1. Under the Civil Code

3. Vigilance over Goods

Vigilance over Goods

Civil Code, Articles 1734–1754¹

Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:

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

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

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

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

(5) Order or act of competent public authority.

Article 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733 ².

Article 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of Article 1738 ³.

Article 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu.

Article 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.

Article 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 Article 1734, No. 2 ⁴.

Article 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.

Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced.

Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.

Article 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order.

Article 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be:

(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.

Article 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:

(1) That the goods are transported at the risk of the owner or shipper;

(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;

(3) That the common carrier need not observe any diligence in the custody of the goods;

(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported;

(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;

(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished;

(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.

Article 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation.

Article 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods.

Article 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid.

Article 1749. A stipulation that the common carrier'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.

Article 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon.

Article 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy.

Article 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.

Article 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration.

Article 1754. The provisions of articles 1733 to 1753 shall apply to the passenger's baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.

General Rule: Common Carriers are responsible for the loss, destruction, or deterioration of the goods they are transporting. (Civil Code, Art. 1734)

Mere proof of delivery of goods in good order to the common carrier and the arrival of the same goods in bad order at their destination constitutes prima facie case of fault or negligence against the carrier. (Belgian Overseas Chartering and Shipping N.V. v. The Philippine First Insurance Co., Inc., 432 Phil. 567)

EXEMPTING CAUSES

Common carriers are responsible for the loss, destruction, or deterioration of the goods, UNLESS the same is due to any of the following causes ONLY:

• Flood, storm, earthquake, lightning, or other natural disaster or calamity;
• Act of the public enemy in war, whether international or civil;
• Act or omission of the shipper or owner of the goods;
• The character of the goods or defects in the packing or in the containers;
• Order or act of competent public authority. (Civil Code, Art. 1734)¹⁶

NOTE: Article 1734 lists the statutory exempting causes. A carrier may also invoke a fortuitous event outside that list if it establishes the requirements for exemption, as in De Guzman v. Court of Appeals, G.R. No. L-47822 (December 22, 1988).

Conditions Required:

• Natural disaster was the proximate and only cause
• Common carrier must have exercised due diligence to prevent or minimize the loss before, during, and after the occurrence of the natural disaster (Civil Code, Art. 1739)¹⁷
• Common carrier not in delay. (Civil Code, Art. 1740)¹⁸

Requisites for Caso Fortuito (Force Majeure):

• The event must be independent of human will;
• The occurrence must render it impossible for the debtor to fulfill its obligation in a normal manner;
• The debtor must not have participated or aggravated the injury to the creditor; and
• The event must have been unforeseeable, or if it could be foreseen, unavoidable.

Fire cannot be considered as a natural disaster or calamity that exempts common carriers from liability. Fire will only exempt carriers if it was caused by lightning or by other natural disaster or calamity (Eastern Shipping Lines, Inc v. Intermediate Appellate Court)¹⁹

Heavy seas and rain are not causes for carriers to be exempted from liability. Rather, those are normal occurrences that a vessel would encounter (Eastern Shipping Lines, Inc v. Intermediate Appellate Court)

Mechanical defects are not within the ambit of a natural disaster or fortuitous events. (Necesito v. Paras, G.R. No. L-10605, 30 June 1958)²⁰

A tire blow-out is not considered a fortuitous event, as there are human factors involved in the situation (Yobido v. Court of Appeals, G.R. No. 113003, 17 October 1997)²¹

High jacking is not an exempting cause under Art. 1734 of the Civil Code²². However, common carriers are not held liable for the acts or events which cannot be foreseen or are inevitable, provided that they exercised extraordinary diligence (De Guzman v. COURT OF APPEALS and ERNESTO CENDANA, G.R. No. L-47822, 22 December 1988)²³

Conditions Required:

• Act was the proximate and only cause;
• Common carrier must have exercised due diligence to prevent or minimize loss before, during, and after the act.

If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility (Civil Code, Art. 1740)²⁴.

Conditions Required:

• If proximate cause, exempting
• If contributory negligence, mitigating
• A carrier that accepts cargo despite a known problem without objection may, depending on its knowledge and conduct, be estopped from relying on that problem; immediate protest is not a universal requisite (Civil Code, Arts. 1734(3), 1741).

When the private respondent did furnish the common carrier with an inaccurate weight of the payloader, the common carrier is nonetheless liable, for the damage caused to the machinery could have been avoided by the exercise of reasonable skill and attention on its part in overseeing the unloading of such a heavy equipment. It was the duty of its Chief Officer to determine the weight of heavy cargoes before accepting them (Compania Maritima v. CA, G.R. No. 31379)²⁵

G.R. No. 31379: verify against G.R. No. L-31379.

Conditions Required:

• Exercise of due diligence to forestall or prevent loss; and
• Immediate protest by the carrier if the problem with the goods or the packing or containers is visible; otherwise, carrier may be in estoppel

This particular exempting cause only refers to cases when goods are lost or damaged while in transit as a result of:

• Natural decay of perishable goods;
• Fermentation or evaporation of substances liable therefor;
• Necessary and natural wear and tear of goods in transport;
• Defects in the packages; or
• Natural propensities of animals. (Belgian Overseas Chartering and Shipping N.v. and Jardine Davies Transport Servi v. Philippine First Insurance Co., Inc., G.R. No. 143133, 5 June 2002)²⁶

If the improper packaging is known to the carrier or his/her/its employees or the improper packaging is apparent under ordinary observation but nevertheless accepts it without protest, Art. 1734(4)²⁷ will not relieve the carrier from any liability (Calvo v. Ucpb General Insurance Co., Inc., G.R. No. 148496, 19 March 2002)²⁸

Condition Required:

• Said public authority had the power to issue the order. (Civil Code, Art. 1743)²⁹

Similar conditions: the order was lawful; or the order was issued under legal processes of authority. (Ganzon v. CA)³⁰

Summary Table: Art. 1734³¹ and Defenses

a. Requirement of absence of negligence

In order to avail the defense of natural disasters, it must be shown that the natural disaster must have been the proximate and only cause of the loss, destruction, or deterioration. (Civil Code, Art. 1739)³². This defense cannot be availed then if the carrier is negligent.

b. Absence of delay

A common carrier is still liable, even though the loss, destruction, or deterioration of the goods was caused by a natural disaster, when it negligently incurs delay in the transportation of goods. (Civil Code, Art. 1740)³³

c. Due diligence to prevent or lessen the losses

Common carriers are required to exercise due diligence to prevent or minimize the loss, destruction, or deterioration of the goods in the following exempting causes:

• Natural disasters
• Acts of public enemy in war
• Character of the goods or defects in the packaging or in the containers