TRANSPORTATION LAWS

CASE COMPENDIUM

A. COMMON CARRIER

I. Definition of Common Carrier

FIRST PHILIPPINE INDUSTRIAL CORP. VS. COURT OF APPEALS

G.R. No. 125948. December 29, 1998

DOCTRINE:
Common carriers are not confined to transport of good using vehicles of crafts. The transport of oil
through a series of pipelines can be considered as the work of a common carrier.

A common carrier is one who holds himself out to the public as engaged in the business of
transporting persons or property from place to place, for compensation, offering his services to the
public generally.

FACTS:
Petitioner FPIC is a grantee of a pipeline concession under RA 387 (Petroleum Act) to contract,
install, and operate oil pipelines.

Sometime in January 1995, the FPIC applied for a Mayor’s Permit from the Office of the City
Mayor of Batangas. Before said permit was to be issued, the City Treasurer required the payment of
local tax based on gross receipts from the fiscal year 1993 pursuant to the Local Government Code.
The petitioner paid the first installment under protest contending that it is engaged in the business of
transporting petroleum products from Batangas refineries, via pipeline, to Sucat and JFT Pandacan
Terminals. FPIC further claimed exemption from paying tax on gross receipts under Sec. 133 of the
LGC; It also alleged that transportation contractors are not included in the enumeration of
contractors under Sec. 131 of the LGC.

On the other hand, the City Treasurer denied the protest on the ground that FPIC cannot be
considered to be engaged in the transportation business. It was asserted by the Respondent City
Treasurer that pipelines are not included in the term “common carrier” which it contended solely
refers to trucks, trains, ships, and the like.

Thus, the City Treasurer held that FPIC is not exempted.

Petitioner FPIC filed a complaint for tax refund with the RTC Batangas, however, the same was
denied. The CA affirmed the same. While the SC initially denied the petition, it was reinstated after
the granting of Petitioner’s MR.

ISSUE:
WON the petitioner is a common carrier

RULING:
The SC ruled in the AFFIRMATIVE. A "common carrier" may be defined, broadly, as one who
holds himself out to the public as engaged in the business of transporting persons or property from
place to place, for compensation, offering his services to the public generally.

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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.”

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 FPIC 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 FPIC has a limited clientele does not exclude it from the
definition of a common carrier.

Also, respondent's argument that the term "common carrier" as used in Section 133 (j) of the LGC
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 FPIC, 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 Petroleum Act of the Philippines (Republic Act 387), FPIC is considered a "common
carrier." (Article 86)

Republic Act 387 also regards petroleum operation as a public utility. (Article 7)

The Bureau of Internal Revenue likewise considers the FPIC a "common carrier." (BIR Ruling No.
069-83)
PEDRO DE GUZMAN VS. COURT OF APPEALS
G.R. No. L-47822. December 22, 1988

DOCTRINE:
The 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. A certificate of
public convenience is not a requisite for the incurring of liability under the Civil Code provisions
governing common carriers (De Guzman v. Court of Appeals).

FACTS:

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Cendena was a junk dealer and was engaged in buying used bottles and scrap materials in
Pangasinan and brought these to Manila for resale. He used two 6-wheeler trucks.

On the return trip to Pangasinan, he would load his vehicles with cargo which various merchants
wanted delivered to Pangasinan. For that service, he charged freight lower than regular rates.
General Milk Co. contacted with him for the hauling of 750 cartons of milk. On the way to
Pangasinan, one of the trucks was hijacked by armed men who took with them the truck and its
cargo and kidnapped the driver and his helper. Only 150 cartons of milk were delivered. The Milk
Co. sued to claim the value of the lost merchandise based on an alleged contract of carriage.
Cendena denied that he was a common carrier and contended that he could not be liable for the loss
it was due to force majeure. The trial court ruled that he was a common carrier. The CA reversed.

ISSUE:
WON Cedena is a common carrier

RULING:
The SC ruled in the AFFIRMATIVE. Cendena is properly characterized as a common carrier even
though he merely backhauled goods for other merchants, and even if it was done on a periodic basis
rather than on a regular basis, and even if his principal occupation was not the carriage of goods.
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.

Article 1732 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. It also
avoids making a distinction between a person or enterprise offering transportation services on a
regular or scheduled basis and one offering service on an occasional, episodic or unscheduled basis.
Neither does it make a distinction between a carrier offering its services to the general public and
one who offers services or solicits business only from a narrow segment of population.

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 CEBU SALVAGE CORPORATION VS. PHILIPPINE HOME ASSURANCE
CORPORATION
G.R. No. 150403. January 25, 2007

DOCTRINE:
A “voyage charter,” also known as a contract of affreightment wherein the ship was leased for a
single voyage for the conveyance of goods, in consideration of the payment of freight. Under a
voyage charter, the shipowner 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
freight. An owner who retains possession of the ship remains liable as carrier and must answer for
loss or non-delivery of the goods received for transportation.

FACTS:
Petitioner Cebu Salvage Corp. (as carrier) and Maria Cristina Chemicals Industries, Inc. [MCCII]
(as charterer) entered into a voyage charter where petitioner was to load tons of silica quartz on
board M/T Espiritu Santo for transport and discharge from Negros Occidental to Misamis Oriental,
to consignee Ferrochrome Phils., Inc.-

However, the shipment never reached its destination because the vessel sank resulting in the total
loss of the cargo. MCII filed a claim for the loss of the shipment with its insurer, respondent
Philippine Home Assurance Corp. Respondent paid the claim and was subrogated to the rights of
MCCII, after which it filed a case against petitioner for reimbursement of the amount it paid
MCCII. The trial court and the CA ordered petitioner to pay respondent.

ISSUE:
WON a carrier may be held liable for the loss of cargo resulting from the sinking of a ship it does
not own

RULING:
The SC ruled in the AFFIRMATIVE.

Petitioner argues the agreement was just a contract of hire where MCCII hired the vessel from its
owner, ALS Timber. Since it wasn’t the owner of the vessel, it didn’t have control and
supervision over it and its crew. Thus,it shouldn’t be held liable. Petitioner was a common
carrier. At the time of the loss of the cargo, it was engaged in the business of carrying and
transporting goods by water, for compensation, and offered its services to the public. Petitioner was
the one which contracted with MCCII for the transport of the cargo. It had control over what vessel
it would use. All throughout its dealings with MCCII, it represented itself as a common carrier. The
fact that it did not own the vessel it decided to use to consummate the contract of carriage did
not negate its character and duties as a common carrier.

It was shown that a contract of carriage of goods existed; the cargo was loaded on board the vessel;
loss or non-delivery of the cargo was proven; and petitioner failed to prove that it exercised
extraordinary diligence to prevent such loss or that it was due to some casualty or force majeure.
The voyage charter here being a contract of affreightment, the carrier was answerable for the loss of
the goods received for transportation.

II. Examples of Common Carrier

A.F. SANCHEZ BROKERAGE INC. VS. COURT OF APPEALS

G.R. No. 147079. December 21, 2004

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DOCTRINE:
As defined under 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 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.

FACTS:
Respondent FGU Insurance Corporation (FGU) brought an action for reimbursement against
petitioner A.F. Sanchez Brokerage Inc. (Sanchez Brokerage) to collect the amount paid by the
former to Wyeth-Suaco Laboratories Inc. (Wyeth-Suaco) as insurance payment for the goods
delivered in bad condition.

A.F. Brokerage refused to admit liability for the damaged goods which it delivered from Philippines
Skylanders, Inc. (PSI) to Wyeth-Suaco as it maintained that the damage was due to improper and
insufficient export packaging, discovered when the sealed containers were opened outside the PSI
warehouse.

The Regional Trial Court of Makati dismissed the said complaint; however, the decision was
subsequently reversed and set aside by the Court of Appeals, finding that Sanchez Brokerage is
liable for the carriage of cargo as a ―common carrier by definition of the New Civil Code.

ISSUE:
WON the Sanchez Brokerage is a common carrier

RULING:
The SC ruled in the AFFIRMATIVE. As defined under 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 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 Sanchez Brokerage 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.

In this light, Sanchez Brokerage as a common carrier is mandated to observe, under Article 1733 of
the Civil Code, extraordinary diligence in the vigilance over the goods it transports according to all
the circumstances of each case. In the event that the goods are lost, destroyed or deteriorated, it is
presumed to have been at fault or to have acted negligently, unless it proves that it observed
extraordinary diligence.
It was established that Sanchez Brokerage received the cargoes from the PSI warehouse in good
order and condition and that upon delivery by petitioner some of the cargoes were found to be in
bad order as noted in the Delivery Receipt and as indicated in the Survey and Destruction Report.

While paragraph no. 4 of Article 1734 of the Civil Code exempts a common carrier from liability if
the loss or damage is due to the character of the goods or defects in the packaging or in the
containers, the rule is that if the improper packaging is known to the carrier or his employees or is
apparent upon ordinary observation, but he nevertheless accepts the same without protest or
exception notwithstanding such condition, he is not relieved of liability for the resulting damage. If

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the claim of Sanchez Brokerage that some of the cartons were already damaged upon delivery to it
were true, then it should naturally have received the cargo under protest or with reservation duly
noted on the receipt issued by PSI but it made no such protest or reservation.

LOADMASTERS CUSTOMS SERVICES INC. VS. GLODEL BROKERAGE CORP.

G.R. No. 179446. January 10, 2011

DOCTRINE:
A customs broker is also regarded as a common carrier, the transportation of goods being an
integral part of its business.

One engaged in the business of transporting goods by land, through its trucking service, is a
common carrier, as distinguished from a private carrier wherein the carriage is generally
undertaken by special agreement and it does not hold itself out to carry goods for the general
public.

FACTS:
On August 28, 2001, R&B Insurance issued an insurance policy in favor of Columbia to insure the
shipment of 132 bundles of electric copper cathodes against All Risks. On the same day, the cargoes
were shipped on board the vessel Richard Rey from Isabela, Leyte, to North Harbor, Manila where
they arrived on the same day. Columbia engaged the services of Glodel for the release and
withdrawal of the cargoes from the pier and the subsequent delivery to its warehouses/plants.
Glodel, in turn, engaged the services of Loadmasters for the use of its delivery trucks to transport
the cargoes to Columbia’s warehouses/plants in Bulacan and Valenzuela City. The goods were
loaded on board the 12 trucks owned by Loadmasters, driven by its employed drivers and

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accompanied by its employed truck helpers. Of which, 6 were to be delivered to Balagtas, Bulacan,
while the other 6 were destined for Lawang Bato, Valenzuela City. The cargoes destined for
Lawang Bato were duly delivered in Columbia’s warehouses. Of the six trucks en route to Balagtas,
Bulacan, however, only 5 reached the destination as one of the trucks failed to deliver its cargo.
Later, the lost truck was recovered but without the copper cathodes.

Because of this incident, Columbia filed with R&B Insurance a claim for insurance indemnity of
which the latter paid after the requisite investigation and adjustment. R&B Insurance, thereafter,
filed a complaint for damages against both Loadmasters and Glodel before the Regional Trial Court
-Manila (RTC) where it sought reimbursement of the amount it had paid to Columbia for the loss of
the subject cargo. It claimed that it had been subrogated to the right of the consignee to recover
from the party/parties who may be held legally liable for the loss. On November 2003, the RTC
held Glodel liable for damages for the loss of the subject cargo and dismissing Loadmasters
counterclaim for damages and attorney’s fees against R&B Insurance. Both R&B Insurance and
Glodel appealed the RTC decision to the CA which later partly grants the appeal, holding
Loadmasters as liable to Glodel in the amount of the insurance indemnity the latter has been held
liable to R&B Insurance Corp. Hence, Loadmasters filed the present petition for review on
certiorari before this Court.

ISSUE:
WON Loadmasters and Glodel are common carriers to determine their liability for the loss of the
subject cargo

RULING:
The SC ruled in the AFFIRMATIVE. Under Article 1732 of the Civil Code, common carriers are
persons, corporations, firms, or associations engaged in the business of carrying or transporting
passenger or goods, or both by land, water or air for compensation, offering their services to the
public. In this case, Loadmasters is a common carrier because it is engaged in the business of
transporting goods by land, through its trucking service. Glodel is also considered a common carrier
as it is a corporation duly organized and existing under the laws of the Republic of the Philippines
and is engaged in the business of customs brokering, which is also a form of common carrier
service, the transportation of goods being an integral part of its business as held in Schmitz
Transport & Brokerage Corporation v. Transport Venture, Inc.

To avoid liability for a quasi-delict committed by its employee, an employer must overcome the
presumption by presenting convincing proof that he exercised the care and diligence of a good
father of a family in the selection and supervision of his employee. In this regard, Loadmasters
failed. Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to
ensure that Loadmasters would fully comply with the undertaking to safely transport the subject
cargo to the designated destination. It should have been more prudent in entrusting the goods to
Loadmasters by taking precautionary measures, such as providing escorts to accompany the trucks
in delivering the cargoes. Glodel should, therefore, be held liable with Loadmasters. Its defense of
force majeure is unavailing.

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Page 8 of 36
 UNSWORTH TRANSPORT INTERNATIONAL PHILS. VS. COURT OF APPEALS
G.R. No. 166250. July 26, 2010

DOCTRINE:
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.

A freight forwarder assumes the responsibility of a carrier, which actually executes the transport,
even though the forwarder does not carry the merchandise itself.

FACTS:
Shipper Sylvex Purchasing Corporation delivered to Unsworth Trans Int’l (UTI) a shipment of 27
drums of various raw materials for pharmaceutical manufacturing. A bill of lading was issued. The
shipment was loaded on American President Lines (APL) for delivery. M/V Pres Jackson then
transshipped(transferred) to M/V Pres Taft. Consignee is Unilab. UTI received the shipment (upon
arrival in the Port of Manila) and placed it in its warehouse. UTI stamped the Permit to Deliver
Imported Goods procured by Champs (customs broker). Three days after, Oceanica Cargo Marine
Surveyors Corp. (OCMSC) conducted a stripping survey of the shipment, the results showed that 1
steel drum which contained Vitamin B Complex had a hole on the side with approx. spilling of 1%.
Nonetheless, the arrastre Jardine Davies Transport Services (Jardine) issued Gate Pass which noted
that the shipment was complete and in good order. Upon arrival at Unilab’s warehouse, J.G. Bernas
Adjusters and Surveyors (J.G. Bernas) surveyed the shipment. The report stated that 1 bag had a
tearon the side, the contents partly spilled, 1 drum was punctured and retaped on the bottom side
whose content was lacking and that there were 5 drums lacking. The final inspection yielded the
same results. Afterwhich, Unilab’s quality control representative rejected one paper bag containing
dried yeast and one steeldrum of Vit. B Complex for being unfit for the intended purpose. Unilab
filed a formal claim for damages against Private Respondent Pioneer Insurance and Surety Corp.
(PISC) and UTI. UTI denied liability on the basis of the gate pass issued by Jardine that the goods
were in complete and in good condition. PISC paid the claimed amount by virtue of the Loss and
Subrogation Receipt, PISC filed against UTI a complaint for Damages. RTC ruled in favor of PISC
and against APL and CA affirmed the same.

ISSUE:
WON the petitioner is liable as a common carrier

RULING:
The SC ruled in the AFFIRMATIVE. 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. 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

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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. 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. 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.

SPS. PEREÑA VS. SPS. NICOLAS AND ZARATE

G.R. No. 157917. August 29, 2012

DOCTRINE:
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.

FACTS:
Perenas were engaged in the business of transporting students to Don Bosco. The Zarates engaged
Perenas services to transport their son, Aaron, to school.

While on the way to school, the van’s air-conditioned unit was turned on and the stereo playing
loudly. The driver took a detour because they were running late due to the traffic in SLEX. The

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detour was through a narrow path underneath the Magallanes Interchange used as short cut into
Makati. When the van was to traverse the PNR railroad crossing, the van was tailing a large
passenger bus so the driver’s view of the oncoming train was blocked. The train hit the van at the
rear end and the impact threw 9 students 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.

The Zarates filed for damages against Alfaro, Perenas, PNR, and the train driver. The cause of
action against Perena was for contract of carriage while for PNR, quasi delict. Perena posited the
defense of diligence of a good father in the selection and supervision of their driver

ISSUE:
WON a school service is considered a common carrier

RULING:
The SC ruled in the AFFIRMATIVE. The Supreme Court ruled in favor spouses Zarate, affirming
the decision of the Court of Appeals. In this case, the Supreme Court, once and for all lay the matter
to rest that the school service is a common carrier and not a private carrier, and as such, they are
required to observe the extraordinary diligence as provided under Article 1733 of the Civil Code.
According to the Supreme Court, 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. Otherwise stated, making the activity or
holding himself or itself out to the public as a ready to act for all who may desire his or its services
to transport goods or persons for a fee.

Applying the considerations mentioned above, there is no question that Perenas as the operators of a
school 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; c) transporting
students for a fee. Despite catering limited clientele, the Perenas operated as a common carrier
because they hold 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. On the second
issue, Article 1756 of the Civil code provides that, In case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as prescribed in articles 1733 and 1755. In this case,
Aaron Zarate died, and thus as provided under the abovementioned law, they are negligent.

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Page 12 of 36
 TORRES-MADRID BROKERAGE INC. VS. FEB MITSUI MARINE INSURANACE CO.
AND MANALASTAS
G.R. No. 194121. August 29, 2012

DOCTRINE:
As long as an entity holds itself to the public for the transport of goods as a business, it is
considered a common carrier regardless of whether it owns the vehicle used or has to actually hire
one.·

FACTS:
Sony Philippines engaged the services of TMBI to facilitate, process, withdraw and deliver the
shipment from the port to its warehouse in Biñan, Laguna.

TMBI — who did not own any delivery trucks — subcontracted the services of Benjamin
Manalastas‘ company, BMT Trucking Services (BMT), to transport the shipment from the port to
the Biñan warehouse. TMBI notified Sony who had no objections to the arrangement. On October
9, 2000, the four trucks left BMT’s garage for Laguna. However, only three trucks arrived at Sony’s
Biñan warehouse. The other truck, driven by Rufo Reynaldo Lapesura was found abandoned along
the Diversion Road in Filinvest, Alabang, Muntinlupa City. Both the driver and the shipment were
missing.

TMBI notified Sony of the loss. It also sent BMT a letter demanding payment for the lost shipment.
BMT refused to pay, insisting that the goods were “hijacked.” Sony filed an insurance claim with
Mitsui, the insurer of the goods. Mitsui paid Sony PHP7,293,386.23 corresponding to the value of
the lost goods.

After being subrogated to Sony’s rights, Mitsui sent TMBI a demand letter for payment of the lost
goods. TMBI refused to pay Mitsui’s claim. As a result, Mitsui filed a complaint against TMBI.
TMBI, in turn, impleaded Benjamin Manalastas, the proprietor of BMT, as a third-party defendant.
TMBI alleged that BMT’s driver, Lapesura, was responsible for the theft/hijacking of the lost cargo
and claimed BMT’s negligence as the proximate cause of the loss. TMBI prayed that in the event it
is held liable to Mitsui for the loss, it should be reimbursed by BMT. At the trial, it was revealed
that BMT and TMBI have been doing business with each other since the early 80’s. It also came out
that there had been a previous hijacking incident involving Sony’s cargo in 1997, but neither Sony
nor its insurer filed a complaint against BMT or TMBI.

RTC ruled that TMBI and Benjamin Manalastas are jointly and solidarily liable to pay Mitsui. It
held that TMBI and Manalastas were common carriers and had acted negligently. CA affirmed the
RTC decision.

TMBI’s Petition (Same with BMT’s, except the last two plus blamed TMBI for not providing
security measures): 1)That the hacking of the truck was a fortuitous event. Considering Lapesura
was never found, the Court should not discount the possibility that he was a victim rather than a
perpetrator; 2) TMBI denies being a common carrier because it does not own a single truck to
transport its shipment and it does not offer transport services to the public for compensation; 3) That
the service it offered was limited to the processing of paperwork attendant to the entry of Sony’s
goods. It denies that delivery of the shipment was a part of its obligation; 4) TMBI solely blames
BMT as it had full control and custody of the cargo when it was lost.

ISSUE:
WON TMBI is a common carrier

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RULING:
The SC ruled in the AFFIRMATIVE. A brokerage may be considered a common carrier if it also
undertakes to deliver the goods for its customers.

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

In A.F. Sanchez Brokerage, Inc. v. Court of Appeals, we held that a customs broker — whose
principal business is the preparation of the correct customs declaration and the proper shipping
documents — is still considered a common carrier if it also undertakes to deliver the goods for its
customers. The law does not distinguish between one whose principal business activity is the
carrying of goods and one who undertakes this task only as an ancillary activity.

Despite TMBI’s present denials, we find that the delivery of the goods is an integral, albeit
ancillary, part of its brokerage services. TMBI admitted that it was contracted to facilitate, process,
and clear the shipments from the customs authorities, withdraw them from the pier, then transport
and deliver them to Sony’s warehouse in Laguna.

That TMBI does not own trucks and has to subcontract the delivery of its clients’ goods, is
immaterial. As long as an entity holds itself to the public for the transport of goods as a business, it
is considered a common carrier regardless of whether it owns the vehicle used or has to actually
hire one.

Lastly, TMBI’s customs brokerage services — including the transport/delivery of the cargo — are
available to anyone willing to pay its fees. Given these circumstances, we find it undeniable that
TMBI is a common carrier.

Next, the theft or the robbery of the goods is not considered a fortuitous event or a force majeure.
Nevertheless, a common carrier may absolve itself of liability for a resulting loss: (1) if it proves
that it exercised extraordinary diligence in transporting and safekeeping the goods; or (2) if it
stipulated with the shipper/owner of the goods to limit its liability for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary diligence.

However, a stipulation diminishing or dispensing with the common carrier’s liability for acts
committed by thieves or robbers who do not act with grave or irresistible threat, violence, or force is
void for being contrary to public policy. De Guzman v. Court of Appeals interpreted Article 1745 to
mean that a robbery attended by “grave or irresistible threat, violence or force” is a fortuitous event
that absolves the common carrier from liability. Neither TMBI nor BMT succeeded in
substantiating this theory that the hijacking was attended by force or intimidation through evidence.

Despite the subcontract, TMBI remained responsible for the cargo. Under Article 1736, a common
carrier’s extraordinary responsibility over the shipper’s goods lasts from the time these goods are
unconditionally placed in the possession of, and received by, the carrier for transportation, until
they are delivered, actually or constructively, by the carrier to the consignee. That the cargo
disappeared during transit while under the custody of BMT — TMBI’s subcontractor — did not
diminish nor terminate TMBI’s responsibility over the cargo. Article 1735 of the Civil Code
presumes that it was at fault.

Page 14 of 36
Instead of showing that it had acted with extraordinary diligence, TMBI simply argued that it was
not a common carrier bound to observe extraordinary diligence. Its failure to successfully establish
this premise carries with it the presumption of fault or negligence, thus rendering it liable to
Sony/Mitsui for breach of contract.

Page 15 of 36
III.Distinctions between common carrier and private carrier

PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY VS. PKS SHIPPING

COMPANY
G.R. No. 149038. April 9, 2003

DOCTRINE:
Much of 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 an isolated transaction, not a part of
the business or occupation, and the carrier does not hold itself out to carry the goods for the
general public or to a limited clientele, although involving the carriage of goods for a fee, the
person or corporation providing such service could very well be just a private carrier; The concept
of a common carrier does not change merely because individual contracts are executed or
entered into with patrons of the carrier such restrictive interpretation would make it easy for a
common carrier to escape liability by the simple expedient of entering into those distinct
agreements with clients.

FACTS:
Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping
Company (PKS Shipping) for the shipment to Tacloban City of seventy-five thousand bags of
cement worth. DUMC insured the goods for its full value with petitioner Philippine American
General Insurance Company (Philamgen). The goods were loaded aboard the dumb barge Limar I
belonging to PKS Shipping. While Limar I was being towed by respondent’s tugboat, MT Iron
Eagle, the barge sank, bringing down with it the entire cargo of 75,000 bags of cement.

DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen
promptly made payment; it then sought reimbursement from PKS Shipping of the sum paid to
DUMC but the shipping company refused to pay, prompting Philamgen to file suit against PKS.
The RTC dismissed the complaint after finding that the total loss of the cargo could have been
caused either by a fortuitous event, in which case the ship owner was not liable.

Philamgen interposed an appeal to the Court of Appeals which affirmed in toto the decision of the
trial court. The appellate court ruled that evidence to establish that PKS Shipping was a common
carrier at the time it undertook to transport the bags of cement was wanting because the peculiar
method of the shipping company’s carrying goods for others was not generally held out as a
business but as a casual occupation.

ISSUE:
1. WON PKS Shipping is a common carrier
2. WON PKS Shipping is liable

RULING:
1. The SC ruled in the AFFIRMATIVE. clients. Much of 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 an isolated transaction, not a part of the business or occupation, and the carrier does
not hold itself out to carry the goods for the general public or to a limited clientele, although
involving the carriage of goods for a fee, the person or corporation providing such service could
very well be just a private carrier. A typical case is that of a charter party which includes both the
vessel and its crew, such as in a bareboat or demise, where the charterer obtains the use and service

Page 16 of 36
of all or some part of a ship for a period of time or a voyage or voyages and gets the control of the
vessel and its crew.

PKS Shipping has engaged itself in the business of carrying goods for others, although for a limited
clientele, undertaking to carry such goods for a fee. The regularity of its activities in this area
indicates more than just a casual activity on its part. Neither can the concept of a common carrier
change merely because individual contracts are executed or entered into with patrons of the carrier.

2. The SC ruled in the NEGATIVE. PKS Shipping is not liable.

The vessel was suddenly tossed by waves of extraordinary height of six (6) to eight (8) feet and
buffeted by strong winds of 1.5 knots resulting in the entry of water into the barge’s hatches. The
official Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise
Load Line Certificate would attest to the seaworthiness of Limar I. As such, under Art. 1733,
NCC, common carriers are exempt from liability for loss, destruction, or deterioration of the
goods due to any of the following causes, among others:

Flood, storm, earthquake, lightning, or other natural disaster or calamity

Page 17 of 36
IV. Diligence Required of Common Carriers

HEIRS OF AMPARO DE LOS SANTOS VS. COURT OF APPEALS

G.R. No. 51165. June 21, 1990

DOCTRINE:
Article 587 speaks only of situations where the fault or negligence is committed solely by the
captain. In cases where the shipowner is likewise to be blamed, Article 587 does not apply. Such a
situation will be covered by the provisions of the New Civil Code on Common Carriers.

Owing to the nature of their business and for reasons of public policy, common carriers are tasked
to observe extraordinary diligence in the vigilance over the goods and for the safety of its
passengers (Article 1733, New Civil Code). Further, they are bound to 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.

FACTS:
M/V Mindoro, owned by Campania Maritima, sailed from pier 8 North Harbor Manlia bound for
New Washington, Aklan, with many passengers aboard. Said vessel met typhoon Welming and
due to the strong waves, it sank causing the drowning of many passengers, although 136
survived.

A complaint was filed by the heirs of Delos Santos and others as pauper litigants against Campania
Maritima, for damages due to the death of several passengers as a result of the sinking of the vessel,
M/V Mindoro.

In alleging negligence on the part of the vessel, plaintiffs introduced and submitted evidence
including the resurvey of the M/V Mindoro victims. The Board of Marine Inquiry, in its decision,
found that the captain and some officers of the crew were negligent in operating the vessel and
imposed upon them a suspension and/or revocation of their license certificates. However, said
decision cannot be executed against the captan who perished with the vessel.

The defendant alleges that no negligence was ever established and, in fact, the shipowners and their
officers took all the necessary precautions in operating the vessel. Furthermore, the loss of lives as a
result of the drowning of some passengers, including the relatives of the herein plaintiffs, was due
to force majeure because of the strong typhoon Welming.

The trial court adjudged the case in favor of Campania Maritima, dismissing the case due to lack of
sufficient evidence. Forthwith, petitioners brought an appeal to the CA.

ISSUE:
1. WON Campania Maritima was negligent
2. WON Art. 587 is applicable in the case

RULING:
1. The SC ruled in the AFFIRMATIVE. Maritima claims that it did not have any information
about typhoon Welming until after the boat was already at sea. Modern technology belies such
contention. The Weather Bureau is now equipped with modern apparatus which enables it to detect
any incoming atmospheric disturbances. It is highly improbable due to the late departure of the ship

Page 18 of 36
that the Weather Bureau had not yet issued any typhoon bulletin at any time during the day to the
shipping companies. In allowing the ship to depart late from Manila despite the typhoon advisories,
Maritima displayed lack of foresight and minimum concern for the safety of its passengers
taking into account the surrounding circumstances of the case.

Maritima presents evidence of the seaworthy condition of the ship prior to its departure to prove
that it exercised extraordinary diligence in this case.While indeed it is true that all these things were
done on the vessel, Maritima, however, could not present evidence that it specifically installed a
radar which could have allowed the vessel to navigate safely for shelter during a storm.
Consequently, the vessel was left at the mercy of Welming in the open sea because although it was
already in the vicinity of the Aklan river, it was unable to enter the mouth of Aklan River to get into
New Washington, Aklan due to darkness and the Floripon Lighthouse at the entrance of the Aklan
River was not functioning or could not be seen at all.

The foregoing clearly demonstrates that Maritima’s lack of extraordinary diligence coupled
with the negligence of the captain as found by the appellate court were the proximate causes
of the sinking of M/V Mindoro. Hence, Maritima is liable for the deaths and injury of the
victims.

2. Under this provision, a shipowner or agent has the right of abandonment; and by necessary
implication, his liability is confined to that which he is entitled as of right to abandon the vessel
with all her equipments and the freight it may have earned during the voyage (Yangco v. Laserna, et
al., 73 Phil. 330, 332). Notwithstanding the passage of the New Civil Code, Article 587 of the Code
of Commerce is still good law. The reason lies in the peculiar nature of maritime law which is
exclusively real and hypothecary that operates to limit such liability to the value of the vessel, or to
the insurance thereon, if any (Yangco v. Laserna, ibid). As correctly stated by the appellate court,
this rule is found necessary to offset against the innumerable hazards and perils of a sea voyage and
to encourage shipbuilding and marine commerce.

Contrary to the petitioners’ supposition, the limited liability doctrine applies not only to the
goods but also in all cases like death or injury to passengers wherein the shipowner or agent
may properly be held liable for the negligent or illicit acts of the captain (Yangco v. Laserna,
ibid). It must be stressed at this point that Article 587 speaks only of situations where the fault or
negligence is committed solely by the captain. In cases where the shipowner is likewise to be
blamed, Article 587 does not apply. Such a situation will be covered by the provisions of the
New Civil Code on Common Carriers. Owing to the nature of their business and for reasons of
public policy, common carriers are tasked to observe extraordinary diligence in the vigilance over
the goods and for the safety of its passengers (Article 1733, New Civil Code). Further, they are
bound to 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 (Article 1755,
New Civil Code). Whenever death or injury to a passenger occurs, common carriers are presumed
to have been at fault or to have acted negligently unless they prove that they observed extraordinary
diligence as prescribed by Articles 1733 and 1755 (Article 1756, New Civil Code).

Page 19 of 36
Page 20 of 36
 AMERICAN HOME ASSURANCE COMPANY VS. COURT OF APPEALS
G.R. No. 94149. May 5, 1992

DOCTRINE:
The law of the country to which the goods are to be transported governs the liability of the common
carrier in case of their loss, destruction or deterioration.

Common carriers bound to observe extraordinary diligence in the vigilance over the goods and for
the safety of passengers transported by them according to all circumstances of each case.

Common Carriers cannot limit their liability for injury or loss of goods where such injury or loss
was caused by its own negligence.

FACTS:
American Home Assurance Co. and the National Marine Corporation (NMC) are foreign
corporations licensed to do business in the Philippines. Cheng Hwa Pulp Corporation shipped
5,000 bales (1,000 ADMT) of bleached kraft pulp from Haulien, Taiwan on board “SS Kaunlaran”,
which is owned and operated by NMC. The said shipment was consigned to Mayleen Paper, Inc. of
Manila, which insured the shipment with American Home Assurance Co. the shipment arrived in
Manila and was discharged into the custody of the Marina Port Services, Inc., for eventual delivery
to the consignee-assured.

However, upon delivery of the shipment to Mayleen Paper, Inc., it was found that 122 bales had
either been damaged or lost. The loss was calculated to be 4,360 kilograms with an estimated value
of P61,263.41. Mayleen Paper, Inc. then duly demanded indemnification from NMC for the
damages and losses in the shipment but to no avail. Mayleen Paper, Inc. sought recovery from
American Home Assurance Co. Upon demand and submission of proper documentation, American
Home Assurance paid Mayleen Paper, Inc. the adjusted amount of P31, 506.75 for the
damages/losses suffered by the shipment, hence, AHA was subrogated to the rights and interests of
Mayleen Paper, Inc.

AHA brought a suit against respondent NMC for the amount it paid Mayleen Paper, Inc.

The RTC rendered a decision dismissing the complaint, such decision was affirmed by the CA.

ISSUE:
WON American Home Assurance Company is entitled to reimbursement from NMC of what it paid
to Mayleen Paper

RULING:
The SC ruled in the AFFIRMATIVE. Under Article 1733 of the Civil Code, 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 passengers transported by them
according to all circumstances of each case. Thus, under Article 1735 of the same Code, in all cases
other than those mentioned in Article 1734 thereof, the common carrier shall be presumed to
have been at fault or to have acted negligently, unless it proves that it has observed the
extraordinary diligence required by law.

Common carriers cannot limit their liability for injury or loss of goods where such injury or loss
was caused by its own negligence. Otherwise stated, the law on averages under the Code of
Commerce cannot be applied in determining liability where there is negligence.

Page 21 of 36
Under the foregoing principle and in line with the Civil Code’s mandatory requirement of
extraordinary diligence on common carriers in the care of goods placed in their stead, it is but
reasonable to conclude that the issue of negligence must first be addressed before the proper
provisions of the Code of Commerce on the extent of liability may be applied.

As resolved in National Development Co. v. C.A. (164 SCRA 593 [1988]; citing Eastern
Shipping Lines, Inc. v. I.A.C.,“the law of the country to which the goods are to be transported
governs the liability of the common carrier in case of their loss, destruction or deterioration.”
(Article 1753, Civil Code).

Thus, for cargoes transported to the Philippines, the liability of the carrier is governed primarily by
the Civil Code and in all matters not regulated by said Code, the rights and obligations of common
carrier shall be governed by the Code of Commerce and by special laws (Article 1766, Civil Code).

Article 1734 of the Civil Code provides that common carrier are responsible for loss, destruction or
deterioration of the goods, unless due to any of the causes enumerated therein. Herein, it is obvious
that the present case does not fall under any of the exceptions. Thus, American Home Assurance
Company is entitled to reimbursement of what it paid to Mayleen Paper, Inc. as insurer.

Page 22 of 36
 PHILIPPINE AIRLINES INC. VS COURT OF APPEALS
G.R. No. 82619. September 15, 1993

DOCTRINE:
The contract of air carriage is a peculiar one. Being imbued with public interest, the law requires
common carriers to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due regard for all the circumstances.

FACTS:
Sometime in November 1976, private respondent filed a complaint for damages for breach of
contract of carriage against Philippine Airlines, Inc. (PAL), before the CFI. Zapatos purchased a
ticket from PAL wherein it was agreed that the latter would transport him to Ozamiz City. The
plane’s route was from Cebu-Ozamiz-Cotabato. However, due to unfavoarable weather conditions
and the fact that PAL did not have an all-weather airport, PAL had bypassed Ozamiz City. PAL
then informed Zapatos of his options, to return to Cebu on the same day, or take the next flight to
Cebu the following day, or to take the next available flight to Ozamiz City. Zapatos chose to return
to Ozamiz City on the same day. However, there were only six (6) seats available and, the seats
were given to the passengers according to their check-in sequence at Cebu. Consequently, Zapatos
was stranded in Cotabato City, where a battle between the government and the Muslims was
ongoing. During his stay in Cotabato City, PAL also failed to provide accomodations for Zapatos. It
also refused to have the latter hitch a ride with its employees on a ford truck bound for the City. It
also failed to return Zapatos’ luggage. This prompted Zapatos to file a complaint for damages
against Philippine Air Lines for breach of contract. PAL claimed that it should not be charged with
the task of looking after the passengers’ comfort and convenience because the diversion of the flight
was due to a fortuitous event,and that if made liable, an added burden is given to PAL which is over
and beyond its duties under the contract of carriage

ISSUE:
WON PAL is liable for breach of contract of carriage

RULING:
The SC ruled in the AFFIRMATIVE. Undisputably, PAL's diversion of its flight due to
inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL's
contract with its passengers. Being in the business of air carriage and the sole one to operate in the
country, PAL is deemed equipped to deal with situations as in the case at bar.

What we said in one case once again must be stressed, i.e., the relation of carrier and passenger
continues until the latter has been landed at the port of destination and has left the carrier's
premises. Hence, PAL necessarily would still have to exercise extraordinary diligence in
safeguarding the comfort, convenience and safety of its stranded passengers until they have reached
their final destination. On this score, PAL grossly failed considering the then ongoing battle
between government forces and Muslim rebels in Cotabato City and the fact that the private
respondent was a stranger to the place. While we find PAL remiss in its duty of extending utmost
care to private respondent while being stranded in Cotabato City, there is no sufficient basis to
conclude that PAL failed to inform him about his non-accommodation on Flight 560, or that it was
inattentive to his queries relative thereto.

Page 23 of 36
Page 24 of 36
 MACAM VS. COURT OF APPEALS
G.R. No. 125524. August 5, 1999

DOCTRINE:
The extraordinary responsibility of the common carriers lasts until actual or constructive delivery
of the cargoes to the consignee or to the person who has a right to receive them.

FACTS:
Petitioner Benito Macam shipped on board the vessel Nen Jiang, owned and operated by respondent
China Ocean Shipping Co., through local agent respondent Wallem Philippines Shipping, Inc.
boxes of watermelons and mangoes which were covered by bill of ladings and exported through
letters of credit issued by National Bank of Pakistan, Hongkong (Pakistan Bank). The Bills of
Lading contained the following pertinent provision: “One of the Bills of Lading must be
surrendered duly endorsed in exchange for the goods or delivery order.” The shipment was bound
for Hongkong with Pakistan Bank as consignee and Great Prospect Company of Kowloon,
Hongkong (GPC) as notify party.

On April 1989, copies of the bills of lading and commercial invoices were submitted to petitioner’s
depository bank, Consolidated Banking Corporation (Solidbank), which paid petitioner in advance
the total value of the shipment.

Upon arrival in Hongkong and after receiving a telex instruction, the shipment was delivered by
respondent Wallem directly to GPC, not to Pakistan Bank, and without the required bill of lading
having been surrendered. Subsequently, GPC failed to pay Pakistan Bank such that the latter, still in
possession of the original bills of lading, refused to pay petitioner through Solidbank.

ISSUE:
WON the respondents are liable to the petitioner for releasing the goods to GPC without the bills of
lading or bank guarantee

RULING:
The SC ruled in the NEGATIVE. It is a standard maritime practice when immediate delivery is of
the essence, for shipper to request or instruct the carrier to deliver the goods to the buyer upon
arrival at the port of destination without requiring presentation of bill of lading as that usually takes
time. Thus, taking into account that subject shipment consisted of perishable goods and
SOLIDBANK pre-paid the full amount of value thereof, it is not hard to believe the claim of
respondent WALLEM that petitioner indeed requested the release of the goods to GPC without
presentation of the bills of lading and bank guarantee.

To implement the said telex instruction, the delivery of the shipment must be to GPC, the notify
party or real importer/buyer of the goods and not the PAKISTANI BANK since the latter can very
well present the original Bills of Lading in its possession. Likewise, if it were the PAKISTANI
BANK to whom the cargoes were to be strictly delivered, it will no longer be proper to require a
bank guarantee as a substitute for the Bill of Lading. To construe otherwise will render meaningless
the telex instruction. After all, the cargoes consist of perishable fresh fruits and immediate delivery
thereof the buyer/importer is essentially a factor to reckon with.

The Court emphasized that the extraordinary responsibility of the common carriers lasts until actual
or constructive delivery of the cargoes to the consignee or to the person who has a right to receive
them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the
notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner

Page 25 of 36
also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint
before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as
buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to
receive them was proper.

Page 26 of 36
 VIRGINES CALVO VS. UCPB GENERAL INSURANCE CO.
G.R. No. 148496. March 19, 2002

DOCTRINE:
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.

FACTS:
Virgines Calvo, owner of Transorient Container Terminal Services, Inc. (TCTSI), and a custom
broker, 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 to the Tabacalera
Compound, Ermita, Manila. The cargo was insured by respondent UCPB General Insurance Co.,
Inc.

On July 14, 1990, contained in 30 metal vans, arrived in Manila on board “M/V Hayakawa Maru”.
After 24 hours, they were unloaded from vessel to the custody of the arrastre operator, Manila Port
Services, Inc. From July 23 to 25, 1990, petitioner, pursuant to her contract with SMC, withdrew
the cargo from the arrastre operator and delivered it to SMC’s warehouse in Manila. On July 25, the
goods were inspected by Marine Cargo Surveyors, reported that 15 reels of the semi-chemical
fluting paper were “wet/stained/torn” and 3 reels of kraft liner board were also torn. The damages
cost P93,112.00.

SMC collected the said amount from respondent UCPB under its insurance contract. Respondent on
the other hand, as a subrogee of SMC, brought a suit against petitioner in RTC. RTC rendered
judgment finding petitioner liable for the damage to the shipment. The decision was affirmed by the
CA.

ISSUE:
WON Calvo is a common carrier, and thus can be held liable

RULING:
The SC ruled in the AFFIRMATIVE. 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
petitioner’s contention would be to deprive those with whom she contracts the protection which the
law affords them notwithstanding the fact that the obligation to carry goods for her customers, as
already noted, is part and parcel of petitioner’s business.

As to petitioner’s 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. In Compania Maritima v. Court of Appeals, the meaning of
extraordinary diligence in the vigilance over goods was explained thus: 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

Page 27 of 36
tendered for shipment, and to exercise due care in the handling and stowage, including such
methods as their nature requires.

Anent petitioner’s insistence that the cargo could not have been damaged while in her custody as
she immediately delivered the containers to SMC’s compound, suffice it to say that to prove the
exercise of extraordinary diligence, 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.

Petitioner is liable because she failed to prove that she exercised extraordinary diligence in the
carriage of goods, the presumption of negligence as provided under Art. 1735 applies. 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 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.

Page 28 of 36
 VECTOR SHIPPING CORP. AND SORIANO VS. MACASA
G.R. No. 160219. July 21, 2008

DOCTRINE:
The nature of the business of common carriers is impressed with a special public duty. The public
must of necessity rely on the care and skill of common carriers in the vigilance over the goods and
safety of the passengers, especially because with the modern development of science and
invention, transportation has become more rapid, more complicated and somehow more
hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct
an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its
seaworthiness.

FACTS:
Spouses Cornelio (Cornelio) and Anacleta Macasa (Anacleta), together with their eight-year-old
grandson, Ritchie Macasa, (Ritchie) boarded the MV Doña Paz, owned and operated by respondent
Sulpicio Lines, Inc. (Sulpicio Lines), at Tacloban, Leyte bound for Manila. MV Doña Paz collided
with the MT Vector, an oil tanker owned and operated by petitioners Vector Shipping Corporation
(Vector Shipping) and Francisco Soriano (Soriano). Only twenty-six persons survived: 24
passengers of MV Doña Paz and 2 crew members of MT Vector. Both vessels were never retrieved.
Respondents Adelfo, Emilia, Timoteo, and Cornelio, Jr., all surnamed Macasa, are the children of
Cornelio and Anacleta. On the other hand, Timoteo and his wife, respondent Rosario Macasa, are
the parents of Ritchie (the Macasas.

The Macasas filed a Complaint for Damages arising out of breach of contract of carriage against
Sulpicio Lines before the RTC. The complaint imputed negligence to Sulpicio Lines because it was
remiss in its obligations as a common carrier.

Sulpicio Lines traversed the complaint, alleging, among others that (1) MV Doña Paz was
seaworthy in all aspects; (2) it exercised extraordinary diligence in transporting their passengers and
goods; (3) it acted in good faith as it gave immediate assistance to the survivors and kin of the
victims; (4) the sinking of MV Doña Paz was without contributory negligence on its part; and (5)
the collision was MT Vector's fault since it was allowed to sail with an expired coastwise license,
expired certificate of inspection and it was manned by unqualified and incompetent crew members
per findings of the Board of Marine Inquiry (BMI).

The RTC ruled in favor of petitioners. Aggrieved, Sulpicio Lines, Caltex, Vector Shipping and
Soriano appealed to the CA. The Court of Appeals affirmed the RTC decision with modification on
the amount of damages awarded.

ISSUE:
WON Vector and Soriano are liable to indemnify or reimburse Sulpicio for the amounts it paid to
the Macasas because its liability arises from breach of contract of carriage, inasmuch as in culpa
contractual it is sufficient to prove the existence of the contract, because carrier is presumed to be at
fault or to have acted negligently it being its duty to exercise extraordinary diligence and cannot
make the safety of its passengers dependent upon the diligence of Vector and Soriano

RULING:
The petitioners insist the ruling in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc. where Caltex
was exonerated from any third-party liability, while this Court sustained the CA ruling that Vector
Shipping and Soriano are liable to reimburse and indemnify Sulpicio Lines for whatever damages,
attorneys fees and costs the latter is adjudged to pay the victims therein.

Page 29 of 36
Their invocation before this Court of Francisco Soriano v. Sulpicio Lines, Inc. along with Vector
Shipping Corporation and Francisco Soriano v. American Home Assurance Co. and Sulpicio Lines,
Inc. is unavailing. It may be noted that in a Resolution dated February 13, 2006, this Court denied
the petition in Francisco Soriano v. Sulpicio Lines, Inc. for its failure to sufficiently show that the
CA committed any reversible error in the challenged decision as to warrant the exercise of this
Courts discretionary appellate jurisdiction. Considering that in the cases which have reached this
Court, we have consistently upheld the third-party liability of petitioners, we see no cogent reason
to deviate from this ruling.

Moreover, in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc., we held that MT Vector fits the
definition of a common carrier under Article 1732 of the New Civil Code.

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. 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
the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755
of the Civil Code.

The provisions owed their conception to the nature of the business of common carriers. This
business is impressed with a special public duty. The public must of necessity rely on the care and
skill of common carriers in the vigilance over the goods and safety of the passengers, especially
because with the modern development of science and invention, transportation has become more
rapid, more complicated and somehow more hazardous. For these reasons, a passenger or a shipper
of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being
obliged by law to impliedly warrant its seaworthiness.

Lastly, all evidence points to the fact that it was MT Vectors negligent officers and crew which
caused it to ram into MV Dona Paz. More so, MT Vector was found to be carrying expired
coastwise license and permits and was not properly manned. As the records would also disclose,
there is a defect in the ignition system of the vessel, and it was not convincingly shown whether the
necessitated repairs were in fact undertaken before the said ship had set to sea. In short, MT Vector
was unseaworthy at the time of the mishap. That the said vessel was allowed to set sail when it
was, to everyone in the group’s knowledge, not fit to do so translates into rashness and
imprudence.

R TRANSPORT CORPORATION VS. PANTE

G.R. No. 162104. Sept,ber 15, 2009

DOCTRINE:
Under the Civil Codem common carriers from the nature of their business and for reasons for the
safety of the passengers transported by them, according to all the passengers as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with due regard for
all the circumstances.

Common carriers are liable for the death or injury to passengers through the negligence or willful
acts of the former employees, although such employees may have acted beyond the scope of the
authority or in violation of the orders of the common carriers.

FACTS:

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R Transport operates a bus line which transports passengers from Cubao, Quezon City to Gapan,
Nueva Ecija. Sometime in January 1995, Pante rode a bus from Cubao (P48 fare). Along a highway
in Bulacan, the bus hit a tree and a house due to the reckless driving of Johnny Mediquia. Pante
sustained a “laceration frontal area, with fracture of the right humerous”.
His operation, confinement, and medications caused him P30K. He became unemployed as
Goldilocks refused to re-employ him due to his condition.He had to undergo a second operation
after four years. He spent another P15k.The only assistance petitioner gave was the amount of P7K
to reimburse him for the stainless steel plate placed in his arm. Other than that, petitioner refused to
assist Pante.By March of the same year, Pante sued for damages. Petitioner in its answer denied
fault claiming that it exercised the diligence of a good father of the family in the selection and
supervision of employees, and that the accident was force majeure. The case went on for 7 years.
The delays were due to the multiple postponements and unexplained absence of petitioner’s
counsel. Its rights to cross-examine and present evidence were eventually forfeited as a
consequence. RTC ruled in favour of Pante. CA affirmed RTC’s decision.

ISSUE:
W/N Petitioner is liable for damages despite Pante not presenting substantial evidence to support his
claim.

RULING:
YES. Petitioner is liable for damages.
 Petitioner, as a common carrier, is expected to exercise extraordinary diligence, and has the
duty to transport its passengers safely to their destination.
 ARTICLE 1756 OF THE CIVIL CODE: In case of death or injuries to passengers, common
carriers are presumed at fault or negligent unless they are able to prove their exercise of
extraordinary diligence.
 ARTICLE 1759: Common carriers are also liable for the negligence of their employees.
 The liability of common carriers does not cease upon proof that they exercised extraordinary
diligence of a good father of the family in the selection and supervision of employees.
 Petitioner cannot claim that it was denied due process which prevented it from presenting
evidence in his defense. Due to the unexplained absences of his counsel, the hearings had to
be constantly postponed, which resulted in a 7-year delay of the case. It was given the
opportunity to present its evidence, but was considered to have waived its right.
 Petitioner also contends that the CA and TC erred in awarding damages in favour of Pante in
the amount of P22,000 based on a statement issued by the Baliuag Hospital and not based on
the receipt. The Court held that this was without merit since in another case, the Court
awarded damages for hospitalization expenses based on the statement of account issued by
the Makati Medical Center.
 The Court also affirmed the award of moral damages, citing Spouses Ong vs. CA where
moral damages were given to passengers who suffered physical injuries. It is the usual
practice to award moral damages for physical injuries sustained. Pante here suffered
physical pain, mental anguish and anxiety as a result of the accident. P50,000 is proper.
 An award of exemplary damages is also proper, as the driver was manning the bus in a
reckless, negligent, and imprudent manner. This will provide as an example or as a
correction for the public good.

PETITION IS DENIED.

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 NEDLLOYD LIJNEN B.V. ROTTERDAM AND THE EAST ASIATIC CO., LTD. VS.
GLOW LAKS ENTERPRISES, LTD., G.R. NO. 156330, NOVEMBER 19, 2014
DOCTRINE:
Under the New Civil Code, common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over goods, according
to the circumstances of each case.

Common carriers are responsible for loss, destruction or deterioration of the goods unless the same
is due to flood, storm, earthquake or other natural disaster or calamity.

Extraordinary diligence is that extreme care and caution which persons of unusual prudence and
circumspection use for securing or preserving their own property or rights. This expecting standard
imposed on common carriers in contract of carrier of goods is intended to tilt the scales in favor of
the shipper who is at the mercy of the common carrier once the goods have been lodged for the
shipment. Hence, in case of loss of goods in transit, the common carrier is presumed under the law
to have been in fault or negligent.

Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the
common carrier begins from the time the goods are delivered to the carrier. This responsibility
remains in full force and effect even when they are temporarily unloaded or stored in transit, unless
the shipper or owner exercises the right of stoppage in transitu, and terminates only after the lapse
of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled
to receive them.

It was further provided in the same statute that the carrier may be relieved from the responsibility
for loss or damage to the goods upon actual or constructive delivery of the same by the carrier to the
consignee or to the person who has the right to receive them. In sales, actual delivery has been
defined as the ceding of the corporeal possession by the seller, and the actual apprehension of the
corporeal possession by the buyer or by some person authorized by him to receive the goods as his
representative for the purpose of custody or disposal. By the same token, there is actual delivery in
contracts for the transport of goods when possession has been turned over to the consignee or to his
duly authorized agent and a reasonable time is given him to remove the goods.

FACTS: Petitioner Nedlloyd Lijnen B.V. Rotterdam (Nedlloyd) is a foreign corporation engaged in
the business of carrying goods by sea, whose vessels regularly call at the port of Manila. It is doing
business in the Philippines thru its local ship agent, co-petitioner East Asiatic Co., Ltd. (East
Asiatic).

Respondent Glow Laks Enterprises,Ltd., is likewise a foreign corporation organized and existing
under the laws of Hong Kong. It is not licensed to do, and it is not doing business in, the
Philippines.

On or about 14 September 1987, respondent loaded on board M/S Scandutch at the Port of Manila a
total 343 cartoons of garments, complete and in good order for pre-carriage tothe Port of Hong
Kong. The goods covered by Bills of Lading Nos. MHONX-2 and MHONX-3 arrived in good
condition in Hong Kong and were transferred to M/S Amethyst for final carriage to Colon, Free
Zone, Panama. Both vessels, M/S Scandutch and M/S Amethyst, are owned by Nedlloyd
represented in the Phlippines by its agent, East Asiatic. The goods which were valued at
US$53,640.00 was agreed to be released to the consignee, Pierre Kasem, International, S.A., upon
presentation of the original copies of the covering bills of lading. Upon arrival of the vessel at the
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Port of Colon on 23 October 1987, petitioners purportedly notified the consignee of the arrival of
the shipments, and its custody was turned over tothe National Ports Authority in accordance with
the laws, customs regulations and practice of trade in Panama. By an unfortunate turn ofevents,
however, unauthorized persons managed to forge the covering bills of lading and on the basis of the
falsified documents, the ports authority released the goods.

On 16 July 1988, respondent filed a formal claim with Nedlloyd for the recovery of the amount of
US$53,640.00 representing the invoice value of the shipment but to no avail. Claiming that
petitioners are liable for the misdelivery of the goods, respondent initiated Civil Case No. 88-45595
before the Regional Trial Court (RTC) of Manila, Branch 52, seeking for the recovery of the
amount of US$53,640.00, including the legal interest from the date of the first demand.

In disclaiming liability for the misdelivery of the shipments, petitioners asserted in their Answerthat
they were never remiss in their obligation as a common carrier and the goods were discharged in
good order and condition into the custody of the National Ports Authority of Panama in accordance
with the Panamanian law. They averred that they cannot be faulted for the release of the goods to
unauthorized persons, their extraordinary responsibility as a common carrier having ceased at the
time the possession of the goods were turned over to the possession of the port authorities.

After the Pre-Trial Conference, trial on the merits ensued. Both parties offered testimonial and
documentary evidence to support their respective causes. On 29 April 2004, the RTC rendered a
Decision ordering the dismissal of the complaint but granted petitioners’ counterclaims. In effect,
respondent was directed to pay petitioners the amount of P120,000.00 as indemnification for the
litigation expenses incurred by the latter. In releasing the common carrier from liability for the
misdelivery of the goods, the RTC ruled that Panama law was duly proven during the trial and
pursuant to the said statute, carriers of goods destined to any Panama port of entry have to discharge
their loads into the custody of Panama Ports Authority to make effective government collection of
port dues, customs duties and taxes. The subsequent withdrawal effected by unauthorized persons
on the strength of falsified bills of lading does not constitute misdelivery arising from the fault of
the common carrier. The decretal part of the RTC Decision reads: WHEREFORE, judgment is
renderedfor [petitioners] and against [Respondent], ordering the dismissal of the complaint and
ordering the latter to pay [petitioners] the amount of ONE HUNDRED TWENTY THOUSAND
PESOS (P120,000.00) on their counterclaims.

ISSUE: WON PETITIONERS WERE ABLE TO PROVE THE LAWS OF PANAMA

BY PRESENTING AS EVIDENCE THE [GACETA] OFFICIAL OF REPUBLICA DE PANAMA

NO. 17.596 WHERE THE APPLICABLE PANAMANIAN LAWS WERE OFFICIALLY
PUBLISHED, AND THE TESTIMONY OF EXPERT WITNESSES, 

HELD: NO. It is well settled that foreign laws do not prove themselves in our jurisdiction and our
courts are not authorized to take judicial notice of them. Like any other fact, they must be alleged
and proved. To prove a foreign law, the party invoking it must present a copy thereof and comply
with Sections 24 and 25 of Rule 132 of the Revised Rules of Court which read: SEC. 24. Proof of
official record. — The record of public documents referred to in paragraph (a) of Section 19, when
admissible for any purpose, may be evidenced by an official publication thereof or by a copy
attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a certificate that such officer has the custody. If the
Page 33 of 36
office in which the record is kept is in a foreigncountry, the certificate may be made by a secretary
of the embassy or legation, consul general, consul, vice- consul, or consular agent or by any officer
in the foreign service of the Philippines stationed in the foreign country in which the record is kept,
and authenticated by the seal of his office.

SEC. 25. What attestation of copy must state. — Whenever a copy of a document or record is
attested for the purpose of the evidence, the attestation must state,in substance, that the copy is a
correct copy of the original, or a specific part thereof, as the case may be. The attestation must be
under the official seal of the attesting officer, if there be any, or if he be the clerk of a court having a
seal, under the seal of such court.

For a copy of a foreign public document to be admissible, the following requisites are mandatory:
(1) itmust be attested by the officer having legal custody of the records or by his deputy; and (2) it
must be accompanied by a certificate by a secretary of the embassy or legation, consul general,
consul, vice-consular or consular agent or foreign service officer, and with the seal of his office.
Such official publication or copy must be accompanied, if the record is not kept in the Philippines,
with a certificate that the attesting officer has the legal custody thereof. The certificate may be
issued by any of the authorized Philippine embassy or consular officials stationed in the foreign
country in which the record is kept, and authenticated by the seal of his office. The attestation must
state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the
case may be, and mustbe under the official seal of the attesting officer.

Contrary to the contention of the petitioners, the Panamanian laws, particularly Law 42 and its
Implementing Order No. 7, were not duly proven in accordance with Rules of Evidence and as
such, it cannot govern the rights and obligations of the parties in the case at bar. While a photocopy
of the Gaceta Official of the Republica de Panama No. 17.596, the Spanish text of Law 42 which is
theforeign statute relied upon by the court a quoto relieve the common carrier from liability, was
presented as evidence during the trial of the case below, the same however was not accompanied by
the required attestation and certification.

It is explicitly required by Section 24, Rule 132 of the Revised Rules of Court that a copy of the
statute must be accompanied by a certificate of the officer who has legal custody of the records and
a certificate made by the secretary of the embassy or legation, consul general, consul, vice-consular
or by any officer in the foreign service of the Philippines stationed in the foreign country, and
authenticated by the seal of his office. The latter requirement is not merely a technicality but is
intended to justify the giving of full faith and credit to the genuineness of the document in a foreign
country. Certainly, the deposition of Mr. Enrique Cajigas, a maritime law practitioner in the
Republic of Panama, before the Philippine Consulate in Panama, is not the certificate contemplated
by law. At best, the deposition can be considered as an opinion of an expert witness who possess the
required special knowledge on the Panamanian laws but could not be recognized as proof of a
foreign law, the deponent not being the custodian of the statute who can guarantee the genuineness
of the document from a foreign country. To admit the deposition as proof of a foreign law is,
likewise, a disavowal of the rationaleof Section 24, Rule 132 of the Revised Rules of Court, which
isto ensure authenticity of a foreign law and its existence so as to justify its import and legal
consequence on the event or transaction in issue. The above rule, however, admits exceptions, and
the Court in certain cases recognized that Section 25, Rule132 of the Revised Rules of Court does
not exclude the presentation of other competent evidence to prove the existence of foreign law. In
Willamete Iron and Steel Works v. Muzzal20 for instance, we allowed the foreign law tobe
established on the basis of the testimony in open court during the trial in the Philippines of an
Page 34 of 36
attorney-atlaw in San Francisco, California, who quoted the particular foreign law sought to be
established. The ruling is peculiar to the facts. Petitioners cannot invoke the Willamete ruling to
secure affirmative relief since their so called expert witness never appeared during the trial below
and his deposition, that was supposed to establish the existence of the foreign law, was obtained ex-
parte.

It is worth reiterating at this point that under the rules of private international law, a foreign law
must be properly pleaded and proved as a fact. In the absence of pleading and proof, the laws of the
foreign country or state will be presumed to be the same as our local or domestic law. This is known
as processual presumption. While the foreign law was properly pleaded in the case at bar, it
was,however, proven not in the manner provided by Section 24, Rule 132 of the Revised Rules of
Court. The decision of the RTC, which proceeds from a disregard of specific rules cannot be
recognized.

V. Liabilities of Common Carriers

MA. LUISA BENEDICTO VS. HON. INTERMEDIATE APPELLATE COURT,

G.R. NO. 70876, JULY 19, 1990

DOCTRINE:
The prevailing doctrine on common carriers makes the registered owner liable for consequences
flowing from the operations of the carrier, even though the specific vehicle involved may already
have been transferred to another person. This doctrine rests upon the principle that in dealing with
vehicles registered under the Public Service Law, the public has the right to assume that the
registered owner is the actual or lawful owner thereof.

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VIGILANCE OVER GOODS

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