De Guzman vs. Court of Appeals et. al.G.R. No. L-47822, December 22, 1988

FACTS:

Respondent Cendena was engaed in buying bottles and scrap metal in Pangasinan. He utilized two (2) six-wheeler trucks which he owned for hauling the material to Manila. In 1970, petitioner De Guzman, an authorized dealer of General Milk Company in Pangasinan, contracted with respondent for the hauling of 750 cartons of Liberty filled milk from a warehouse in Makati, Rizal, to the petitioners establishment in Pangasinan. 150 cartons were loaded on a truck driven by respondent himself while 600 cartons were loaded to the other truck which was driven by respondents driver. Only 150 boxes of milk were delivered and the other 600 boxes never reached the petitioner because the said truck was hijacked on its way to Pangasinan. Petitioner commenced an action againts respondent Cendena demanding payment of the value of the lost merchandise plus damages and attorneys fees. Respondent however denied that he was a common carrier and argued that he could not be held liable for the lost goods since it was due to force majeure. The trial court found respondent Cendena to be a common carrier and held him liable. The Court of Appelas, however, reversed the decision of the trial court and held that Cendena is not a common carrier because he just entered into a sideline only in delivering the goods. Hence, this Petition for Review.

ISSUES:

(1) WON respondent Cenmdena may be properly characterized as a common carrier.(2) WON the absence of a certificate of public convenience concludes that respondent is not a common carrier.

HELD:

(1) YES. According to Art. 1732 of the Civil Code, Common carriers are persons, corporations, firms or Associations engaged in the businedd of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public. The said article makes no distinction between one whose PRINCIPAL business activity is the carrying of persons or goods or both, and one who does such carrying as and ANCILLIARY or sideline activity. Nor does the article make any distinction between a carrier offering its services on a regular basis or on an occassional basis. The meaning of public service under the Public Service Act was used to supplement the concept of common carrier which inludes xxx every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general pr limited clientele, whether permanent, occasional, or accidental, and done for general business purposes xxx. It appears that respondent is properly characterized as a common carrier even though he merely back-hauled goods for other merchants from Manila to Pangasinan, althoughsuch was done on an occasional manner and even though respondents principal occupatiuon was not the carriage of goods for others.

(2) NO. The Court ruled that a certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations and has been granted a certificate of public convenience or other franchise. To exempt private respondent from the liabilities of a common carrier because he has not secured the necessary certificate of public convenience, would be offensive to sound public policy.

Ruling: The hijacking cannot be considered an exception to the liability of the common carrier because Article 1734 is a closed list. However, due to the grave or irresistible force by the thieves, the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. Hence, Cendena was not held liable for the loss of the merchandise.

[G.R. No. 186312. June 29, 2010.]SPOUSES DANTE CRUZ and LEONORA CRUZ,petitioners,vs. SUN HOLIDAYS, INC.,respondent.

Ponente: CARPIO MORALES,Jp:FACTS:Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 2001 against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on September 11, 2000 on board the boatM/B Coco Beach IIIthat capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the couple had stayed at Coco Beach Island Resort (Resort) owned and operated by respondent.The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11, 2000 was by virtue of a tour package-contract with respondent that included transportation to and from the Resort and the point of departure in Batangas. Miguel C. Matute (Matute), a scuba diving instructor and one of the survivors, gave his account of the incident that led to the filing of the complaint as follows:Matute stayed at the Resort from September 8 to 11, 2000. He was originally scheduled to leave the Resort in the afternoon of September 10, 2000, but was advised to stay for another night because of strong winds and heavy rains.On September 11, 2000, as it was still windy, Matute and 25 other Resort guests including petitioners' son and his wife trekked to the other side of the Coco Beach mountain that was sheltered from the wind where they boardedM/B Coco Beach III,which was to ferry them to Batangas.Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt from side to side and the captain to step forward to the front, leaving the wheel to one of the crew members.The waves got more unwieldy. After getting hit by two big waves which came one after the other,M/B Coco Beach IIIcapsized putting all passengers underwater.The passengers, who had put on their life jackets, struggled to get out of the boat. Upon seeing the captain, Matute and the other passengers who reached the surface asked him what they could do to save the people who were still trapped under the boat. The captain replied"Iligtas niyo na lang ang sarili niyo"(Just save yourselves).AcCTaDHelp came after about 45 minutes when two boats owned by Asia Divers in Sabang, Puerto Galera passed by the capsizedM/B Coco Beach III.Boarded on those two boats were 22 persons, consisting of 18 passengers and four crew members, who were brought to Pisa Island. Eight passengers, including petitioners' son and his wife, died during the incident.At the time of Ruelito's death, he was 28 years old and employed as a contractual worker for Mitsui Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic monthly salary of $900. Petitioners, by letter of October 26, 2000,demanded indemnification from respondent for the death of their son in the amount of at least P4,000,000. Respondent denied any responsibility for the incident which it considered to be a fortuitous event. It nevertheless offered, as an act of commiseration, the amount of P10,000 to petitioners upon their signing of a waiver.Petitioners declined, they filed the Complaint, alleging that respondent, as a common carrier, was guilty of negligence in allowingM/B Coco Beach IIIto sail notwithstanding storm warning bulletins issued by the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) as early as 5:00 a.m. of September 11, 2000. Carlos Bonquin, captain ofM/B Coco Beach III,averred that the Resort customarily requires four conditions to be met before a boat is allowed to sail, to wit: (1) the sea is calm, (2) there is clearance from the Coast Guard, (3) there is clearance from the captain and (4) there is clearance from the Resort's assistant manager.He added thatM/B Coco Beach IIImet all four conditions on September 11, 2000, but asubascoor squall, characterized by strong winds and big waves, suddenly occurred, causing the boat to capsize.By Decision of February 16, 2005,Branch 267 of the Pasig RTC dismissed petitioners' Complaint and respondent's CounterclaimPetitioners' Motion for Reconsideration having been denied by Order dated September 2, 2005,they appealed to the Court of Appeals.By Decision of August 19, 2008,the appellate court denied petitioners' appeal, holding, among other things, that the trial court correctly ruled that respondent is a private carrier which is only required to observe ordinary diligence; that respondent in fact observed extraordinary diligence in transporting its guests on boardM/B Coco Beach III;and that the proximate cause of the incident was a squall, a fortuitous event.Petitioners' Motion for Reconsideration having been denied by Resolution dated January 16, 2009,they filed the present Petition for ReviewISSUE:1. WON respondent is a common carrier2. WON respondent is guilty of negligence in allowing M/B Coco Beach III sail notwithstanding storm warning bulletins issued by PAGASA.

HELD:1. YES.Petitioners correctly rely onDe Guzman v. Court of Appealsin characterizing respondent as a common carrier.The Civil Code defines "common carriers" in the following terms:Article 1732.Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public.The above article makesno distinction betweenone whoseprincipal business activityis the carrying of persons or goods or both, and one who does such carrying only as anancillary activity(in local idiom, as "a sideline").Article 1732 also carefully avoids making any distinction betweena person or enterprise offering transportation service on aregular or scheduled basis andone offering such service on anoccasional, episodic or unscheduled basis.Neither does Article 1732 distinguish betweena carrier offering its services to the"general public,"i.e.,the general community or population,andone who offers services or solicits business only from anarrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinctions.So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on common carriers set forth in the Civil Code.Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly considered ancillary thereto. The constancy of respondent's ferry services in its resort operations is underscored by its having its ownCoco Beachboats. And the tour packages it offers, which include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus available to the public.That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be imprudent to suppose that it provides said services at a loss. The Court is aware of the practice of beach resort operators offering tour packages to factor the transportation fee in arriving at the tour package price. That guests who opt not to avail of respondent's ferry services pay the same amount is likewise inconsequential. These guests may only be deemed to have overpaid.2. YES. A very cautious person exercising the utmost diligence would thus not brave such stormy weather and put other people's lives at risk. The extraordinary diligence required of common carriers demands that they take care of the goods or lives entrusted to their hands as if they were their own. This respondent failed to do.

Respondent cites the squall that occurred during the voyage as the fortuitous event that overturnedM/B Coco Beach III.As reflected above, however, the occurrence of squalls was expected under the weather condition of September 11, 2000. Moreover, evidence shows thatM/B Coco Beach IIIsuffered engine trouble before it capsized and sank. The incident was, therefore, not completely free from human intervention. The Court need not belabor how respondent's evidence likewise fails to demonstrate that it exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the squall.AsDe Guzmaninstructs, Article 1732 of the Civil Code defining "common carriers" has deliberately refrained from making distinctions on whether the carrying of persons or goods is the carrier's principal business, whether it is offered on a regular basis, or whether it is offered to the general public. The intent of the law is thus to not consider such distinctions. Otherwise, there is no telling how many other distinctions may be concocted by unscrupulous businessmen engaged in the carrying of persons or goods in order to avoid the legal obligations and liabilities of common carriers.The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical cyclone warnings for shipping on September 10 and 11, 2000 advising of tropical depressions in Northern Luzon which would also affect the province of Mindoro.By the testimony of Dr. Frisco Nilo, supervising weather specialist of PAGASA, squalls are to be expected under such weather condition. Respondent's insistence that the incident was caused by a fortuitous event does not impress either.The elements of a "fortuitous event" are: (a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtors to comply with their obligations, must have been independent of human will; (b) the event that constituted thecaso fortuitomust have been impossible to foresee or, if foreseeable, impossible to avoid; (c) the occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal manner; and (d) the obligor must have been free from any participation in the aggravation of the resulting injury to the creditor. To fully free a common carrier from any liability, the fortuitous event must have been theproximate and only causeof the loss. And it should have exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the fortuitous event. Article 1764vis--visArticle 2206of the Civil Code holds the common carrier in breach of its contract of carriage that results in the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity and (3) moral damages.Petitioners are entitled to indemnity for the death of Ruelito which is fixed at P50,000. As for damages representing unearned income, the formula for its computation is:Net Earning Capacity=life expectancy x (gross annual income -reasonable and necessary living expenses).Life expectancy is determined in accordance with the formula:2/3 x [80 age of deceased at the time of death] Applying the above guidelines, the Court determines Ruelito's life expectancy as follows:Life expectancy = 2/3 x [80 age of deceased at the time of death]2/3 x [80 - 28]2/3 x [52]Life expectancy = 35Documentary evidence shows that Ruelito was earning a basic monthly salary of $900which, when converted to Philippine peso applying the annual average exchange rate of $1 = P44 in 2000,amounts to P39,600. Ruelito's net earning capacity is thus computed as follows:Net Earning Capacity = life expectancy x (gross annual income - reasonableand necessary living expenses).= 35 x (P475,200 - P237,600)= 35 x (P237,600)Net Earning Capacity = P8,316,000Respecting the award of moral damages, since respondent common carrier's breach of contract of carriage resulted in the death of petitioners' son, following Article 1764vis--visArticle 2206 of the Civil Code, petitioners are entitled to moral damages.DAETHcSince respondent failed to prove that it exercised the extraordinary diligence required of common carriers, it is presumed to have acted recklessly, thus warranting the award too of exemplary damages, which are granted in contractual obligations if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Under the circumstances, it is reasonable to award petitioners the amount of P100,000 as moral damages and P100,000 as exemplary damages. THE Court of Appeals Decision of August 19, 2008 isREVERSEDandSET ASIDE. Judgment is rendered in favor of petitioners ordering respondent to pay petitioners the following: (1) P50,000 as indemnity for the death of Ruelito Cruz; (2) P8,316,000 as indemnity for Ruelito's loss of earning capacity; (3) P100,000 as moral damages; (4) P100,000 as exemplary damages; (5) 10% of the total amount adjudged against respondent as attorneys fees; and (6) the costs of suit.The total amount adjudged against respondent shall earn interest at the rate of 12% per annum computed from the finality of this decision until full payment.FIRST PHILIPPINE INDUSTRIAL CORPORATION v. CAGR. 125948, December 29, 1998

FACTS:Petitioner First Philippine Industrial Corporation (FIPC) is a grantee of a pipeline concession under Republic Act No. 387, to contract, install and operate oil pipelines. Sometime in January 1995, petitioner applied for mayors permit in Batangas. However, the Treasurer required petitioner to pay a local tax based on gross receipts amounting to P956,076.04 payable in four installments. In order not to hamper its operations, petitioner paid the tax for the first quarter of 1993. On January 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt from local tax since it is engaged in transportation business. The respondent City Treasurer denied the protest contending that petitioner cannot be considered engaged in trasportation business thus it cannot claim exemption under Section 133 (j) of the Local Government Code. Petitioner filed a complaint before the Regional Trial Court of Batangas for tax refund. Respondents assert that pipelines are not included in the term common carrier which refers solely to ordinary carriers such as trucks, trains, ships and the like, that the term common Carrier pertains to the mode or manner by which a product is delivered to its destination. The trial court dismissed the complaint, and such was affirmed by the Court of Appeals.

ISSUE/S:Whether or not FIPC is a common carrier?

HELD/RULING:Yes, FIPC is a common carrier. 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.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 petitioner is a common carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier. 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.

CALVO VS. UCPB GENERAL INSURANCE CO., INC. G.R. No. 148496March 19, 2002Mendoza, J.:

FACTS:Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a sole proprietorship customs broker. Petitioner entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the Port Area in Manila to SMC's warehouse in Ermita, Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc. On July 14, 1990, the shipment, contained in 30 metal vans, arrived in Manila on board "M/V Hayakawa Maru" and were unloaded from the vessel to the custody of the arrastre operator, Manila Port Services, Inc. Pursuant to her contract with SMC, petitioner Calco withdrew the cargo from the arrastre operator and delivered it to SMC's warehouse in Ermita, Manila. After inspection, it was found that some of the cargoes were damaged. SMC collected payment from respondent UCPB under its insurance contract for the said amount. Respondent UCPB, as subrogee of SMC, brought suit against petitioner in the Regional Trial Court, which rendered the petitioner liable for damages to the cargo handled. The decision was affirmed by the Court of Appeals on appeal. Hence this petition for review on certiorari.

ISSUE/s:Whether the petitioner is a common carrier or a private or special carrier who did not hold its services to the public.

HELD:Article 1732 of the Civil Code provides that 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. Hence, the Supreme Court ruled that petitioner is a common carrier because the transportation of goods is an integral part of her business. It was further held that as such, she is bound to observe extraordinary diligence in the carriage of goods as provided in Article 1733; that to prove extraordinary diligence, petitioner must do more than merely show the possibility that some other party could be responsible for the damage; and that improper packing of the goods could be a basis to exempt petitioner from liability, but petitioner accepted the cargo without exception despite the apparent defects in some of the container vans.

ASIA LIGHTERAGE AND SHIPPING v. CAGR. 147246, August 19, 2003

FACTS:Petitioner Asia Lighterage and Shipping, Inc. was contracted as carrier by the consignee, General Milling Corporation, to deliver a cargo to the consignee's warehouse at Pasig City. The cargo, however, did not reach the consignee. The transport of said cargo was suspended due to a warning of an incoming typhoon, however, the petitioner proceeded to pull the barge to Engineering Island off Baseco to seek shelter from the approaching typhoon. A few days after, the barge develop a list because of a hole it sustained after hitting an unseen protruberance underneath the water. Upon reaching the Sta. Mesa spillways, the barge again ran aground due to strong current. To avoid the complete sinking of the barge, a portion of the goods was transferred to three other barges. The next day, the towing bits of the barge broke. It sank completely, resulting in the total loss of the remaining cargo. Private respondent, Prudential Guarantee and Assurance, Inc., as insurer, indemnified the General Milling Corp. for the lost cargo and thus, as subrogee, sought recovery from petitioner, Asia Lighterage. Both the trial court and the appellate court ruled in favor of private respondent.

ISSUE:1. Whether or not Asia Lighterage is a common carrier?2. Whether or not Asia Lighterage exercised extraordinary diligence in its care and custody of the consignees cargo?

HELD:1. Yes, Asia Lighterage is a common carrier. Article 1732 of the Civil Code defines common carriers as persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. The definition of common carriers in Article 1732 of the Civil Code 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; that there was no distinguishment between a person or enterprise offering transporation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis, that Article 1732 does not distinguish between a carrier offering its services to the general public, and one who offers services or solicits business only from a narrow segment of the general population. In the case at bar, the principal business of the petitioner is that of lighterage and drayage and it offers its barges to the public for carrying or transporting goods by water for compensation. Petitioner is clearly a common carrier, whether its carrying of goods is done on an irregular rather than scheduled manner, and with an only limited clientele. A common carrier need not have fixed and publicly known routes. Neither does it have to maintain terminals or issue tickets. The test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted." In the case at bar, the petitioner admitted that it is engaged in the business of shipping and lighterage, offering its barges to the public, despite its limited clientele for carrying or transporting goods by water for compensation.

2. No, petitioner failed to exercise extraordinary diligence in its care and custody of the consignee's goods. Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of negligence in the case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instances when the presumption of negligence does not attach:Art. 1734.Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:(1)Flood, storm, earthquake, lightning, or other natural disaster or calamity;(2)Act of the public enemy in war, whether international or civil;(3)Act or omission of the shipper or owner of the goods;(4)The character of the goods or defects in the packing or in the containers;(5)Order or act of competent public authority.In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss of its cargo. Petitioner claims that this was caused by a typhoon, hence, it should not be held liable for the loss of the cargo. However, petitioner failed to prove that the typhoon is the proximate and only cause of the loss of the goods, and that it has exercised due diligence before, during and after the occurrence of the typhoon to prevent or minimize the loss. The evidence show that, even before the towing bits of the barge broke, it had already previously sustained damage when it hit a sunken object while docked at the Engineering Island. It even suffered a hole. Clearly, this could not be solely attributed to the typhoon. The partly-submerged vessel was refloated but its hole was patched with only clay and cement. The patch work was merely a provisional remedy, not enough for the barge to sail safely. Thus, when petitioner persisted to proceed with the voyage, it recklessly exposed the cargo to further damage.

DEGREE OF DILIGENCE and ARRASTRE[G.R. No. 171194. February 4, 2010.]ASIAN TERMINALS, INC., petitioner, vs. DAEHAN FIRE AND MARINE INSURANCE CO., LTD., respondent.NACHURA, J p:Facts: On 8July 2008 Doosan Corporation shipped 26 Boxes of printed alluminum sheets on board vessel Heung-A Dragon owned by Dongnama Shipping Co., Ltd., it is covered by bill lading and consigned to Access International. Doosan insured the shipment with Daehan Fire and Marine Insurance Co. Ltd. under all risk marine cargo insurance policy. The vessel arrived in Manila that was then unloaded under good condition and no survey were conducted in the Equipment Interchange Receipt. Successively, the Access International requested from the licensed broker, Victoria Lazo together with Asian Terminal Inc. a joint survey of shipment but still no inspection was made. Victoria Lazo and Asian Terminal then released the and delivered to Access International warehouse. However, there were only 12 boxes that is accounted whole 14 boxes were missing amounting $34,993.28. Thus Access International asked for the indemnifdication from Daehan Fire and marine Insurance Co. amounting $45,728.81.Daehan now filed a case represented by Smith Bell against DongnamaUNiship Inc. alleging that the loss and damages was due to the fault of the Asian Terminal Inc. and Victoria Lazo. RTC: Dismissed the Case on the groundsof insufficiency of evidenceCA: Reversed the Decision of RTC. Ordering Asian Terminal Inc. and Victoria Lazo to pay Daehan Fore and Marine Insurance Co.Issue: Whether or not the Petitioner Asian Terminals Inc. is liable for the loss of the shipment notwithstanding the acknowledgement by consignees broker/ representative in the Equipment Interchange Receipt that the shipment was received in good order.Held: Yes. In the performance of its obligation, An Arrastre Operator should OBSERVE THE SAME DEGREE OF DILIGENCE as that required of COMMON CARRIERS and warehouseman. Being a custodian of goods an arrastre must take care of goods and turn them over to party entitled into possession. In a burden of proof to show compliance in the obligation to deliver goods to appropriate party must devolve upon arrastre operator. Since safe keeping of goods is its responsibility, it must prove that the losses were not due to its negligence or to that of its employee. Under claims and Liability, the contractor shall be solely liable for any injury or damages that may arise on account of negligence or carelessness of CONTRACTOR. What is essential is knowledge beforehand of the extent of risk to be undertaken by arrastre operator, as determined by the value of property.

Sps. Perea vs. Sps. ZarateG.R. No. 157917, August 29, 2012

FACTS:

Sps. Zarate, parents of Aaron Zarate, engaged the services of Sps. Perea for the adequate and safe transportation carriage of the former spouses son from their residence to his school. During the effectivity of the contract of carriage, Aaron Zarate died in connection with a vehicular/train collision which occurred while Aaron was riding the contracted carrier. At the time of the said collision, there were no safety warning signs and railings at the site commonly used for railroad crossing. The site of the collision was not intended by the railroad operator for railroad crossing at the time of the collision. PNR refused to acknowledge any liability for the collision. In Sps. Pereas defense, they adduces evidence to show that they had exercised the diligence of a good father of a family in the selection and supervision of Alfaro, the driver, by making sure that Alfaro had been issued a drivers license and had not been involved in any vehicular accident prior to the collision. The RTC ruled in favor of Sps. Zarate and held the Pereas and PNR jointly and severally liable for the death of Aaron plus damages. The CA upheld the award for the loss of Aarons earning capacity, plus damages, and the award for Attorneys fees was deleted. Hence, this petition.

ISSUE:

WON the Pereas and PNR are jointly and severally liable for damages.

HELD:

YES. The defense of the Pereas that they exercised the diligence of a good father of a family has no merit because they operated as common carriers and that their standard of care was extraordinary diligence, not the ordinary diligence of a good father of a family. The Pereas, acting as a common carrier, were already presumed to be negligent at the time of the accident because death had occurred to their passenger. The presumption for negligence, being a presumption of law, laid the burden of evidence on their shoulders to establish that they had not been negligent. There is no question that the Pereas did not overturn the presumption of their negligence by credible evidence. Their defense of having observed the diligence of a good father of a family in the selection and supervision of their driver was not legally sufficient. PNR was also found guilty of negligence because it did not ensure the safety of others through the placing of crossbars, signal lights, warning signs, and other permanent safety barriers to prevent vehicles or pedestrians from crossing there. Hence, the Pereas and PNR should jointly and severally be liable for the death of Aaron Zarate.

F. C. FISHER,plaintiff,vs. YANGCO STEAMSHIP COMPANY, J. S. STANLEY, as Acting Collector of Custom of the Philippine Islands, IGNACIO VILLAMOR, as Attorney-General of the Philippine Islands, and W. H. BISHOP, as prosecuting attorney of the city of Manila,respondents.[G.R. No. 8095. November 5, 1914 & March 31, 1915.]

Ponente: CARSON,Jp:

SYLLABUS1.COMMON CARRIERS; PREFERENCES AND DISCRIMINATIONS. Whatever may have been the rule at common law, common carriers in this jurisdiction cannot lawfully decline to accept a particular class of goods for carriage to the prejudice of the traffic in those goods unless it appears that for some sufficient reason the discrimination against the traffic in such goods is reasonable and necessary. Mere prejudice or whim will not suffice. The grounds of the discrimination must be substantial ones, such as will justify the courts in holding the discrimination to have been reasonable and necessary under all the circumstances of the case

2.PREFERENCES AND DISCRIMINATIONS; EXPLOSIVES. It cannot be doubted that the refusal of a "steamship company, the owner of a large number of vessels" engaged in the coastwise trade of the Philippine Islands as a common carrier of merchandise, to accept explosives for carriage on any of its vessels subjects the traffic in such explosives to a manifest prejudice and discrimination, and in each case it is a question of fact whether such prejudice or discrimination is undue, unnecessary or unreasonable.

FACTS:The complaint alleges that plaintiff is a stockholder in the Yangco Steamship Company, the owner of a large number of steam vessels, duly licensed to engage in the coastwise trade of the Philippine Islands; that on or about June 10, 1912, the directors of the company adopted a' resolution which was thereafter ratified and affirmed by the shareholders of the company, "expressly declaring and providing that the classes of merchandise to be carried by the company in its business as a common carrier do not include dynamite, powder or other explosives, and expressly prohibiting the officers, agents and servants of the company from offering to carry, accepting for carriage or carrying said dynamite, powder or other explosives;" that thereafter the respondent Acting Collector of Customs demanded and required of the company the acceptance and carriage of such explosives; that he has refused and suspended the issuance of the necessary clearance documents of the vessels of the company unless and until the company consents to accept such explosives for carriage; that plaintiff is advised and believes that should the company decline to accept such explosives for carriage.The respondent Attorney-General of the Philippine Islands and the respondent prosecuting attorney of the city of Manila intend to institute proceedings under the penal provisions of sections 4, 5, and 6 of Act No. 98 of the Philippine Commission against the company, its managers, agents and servants, to enforce the requirements of the Acting-Collector of Customs as to the acceptance of such explosives for carriage; that notwithstanding the demands of the plaintiff stockholder, the manager, agents and servants of the company decline and refuse to cease the carriage of such explosives, on the ground that by reason of the severity of the penalties with which they are threatened upon failure to carry such explosives, they cannot subject themselves to "the ruinous consequences which would inevitably result" from failure on their part to obey the demands and requirements of the Acting Collector of Customs as to the acceptance for carriage of explosives; that plaintiff believes that the Acting Collector of Customs erroneously construes the provisions of Act No. 98 in holding that they require the company to accept such explosives for carriage notwithstanding the above mentioned resolution of the directors and stockholders of the company, and that if the Act does in fact require the company to carry such explosives it is to that extent unconstitutional and void; that notwithstanding this belief of complainant as to the true meaning of the Act. The questions involved cannot be raised by the refusal of the company or its agents to comply with the demands of the Acting Collector of Customs, without the risk of irreparable loss and damage resulting from his refusal to facilitate the documentation of the company's vessels, and without assuming a risk of pains and penalties under the drastic provisions of the Act which prohibit any attempt on the part of the company to test the questions involved by refusing to accept such explosives for carriage.The prayer of the complaint is as follows:"Wherefore your petitioner prays to this honorable court as follows:"First.That to the due hearing of the above entitled action be issued a writ of prohibition perpetually restraining the respondent Yangco Steamship Company, its appraisers, agents, servants or other representatives from accepting to carry and from carrying, in steamers of said company dynamite, powder or other explosive substance, in accordance with the resolution of the board of directors and of the shareholders of said company."Second.That a writ of prohibition be issued perpetually enjoining the respondent J. S. Stanley as Acting Collector of Customs of the Philippine Islands, his successors, deputies, servants or other representatives, from obligating the said Yangco Steamship Company, by any means whatever, to carry dynamite, powder or other explosive substance."Third.That a writ of prohibition be issued perpetually enjoining the respondent Ignacio Villamor as Attorney-General of the Philippine Islands, and W. H. Bishop as prosecuting attorney of the city of Manila, their deputies, representatives or employees, from accusing the said Yangco Steamship Company, its officers, agents or servants, of the violation of Act No. 98 by reason of the failure or omission of the said company to accept for carriage or to carry dynamite, powder or other explosive."Fourth.That the petitioner be granted such other remedy as may be meet and proper."ISSUE: Whether the refusal of the owners and officers of a steam vessel, duly licensed to engage in the coastwise trade of the Philippine Islands and engaged in that trade as a common carrier, to accept for carriage "dynamite, powder or other explosives" from any and all shippers who may offer such explosives for carriage can be held to be a lawful act without regard to any question as to the conditions under which such explosives are offered for carriage, or as to the suitableness of the vessel for the transportation of such explosives, or as to the possibility that the refusal to accept such articles of commerce in a particular case may have the effect of subjecting any person or locality or the traffic in such explosives to an undue, unreasonable or unnecessary prejudice or discrimination.

HELD:YES. To this complaint the respondents demurred, and we are of opinion that the demurrer must be sustained, on the ground that the complaint does not set forth facts sufficient to constitute a cause of action.It will readily be seen that plaintiff seeks in these proceedings to enjoin the steamship company from accepting for carriage on any of its vessels, dynamite, powder or other explosives, under any conditions whatsoever; to prohibit the Collector of Customs and the prosecuting officers of the government from all attempts to compel the company to accept such explosives for carriage on any of its vessels under any conditions whatsoever; and to prohibit these officials from any attempt to invoke the penal provisions of Act No. 98, in any case of a refusal by the company or its officers so to do; and this without regard to the conditions as to safety and so forth under which such explosives are offered for carriage, and without regard also to any question as to the suitableness for the transportation of such explosives of the particular vessel upon which the shipper offers them for carriage; and further without regard to any question as to whether such conduct on the part of the steamship company and its officers involves in any instance an undue, unnecessary or unreasonable discrimination to the prejudice of any person, locality or particular kind of traffic.

The duties and liabilities of common carriers in this jurisdiction are defined and fully set forth in Act No. 98 of the Philippine Commission, and, until and unless that statute be declared invalid or unconstitutional, we are bound by its provisions.Sections 2, 3 and 4 of the Act are as follows:"SEC. 2.It shall be unlawful for any common carrier engaged in the transportation of passengers or property as above set forth to make or give any unnecessary or unreasonable preference or advantage to any particular person, company, firm, corporation or locality, or any particular kind of traffic in any respect whatsoever, or to subject any particular person, company, firm, corporation or locality, or any particular kind of traffic, to any undue or unreasonable prejudice or discrimination whatsoever, and such unjust preference or discrimination is also hereby prohibited and declared to be unlawful."SEC. 3.No common carrier engaged in the carriage of passengers or property as aforesaid shall, under any pretense whatsoever, fail or refuse to receive for carriage, and as promptly as it is able to do so without discrimination, to carry any person or property offering for carriage, and in the order in which such persons or property are offered for carriage, nor shall any such common carrier enter into any arrangement, contract or agreement with any other person or corporation whereby the latter is given an exclusive or preferential privilege over any other person or persons to control or monopolize the carriage of any class or kind of property to the exclusion or partial exclusion of any other person or persons, and the entering into any such arrangement, contract or agreement, under any form or pretense whatsoever, is hereby prohibited and declared to be unlawful."SEC. 4.Any willful violation of the provisions of this Act by any common carrier engaged in the transportation of passengers or property as hereinbefore set forth is hereby declared to be punishable by a fine not exceeding five thousand dollars money of the United States, or by imprisonment not exceeding two years, or both, within the discretion of the court."

The validity of this Act has been questioned on various grounds, and it is vigorously contended that in so far as it imposes any obligation on a common carrier to accept for carriage merchandise of a class which he makes no public profession to carry, or which he has expressly or impliedly announced his intention to decline to accept for carriage from all shippers alike, it isultra vires, unconstitutional and void.We may dismiss without extended discussion any argument or contention as to the invalidity of the statute based on alleged absurdities inherent in its provisions or on alleged unreasonable or impossible requirements which may be read into it by a strained construction of its terms.Read in connection with its context this, as well as all the other mandatory and prohibitory provisions of the statute, was clearly intended merely to forbid failures or refusals to receive persons or property for carriage involving any "unnecessary or unreasonable preference or advantage to any particular person, company, firm, corporation or locality, or any particular kind of traffic in any respect whatsoever," or which would "subject any particular person, company, firm, corporation or locality, or any particular kind of traffic to any undue or unreasonable prejudice or discrimination whatsoever."

The traffic in dynamite, gunpowder and other explosives is vitally essential to the material and general welfare of the people of these Islands. If dynamite, gunpowder and other explosives are to continue in general use throughout the Philippines, they must be transported by water from port to port in the various islands which make up the Archipelago. We are satisfied therefore that the refusal by a particular vessel, engaged as a common carrier of merchandise in the coastwise trade of the Philippine Islands, to accept any or all of these explosives for carriage would constitute a violation of the prohibitions against discriminations penalized under the statute, unless it can be shown by affirmative evidence that there is so real and substantial a danger of disaster necessarily involved in the carriage of any or all of these articles of merchandise as to render such refusal a due or a necessary or a reasonable exercise of prudence and discretion on the part of the shipowner.The complaint in the case at bar lacking the necessary allegations under this ruling, the demurrer must be sustained on the ground that the facts alleged do not constitute a cause of action.Unless an amended complaint be filed in the meantime let judgment be entered ten days hereafter sustaining the demurrer and dismissing the complaint with costs against the complainant, and twenty days thereafter let the record be filed in the archives of original actions in this court. So ordered.

United States vs Quinajon, et. al.G.R. No. L-8686, July 30, 1915

FACTS:

The defendants were charged with a violation of the pprovisions of Act No. 98. It was claimed the the defendants were engaged for more than four years in the transportation of passengers and merchandise and that the said accused had been regularly charging 6 centavos for the unloading and loading of each package of merchandise. That, in the months of June, July, and September, 1912, the said accused, by means of their virayes and employees, did unload in the port of Currimao aforementioned 5,986 sacks of rice belonging to the provincial government of Ilocos Norte, P.I., that had come from Manila, P.I., which sacks were unloaded from the steamers in which they had been shipped and were carried to the storage warehouses in which they were deposited; that the said accused did willfully, unlawfully, and criminally demand and collect from the provincial treasurer for the unloading of each one of the said sacks of rice 10 centavos which, as set forth in the preceding paragraph, they have been regularly charging for such services in the unloading of the same kind of merchandise and under virtually the same circumstances and conditions. Under Sec. 1, Act No. 98, No person or corporation engaged as a common carrier shall directly or indirectly charge, demand, collect rate, rebate, drawback, or other device, or receive from any person or persons, charge, demand, collect, or receive from a greater or less compensation xxx, Under Sec.2 of Act No. 98, It shall be unlawful for any common carrier to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality xxx. Upon that complaint the defendants were duly arraigned, tried, found guilty of the crime charged, and sentenced by the Honorable Dionisio Chanco, judge, to pay a fine of $100 (P200) and costs, and to return to the provincial government of the Province of Ilocos Norte the sum of P359.16.

ISSUE:

WON the defendants violated Act No. 98 or "An Act to regulate commerce in the Philippine Islands.".\

HELD:

Said Act No. 98 is "An Act to regulate commerce in the Philippine Islands." Its purpose, so far as it is possible, is to compel common carriers to render to all persons exactly the same or analogous service for exactly the same price, to the end that there may be no unjust advantage or unreasonable discrimination. It applies to persons or corporation engaged as common carriers of passengers or property. It will be noted that the law requires common carriers to carry for all persons, either passengers or property, for exactly the same charge for a like or contemporaneous service in the transportation of like kind of traffic under substantially similar circumstances or conditions. The law prohibits common carriers from subjecting any person, etc., or locality, or any particular kind of traffic, to any undue or unreasonable prejudice or discrimination whatsoever. The law does not require that the same charge shall be made for the carrying of passengers or property, unless all the conditions are alike and contemporaneous. It is not believed that the law prohibits the charging of a different rate for the carrying of passengers or property when the actual cost of handling and transporting the same is different. In the present case there is no pretense that it actually cost more to handle the rice for the province than it did for the merchants with whom the special contracts were made. From the evidence it would seem that there was a clear discrimination made against the province. Discrimination is the thing which is specifically prohibited and punished under the law. Hence, the decision of the trial court was affirmed and the defendants were found guilty of violation of Act No. 98.

LOADSTAR SHIPPING v. CAGR. 131621, September 28, 1999

FACTS:Loadstar Shipping Co. Inc. received on board its M/V Cherokee goods, amounting to P6,067,178, which were insured for the same amount with the respondent Manila Insurance Co. (MIC) against various risks including total loss by total loss of the vessel. The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (PGAI) for P4 million. On its way to Manila from the port of Nasipit, Agusandel Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with Loadstar which, however, ignored the same. As the insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation receipt therefor.

MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of the vessel was due to the fault and negligence of Loadstar and its employees. PGAI was later dropped as a party defendant after it paid the insurance proceeds to Loadstar. Loadstar submits that the vessel was a private carrier because it was not issued a certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one consignee for a special cargo. The trial court rendered judgment in favor of MIC. Loadstar elevated the matter to the Court of Appeals, which affirmed the RTCs decision in toto.

ISSUE/S:1. Whether or not Loadstar is a common carrier?2. Whether or not the limited liability theory is applicable?

HELD8/RULING:1. YES, Loadstar is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled.The records do not disclose that the M/V "Cherokee," on the date in question, undertook to carry a special cargo or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V "Cherokee" was a "general cargo carrier. Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers. Loadstar fits the definition of a common carrier under Article 1732 of the Civil Code, which states that 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.

2. No, it is not applicable in this case. The Court found that the M/V Cherokee was not seaworthy when it embarked on its voyage. The vessel was not even sufficiently manned at the time. "For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code." The doctrine of limited liability does not apply where there was negligence on the part of the vessel owner or agent. Loadstar was at fault or negligent in not maintaining a seaworthy vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In any event, it did not sink because of any storm that may be deemed as force majeure, inasmuch as the wind condition in the area where it sank was determined to be moderate. Since it was remiss in the performance of its duties, Loadstar cannot hide behind the "limited liability" doctrine to escape responsibility for the loss of the vessel and its cargo.

PLANTERS PRODUCTS, INC. VS. COURT OF APPEALSG.R. No. 101503SEPTEMBER 15, 1993Belosillo, J.:

FACTS:Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) 9,329.7069 metric tons of Urea 46% fertilizer which the latter shipped in bulk aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union, Philippines. On May 17, 1974, or prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General Charter was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan. After inspection by the charterer's representative, the load of urea was found fit to take in bulk. After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids and remained sealed throughout the entire voyage. On July 3, 1974, upon arrival of the vessel at her port of call, the steel pontoon hatches were opened with the use of the vessel boom. Planters unloaded the cargo from the holders into the steel bodied dump trucks. Each time the dump trucks were filled up, its load of urea was covered with tarpaulin before it was transported to the consignees warehouse located some (50) fifty meters from the wharf. It took (11) eleven days for PPI to unload the cargo. A private marine and cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped. The survey report by CSCI revealed a shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt. In PPI's Certificate of Shortage/Damaged Cargo it was shown that the cargo delivered was indeed short of 94.839 M/T and about 23 M/T were rendered unfit for commerce, having been polluted with sand, rust and dirt. Consequently, PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for the cost of the shortage and diminution in value. Respondent SSA alleged that what they received was just a request for shortlanded certificate and not a formal claim, and that they had nothing to do with the discharge of the shipment. Hence, they denied said request. On July 18, 1975, PPI filed an action for damages with the CFI of Manila. The defendant carrier argued that the strict public policy governing common carriers does not apply to them because they have become private carriers by reason of the provisions of the charter-party. The court a quo ruled against the defendant. The Court of Appeals reversed the lower court and absolved the carrier from liability for the value of the cargo that was lost or damaged. Relying on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., the appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a private carrier and not a common carrier by reason of the time charter-party. Hence, petitioner PPI appeals by way of a petition for review assailing the decision of the Court of Appeals.

ISSUE:Whether a common carrier becomes a private carrier by reason of a charter-party.Whether the shipowner in the instant case was able to prove that he had exercised that degree of diligence required of him under the law.

HELD:A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment by which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight; Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants. Contract of affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship. Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The definition extends to carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or transporting passengers or both for compensation as a public employment and not as a casual occupation. The distinction between a "common or public carrier" and a "private or special carrier" lies in the character of the business, such that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier. The distinction between a common or public carrier and a private or special carrier lies in the character of the business, such that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier. The respondent carrier, in the ordinary course of business, operates as a common carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means in doing so. Hence on the first issue, the court ruled that it is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American Steamship Agencies is misplaced for the reason that the meat of the controversy therein was the validity of a stipulation in the charter-party exempting the shipowner from liability for loss due to the negligence of its agent, and not the effects of a special charter on common carriers. With regard the second issue, this court agreed with respondent carrier that bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so, with a variable weather condition prevalent during its unloading, as was the case at bar. This is a risk the shipper or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. On the other hand, no proof was adduced by the petitioner showing that the carrier was remiss in the exercise of due diligence in order to minimize the loss or damage to the goods it carried.

SAN PABLO v. PANTRANCOGR. L-61461 & 61501, August 21, 1987

FACTS: Pantranco through its counsel wrote to Maritime Industry Authority (MARINA) requesting authority to lease/purchase a vessel named M/V "Black Double" "to be used for its project to operate a ferryboat service from Matnog, Sorsogon and Allen, Samar that will provide service to company buses and freight trucks that have to cross San Bernardo Strait. Pantranco nevertheless acquired the vessel M/V "Black Double" for P3 Million pesos. It wrote the Chairman of the Board of Transportation (BOT) through its counsel, that it proposes to operate a ferry service to carry its passenger buses and freight trucks between Allen and Matnog in connection with its trips to Tacloban City. Without awaiting action on its request Pantranco started to operate said ferry service. The BOT rendered its decision holding that the ferryboat service is part of its Certificate for Public Convenience (CPC) to operate from Pasay to Samar/Leyte by amending Pantranco's CPC, that the grant of authority to operate a private ferryboat service as one of the conditions for the grant of the certificate subject to the condition that the ferryboat shall be for the exclusive use of Pantranco buses, its passengers and freight trucks, and should it offer itself to the public for hire other than its own passengers, it must apply for a separate certificate of public convenience as a public ferryboat service, separate and distinct from its land transport systems.

ISSUE: Whether or not the ferry boat is a common carrier?

HELD: YES, Pantrancos ferry service operation is a common carrier. The contention of private respondent Pantranco that its ferry service operation is as a private carrier, not as a common carrier for its exclusive use in the ferrying of its passenger buses and cargo trucks is absurd. Pantranco does not deny that it charges its passengers separately from the charges for the bus trips and issues separate tickets whenever they board the M/V "Black Double" that crosses Matnog to Allen. Nevertheless, considering that the authority granted to Pantranco is to operate a private ferry, it can still assert that it cannot be held to account as a common carrier towards its passengers and cargo. Such an anomalous situation that will jeopardize the safety and interests of its passengers and the cargo owners cannot be allowed.What appears clear from the record is that at the beginning PANTRANCO planned to operate such ferryboat service between Matnog and Allen as a common carrier so it requested authority from MARINA to purchase the vessel M/V "Black Double" in accordance with the procedure provided for by law for such application for a certificate of public convenience. Thus the Court holds that the water transport service between Matnog and Allen is not a ferryboat service but a coastwise or interisland shipping service. Before private respondent may be issued a franchise or CPC for the operation of the said service as a common carrier, it must comply with the usual requirements of filing an application, payment of the fees, publication, adducing evidence at a hearing and affording the oppositors the opportunity to be heard, among others, as provided by law.

PRIVATE CARRIER VS PUBLIC CARRIER[G.R. No. 149038. April 9, 2003.]PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, petitioner, vs. PKS SHIPPING COMPANY, respondent.VITUG, J p:Facts: Davao Union Marketing Corporation contracted the service of PKS Shipping Company to transport 75,000 bags of cement insuring it in the amount of P 3, 375,00.00 to Philagen. Suddenly the barge sank and brings down the entire shipment. Thus Davao Union Marketing Corporation then filed a case for the claim of the entire amount of insurance. Further, Philagen sought for reimbursement of the amount paid but PKS Shipping Company refused to pay. RTC: Dismissed the case on the grounds that it is caused by fortuitous event in which case the ship-owner is not liable CA: Affirmed in Toto with RTCs decision concluded further that PKS is not a common carrier because carrying of goods for the other is not its principal work and it is a mere casual occupation. PKS Shipping Company being not a common carrier must only observe ORDINARY DILIGENCE and not EXTRAORDINARY DILIGENCE as expected of COMMON CARRIER. Issue: Whether PKS Shipping Company is a private carrier or common carrier thus observing the proper diligence.Held: According to Article 1723, A common carrier are persons, corporationsm 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."Complementary to the codal definition is Section 13, paragraph (b), of the Public Service Act; it defines "public service" to be ". . . every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless communication systems, wire or wireless broadcasting stations and other similar public services. THEREFORE, The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as 'a sideline').In addressing the proper diligence, Article 1733 of the Civil Code requires common carriers to observe extraordinary diligence in the vigilance over the goods they carry. In case of loss, destruction or deterioration of goods, common carriers are presumed to have been at fault or to have acted negligently, and the burden of proving otherwise rests on them. There is no way by which the barge's or the tugboat's crew could have prevented the sinking of Limar I. 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 and should strengthen the factual findings of the appellate court.Thus FORTUITIOUS EVENT.Petition Denied.

FGU Insurance Corp. vs. G.P. Sarmiento Trucking CorpG. R. No. 141910, August 6, 2002

FACTS:

G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the plant site of Concepcion Industries, Inc., along South Superhighway in Alabang, Metro Manila, to the Central Luzon Appliances in Dagupan City. While the truck was traversing the north diversion road along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes. FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of the covered cargoes. FGU, in turn, being the subrogee of the rights and interests of Concepcion Industries, Inc., sought reimbursement of the amount it had paid to the latter from GPS. Since the trucking company failed to heed the claim, FGU filed a complaint for damages and breach of contract of carriage against GPS and its driver Lambert Eroles. The trial court dismissed the case on the ground that plaintiff did not present any single evidence that would prove that defendant is a common carrier. Accordingly, the application of the law on common carriers is not warranted and the presumption of fault or negligence on the part of a common carrier in case of loss, damage or deterioration of goods during transport under 1735 of the Civil Code is not availing. The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. Hence, this petition.

ISSUE:

WON GPS is a common carrier.

HELD:

NO. The Court finds the conclusion of the trial court and the Court of Appeals to be amply justified. GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services to no other individual or entity, cannot be considered a common carrier. 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 hire or compensation, offering their services to the public, whether to the public in general or to a limited clientele in particular, but never on an exclusive basis. The true test of a common carrier is the carriage of passengers or goods, providing space for those who opt to avail themselves of its transportation service for a fee. Given accepted standards, GPS scarcely falls within the term "common carrier. However, GPS cannot escape from liability. Respondent trucking corporation recognizes the existence of a contract of carriage between it and petitioners assured, and admits that the cargoes it has assumed to deliver have been lost or damaged while in its custody. In such a situation, a default on, or failure of compliance with, the obligation in this case, the delivery of the goods in its custody to the place of destination - gives rise to a presumption of lack of care and corresponding liability on the part of the contractual obligor the burden being on him to establish otherwise. GPS has failed to do so. Respondent driver, on the other hand, without concrete proof of his negligence or fault, may not himself be ordered to pay petitioner. The driver, not being a party to the contract of carriage between petitioners principal and defendant, may not be held liable under the agreement. A contract can only bind the parties who have entered into it or their successors who have assumed their personality or their juridical position. In culpa contractual, upon which the action of petitioner rests as being the subrogee of Concepcion Industries, Inc., the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of relief. The law, recognizing the obligatory force of contracts, will not permit a party to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof.

BAER SENIOR & CO.'S SUCCESSORS,plaintiff-appellee,vs. LA COMPAIA MARITIMA,defendant-appellant.[G.R. No.1963. April 30, 1906.]Chicote, Miranda & Sierra,for appellant.Pillsbury & Sutro,for appellee.

SYLLABUS1.CONTRACTS; TOWAGE. A contract of towage is not a contract for the carriage of goods.2.ID.; ID.; NEGLIGENCE. Such a contract, so far as the question of negligence is concerned, is governed by article 1104 of the Civil Code, and not by articles 1601, 1602, or 1902 of the same code.

Ponente:WILLARD,Jp:

FACTS:The plaintiff (owner of the launchMascota) which was then at Aparri, made a contract with the defendant about the 2d of February, 1903, by the terms of which the defendant agreed to tow the launch from Aparri to Manila. In accordance with this agreement the launch was delivered to the defendant at Aparri on the day named, and the defendant's steamerChurrucaleft Aparri on that day with the launch in tow. The steamer, with the launch in tow, arrived safely at Vigan. Two or three hours after leaving Vigan the wind increased in violence, with a rough sea. The speed of the streamer was decreased so that the tow might travel more easily. About half-past 11 at night the lookout, who was stationed in the stern of the steamer for the purpose of watching the launch, reported to the officer of the deck that the launch had disappeared. The steamer was stopped and search was made the rest of the night for the launch, but without success, and in the morning the steamer proceeded on her way to Manila. This action was brought to recover the value of the launch. Judgment was rendered in the court below in favor of plaintiff. The defendant moved for a new trial, which was denied, and it has brought the case here by bill of exceptions.

ISSUE:1. Whether or not a contract of towage is a contract of carriage of goods2. Whether or not defendant is liable under negligence governed by Art 1601 of the Civil Code.

HELD:1. No. A contract of towage is not a contract for the carriage of goods.2. No. Such a contract of towage, so far as the question of negligence is concerned, is governed by article 1104 of the Civil Code, and not by articles 1601, 1602, or 1902 of the same code.

By the terms of articles 1104 the defendant was bound to exercise what is known in the American law as ordinary diligence, taking into consideration the nature of the obligation and the circumstances of persons, time, and place.Evidence in the case shows that the defendant did exercise the diligence required of it by law. The evidence, the towing line was passed from the steamer to the launch, around the stern of the launch once or twice, and one or two other lines passed entirely around the bow of the launch and under the keel. These lines were fastened to a post in the bow of the launch, which post, according to the testimony of the defendant's witnesses, was used for fastening ropes in cases of towing, and, according to one witness of the plaintiff, for the purpose of fastening the launch to the wharf. At the time the loss occurred the towing line did not break, but this post did, and was found fastened to the towing lines when they were pulled on board the steamer. The captain of the steamer and the first mate, both men of experience in the matter, testified that the lines were properly adjusted and the tow properly made fast to the steamer. The only evidence to the contrary was the evidence furnished by one witness of the plaintiff, who testified that he was present when the towing lines were made fast by the captain himself, of the steamer; that he then told the captain it should be done another way. The captain denied this. This witness had no experience, according to his own testimony, in the matter of towing; had never had occasion to make fast a tow to a tug, and had never seen it done, with one exception; and that when this same launch was towed from Manila to Aparri. We do not think his evidence is sufficient to overcome the evidence of the defendant.The judgment of the court below is reversed, and judgment entered for the defendant, absolving it from the complaint, with the costs of the lower court. No costs will be allowed to either party in this court. After the expiration of twenty days final judgment will be entered in accordance herewith and ten days thereafter the case remanded to the lower court for proper procedure.

The first question to be determined is as to the nature of the liability of the defendant. Articles 1601 and 1602 of the Civil Code are as follows:"ART. 1601.Carriers of goods by land or by water shall be subject with regard to the keeping and preservation of the things intrusted to them, to the same obligations as determined for in keepers by articles 1783 and 1784."The provisions of this article shall be understood without prejudice to what is prescribed by the Code of Commerce with regard to transportation by sea and land."ART. 1602.Carriers are also liable for the loss of and damage to the things which they receive, unless they prove that the loss or damage arose from a fortuitous event or forcemajuere."Article 618 of the Code of Commerce is in part as follows:"ART. 618.The captain shall be civilly liable to the agent and the latter to the third persons who may have made contracts with the former "1.For all the damages suffered by the vessel and its cargo by reason of want skill or negligence on his part. If a misdemeanor with the Penal Code.Article 620 of the same code is in part as follows:"ART. 620.The captain shall not be liable for the damages caused to the vessel or to the cargo by reason of forcemajuere; but he shall always be so no agreement to the contrary being valid for those arising through his own fault."These articles treat of the liability of a carrier of goods, but we do not think that the defendant was a carrier of goods in respect to this launch. The reasons for so holding under the American law found in the case of TheJ. P. Donaldson(167 U. S., 599, 602, 603) are equally cogent when applied to the Spanish law. The court there said:"While the tug is performing her contract of towing the barges they may indeed be regarded as part of herself, in the sense that her master is bound to use due care to provide for their safety as well as her own and to avoid collision, either of them or of herself, with other vessels. (TheSyracuse, 9 Wall., 672, 675, 676; TheCivilta, 103 U. S., 699, 701.)"But the barges in tow are by no means put under the control of the master of the tug to the same extent as the tug herself, and the cargo, if any, on board of her."A general ship carrying goods for hire, whether employed in internal, in coasting, or in foreign commerce, is a common carrier; and the ship and her owners, in the absence of a valid agreement to the contrary, are liable to the owners of the goods carried as insurers against all losses, excepting only such irresistible causes as the act of God and public enemies. (Liverpool Steamship Co. vs. Phoenix Ins. Co., 129 U. S., 397, 437.) But a tug and her owners are subject to no such liability to the owners of the vessels towed, or of the cargoes can not maintain any action for the loss of either against the tug of her owners, without proving negligence on her part. As was said by Mr. Justice Strong, and repeated by the present Chief Justice: "An engagement to tow does not impose either an obligation to insure or the liability of common carriers. The burden is always upon him who alleges the breach of such a contract to show either that there has been no attempt at performance, or that there has been negligence or unskillfulness to his injury in the performance. Unlike the case of common carriers, damage sustained by the tow does not ordinarily raise a presumption that the tug has been in fault. The contract requires no more than that he who undertakes to tow shall carry out his undertaking with that degree of caution and skill which prudent navigators usually employ in similar services." (The Webb, 14 Wall., 406, 414; TheBurlington, 137 U. S., 386, 391. See also TheL. P. Dayton, 120 U. S., 337, 351.)The obligation of the defendant grew out of a contract made between it and the plaintiff, and the liability of the former is defined in articles 1101 and 1104 of the Civil Code, which are as follows:"ART. 1101.Those who in fulfilling their obligations are guilty of fraud, negligence, or delay, and those who in any manner whatsoever act in contravention of the stipulations of the same, shall be subject to indemnify for the losses and damages caused thereby.""ART. 1104.The fault or negligence of the debtor consists of the omission of the steps which may be required by the character of the obligation, and which may pertain to the circumstances of the persons, time, and place."Should the obligation not state what conduct is to be observe in its fulfillment, that observed by a good father of a family shall be required."

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC.,vs. PHOENIX ASSURANCE COMPANY OF NEW YORK/MCGEE & CO., INC.,G.R. No. 162467. May 8, 2009.FACTS:Del Monte Phils.contracted Mindanao Terminal, a stevedoring company, to load and stow ashipment of fresh green bananas and pineapples into the vessel M/V Mistrau docked at the port of Davao City andbound for Incheon, South Korea. The goods were insured with Phoenix Assurance. Upon discharge of thecargo in Korea, several cartons of the fresh green bananas and pineapples were damaged and no longer had anycommercial value. DelMonte filed an insurance claim andwas paid byPhoenix Assurance. The lattersued Mindanao Terminal for damages before the RTC of Davao City. The RTC dismissed the complaintfor lack of cause of action against Mindanao Terminal because its services were contracted by Del Monteand not by the insurer; in addition to that, Mindanao had acted merely as a labor provider. The CA reversed the ruling and held Mindanao Terminal to be liable for damages. ISSUE/S:Whether or not Phoenix and McGee have a cause of action and whether Mindanao Terminal is liable for not having exercise extraordinary diligence in the transport and storage of the cargo. HELD/RULING:No. It was neither alleged nor proven by Phoenix and McGee that Mindanao Terminal was bound by contractual stipulation to observe a higher degree of diligence than that required of a good father of a family. Hence, the Supreme Court concluded that following Article 1173, Mindanao Terminal was required to observe ordinary diligence only in loading and stowing the cargoes of Del Monte Produce aboard M/VMistrau.There is a distinction between anarrastreand a stevedore.Arrastre, a Spanish word which refers to hauling of cargo, comprehends the handling of cargo on the wharf or between the establishment of the consignee or shipper and the ships tackle. The responsibility of thearrastreoperator lasts until the delivery of the cargo to the consignee. The service is usually performed by longshoremen. On the other hand,stevedoringrefers to the handling of the cargo from the pier to the ships cargo hold. The responsibility of the stevedore ends upon the loading and stowing of the cargo in the vessel. It is not disputed that Mindanao Terminal was performing purelystevedoringfunction while the private respondent inthesummarizedcase was performingarrastrefunction.

KILUSANG MAYO UNO LABOR CENTERvHON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD, and the PROVINCIAL BUSES OPERATORS ASSOCIATION OF THE PHILIPPINESG.R. No. 115381. December 23, 1994.FACTS:Then Secretary of DOTC, Oscar M. Orbos, issued Memorandum Circular No. 90-395 to then LTFRB Chairman, Remedios A.S. Fernando allowing provincial bus operators to charge passengers rates within a range of 15% above and 15% below the LTFRB official rate for a period of one (1) year.This range was later increased by LTFRB thru a Memorandum Circular No. 92-009 providing, among others, that "The existing authorized fare range system of plus or minus 15 per cent for provincial buses and jeepneys shall be widened to 20% and -25% limit in 1994 with the authorized fare to be replaced by an indicative or reference rate as the basis for the expanded fare range."Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation policy of the DOTC allowing provincial bus operators to collect plus 20% and minus 25% of the prescribed fare without first having filed a petition for the purpose and without the benefit of a public hearing, announced a fare increase of twenty (20%) percent of the existing fares.On March 16, 1994, petitioner KMU filed a petition before the LTFRB opposing the upward adjustment of bus fares, which the LTFRB dismissed for lack of merit.ISSUE/S:Whether or not the absence of notice and hearing and the delegation of authority in the increase or decrease of transportation fares to provincial bus and jeepney operators is unlawful?HELD/RULING:Yes. Under Section 16 (c) of the Public Service Act, as amended, the legislature delegated to the defunct Public Service Commission the power of fixing the rates of public services. LTFRB, the existing regulatory body today, is likewise vested with the same under Executive Order 202.

The authority given by the LTFRB to the bus operators to set fares over and above the authorized existing fare is unlawful and invalid, as it is tantamount to undue delegation of legislative authority. Under the maxim potestas delegate non delegaripotest what has been delegated cannot be delegated.

The policy allowing provincial bus operators to change and increase their fares would result not only to a chaotic situation but to an anarchic state of affairs. This would leave the riding public at the mercy of transport operators who may increase fares, every hour, and every day, every month or every year, whenever it pleases them or whenever they deem it necessary to do so. Furthermore, under the Section 16 (a) of Public Service Act, there must be proper notice and hearing in the fixing of rates, to arrive at a just and reasonable rate acceptable to both the public utility and the public.

GOVERNMENT REGULATION OF COMMON CARRIERS BUSINESS[G.R. No.L-30212. September 30, 1987.]BIENVENIDO GELISAN, petitioner, vs. BENITO ALDAY, respondent.PADILLA, J p:Facts: BienvenidoGelisan is the owner of a freight truck which Roberto Espiritu hired for the purpose of hauling rice, flour, sugar and fertilizer at an agreed price of P18.00 per trip within the limits of the City of Manila, provided that the load shall noet exceed 200 sacks. The truck was taken by a driver Espiritu. Alday, a trucking operator, had a contract to haul the fertilizers of Allas Fertilizer Corporatioon.Espiritu offered the truck in which ALday accepted. The fertilizers then were delivered to the driver and helper of Espiritu, however the latter did not deliver the fertilizers. Espiritu could not be found and Alday reported the loss to Manila Police Department. But soon, Espiritu was arrested and booked for theft. Alday saw the truck in question and it was impounded by the police. Gelisan claimed the truck from the police department. Gelisan claimed that he had no contractual relations to Alday as regards to the hauling and/or delivery that the alleged misappropriation or non-delivery by Espiritu was entirely beyond his control.Issue: Whether or not Gelisan is liable because the said truck is registered under his nameHeld: Yes, He is liable. The registered owner of the public service vehicle is responsible for damages that may arise from the consequences of the incident to its operation or that may be caused to any of the passengers therein. Gelisans claim that he is not liable in view of the contract of lease executed by