Case No.

Baliwag v. CA (1989)

Facts:

On December 17, 1984, George, who was a paying passenger on a Baliwag bus was thrown off by the
bus driven in a careless and negligent manner by Leonardo Cruz, authorized bus driver, along
Barangay Patubig, Marilao, Bulacan. He suffered from multiple serious physical injuries resulting to
his confinement in the hospital for treatment. His parents incurred costs amounting to more than
Php200,000.

George and his parents filed a complaint against the bus company for breach of contract of carriage.
In its Answer, Baliwag attributed the whole incident to George because the bus company claimed
that he stood up from his seat and proceeded to jump off from the bus without provocation from
anyone and despite the protestations of the driver. Baliwag then filed a third-party complaint against
Fortune Insurance & Surety Company for 50,000.

However, in November 1985, Fortune Insurance and Baliwag both filed their motions to dismiss on
the ground that there was already a settlement with George for Php8020 and that George has signed
a "Release of Claims." George's parents opposed the said motions, claiming that George is still a
student and fully dependent on them for support. The RTC ruled in favor of Baliwag and Fortune
Insurance because George is of legal age. The CA reversed the decision, holding that the Release of
Claims is invalid since it does not have the conformity of all parties.

Issue: Whether or not the Release of Claims signed by George is valid.

Held:

Yes. George is of legal age and has the capacity to do acts with legal effects. Aside from this, George
is the only real party-in-interest since a contract of carriage can only be between the passenger and
the carrier. It does not involve George's parents who were not passengers on the said bus. Being
valid, the Release of Claims has the effect of a compromise agreement since it was entered into for
the purpose of making a full and final compromise adjustment and settlement of the cause of action
involved.
Case No. 2

DANGWA TRANSPORTATION CO, INC. vs. COURT OF APPEALS, et al

GR No. 95582 October 7, 1991

When the bus is not in motion, there is no necessity for a person who wants to ride the same to signal
his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to bus
riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no
act that would have the effect of increasing the peril to a passenger while he was attempting to board
the same. The premature acceleration of the bus in this case was a breach of such duty.

FACTS:

Pedrito Cudiamat, whose heirs are the respondents of this case, died after falling off from the
platform of the bus, operated by Dangwa Transportation Co, Inc. and driven by Theodore M.
Lardizabal.

While the bus was on stop, Cudiamat boarded therein. Instead of waiting for Cudiamat to secure
his seat, Lardizabal suddenly stepped on the accelerator. Cudiamat fell off from the platform. The
rear tires ran over him.

The driver only brought Cudiamat to the hospital after having delivered a passenger and a
refrigerator.

The lower court held Cudiamat negligent in trying to board a moving vehicle, especially with one
of this hands holding an umbrella.

The Court of Appeals reversed the lower court and ruled that Cudiamat was not negligent.

ISSUE:

Whether or not the Dangwa Transportation Co., Inc. is guilty of negligence.

RULING:

YES, Dangwa is guilty of negligence.

The contention of Dangwa Transportation Co., Inc. that the driver and the conductor had no
knowledge that the victim would ride on the bus, since the latter had supposedly not manifested his
intention to board the same does not merit consideration. When the bus is not in motion, there is no
necessity for a person who wants to ride the same to signal his intention to board. A public utility
bus, once it stops, is in effect making a continuous offer to bus riders. Hence, it becomes the duty
of the driver and the conductor, every time the bus stops, to do no act that would have the effect
of increasing the peril to a passenger while he was attempting to board the same. The premature
acceleration of the bus in this case was a breach of such duty.
 It is the duty of common carriers of passengers to stop their conveyances a reasonable length of
time in order to afford passengers an opportunity to board and enter, and they are liable for injuries
suffered by boarding passengers resulting from sudden starting up or jerking off their conveyances.

It is not negligent per se for one to attempt to board a train or streetcar which is moving slowly.
An ordinary prudent person would have made the same attempt to board the moving conveyance
under the same or similar circumstances. The fact that passengers board and alighted from slowly
moving vehicle is a matter of common experience.

The victim herein, by stepping and standing on the platform of the bus, is already considered a
passenger and is entitled all the rights and protection pertaining to such a contractual relation.
Hence, it has been held that the duty which the carriers of passengers owes to their patrons extends
to persons boarding as well as to those alighting therefrom.

Common carriers, from the nature of their business and reasons of public policy, are bound to
observe extraordinary diligence for the safety of the passengers transported by the according to all
the circumstances of each case. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence very cautious persons, with a due
regard for all the circumstances.

It has also been repeatedly held that in an action based on a contract of carriage, the court need not
make an express finding of fault or negligence on the part of the carrier in order to hold it
responsible to pay the damages sought by the passenger. By contract of carriage, the carrier
assumes the express obligation to transport the passenger to his destination safely and observe
extraordinary diligence with a due regard for all the circumstances, and any injury that might be
suffered by the passenger is right away attributable to the fault or negligence of the carrier. This is
an exception to the general rule that negligence must be proved, and it is therefore incumbent upon
the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and
1755 of the Civil Code.

Moreover, the circumstances under which the driver and the conductor failed to bring the gravely
injured victim immediately to the hospital for medical treatment is a patent and incontrovertible
proof of their negligence. It defies understanding and can even be stigmatized as callous
indifference. The evidence shows that after the accident the bus could have forthwith turned at
Bunk 56 and thence to the hospital, but its driver instead opted to first proceed to Bunk 70 to allow a
passenger to alight and to deliver a refrigerator, despite the serious condition of the victim.
Case No. 3

DE GUZMAN vs. COURT OF APPEALS & CENDANA

G.R. No. L-47822 (168 SCRA 612)
December 22, 1988
Ponente: Feliciano, J.:

Topic: The concept of "common carrier" under Article 1732 may be seen to coincide neatly with the
notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended).

Parties of the case:

Petitioner: Pedro De Guzman

Respondent: Court of Appeals and Ernesto Cendana
Facts:

Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap
metal in Pangasinan. He utilized two (2) six-wheeler trucks in bringing the scrap materials to Manila
for resale. On the return trip to Pangasinan, respondent would load his vehicles with cargo owned by
various merchants. For that service, respondent charged freight rates which were commonly lower
than regular commercial rates.

Petitioner De Guzman, a merchant and authorized dealer of General Milk Company

(Philippines), Inc. in Urdaneta, Pangasinan. He contracted private respondent for the hauling of 750
cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal. Respondent loaded in
Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by respondent
himself, while 600 cartons were placed on board the other truck which was driven by Manuel
Estrada, respondent's driver and employee.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never
reached petitioner, since the truck which carried these boxes was hijacked by armed men who took
with them the truck, its driver, his helper and the cargo.

Petitioner commenced action against private respondent in the CFI of Pangasinan,

demanding payment equivalent to the claimed value of the lost merchandise, plus damages and
attorney's fees. Petitioner argued that private respondent is liable for being a common carrier and
having failed to exercise the extraordinary diligence required of him by the law.

In his Answer, private respondent denied that he was a common carrier and argued that he
could not be held responsible for the value of the lost goods, such loss having been due to force
majeure.

The Trial Court rendered a Decision finding private respondent to be a common carrier and
holding him liable for the value of the undelivered goods plus damages and attorney’s fees.
 The CA reversed the judgment of the trial court and held that respondent had been engaged
in transporting return loads of freight "as a casual occupation — a sideline to his scrap iron business"
and not as a common carrier.

Issues:
1. Whether or not private respondent Cendana can be properly characterized as a common
carrier.
2. Whether or not Ernesto Cendana is liable to pay the undelivered goods.

Held:

1. Yes. The Civil Code defines "common carriers" in the following terms:

Article 1732. Common carriers are persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.
The above article makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in
local Idiom as "a sideline"). Article 1732 also carefully avoids making any distinction between a person
or enterprise offering transportation service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a narrow segment of the
general population.
The concept of "common carrier" under Article 1732 may be seen to coincide neatly with the
notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended)
which at least partially supplements the law on common carriers set forth in the Civil Code.

It appears to the Court that private respondent is properly characterized as a common

carrier even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan,
although such back-hauling was done on a periodic or occasional rather than regular or scheduled
manner, and even though private respondent's principal occupation was not the carriage of goods
for others. There is no dispute that private respondent charged his customers a fee for hauling their
goods; that fee frequently fell below commercial freight rates is not relevant here.

A certificate of public convenience (CPC) is not a requisite for the incurring of liability under
the Civil Code provisions governing common carriers. That liability arises the moment a person or
firm acts as a common carrier, without regard to whether or not such carrier has also complied with
the requirements of the applicable regulatory statute and implementing regulations and has been
granted a certificate of public convenience or other franchise.

2. No. Common carriers, "by the nature of their business and for reasons of public policy" are
held to a very high degree of care and diligence ("extraordinary diligence") in the carriage of goods
as well as of passengers.
 Article 1745, par. 6 provides in relevant part:

(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;

Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed
to divest or to diminish such responsibility — even for acts of strangers like thieves or
robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat,
violence or force." We believe and so hold that the limits of the duty of extraordinary diligence in
the vigilance over the goods carried are reached where the goods are lost as a result of a robbery
which is attended by "grave or irresistible threat, violence or force."

In these circumstances, the occurrence of the loss must reasonably be regarded as quite
beyond the control of the common carrier and properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not made absolute insurers against all risks of
travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen
or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary
diligence.

Thus, private respondent Cendana is not liable for the value of the undelivered merchandise
which was lost because of an event entirely beyond private respondent's control.

Case No. 4
FIRST PHILIPPINE INDUSTRIAL CORP V. COURT OF APPEALS (1997)
FACTS:
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract,
install and operate oil pipelines. In 1995, petitioner applied for a mayor's permit with the Office of the
Mayor of Batangas City. However, before the mayor's permit could be issued, the respondent City
Treasurer required petitioner to pay a local tax based on its gross receipts for the fiscal year 1993.
Petitioner paid the tax under protest for the first quarter of 1993.
Petitioner filed a letter-protest addressed to the respondent City Treasurer reminding the latter that
FPIC is a pipeline operator with a government concession granted under the Petroleum Act. It is
engaged in the business of transporting petroleum products; hence is exempt from paying tax on
gross receipts under Section 133 of the Local Government Code of 1991. The respondent City
Treasurer denied the protest contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under Section 133 (j) of the Local
Government Code.
Petitioner filed with the Regional Trial Court of Batangas City a complaint for tax refund with prayer
for a writ of preliminary injunction against respondents City of Batangas and Adoracion Arellano in
her capacity as City Treasurer. Petitioner alleged, inter alia, that: (1) the imposition and collection of
the business tax on its gross receipts violates Section 133 of the Local Government Code; (2) the
authority of cities to impose and collect a tax on the gross receipts of "contractors and independent
contractors" under Sec. 141 (e) and 151 does not include the authority to collect such taxes on
transportation contractors for, as defined under Sec. 131 (h), the term "contractors" excludes
transportation contractors; and, (3) the City Treasurer illegally and erroneously imposed and
collected the said tax, thus meriting the immediate refund of the tax paid.

The trial court dismissed the complaint, ruling that plaintiff is either a contractor or other
independent contractor. Under the Local Government Code, the exemption granted under Sec. 133
(j) encompasses only common carriers so as not to overburden the riding public or commuters with
taxes. Plaintiff is not a common carrier, but a special carrier extending its services and facilities to a
single specific or "special customer" under a "special contract."

Petitioner assailed the aforesaid decision before the Supreme Court via a petition for review. But
the SC referred it back to CA. CA affirmed the trial court’s dismissal. Hence, this petition.
ISSUE:
Whether the petitioner is a common carrier, hence exempt from business tax under Local
Government Code of 1991.
RULING:
Yes. Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public."
TEST IN DETERMING A COMMON CARRIER
The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for others as a public employment,
and must hold himself out as ready to engage in the transportation of goods for
person generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and over
his established roads; and
4. The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a common
carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for
hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons
who choose to employ its services, and transports the goods by land and for compensation. The fact
that petitioner has a limited clientele does not exclude it from the definition of a common carrier.
PETITIONER IS WITHIN THE CONCEPT OF COMMON CARRIER

The concept of 'common carrier' under Article 1732 may be seen to coincide neatly with the notion of
'public service.’ 'public service' includes:

'every person that now or hereafter may own, operate, manage, or control in the Philippines,
for hire or compensation, with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common carrier, railroad, street
 railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with
or without fixed route and whatever may be its classification, freight or carrier service of any
class, express service, steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair
shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system gas, electric
light heat and power, water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other similar public
services.
PETITIONER IS A COMMON CARRIER UNDER VARIOUS LAWS; EXEMPT FROM BUSINESS TAX UNDER
LGC 1991
Respondent's argument that the term "common carrier" as used in Section 133 (j) of the Local
Government Code refers only to common carriers transporting goods and passengers through
moving vehicles or vessels either by land, sea or water, is erroneous.
As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no
distinction as to the means of transporting, as long as it is by land, water or air. It does not provide
that the transportation of the passengers or goods should be by motor vehicle. In fact, in the United
States, oil pipe line operators are considered common carriers.
Under the Article 86 of Petroleum Act of the Philippines (Republic Act 387), petitioner being a
pipeline concessionaire is considered a "common carrier."
Republic Act 387, Article 7 also regards petroleum operation as a public utility.
The Bureau of Internal Revenue likewise considers the petitioner a "common carrier" in BIR Ruling
No. 069-83 since it is engaged only in transporting petroleum products.
From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and,
therefore, exempt from the business tax as provided for in Section 133 (j)1 of the Local Government
Code.
As per deliberations conducted in the House of Representatives on the Local Government Code of
1991, the reason why the transportation business is being excluded from the taxing powers of the
local government units is that they want to prevent a duplication of the so-called "common carrier's
tax."
Petitioner is already paying three (3%) percent common carrier's tax on its gross sales/earnings under
the National Internal Revenue Code. To tax petitioner again on its gross receipts in its transportation
of petroleum business would defeat the purpose of the Local Government Code.

1 Section 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the exercise of the
taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following :
(j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire
and common carriers by air, land or water, except as provided in this Code."
Case No. 5
PLANTERS PRODUCTS, INC., petitioner, vs.COURT OF APPEALS

Facts:

Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation Urea
fertilizer which the latter shipped in bulk aboard the cargo vessel M/V "Sun Plum" owned by private
respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San
Fernando, La Union, Philippines. Prior to its voyage, a time charter-party on the vessel M/V "Sun
Plum"2 was entered into between Mitsubishi as shipper/charterer and KKKK

Before loading the fertilizer aboard the vessel, four (4) of her holds4 were all presumably
inspected by the charterer's representative and found fit to take a load of urea in bulk. Upon arrival
of the vessel at her port of call, the steel pontoon hatches were opened with the use of the vessel's
boom. Petitioner unloaded the cargo from the holds into its steelbodied dump trucks which were
parked alongside the berth, using metal scoops attached to the ship. The hatches remained open
throughout the duration of the discharge.

It took eleven (11) days for PPI to unload the cargo.10A private marine and cargo surveyor,
Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the
cargo shipped. The survey report submitted by CSCI to the consignee (PPI) revealed a shortage in
the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was
contaminated with dirt. The same results were contained in a Certificate of Shortage/Damaged Cargo
prepared by PPI which showed that the cargo delivered was indeed short of 94.839 M/T and about
23 M/T were rendered unfit for commerce, having been polluted with sand, rust and dirt. 12

Consequently, PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident
agent of the carrier, KKKK, for P245,969.31 representing the cost of the alleged shortage in the
goods shipped and the diminution in value of that portion said to have been contaminated with dirt.

Respondent SSA explained that they were not able to respond to the consignee's claim for
payment because, according to them, what they received was just a request for shortlanded
certificate and not a formal claim, and that this "request" was denied by them because they "had
nothing to do with the discharge of the shipment." 14 Hence, on 18 July 1975, PPI filed an action for
damages with the Court of First Instance of Manila. The defendant carrier argued that the strict
public policy governing common carriers does not apply to them because they have become private
carriers by reason of the provisions of the charter-party. The court a quo however sustained the claim
of the plaintiff against the defendant carrier for the value of the goods lost or damaged. On appeal,
respondent Court of Appeals reversed the lower court and absolved the carrier from liability for the
value of the cargo that was lost or damaged.

Issue: WON a common carrier becomes a private carrier by reason of a charter-party.

Held: No. A public carrier shall remain as such, notwithstanding the charter of the whole or portion
of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a
time-charter or voyage-charter. It is only when the charter includes both the vessel and its crew, as in
a bareboat or demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned. Indubitably, a shipowner in a time or voyage charter
retains possession and control of the ship, although her holds may, for the moment, be the property
of the charterer.

When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and
compliment were under the employ of the shipowner and therefore continued to be under its direct
supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the
ship, with the duty of caring for his cargo when the charterer did not have any control of the means
in doing so. This is evident in the present case considering that the steering of the ship, the manning
of the decks, the determination of the course of the voyage and other technical incidents of
maritime navigation were all consigned to the officers and crew who were screened, chosen and
hired by the shipowner.

However, respondent carrier has sufficiently overcome, by clear and convincing proof,
the prima facie presumption of negligence. The hatches remained close and tightly sealed while the
ship was in transit as the weight of the steel covers made it impossible for a person to open without
the use of the ship's boom. When M/V "Sun Plum" docked at its berthing place, representatives of
the consignee boarded, and in the presence of a representative of the shipowner, the foreman, the
stevedores, and a cargo surveyor representing CSCI, opened the hatches and inspected the condition
of the hull of the vessel. The stevedores unloaded the cargo under the watchful eyes of the
shipmates who were overseeing the whole operation on rotation basis. Moreover, a shipowner is
liable for damage to the cargo resulting from improper stowage only when the stowing is done by
stevedores employed by him, and therefore under his control and supervision, not when the same is
done by the consignee or stevedores under the employ of the latter. Respondent carrier presented a
witness who testified on the characteristics of the fertilizer shipped and the expected risks of bulk
shipping. Mr. Estanislao Chupungco, If there was loss or contamination of the cargo, it was more
likely to have occurred while the same was being transported from the ship to the dump trucks and
finally to the consignee's warehouse

Clearly, respondent carrier has sufficiently proved the inherent character of the goods which
makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further
contributed to the loss. On the other hand, no proof was adduced by the petitioner showing that the
carrier was remise in the exercise of due diligence in order to minimize the loss or damage to the
goods it carried.

Important Terms:

A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is
let by the owner to another person for a specified time or use; 20 a contract of affreightment by
which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other
person for the conveyance of goods, on a particular voyage, in consideration of the payment of
freight; 21 Charter parties are of two types: (a) contract of affreightment which involves the use of
shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; and,
(b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the
charterer with a transfer to him of its entire command and possession and consequent control over
its navigation, including the master and the crew, who are his servants. Contract of affreightment
may either be time charter, wherein the vessel is leased to the charterer for a fixed period of time, or
voyage charter, wherein the ship is leased for a single voyage. 22 In both cases, the charter-party
provides for the hire of vessel only, either for a determinate period of time or for a single or
consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and
the crew, and defray the expenses for the maintenance of the ship.

The term "common or public carrier" is defined in Art. 1732 of the Civil Code. 23 The definition extends
to carriers either by land, air or water which hold themselves out as ready to engage in carrying
goods or transporting passengers or both for compensation as a public employment and not as a
casual occupation. The distinction between a "common or public carrier" and a "private or special
carrier" lies in the character of the business, such that if the undertaking is a single transaction, not a
part of the general business or occupation, although involving the carriage of goods for a fee, the
person or corporation offering such service is a private carrier.

Case No. 6
[G.R. No. 111127. July 26, 1996]
MR. & MRS. ENGRACIO FABRE, JR.* and PORFIRIO CABIL, petitioners, vs. COURT OF APPEALS, THE
WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO, et
al, respondents.
MENDOZA, J.:
FACTS: Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda
minibus. They used the bus principally in connection with a bus service for school children which they
operated in Manila. Private respondent Word for the World Christian Fellowship Inc. (WWCF)
arranged with petitioners for the transportation of 33 members of its Young Adults Ministry from
Manila to La Union and back in paying the amount of P3,000.00.
Taking a detour to an unfamiliar and unusual route due to a broken bridge in the usual route, driver
petitioner Cabil came upon a sharp curve on the highway, running on a south to east direction, which
he described as siete. The road was slippery because it was raining, causing the bus, which was
running at the speed of 50 kilometers per hour, to skid, rammed the fence of one Jesus Escano, then
turned over and landed on its left side, coming to a full stop only after a series of impacts. Several
passengers were injured.
One of the injured passengers, Amyline Antonio, brought this case in the RTC of Makati, Metro
Manila. As a result of the accident, she is now suffering from paraplegia and is permanently
paralyzed from the waist down.

Trial court: No convincing evidence was shown that the minibus was properly checked for travel to a
long distance trip and that the driver was properly screened and tested before being admitted for
employment. Indeed, all the evidence presented have shown the negligent act of the defendants
which ultimately resulted to the accident subject of this case. WHEREFORE, premises considered, the
Court hereby renders judgment against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil
Accordingly, it
Court of Appeals: Decision affirmed with modifications on amount of awards. Hence, this petition for
certiorari.
ISSUE: 1) Is driver petitioner Cabil is liable? How about petitioner employer Fabres?
2) Whether a Contract of Carriage exists in this case?
3) Whether the liabilities of the driver and employer joint or solidary?

RULING: 1) YES. Considering the foregoing the fact that it was raining and the road was slippery, that
it was dark, that he drove his bus at 50 kilometers an hour when even on a good day the normal
speed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil was grossly
negligent and should be held liable for the injuries suffered by private respondent Amyline Antonio.
Further, pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption
that his employers, the Fabres, were themselves negligent in the selection and supervision of their
employee.
2) YES. Petitioners, the Fabres, did not have to be engaged in the business of public transportation
for the provisions of the Civil Code on common carriers to apply to them. As this Court has held:

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business
of carrying or transporting passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as an ancillary activity
(in local idiom, as a sideline). Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the general public, i.e., the general community
or population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1732 deliberately refrained from making such distinctions.
As common carriers, the Fabres were bound to exercise extraordinary diligence for the safe
transportation of the passengers to their destination. This duty of care is not excused by proof that
they exercised the diligence of a good father of the family in the selection and supervision of their
employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers through the negligence or
wilful acts of the formers employees, although such employees may have acted beyond the scope of
their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision of their employees.
The same circumstances detailed above, supporting the finding of the trial court and of the
appellate court that petitioners are liable under Arts. 2176 and 2180 for quasi delict, fully justify
finding them guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.
3) SOLIDARY. Driver is liable because of quqsi-deliict; Owner is liable because of culpa-contractual.
Private respondents in this case and her co-plaintiffs did not stake out their claim against the carrier
and the driver exclusively on one theory, much less on that of breach of contract alone. After all, it
was permitted for them to allege alternative causes of action and join as many parties as may be
liable on such causes of action so long as private respondent and her co-plaintiffs do not recover
twice for the same injury. What is clear from the cases is the intent of the plaintiff there to recover
from both the carrier and the driver, thus justifying the holding that the carrier and the driver were
jointly and severally liable because their separate and distinct acts concurred to produce the same
injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as to the award
of damages.Petitioners are ORDERED to PAY jointly and severally the private respondent Amyline
Antonio. SO ORDERED.

Case No. 7
LOADSTAR V. PIONEER ASIA INSURANCE

The pertinent facts are as follows:

Petitioner Loadstar Shipping Co., Inc. (Loadstar for brevity) is the registered owner and
operator of the vessel M/V Weasel. It holds office at 1294 Romualdez St., Paco, Manila.

On June 6, 1984, Loadstar entered into a voyage-charter with Northern Mindanao Transport
Company, Inc. for the carriage of 65,000 bags of cement from Iligan City to Manila. The shipper was
Iligan Cement Corporation, while the consignee in Manila was Market Developers, Inc.

On June 24, 1984, 67,500 bags of cement were loaded on board M/V Weasel and stowed in
the cargo holds for delivery to the consignee. The shipment was covered by petitioners Bill of
Lading dated June 23, 1984.

Prior to the voyage, the consignee insured the shipment of cement with respondent Pioneer
Asia Insurance Corporation for P1,400,000, for which respondent issued Marine Open Policy No.
MOP-006 dated September 17, 1980, covering all shipments made on or after September 30, 1980.

At 12:50 in the afternoon of June 24, 1984, M/V Weasel left Iligan City for Manila in good
weather. However, at 4:31 in the morning of June 25, 1984, Captain Vicente C. Montera, master
of M/V Weasel, ordered the vessel to be forced aground. Consequently, the entire shipment of
cement was good as gone due to exposure to sea water. Petitioner thus failed to deliver the goods
to the consignee in Manila.

The consignee demanded from petitioner full reimbursement of the cost of the lost
shipment. Petitioner, however, refused to reimburse the consignee despite repeated demands.

Nonetheless, on March 11, 1985, respondent insurance company paid the

consignee P1,400,000 plus an additional amount of P500,000, the value of the lost shipment of
cement. In return, the consignee executed a Loss and Subrogation Receipt in favor of respondent
concerning the latters subrogation rights against petitioner.

Hence, on October 15, 1986, respondent filed a complaint docketed as Civil Case No.
86-37957, against petitioner with the Regional Trial Court of Manila, Branch 8. It alleged that: (1)
the M/V Weasel was not seaworthy at the commencement of the voyage; (2) the weather and sea
conditions then prevailing were usual and expected for that time of the year and as such, was an
ordinary peril of the voyage for which the M/V Weasel should have been normally able to cope with;
and (3) petitioner was negligent in the selection and supervision of its agents and employees then
manning the M/V Weasel.

In its Answer, petitioner alleged that no fault nor negligence could be attributed to it
because it exercised due diligence to make the ship seaworthy, as well as properly manned and
equipped. Petitioner insisted that the failure to deliver the subject cargo to the consignee was due
to force majeure. Petitioner claimed it could not be held liable for an act or omission not directly
attributable to it

The RTC reasoned that petitioner, as a common carrier, bears the burden of proving that it
exercised extraordinary diligence in its vigilance over the goods it transported. The trial court
explained that in case of loss or destruction of the goods, a statutory presumption arises that the
common carrier was negligent unless it could prove that it had observed extraordinary diligence.

Petitioners defense of force majeure was found bereft of factual basis. The RTC called
attention to the PAG-ASA report that at the time of the incident, tropical storm Asiang had moved
away from the Philippines. Further, records showed that the sea and weather conditions in the area
of Hinubaan, Negros Occidental from 8:00 p.m. of June 24, 1984 to 8:00 a.m. the next day were slight
and smooth. Thus, the trial court concluded that the cause of the loss was not tropical
storm Asiang or any other force majeure, but gross negligence of petitioner.

Petitioner appealed to the Court of Appeals.

ISSUE: WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER IS A
COMMON CARRIER UNDER ARTICLE 1732 OF THE CIVIL CODE.

RULING:

NO, The threshold issues in this case are: (1) Given the circumstances of this case, is petitioner a
common or a private carrier? and (2) In either case, did petitioner exercise the required diligence i.e.,
the extraordinary diligence of a common carrier or the ordinary diligence of a private carrier?

Article 1732 of the Civil Code defines a common carrier as follows:

Article 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public.
Petitioner is a corporation engaged in the business of transporting cargo by water and for
compensation, offering its services indiscriminately to the public. Thus, without doubt, it is a
common carrier. However, petitioner entered into a voyage-charter with the Northern
Mindanao Transport Company, Inc. Now, had the voyage-charter converted petitioner into a
private carrier?

We think not. The voyage-charter agreement between petitioner and Northern Mindanao Transport
Company, Inc. did not in any way convert the common carrier into a private carrier. We have already
resolved this issue with finality in Planters Products, Inc. v. Court of Appeals where we ruled that:
 It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or more
persons, provided the charter is limited to the ship only, as in the case of a
time-charter or voyage-charter. It is only when the charter includes both the vessel
and its crew, as in a bareboat or demise that a common carrier becomes private, at
least insofar as the particular voyage covering the charter-party is concerned.
Indubitably, a shipowner in a time or voyage charter retains possession and control
of the ship, although her holds may, for the moment, be the property of the
charterer.

Conformably, petitioner remains a common carrier notwithstanding the existence of the

charter agreement with the Northern Mindanao Transport Company, Inc. since the said charter is
limited to the ship only and does not involve both the vessel and its crew. As elucidated in Planters
Products, its charter is only a voyage-charter, not a bareboat charter.

As a common carrier, petitioner is required to observe extraordinary diligence in the vigilance

over the goods it transports. When the goods placed in its care are lost, petitioner is presumed to
have been at fault or to have acted negligently. Petitioner therefore has the burden of proving that it
observed extraordinary diligence in order to avoid responsibility for the lost cargo

Case No. 8 (PDF File)

Case No. 9

LOADSTAR SHIPPING v. COURT OF APPEALS

FACTS:
On 19 November 1984, LOADSTAR received on board its M/V Cherokee (hereafter, the vessel) the
following goods for shipment:

a) 705 bales of lawanit hardwood;

b) 27 boxes and crates of tilewood assemblies and others; and
c) 49 bundles of mouldings R & W Apitong Bolidenized.

The goods, amounting to P6,067,178, were insured for the same amount with MIC against various
risks including TOTAL LOSS BY TOTAL LOSS OF THE VESSEL. The vessel, in turn, was insured by
Prudential Guarantee & Assurance, Inc. (hereafter PGAI) for P4 million. On 20 November 1984, on its
way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off
Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with
LOADSTAR which, however, ignored the same. As the insurer, MIC paid P6,075,000 to the insured in
full settlement of its claim, and the latter executed a subrogation receipt therefor.

On 4 February 1985, MIC filed a complaint against LOADSTAR and PGAI, alleging that the sinking of
the vessel was due to the fault and negligence of LOADSTAR and its employees. It also prayed that
PGAI be ordered to pay the insurance proceeds from the loss of the vessel directly to MIC, said
amount to be deducted from MICs claim from LOADSTAR.
In its answer, LOADSTAR denied any liability for the loss of the shippers goods and claimed that the
sinking of its vessel was due to force majeure. PGAI, on the other hand, averred that MIC had no
cause of action against it, LOADSTAR being the party insured. In any event, PGAI was later dropped
as a party defendant after it paid the insurance proceeds to LOADSTAR.

RTC: Ruled in favor of MIC, prompting LOADSTAR

CA: Affirmed its decision in toto.
In dismissing LOADSTAR’s appeal, the appellate court made the following observations:
1) LOADSTAR cannot be considered a private carrier on the sole ground that there was a single
shipper on that fateful voyage. The court noted that the charter of the vessel was limited to the ship,
but LOADSTAR retained control over its crew.
2) As a common carrier, it is the Code of Commerce, not the Civil Code, which should be applied in
determining the rights and liabilities of the parties.
3) The vessel was not seaworthy because it was undermanned on the day of the voyage. If it had
been seaworthy, it could have withstood the natural and inevitable action of the sea on 20
November 1984, when the condition of the sea was moderate. The vessel sank, not because of force
majeure, but because it was not seaworthy. LOADSTARS allegation that the sinking was probably
due to the convergence of the winds, as stated by a PAGASA expert, was not duly proven at the trial.
The limited liability rule, therefore, is not applicable considering that, in this case, there was an actual
finding of negligence on the part of the carrier.
4) Between MIC and LOADSTAR, the provisions of the Bill of Lading do not apply because said
provisions bind only the shipper/consignee and the carrier. When MIC paid the shipper for the goods
insured, it was subrogated to the latters rights as against the carrier, LOADSTAR.
5) There was a clear breach of the contract of carriage when the shippers goods never reached their
destination. LOADSTARs defense of diligence of a good father of a family in the training and
selection of its crew is unavailing because this is not a proper or complete defense in culpa
contractual.
6) Art. 361 (of the Code of Commerce) has been judicially construed to mean that when goods are
delivered on board a ship in good order and condition, and the shipowner delivers them to the
shipper in bad order and condition, it then devolves upon the shipowner to both allege and prove
that the goods were damaged by reason of some fact which legally exempts him from liability.
Transportation of the merchandise at the risk and venture of the shipper means that the latter bears
the risk of loss or deterioration of his goods arising from fortuitous events, force majeure, or the
inherent nature and defects of the goods, but not those caused by the presumed negligence or fault
of the carrier, unless otherwise proved.

ISSUES:
(1) Is the M/V Cherokee a private or a common carrier?

(2) Did LOADSTAR observe due and/or ordinary diligence in these premises?

RULING: (read Petitioner’s arguments)

(1) We hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a
certificate of public convenience, and this public character is not altered by the fact that the carriage
of the goods in question was periodic, occasional, episodic or unscheduled.
LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc.,
where this Court held that a common carrier transporting special cargo or chartering the vessel to a
special person becomes a private carrier that is not subject to the provisions of the Civil Code. Any
stipulation in the charter party absolving the owner from liability for loss due to the negligence of its
agent is void only if the strict policy governing common carriers is upheld. Such policy has no force
where the public at large is not involved, as in the case of a ship totally chartered for the use of a
single party. LOADSTAR also cited Valenzuela Hardwood and Industrial Supply, Inc. v. Court of
Appeals and National Steel Corp. v. Court of Appeals, both of which upheld the Home Insurance
doctrine.

These cases invoked by LOADSTAR are not applicable in the case at bar for simple reason that the
factual settings are different. The records do not disclose that the M/V Cherokee, on the date in
question, undertook to carry a special cargo or was chartered to a special person only. There was no
charter party. The bills of lading failed to show any special arrangement, but only a general provision
to the effect that the M/V Cherokee was a general cargo carrier. Further, the bare fact that the vessel
was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is
not reason enough to convert the vessel from a common to a private carrier, especially where, as in
this case, it was shown that the vessel was also carrying passengers.

The Civil Code defines common carriers in the following terms:

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.

The above article makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary activity (in local
idiom, as a sideline. Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the general public, i.e., the general community or
population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1733 deliberately refrained from making such distinctions.

“A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers. That liability arises the moment a person or firm acts as a
common carrier, without regard to whether or not such carrier has also complied with the
requirements of the applicable regulatory statute and implementing regulations and has been
granted a certificate of public convenience or other franchise. To exempt private respondent from
the liabilities of a common carrier because he has not secured the necessary certificate of public
convenience, would be offensive to sound public policy; that would be to reward private respondent
precisely for failing to comply with applicable statutory requirements. The business of a common
carrier impinges directly and intimately upon the safety and well being and property of those
members of the general community who happen to deal with such carrier. The law imposes duties
and liabilities upon common carriers for the safety and protection of those who utilize their services
and the law cannot allow a common carrier to render such duties and liabilities merely facultative by
simply failing to obtain the necessary permits and authorizations.”
(2) We find that the M/V Cherokee was not seaworthy when it embarked on its voyage on 19
November 1984. The vessel was not even sufficiently manned at the time. For a vessel to be
seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of
competent officers and crew. The failure of a common carrier to maintain in seaworthy condition its
vessel involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the
Civil Code.

Neither do we agree with LOADSTARs argument that the limited liability theory should be applied in
this case. The doctrine of limited liability does not apply where there was negligence on the part of
the vessel owner or agent. LOADSTAR was at fault or negligent in not maintaining a seaworthy
vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In any
event, it did not sink because of any storm that may be deemed as force majeure, inasmuch as the
wind condition in the area where it sank was determined to be moderate. Since it was remiss in the
performance of its duties,

LOADSTAR cannot hide behind the limited liability doctrine to escape responsibility for the loss of
the vessel and its cargo.

LOADSTAR ARGUMENTS:
LOADSTAR submits that the vessel was a private carrier because it was not issued a certificate of
public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only
one shipper, one consignee for a special cargo.

(In refutation, MIC argues that the issue as to the classification of the M/V Cherokee was not timely
raised below; hence, it is barred by estoppel. While it is true that the vessel had on board only the
cargo of wood products for delivery to one consignee, it was also carrying passengers as part of its
regular business. Moreover, the bills of lading in this case made no mention of any charter party but
only a statement that the vessel was a general cargo carrier. Neither was there any special
arrangement between LOADSTAR and the shipper regarding the shipment of the cargo. The singular
fact that the vessel was carrying a particular type of cargo for one shipper is not sufficient to convert
the vessel into a private carrier.)

As regards the second error, LOADSTAR argues that as a private carrier, it cannot be presumed to
have been negligent, and the burden of proving otherwise devolved upon MIC.

LOADSTAR also maintains that the vessel was seaworthy. Before the fateful voyage on 19 November
1984, the vessel was allegedly dry docked at Keppel Philippines Shipyard and was duly inspected by
the maritime safety engineers of the Philippine Coast Guard, who certified that the ship was fit to
undertake a voyage. Its crew at the time was experienced, licensed and unquestionably competent.
With all these precautions, there could be no other conclusion except that LOADSTAR exercised the
diligence of a good father of a family in ensuring the vessels seaworthiness.

LOADSTAR goes on to argue that, being a private carrier, any agreement limiting its liability, such as
what transpired in this case, is valid. Since the cargo was being shipped at owners risk, LOADSTAR
was not liable for any loss or damage to the same. Therefore, the Court of Appeals erred in holding
that the provisions of the bills of lading apply only to the shipper and the carrier, and not to the
insurer of the goods, which conclusion runs counter to the Supreme Courts ruling in the case of St.
Paul Fire & Marine Insurance Co. v. Macondray & Co., Inc., [9] and National Union Fire Insurance
Company of Pittsburg v. Stolt-Nielsen Phils., Inc.

Case No. 10
G.R. No. 186312 June 29, 2010

SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners, vs. SUN HOLIDAYS, INC., Respondent.

Facts:

Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 2001 against Sun
Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of Pasig City for damages arising from
the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on September 11, 2000 on
board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera, Oriental
Mindoro where the couple had stayed at Coco Beach Island Resort (Resort) owned and operated by
respondent.

On September 11, 2000, as it was still windy, Matute and 25 other Resort guests including petitioners’
son and his wife trekked to the other side of the Coco Beach mountain that was sheltered from the
wind where they boarded M/B Coco Beach III, which was to ferry them to Batangas.

Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into
the open seas, the rain and wind got stronger, causing the boat to tilt from side to side and the
captain to step forward to the front, leaving the wheel to one of the crew members.

The waves got more unwieldy. After getting hit by two big waves which came one after the other,
M/B Coco Beach III capsized putting all passengers underwater. The passengers, who had put on
their life jackets, struggled to get out of the boat. Upon seeing the captain, Matute and the other
passengers who reached the surface asked him what they could do to save the people who were still
trapped under the boat. The captain replied "Iligtas niyo na lang ang sarili niyo" (Just save
yourselves).

Help came after about 45 minutes when two boats owned by Asia Divers in Sabang, Puerto Galera
passed by the capsized M/B Coco Beach III. Boarded on those two boats were 22 persons, consisting
of 18 passengers and four crew members, who were brought to Pisa Island. Eight passengers,
including petitioners’ son and his wife, died during the incident.

Issue: Whether or not respondent is a common carrier.

Held:

The Civil Code defines "common carriers" in the following terms:

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.
The above article makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary activity (in local
idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1733 deliberately refrained from making such distinctions.

Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business
as to be properly considered ancillary thereto. The constancy of respondent’s ferry services in its
resort operations is underscored by its having its own Coco Beach boats. And the tour packages it
offers, which include the ferry services, may be availed of by anyone who can afford to pay the same.
These services are thus available to the public.

That respondent does not charge a separate fee or fare for its ferry services is of no moment. It
would be imprudent to suppose that it provides said services at a loss. The Court is aware of the
practice of beach resort operators offering tour packages to factor the transportation fee in arriving
at the tour package price. That guests who opt not to avail of respondent’s ferry services pay the
same amount is likewise inconsequential. These guests may only be deemed to have overpaid.

Case No. 11
WESTWIND SHIPPING CORPORATION v. UCPB GENERAL INSURANCE CO.

G.R. No. 200289; November 25,2013

FACTS:

Kinshu Mataichi Corporation shipped from the port of Kobe, Japan, 197 metal containers/skids of
tin-free steel for delivery to the consignee, San Miguel Corporation (SMC). The shipment was loaded
and received clean on board M/V Golden Harvest Voyage No. 66, a vessel owned and operated by
Westwind Shipping Corporation. SMC insured the cargoes against all risks with UCPB General
Insurance Co., Inc. The shipment arrived in Manila and was discharged in the custody of the arrastre
operator, Asian Terminals, Inc (ATI). During the unloading operation, six containers/skids sustained
dents and punctures from the forklift used by the stevedores of Ocean Terminal Services, Inc (OTSI)
in centering and shuttling the containers/skids. Orient Freight Intemational, Inc. (OFII), the customs
broker of SMC, withdrew from ATI the 197 containers/skids and delivered the same at SMC's
warehouse. It was discovered upon discharge that additional nine containers/skids were also
damaged due to the forklift operations; thus, making the total number of 15 containers/skids in bad
order.

SMC filed a claim against UCPB, Westwind, ATI, and OFII to recover the amount corresponding to the
damaged 15 containers/skids. When UCPB paid the total sum of Php 292,732.80. SMC signed the
subrogation receipt. Thereafter, in the exercise of its right of subrogation, UCPB instituted a
complaint for damages against Westwind, ATI, and OFII. The RTC opined that Westwind is not liable,
since the discharging of the cargoes were done by ATI personnel using forklifts. It likewise absolved
OFII from any liability, reasoning that it never undertook the operation of the forklifts which caused
the dents and punctures, and that it merely facilitated the release and delivery of the shipment as
the customs broker and representative of SMC. On appeal by UCPB, the CA reversed and set aside
the trial court ruling. It concluded that the common carrier, not the arrastre operator, is responsible
during the unloading of the cargoes and is still bound to exercise extraordinary diligence at the time.
The CA also considered that OFII is liable, agreeing with UCPB's contention that OFII is a common
carrier bound to observe extraordinary diligence and is presumed to be at fault or have acted
negligently for such damage.

ISSUE: Whether Westwind and OFII are liable to exercise extraordinary diligence.

RULING: YES. Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods transported by them.
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. In this case, since the discharging of the containers/skids, which were
covered by only one bill of lading, had not yet been completed at the time the damage occurred,
there is no reason to imply that there was already delivery, actual or constructive, of the cargoes to
ATI. The mere proof of delivery of goods in good order to the carrier, and their arrival in the place of
destination in bad order, make out a prima facie case against the carrier, so that if no explanation is
given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon the
carrier to prove that the loss was due to accident or some other circumstances inconsistent with its
liability. The contention of OFII is likewise untenable. A customs broker has been regarded as a
common carrier because transportation of goods is an integral part of its business. Article 1732 does
not distinguish between one whose principal business activity is the carrying of goods and one who
does such carrying only as an ancillary activity. The contention, therefore, of petitioner that it is not a
common carrier but a customs broker whose principal function is to prepare the correct customs
declaration and proper shipping documents as required by law is bereft of merit. It suffices that
petitioner undertakes to deliver the goods for pecuniary consideration. As the transportation of
goods is an integral part of a customs broker, the customs broker is also a common carrier. For to
declare otherwise "would be to deprive those with whom it contracts the protection which the law
affords them notwithstanding the fact that the obligation to carry goods for its customers, is part
and parcel of petitioner's business.

Common carriers, from the nature of their business and for reasons of public policy, are bound to
observe extraordinary diligence in vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Case No. 12
VIRGINES CALVO doing business under the name and style TRANSORIENT
CONTAINER TERMINAL SERVICES, INC., petitioner, vs. UCPB GENERAL INSURANCE
CO., INC. (formerly Allied Guarantee Ins. Co., Inc.) respondent.
MENDOZA, J.:

FACTS:
 This is a petition for review of the decision, dated May 31, 2001, of the Court of Appeals,
affirming the decision of the Regional Trial Court, Makati City, Branch 148, which ordered
petitioner to pay respondent, as subrogee, the amount of P93,112.00 with legal interest,
representing the value of damaged cargo handled by petitioner, 25% thereof as attorney’s
fees, and the cost of the suit.

 Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services, Inc.
(TCTSI), a sole proprietorship customs broker. Petitioner entered into a contract with San
Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124
reels of kraft liner board from the Port Area in Manila to SMCs
warehouse at the Tabacalera Compound, Romualdez St., Ermita, Manila.

The cargo was insured by respondent UCPB General Insurance Co., Inc.

 On July 14, 1990, the shipment in question, contained in 30 metal vans, arrived in Manila on
board M/V Hayakawa Maru and, after 24 hours, were unloaded from the vessel to the
custody of the arrastre operator, Manila Port Services, Inc.

From July 23 to July 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the
cargo from the arrastre operator and delivered it to SMCs warehouse in Ermita, Manila.

On July 25, 1990, the goods were inspected by Marine Cargo Surveyors, who found that 15
reels of the semi-chemical fluting paper were wet/stained/torn and 3 reels of kraft liner board
were likewise torn. The damage was placed at P93,112.00.

SMC collected payment from respondent UCPB under its insurance contract for the
aforementioned amount.

 RTC LEVEL:
Respondent, as subrogee of SMC, brought suit against petitioner in the Regional Trial Court,
Branch 148, Makati City, which, rendered judgment finding petitioner liable to respondent for
the damage to the shipment.

The subject cargoes sustained damage while in the custody of defendants. Evidence such as
the Warehouse Entry Slip; the Damage Report with entries appearing therein, which the
claims processor, Ms. Agrifina De Luna, claimed to be tearrage at the end and tearrage at the
middle of the subject damaged cargoes respectively, coupled with the Marine Cargo Survey
Report confirms the fact of the damaged condition of the subject cargoes. The surveyor[s]
 report in particular opine that damages sustained by shipment is attributable to improper
handling in transit presumably whilst in the custody of the broker. Defendant did not present
any evidence on what precaution [she] performed to prevent [the] said incident, hence the
presumption is that the moment the defendant accepts the cargo [she] shall perform such
extraordinary diligence because of the nature of the cargo.

Generally speaking under Article 1735 of the Civil Code, if the goods are proved to have been
lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they have observed the extraordinary
diligence required by law. The burden of the plaintiff, therefore, is to prove merely that the
goods he transported have been lost, destroyed or deteriorated. Thereafter, the burden is
shifted to the carrier to prove that he has exercised the extraordinary diligence required by
law. Thus, it has been held that the mere proof of delivery of goods in good order to a carrier,
and of their arrival at the place of destination in bad order, makes out a prima facie case
against the carrier, so that if no explanation is given as to how the injury occurred, the
carrier must be held responsible. It is incumbent upon the carrier to prove that the loss was
due to accident or some other circumstances inconsistent with its liability.

Defendant, being a customs brother, warehouseman and at the same time a common carrier
is supposed [to] exercise [the] extraordinary diligence required by law, hence the
extraordinary responsibility 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 the right
to receive the same.[3]

 The decision was affirmed by the Court of Appeals on appeal. Hence this petition for review
on certiorari.
ISSUES: WON THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR IN
CLASSIFYING THE PETITIONER AS A COMMON CARRIER AND NOT AS PRIVATE OR SPECIAL CARRIER
WHO DID NOT HOLD ITS SERVICES TO THE PUBLIC
NOTE:
 Petitioner contends that contrary to the findings of the trial court and the Court of Appeals,
she is not a common carrier but a private carrier because, as a customs broker and
warehouseman, she does not indiscriminately hold her services out to the public but only
offers the same to select parties with whom she may contract in the conduct of her business.
 If petitioner is not a common carrier, although both the trial court and the Court of Appeals
held otherwise, then she is indeed not liable beyond what ordinary diligence in the vigilance
over the goods transported by her, would require. Consequently, any damage to the cargo
she agrees to transport cannot be presumed to have been due to her fault or negligence.
HELD: The petitioner is a common carrier. CA’s decision is affirmed

 The Civil Code defines common carriers in the following terms:

 Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.

The above article makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity . . . Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the general public, i.e., the general
community or population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1732 deliberately refrained
from making such distinctions.

So understood, the concept of common carrier under Article 1732 may be seen to coincide
neatly with the notion of public service, under the Public Service Act (Commonwealth Act
No. 1416, as amended) which at least partially supplements the law on common carriers set
forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, public
service includes:

x x x every person that now or hereafter may own, operate, manage, or control in
the Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, subway motor vehicle,
either for freight or passenger, or both, with or without fixed route and whatever
may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair shop, wharf
or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light,
heat and power, water supply and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting stations and other
similar public services. x x x [8]

 There is greater reason for holding petitioner to be a common carrier because the
transportation of goods is an integral part of her business. To uphold petitioners contention
would be to deprive those with whom she contracts the protection which the law affords
themnotwithstanding the fact that the obligation to carry goods for her customers, as
already noted, is part and parcel of petitioners business.

 PETITIONER LIABILITY. Art. 1733 of the Civil Code provides:

Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them, according to all the circumstances
of each case. . . .
 The extraordinary diligence in the vigilance over the goods tendered for shipment requires
the common carrier to know and to follow the required precaution for avoiding damage to,
or destruction of the goods entrusted to it for sale, carriage and delivery. It requires common
carriers to render service with the greatest skill and foresight and to use all reasonable
means to ascertain the nature and characteristic of goods tendered for shipment, and to
exercise due care in the handling and stowage, including such methods as their nature
requires.

The Survey Report (Exh. H) of the Marine Cargo Surveyors indicates that when the shipper
transferred the cargo in question to the arrastre operator, these were covered by clean
Equipment Interchange Report (EIR) and, when petitioners employees withdrew the cargo
from the arrastre operator, they did so without exception or protest either with regard to
the condition of container vans or their contents.

As found by the Court of Appeals:

From the [Survey Report], it [is] clear that the shipment was discharged from the vessel to
the arrastre, Marina Port Services Inc., in good order and condition as evidenced by clean
Equipment Interchange Reports (EIRs). Had there been any damage to the shipment, there
would have been a report to that effect made by the arrastre operator. The cargoes were
withdrawn by the defendant-appellant from the arrastre still in good order and condition as
the same were received by the former without exception, that is, without any report of
damage or loss. Surely, if the container vans were deformed, cracked, distorted or dented,
the defendant-appellant would report it immediately to the consignee or make an exception
on the delivery receipt or note the same in the Warehouse Entry Slip (WES). None of these
took place. To put it simply, the defendant-appellant received the shipment in good order
and condition and delivered the same to the consignee damaged. We can only conclude that
the damages to the cargo occurred while it was in the possession of the defendant-appellant.
Whenever the thing is lost (or damaged) in the possession of the debtor (or obligor), it shall
be presumed that the loss (or damage) was due to his fault, unless there is proof to the
contrary. No proof was proffered to rebut this legal presumption and the presumption of
negligence attached to a common carrier in case of loss or damage to the goods.

 Petitioner must do more than merely show the possibility that some other party could be
responsible for the damage. It must prove that it used all reasonable means to ascertain the
nature and characteristic of goods tendered for [transport] and that [it] exercise[d] due care
in the handling [thereof]. Petitioner failed to do this.
 Nor is there basis to exempt petitioner from liability under Art. 1734(4), which provides

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:

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

For this provision to apply, the rule is that if the improper packing or, in this case, the defect/s
in the container, is/are known to the carrier or his employees or apparent upon ordinary
observation, but he nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for damage
resulting therefrom.[14] In this case, petitioner accepted the cargo without exception despite
the apparent defects in some of the container vans. Hence, for failure of petitioner to prove
that she exercised extraordinary diligence in the carriage of goods in this case or that she is
exempt from liability, the presumption of negligence as provided under Art. 1735[15] holds.