LEA MER INDUSTRIES INC VS MALAYAN INSURANCE CO, INC.
GR No. 161745, SEPTEMBER 30, 2005
The distinction is significant, because a demise or bareboat charter
FACTS: indicates a business undertaking that is private in character. Consequently,
the rights and obligations of the parties to a contract of private carriage
Ilian Silica Mining entered into a contract of carriage with the petitioner,
are governed principally by their stipulations, not by the law on common
Lea Mer Industries Inc. for the shipment of 900 metric tons of silica sand
worth P565,000. The cargo was consigned to Vulcan Industrial and Mining carriers. The Contract in the present case was one of affreightment, as
Corporation and was to be shipped from Palawan to Manila. The silica sand shown by the fact that it was petitioner's crew that manned the tugboat
was boarded to Judy VII, the vessel leased by Lea Mer. However, during the M/V Ayalit and controlled the barge Judy VII.
course of its voyage, the vessel sank which led to the loss of the cargo.
Consequently, the respondent, as the insurer, paid Vulcan the value of the
lost cargo. Malayan Insurance Co., Inc. then collected from the petitioner Common carriers are bound to observe extraordinary diligence in their
the amount it paid to Vulcan as reimbursement and as its exercise on the vigilance over the goods and the safety of the passengers they transport,
right of subrogation. Lea Mer refused to pay which led Malayan to institute
as required by the nature of their business and for reasons of public policy.
a complaint with the RTC. The RTC dismissed the complaint stating that the
loss was due to a fortuitous event, Typhoon Trining. Petitioner did not know Extraordinary diligence requires rendering service with the greatest skill
that a typhoon was coming and that it has been cleared by the Philippine and foresight to avoid damage and destruction to the goods entrusted for
Coast Guard to travel from Palawan to Manila. The CA reversed the ruling carriage and delivery.
of the trial court for the reason that said vessel was not seaworthy when it
sailed to Manila.
ISSUE: Common carriers are presumed to have been at fault or to have acted
Whether or not the petitioner is liable for the loss of the cargo. negligently for loss or damage to the goods that they have transported.
This presumption can be rebutted only by proof that they observed
HELD:
extraordinary diligence, or that the loss or damage was occasioned by any
CA reversed. Common carriers are persons, corporations, firms or of the following causes:
associations engaged in the business of carrying or transporting
"(1) Flood, storm, earthquake, lightning, or other natural disaster or
passengers or goods, or both — by land, water, or air — when this service
calamity;
is offered to the public for compensation. Petitioner is clearly a common
carrier, because it offers to the public its business of transporting goods
"(2) Act of the public enemy in war, whether international or civil;
through its vessels. Thus, the Court corrects the trial court's finding that
petitioner became a private carrier when Vulcan chartered it. Charter "(3) Act or omission of the shipper or owner of the goods;
parties are classified as contracts of demise (or bareboat) and
affreightment, which are distinguished as follows: "(4) The character of the goods or defects in the packing or in the
containers;
"(5) Order or act of competent public authority."
"Under the demise or bareboat charter of the vessel, the charterer will
generally be considered as owner for the voyage or service stipulated. The Jurisprudence defines the elements of a "fortuitous event" as follows: (a)
charterer mans the vessel with his own people and becomes, in effect, the the cause of the unforeseen and unexpected occurrence, or the failure of
owner pro hac vice, subject to liability to others for damages caused by the debtors to comply with their obligations, must have been independent
negligence. To create a demise, the owner of a vessel must completely and of human will; (b) the event that constituted the caso fortuito must have
exclusively relinquish possession, command and navigation thereof to the been impossible to foresee or, if foreseeable, impossible to avoid; (c) the
charterer; anything short of such a complete transfer is a contract of occurrence must have been such as to render it impossible for the debtors
affreightment (time or voyage charter party) or not a charter party at all." to fulfill their obligation in a normal manner; and (d) the obligor must have
been free from any participation in the aggravation of the resulting injury required by the pertinent law, it was not enough for the common carrier to
to the creditor. To excuse the common carrier fully of any liability, the show that there was an unforeseen or unexpected occurrence. It had to
fortuitous event must have been the proximate and only cause of the loss. show that it was free from any fault — a fact it miserably failed to prove.
Moreover, it should have exercised due diligence to prevent or minimize
the loss before, during and after the occurrence of the fortuitous event. As
