the use is whether the public may enjoy it by right or only by

permission.

DECISION
FIRST DIVISION

[G.R. No. 15122. March 10, 1920. ] JOHNSON, J. :

THE UNITED STATES, Plaintiff-Appellee, v. TAN PIACO, VENTURA

ESTUYA, PEDRO HOMERES, MAXIMINO GALSA and EMILIO Said defendants were charged with a violation of the Public Utility
LEOPANDO, Defendants. TAN PIACO, Appellant. Law (Act No. 2307 as amended by Acts Nos. 2362 and 2694), in that
they were operating a public utility without permission from the
Recaredo Ma. Calvo for Appellant. Public Utility Commissioner.

Attorney-General Paredes for Appellee. Upon the complaint presented each of said defendants were
arrested and brought to trial. After hearing the evidence the
SYLLABUS Honorable Cayetano Lukban, judge, found that the evidence was
insufficient to support the charges against Ventura Estuya, Pedro
1. PUBLIC UTILITY, CONTROL BY PUBLIC UTILITY COMMISSION;
Homeres, Maximino Galsa and Emilio Leopando, and absolved them
CRIMINAL LIABILITY OF OWNER OF AUTOMOBILE. TRUCK OPERATED
from all liability under the complaint and discharged them from the
UNDER SPECIAL CONTRACT AND NOT FOR GENERAL PUBLIC
custody of the law. The lower court found the defendant Tan Piaco
BUSINESS. — The owner of an automobile truck who operates the
guilty of the crime charged in the complaint and sentence him to
same under a special contract for carrying passengers and freight, in
pay a fine of P100, and, in case of insolvency, to suffer subsidiary
each case, and has not held himself out to carry all passengers and
imprisonment, and to pay one- fifth part of the costs. :E; rom that
freight for all persons who might offer, is not a public utility and is
sentence Tan Piaco appealed to this court.
not criminally liable for his failure to obtain a license from the Public
Utility Commissioner. If the use is merely optional with the owner,
The facts proved during the trial of the cause may be stated as
or the public benefit is merely accidental, it is not a public use,
follows:chanrob1es virtual 1aw library
authorizing the exercise of the jurisdiction of the public utility
commission. The true criterion by which to judge of the character of
The appellant rented two automobile trucks and was using them
upon the highways of the Province of Leyte for the purpose of
carrying some passengers and freight; that he cal ried passengers
and freight under a special contract in each case; that he had not
held himself out to carry all passengers and all freight for all persons
who might offer passengers and freight.
The Attorney-General, in a carefully prepared brief, says: "The
question is whether the appellant, under the above facts, was a
public utility under the foregoing definitions," and was therefore
subject to the control and regulation of the Public Utility
Commission. "We have not found anything in the evidence showing
that the appellant operated the trucks in question for public use.
These trucks, so far as indicated by the evidence and as far as the
appellant is concerned, furnished service under special agreements
to carry particular persons and property. . . For all that we can
deduce from the evidence, these passengers, or the owners of the
freight, may have controlled the whole vehicles ’both as to
contents, direction, and time of use,’ which facts, under all the
circumstances of the case, would, in our opinion, take away the
defendant’s business from the provisions of the Public Utility
Act."cralaw virtua1aw library
In support of the conclusion of the Attorney-General, he cites the
case of Terminal Taxicab Co. v. Kutz (241 U. S., 252). In that case the
Terminal Taxicab Co. furnished automobiles from its central garage
on special orders and did not hold itself out to accommodate any
and all persons. The plaintiff reserved to itself the right to refuse
service. The Supreme Court of the United States, speaking through
Mr. Justice Holmes, said: "The bargains made by the plaintiff are
individual, and however much they may tend towards uniformity in
price, probably have not the mechanical fixity of charges that attend
the use of taxicabs from the stations to the hotels. The court is of
the opinion that that part of the business is not to be regarded as a
public utility. It is true that all business, and, for the matter of that,
every life in all its details, has a public aspect, some bearing upon
the welfare of the country in which it is passed." The court held that
by virtue of the fact that said company did not hold itself out to
serve any and all persons, it was not a public utility and was not
subject to the jurisdiction of the public utility commission.
Upon the facts adduced during the trial of the cause, and for the
foregoing reasons, the Attorney-General recommends that the
sentence of the lower court be revoked and that the appellant be
absolved from all liability under the complaint.
Section 14 of Act No. 2307, as amended by section 9 of Act No.
2694, provides that: "The Public Utility Commission or
Commissioners shall have general supervision and regulation of,
jurisdiction and control over, all public utilities. . . The term ’public
utility’ is hereby defined to include every individual, copartnership,
association, corporation or joint stock company, etc., etc., that now
or hereafter may own, operate, manage, or control any common
carrier, railroad, street railway, etc., etc., engaged in the
transportation of passengers, cargo, etc., etc., for public use."cralaw
virtua1aw library
Under the provisions of said section, two things are necessary: (a)
The individual, copartnership, etc., etc., must be a public utility; and
(b) the business in which such individual, copartnership, etc., etc., is
engaged must be for public use. So long as the individual or
copartnership, etc., etc., is engaged in a purely private enterprise,
without attempting to render service to all who may apply, he can
in no sense be considered a public utility, for public use.
"Public use" means the same as "use by the public." The essential
feature of the public use is that it is not confined to privileged
individuals, but is open to the indefinite public. It is this indefinite or
unrestricted quality that gives it its public character. In determining
whether a use is public, we must look not only to the character of
the business to be done, but also to the proposed mode of doing it.
If the use is merely optional with the owners, or the public benefit is
merely incidental, it is not a public use, authorizing the exercise of
the jurisdiction of the public utility commission. There must be, in
general, a right which the law compels the owner to give to the
general public. It is not enough that the general prosperity of the
public is promoted. Public use is not synonymous with public
interest. The true criterion by which to judge of the character of the
use is whether the public may enjoy it by right or only by
permission.

For all of the foregoing reasons, we agree with the Attorney-General

that the appellant was not operating a public utility, for public use,
and was not, therefore, subject to the jurisdiction of the Public
Utility Commission.

Therefore, the sentence of the lower court is hereby revoked, and it

is hereby ordered and decreed that the complaint be dismissed and
that the defendant be absolved from all liability under the same,
and that he be discharged from the custody of the law, without any
finding as to cost. So ordered.

Arellano, C.J., Torres, Araullo, Street, Malcolm and Avanceña, JJ.,

concur.
G.R. No. 203865
UNITRANS INTERNATIONAL FORWARDERS, INC., Petitioner
vs.
INSURANCE COMPANY OF NORTH AMERICA, UNKNOWN
CHARTERER OF THE VESSEL M/S "DORIS WULLF", AND TMS SHIP
AGENCIES, Respondents
DECISION
CAGUIOA, J.:
Before the Court is a Petition for Review on Certiorari1 (Petition)
under Rule 45 of the Rules of Court filed by petitioner Unitrans
International Forwarders, Inc. (Unitrans) against respondents
Insurance Company of North America (ICNA), the unknown
charterer of the vessel M/S "Doris Wullf" (unknown charterer of
M/S Doris Wullf), and TMS Ship Agencies (TSA).
The instant Petition assails the Decision2 dated October 27, 2011
(assailed Decision) and Resolution3 dated October 12, 2012 (assailed
Resolution) rendered by the Court of Appeals4 (CA) in CA-G.R. CV
No. 95367.
The Facts and Antecedent Proceedings
As culled from the records of the case, the essential facts and
antecedent proceedings of the instant case are as follows:
On July 28, 2003, ICNA filed an Amended Complaint5 for collection
of sum of money (Complaint) arising from marine insurance
coverage on two (2) musical instruments imported from Melbourne
Australia on April 22, 2002.
The Complaint, which was filed before the Regional Trial Court of
Makati City, Branch 139 (RTC), was instituted against South East Asia
Container Line (SEACOL) and the unknown owner/charterer of the
vessel M/S Buxcrown, both doing business in the Philippines
through its local ship agent Unitrans, and against the unknown
charterer of M/S Doris Wullf, doing business in the Philippines
through its local ship agent TSA, for the collection of the principal
amount of Twenty-Two Thousand, Six Hundred Fifty-Seven Dollars
and Eighty Three Cents (US$22,657.83) with interests thereon and
attorney's fees. The case was docketed as Civil Case No. 03-505.
ICNA alleged in its Complaint that:
1. On or about 22 April 2002, in Melbourne, Australia, SEACOL [, a
foreign company,] solicited and received shipment of pieces of STC
musical instruments from the shipper Dominant Musical Instrument
for transportation to and delivery at the port of Manila, complete
and in good condition, as evidenced by Bill of Lading No. 502645.
SEACOL then loaded the insured shipment on board M/S Buxcrown
for transportation from Melbourne Australia to Singapore. In
Singapore, the shipment was transferred from M/S Buxcrown to
M/S Doris Wullf for final transportation to the port of Manila.
2. The aforesaid shipment was insured with ICNA against all risk
under its Policy No. MOPA-06310 in favor of the consignee, San
Miguel Foundation for the Performing Arts (San Miguel).
3. On 12 May 2002, M/S Doris Wullf arrived and docked at the
Manila International Container Port, North Harbor, Manila. The
container van was discharged from the vessel [, was received by
Unitrans,] and upon stripping the contents thereof, it was found
that two of the cartons containing the musical instruments were in
bad order condition, per Turn Over Survey Report6 dated 14 May
2002. Unitrans then delivered the subject shipment to the
consignee. After further inspection, it was found out that two units
of musical instruments were damaged and could no longer be used
for their intended purpose, hence were declared a total loss;
4. Obviously, the damages sustained by the insured cargo were
caused by the fault and negligence of the [therein] defendants;
5. Formal claims were filed against [the therein] defendants but
they refused and failed to pay the same without valid and legal
grounds;
6. As cargo-insurer of the subject shipment and by virtue of the
insurance claim filed by the consignee, ICNA paid the sum of
$22,657.83.
7. By reason of the said payment, ICNA was subrogated to
consignee's rights of recovery against [the] defendants [therein];
8. Due to the unjustified refusal of the defendants [therein] to pay
its claims, ICNA was constrained to engage the services of counsel.7
8
In its Answer with Counterclaim dated July 8, 2004, Unitrans denied
being a ship agent of SEACOL and the vessel M/S Buxcrown's
unknown owner or charter. According to Unitrans, BTI Logistics PTY
LTD. (BTI Logistics), a foreign freight forwarder, engaged its services
as delivery or receiving agent in connection to the subject shipment.
As such agent, Unitrans' obligations were limited to receiving and
handling the bill of lading sent to it by BTI Logistics, prepare an
inward cargo manifest, notify the party indicated of the arrival of
the subject shipment, and release the bill of lading upon order of
the consignee or its representative so that the subject shipment
could be withdrawn from the pier/customs. It further alleged that
the consignee, San Miguel, also engaged its services as customs
broker for the subject shipment. As such, Unitrans' obligation was
limited to paying on behalf of San Miguel the necessary duties and
kindred fees, file with the Bureau of Customs (BOC) the Import
Entry Internal Revenue Declaration together with other pertinent
documents, as well as to pick up the shipment and then transport
and deliver the said shipment to the consignee's premises in good
condition.
On its part, TSA and the unknown charterer of M/S Doris Wullf
alleged in their Amended Answer with Compulsory
Counterclaim9 dated July 11, 2004 that while TSA is indeed the
commercial agent of M/S Doris Wullf, both parties are not parties
whatsoever to the bill of lading and have no connection in any way
with SEACOL, the unknown owner and/or charterer of the vessel
M/S Buxcrown and Unitrans. It was further alleged that the subject
shipment was discharged from the vessel M/S Doris Wullf complete
and in the same condition as when it was loaded therein, which is a
fact stated in the Turn-Over Survey Report.
The Ruling of the RTC
In its Decision10 dated March 29, 2010, the RTC granted the
Complaint and held Unitrans liable to ICNA for the sum of
US$22,657.83 or its equivalent in Philippine Peso, i.e., One Million,
Forty-Two Thousand, Two Hundred Sixty Pesos and Eighteen
Centavos (₱1,042,260.18) with interest. The dispositive portion of
the RTC's Decision reads:
WHEREFORE, in view of the foregoing considerations, the Court
hereby GRANTS in favor of the plaintiff against defendant Unitrans,
hence Unitrans is hereby ordered to pay plaintiff the sum of
P1,042,260.18 (US$22,657.83XP46.00), with interest at six percent
(6%) per annum from date hereof until finality, and twelve percent
(12%) per annum from finality until fully paid plus cost of suit.
The complaint against TMS is hereby DISMISSED for insufficiency of
evidence including the counterclaim of TMS.
SO ORDERED.11
The RTC found that the witness of Unitrans itself admitted in open
court that "Unitrans is a non-vessel operating common carrier
(NVOCC). Moreover, this witness admitted that Unitrans is the
delivery and collecting agent of BTI, who is duty bound to [deliver]
the subject shipment in good order and condition to San Miguel.
Thus, Unitrans is a common carrier. Under Article 1742 of the New
Civil Code, it states: 'Even if the loss, destruction, or deterioration of
the goods should be caused by the character of the goods, or [the]
faulty nature of the packing or of the containers, the common
carrier must exercise due diligence to forestall or lessen the loss.' It
appears that Unitrans, as common carrier, did not observe this
requirement of the law."12
Feeling aggrieved, Unitrans appealed the RTC's Decision before the
CA.13
The Ruling of the CA
In its assailed Decision, the CA denied Unitrans' appeal for lack of
merit. The dispositive portion of the assailed Decision reads:
WHEREFORE, the appeal is DENIED and the Decision appealed from
is AFFIRMED.
IT IS SO ORDERED.14
In sum, the CA denied Unitrans' argument that the failure of the
Court to issue summons and acquire jurisdiction with respect to
SEACOL and the unknown charterer/owner of M/S Buxcrown, which
are based abroad, is tantamount to a failure to include
indispensable parties because Unitrans failed to show that the
aforesaid entities are indispensable parties. As observed by the CA,
"Unitrans merely concluded that the said parties were indispensable
because they were repeatedly impleaded by ICNA as defendants in
its original complaint x x x."15
Further, "[t]he contention of Unitrans, that the trial court x x x had
no factual and legal basis in holding it liable as a common carrier
and agent of BTI Logistics is sorely bereft of merit."16
Unitrans filed its Motion for Clarification and Reconsideration17 of
the assailed Decision on November 17, 2011, which was denied by
the CA in its assailed Resolution.
Hence, the instant Petition.
TSA and the unknown charterer of M/S Doris Wullf filed their
Comment (To Petitioner's Petition for Review on Certiorari)18 on
April 23, 2013. ICNA filed its Comment19 on April 30, 2013. Unitrans
filed its Consolidated Reply Brief20 on February 12, 2014.
On October 7, 2016, TSA and the unknown charterer of M/S Doris
Wullf filed their Memorandum.21 ICNA filed its Memorandum22 on
October 18, 2016. Unitrans filed its Memorandum23 on October 27,
2016.
Issue
The "central question to be resolved by the Court is whether the CA
was correct in rendering the assailed Decision, which affirmed the
RTC's Decision holding Unitrans liable to ICNA.
The Court's Ruling
The instant Petition is centered on how "the RTC Decision only
singled out herein petitioner [Unitrans] x x x [and] is completely
silent on how the rest of the defendants came to be absolved from
any liability and/or exonerated from being held solidarity liable with
herein petitioner, notwithstanding a prayer therefor in the
Complaint."24
In the main, Unitrans posits the view that the RTC's finding of
liability on the part of Unitrans, as affirmed by the CA, supposedly
amounts to a misapprehension of the evidence and the facts.25
Unitrans even goes further by arguing that the RTC Decision is non-
compliant with Section 14, Article VIII of the 1987 Constitution,
which states that "[n]o decision shall be rendered by any court
without expressing therein clearly and distinctively the facts and the
law on which it is based."26 Unitrans opines that the RTC's Decision
transgressed the aforementioned constitutional provision because it
was supposedly "totally left in the dark on how and why its co-
defendants, except for [TSA], had been absolved."27
The instant Petition is bereft of merit.
First and foremost, Unitrans' issue on how the RTC and CA allegedly
misapprehended the facts of the instant case and failed to fully
appreciate evidence on record is undoubtedly a question of fact,
asking the Court to recalibrate, reassess, and reexamine evidentiary
matters.
A question of facts exists when the doubt or difference arises as to
the truth or falsehood of facts or when the query invites calibration
of the whole evidence considering mainly the credibility of the
witnesses, the existence and relevancy of specific surrounding
circumstances as well as their relation to each other and to the
whole, and the probability of the situation.28 That is precisely what
Unitrans is asking the Court to do - to reassess, reexamine, and
recalibrate the evidence on record.
A catena of cases has consistently held that questions of fact cannot
be raised in an appeal via certiorari before the Court and are not
proper for its consideration.29 The Court is not a trier of facts. It is
not the Court's function to examine and weigh all over again the
evidence presented in the proceedings below.30
Upon careful review of the records of the instant case, the Court
finds no cogent reason to reverse the RTC's and CA's factual findings
and their appreciation of the evidence on record. The Court finds
that the RTC's and CA's factual and legal conclusion that Unitrans is
liable to ICNA with respect to the damaged musical instruments is
amply supported by the evidence on record.
As found by the RTC in its Decision, and as affirmed by the CA in its
assailed Decision, Unitrans' own witness, Mr. Gerardo Estanislao Del
Rosario (Del Rosario) himself testified in open court that Unitrans,
as a freight forwarding entity and an accredited non-vessel
operating common carrier, was the one engaged by BTI Logistics as
its delivery agent in Manila. Del Rosario attested that BTI Logistics
was the forwarding agent in Australia who received the cargo
shipment from the consignor" for shipment to Manila. Del Rosario
further testified that Unitrans acted as the delivery/forwarding
agent of BTI Logistics with respect to the subject shipment. Del
Rosario unequivocally testified that under its agreement with BTI
Logistics, Unitrans engaged itself "to handle the cargo and to make
sure that it was delivered to the consignee from the port of Manila
to the consignee."31 As noted by the CA, "Del Rosario also admitted
that in so far as the subject shipment is concerned, Unitrans acted
as a local agent of BTI Logistics, which was duty bound to deliver the
same to the right party."32
Moreover, to reiterate, in its Answer with Counterclaim, Unitrans
had already expressly admitted that San Miguel also engaged its
services as customs broker for the subject shipment; one of its
obligations was to pick up the shipment and then transport and Hence, jurisprudence holds that a common carrier is presumed to
deliver the same to the consignee's premises in good condition. have been negligent if it fails to prove that it exercised extraordinary
vigilance over the goods it transported. When the goods shipped
Having been placed with the obligation to deliver the subject
are either lost or arrived in damaged condition, a presumption
shipment from the port of Manila to San Miguel's premises in good
arises against the carrier of its failure to observe that diligence, and
condition, during the pre-trial conference conducted on June 20,
there need not be an express finding of negligence to hold it
2007, it was admitted by Unitrans that "[t]he subject shipment was
liable. To overcome the presumption of negligence, the common
delivered by [petitioner] Unitrans."33 Yet, it is not disputed by any
carrier must establish by adequate proof that it exercised
party that the subject shipment, i.e., musical instruments, were
extraordinary diligence over the goods. It must do more than
severely damaged beyond use and did not arrive in good condition
merely show that some other party could be responsible for the
at the premises of the consignee, San Miguel. It is indubitably clear
damage.34
that Unitrans failed to fulfill its obligation to deliver the subject
shipment in good condition. In the instant case, considering that it is undisputed that the subject
goods were severely damaged, the presumption of negligence on
Emphasis must be placed on the fact that Unitrans itself admitted,
the part of the common carrier, i.e., Unitrans, arose. Hence, it had
through its own witness and general manager, Del Rosario, that in
to discharge the burden, by way of adequate proof, that it exercised
handling the subject shipment and making sure that it was delivered
extraordinary diligence over the goods; it is not enough to show
to the consignee's premises in good condition as the
that some other party might have been responsible for the
delivery/forwarding agent, Unitrans was acting as a freight
damage. Unitrans failed to discharge this burden. Hence, it cannot
forwarding entity and an accredited non-vessel operating common
escape liability.
carrier.1âшphi1
With respect to Unitrans' argument that it was unfair for it to be
Article 1735 of the Civil Code states that if the goods are lost,
subjected to sole liability, as aptly explained by the RTC in its
destroyed or deteriorated, common carriers are presumed to have
Decision, Unitrans itself, through its own witness, Del Rosario,
been at fault or to have acted negligently, unless they prove that
"declared [that TSA] never had an occasion to handle this subject
they observed extraordinary diligence as required in Article 1733.
cargo."35 Hence, the RTC noted that "[t]he witness for [petitioner]
In turn, Article 1733 states that common carriers, from the nature of Unitrans has practically exempted [respondent TSA] when he stated
their business and for reasons of public policy, are bound to observe that the subject cargo [was] never in possession of [TSA]. Thus,
extraordinary diligence in the vigilance over the goods and for the [respondent TSA] could not be made liable for [this] obvious
safety of the passengers transported by them, according to all the reason."36
circumstances of each case.
Hence, for the reasons explained above, the Court is not convinced
of Unitrans' argument that the RTC's Decision violated Section 14,
Article VIII of the 1987 Constitution. To the contrary, the Court finds
that the RTC's Decision clearly and distinctively narrated the facts
and the applicable law; the RTC's Decision clearly explained the
reason why Unitrans is the entity imposed with the liability.

WHEREFORE, premised considered, the instant Petition is

hereby DENIED. The Decision dated October 27, 2011 and
Resolution dated October 12, 2012 rendered by the Court of
Appeals in CA-G.R. CV No. 95367 are AFFIRMED with
MODIFICATION. The total of the amount adjudged against
petitioner and the 6% interest thereon computed by the RTC from
its Decision until finality shall earn interest at 6% per annum from
finality of this Decision until fully paid plus cost of suit.

SO ORDERED.
G.R. No. 166250 July 26, 2010 On the same day that the bill of lading was issued, the shipment was
loaded in a sealed 1x40 container van, with no. APLU-982012,
UNSWORTH TRANSPORT INTERNATIONAL (PHILS.),
boarded on APL’s vessel M/V "Pres. Jackson," Voyage 42, and
INC., Petitioner,
transshipped to APL’s M/V "Pres. Taft"8 for delivery to petitioner in
vs.
favor of the consignee United Laboratories, Inc. (Unilab).
COURT OF APPEALS and PIONEER INSURANCE AND SURETY
CORPORATION, Respondents. On September 30, 1992, the shipment arrived at the port of Manila.
On October 6, 1992, petitioner received the said shipment in its
DECISION
warehouse after it stamped the Permit to Deliver Imported
NACHURA, J.: Goods9 procured by the Champs Customs Brokerage.10 Three days
thereafter, or on October 9, 1992, Oceanica Cargo Marine Surveyors
For review is the Court of Appeals (CA) Decision1 dated April 29, Corporation (OCMSC) conducted a stripping survey of the shipment
2004 and Resolution2 dated November 26, 2004. The assailed located in petitioner’s warehouse. The survey results stated:
Decision affirmed the Regional Trial Court (RTC) decision3 dated
February 22, 2001; while the assailed Resolution denied petitioner 2-pallets STC 40 bags Dried Yeast, both in good order condition and
Unsworth Transport International (Philippines), Inc., American properly sealed
President Lines, Ltd. (APL), and Unsworth Transport International,
19- steel drums STC Vitamin B Complex Extract, all in good order
Inc.’s (UTI’s) motion for reconsideration.
condition and properly sealed
The facts of the case are:
1-steel drum STC Vitamin B Complex Extra[ct] with cut/hole on side,
On August 31, 1992, the shipper Sylvex Purchasing Corporation with approx. spilling of 1%11
delivered to UTI a shipment of 27 drums of various raw materials for
On October 15, 1992, the arrastre Jardine Davies Transport Services,
pharmaceutical manufacturing, consisting of: "1) 3 drums (of)
Inc. (Jardine) issued Gate Pass No. 761412 which stated that "22
extracts, flavoring liquid, flammable liquid x x x banana flavoring; 2)
drums13 Raw Materials for Pharmaceutical Mfg." were loaded on a
2 drums (of) flammable liquids x x x turpentine oil; 2 pallets. STC: 40
truck with Plate No. PCK-434 facilitated by Champs for delivery to
bags dried yeast; and 3) 20 drums (of) Vitabs: Vitamin B Complex
Unilab’s warehouse. The materials were noted to be complete and
Extract."4 UTI issued Bill of Lading No. C320/C15991-2,5 covering the
in good order in the gate pass.14 On the same day, the shipment
aforesaid shipment. The subject shipment was insured with private
arrived in Unilab’s warehouse and was immediately surveyed by an
respondent Pioneer Insurance and Surety Corporation in favor of
independent surveyor, J.G. Bernas Adjusters & Surveyors, Inc. (J.G.
Unilab against all risks in the amount of ₱1,779,664.77 under and by
Bernas). The Report stated:
virtue of Marine Risk Note Number MC RM UL 0627 926 and Open
Cargo Policy No. HO-022-RIU.7 1-p/bag torn on side contents partly spilled
1-s/drum #7 punctured and retaped on bottom side content lacking
5-drums shortship/short delivery15
On October 23 and 28, 1992, the same independent surveyor
conducted final inspection surveys which yielded the same results.
Consequently, Unilab’s quality control representative rejected one
paper bag containing dried yeast and one steel drum containing
Vitamin B Complex as unfit for the intended purpose.16
On November 7, 1992, Unilab filed a formal claim17 for the damage
against private respondent and UTI. On November 20, 1992, UTI
denied liability on the basis of the gate pass issued by Jardine that
the goods were in complete and good condition; while private
respondent paid the claimed amount on March 23, 1993. By virtue
of the Loss and Subrogation Receipt18 issued by Unilab in favor of
private respondent, the latter filed a complaint for Damages against
APL, UTI and petitioner with the RTC of Makati.19 The case was
docketed as Civil Case No. 93-3473 and was raffled to Branch 134.
After the termination of the pre-trial conference, trial on the merits
ensued. On February 22, 2001, the RTC decided in favor of private
respondent and against APL, UTI and petitioner, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintif
PIONEER INSURANCE & SURETY CORPORATION and against the
defendants AMERICAN PRESIDENT LINES and UNSWORTH
TRANSPORT INTERNATIONAL (PHILS.), INC. (now known as JUGRO
TRANSPORT INT’L., PHILS.), ordering the latter to pay, jointly and
severally, the former the following amounts:
1. The sum of SEVENTY SIX THOUSAND TWO HUNDRED THIRTY ONE
and 27/100 (Php76,231.27) with interest at the legal rate of 6% per
annum to be computed starting from September 30, 1993 until fully
paid, for and as actual damages;
2. The amount equivalent to 25% of the total sum as attorney’s fees;
3. Cost of this litigation.
SO ORDERED.20
On appeal, the CA affirmed the RTC decision on April 29, 2004. The
CA rejected UTI’s defense that it was merely a forwarder, declaring
instead that it was a common carrier. The appellate court added
that by issuing the Bill of Lading, UTI acknowledged receipt of the
goods and agreed to transport and deliver them at a specific place
to a person named or his order. The court further concluded that
upon the delivery of the subject shipment to petitioner’s
warehouse, its liability became similar to that of a depositary. As
such, it ought to have exercised ordinary diligence in the care of the
goods. And as found by the RTC, the CA agreed that petitioner failed
to exercise the required diligence. The CA also rejected petitioner’s
claim that its liability should be limited to $500 per package
pursuant to the Carriage of Goods by Sea Act (COGSA) considering
that the value of the shipment was declared pursuant to the letter
of credit and the pro forma invoice. As to APL, the court considered
it as a common carrier notwithstanding the non-issuance of a bill of
lading inasmuch as a bill of lading is not indispensable for the
execution of a contract of carriage.21
Unsatisfied, petitioner comes to us in this petition for review on
certiorari, raising the following issues:
1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION IN UPHOLDING THE DECISION OF THE
REGIONAL TRIAL COURT DATED 22 FEBRUARY 2001, AWARDING
THE SUM OF SEVENTY SIX THOUSAND TWO HUNDRED THIRTY ONE
AND 27/100 PESOS (PHP76,231.27) WITH LEGAL INTEREST AT 6%
PER ANNUM AS ACTUAL DAMAGES AND 25% AS ATTORNEY’S FEES.
2. WHETHER OR NOT PETITIONER UTI IS A COMMON CARRIER.
3. WHETHER OR NOT PETITIONER UTI EXERCISED THE REQUIRED
ORDINARY DILIGENCE.
4. WHETHER OR NOT THE PRIVATE RESPONDENT SUFFICIENTLY
ESTABLISHED THE ALLEGED DAMAGE TO ITS CARGO.22
Petitioner admits that it is a forwarder but disagrees with the CA’s
conclusion that it is a common carrier. It also questions the
appellate court’s findings that it failed to establish that it exercised
extraordinary or ordinary diligence in the vigilance over the subject
shipment. As to the damages allegedly suffered by private
respondent, petitioner counters that they were not sufficiently
proven. Lastly, it insists that its liability, in any event, should be
limited to $500 pursuant to the package limitation rule. Indeed,
petitioner wants us to review the factual findings of the RTC and the
CA and to evaluate anew the evidence presented by the parties.
The petition is partly meritorious.
Well established is the rule that factual questions may not be raised
in a petition for review on certiorari as clearly stated in Section 1,
Rule 45 of the Rules of Court, viz.:
Section 1. Filing of petition with Supreme Court. – A party desiring
to appeal by certiorari from a judgment or final order or resolution
of the Court of Appeals, the Sandiganbayan, the Regional Trial Court
or other courts whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be distinctly set
forth.
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, (1) to assemble and consolidate, or to provide
for 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.231avvphi1
A freight forwarder’s 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.24
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.25 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. As a receipt, it recites the
date and place of shipment, describes the goods as to quantity,
weight, dimensions, identification marks, condition, quality, and
value. As a contract, it names the contracting parties, which include
the consignee; fixes the route, destination, and freight rate or
charges; and stipulates the rights and obligations assumed by the
parties.26
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.28
Though it is not our function to evaluate anew the evidence
presented, we refer to the records of the case to show that, as
correctly found by the RTC and the CA, petitioner failed to rebut the
prima facie presumption of negligence in the carriage of the subject
shipment.
First, as stated in the bill of lading, the subject shipment was
received by UTI in apparent good order and condition in New York,
United States of America. Second, the OCMSC Survey Report stated
that one steel drum STC Vitamin B Complex Extract was discovered
to be with a cut/hole on the side, with approximate spilling of 1%.
Third, though Gate Pass No. 7614, issued by Jardine, noted that the
subject shipment was in good order and condition, it was
specifically stated that there were 22 (should be 27 drums per Bill of
Lading No. C320/C15991-2) drums of raw materials for
pharmaceutical manufacturing. Last, J.G. Bernas’ Survey Report
stated that "1-s/drum was punctured and retaped on the bottom
side and the content was lacking, and there was a short delivery of
5-drums."
All these conclusively prove the fact of shipment in good order and
condition, and the consequent damage to one steel drum of Vitamin
B Complex Extract while in the possession of petitioner which failed
to explain the reason for the damage. Further, petitioner failed to
prove that it observed the extraordinary diligence and precaution
which the law requires a common carrier to exercise and to follow
in order to avoid damage to or destruction of the goods entrusted
to it for safe carriage and delivery.29
However, we affirm the applicability of the Package Limitation Rule
under the COGSA, contrary to the RTC and the CA’s findings.
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.
Thus, the COGSA supplements the Civil Code by establishing a
provision limiting the carrier’s liability in the absence of a shipper’s
declaration of a higher value in the bill of lading.30 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 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 ANTONIO EDUARDO B. NACHURA
goods have been declared by the shipper before shipment and Associate Justice
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. Contrary to the CA’s conclusion, the
insertion of the words "L/C No. LC No. 1-187-008394/ NY 69867
covering shipment of raw materials for pharmaceutical Mfg. x x x"
cannot be the basis of petitioner’s liability.31 Furthermore, the
insertion of an invoice number does not in itself sufficiently and
convincingly show that petitioner had knowledge of the value of the
cargo.32

In light of the foregoing, petitioner’s 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. In addition to said amount, as aptly held by the trial court,
an interest rate of 6% per annum should also be imposed, plus 25%
of the total sum as attorney’s fees.

WHEREFORE, premises considered, the petition is PARTIALLY

GRANTED. The Court of Appeals Decision dated April 29, 2004 and
Resolution dated November 26, 2004 are AFFIRMED with
MODIFICATION by reducing the principal amount due private
respondent Pioneer Insurance and Surety Corporation from
₱76,231.27 to $500, with interest of 6% per annum from date of
demand, and 25% of the amount due as attorney’s fees.

The other aspects of the assailed Decision and Resolution STAND.

SO ORDERED.