Transportation and maritime law

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

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

(5) Order or act of competent public authority.
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Art. 1733.
4 Agbayani:
Responsibility of common carriers.-- In general, CC are responsible for the loss, destruction, or deterioration of the goods carried by them. This responsibility arises from contract, as the relation between a carrier and its patrons is of a contractual nature. A failure on the carrier to use extra-ordinary care in carrying goods or passengers safely is a breach of contract and constitutes culpa contractual not culpa aquiliana. While the liability of a carrier as an insurer is not recognized in this jurisdiction, a carrier is liable for damages suffered by goods carried if such damages arise from its negligence. The carrier is also liable even in those cases where the cause of the loss or damage is unknown.
Due extraordinary diligence required, carriers given wide discretion in selection and supervision of persons to handle goods.-- The law requires CC to exercise extra-o diligence which means that they must render service with the greatest skill and utmost foresight. The extra-o diligence required of CC in the handling of the goods of the shipper and the consignees lasts from the time the cargoes are loaded in the vessels until they are discharged and delivered to the consignees. To comply with this obligation, CC should be afforded the right of having a wide discretion in the selection and supervision of persons who will handle the goods.
Air carrier can terminate services of pilot for serious misconduct and drunkenness, because of its duty of extraordinary dilignece.-- The CC can terminate the services of its drivers, pilots and EEs for serious misconduct and drunkenness because of its duty of extra-ordinary diligence. Whenever a passenger dies or is injured the presumption is that the CC is at fault notwithstanding the fact that it has exercised due diligence of a good father of a family in the selection and supervision of its EEs. Thus, extra-ordinary measures and diligence should be exercised by it for the safety of its passengers and their belongings. A CC can terminate an EE whose continued service is inimical to its interests and the safety of the passengers.
Carrier has duty to keep and care for goods carried.-- It is the duty of the CC to properly and carefully handle, carry, keep and care for the goods carried and to exercise due care to ascertain and consider the nature of the goods offered for shipment and to use such methods for their care during the voyage as their nature requires. The carrier is liable for injury to, or loss of, cargo resulting from the failure to properly care for and handle the cargo en route; and it is required to provide adequate ventilation for the safe carriage of the cargo, and provide reasonable and ordinary inspection and care in and about the transportation of cargo. A vessel should not accept cargo unless it can be given the type of storage that its character requires, for placing of conditions in a bill of lading does not relieve the vessels of obligation to take appropriate care of the cargo.
Duty of carrier to deliver cargo in good condition as when loaded.-- There is no absolute obligation for a CC to accept cargo. It should not be accepted unless it can be given the type of storage that its character requires. Where a vessel accepts a cargo for shipment for valuable consideration, it takes the risk of delivering it in good condition as when it was loaded. And if the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom.

In the exercise of extra-ordinary diligence required by law, the CC must give due regard to all circumstances and take all steps necessary to insure the safety of the passengers and the goods given the circumstances.

Presumption of negligence.-- Under Art. 1735, if the goods are proved to have been lost, destroyed or deteriorated, CC are presumed to have been at fault or to have acted negligently, unless they prove that they have observed the extra-o diligence required by law.

The plaintiff needs only to prove that the goods he transported have been lost, destroyed or deteriorated

CC must then prove that he has exercised extra-ordinary diligence required by law or that the loss, etc. was due to accident or some other circumstances inconsistent with its liability

Mere proof of delivery of goods in order to a carrier, and of their arrival at the place of destination in bad order makes out a prima facie case against the CC

Defenses available to CC:
1. Art. 1734

2. Art. 1735 (exercise of extra-ordinary diligence required by law)

3. Natural disaster: The CC is exempt from liability if he proves that the loss or destruction of the merchandise was due to accident and force majeure and not to fraud, fault or negligence on the part of the EEs and owners of the CC.

CC cannot interpose the defense that it exercised due diligence in the selection and supervision of EEs. The liability of the CC arises from breach of the contract of carriage and not from culpa aquiliana. It is however the duty of CC to teach their drivers not to overload vehicles, not to exceed safe and legal speed limits, and other safety precautions.

Carrier not insurer.-- CC are not required to exercise all the care, skill and diligence of which the human mind can conceive nor such as will free the transportation of passengers from all possible perils. A CC is not an insurer of the safety of the passengers and is not absolutely and at all events to carry them safely and without injury.
Ynchausti Steamship Co. vs Dexter 41 Phil 289
F: The Govt. of the Philippines, acting through the Insular Purchasing Agent, employed the services of petitioner, Ynchausti Steamship Co., a common carrier for the transportation, on board the steamship Venus, from the port of Manila to the port of Appari, Cagayan, of consignments of merchandise, consisting of 30 cases of Wine Rose mineral oil of two 5-gallon cans to the case. On another occasion, the Govt. also sent 96 cases of Cock brand mineral oil, ten gallons to the case. The goods were delivered by the shipper to the carrier which accordingly received them, and to evidence the contract of transportation, the parties duly executed and delivered what is popularly called Govt. bill of lading, whereby it was stipulated that the carrier, Ynchausti, received the above-mentioned supplies in apparent good condition, obliging itself to carry said supplies to the place agreed upon.

Both shipments arrived with one case missing per shipment. Ynchausti denied negligence. However, upon investigation, the Insular Auditor decided that the leakages were due to Ynchausti's negligence. The Insular Auditor deducted the amount of the lost goods from the entire amount payable to Ynchausti. Petitioner refused to accept the warrant. Hence, this action was filed.

Issue : Is Ynchausti liable for the loss? YES.
Ratio : Sec. 646 of the Administrative Code provided that when Govt. property is transmitted from one source to another by carrier, it shall be upon proper bill of lading or receipt, from such carrier; and it shall be the duty of the consignee or his representative to make all notation of any evidence of loss, shortage, or damage, on the bill of lading or receipt before accomplishing it. It is admitted by petitioner that the consignee, at the time the goods were delivered, noted the losses in the respective bill of ladings. Such notation made in obedience to the code, is competent evidence to show that the shortage did exist. Inasmuch as the fact of loss was proven, it results in the presumption that the petitioner was to blame for the loss; and it was incumbent upon the petitioner to rebut that presumption by proving that the loss was not due to any fault or negligence of the petitioner.

The mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of destination in bad order, makes out a prima facie case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon the carrier to prove that the loss was due to accident or some other circumstance inconsistent with its liability. Indeed, if the Govt. had instituted an action in court against petitioner to recover the value of the oil lost, it would, based on the facts, be entitled to judgment. In the absence of proof showing that the carrier was not at fault for the loss, the Insular Auditor was entitled to withhold the amount admittedly due to the petitioner for the freight charges, a sum sufficient to cover the value of the oil lost in transit.

Mirasol vs Dollar 53 Phil 124
F: Mirasol was the owner of two cases of Encyclopedia Brittanica shipped in good order and condition on board Dollar's steamship, President Garfield, to be transported from New York to Manila. The books arrived in bad order and damaged condition, resulting in total loss of one case and partial loss of the other. Mirasol filed claims, but Dollar refused to pay alleging that the damage was caused by sea water and that Mirasol entered into a contract providing that Dollar will not be held liable for loss or damage of merchandise resulting from "acts of God" or "perils of the sea," and that in no case shall it be held liable beyond $250 for any article not enclosed in a package unless a higher value is stated therein and ad valorem freight paid or assessed thereon. The LC ruled in favor of Mirasol for payment of P 2,080.
Issue : WON Dollar may be held liable. YES.
Ratio: There was no claim or pretense that Mirasol signed the bill of lading or that he knew of its contents. In that situation, he was not legally bound by the clause limiting Dollar's liability. Where it appears that a bill of lading was issued to a shipper containing a clause limiting the carrier's liability, printed in fine letters on the back of the bill of lading, which the shipper did not sign and of which he was not advised, the shipper is not bound by the clause limiting liability and the stipulation is void or against public policy.

Shippers who are forced to ship goods in an ocean liner have legal rights. When the goods are delivered on board the ship in good order and condition and the carrier delivers them to the shipper in bad order and condition, in an action for damages, the burden of proof shifted and it devolves upon the carrier to both allege and prove that the goods were damaged by reason of some act which legally exempts it from liability.

Having received the boxes in good condition, its legal duty was to deliver them in the same condition as received. Dollar, having admitted that the goods were damaged while in transit and in its possession, the burden of proof then shifted and it devolved upon him to allege and prove that the damage was caused by reason of some fact which exempted it from liability. As to when and how the goods were damaged in transit is a matter peculiarly within the knowledge of the carrier and its employees. To require Mirasol to prove such, would force him to rely upon the EEs of Dollar's ship, which in legal effect would be to say that he could not recover damages at all.

Since Dollar was not even able to prove that the goods were wet with sea water due to a fortuitous event, it must be presumed that the carrier was liable.

2. Exemption from liability
Proof of the delivery of the goods in good order to a carrier, and of their arrival at the place of destination short or in bad order, makes a prima facie case; it is incumbent on the carrier, in order to exonerate itself, to prove that the loss or injury was due to some circumstances inconsistent with its liability
(a) Natural disaster
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the ff. causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

xxx
Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm, or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Art. 1734 (2).
Art. 1740. If the CC negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.
Art. 361. Merchandise shall be transported at the risk and venture of the shipper, if the contrary has not been expressly stipulated.

As a consequence, all the losses and deteriorations which the goods may suffer during the transportation by reason of fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the account and risk of the shipper.

Proof of these accidents is incumbent upon the carrier. (Code of Commerce.)

4 Agbayani:

Effect of New Civil Code.-- Transportation of the merchandise "at the risk and venture of the shipper" means that the shipper will suffer losses and deterioration arising from fortuitous event, force majeure, or inherent nature and defects of the goods. It does not mean that the carrier is free from liability for losses and deterioration arising from his negligence or fault, w/c is presumed. Thus construed, par. 1 of Art. 361 is not inconsistent with Art. 1735 of the NCC.
Requisites for defense of natural disaster:
1. Art. 1739 -- natural disaster must have been the proximate and only cause of the loss

2. The CC must exercise due diligence to prevent or minimize the loss before, during and after the occurrence of flood, storm, or other natural disaster. If the CC does not exercise due diligence in minimizing the loss, he may yet be held liable notwithstanding the fact that the loss, destruction or deterioration of the goods arose out of natural disaster.

3. Art. 1740 -- the CC must not be in delay. If the CC incurs in delay, a natural disaster shall not free it from responsibility. Under Art. 1165 par. 3, if the obligor incurs delay, he shall be responsible for any fortuitous event until he has effected delivery.
However, if between the delay or refusal of the CC to transport the goods and the loss of the goods due to an act of God there intervened the shipper's negligence, thus causing a break in the chain of causation between the act of God which caused their loss and the CC's fault, the act of God is the proximate cause of the loss and the carrier's delay or refusal to transport the goods, is merely the remote cause. In such cases, the shipper is not even entitled to set up the claim of contributory negligence. It is then necessary that it be established that the CC was guilty of a willful or negligent act and that between this willful or negligent act and the act of God, no negligence on the part of the shipper intervened.
Accident due to defects of carrier not caso fortuito.-- Accidents caused either by defects in the carrier or through the negligence of the carrier is not caso fortuito. The passenger or shipper has every right to presume that the carrier is perfectly in good condition and could transport him safely and securely to his destination
Tan Chiong San vs Ynchausti & Co., 22 Phil 152
F: Ynchausti and Co. received from Ong Bien Sip in Manila 205 bundles of goods to be conveyed by YC's steamer to Gubat in Sorsogon, and there to be transhipped to another vessel belonging to YC and transported to Catarman, in Samar. As the lorcha Pilar, which was to transport the goods to Catarman was not yet in Gubat when the cargo arrived, the cargo was stored in YC's warehouse.

Several days later, the lorcha arrived and the goods were loaded. However, as the lorcha was being towed, a storm arose, drove the lorcha to the shore and wrecked it, scattering the goods on the beach. YC's laborers proceeded to gather up the goods. As it was impossible to preserve the goods, they were sold at a public auction. Plaintiff filed an action for damages for P 20,000. LC decided that plaintiff was entitled only to P 14,642.63.

Issues: (1) WON the carrier is relieved from liability due to force majeure. YES.

(2) WON the carrier is liable for the loss of the cargo and for failure to deliver the same at the place of destination. NO.

Ratio: (1) It is a proven fact that the loss or damage to the goods shipped on the said lorcha was due to the force majeure which caused the wreck of the said craft. Accdg. to Art. 361 of the Code of Commerce, merchandise shall be transported at the risk and venture of the shipper, unless the contrary be expressly stipulated. No such stipulation appears of record, therefore, all damages and impairment suffered by the goods in transportation, by reason of accident, force majeure, or by virtue of the nature or defect of the articles, are for the account and risk of the shipper. The carrier is exempt from liability if he is able to prove, as he did prove, that the loss or destruction of the merchandise was due to accident and force majeure and not to fraud, fault or negligence on the part of the captain or owner of the ship -- that the loss was a result of the stranding of Pilar because of the hurricane that overtook it.
(2) The record bears no proof that said loss caused by the destruction of Pilar occurred through the carelessness or negligence of the defendant, its agents or patron of the lorcha. The defendant as well as its agents and patron had a natural interest in preserving the craft -- an interest equal to that of the plaintiff. The record discloses that Pilar was manned by an experienced patron and a sufficient number of crewmen plus the fact that it was fully equipped. The crewmen took all the precautions that any diligent man should have taken whose duty it was to save the boat and its cargo, and by the instinct of self- preservation of their lives. Considering, therefore, the conduct of the men of the defendant Pilar and of its agents during the disaster, the defendant has not incurred any liability whatsoever for the loss of the goods, inasmuch as such loss was the result of a fortuitous event or force majeure, and there was no negligence or lack of care or diligence on the part of the defendant or its agents.

Loss of a ship and of its cargo, in a wreck due to accident or force majeure must, as a general rule, fall upon their respective owners, except in cases where the wrecking or stranding of the vessel occurred through malice, carelessness or lack of skill on the part of the captain or because the vessel put to sea is insufficiently repaired and prepared. (Art. 841, Code of Commerce)

Martini Ltd. vs Macondray & Co., 39 Phil 934
F: Martini shipped on board the Easter, owned by the Australian Steamship Co. represented in the Philippines by Macondray, 219 cases of chemicals for Kobe, Japan. Upon arrival in Kobe, it was discovered that the shipment was damaged by rain and sea water. Martini claims that it was the ship's duty to stow the cargo in the hold and not to place it on the deck exposed to the elements. Macondray denied any responsibility on the ground that the contract of affreightment clearly states that the cargo was to be carried on deck at shipper's risk as evidenced by the words "on deck at shipper's risk" stamped on the bill of lading.

Ordinarily, when a shipper wishes to avail of space on board a ship, he first obtains a shipping order from the ship owner. This shipping order is authority for the ship's officers to accept the shipper's cargo. When signed by the ship's mate, this would constitute the mate's receipt showing that the cargo has been taken aboard. The shipper would then present this receipt to the agent of the ship's company who would then issue the bill of lading. However, in this case, the shipper obtained the bill of lading without first presenting the mate's receipt (so as to expedite the negotiation of the bill with the banks). By doing so, the shipper entered into a written guaranty, binding himself to abide by the terms of the mate's receipt which in this case obtained a stipulation that the cargo shall be shipped on or under the deck at the option of the ship and at shipper's risk.

In this case, plaintiff protested the arrangement but when the defendant informed them that the cargo could be discharged if they were dissatisfied, plaintiff did not order its discharge. The CFI ruled for Martini.
Issues: (1) WON plaintiff consented to having the cargo carried on deck. YES.

(2) WON defendant was negligent and thus liable for the damage to the cargo. NO.

Ratio: While Martini would have greatly preferred for the cargo to be carried under the hatches, they nevertheless consented for it to go on deck. Codina, an EE of Martini, if attentive to the interests of his company, must have known from the tenor of the guaranty which he signed that defendant had reserved the right to carry the cargo on deck. The bill of lading plainly showed that the cargo would be so carried. The plaintiff was duly notified as to the manner by which was the cargo was to be shipped. They only protested after the bill had been negotiated at the bank and even when there was time to stop the shipment, they failed to give the necessary instructions thereby manifesting acquiescence.

In every contract of affreightment, losses by dangers of the seas are excepted from the risk which the carrier takes upon himself whether the exception is expressed in contract or not. The exception is made by law and falls within the general principle that no one is responsible for fortuitous events. But then this general law is subject to the exception that when the inevitable accident is preceded by fault of the carrier, without which it would not have happened, then he becomes responsible for it.

The carrier is responsible for safe and proper storage of the cargo, and there is no doubt that by the general maritime law he is bound to secure the cargo safely under deck. If he carries the goods on deck without the consent of the shipper and the goods are damaged or lost in consequence of being exposed, the carrier cannot protect himself by showing that they were damaged or lost by the dangers of the sea. When the shipper consents to his goods being carried on deck, he takes the risk upon himself.

If goods shipped are found to have been damaged, the burden of proof is on the carrier to show that the damage was due to fortuitous events. But, even if the damage is caused by one of the excepted causes, the carrier is still responsible if the injury might have been avoided by the exercise of reasonable skill and attention on their part. However, in this case, where the shipper consented to the conditions of carriage, the burden of proof is shifted to the shipper.

As there is no allegation or proof of negligence on the part of the carrier in protecting the cargo from rain or sea water and as the complaint clearly indicates that the damage was due to it being kept on deck, and such manner of carriage having been consented to by the plaintiff, the defendant is absolved. It is not permissible for the court, in the absence of any allegation or proof of negligence, to attribute negligence to the ship's employees in the matter of protecting the goods from rains and storms.
Eastern Shipping Lines vs IAC, 150 SCRA 463
Issue: Should petitioner be exempted from liability under Art. 1734 on the ground that the loss of the vessel by fire comes under the phrase "natural disaster or calamity?" NO.
Ratio: Fire may not be considered a natural disaster or calamity. This must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by another natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier. Art. 1680 which considers fire as an extra-ordinary fortuitous event does not apply since it refers only to leases of rural lands where a reduction of rent is allowed when more than 1/2 of the fruits have been lost due to such event.

As the peril of fire is not comprehended under Art. 1734, Art. 1735 applies and the CC shall be presumed to have been at fault or to have acted negligently, unless it proves extra-ordinary diligence. The burden is on the CC.

The LC and the CA found that there was lack of diligence on the part of CC amounting to actual fault. Even if the fire were to be considered a natural disaster under Art. 1734, it is required under Art. 1739 that the disaster must have been the proximate and only cause of the loss, and that the CC exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster. Nor may petitioner seek refuge under COGSA since fire is only an exempting circumstance if not caused by actual fault or privity of the carrier.
Issue: On the $500 Per Package Limitation
Ratio: Petitioner carrier avers that its liability should not exceed $500 per package as provided in Section 4(5) of the COGSA, which reads:

"(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package xxx or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading."

Article 1749, NCC also allows the limitations of liability in that it provides that "a stipulation that the CC's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding."

It is to be noted that the Civil Code does not of itself limit the liability of the CC to a fixed amount per package, although the Code expressly permits a stipulation limiting such liability. Thus, the COGSA, which is suppletory to the Civil Code, steps in and supplements the Code by establishing a statutory provision limiting the carrier's liability in the absence of a declaration of a higher value of the goods by the shipper in the bill of lading. The provisions of the COGSA on limited liability are as much a part of a bill of lading as though physically in it and as much a part thereof as though placed therein by agreement of the parties.

In these cases, there is no stipulation in the respective bills of lading limiting the carrier's liability for the loss or destruction of the goods. Nor is there a declaration of a higher value of the goods. Hence, petitioner carrier's liability should not exceed $500 per package, or its peso equivalent, at the time of the payment of the value of the goods lost, but in no case "more than the amount of damage actually sustained."

The liability was computed as: 128 cartons (shipping unit) x $500 = $64,000. The cartons and not the containers should be considered as the shipping unit.

Dissenting : Yap, J.

There is no evidence that the containers were carrier- supplied. The shipper must have saved on freight charges by using containers for shipment. The containers should be considered as the shipping unit.

(b) Act of public enemy