646 SUPREME COURT REPORTS ANNOTATED

Ganzon vs. Court of Appeals

*
No. L-48757. May 30, 1988.

MAURO GANZON, petitioner, vs. COURT OF APPEALS

and GELACIO E. TUMAMBING, respondents.

Civil Law; Obligations; Contracts; Common Carriers;

Perfection of contract of carriage; Extraordinary responsibility of
carrier for loss, destruction or deterioration of the goods, when it
commences and ceases.—By the said act of delivery, the scraps
were unconditionally placed in the possession and control of the
common carrier, and upon their receipt by the carrier for
transportation, the contract of carriage was deemed perfected.
Consequently, the petitioner-carrier’s extraordinary responsibility
for the loss, destruction, or deterioration of the goods commenced,
Pursuant to Art. 1736, such extraordinary responsibility would
cease only upon the delivery, actual or constructive, by the carrier
to the consignee, or to the person who has a right to receive

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* SECOND DIVISION.

647

VOL. 161, MAY 30, 1988 647

Ganzon vs. Court of Appeals

them. The fact that part of the shipment had not been loaded on
board the lighter did not impair the said contract of
transportation as the goods remained in the custody and control
of the carrier, albeit still unloaded.

Same; Same; Same; Failure of petitioner to show that the loss

of the goods was due to causes under Art. 1734 of the Civil Code.—
The petitioner has failed to show that the loss of the scraps was
due to any of the following causes enumerated in Article 1734 of
the Civil Code.

Same; Same; Same; Same; Presumption that petitioner acted

negligently for his failure to show that the loss of the goods was
due to causes under Art. 1734 of the Civil Code; Effect of the
presumption; Failure of petitioner to prove the exercise of
extraordinary diligence.—Hence, the petitioner is presumed to
have been at fault or to have acted negligently. By reason of this
presumption, the court is not even required to make an express
finding of fault or negligence before it could hold the petitioner
answerable for the breach. of the contract of carriage, Still, the
petitioner could have been exempted from any liability had he
been able to prove that he observed extraordinary diligence in the
vigilance over the goods in his custody, according to all the
circumstances of the case, or that the loss was due to an
unforeseen event or to force majeure. As it was, there was hardly
any attempt on the part of the petitioner to prove that he
exercised such extraordinary diligence.

Same; Same; Same; Same; Loss of the scraps not due to caso
fortuito.—We cannot sustain the theory of caso fortuito. In the
courts below, the petitioner’s defense was that the loss of the
scraps was due to an “order or act of competent public authority,”
and this contention was correctly passed upon by the Court of
Appeals.

Same; Same; Same; Same; Change of theory on appeal, not

allowed; Intervention of municipal officials, not of a character that
would render impossible the fulfillment by the carrier of its
obligations.—Now the petitioner is changing his theory to caso
fortuito. Such a change of theory on appeal we cannot, however,
allow. In any case, the intervention of the municipal officials was
not of a character that would render impossible the fulfillment by
the carrier of its obligation. The petitioner was not duty bound to
obey the illegal order to dump into the sea the scrap iron.
Moreover, there is absence of sufficient proof that the issuance of
the same order was attended with such force or intimidation as to
completely overpower the will of the petitioner’s employees. The
mere difficulty in the fulfillment of the obligation is not
considered force majeure. We agree with the private respondent

648

648 SUPREME COURT REPORTS ANNOTATED

 Ganzon us. Court of Appeals

that the scraps could have been properly unloaded at the shore or
at the NASSCO compound, so that after the dispute with the local
officials concerned was settled, the scraps could then be delivered
in accordance with the contract of carriage.

Same; Same; Same; Absence of incompatibility between the

provisions on common carriers and of the Code of Commerce;
Articles 1734 and 1735 of the Civil Code, interpreted; Requirement
for the exercise of carrier of ordinary diligence, deemed modified by
Art. 1733 of the Civil Code.—There is no incompatibility between
the Civil Code provisions on common carriers and Articles 361
and 362 of the Code of Commerce which were the basis for this
Court’s ruling in Government of the Philippine Islands vs.
Ynchausti & Co. and which the petitioner invokes in this petition.
For Art. 1735 of the Civil Code, conversely stated, means that the
shipper will suffer the losses and deterioration arising from the
causes enumerated in Art. 1734; and in these instances, the
burden of proving that damages were caused by the fault or
negligence of the carrier rests upon him. However, the carrier
must first establish that the loss or deterioration was occasioned
by one of the excepted causes or was due to an unforeseen event
or to force majeure. Be that as it may, insofar as Art. 362 appears
to require of the carrier only ordinary diligence, the same is
deemed to have been modified by Art. 1733 of the Civil Code.

Same; Same; Same; Damages; Award of actual and exemplary

damages, proper, as they were not sufficiently controverted.—
Finding the award of actual and exemplary damages to be proper,
the same will not be disturbed by us. Besides, these were not
sufficiently controverted by the petitioner.

PETITION for certiorari to review the decision of the Court

of Appeals. Pascual, J.
The facts are stated in the opinion of the Court.
     Antonio B. Abinoja for petitioner.
          Quijano, Arroyo & Padilla Law Office for
respondents.

SARMIENTO, J.:

The private respondent

1
instituted in the Court of First
Instance of Manila an action against the petitioner for
damages based on culpa contractual.
2
The antecedent facts,
as found by the respondent Court, are undisputed:

_______________
 1 Presided by Judge Jesus P. Morfe.
2 Pascual, Chairman, ponente; Agrava and Climaco, JJ., concurring.

649

VOL. 161, MAY 30, 1988 649

Ganzon vs. Court of Appeals

On November 28, 1956, Gelacio Tumambing contracted the

services of Mauro B. Ganzon to haul 305 tons of scrap iron from
Mariveles, Bataan, to the port of Manila on board the lighter LCT
“Batman” (Exhibit 1, Stipulation of Facts, Amended Record on
Appeal, p. 38). Pursuant to this agreement, Mauro B. Ganzon sent
his lighter “Batman” to Mariveles where it docked in three feet of
water (t.s.n., September 28, 1972, p. 31). On December 1, 1956,
Gelacio Tumambing delivered the scrap iron to defendant
Filomeno Niza, captain of the lighter, for loading which was
actually begun on the same date by the crew of the lighter under
the captain’s supervision. When about half of the scrap iron was
already loaded (t.s.n., December 14, 1972, p. 20), Mayor Jose
Advincula of Mariveles, Bataan, arrived and demanded P5,000.00
from Gelacio Tumambing. The latter resisted the shakedown and
after a heated argument between them, Mayor Jose Advincula
drew his gun and fired at Gelacio Tumambing (t.s.n., March 19,
1971, p. 9; September 28, 1972, pp. 6–7). The gunshot was not
fatal but Tumambing had to be taken to a hospital in Balanga,
Bataan, for treatment (t.s.n., March 19, 1971, p. 13; September
28, 1972, p. 15).
After sometime, the loading of the scrap iron was resumed. But
on December 4, 1956, Acting Mayor Basilio Rub, accompanied by
three policemen, ordered captain Filomeno Niza and his crew to
dump the scrap iron (t.s.n., June 16, 1972, pp. 8–9) where the
lighter was docked (t.s.n., September 28, 1972, p. 31). The rest
was brought to the compound of NASSCO (Record on Appeal, pp.
20–22). Later on Acting Mayor Rub issued a receipt stating that
the Municipality of Mariveles had taken custody of the scrap iron
(Stipulation of Facts, Record on Appeal, p. 40; t.s.n., September
28, 1972, p. 10.)

On the basis of the above findings, the respondent Court

rendered a decision, the dispositive portion of which states:

WHEREFORE, the decision appealed from is hereby reversed and

set aside and a new one entered ordering defendant-appellee
Mauro Ganzon to pay plaintiff-appellant Gelacio E. Tumambing
the sum of P5,895.00 as actual damages, the sum of P5,000.00 as
exemplary damages, and the amount of P2,000.003
as attorney’s
fees. Costs against defendant-appellee Ganzon.
In this petition for review on certiorari, the alleged errors
in the decision of the Court of Appeals are:

_______________

3 Decision, 9; Rollo 19.

650

650 SUPREME COURT REPORTS ANNOTATED

Ganzon vs, Court of Appeals

THE COURT OF APPEALS FINDING THE HEREIN

PETITIONER GUILTY OF BREACH OF THE CONTRACT OF
TRANSPORTATION AND IN IMPOSING A LIABILITY
AGAINST HIM COMMENCING FROM THE TIME THE SCRAP
WAS PLACED IN HIS CUSTODY AND CONTROL HAVE NO
BASIS IN FACT AND IN LAW.

II

THE APPELLATE COURT ERRED IN CONDEMNING THE

PETITIONER FOR THE ACTS OF HIS EMPLOYEES IN
DUMPING THE SCRAP INTO THE SEA DESPITE THAT IT
WAS ORDERED BY THE LOCAL GOVERNMENT OFFICIAL
WITHOUT HIS PARTICIPATION.

III

THE APPELLATE COURT FAILED TO CONSIDER THAT

THE LOSS OF THE SCRAP WAS DUE TO A FORTUITOUS
EVENT AND THE PETITIONER IS THEREFORE NOT
4
LIABLE
FOR ANY LOSSES AS A CONSEQUENCE THEREOF.

The petitioner, in his first assignment of error, insists that

the scrap iron had not been unconditionally placed under
his custody and control to make- him liable. However, he
completely agrees with the respondent Court’s finding that
on December 1, 1956, the private respondent delivered the
scraps to Captain Filomeno Niza for loading in the lighter
“Batman.” That the petitioner, thru his employees, actually
received the scraps is freely admitted. Significantly, there
is not the slightest allegation or showing of any condition,
qualification, or restriction accompanying the delivery by
the private respondent-shipper of the scraps, or the receipt
of the same by the petitioner. On the contrary, soon after
the scraps were delivered to and received by the petitioner-
common carrier, loading was commenced.
 By the said act of delivery, the scraps were
unconditionally placed in the possession and control of the
common carrier, and upon their receipt by the carrier for
transportation, the contract of carriage was deemed
perfected. Consequently, the petitioner-carrier’s
extraordinary responsibility for the loss, de-

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4 Petitioner’s Brief, 3, 7, 9; Rollo, 41.

651

VOL. 161, MAY 30, 1988 651

Ganzon vs. Court of Appeals

struction, or deterioration of the goods commenced,

Pursuant to Art. 1736, such extraordinary responsibility
would cease only upon the delivery, actual or constructive,
by the carrier to the consignee,
5
or to the person who has a
right to receive them. The fact that part of the shipment
had not been loaded on board the lighter did not impair the
said contract of transportation as the goods remained in
the custody and control of the carrier, albeit still unloaded.
The petitioner has failed to show that the loss of the
scraps was due to any of the following causes enumerated
in Article 1734 of the Civil Code, namely:

(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.

Hence, the petitioner is presumed

6
to have been at fault or
to have acted negligently. By reason of this presumption,
the court is not even required to make an express finding of
fault or negligence before it could hold the petitioner
answerable for the breach of the contract of carriage. Still,
the petitioner could have been exempted from any liability
had he been able to prove that he observed extraordinary
diligence in the vigilance

_______________
 5 Article 1736, Civil Code of the Philippines:

Art. 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.

6 Article 1735, supra.

Art. 1735. In all cases other than those inentioned 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.

652

652 SUPREME COURT REPORTS ANNOTATED

Ganzon vs, Court of Appeals

over the goods in his custody, according to all the

circumstances or the case, or that the loss was due to an
unforseen event or to force majeure, As it was, there was
hardly any attempt on the part of the petitioner to prove
that he exercised such extraordinary diligence.
It is in the second and third assignments of error where
the petitioner maintains that he is exempt from any
liability because the loss of the scraps was due mainly to
the intervention of the municipal officials of Mariveles
which constitutes7 a caso fortuito as defined in Article 1174
of the Civil Code.
We cannot sustain the theory of caso fortuito. In the
courts below, the petitioner’s defense was that the loss of
the scraps was due to an “order or act of competent public
authority,” and this contention was correctly passed upon
by the Court of Appeals which ruled that:

x x x In the second place, before the appellee Ganzon could be

absolved from responsibility on the ground that he was ordered by
competent public authority to unload the scrap iron, it must be
shown that Acting Mayor Basilio Rub had the power to issue the
disputed order, or that it was lawful, or that it was issued under
legal process of authority. The appellee failed to establish this.
Indeed, no authority or power of the acting mayor to issue such an
order was given in evidence. Neither has it been shown that the
cargo of scrap iron belonged to the Municipality of Mariveles.
What we have in the record is the stipulation of the parties that
the cargo of scrap iron was accumulated by the appellant through
separate purchases here and there from private individuals
(Record on Appeal, pp. 38–39). The fact remains that the order
given by the acting mayor to dump the scrap iron into the sea was
part of the pressure applied by Mayor Jose Advincula to
shakedown the appellant for P5,000.00. The order of the acting
mayor did not constitute valid authority for appellee Mauro
Ganzon and his representatives to carry out.

Now the petitioner is changing his theory to caso fortuito.

Such a change of theory on appeal we cannot, however,
allow.

_______________

7 Art. 1174, supra:

Art, 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.

653

VOL. 161, MAY 30, 1988 653

Ganzon vs. Court of Appeals

In any case, the intervention of the municipal officials was

not of a character that would render impossible the
fulfillment by the carrier of its obligation. The petitioner
was not duty bound to obey the illegal order to dump into
the sea the scrap iron. Moreover, there is absence of
sufficient proof that the issuance of the same order was
attended with such force or intimidation as to completely
overpower the will of the petitioner’s employees. The mere
difficulty in the fulfillment of the obligation is not
considered force majeure. We agree with the private
respondent that the scraps could have been properly
unloaded at the shore or at the NASSCO compound, so that
after the dispute with the local officials concerned was
settled, the scraps could then be delivered in accordance
with the contract of carriage.
There is no incompatibility between the 8 Civil Code 9
provisions on common carriers and Articles 361 and 362 of
the Code of

_______________

8 Article 361, Code of Commerce:

Art. 361. The 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 deterioration 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.

9 Article 362, Code of Commerce:

Art. 362. Nevertheless, the carrier shall be liable for the losses and damages
resulting from the causes mentioned in the preceding article if it is proved, as
against him, that they arose through his negligence or by reason of his having
failed to take the precautions which usage has established among careful persons,
unless the shipper has committed fraud in the bill of lading, representing the
goods to be of a kind or quality different from what they really were.
If, notwithstanding the precautions referred to in this article, the goods
transported run the risk of being lost, on account of their nature or by reason of
unavoidable accident, there being no time for their owners to dispose of them, the
carrier may proceed to sell them, placing them for this purpose at the disposal of
the judicial authority or of the officials designated by special provisions.

654

654 SUPREME COURT REPORTS ANNOTATED

Ganzon vs. Court of Appeals

Commerce which were the basis for this Court’s ruling10

in
Government of the Philippine vs. Ynchausti & Co. which
the petitioner invokes in this petition. For Art. 1735 of the
Civil Code, conversely stated, means that the shipper will
suffer the losses and deterioration arising from the causes
enumerated in Art. 1734; and in these instances, the
burden of proving that damages were caused by the fault or
negligence of the carrier rests upon him. However, the
carrier must first establish that the loss or deterioration
was occasioned by one of the excepted causes or was due to
an unforeseen event or to force majeure. Be that as it may,
insofar as Art. 362 appears to require of the carrier only
ordinary diligence, the same is deemed to have been
modified by Art. 1733 of the Civil Code.
Finding the award of actual and exemplary damages to
be proper, the same will not be disturbed by us. Besides,
these were not sufficiently controverted by the petitioner.
WHEREFORE, the petition is DENIED; the assailed
decision of the Court of Appeals is hereby AFFIRMED.
Costs against the petitioner,
This decision is IMMEDIATELY EXECUTORY.

     Yap (C.J.), Paras and Padilla, JJ., concur.

      Melencio-Herrera, J., with dissent attached.

MELENCIO-HERRERA, J., dissenting:

I am constrained to dissent.
It is my view that petitioner can not be held liable in
damages for the loss and destruction of the scrap iron. The
loss of said cargo was due to an excepted cause—an “order
or act of competent public authority” (Article 1734[5], Civil
Code).
The loading of the scrap iron on the lighter had to be
suspended because of Municipal Mayor Jose Advincula’s
intervention, who was a “competent public authority.”
Petitioner had no control over the situation as, in fact,
Tumambing himself, the owner of the cargo, was impotent
to stop the “act” of said official and even suffered a gunshot
wound on the occasion.
When loading was resumed, this time it was Acting
Mayor Basilio Rub, accompanied by three policemen, who
ordered the

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10 No. 14191, September 29,1919, 40 Phil. 219.

655

VOL. 161, MAY 30, 1988 655

CLLC E.G. Gochangco Workers Union vs. NLRC

dumping of the scrap iron into the sea right where the
lighter was docked in three feet of water. Again, could the
captain of the lighter and his crew have defied said order?
Through the “order” or “act” of “competent public
authority,” therefore, the performance of a contractual
obligation was rendered impossible. The scrap iron that
was dumped into the sea was “destroyed” while the rest of
the cargo was “seized.” The seizure is evidenced by the
receipt issued by Acting Mayor Rub stating that the
Municipality of Mariveles had taken custody of the scrap
iron. Apparently, therefore, the seizure and destruction of
the goods was done under legal process or authority so that
petitioner should be freed from responsibility.

“Art. 1743. If through 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.”

Petition denied. Decision affirmed.

 Note.—Carrier is liable over goods discharged by it in
bad order condition, and of the arrastre operator for goods
damaged under its custody. (Metro Port Service, Inc. vs.
Court of Appeals, 131 SCRA 365).

——o0o——

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