G.R. No. 1837: September 5, 1905
ESTEBAN QUIROS, plaintiff-appellant, vs. D. M. CARMAN, defendant-appellee.

FACTS: The defendant, D.M. Carman, had a contract with the U.S. Army Quartermaster’s Department to furnish cascoes and lorchas. He did not own the vessels but obtained them from owners like the plaintiff, Esteban Quiros. Quiros turned over his casco to Carman, who placed it in government service. The casco was lost in a typhoon. Quiros sued Carman for its value, alleging an express verbal contract wherein Carman agreed to pay for any damages to the casco while in his possession. Carman denied this, claiming he acted merely as an agent or intermediary between the owners and the government. The evidence showed Quiros was aware of the terms of Carman’s contract with the government, under which the government was responsible for damages occurring during its service, except those caused by the “action of the elements,” and Quiros received a daily payment from Carman less a commission.

ISSUE
What was the nature and terms of the contract between Quiros and Carman regarding the casco, particularly concerning liability for its loss?

RULING
The Supreme Court held there was no express contract between Quiros and Carman as alleged. The tacit contract between them adopted the terms of the contract between Carman and the government, except for the commission retained by Carman. Since the government contract excluded liability for loss due to the “action of the elements,” and the casco was lost in a typhoon (an act of the elements), Carman was not liable. The Court also found no error in the lower court’s act of setting aside a default judgment against Carman, as his affidavit showed he had no knowledge of the summons. The judgment absolving Carman from liability was affirmed.