1. Unsworth Transport International (Phils.), Inc. vs.
(1) to assemble and consolidate, or to provide for
Court of Appeals and Pioneer Insurance and Surety
Corporation
Facts: Sylvex Purchasing Corp. delivered to UTI a
shipment of 27 drums of various raw materials for
pharmaceutical manufacturing on Aug. 31, 1992. UTI
issued a Bill of Lading covering the said shipment. The
shipment was insured with private respondent Pioneer
Insurance and Surety Corp. in favor of Unilab against all
risk of P1,779,664.77.
The shipment arrived at the port of Manila on
Sept. 30, 1992 and on Oct. 6, 1992, petitioner received
the shipment in its warehouse. On Oct. 9, 1992, Oceanica
Cargo Marine Surveyors Corp. (OCMSC) conducted a
stripping survey of the shipment located in the petitioner’s
warehouse. The results shows that everything is in good
order condition and properly sealed except on the 1-steel
drum STC Vitamin B Complex Extract which has a
cut/hole on side, with approximate spilling of 1%.
On Oct. 15, 1992, arrastre Jardine Davies issued
a gate pass which stated the “22 drums” raw materials
were noted to be complete and in good order. The
shipment arrived at the Unilab’s warehouse and was
immediately surveyed by an independent surveyor, J.G
Bernas Adjusters & Surveyors. The result shows that; (1)
1-p/bag torn on side contents partly spilled, (2) 1-s/drum
#7 punctured and retaped on bottom side lacking and (3)
5-drims shortship/short delivery. The same independent
surveyor conducted final inspection surveys which yielded
the same results.
Unilab filed a formal claim for the damage against
the private respondent and UTI. UTI denied liability on the
basis of the gate pass issued by Jardine that the goods
were complete and in good condition. Private Repondent
paid the claim and by virtue of the Loss and Subrogation
Receipt, filed a complaint for damages against APL, UTI
and petitioner with the RTC.
RTC rendered a decision in favor of private
respondent. On appeal, the CA affirned the decision of
the RTC.
Issue:
1. Whether or not petitioner UTI is a common carrier
2. Whether or not private respondent sufficiently
established the alleged damage to its cargo
Held: UTI is a common carrier.
Admittedly, petitioner is a freight forwarder. The term
freight forwarder" refers to a firm holding itself out to the
general public (other than as a pipeline, rail, motor, or
water carrier) to provide transportation of property for
compensation and, in the ordinary course of its business,
assembling and consolidating, shipments, and to perform
or provide for break-bulk and distribution operations of the
shipments; (2) to assume responsibility for the
transportation of goods from the place of receipt to the
place of destination; and (3) to use for any part of the
transportation a carrier subject to the federal law
pertaining to common carriers.
A freight forwarders liability is limited to damages arising
from its own negligence, including negligence in choosing
the carrier; however, where the forwarder contracts to
deliver goods to their destination instead of merely
arranging for their transportation, it becomes liable as a
common carrier for loss or damage to goods. A freight
forwarder assumes the responsibility of a carrier, which
actually executes the transport, even though the
forwarder does not carry the merchandise itself.
It is undisputed that UTI issued a bill of lading in favor of
Unilab. Pursuant thereto, petitioner undertook to
transport, ship, and deliver the 27 drums of raw materials
for pharmaceutical manufacturing to the consignee.
A bill of lading is a written acknowledgement of the
receipt of goods and an agreement to transport and to
deliver them at a specified place to a person named or on
his or her order. It operates both as a receipt and as a
contract. It is a receipt for the goods shipped and a
contract to transport and deliver the same as therein
stipulated.
Undoubtedly, UTI is liable as a common carrier. Common
carriers, as a general rule, are presumed to have been at
fault or negligent if the goods they transported
deteriorated or got lost or destroyed. That is, unless they
prove that they exercised extraordinary diligence in
transporting the goods. In order to avoid responsibility for
any loss or damage, therefore, they have the burden of
proving that they observed such diligence.[27] Mere proof
of delivery of the goods in good order to a common
carrier and of their arrival in bad order at their destination
constitutes a prima facie case of fault or negligence
against the carrier. If no adequate explanation is given as
to how the deterioration, loss, or destruction of the goods
happened, the transporter shall be held responsible.
Held: No
It is to be noted that the Civil Code does not limit the
liability of the common carrier to a fixed amount per
package. In all matters not regulated by the Civil Code,
the rights and obligations of common carriers are
governed by the Code of Commerce and special laws.
Section 4(5) of the COGSA provides: (5) Neither the
carrier nor the ship shall in any event be or become liable
for any loss or damage to or in connection with the
transportation of goods in an amount exceeding $500 per
package of lawful money of the United States, or in case
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of goods not shipped in packages, per customary freight
unit, or the equivalent of that sum in other currency,
unless the nature and value of such goods have been
declared by the shipper before shipment and inserted in
the bill of lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be
conclusive on the carrier.
In the present case, the shipper did not declare a higher
valuation of the goods to be shipped. Petitioners liability
should be limited to $500 per steel drum. In this case, as
there was only one drum lost, private respondent is
entitled to receive only $500 as damages for the loss.
2. PHILIPPINES FIRST INSURANCE CO., INC. vs.
WALLEM PHILS. SHIPPING, INC.
G.R. No. 165647               March 26, 2009
FACTS: Anhui Chemicals Import & Export Corporation
loaded on board M/S Offshore Master a shipment
consisting of 10,000 bags of sodium sulphate anhydrous
99 PCT Min. (shipment) with a gross weight of 500, 200
kilograms, complete and in good order for transportation
to and delivery at the port of Manila for L.G. Atkimson
Import-Export, Inc. (consignee), covered by a Clean Bill of
Lading. The Owner and/or Charterer of M/V Offshore
Master is unknown while the shipper of the shipment is
Shanghai Fareast Ship Business Company. Both are
foreign firms doing business in the Philippines, thru its
local ship agent, respondent Wallem Philippines
Shipping, Inc. (Wallem).
The shipment arrived at the port of Manila on board M/S
Offshore Master from which it was subsequently
discharged. During the discharge of the shipment from
the carrier, 2,426 poly bags (bags) were in bad order and
condition, having sustained various degrees of spillages
and losses. This is evidenced by the Turn Over Survey of
Bad Order Cargoes and Request for Bad Order Survey
by the arrastre operator.
Asia Star Freight Services, Inc. undertook the delivery of
the subject shipment from the pier to the consignee’s
warehouse in Quezon City, while the final inspection was
conducted jointly by the consignee’s representative and
the cargo surveyor. During the unloading, it was found
and noted that the bags had been discharged in damaged
and bad order condition. Upon inspection, it was
discovered that 63,065.00 kilograms of the shipment had
sustained unrecovered spillages, while 58,235.00
kilograms had been exposed and contaminated, resulting
in losses due to depreciation and downgrading.
Since the shipment was insured with petitioner
Philippines First Insurance Co., Inc. against all risks, the
consignee filed a formal claim with petitioner for the
damage and losses sustained by the shipment.
Consequently, petitioner paid the consignee the sum
of P397,879.69 and the latter signed a subrogation
receipt. Petitioner, in the exercise of its right of
subrogation, sent a demand letter to Wallem for the
recovery of the amount paid by petitioner to the
consignee.
It is undisputed that the shipment was damaged prior to
its receipt by the insured consignee. The damage to the
shipment was documented by the turn-over survey and
Request for Bad Order Survey. The turn-over survey, in
particular, expressly stipulates that 2,426 bags of the
shipment were received by the arrastre operator in
damaged condition. With these documents, petitioner
insists that the shipment incurred damage or losses while
still in the care and responsibility of Wallem and before it
was turned over and delivered to the arrastre operator.
ISSUE: Whether or not the carrier (respondent Wallem)
should be held liable for the cost of the damaged
shipment.
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. Subject to certain exceptions
enumerated under Article 1734 of the Civil Code,
common carriers are responsible for the loss, destruction,
or deterioration of the goods. 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.
For marine vessels, Article 619 of the Code of Commerce
provides that the ship captain is liable for the cargo from
the time it is turned over to him at the dock or afloat
alongside the vessel at the port of loading, until he
delivers it on the shore or on the discharging wharf at the
port of unloading, unless agreed otherwise. In Standard
Oil Co. of New York v. Lopez Castelo, the Court
interpreted the ship captain’s liability as ultimately that of
the shipowner by regarding the captain as the
representative of the ship owner.
Lastly, Section 2 of the COGSA provides that under every
contract of carriage of goods by sea, the carrier in relation
to the loading, handling, stowage, carriage, custody, care,
and discharge of such goods, shall be subject to the
responsibilities and liabilities and entitled to the rights and
immunities set forth in the Act. Section 3 (2) which states
that among the carriers’ responsibilities are to properly
and carefully load, care for and discharge the goods
carried. The bill of lading covering the subject shipment
likewise stipulates that the carrier’s liability for loss or
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damage to the goods ceases after its discharge from the
vessel. Article 619 of the Code of Commerce holds a ship
captain liable for the cargo from the time it is turned over
to him until its delivery at the port of unloading.
In a case decided by a U.S. Circuit Court, Nichimen
Company v. M./V. Farland, it was ruled that like the duty
of seaworthiness, the duty of care of the cargo is non-
delegable, and the carrier is accordingly responsible for
the acts of the master, the crew, the stevedore, and his
other agents. It has also been held that it is ordinarily the
duty of the master of a vessel to unload the cargo and
place it in readiness for delivery to the consignee, and
there is an implied obligation that this shall be
accomplished with sound machinery, competent hands,
and in such manner that no unnecessary injury shall be
done thereto. And the fact that a consignee is required to
furnish persons to assist in unloading a shipment may not
relieve the carrier of its duty as to such unloading.
The exercise of the carrier’s custody and responsibility
over the subject shipment during the unloading actually
transpired in the instant case during the unloading of the
shipment as testified by Mr. Talens, the cargo surveyor.
According to him, the services of the stevedores were
hired by the checker of the vessel who is also an
employee of Wallem. Moreover, the liability of Wallem is
highlighted by Mr. Talen’s notes in the Bad Order
Inspection, to wit:
"The bad order torn bags, was due to stevedores[‘]
utilizing steel hooks/spikes in piling the cargo to [the]
pallet board at the vessel’s cargo holds and at the pier
designated area before and after discharged that cause
the bags to torn [sic]."
The records are replete with evidence which show that
the damage to the bags happened before and after their
discharge and it was caused by the stevedores of the
arrastre operator who were then under the supervision of
Wallem. It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain under the
custody of the carrier. In the instant case, the damage or
losses were incurred during the discharge of the shipment
while under the supervision of the carrier. Consequently,
the carrier is liable for the damage or losses caused to
the shipment.
3. Estrellita M. Bascos vs. Court of Appeals and
Rodolfo A. Cipriano
Facts:
Rodolfo A. Cipriano representing Cipriano
Trading Enterprise (CIPTRADE for short) entered into a
hauling contract 2 with Jibfair Shipping Agency
Corporation whereby the former bound itself to haul the
latter's 2,000 m/tons of soya bean meal from Magallanes
Drive, Del Pan, Manila to the warehouse of Purefoods
Corporation in Calamba, Laguna. To carry out its
obligation, CIPTRADE, through Rodolfo Cipriano,
subcontracted with Estrellita Bascos (petitioner) to
transport and to deliver 400 sacks of soya bean meal
worth P156,404.00 from the Manila Port Area to
Calamba, Laguna at the rate of P50.00 per metric ton.
Petitioner failed to deliver the said cargo. As a
consequence of that failure, Cipriano paid Jibfair Shipping
Agency the amount of the lost goods in accordance with
the contract
Cipriano demanded reimbursement from
petitioner but the latter refused to pay. Eventually,
Cipriano filed a complaint for a sum of money and
damages.
Petitioner interposed the following defenses: that
there was no contract of carriage since CIPTRADE
leased her cargo truck to load the cargo from Manila Port
Area to Laguna; that CIPTRADE was liable to petitioner in
the amount of P11,000.00 for loading the cargo; that the
truck carrying the cargo was hijacked along Canonigo St.,
Paco, Manila on the night of October 21, 1988; that the
hijacking was immediately reported to CIPTRADE and
that petitioner and the police exerted all efforts to locate
the hijacked properties; that after preliminary
investigation, an information for robbery and carnapping
were filed against Jose Opriano, et al.; and that hijacking,
being a force majeure, exculpated petitioner from any
liability to CIPTRADE.
RTC rendered a decision in favor to Rodolfo
Cipriano. On appeal, the CA, affirmed the RTC decision.
Issue:
1. Was petitioner a common carrier?
2. Was the hijacking referred to a force majeure?
Held: Yes
Article 1732 of the Civil Code defines a common carrier
as "(a) person, corporation or 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." The
test to determine a common carrier is "whether the given
undertaking is a part of the business engaged in by the
carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the
business transacted." In this case, petitioner herself has
made the admission that she was in the trucking
business, offering her trucks to those with cargo to move.
Judicial admissions are conclusive and no evidence is
required to prove the same.
But petitioner argues that there was only a contract of
lease because they offer their services only to a select
group of people and because the private respondents,
plaintiffs in the lower court, did not object to the
Page 3 of 10
presentation of affidavits by petitioner where the
transaction was referred to as a lease contract.
Regarding the first contention, the holding of the Court in
De Guzman vs. Court of Appeals is instructive. In
referring to Article 1732 of the Civil Code, it held thus:
"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.
Held: No. Common carriers are obliged to observe
extraordinary diligence in the vigilance over the goods
transported by them. Accordingly, they are presumed to
have been at fault or to have acted negligently if the
goods are lost, destroyed or deteriorated. There are very
few instances when the presumption of negligence does
not attach and these instances are enumerated in Article
1734. In those cases where the presumption is applied,
the common carrier must prove that it exercised
extraordinary diligence in order to overcome the
presumption.
In this case, petitioner alleged that hijacking constituted
force majeure which exculpated her from liability for the
loss of the cargo. In De Guzman vs. Court of Appeals, the
Court held that hijacking, not being included in the
provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is
presumed to have been at fault or negligent. To exculpate
the carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with grave or
irresistible threat, violence, or force.
To establish grave and irresistible force, petitioner
presented her accusatory affidavit, Jesus Bascos'
affidavit, and Juanito Morden's "Salaysay". However, both
the trial court and the Court of Appeals have concluded
that these affidavits were not enough to overcome the
presumption. Petitioner's affidavit about the hijacking was
based on what had been told her by Juanito Morden. It
was not a first-hand account. While it had been admitted
in court for lack of objection on the part of private
respondent, the respondent Court had discretion in
assigning weight to such evidence. We are bound by the
conclusion of the appellate court. In a petition for review
on certiorari, We are not to determine the probative value
of evidence but to resolve questions of law. Secondly, the
affidavit of Jesus Bascos did not dwell on how the
hijacking took place. Thirdly, while the affidavit of Juanito
Morden, the truck helper in the hijacked truck, was
presented as evidence in court, he himself was a witness
as could be gleaned from the contents of the petition.
Affidavits are not considered the best evidence if the
affiants are available as witnesses. The subsequent filing
of the information for carnapping and robbery against the
accused named in said affidavits did not necessarily
mean that the contents of the affidavits were true
because they were yet to be determined in the trial of the
criminal cases.
4. COASTWISE LIGHTERAGE CORPORATION vs.
COURT OF APPEALS and the PHILIPPINE GENERAL
INSURANCE COMPANY
G.R. No. 114167 July 12, 1995
FACTS: Pag-asa Sales, Inc. entered into a contract to
transport molasses (Negros to Manila) with Coastwise
Lighterage Corporation (Coastwise for brevity), using the
latter's dumb barges. The barges were towed in tandem
by the tugboat MT Marica, which is likewise owned by
Coastwise.
Upon reaching Manila Bay, one of the barges, "Coastwise
9", struck an unknown sunken object and water gushed in
through a hole "two inches wide and twenty-two inches
long"  contaminating and rendered the molasses for the
use it was intended. This prompted the consignee, Pag-
asa Sales, Inc. to reject the shipment of molasses as a
total loss. Thereafter, Pag-asa Sales, Inc. filed a formal
claim with the insurer of its lost cargo, herein private
respondent, Philippine General Insurance Company
(PhilGen, for short) and against the carrier, herein
petitioner, Coastwise Lighterage. Coastwise Lighterage
denied the claim and it was PhilGen which paid the
consignee, Pag-asa Sales, Inc., the amount of
P700,000.00.
PhilGen sought to recover the amount of P700,000.00
which it paid to Pag-asa Sales, claiming to be subrogated
to all the contractual rights and claims which the
consignee may have against the carrier, which is
presumed to have violated the contract of carriage.
ISSUE: Whether or not petitioner Coastwise Lighterage
was transformed into a private carrier, by virtue of the
contract of affreightment which it entered into with the
consignee, Pag-asa Sales, Inc. Corollarily, if it were in
fact transformed into a private carrier, did it exercise the
ordinary diligence to which a private carrier is in turn
bound?
HELD: Petitioner contends that the RTC and the Court of
Appeals erred in finding that it was a common carrier. It
stresses the fact that it contracted with Pag-asa Sales,
Inc. to transport the shipment of molasses from Negros
Oriental to Manila and refers to this contract as a "charter
Page 4 of 10
agreement". It then proceeds to cite the case of Home
Insurance Company vs. American Steamship Agencies,
Inc. 2 wherein this Court held: ". . . a common carrier
undertaking to carry a special cargo or chartered to a
special person only becomes a private carrier."
Petitioner's reliance on the aforementioned case is
misplaced. In its entirety, the conclusions of the court are
as follows:
Accordingly, the charter party contract is one of
affreightment over the whole vessel. As such, the liability
of the shipowner for acts or negligence of its captain and
crew would remain in the absence of stipulation. 3
A contract of affreightment is one in which the owner of
the vessel leases part or all of its space to haul goods for
others. It is a contract for special service to be rendered
by the owner of the vessel and under such contract the
general owner retains the possession, command and
navigation of the ship, the charterer or freighter merely
having use of the space in the vessel in return for his
payment of the charter hire. . . . .
. . . . An owner who retains possession of the ship though
the hold is the property of the charterer, remains liable as
carrier and must answer for any breach of duty as to the
care, loading and unloading of the cargo. . . .
Although a charter party may transform a common carrier
into a private one, the same however is not true in a
contract of affreightment on account of the
aforementioned distinctions between the two.
Petitioner admits that the contract it entered into with the
consignee was one of affreightment. 5 We agree. Pag-
asa Sales, Inc. only leased three of petitioner's vessels, in
order to carry cargo from one point to another, but the
possession, command and navigation of the vessels
remained with petitioner Coastwise Lighterage.
Coastwise Lighterage, by the contract of affreightment,
was not converted into a private carrier, but remained a
common carrier and was still liable as such.
As a common carrier, petitioner is liable for breach of the
contract of carriage, having failed to overcome the
presumption of negligence with the loss and destruction
of goods it transported, by proof of its exercise of
extraordinary diligence.
6. SPOUSES TEODORO and NANETTE PERENA vs.
SPOUSES TERESITA and NICOLAS ZARATE
G.R. No. 157917               August 29, 2012
FACTS:
 The Pereñas were engaged in the business of
transporting students from their respective
residences. In their business, the Pereñas used a KIA
Ceres Van which had the capacity to transport 14
students at a time, two of whom would be seated in
the front beside the driver, and the others in the rear,
with six students on either side. They employed
Clemente Alfaro (Alfaro) as driver of the van.
 Spouses Zarate engaged the services of spouses
Pereña for the adequate and safe transportation
carriage of the former spouses' son, Aaron, from their
residence in Parañaque to his school at the Don
Bosco Technical Institute in Makati City.
 On August 22, 1996, as on previous school days, the
van picked Aaron up around 6:00 a.m. from the
Zarates’ residence. Aaron took his place on the left
side of the van near the rear door.
 Considering that the students were due at Don Bosco
by 7:15 a.m., and that they were already running late
because of the heavy vehicular traffic on the South
Superhighway, Alfaro took the van to an alternate
route at about 6:45 a.m. by traversing the narrow path
underneath the Magallanes Interchange that was
then commonly used by Makati-bound vehicles as a
short cut into Makati. At the time, the narrow path was
marked by piles of construction materials and parked
passenger jeepneys, and the railroad crossing in the
narrow path had no railroad warning signs, or
watchmen, or other responsible persons manning the
crossing.
 In fact, the bamboo barandilla was up, leaving the
railroad crossing open to traversing motorists. He
then tried to overtake a bus. However, there was in
fact an oncoming train but Alfaro no longer saw the
train as his view was already blocked by the bus he
was trying to overtake. The train hit the rear end of
the van, and the impact threw nine of the 12 students
in the rear, including Aaron, out of the van. Aaron
landed in the path of the train, which dragged his
body and severed his head, instantaneously killing
him.
 Devastated by the early and unexpected death of
Aaron, the Zarates commenced this action for
damages against Alfaro, the Pereñas, PNR and
Alano.
 The Zarates’ claim against the Pereñas was upon
breach of the contract of carriage for the safe
transport of Aaron; but that against PNR was based
on quasi-delict under Article 2176, Civil Code.
 In their defense, the Pereñas adduced evidence to
show that they had exercised the diligence of a good
father of the family in the selection and supervision of
Alfaro, by making sure that Alfaro had been issued a
driver’s license and had not been involved in any
vehicular accident prior to the collision; that their own
son had taken the van daily; and that Teodoro Pereña
Page 5 of 10
 had sometimes accompanied Alfaro in the van’s trips
transporting the students to school.
 For its part, PNR tended to show that the proximate
cause of the collision had been the reckless crossing
of the van whose driver had not first stopped, looked
and listened; and that the narrow path traversed by
the van had not been intended to be a railroad
crossing for motorists.
 The RTC ruled in favor of the Zarates. The CA
affirmed the RTC
ISSUE: Whether or not the defense of due diligence of a
good father by the Pereñas is untenable.
RULING:
 The defense of due diligence of a good father by the
Pereñas is untenable.
 The Pereñas are common carriers. They are not
merely private carriers. Private transports for schools
are common carriers.
 The true test for a common carrier is not the quantity
or extent of the business actually transacted, or the
number and character of the conveyances used in the
activity, but whether the undertaking is a part of the
activity engaged in by the carrier that he has held out
to the general public as his business or occupation. If
the undertaking is a single transaction, not a part of
the general business or occupation engaged in, as
advertised and held out to the general public, the
individual or the entity rendering such service is a
private, not a common, carrier. The question must be
determined by the character of the business actually
carried on by the carrier, not by any secret intention
or mental reservation it may entertain or assert when
charged with the duties and obligations that the law
imposes
 The Pereñas as the operators of a school bus service
were: (a) engaged in transporting passengers
generally as a business, not just as a casual
occupation; (b) undertaking to carry passengers over
established roads by the method by which the
business was conducted; and (c) transporting
students for a fee. Despite catering to a limited
clientèle, the Pereñas operated as a common carrier
because they held themselves out as a ready
transportation indiscriminately to the students of a
particular school living within or near where they
operated the service and for a fee.
 The common carrier’s standard of care and vigilance
as to the safety of the passengers is defined by law.
Given the nature of the business and for reasons of
public policy, the common carrier is 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." Article 1755 of the Civil
Code specifies that the common carrier should "carry
the passengers safely as far as human care and
foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the
circumstances." To successfully fend off liability in an
action upon the death or injury to a passenger, the
common carrier must prove his or its observance of
that extraordinary diligence; otherwise, the legal
presumption that he or it was at fault or acted
negligently would stand. No device, whether by
stipulation, posting of notices, statements on tickets,
or otherwise, may dispense with or lessen the
responsibility of the common carrier as defined under
Article 1755 of the Civil Code.
 Being a common carrier, what is required of the
Pereñas is not mere diligence of a good father. What
is specifically required from them by law is
extraordinary diligence – a fact which they failed to
prove in court. Verily, their obligation as common
carriers did not cease upon their exercise of diligently
choosing Alfaro as their employee.
11. PEDRO DE GUZMAN vs. COURT OF APPEALS
and ERNESTO CENDANA
G.R. No. L-47822 December 22, 1988
FACTS: Respondent Cendana, a junk dealer, was
engaged in buying up used bottles and scrap metal in
Pangasinan. He utilized two (2) six-wheeler trucks which
he owned for hauling the quantities of scrap material to
Manila. On the return trip to Pangasinan, respondent
would load his vehicles with cargo which various
merchants wanted delivered to differing establishments in
Pangasinan. For that service, respondent charged freight
rates which were commonly lower than regular
commercial rates.
Petitioner de Guzman an authorized dealer of GMC
Philippines, contracted with respondent for the hauling of
750 cartons of Liberty filled milk from a warehouse in
Rizal, to petitioner's establishment in Urdaneta. On
December 1970, 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
somewhere along Tarlac, by armed men who took with
them the truck, its driver, his helper and the cargo.
Page 6 of 10
Petitioner then commenced an action against private
respondent in the CFI of Pangasinan, demanding
payment of the claimed value of the lost merchandise,
plus damages and attorney's fees. Petitioner argued that
private respondent, being a common carrier, and having
failed to exercise the extraordinary diligence required of
him by the law, should be held liable for the value of the
undelivered goods. 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
CA ruled that respondent Cendena is not a common
carrier because he held no certificate of public
convenience.
ISSUES:
1. Whether or not private respondent Ernesto
Cendana may be properly characterized as a
common carrier.
2. Liability of the common carrier.
1. Respondent is a common carrier. As defined by Article
1732 of the Civil Code, "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.
It 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.
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 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. Respondent is not liable for the undelivered goods.
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 1734
establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the
goods which they carry, "unless the same is due to any of
the following causes only:
(1) Flood, storm, earthquake, lightning or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether international
or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing
or-in the containers; and
(5) Order or act of competent public authority.
It is important to point out that the above list of causes of
loss, destruction or deterioration which exempt the
common carrier for responsibility therefor, is a closed list.
Causes falling outside the foregoing list, even if they
appear to constitute a species of force majeure fall within
the scope of Article 1735.
The specific cause alleged in the instant case — the
hijacking of the carrier's truck — does not fall within any
of the five (5) categories of exempting causes listed in
Article 1734. It would follow, therefore, that the hijacking
of the carrier's vehicle must be dealt with under the
provisions of Article 1735, in other words, that the private
respondent as common carrier is presumed to have been
at fault or to have acted negligently. This presumption,
however, may be overthrown by proof of extraordinary
diligence on the part of private respondent.
Page 7 of 10
Under Article 1745 (6), 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." In the instant case, armed men held
up the second truck owned by private respondent which
carried petitioner's cargo. The record shows that an
information for robbery in band was filed in the CFI of
Tarlac, Branch 2. There, the accused were charged with
willfully and unlawfully taking and carrying away with
them the second truck, driven by Manuel Estrada and
loaded with the 600 cartons of Liberty filled milk destined
for delivery at petitioner's store in Urdaneta, Pangasinan.
The decision of the trial court shows that the accused
acted with grave, if not irresistible, threat, violence or
force. 3 Three (3) of the five (5) hold-uppers were armed
with firearms. The robbers not only took away the truck
and its cargo but also kidnapped the driver and his
helper, detaining them for several days and later
releasing them in Zambales. The hijacked truck was
subsequently found by the police in Quezon City. The
Court of First Instance convicted all the accused of
robbery, though not of robbery in band.  4
In these circumstances, we hold that 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.
14. COGEO-CUBAO OPERATORS AND DRIVERS
ASSOCIATION vs. THE COURT OF APPEALS
G.R. No. 100727 March 18, 1992
FACTS: A certificate of public convenience to operate a
jeepney service was to be issued in favor of Lungsod
Silangan to ply the Cogeo-Cubao route in 1983. Petitioner
Association, on the otherhand, was an organization which
main purpose is representing respondents for whatever
contract and/or agreement it will have regarding the
ownership of units, and the like, of the members of the
Association.
Perturbed by respondents Board Resolution No. 9,
adopting a Bandera' System under which a member of
the cooperative is permitted to queue for passenger at the
disputed pathway in exchange for the ticket worth twenty
pesos, the proceeds of which shall be utilized for
Christmas programs of the drivers and other benefits, and
on the strength of defendants' registration as a collective
body with the Securities and Exchange Commission,
petitioners, led by Romeo Oliva decided to form a human
barricade and assumed the dispatching of passenger
jeepneys.
Petitioner contends that the association was formed not
to complete with the respondent corporation in the latter's
operation as a common carrier; that the same was
organized for the common protection of drivers from
abusive traffic officers who extort money from them, and
for the elimination of the practice of respondent
corporation of requiring jeepney owners to execute deed
of sale in favor of the corporation to show that the latter is
the owner of the jeeps under its certificate of public
convenience. Petitioner also argues that in organizing the
association, the members thereof are merely exercising
their freedom or right to redress their grievances. It,
however, admitted that it is not authorized to transport
passengers
ISSUE: Whether or not the petitioner usurped the
property right of the respondent which shall entitle the
latter to the award of nominal damages.
RULING: YES. Under the Public Service Law, a
certificate of public convenience is an authorization
issued by the Public Service Commission for the
operation of public services for which no franchise is
required by law. In the instant case, a certificate of public
convenience was issued to respondent corporation to
operate a public utility jeepney service on the Cogeo-
Cubao route. As found by the trial court, the certificate
was issued pursuant to a decision passed by the Board of
Transportation.
A certification of public convenience is included in the
term "property" in the broad sense of the term. Under the
Public Service Law, a certificate of public convenience
can be sold by the holder thereof because it has
considerable material value and is considered as valuable
asset (Raymundo v. Luneta Motor Co., et al., 58 Phil.
889). Although there is no doubt that it is private property,
it is affected with a public interest and must be submitted
to the control of the government for the common good
(Pangasinan Transportation Co. v. PSC, 70 Phil 221).
Hence, insofar as the interest of the State is involved, a
certificate of public convenience does not confer upon the
holder any proprietary right or interest or franchise in the
route covered thereby and in the public highways (Lugue
v. Villegas, L-22545, Nov . 28, 1969, 30 SCRA 409).
However, with respect to other persons and other public
utilities, a certificate of public convenience as property,
which represents the right and authority to operate its
facilities for public service, cannot be taken or interfered
with without due process of law. Appropriate actions may
be maintained in courts by the holder of the certificate
against those who have not been authorized to operate in
competition with the former and those who invade the
rights which the former has pursuant to the authority
granted by the Public Service Commission (A.L. Ammen
Transportation Co. v. Golingco. 43 Phil. 280).
In the case at bar, the trial court found that petitioner
association forcibly took over the operation of the jeepney
Page 8 of 10
service in the Cogeo-Cubao route without any
authorization from the Public Service Commission and in
violation of the right of respondent corporation to operate
its services in the said route under its certificate of public
convenience. These were its findings which were affirmed
by the appellate court:
The Court from the testimony of plaintiff's witnesses as
well as the documentary evidences presented is
convinced that the actions taken by petitioner herein
though it admit that it did not have the authority to
transport passenger did in fact assume the role as a
common carrier engaged in the transport of passengers
within that span of ten days when it unilaterally took upon
itself the operation and dispatching of jeepneys at St.
Mary's St. The president, Romeo Oliva himself in his
testimony confirmed that there was indeed a takeover of
the operations at St. Mary's St.
Article 21 of the Civil Code provides that any person who
wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall
compensate the latter for the damage. The provision
covers a situation where a person has a legal right which
was violated by another in a manner contrary to morals,
good customs or public policy. It presupposes loss or
injury, material or otherwise, which one may suffer as a
result of such violation. It is clear form the facts of this
case that petitioner formed a barricade and forcibly took
over the motor units and personnel of the respondent
corporation. This paralyzed the usual activities and
earnings of the latter during the period of ten days and
violated the right of respondent Lungsod Corp. To
conduct its operations thru its authorized officers.
As to the propriety of damages in favor of respondent
Lungsod Corp., the respondent appellate court stated:
. . . it does not necessarily follow that plaintiff-appellee is
entitled to actual  damages and attorney's fees. While
there may have been allegations from plaintiff-
cooperative showing that it did in fact suffer some from of
injury . . . it is legally unprecise to order the payment of
P50,000.00 as actual damages for lack of concrete proof
therefor. There is, however, no denying of the act of
usurpation by defendants-appellants which constituted an
invasion of plaintiffs'-appellees' property right. For this,
nominal damages in the amount of P10,000.00 may be
granted. (Article 2221, Civil Code).
No compelling reason exists to justify the reversal of the
ruling of the respondent appellate court in the case at bar.
Article 2222 of the Civil Code states that the court may
award nominal damages in every obligation arising from
any source enumerated in Article 1157, or in every case
where any property right has been invaded. Considering
the circumstances of the case, the respondent
corporation is entitled to the award of nominal damages.
15. LUZON BROKERAGE CO., INC. vs. THE PUBLIC
SERVICE COMMISSION
G.R. No. L-37661 November 16, 1932
FACTS: Petitioner prays for a writ of prohibition ordering
the respondents to desist and refrain from requiring the
petitioner to file an application for a certificate of public
convenience and necessity for the operation of its auto-
trucks. Petitioner is a corporation conducting the business
of customs broker. It maintains and operates a fleet of
trucks designed and utilized exclusively for the carriage of
goods or cargo of its particular customers, which from
time to time are landed and received from vessels and
delivered to the consignees or owners thereof, or are
forwarded and delivered to such vessels for shipment. It
does not solicit nor accept from the public indiscriminately
goods or cargo for transportation on its aforesaid trucks;
and that all the transporting, carrying, and delivering
business conducted by the petitioner is limited and
confined to the articles, goods, and wares of its patrons
as customs broker. It is registered and licensed in the
Bureau of Public Works under the so-called TH
denomination. Petitioner contended that it is not a "public
service" or "public utility" in contemplation of law even if it
receives compensation for its transportation and delivery
services in addition to its customary customs brokerage
fees.
Respondents, on the other hand, insisted that
petitioner came well within the jurisdiction of the Public
Service Commission by virtue of the provisions of section
13 of Act No. 3108, as amended. That, according to
established practice and existing regulations of the
Bureau of Public Works, motor trucks may be registered
in said bureau under either of the following
denominations: (a) T for trucks devoted exclusively to the
carriage of owner's goods or cargo; (b) TH for trucks
carrying cargo only, for compensation or hire; (c) TG for
trucks duly licensed as garage by the municipal or city
authorities concerned and authorized to be operated as
such by Public Service Commission; and (d) TPU for
trucks which are devoted to public use or service for the
carriage of passengers and freight or cargo and are
operated under certificate of public convenience.
Respondents contend that under the wording of
section 13 of Act No. 3108 made by Act No. 3316, any
person who operates a freight and or passenger motor
vehicle with or without fixed route, for hire or
compensation, is now subject to the supervision,
regulation, jurisdiction and control of the Public Service
Commission and must comply with all the provisions of
the Public Service Law. It contended that if the business
enumerated in section 13 are carried on for "hire or
compensation", that is all that is necessary to subject
them to the supervision, regulation and control of the
commission.
Issue 1: Whether the petitioner’s business is one of a
common carrier?
Page 9 of 10
Ruling: No. The petitioner had been operating for 20
years and even with the succeeding amendments in the
Public Utility Acts during those years in operation, the
respondents and the Government of the Philippine
Islands did not regard said trucks as common carriers or
a public utility. In other words, what was not a common
carrier business under Act No. 3108 is not a common
carrier business under its amendment, which is Act No.
3316.

Issue 2: Whether the amendments introduced into

section 13 of Act No. 3108 by Act No. 3316 conferred
jurisdiction on the respondents over the petitioner's
business, although it is not a common carrier.
Ruling: No. Legislature did not intend to include private
businesses in the definition of a public service.
The material amendments of section 13 of Act
No. 3108, made by Act No. 3316, are the following: The
term "public service" is substituted for the term "public
utility" and the phrase "for public use" is eliminated and
the phrase "for hire or compensation" is inserted in the
definition of a public service.
The idea of public use is implicit in the term
"public service". The insertion of the phrase "for hire or
compensation" throws no light on whether the Legislature
intended to include private businesses in the definition of
a public service, which the respondent is insinuating.
Notwithstanding the compensation the petitioner receives
for its transportation, the element of public use is an
essential feature of every public service in relation to
common carriers. And this public service is not offered by
petitioner to the public at large but only to the particular
patron or customer base on their existing special contract.
Lastly, writ of prohibition was granted.

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