MAURO GANZON, PETITIONER, VS. COURT OF APPEALS AND GELACIO E. TUMAMBING, RESPONDENTS.

Ganzon versus Court of Appeals

The Case

This is a petition for review on certiorari brought by Mauro Ganzon against the Court of Appeals and Gelacio Tumambing. Tumambing had sued Ganzon for damages arising from culpa contractual, that is, breach of a contract of carriage. Ganzon had contracted to haul Tumambing's scrap iron by lighter from Mariveles, Bataan, to the port of Manila, and the cargo was lost. The case matters because it fixes the exact moment when the extraordinary responsibility of a common carrier begins, and because it draws a hard line between an order of a competent public authority, which excuses the carrier, and an illegal shakedown order, which does not.

Procedural History

Tumambing filed his action for damages based on culpa contractual in the Court of First Instance of Manila. The trial court ruled in favor of Ganzon. Tumambing appealed, and the Court of Appeals reversed the trial court and entered a new judgment ordering Ganzon to pay actual damages, exemplary damages, and attorney's fees, with costs against him. Ganzon then came to the Supreme Court by petition for review on certiorari, assigning as errors the finding of breach of the contract of transportation, the condemnation for the acts of his employees in dumping the scrap, and the failure to treat the loss as a fortuitous event.

Facts

On November 28, 1956, Gelacio Tumambing contracted the services of Mauro Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter Batman. Ganzon sent the lighter to Mariveles, where it docked in three feet of water. On December 1, 1956, Tumambing delivered the scrap iron to Filomeno Niza, captain of the lighter, for loading, and the crew began loading under the captain's supervision.

When about half of the scrap iron had been loaded, Mayor Jose Advincula of Mariveles arrived and demanded 5,000 pesos from Tumambing. Tumambing resisted the shakedown, and after a heated argument the mayor drew his gun and fired at him. The gunshot was not fatal, but Tumambing had to be taken to a hospital in Balanga, Bataan, for treatment. Loading was later resumed.

On December 4, 1956, Acting Mayor Basilio Rub, accompanied by three policemen, ordered Captain Niza and his crew to dump the scrap iron where the lighter was docked. The rest was brought to the compound of NASSCO. Acting Mayor Rub later issued a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron.

Issues

• Whether or not the scrap iron had been unconditionally placed in the possession and control of the carrier so as to make it liable, even though part of the shipment had not yet been loaded on board the lighter.
• Whether or not the carrier is liable for the acts of its employees in dumping the scrap into the sea when the dumping was ordered by local government officials without the carrier's participation.
• Whether or not the loss of the scrap was due to a fortuitous event, exempting the carrier from liability.

Applicable Provisions

Article 1736 of the Civil Code provides:

Article 1736. The extraordinary responsibility of the common carriers 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.

This fixes the period of the carrier's extraordinary responsibility, which the Court holds had already begun when the scrap was delivered for loading.

Article 1735 of the Civil Code provides:

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.

This supplies the presumption of fault against the carrier once the goods are lost and no excepted cause is shown.

Article 1174 of the Civil Code provides:

Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable.

This is the fortuitous event provision on which the carrier unsuccessfully relied.

Ruling

On the first issue, the Court held that by the act of delivery the scraps were unconditionally placed in the possession and control of the common carrier, and upon their receipt for transportation the contract of carriage was deemed perfected. The carrier's extraordinary responsibility for the loss, destruction, or deterioration of the goods then commenced, and under Article 1736 it would cease only upon actual or constructive delivery to the consignee or to the person with a right to receive them. The fact that part of the shipment had not been loaded did not impair the contract, because the goods remained in the custody and control of the carrier.

On the second issue, the Court held that the carrier failed to show that the loss fell under any of the causes enumerated in Article 1734 of the Civil Code, namely 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; and order or act of competent public authority. Hence the carrier is presumed to have been at fault or to have acted negligently, and the court need not even make an express finding of fault or negligence. The carrier could have been exempted had it proved extraordinary diligence in the vigilance over the goods, or that the loss was due to an unforeseen event or force majeure, but it made hardly any attempt to do so. The Court agreed with the Court of Appeals that before the carrier could be absolved on the ground of an order of competent public authority, it must be shown that the acting mayor had the power to issue the order, or that it was lawful, or that it was issued under legal process of authority, and the carrier established none of these. The order was part of the pressure applied by Mayor Advincula to shakedown the shipper, and did not constitute valid authority.

On the third issue, the Court refused to sustain the theory of caso fortuito. The carrier had changed its theory on appeal, which the Court would not allow. In any case, the intervention of the municipal officials was not of a character that rendered impossible the fulfillment of the carrier's obligation. The carrier was not duty bound to obey the illegal order to dump the scrap into the sea, and there was no sufficient proof that the order was attended with such force or intimidation as to completely overpower the will of its employees. The mere difficulty in the fulfillment of the obligation is not considered force majeure. The scraps could have been properly unloaded at the shore or at the NASSCO compound, so that after the dispute was settled they could be delivered in accordance with the contract.

The Court added that there is no incompatibility between the Civil Code provisions on common carriers and Articles 361 and 362 of the Code of Commerce. Conversely stated, Article 1735 means that the shipper will suffer the losses arising from the causes enumerated in Article 1734, and in those instances the burden of proving that the damages were caused by the fault or negligence of the carrier rests upon him; but the carrier must first establish that the loss was occasioned by one of the excepted causes or was due to an unforeseen event or force majeure. Insofar as Article 362 appears to require of the carrier only ordinary diligence, it is deemed modified by Article 1733 of the Civil Code. The award of actual and exemplary damages was found proper and was not disturbed.

Doctrine

A common carrier's extraordinary responsibility begins the moment the goods are unconditionally placed in its possession and received for transportation, and it ends only upon actual or constructive delivery to the consignee or to the person entitled to receive them. Once the goods are lost, destroyed, or deteriorated, the carrier is presumed at fault or negligent, and the court need not make an express finding of fault; the carrier must prove extraordinary diligence or that the loss came from an excepted cause or force majeure. An order of a public authority excuses the carrier only if that authority had the power to issue it, or the order was lawful, or it was issued under legal process; an illegal shakedown order is no excuse, and mere difficulty in performing the obligation is not force majeure.

Disposition

The petition was denied and the decision of the Court of Appeals was affirmed, with costs against the petitioner, and the decision was declared immediately executory.

Remember This

Memorize the rule that the carrier's extraordinary responsibility runs from unconditional receipt of the goods for transportation until actual or constructive delivery, and that only a lawful order of a competent public authority excuses loss. Examiners use this case to test the commencement of carrier liability and the strict limits of the excepted cause of order or act of competent public authority.