to the
effect that the vessel VLASONS I was drydocked x x x and

PCG Inspectors were sent on board for inspection x x x.
After completion of drydocking and duly inspected by PCG
Inspectors, the vessel VLASONS I, a cargo vessel, is in
seaworthy condition, meets all requirements, fitted and
equipped for trading as a cargo vessel was cleared by the
Philippine Coast Guard and sailed for Cebu Port on July 10,
1974. (sic) NSCs claim, therefore, is obviously misleading
and erroneous.
At any rate, it should be stressed that that NSC has the
burden of proving that MV Vlasons I was not seaworthy. As
observed earlier, the vessel was a private carrier and, as
such, it did not have the obligation of a common carrier to
show that it was seaworthy. Indeed, NSC glaringly failed to
discharge its duty of proving the willful negligence of VSI in
making the ship seaworthy resulting in damage to its cargo.
Assailing the genuineness of the certificate of seaworthiness
is not sufficient proof that the vessel was not seaworthy.
Fourth Issue: Demurrage and Attorneys Fees
The contract of voyage charter hire provides inter alia:
xxx xxx xxx
2.Cargo:Fullcargoofsteelproductsofnotlessthan2,500MT,
10%moreorlessatMastersoption.
xxx xxx xxx
6.Loading/DischargingRate:750tonsperWWDSHINC.
7.Demurrage/Dispatch:P8,000.00/P4,000.00perday.
[if!supportFootnotes][39]
[endif]
The Court defined demurrage in its strict sense as the

compensation provided for in the contract of affreightment for
the detention of the vessel beyond the laytime or that period
of time agreed on for loading and unloading of cargo.
It is given to compensate the shipowner for the
nonuse of the vessel. On the other hand, the following is
well-settled:
Laytimerunsaccordingtotheparticularclauseofthecharterparty.
[if !
xxxIflaytimeisexpressedinrunningdays,thismeansdayswhen
theshipwouldberuncontinuously,andholidaysarenotexcepted.
Aqualificationofweatherpermittingexceptsonlythosedays
whenbadweatherreasonablypreventstheworkcontemplated.
[if!
In this case, the contract of voyage charter hire provided for

a four-day laytime; it also qualified laytime as WWDSHINC
or weather working days Sundays and holidays included.
The running of laytime was thus made subject to
the weather, and would cease to run in the event
unfavorable weather interfered with the unloading of cargo.
Consequently, NSC may not be held liable for
demurrage as the four-day laytime allowed it did not lapse,
having been tolled by unfavorable weather condition in view
of the WWDSHINC qualification agreed upon by the parties.
Clearly, it was error for the trial court and the Court of
Appeals to have found and affirmed respectively that NSC
incurred eleven days of delay in unloading the cargo. The
trial court arrived at this erroneous finding by subtracting
from the twelve days, specifically August 13, 1974 to August
24, 1974, the only day of unloading unhampered by
unfavorable weather or rain which was August 22, 1974.
Based on our previous discussion, such finding is a
reversible error. As mentioned, the respondent appellate
court also erred in ruling that NSC was liable to VSI for
demurrage, even if it reduced the amount by half.
Attorneys Fees
VSI assigns as error of law the Court of Appeals deletion of
the award of attorneys fees. We disagree. While VSI was
compelled to litigate to protect its rights, such fact by itself
will not justify an award of attorneys fees under Article 2208
of the Civil Code when x x x no sufficient showing of bad
faith would be reflected in a partys persistence in a case
other than an erroneous conviction of the righteousness of
his cause x x x.
Moreover, attorneys fees may
[if !
[if !
not be awarded to a party for the reason alone that the

judgment rendered was favorable to the latter, as this is
tantamount to imposing a premium on ones right to litigate or
seek judicial redress of legitimate grievances.
Epilogue
At bottom, this appeal really hinges on a factual issue: when,
how and who caused the damage to the cargo? Ranged
against NSC are two formidable truths. First, both lower
courts found that such damage was brought about during the
unloading process when rain and seawater seeped through
the cargo due to the fault or negligence of the stevedores
employed by it. Basic is the rule that factual findings of the
trial court, when affirmed by the Court of Appeals, are
binding on the Supreme Court. Although there are settled
exceptions, NSC has not satisfactorily shown that this case
is one of them. Second, the agreement between the parties
-- the Contract of Voyage Charter Hire -- placed the burden
of proof for such loss or damage upon the shipper, not upon
the shipowner. Such stipulation, while disadvantageous to
NSC, is valid because the parties entered into a contract of
private charter, not one of common carriage. Basic too is the
doctrine that courts cannot relieve a party from the effects of
a private contract freely entered into, on the ground that it is
allegedly one-sided or unfair to the plaintiff. The charter party
is a normal commercial contract and its stipulations are
agreed upon in consideration of many factors, not the least
of which is the transport price which is determined not only
by the actual costs but also by the risks and burdens
assumed by the shipper in regard to possible loss or
damage to the cargo. In recognition of such factors, the
parties even stipulated that the shipper should insure the
cargo to protect itself from the risks it undertook under the
charter party. That NSC failed or neglected to protect itself
with such insurance should not adversely affect VSI, which
had nothing to do with such failure or neglect.
WHEREFORE, premises considered, the instant

consolidated petitions are hereby DENIED. The questioned
Decision of the Court of Appeals is AFFIRMED with the
MODIFICATION that the demurrage awarded to VSI is
deleted. No pronouncement as to costs.
SO ORDERED
FIRST DIVISION
[G.R. No. 131621. September 28, 1999]
LOADSTAR SHIPPING CO., INC., petitioner, vs.
COURT OF APPEALS and THE MANILA
INSURANCE CO., INC., respondents.
DECISION
DAVIDE, JR., C.J.:
Petitioner Loadstar Shipping Co., Inc. (hereafter

LOADSTAR), in this petition for review on certiorari under Rule
45 of the 1997 Rules of Civil Procedure, seeks to reverse and set
aside the following: (a) the 30 January 1997 decision [if !supportFootnotes][1]
[endif]
of the Court of Appeals in CA-G.R. CV No. 36401, which
affirmed the decision of 4 October 1991[if !supportFootnotes][2][endif] of the
Regional Trial Court of Manila, Branch 16, in Civil Case No. 8529110, ordering LOADSTAR to pay private respondent Manila
Insurance Co. (hereafter MIC) the amount of P6,067,178, with
legal interest from the filing of the complaint until fully paid,
P8,000 as attorneys fees, and the costs of the suit; and (b) its
resolution of 19 November 1997,[if !supportFootnotes][3][endif] denying
LOADSTARs motion for reconsideration of said decision.
The facts are undisputed.
On 19 November 1984, LOADSTAR received on board its
M/V Cherokee (hereafter, the vessel) the following goods for
shipment:
a) 705 bales of lawanit hardwood;
b) 27 boxes and crates of tilewood assemblies and others; and
c) 49 bundles of mouldings R & W (3) Apitong Bolidenized.
The goods, amounting to P6,067,178, were insured for the same

amount with MIC against various risks including TOTAL LOSS
BY TOTAL LOSS OF THE VESSEL. The vessel, in turn, was
insured by Prudential Guarantee & Assurance, Inc. (hereafter
PGAI) for P4 million. On 20 November 1984, 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.
On 4 February 1985, 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.
It also prayed that PGAI be ordered to pay the insurance proceeds
from the loss of the vessel directly to MIC, said amount to be
deducted from MICs claim from LOADSTAR.
In its answer, LOADSTAR denied any liability for the loss of
the shippers goods and claimed that the sinking of its vessel was
due to force majeure. PGAI, on the other hand, averred that MIC
had no cause of action against it, LOADSTAR being the party
insured. In any event, PGAI was later dropped as a party defendant
after it paid the insurance proceeds to LOADSTAR.
As stated at the outset, the court a quo rendered judgment in
favor of MIC, prompting LOADSTAR to elevate the matter to the
Court of Appeals, which, however, agreed with the trial court and
affirmed its decision in toto.
In dismissing LOADSTARs appeal, the appellate court made
the following observations:
1) LOADSTAR cannot be considered a private carrier on the sole
ground that there was a single shipper on that fateful voyage. The court
noted that the charter of the vessel was limited to the ship, but
LOADSTAR retained control over its crew.[if !supportFootnotes][4][endif]
2) As a common carrier, it is the Code of Commerce, not the Civil
Code, which should be applied in determining the rights and liabilities
of the parties.
3) The vessel was not seaworthy because it was undermanned on the
day of the voyage. If it had been seaworthy, it could have withstood the
natural and inevitable action of the sea on 20 November 1984, when the
condition of the sea was moderate. The vessel sank, not because of
force majeure, but because it was not seaworthy. LOADSTARS
allegation that the sinking was probably due to the convergence of the
winds, as stated by a PAGASA expert, was not duly proven at the trial.
The limited liability rule, therefore, is not applicable considering that,
in this case, there was an actual finding of negligence on the part of the
carrier.[if !supportFootnotes][5][endif]
4) Between MIC and LOADSTAR, the provisions of the Bill of Lading
do not apply because said provisions bind only the shipper/consignee
and the carrier. When MIC paid the shipper for the goods insured, it
was subrogated to the latters rights as against the carrier, LOADSTAR.
5) There was a clear breach of the contract of carriage when the

shippers goods never reached their destination. LOADSTARs defense
of diligence of a good father of a family in the training and selection of
its crew is unavailing because this is not a proper or complete defense
in culpa contractual.
6) Art. 361 (of the Code of Commerce) has been judicially construed to
mean that when goods are delivered on board a ship in good order and
condition, and the shipowner delivers them to the shipper in bad order
and condition, it then devolves upon the shipowner to both allege and
prove that the goods were damaged by reason of some fact which
legally exempts him from liability. Transportation of the merchandise at
the risk and venture of the shipper means that the latter bears the risk of
loss or deterioration of his goods arising from fortuitous events, force
majeure, or the inherent nature and defects of the goods, but not those
caused by the presumed negligence or fault of the carrier, unless
otherwise proved.[if !supportFootnotes][7][endif]
The errors assigned by LOADSTAR boil down to a

determination of the following issues:
(1) Is the M/V Cherokee a private or a common carrier?
(2) Did LOADSTAR observe due and/or ordinary diligence in these
premises?
Regarding the first issue, 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.
In refutation, MIC argues that the issue as to the classification
of the M/V Cherokee was not timely raised below; hence, it is
barred by estoppel. While it is true that the vessel had on board
only the cargo of wood products for delivery to one consignee, it
was also carrying passengers as part of its regular business.
Moreover, the bills of lading in this case made no mention of any
charter party but only a statement that the vessel was a general
cargo carrier. Neither was there any special arrangement between
LOADSTAR and the shipper regarding the shipment of the cargo.
The singular fact that the vessel was carrying a particular type of
cargo for one shipper is not sufficient to convert the vessel into a
private carrier.
As regards the second error, LOADSTAR argues that as a
private carrier, it cannot be presumed to have been negligent, and
the burden of proving otherwise devolved upon MIC. [if !supportFootnotes][8]
[endif]
LOADSTAR also maintains that the vessel was seaworthy.

Before the fateful voyage on 19 November 1984, the vessel was
allegedly dry docked at Keppel Philippines Shipyard and was duly
inspected by the maritime safety engineers of the Philippine Coast
Guard, who certified that the ship was fit to undertake a voyage. Its
crew at the time was experienced, licensed and unquestionably
competent. With all these precautions, there could be no other
conclusion except that LOADSTAR exercised the diligence of a
good father of a family in ensuring the vessels seaworthiness.
LOADSTAR further claims that it was not responsible for the
loss of the cargo, such loss being due to force majeure. It points out
that when the vessel left Nasipit, Agusan del Norte, on 19
November 1984, the weather was fine until the next day when the
vessel sank due to strong waves. MICs witness, Gracelia Tapel,
fully established the existence of two typhoons, WELFRING and

YOLING, inside the Philippine area of responsibility. In fact, on
20 November 1984, signal no. 1 was declared over Eastern
Visayas, which includes Limasawa Island. Tapel also testified that
the convergence of winds brought about by these two typhoons
strengthened wind velocity in the area, naturally producing strong
waves and winds, in turn, causing the vessel to list and eventually
sink.
LOADSTAR goes on to argue that, being a private carrier, any
agreement limiting its liability, such as what transpired in this case,
is valid. Since the cargo was being shipped at owners risk,
LOADSTAR was not liable for any loss or damage to the same.
Therefore, the Court of Appeals erred in holding that the
provisions of the bills of lading apply only to the shipper and the
carrier, and not to the insurer of the goods, which conclusion runs
counter to the Supreme Courts ruling in the case of St. Paul Fire &
Marine Insurance Co. v. Macondray & Co., Inc., [if !supportFootnotes][9][endif]
and National Union Fire Insurance Company of Pittsburg v. StoltNielsen Phils., Inc.[if !supportFootnotes][10][endif]
Finally, LOADSTAR avers that MICs claim had already
prescribed, the case having been instituted beyond the period stated
in the bills of lading for instituting the same suits based upon
claims arising from shortage, damage, or non-delivery of shipment
shall be instituted within sixty days from the accrual of the right of
action. The vessel sank on 20 November 1984; yet, the case for
recovery was filed only on 4 February 1985.
MIC, on the other hand, claims that LOADSTAR was liable,
notwithstanding that the loss of the cargo was due to force
majeure, because the same concurred with LOADSTARs fault or
negligence.
Secondly, LOADSTAR did not raise the issue of prescription
in the court below; hence, the same must be deemed waived.
Thirdly, the limited liability theory is not applicable in the case
at bar because LOADSTAR was at fault or negligent, and because
it failed to maintain a seaworthy vessel. Authorizing the voyage
notwithstanding its knowledge of a typhoon is tantamount to

negligence.
We find no merit in this petition.
Anent the first assigned error, we 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.,[if !
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[if !supportFootnotes][12][endif] and
National Steel Corp. v. Court of Appeals,[if !supportFootnotes][13][endif] 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.[if !supportFootnotes][14][endif] 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.
Under the facts and circumstances obtaining in this case,

LOADSTAR fits the definition of a common carrier under Article
1732 of the Civil Code. In the case of De Guzman v. Court of
Appeals,[if !supportFootnotes][15][endif] the Court juxtaposed the statutory
definition of common carriers with the peculiar circumstances of
that case, viz.:
TheCivilCodedefinescommoncarriersinthefollowingterms:
Article1732.Commoncarriersarepersons,corporations,firmsor
associationsengagedinthebusinessofcarryingortransporting
passengersorgoodsorboth,byland,water,orairfor
compensation,offeringtheirservicestothepublic.
Theabovearticlemakesnodistinctionbetweenonewhose
principalbusinessactivityisthecarryingofpersonsorgoodsor
both,andonewhodoessuchcarryingonlyasanancillaryactivity
(inlocalidiom,asasideline.Article1732alsocarefullyavoids
makinganydistinctionbetweenapersonorenterpriseoffering
transportationserviceonaregularorscheduledbasisandone
offeringsuchserviceonanoccasional,episodicorunscheduled
basis.NeitherdoesArticle1732distinguishbetweenacarrier
offeringitsservicestothegeneralpublic,i.e.,thegeneral
communityorpopulation,andonewhooffersservicesorsolicits
businessonlyfromanarrowsegmentofthegeneralpopulation.
WethinkthatArticle1733deliberatelyrefrainedfrommaking
suchdistinctions.
xxx
ItappearstotheCourtthatprivaterespondentisproperly
characterizedasacommoncarriereventhoughhemerelyback
hauledgoodsforothermerchantsfromManilatoPangasinan,
althoughsuchbackhaulingwasdoneonaperiodicoroccasional
ratherthanregularorscheduledmanner,andeventhoughprivate
respondentsprincipaloccupationwasnotthecarriageofgoodsfor
others.Thereisnodisputethatprivaterespondentchargedhis
customersafeeforhaulingtheirgoods;thatthatfeefrequentlyfell
belowcommercialfreightratesisnotrelevanthere.
TheCourtofAppealsreferredtothefactthatprivaterespondent
heldnocertificateofpublicconvenience,andconcludedhewas
notacommoncarrier.Thisispalpableerror.Acertificateofpublic
convenienceisnotarequisitefortheincurringofliabilityunder
theCivilCodeprovisionsgoverningcommoncarriers.That
liabilityarisesthemomentapersonorfirmactsasacommon
carrier,withoutregardtowhetherornotsuchcarrierhasalso
compliedwiththerequirementsoftheapplicableregulatorystatute
andimplementingregulationsandhasbeengrantedacertificateof
publicconvenienceorotherfranchise.Toexemptprivate
respondentfromtheliabilitiesofacommoncarrierbecausehehas
notsecuredthenecessarycertificateofpublicconvenience,would
beoffensivetosoundpublicpolicy;thatwouldbetoreward
privaterespondentpreciselyforfailingtocomplywithapplicable
statutoryrequirements.Thebusinessofacommoncarrierimpinges
directlyandintimatelyuponthesafetyandwellbeingandproperty
ofthosemembersofthegeneralcommunitywhohappentodeal
withsuchcarrier.Thelawimposesdutiesandliabilitiesupon
commoncarriersforthesafetyandprotectionofthosewhoutilize
theirservicesandthelawcannotallowacommoncarriertorender
suchdutiesandliabilitiesmerelyfacultativebysimplyfailingto
obtainthenecessarypermitsandauthorizations.
Moving on to the second assigned error, we find that the M/V
Cherokee was not seaworthy when it embarked on its voyage on
19 November 1984. The vessel was not even sufficiently manned
at the time. For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a sufficient number of
competent officers and crew. The failure of a common carrier to
maintain in seaworthy condition its vessel involved in a contract of
carriage is a clear breach of its duty prescribed in Article 1755 of
the Civil Code.[if !supportFootnotes][16][endif]
Neither do we agree with LOADSTARs argument that the
limited liability theory should be applied in this case. The doctrine
of limited liability does not apply where there was negligence on

the part of the vessel owner or agent.[if !supportFootnotes][17][endif] LOADSTAR
was at fault or negligent in not maintaining a seaworthy vessel and
in having allowed its vessel to sail despite knowledge of an
approaching typhoon. In any event, it did not sink because of any
storm that may be deemed as force majeure, inasmuch as the wind
condition in the area where it sank was determined to be moderate.
Since it was remiss in the performance of its duties, LOADSTAR
cannot hide behind the limited liability doctrine to escape
responsibility for the loss of the vessel and its cargo.
LOADSTAR also claims that the Court of Appeals erred in
holding it liable for the loss of the goods, in utter disregard of this
Courts pronouncements in St. Paul Fire & Marine Ins. Co. v.
Macondray & Co., Inc.,[if !supportFootnotes][18][endif] and National Union Fire
Insurance v. Stolt-Nielsen Phils., Inc.[if !supportFootnotes][19][endif] It was ruled
in these two cases that after paying the claim of the insured for
damages under the insurance policy, the insurer is subrogated
merely to the rights of the assured, that is, it can recover only the
amount that may, in turn, be recovered by the latter. Since the right
of the assured in case of loss or damage to the goods is limited or
restricted by the provisions in the bills of lading, a suit by the
insurer as subrogee is necessarily subject to the same limitations
and restrictions. We do not agree. In the first place, the cases relied
on by LOADSTAR involved a limitation on the carriers liability to
an amount fixed in the bill of lading which the parties may enter
into, provided that the same was freely and fairly agreed upon
(Articles 1749-1750). On the other hand, the stipulation in the case
at bar effectively reduces the common carriers liability for the loss
or destruction of the goods to a degree less than extraordinary
(Articles 1744 and 1745), that is, the carrier is not liable for any
loss or damage to shipments made at owners risk. Such stipulation
is obviously null and void for being contrary to public policy.[if !
It has been said:
Threekindsofstipulationshaveoftenbeenmadeinabillof
lading.Thefirstisoneexemptingthecarrierfromanyandall
liabilityforlossordamageoccasionedbyitsownnegligence.The
secondisoneprovidingforanunqualifiedlimitationofsuch
liabilitytoanagreedvaluation.Andthethirdisonelimitingthe
liabilityofthecarriertoanagreedvaluationunlesstheshipper
declaresahighervalueandpaysahigherrateoffreight.According
toanalmostuniformweightofauthority,thefirstandsecondkinds
ofstipulationsareinvalidasbeingcontrarytopublicpolicy,but
thethirdisvalidandenforceable.[if!supportFootnotes][21][endif]
Since the stipulation in question is null and void, it follows that
when MIC paid the shipper, it was subrogated to all the rights
which the latter has against the common carrier, LOADSTAR.
Neither is there merit to the contention that the claim in this
case was barred by prescription. MICs cause of action had not yet
prescribed at the time it was concerned. Inasmuch as neither the
Civil Code nor the Code of Commerce states a specific prescriptive
period on the matter, the Carriage of Goods by Sea Act (COGSA)
which provides for a one-year period of limitation on claims for
loss of, or damage to, cargoes sustained during transit may be
applied suppletorily to the case at bar. This one-year prescriptive
period also applies to the insurer of the good.[if !supportFootnotes][22][endif] In
this case, the period for filing the action for recovery has not yet
elapsed. Moreover, a stipulation reducing the one-year period is
null and void;[if !supportFootnotes][23][endif] it must, accordingly, be struck down.
WHEREFORE, the instant petition is DENIED and the
challenged decision of 30 January 1997 of the Court of Appeals in
CA-G.R. CV No. 36401 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 106999 June 20, 1996
PHILIPPINE HOME ASSURANCE CORPORATION, petitioner,
vs.
COURT OF APPEALS and EASTERN SHIPPING LINES, INC.,
respondents.
KAPUNAN, J.:p
Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern
Explorer in Kobe, Japan, the following shipment for carriage to Manila
and Cebu, freight pre-paid and in good order and condition, viz: (a)
two (2) boxes internal combustion engine parts, consigned to William
Lines, Inc. under Bill of Lading No. 042283; (b) ten (l0) metric ton.
(334 bags) ammonium chloride, consigned to Orca's Company under
Bill of Lading No. KCE-I2; (c) two hundred (200) bags Glue 300,
consigned to Pan Oriental Match Company under Bill of Lading No.
KCE-8; and (d) garments, consigned to Ding Velayo under Bills of
Lading Nos. KMA-73 and KMA-74.
While the vessel was off Okinawa, Japan, a small flame was detected
on the acetylene cylinder located in the accommodation area near the
engine room on the main deck level. As the crew was trying to
extinguish the fire, the acetylene cylinder suddenly exploded sending
a flash of flame throughout the accommodation area, thus causing
death and severe injuries to the crew and instantly setting fire to the
whole superstructure of the vessel. The incident forced the master
and the crew to abandon the ship.
Thereafter, SS Eastern Explorer was found to be a constructive total
loss and its voyage was declared abandoned.
Several hours later, a tugboat under the control of Fukuda Salvage
Co. arrived near the vessel and commenced to tow the vessel for the
port of Naha, Japan.
Fire fighting operations were again conducted at the said port. After
the fire was extinguished, the cargoes which were saved were loaded
to another vessel for delivery to their original ports of destination.
ESLI charged the consignees several amounts corresponding to
additional freight and salvage charges, as follows: (a) for the goods
covered by Bill of Lading No. 042283, ESLI charged the consignee
the sum of P1,927.65, representing salvage charges assessed
against the goods; (b) for the goods covered by Bill of Lading No.
KCE-12, ESLI charged the consignee the sum of P2,980.64 for
additional freight and P826.14 for salvage charges against the goods;
(c) for the goods covered by Bill of Lading No. KCE-8, ESLI charged
the consignee the sum of P3,292.26 for additional freight and
P4,130.68 for salvage charges against the goods; and

(d) for the goods under Bills of Lading Nos. KMA-73 and KMA-74,
ESLI charged the consignee the sum of P8,337.06 for salvage
charges against the goods.
The charges were all paid by Philippine Home Assurance Corporation
(PHAC) under protest for and in behalf of the consignees.
PHAC, as subrogee of the consignees, thereafter filed a complaint
before the Regional Trial Court of Manila, Branch 39, against ESLI to
recover the sum paid under protest on the ground that the same were
actually damages directly brought about by the fault, negligence,
illegal act and/or breach of contract of ESLI.
In its answer, ESLI contended that it exercised the diligence required
by law in the handling, custody and carriage of the shipment; that the
fire was caused by an unforeseen event; that the additional freight
charges are due and demandable pursuant to the Bill of Lading; 1
and that salvage charges are properly collectible

under Act No. 2616, known as the Salvage Law.
The trial court dismissed PHAC's complaint and ruled in favor of ESLI
ratiocinating thus:
The question to be resolved is whether or not the fire on the vessel
which was caused by the explosion of an acetylene cylinder loaded
on the same was the fault or negligence of the defendant.
Evidence has been presented that the SS "Eastern Explorer" was a
seaworthy vessel (Deposition of Jumpei Maeda, October 23, 1980, p.
3) and before the ship loaded the Acetylene Cylinder No. NCW 875,
the same has been tested, checked and examined and was certified
to have complied with the required safety measures and standards
(Deposition of Senjei Hayashi, October 23, 1980, pp. 2-3). When the
fire was detected by the crew, fire fighting operations was
immediately conducted but due to the explosion of the acetylene
cylinder, the crew were unable to contain the fire and had to abandon
the ship to save their lives and were saved from drowning by passing
vessels in the vicinity. The burning of the vessel rendering it a
constructive total loss and incapable of pursuing its voyage to the
Philippines was, therefore, not the fault or negligence of defendant
but a natural disaster or calamity which nobody would like to happen.
The salvage operations conducted by Fukuda Salvage Company
(Exhibits "4-A" and "6-A") was perfectly a legal operation and charges
made on the goods recovered were legitimate charges.
Act No. 2616, otherwise known as the Salvage Law, is thus

applicable to the case at bar. Section 1 of Act No. 2616 states:
Sec 1. When in case of shipwreck, the vessel or its cargo shall be
beyond the control of the crew, or shall have been abandoned by
them, and picked up and conveyed to a safe place by other persons,
the latter shall be entitled to a reward for the salvage.
Those who, not being included in the above paragraph, assist in
saving a vessel or its cargo from shipwreck, shall be entitled to like
reward.
In relation to the above provision, the Supreme Court has ruled in
Erlanger & Galinger v. Swedish East Asiatic Co., Ltd., 34 Phil. 178,
that three elements are necessary to a valid salvage claim, namely
(a)a marine peril (b) service voluntarily rendered when not required
as an existing duty or from a special contract and (c) success in
whole or in part, or that the service rendered contributed to such
success.
The above elements are all present in the instant case. Salvage
charges may thus be assessed on the cargoes saved from the
vessel. As provided for in Section 13 of the Salvage Law, "The
expenses of salvage, as well as the reward for salvage or assistance,
shall be a charge on the things salvaged or their value." In Manila
Railroad Co. v. Macondray Co., 37 Phil. 583, it was also held that
"when a ship and its cargo are saved together, the salvage allowance
should be charged against the ship and cargo in the proportion of
their respective values, the same as in a case of general
average . . ." Thus, the "compensation to be paid by the owner of the
cargo is in proportion to the value of the vessel and the value of the
cargo saved." (Atlantic Gulf and Pacific Co. v. Uchida Kisen Kaisha,
42 Phil. 321). (Memorandum for Defendant, Records, pp. 212-213).
With respect to the additional freight charged by defendant from the
consignees of the goods, the same are also validly demandable.
As provided by the Civil Code:
Art. 1174. Except in cases expressly specified by law, or when it is
otherwise declared by stipulation, or when the nature of the obligation
require the assumption of risk, no person shall be responsible for
those events which could not be foreseen, or which though foreseen,
were inevitable.
Art 1266. The debtor in obligations to do shall also be released when
the prestation becomes legally or physically impossible without the
fault of the obligor."
The burning of "EASTERN EXPLORER" while off Okinawa rendered

it physically impossible for defendant to comply with its obligation of
delivering the goods to their port of destination pursuant to the
contract of carriage. Under Article 1266 of the Civil Code, the physical
impossibility of the prestation extinguished defendant's obligation..
It is but legal and equitable for the defendant therefore, to demand
additional freight from the consignees for forwarding the goods from
Naha, Japan to Manila and Cebu City on board another vessel, the
"EASTERN MARS." This finds support under Article 844 of the Code
of Commerce which provides as follows:
Art. 844. A captain who may have taken on board the goods saved
from the wreck shall continue his course to the port of destination;
and on arrival should deposit the same, with judicial intervention at
the disposal of their legitimate owners. . . .
The owners of the cargo shall defray all the expenses of this arrival
as well as the payment of the freight which, after taking into
consideration the circumstances of the case, may be fixed by
agreement or by a judicial decision.
Furthermore, the terms and conditions of the Bill of Lading authorize
the imposition of additional freight charges in case of forced
interruption or abandonment of the voyage. At the dorsal portion of
the Bills of Lading issued to the consignees is this stipulation:
12. All storage, transshipment, forwarding or other disposition of
cargo at or from a port of distress or other place where there has
been a forced interruption or abandonment of the voyage shall be at
the expense of the owner, shipper, consignee of the goods or the
holder of this bill of lading who shall be jointly and severally liable for
all freight charges and expenses of every kind whatsoever, whether
payable in advance or not that may be incurred by the cargo in
addition to the ordinary freight, whether the service be performed by
the named carrying vessel or by carrier's other vessels or by
strangers. All such expenses and charges shall be due and payable
day by day immediately when they are incurred.
The bill of lading is a contract and the parties are bound by its terms
(Gov't of the Philippine Islands vs. Ynchausti and Co., 40 Phil. 219).
The provision quoted is binding upon the consignee.
Defendant therefore, can validly require payment of additional freight
from the consignee. Plaintiff can not thus recover the additional
freight paid by the consignee to defendant. (Memorandum for
Defendant, Record, pp. 215-216). 2
On appeal to the Court of Appeals, respondent court affirmed the trial

court's findings and conclusions, 3 hence, the present petition
for review before this Court on the following errors:

I. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH
APPROVAL THE TRIAL COURT'S FINDINGS THAT THE BURNING
OF THE SS "EASTERN EXPLORER", RENDERING ET A
CONSTRUCTIVE TOTAL LOSS, IS A NATURAL DISASTER OR
CALAMITY WHICH NOBODY WOULD LIKE TO HAPPEN, DESPITE
EXISTING JURISPRUDENCE TO THE CONTRARY.
II. THE RESPONDENT COURT ARBITRARILY RULED THAT THE
BURNING OF THE SS "EASTERN EXPLORER" WAS NOT THE
FAULT AND NEGLIGENCE OF RESPONDENT EASTERN
SHIPPING LINES.
III. THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF
DISCRETION IN RULING THAT DEFENDANT HAD EXERCISED
THE EXTRAORDINARY DILIGENCE IN THE VIGILANCE OVER
THE GOODS AS REQUIRED BY LAW.
IV. THE RESPONDENT COURT ARBITRARILY RULED THAT THE
MARINE NOTE OF PROTEST AND STATEMENT OF FACTS
ISSUED BY THE VESSEL'S MASTER ARE NOT HEARSAY
DESPITE THE FACT THAT THE VESSEL'S MASTER, CAPT.
LICAYLICAY WAS NOT PRESENTED COURT, WITHOUT
EXPLANATION WHATSOEVER FOR HIS NON-PRESENTATION,
THUS, PETITIONER WAS DEPRIVED OF ITS RIGHT TO CROSSEXAMINE THE AUTHOR THEREOF.
V. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH
APPROVAL THE TRIAL COURT'S CONCLUSION THAT THE
EXPENSES OR AVERAGES INCURRED IN SAVING THE CARGO
CONSTITUTE GENERAL AVERAGE.
VI. THE RESPONDENT COURT ERRONEOUSLY ADOPTED THE
TRIAL COURT'S RULING THAT PETITIONER WAS LIABLE TO
RESPONDENT CARRIER FOR ADDITIONAL FREIGHT AND
SALVAGE CHARGES. 4
It is quite evident that the foregoing assignment of errors challenges
the findings of fact and the appreciation of evidence made by the trial
court and later affirmed by respondent court. While it is a well-settled
rule that only questions of law may be raised in a petition for review
under Rule 45 of the Rules of Court, it is equally well-settled that the
same admits of the following exceptions, namely: (a) when the
conclusion is a finding grounded entirely on speculation, surmises or

conjectures; (b) when the inference made is manifestly mistaken,
absurd or impossible; (c) where there is a grave abuse of discretion;
(d) when the judgment is based on a misapprehension of facts; (e)
when the findings of fact are conflicting; (f) when the Court of
Appeals, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both appellant and
appellee; (g) when the findings of the Court of Appeals are contrary to
those of the trial court; (h) when the findings of fact are conclusions
without citation of specific evidence on which they are based;
(i) when the facts set forth in the petition as well as in the petitioners'
main and reply briefs are not disputed by the respondents; and (j)
when the finding of fact of the Court of Appeals is premised on the
supposed absence of evidence and is contradicted by the evidence
on record. 5 Thus, if there is a showing, as in the instant
case, that the findings complained of are totally

devoid of support in the records, or that they are so
glaringly erroneous as to constitute grave abuse of
discretion, the same may be properly reviewed and
evaluated by this Court.
It is worthy to note at the outset that the goods subject of the present
controversy were neither lost nor damaged in transit by the fire that
razed the carrier. In fact, the said goods were all delivered to the
consignees, even if the transshipment took longer than necessary.
What is at issue therefore is not whether or not the carrier is liable for
the loss, damage, or deterioration of the goods transported by them
but who, among the carrier, consignee or insurer of the goods, is
liable for the additional charges or expenses incurred by the owner of
the ship in the salvage operations and in the transshipment of the
goods via a different carrier.
In absolving respondent carrier of any liability, respondent Court of
Appeals sustained the trial court's finding that the fire that gutted the
ship was a natural disaster or calamity. Petitioner takes exception to
this conclusion and we agree.
In our jurisprudence, fire may not be considered a natural disaster or
calamity since it almost always arises from some act of man or by
human means.
It cannot be an act of God unless caused by lightning or a natural
disaster or casualty not attributable to human agency. 6

In the case at bar, it is not disputed that a small flame was detected
on the acetylene cylinder and that by reason thereof, the same
exploded despite efforts to extinguish the fire. Neither is there any
doubt that the acetylene cylinder, obviously fully loaded, was stored in
the accommodation area near the engine room and not in a storage
area considerably far, and in a safe distance, from the engine room.
Moreover, there was no showing, and none was alleged by the
parties, that the fire was caused by a natural disaster or calamity not
attributable to human agency. On the contrary, there is strong
evidence indicating that the acetylene cylinder caught fire because of
the fault and negligence of respondent ESLI, its captain and its crew.
First, the acetylene cylinder which was fully loaded should not have
been stored in the accommodation area near the engine room where
the heat generated therefrom could cause the acetylene cylinder to
explode by reason of spontaneous combustion. Respondent ESLI
should have easily foreseen that the acetylene cylinder, containing
highly inflammable material was in real danger of exploding because
it was stored in close proximity to the engine room.
Second, respondent ESLI should have known that by storing the
acetylene cylinder in the accommodation area supposed to be
reserved for passengers, it unnecessarily exposed its passengers to
grave danger and injury. Curious passengers, ignorant of the danger
the tank might have on humans and property, could have handled the
same or could have lighted and smoked cigarettes while repairing in
the accommodation area.
Third, the fact that the acetylene cylinder was checked, tested and
examined and subsequently certified as having complied with the
safety measures and standards by qualified experts 7 before it
was loaded in the vessel only shows to a great extent

that negligence was present in the handling of the
acetylene cylinder after it was loaded and while it was
on board the ship. Indeed, had the respondent and its
agents not been negligent in storing the acetylene
cylinder near the engine room, then the same would
not have leaked and exploded during the voyage.
Verily, there is no merit in the finding of the trial court to which
respondent court erroneously agreed that the fire was not the fault or
negligence of respondent but a natural disaster or calamity. The
records are simply wanting in this regard.
Anent petitioner's objection to the admissibility of Exhibits "4'' and ''5",
the Statement of Facts and the Marine Note of Protest issued by
Captain Tiburcio A. Licaylicay, we find the same impressed with merit
because said documents are hearsay evidence. Capt. Licaylicay,
Master of S.S. Eastern Explorer who issued the said documents, was
not presented in court to testify to the truth of the facts he stated
therein; instead, respondent ESLI presented Junpei Maeda, its
Branch Manager in Tokyo and Yokohama, Japan, who evidently had
no personal knowledge of the facts stated in the documents at issue.
It is clear from Section 36, Rule 130 of the Rules of Court that any
evidence, whether oral or documentary, is hearsay if its probative
value is not based on the personal knowledge of the witness but on
the knowledge of some other person not on the witness stand.
Consequently, hearsay evidence, whether objected to or not, has no
probative value unless the proponent can show that the evidence falls
within the exceptions to the hearsay evidence rule. 8 It is excluded
because the party against whom it is presented is

deprived of his right and opportunity to cross-examine
the persons to whom the statements or writings are
attributed.
On the issue of whether or not respondent court committed an error
in concluding that the expenses incurred in saving the cargo are
considered general average, we rule in the affirmative. As a rule,
general or gross averages include all damages and expenses which
are deliberately caused in order to save the vessel, its cargo, or both
at the same time, from a real and known risk 9 While the instant
case may technically fall within the purview of the said

provision, the formalities prescribed under Articles
813 and 814 of the Code of Commerce in order to
incur the expenses and cause the damage
corresponding to gross average were not complied
with. Consequently, respondent ESLI's claim for
contribution from the consignees of the cargo at the
10
11
time of the occurrence of the average turns to naught.

Prescinding from the foregoing premises, it indubitably follows that
the cargo consignees cannot be made liable to respondent carrier for
additional freight and salvage charges. Consequently, respondent
carrier must refund to herein petitioner the amount it paid under
protest for additional freight and salvage charges in behalf of the
consignees.
WHEREFORE, the judgment appealed from is hereby REVERSED
and SET ASIDE. Respondent Eastern Shipping Lines, Inc. is
ORDERED to return to petitioner Philippine Home Assurance
Corporation the amount it paid under protest in behalf of the
consignees herein.
SO ORDERED.
Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.
Footnotes
1 Sec 12. All storage, transshipment forwarding or other disposition of
cargo at or from port of distress or other place where there has been
a forced interruption or abandonment of the voyage shall be at the
expense of the owner, shipper, consignee of the goods or the holder
of this bill of lading who shall be jointly and severally liable for all
freight charges and expenses of every kind whatsoever, whether
payable in advance or not that may be incurred by the cargo in
addition to the ordinary freight, whether payable in advance or not
that may be incurred by the cargo in addition to the ordinary freight,
whether the service be performed by the named carrying vessel or by
carrier's other vessels or by strangers such expenses and charges
shall be due and payable day by day immediately when they are
incurred.
2 Original Records, pp. 240-243.
3 Rollo, pp. 29-39.
4 Id., at 12-13.
5 Geronimo v. Court of Appeals, 224 SCRA 494, 498-499 (1993]; BPI
Credit Corporation v. Court of Appeals, 204 SCRA 601, 608-609
[1991]; Medina v. Asistio, Jr., 191 SCRA 218, 223-224 [1990].
6 Eastern Shipping Lines, Inc. v. Intermediate Appellate Court 150
SCRA 463 [1987]; Africa v. Caltex, 16 SCRA 448 [1966]; See also 4
Agbayani, Commentaries and Jurisprudence on the Commercial
Laws of the Philippines, 1993 Edition, p. 44.
7 Original Records, p. 171.
8 Baguio v. Court of Appeals, 226 SCRA 366, 370 [1993].

9 Art 811, Code of Commerce.
10 Art 813. In order to incur the expenses and cause the damages
corresponding to gross average, there must be a resolution of the
captain, adopted after deliberation with the sailing mate and other
officers of the vessel, and after hearing the persons interested in the
cargo who may be present.
If the latter shall object, and the captain and officers or a majority of
them, or the captain, if opposed to the majority, should consider
certain measures necessary they may be executed under his
responsibility, without prejudice to the right of the shippers to proceed
against the captain before the competent judge or court, if they can
prove that he acted with malice, lack of skill, or negligence.
If the persons interested in the cargo, being on board the vessel,
have not been heard, they shall not contribute to the gross average,
their share being chargeable against the captain, unless the urgency
of the case should be such that the time necessary for previous
deliberations was wanting.
11 Art 814. The resolution adopted to cause the damages which
constitute general average must necessarily be entered in the log
book, stating the motives and reasons for the dissent, should there be
any, and the irresistible and urgent causes which impelled the captain
if he acted of his own accord.
In the first case the minutes shall be signed by all the persons
present who could do so before taking action, if possible; and if not,
at the first opportunity. In the second case, it shall be signed by the
captain and by the officers of the vessel.
In the minutes, and after the resolution, shall be stated in detail all the
goods jettisoned, and mention shall be made of the injuries caused to
those kept on board. The captain shall be obliged to deliver one copy
of these minutes to the maritime judicial authority of the first port he
may make, within twenty-four hours after his arrival, and to ratify it
immediately under oath.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-23733
October 31, 1969
HERMINIO L. NOCUM, plaintiff-appellee,
vs.
LAGUNA TAYABAS BUS COMPANY, defendant-appellant.
Fernando M. Mangubat and Felimon H. Mendoza for plaintiffappellee. Domingo E. de Lara and Associates for defendantappellant.
BARREDO, J.:
Appeal of the Laguna Tayabas Bus Co., defendant in the Court
below, from a judgment of the said court (Court of First Instance of
Batangas) in its Civil Case No. 834, wherein appellee Herminio L.
Nocum was plaintiff, sentencing appellant to pay appellee the sum of
P1,351.00 for actual damages and P500.00 as attorney's fees with
legal interest from the filing of the complaint plus costs. Appellee, who
was a passenger in appellant's Bus No. 120 then making a trip within
the barrio of Dita, Municipality of Bay, Laguna, was injured as a
consequence of the explosion of firecrackers, contained in a box,
loaded in said bus and declared to its conductor as containing clothes
and miscellaneous items by a co-passenger. The findings of fact of
the trial court are not assailed. The appeal is purely on legal
questions.
Appellee has not filed any brief. All that We have before Us is
appellant's brief with the following assignment of errors:
I
BASED ON THE FACTS THE LOWER COURT FOUND AS
ESTABLISHED, IT ERRED AS A MATTER OF LAW IN NOT
ABSOLVING APPELLANT FROM LIABILITY RESULTING FROM
THE EXPLOSION OF FIRECRACKERS CONTAINED IN A
PACKAGE,
THE
CONTENTS
OF
WHICH
WERE
MISREPRESENTED BY A PASSENGER.
II
THE LOWER COURT ERRED, AS A MATTER OF LAW, IN
AWARDING DAMAGES WITH LEGAL INTEREST IN FAVOR OF
THE APPELLEE.
III
THE LOWER COURT ERRED IN NOT DISMISSING THE
COMPLAINT, WITH COSTS AGAINST THE APPELLEE.
Upon consideration of the points raised and discussed by appellant,
We find the appeal to be well taken.
The main basis of the trial court's decision is that appellant did not
observe the extraordinary or utmost diligence of a very cautious
person required by the following articles of the Civil Code:
ART. 1733. 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 the 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.
ART. 1755. 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 a due regard for all the
circumstances.
ART 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.
Analyzing the evidence presented by the parties, His Honor found:
According to Severino Andaya, a witness for the plaintiff, a man with
a box went up the baggage compartment of the bus where he already
was and said box was placed under the seat. They left Azcarraga at
about 11:30 in the morning and when the explosion occurred, he was
thrown out. PC investigation report states that thirty seven (37)
passengers were injured (Exhibits "O" and "2").
The bus conductor, Sancho Mendoza, testified that the box belonged
to a passenger whose name he does not know and who told him that
it contained miscellaneous items and clothes. He helped the owner in
loading the baggage which weighed about twelve (12) kilos and
because of company regulation, he charged him for it twenty-five
centavos (P0.25). From its appearance there was no indication at all
that the contents were explosives or firecrackers. Neither did he open
the box because he just relied on the word of the owner.
Dispatcher Nicolas Cornista of defendant company corroborrated the
testimony of Mendoza and he said, among other things, that he was
present when the box was loaded in the truck and the owner agreed
to pay its fare. He added that they were not authorized to open the
baggages of passengers because instruction from the management
was to call the police if there were packages containing articles which
were against regulations.
xxx
xxx
xxx
There is no question that Bus No. 120 was road worthy when it left its
Manila Terminal for Lucena that morning of December 5, 1960. The
injuries suffered by the plaintiff were not due to mechanical defects
but to the explosion of firecrackers inside the bus which was loaded
by a co-passenger.
... Turning to the present case, it is quite clear that extraordinary or
utmost diligence of a very cautious person was not observed by the
defendant company. The service manual, exhibits "3" and "3-A,"
prohibits the employees to allow explosives, such as dynamite and
firecrackers to be transported on its buses. To implement this
particular rule for 'the safety of passengers, it was therefore
incumbent upon the employees of the company to make the proper
inspection of all the baggages which are carried by the passengers.
But then, can it not be said that the breach of the contract was due to
fortuitous event? The Supreme Court in the case of Lasam vs. Smith,
45 Phil. 657, quoted Escriche's definition of caso fortuito as "an
unexpected event or act of God which could neither be foreseen nor
resisted, such as floods, torrents, shipwrecks, conflagrations,
lightning, compulsions, insurrections, destructions of buildings by
unforeseen accidents and other occurrences of a similar nature." In
other words, the cause of the unexpected event must be independent
of the will of man or something which cannot be avoided. This cannot
be said of the instant case. If proper and rigid inspection were
observed by the defendant, the contents of the box could have been
discovered and the accident avoided. Refusal by the passenger to
have the package opened was no excuse because, as stated by
Dispatcher Cornista, employees should call the police if there were
packages containing articles against company regulations. Neither
was failure by employees of defendant company to detect the
contents of the packages of passengers because like the rationale in
the Necesito vs. Paras case (supra), a passenger has neither choice
nor control in the exercise of their discretion in determining what are
inside the package of co-passengers which may eventually prove
fatal.
We cannot agree. No doubt, the views of His Honor do seem to be in
line with the reasons that the Code Commission had for incorporating
the above-quoted provisions in its draft of the Civil Code. Indeed, in
approving the said draft, Congress must have concurred with the
Commission that by requiring the highest degree of diligence from
common carriers in the safe transport of their passengers and by
creating a presumption of negligence against them, the recklessness

of their drivers which is a common sight even in crowded areas and,
particularly, on the highways throughout the country may, somehow, if
not in a large measure, be curbed. We are not convinced, however,
that the exacting criterion of said provisions has not been met by
appellant in the circumstances of this particular case.
It is undisputed that before the box containing the firecrackers were
allowed to be loaded in the bus by the conductor, inquiry was made
with the passenger carrying the same as to what was in it, since its
"opening ... was folded and tied with abaca." (Decision p. 16, Record
on Appeal.) According to His Honor, "if proper and rigid inspection
were observed by the defendant, the contents of the box could have
been discovered and the accident avoided. Refusal by the passenger
to have the package opened was no excuse because, as stated by
Dispatcher Cornista, employees should call the police if there were
packages containing articles against company regulations." That may
be true, but it is Our considered opinion that the law does not require
as much. Article 1733 is not as unbending as His Honor has held, for
it reasonably qualifies the extraordinary diligence required of common
carriers for the safety of the passengers transported by them to be
"according to all the circumstances of each case." In fact, Article 1755
repeats this same qualification: "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."
In this particular case before Us, it must be considered that while it is
true the passengers of appellant's bus should not be made to suffer
for something over which they had no control, as enunciated in the
decision of this Court cited by His Honor,1 fairness demands that in
measuring a common carrier's duty towards its passengers,
allowance must be given to the reliance that should be reposed on
the sense of responsibility of all the passengers in regard to their
common safety. It is to be presumed that a passenger will not take
with him anything dangerous to the lives and limbs of his copassengers, not to speak of his own. Not to be lightly considered
must be the right to privacy to which each passenger is entitled. He
cannot be subjected to any unusual search, when he protests the
innocuousness of his baggage and nothing appears to indicate the
contrary, as in the case at bar. In other words, inquiry may be verbally
made as to the nature of a passenger's baggage when such is not
outwardly perceptible, but beyond this, constitutional boundaries are

already in danger of being transgressed. Calling a policeman to his
aid, as suggested by the service manual invoked by the trial judge, in
compelling the passenger to submit to more rigid inspection, after the
passenger had already declared that the box contained mere clothes
and other miscellaneous, could not have justified invasion of a
constitutionally protected domain. Police officers acting without
judicial authority secured in the manner provided by law are not
beyond the pale of constitutional inhibitions designed to protect
individual human rights and liberties. Withal, what must be
importantly considered here is not so much the infringement of the
fundamental sacred rights of the particular passenger herein
involved, but the constant threat any contrary ruling would pose on
the right of privacy of all passengers of all common carriers,
considering how easily the duty to inspect can be made an excuse for
mischief and abuse. Of course, when there are sufficient indications
that the representations of the passenger regarding the nature of his
baggage may not be true, in the interest of the common safety of all,
the assistance of the police authorities may be solicited, not
necessarily to force the passenger to open his baggage, but to
conduct the needed investigation consistent with the rules of propriety
and, above all, the constitutional rights of the passenger. It is in this
sense that the mentioned service manual issued by appellant to its
conductors must be understood.
Decisions in other jurisdictions cited by appellant in its brief, evidently
because of the paucity of local precedents squarely in point,
emphasize that there is need, as We hold here, for evidence of
circumstances indicating cause or causes for apprehension that the
passenger's baggage is dangerous and that it is failure of the
common carrier's employee to act in the face of such evidence that
constitutes the cornerstone of the common carrier's liability in cases
similar to the present one.
The principle that must control the servants of the carrier in a case
like the one before us is correctly stated in the opinion in the case of
Clarke v. Louisville & N.R. Co. 20 Ky L. Rep. 839, 49 S.W. 1120. In
that case Clarke was a passenger on the defendant's train. Another
passenger took a quantity of gasoline into the same coach in which
Clarke was riding. It ignited and exploded, by reason of which he was
severely injured. The trial court peremptorily instructed the jury to find
for the defendant. In the opinion, affirming the judgment, it is said: "It
may be stated briefly, in assuming the liability of a railroad to its

passengers for injury done by another passenger, only where the
conduct of this passenger had been such before the injury as to
induce a reasonably prudent and vigilant conductor to believe that
there was reasonable ground to apprehend violence and danger to
the other passengers, and in that case asserting it to be the duty of
the conductor of the railroad train to use all reasonable means to
prevent such injury, and if he neglects this reasonable duty, and injury
is done, that then the company is responsible; that otherwise the
railroad is not responsible."
The opinion quotes with approval from the case of Gulf, C. & S. F. R.
Co. vs. Shields, 9 Tex. Civ. App. 652, 29 S. W. 652, in which case the
plaintiff was injured by alcohol which had been carried upon the train
by another passenger. In the opinion in that case it is said: "It was but
a short period of time after the alcohol was spilt when it was set on
fire and the accident occurred, and it was not shown that appellant's
employees knew that the jug contained alcohol. In fact, it is not
shown that the conductor or any other employee knew that Harris had
a jug with him until it fell out of the sack, though the conductor had
collected ... (his) fare, and doubtless knew that he had the sack on
the seat with him. ... It cannot be successfully denied that Harris had
the right as a passenger to carry baggage on the train, and that he
had a right to carry it in a sack if he chose to do so. We think it is
equally clear that, in the absence of some intimation or circumstance
indicating that the sack contained something dangerous to other
passengers, it was not the duty of appellant's conductor or any other
employee to open the sack and examine its contents." Quinn v.
Louisville & N. R. Co. 98 Ky. 231, 32 S. W. 742; Wood v. Louisville &
N. R. Co. 101 Ky. 703, 42 S. W. 349; Louisville & N. R. Co. v. Vincent,
29 Ky. L. Rep. 1049, 96 S. W. 898; Louisville & N. R. Co. v. Renfro,
142 Ky. 590, 33 L. R. A. (N. S.) 133, 135 S. W. 266. 2 (Emphasis
supplied)
Explosive or Dangerous Contents. A carrier is ordinarily not liable
for injuries to passengers from fires or explosions caused by articles
brought into its conveyances by other passengers, in the absence of
any evidence that the carrier, through its employees, was aware of
the nature of the article or had any reason to anticipate danger
therefrom. (Bogard v. Illinois C. R Co. 144 Ky. 649, 139 S. W. 855, 36
L. R. A.[N. S.] 337; Clarke v. Louisville & N. R. Co. 101 Ky. 34, 39 S.
W. 840, 36 L. R. A. 123 [explosion of can of gasoline]; East Indian R.
Co. v. Mukerjee [1901] A. C. [Eng.] 396, 3 B. R. C. 420 P. C.

[explosion of fireworks]; Annotation: 37 L. R. A. [N. S.] 725.) 3
Appellant further invokes Article 1174 of the Civil Code which relieves
all obligors, including, of course, common carriers like appellant, from
the consequence of fortuitous events. The court a quo held that "the
breach of contract (in this case) was not due to fortuitous event and
that, therefore, the defendant is liable in damages." Since We hold
that appellant has succeeded in rebutting the presumption of
negligence by showing that it has exercised extraordinary diligence
for the safety of its passengers, "according to the circumstances of
the (each) case", We deem it unnecessary to rule whether or not
there was any fortuitous event in this case.
ACCORDINGLY, the appealed judgment of the trial court is reversed
and the case is dismissed, without costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,
Sanchez and Fernando, JJ., concur.
Castro, J., concurs in the result.
Teehankee, J., reserves his vote.

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THIRD DIVISION

[G.R. No. 112287. December 12, 1997]

NATIONAL STEEL CORPORATION, petitioner,

VLASONS SHIPPING, INC., petitioner, vs.

The Court finds occasion to apply the rules on the

1. The sum of P75,000.00 as unpaid freight and P88,000.00 as

The trial court erred in finding that the MV VLASONS I was

The trial court erred in finding that the rusting of NSCs

The trial court erred in finding that the stevedores hired by

The trial court erred in exempting VSI from liability on the

The trial court erred in ordering NSC to pay freight,

to P44,000.00 and deleting the award of attorneys fees and

1. Whether or not a charterer of a vessel is liable for demurrage

In its separate petition,

The Courts Ruling

losses except on proven willful negligence of the officers of

In the instant case, the Court of Appeals correctly found that

factual findings of both the trial court and the Court of

consider such claim as an uncontroverted fact

And the relevant portions of Jose Pascuas deposition are as

That due diligence was exercised by the officers and the

Q: Now, during your testimony on November 5, 1979, you stated

Q: Now, is this procedure adopted by the stevedores of covering

NSC attempts to discredit the testimony of Angliongto by

NSC which was ultimately responsible for the stevedores it

the duty to load the cargo xxx in a prudent manner, and it is

anchored on the alleged inadmissibility of the certificates of

effect that the vessel VLASONS I was drydocked x x x and

The Court defined demurrage in its strict sense as the

In this case, the contract of voyage charter hire provided for

not be awarded to a party for the reason alone that the

WHEREFORE, premises considered, the instant

Petitioner Loadstar Shipping Co., Inc. (hereafter

The goods, amounting to P6,067,178, were insured for the same

5) There was a clear breach of the contract of carriage when the

The errors assigned by LOADSTAR boil down to a

Regarding the first issue, LOADSTAR submits that the vessel

LOADSTAR also maintains that the vessel was seaworthy.

fully established the existence of two typhoons, WELFRING and

notwithstanding its knowledge of a typhoon is tantamount to

Under the facts and circumstances obtaining in this case,

of limited liability does not apply where there was negligence on

P4,130.68 for salvage charges against the goods; and

and that salvage charges are properly collectible

Act No. 2616, otherwise known as the Salvage Law, is thus

The burning of "EASTERN EXPLORER" while off Okinawa rendered

On appeal to the Court of Appeals, respondent court affirmed the trial

for review before this Court on the following errors:

conclusion is a finding grounded entirely on speculation, surmises or

case, that the findings complained of are totally

disaster or casualty not attributable to human agency. 6

was loaded in the vessel only shows to a great extent

because the party against whom it is presented is

case may technically fall within the purview of the said

time of the occurrence of the average turns to naught.

8 Baguio v. Court of Appeals, 226 SCRA 366, 370 [1993].

creating a presumption of negligence against them, the recklessness

outwardly perceptible, but beyond this, constitutional boundaries are

may be stated briefly, in assuming the liability of a railroad to its

Co. v. Mukerjee [1901] A. C. [Eng.] 396, 3 B. R. C. 420 P. C.

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