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DE GUZMAN V CA

Respondent Ernesto Cendana was engaged in buying up used bottles and scrap metal in Pangasinan. After collection, respondent

would bring such material to Manila for resale. He utilized (2) two six-wheelers trucks which he owned for the purpose. Upon

returning to Pangasinan, he would load his vehicle with cargo belonging to different merchants for delivery to different establishments

in Pangasisnan for which respondent charged a freight fee.

Sometime in November 1970, petitioner Pedro de Guzman, a merchant and dealer of General Milk Company Inc. in Pangasinancontracted with respondent for hauling 750 cartons of milk. Unfortunately, only 150 cartons were delivered, as the other 600 cartons

were intercepted by hijackers along Marcos Highway. Hence, petitioner commenced an action against private respondent.

In his defense, respondent argued that he cannot be held liable due to force majeure, and that he is not a common carrier, hence not

required to exercise extraordinary diligence.

Issues:

1. Whether or not respondent is a common carrier.

2. Whether or not respondent can be held liable for loss of the 600 cartons of milk due to force majeure.

Held:

1. Respondent is a common carrier. Article 1732 of the New Civil Code does not distinguish 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 a

distinction between a person or enterprise offering transportation services on a regular or scheduled basis and one offering such

services on an occasional, episodic, and unscheduled basis.

2. The court ruled in the affirmative. The circumstances do not fall under the exemption from liability as enumerated in Article 1734

of the Civil Code. The general rule is established by the article that common carriers are responsible for the loss, destruction or

deterioration of the goods which they carry, unless the same is due to any of the following causes only:

a. Flood, storm, earthquake, lightning or other natural disasters;

 b. Act of the public enemy, whether international or civil;

c. Act or omission of the shipper or owner of the goods;

d. Character of the goods or defects in the packing;

e. Order or act of competent public authority.

NATIONAL STEEL CORPORATION vs. CA and VLASONS SHIPPING, INC.

[G.R. No. 112287. December 12, 1997]

 National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract of

Voyage Char ter Hire (Affreightment) whereby NSC hired VSI‟s vessel, the MV „VLASONS I‟ to make one (1) voyage to load steel products at Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods only for those it chose under a“special contract of charter party.” 

The vessel arrived with the cargo in Manila, but when the vessel‟s three (3) hatches containing the shipment were opened, nea rly allthe skids of tin plates and hot rolled sheets were allegedly found to be wet and rusty.

 NSC filed its complaint against defendant before the CFI wherein it claimed that it sustained losses as a result of the “act, neglec t anddefault of the master and crew in the management of the vessel as well as the want of due diligence on the part of the defendant tomake the vessel seaworthy … -- all in violation of defendant‟s undertaking under their Contract of Voyage Charter Hire.”  

In its answer, defendant denied liability for the alleged damage claiming that the MV „VLASONS I‟ was seaworthy in all respec ts forthe carriage of plaintiff‟s cargo; that said vessel was not a „common carrier‟ inasmuch as she was under voyage charter contr act with

the plaintiff as charterer under the charter party.

The trial court ruled in favor of VSI; it was affirmed by the CA on appeal.

ISSUE:

Whether or not Vlazons is a private carrier.

HELD:

Yes.

At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as a private carrier. The resolutionof this preliminary question determines the law, standard of diligence and burden of proof applicable to the present case.

Article 1732 of the Civil Code defines a common carrier as “persons, corporations, firms or associations engaged in the busin ess ofcarrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.” It

has been held that the true test of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to

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avail themselves of its transportation service for a fee. A carrier which does not qualify under the above test is deemed a privatecarrier. “Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry g oods for thegeneral public. The most typical, although not the only form of private carriage, is the charter party, a maritime contract by which thecharterer, a party other than the shipowner, obtains the use and service of all or some part of a ship for a period of time or a voyage orvoyages.” 

In the instant case, it is undisputed that VSI did not offer its services to the general public. As found by the Regional Trial Court, itcarried passengers or goods only for those it chose under a “special contract of charter party.” As correctly concluded by the Court of

Appeals, the MV Vlasons I “was not a common but a private carrier.” Consequently, the rights and obligations of VSI and NSC,

including their respective liability for damage to the cargo, are determined primarily by stipulations in their contract of private carriageor charter party. Recently, in Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers ShippingCorporation, the Court ruled:

“ x x x [I]n a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding

on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent

 provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting

commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter

 party that lessen or remove the protection given by law in contracts involving common carriers.”  

First Philippine Industrial Corp. vs. CA

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995, petitioner applied for mayor‟s permit in Batangas. However, the Treasurer required petitioner to pay a local tax based on gross receipts amounting to P956,076.04. Inorder not to hamper its operations, petitioner paid the taxes for the first quarter of 1993 amounting to P239,019.01 under protest. OnJanuary 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt from local tax since it is engaged intransportation business. The respondent City Treasurer denied the protest, thus, petitioner filed a complaint before the Regional TrialCourt of Batangas for tax refund. Respondents assert that pipelines are not included in the term “common carrier” which refers solely

to ordinary carriers or motor vehicles. The trial court dismissed the complaint, and such was affirmed by the Court of Appeals.

Issue:

Whether a pipeline business is included in the term “common carrier” so as to entitle the petitioner to the exemption

Held:

Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged in the business ofcarrying 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 toengage 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 oftransporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all personsindifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The factthat petitioner has a limited clientele does not exclude it from the definition of a common carrier.

Calvo v. UCPB General Insurance G.R. No. 148496 March 19, 2002

Facts: Petitioner 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 InsuranceCo., Inc.

On July 14, 1990, contained in 30 metal vans, arrived in Manila on board “M/V Hayakawa Maru”. After 24 hours, they were unloa dedfrom vessel to the custody of the arrastre operator, Manila Port Services, Inc. From July 23 to 25, 1990, petitioner, pursuant to hercontract with SMC, withdrew the cargo from the arrastre operator and delivered it to SMC‟s warehouse in Manila. On July 25, thegoods 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 ofSMC, brought a suit against petitioner in RTC, Makati City. On December 20, 1995, the RTC rendered judgment finding petitionerliable for the damage to the shipment. The decision was affirmed by the CA.

Issue: Whether or not Calvo is a common carrier?

Held: In this case the contention of the petitioner, that he is not a common carrier but a private carrier, has no merit.

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Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and onewho does such carrying only as ancillary activity. Article 1732 also carefully avoids making any distinction between a person orenterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic orunscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the generalcommunity or population, and one who offers services or solicits business only from a narrow segment of the general population. Wethink that Article 1733 deliberately refrained from making such distinction. (De Guzman v. CA, 68 SCRA 612)

Te concept of “common carrier” under Article 1732 coincide with the notion of “public service”, under the Public Service Act which partially supplements the law on common carrier. Under Section 13, paragraph (b) of the Public Service Act, it includes:

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

FGU Insurance Corporation vs. G.P. Sarmiento Trucking Corporation and Lambert Eroles

G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on June 18, 1994, 30 units of Condura S.D. white refrigerators

aboard its Isuzu truck driven by Lambert Eroles, to the Central Luzon Appliances in Dagupan City. While 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, an insurer of the shipment, paid the value of the covered cargoes (P204,450.00) to Concepcion Industries, Inc.,. Being subrogee

of CII‟s rights & interests, FGU, in turn, sought reimbursement from GPS. Since GPS failed to heed the claim, FGU filed a complaint

for damages & breach of contract of carriage against GPS and Eroles with the RTC. In its answer, respondents asserted that GPS was

only the exclusive hauler of CII since 1988, and it was not so engaged in business as a common carrier. Respondents further claimed

that the cause of damage was purely accidental.

GPS filed a motion to dismiss the complaint by way of demurrer to evidence on the ground that petitioner had failed to prove that it

was a common carrier.

The RTC granted the motion to dismiss on April 30, 1996. It subsequently dismissed the complaint holding that GPS was not a

common carrier defined under the law & existing jurisprudence. The subsequent motion for reconsideration having been denied, FGU

interposed an appeal to the CA. The CA rejected the FGU‟s appeal & ruled in favor of GPS. It also denied petitioner‟s motion for

reconsideration.

ISSUES:

1. WON GPS may be considered a common carrier as defined under the law & existing jurisprudence.

2. WON GPS, either as a common carrier or a private carrier, may be presumed to have been negligent when the goods it undertook to

transport safely were subsequently damaged while in its protective custody & possession.

3. Whether the doctrine of Res ipsa loquitur  is applicable in the instant case.

HELD:

1. The SC finds the conclusion of the RTC and the CA to be amply justified. GPS, being an exclusive contractor & hauler of

Concepcion Industries, Inc., rendering/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/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.”  

2. GPS cannot escape from liability. In culpa contractual, the mere proof of the existence of the contract & the failure of its

compliance justify, prima facie, a corresponding right of relief. The law 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. A breach upon the contract confers upon the

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injured party a valid cause for recovering that which may have been lost/suffered. The remedy serves to preserve the interests of the

 promisee that may include his:

1. Expectation interest –  interest in having the benefit of his bargain by being put in as good a position as he would have been in had

the contract been performed;

2. Reliance interest –  interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he

would have been in had the contract not been made;

3. Restitution interest –  interest in having restored to him any benefit that he has conferred on the other party.

Agreements can accomplish little unless they are made the basis for action. The effect of every infraction is to create a new duty, or to

make recompense to the one who has been injured by the failure of another to observe his contractual obligation unless he can show

extenuating circumstances, like proof of his exercise of due diligence (normally that of the diligence of a good father of a family or,

exceptionally by stipulation or by law such as in the case of common carriers, that of extraordinary diligence) or of the attendance of

fortuitous event, to excuse him from his ensuing liability.

A default on, or failure of compliance with, the obligation gives rise to a presumption of lack of care & corresponding liability on the

 part of the contractual obligor the burden being on him to establish otherwise. GPS has failed to do so.

Eroles, on the other hand, may not be ordered to pay petitioner without concrete proof of his negligence/fault. The driver, not being a

 party to the contract of carriage between petitioner‟s 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/juridical position.

Consonantly with the axiom res inter alios acta aliis neque nocet prodest, such contract can neither favor nor prejudice a third person.

Petitioner‟s civil action against the driver can only be based on culpa aquiliana, which would require the claimant for damag es to

 prove the defendant‟s negligence/fault. 

3. Res ipsa loquitur  holds a defendant liable where the thing which caused the injury complained of is shown to be under the latter‟s

management and the accident is such that, in the ordinary course of things, cannot be expected to happen if those who have its

management/control use proper care. In the absence of the defendant‟s explanation, it affords reasonable evidence that the accident

arose from want of care. It is not a rule of substantive law and does not create an independent ground of liability. Instead, it is regardedas a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and relieves the plaintiff of, the burden of

 producing specific proof of negligence. The maxim simply places the burden of going forward with the proof on the defendant.

However, resort to the doctrine may only be allowed when:

(a) the event is of a kind which does not ordinarily occur in the absence of negligence;

(b) other responsible causes are sufficiently eliminated by the evidence (includes the conduct of the plaintiff and third persons); and

(c) the indicated negligence is within the scope of the defendant‟s duty to the plaintiff.  

Thus, it is not applicable when an unexplained accident may be attributable to one of several causes, for some of which the defendant

could not be responsible.

Res ipsa loquitur generally finds relevance whether or not a contractual relationship exists between the plaintiff and the defendant, for

the inference of negligence arises from the circumstances and nature of the occurrence and not from the nature of the relatio n of the

 parties. Nevertheless,for the doctrine to apply, the requirement that responsible causes (other than those due to defendant‟s conduct)

must first be eliminated should be understood as being confined only to cases of pure (non-contractual) tort since obviously the

 presumption of negligence in culpa contractual immediately attaches by a failure of the covenant or its tenor.

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On the other hand, while the truck driver, whose civil liability is predicated on culpa acquiliana, can be said to have been in control &

management of the vehicle, it is not equally shown that the accident has been exclusively due to his negligence. If it were so, the

negligence could allow res ipsa loquitur to properly work against him. However, clearly this is not the case.

Philamgem vs. PKS Shipping Company

Facts:

Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping Company (PKS Shipping) for theshipment to Tacloban City of seventy-five thousand (75,000) bags of cement worth Three Million Three Hundred Seventy-FiveThousand Pesos (P3,375,000.00). DUMC insured the goods for its full value with petitioner Philippine American General InsuranceCompany (Philamgen). During the transport, the barge where the bags of cement were loaded, sank. Upon demand of payment byDUMC, Philamgen immediately paid them. Hence, it sought reimbursement from PKS Shipping but the latter refused.

Issue:

(1) Whether PKS Shipping is a common carrier or a private carrier; and

(2) WON PKS Shipping exercised the required diligence over the goods they carry. Or, WON PKS Shipping is liable.

Held:

(1) PKS Shipping is a common carrier.

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

(2) 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 1.5knots resulting in the entry of water into the barge‟s hatche s. The official Certificate of Inspection of the barge issued by thePhilippine 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:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity x x x

Asia Lighterage & Shipping, Inc. vs CA & Prudential Guarantee and Assurance, Inc.

On appeal is the CA‟s May 11, 2000 Decision in CA-G.R. CV No. 49195 and February 21, 2001 Resolution affirming with

modification the April 6,1994 Decision of the RTC of  Manilawhich found petitioner liable to pay private respondent the amount of

indemnity and attorney‟s fees. 

FACTS:

Asia Lighterage and Shipping, Inc was contracted as carrier to deliver 3,150 metric tons of Better Western White Wheat in bulk,

(US$423,192.35) to the consignee„s (General Milling Corporation) warehouse at Bo. Ugong,  Pasig City. The cargo was transferred to

it‟s custody on July 25, 1990. The shipment was insured by Prudential Guarantee and Assurance, Inc. against loss/damage forP14,621,771.75.

On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III for delivery to consignee. However, the cargo did

not reach its destination.

It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an incoming typhoon. 5 days later,

the petitioner proceeded to pull the barge to Engineering Island off Baseco to seek shelter from the approaching typhoon. PSTSI III

was tied down to other  barges which arrived ahead of it while weathering out the storm that night. A few days after, the barge

developed a list because of a hole it sustained after hitting an unseen protuberance underneath the water. It filed a Marine Protest on

August 28, 1990 and also secured the services of Gaspar Salvaging Corporation to refloat the barge. The hole was then patched with

clay and cement.

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The barge was then towed to ISLOFF terminal before it finally headed towards the consignee‟s wharf on September 5, 1990. 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 3 other barges.

The next day, the towing bits of the barge broke. It sank completely, resulting in the total loss of the remaining cargo. A 2nd Marine

Protest was filed on September 7, 1990.

7 days later, a bidding was conducted to dispose of the damaged wheat retrieved & loaded on the 3 other barges. The total proceeds

from the sale of the salvaged cargo was P201,379.75.

On the same date, consignee sent a claim letter to the petitioner, and another letter dated September 18, 1990 to the private respondent

for the value of the lost cargo. On January 30, 1991, the private respondent indemnified the consignee in the amount of P4,104,654.22.

Thereafter, as subrogee, it sought recovery of said amount from the petitioner, but to no avail.

ISSUES:

1. Whether petitioner is a common carrier.

2. Assuming petitioner is a common carrier, whether it exercised extraordinary care and diligence in its care and custody of the

consignee‟s cargo. 

HELD:

1. Petitioner 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. 

In De Guzman vs. CA (G.R. No. L-47822, 22 December 1988) it was held that 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. There is alsono distinction between a person or enterprise offering

transportation service on a regular/scheduled basis and one offering such service on an occasional, episodic or unscheduled

basis. Further, 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.Private respondent Ernesto Cendaña was

considered to be a common carrier even if his principal occupation was not the carriage of goods for others, but that of buying used

 bottles and scrap metal in Pangasinan and selling these items in Manila.

To be sure, petitioner fits the test of a common carrier as laid down in Bascos vs. CA( G.R. No. 101089, 07 April 1993, 221 SCRA

318). 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, lighterage and drayage, offering its barges to the public,

despite its limited clientele for carrying/transporting goods by water for compensation. Petitioner is clearly a common carrier.

Therefore, petitioner is a common carrier  whether its carrying of goods is done on an irregular rather than scheduled manner ,

and with an only limited clientele. Acommon carrier need not have fixed and publicly known routes. Neither does it have to maintain

terminals or issue tickets.

2. The findings of the lower courts should be upheld. 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;

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(2) Act of the public enemy in war , whether international or civil;

(3) Act/omission of the shipper/owner of the goods;

(4) The character of the goods or defects in the packing or  in the container s;

(5) Order/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/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. 

Moreover, petitioner still headed to the consignee’s wharf despite knowledge of an incoming typhoon. During the time that the barge

was heading towards the consignee‟s wharf on September 5, 1990, typhoon “Loleng” has already entered the Philippine area of

responsibility.

Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force majeure to escape liability for the loss sustained by

the private respondent. Surely, meeting a typhoon head-on falls short of due diligence required from a common carrier. More

importantly, the officers/employees themselves of petitioner admitted that when the towing bits of the vessel broke that caused its

sinking and the total loss of the cargo upon reaching the Pasig River, it was no longer affected by the typhoon. The typhoon then is not

the proximate cause of the loss of the cargo; a human factor, i.e., negligence had intervened.  

Bascos v. CA

Facts:

Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation whereby theformer bound itself to haul the latter‟s 2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE subcontracted with

 petitioner Estrellita Bascos to transport and deliver the 400 sacks of soya beans. Petitioner failed to deliver the cargo, and as aconsequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract. Cipriano demanded reimbursementfrom petitioner but the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage. Petitioner denied that therewas no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force majeure. The trial court ruledagainst petitioner.

Issues:

(1) Was petitioner a common carrier?

(2) Was the hijacking referred to a force majeure?

Held:

(1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or association engaged in the businessof carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their services to the public."The test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the carrier which hehas held out to the general public as his occupation rather than the quantity or extent of the business transacted." In this case, petitioner

herself has made the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicialadmissions are conclusive and no evidence is required to prove the same.

(2) Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly,they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. There are very fewinstances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. In those caseswhere the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption. The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary toher assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient proofof extraordinary diligence made the presumption conclusive against her.

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A.F. SANCHEZ BROKERAGE vs CA

 A common carrier is liable to the resulting damage to the goods if the improper packaging is known to the carrier or his empl oyees or

is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception.

FACTS: Respondent FGU Insurance Corporation (FGU) brought an action for reimbursement against petitioner A.F. SanchezBrokerage Inc. (Sanchez Brokerage) to collect the amount paid by the former to Wyeth-Suaco Laboratories Inc. (Wyeth-Suaco) asinsurance 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 containerswere opened outside the PSI warehouse.

The Regional Trial Court of Makati dismissed the said complaint; however, the decision was subsequently reversed and set aside bythe 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: Whether or not the FGU Insurance is liable for the delivery of the damaged goods

HELD: As defined under Article 1732 of the Civil Code, common carriers are persons, corporations, firms or associations engaged inthe business of carrying or transporting passengers or goods or both by land, water or air for compensation, offering their services tothe 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, extraordinarydiligence in the vigilance over the goods it transports according to all the circumstances of each case. In the event that the goods arelost, destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently, unless it proves that it observedextraordinary diligence.

The concept of ―extra-ordinary diligence‖ was explained in Compania Maritima v. Court of Appeals. The extraordinary diligence in

the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution foravoiding damage to or destruction of the goods entrusted to it for sale, carriage and delivery. It requires common carriers to renderservice with the greatest skill and foresight and ―to use all reasonable means to ascertain the nature and characteristics of   goods

tendered for shipment and to exercise due care in the handling and storage including such methods as their nature requires.

It was established that Sanchez Brokerage received the cargoes from the PSI warehouse in good order and condition and that upondelivery by petitioner some of the cargoes were found to be in bad order as noted in the Delivery Receipt and as indicated in theSurvey 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 thecharacter of the goods or defects in the packaging or in the containers, the rule is that if the improper packaging is known to the carrieror his employees or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exceptionnotwithstanding such condition, he is not relieved of liability for the resulting damage. If the claim of Sanchez Brokerage that some ofthe cartons were already damaged upon delivery to it were true, then it should naturally have received the cargo under protest or withreservation duly noted on the receipt issued by PSI but it made no such protest or reservation.

Asian Terminals, Inc. vs. Daehan Fire and Marine Insurance Co., Ltd

where it was observed that the relationship between the consignee and the arrastre operator is akin to that existing between the

consignee and/or the owner of the shipped goods and the common carrier, or that between a depositor and a warehouseman.

PERENA V ZARATE

In June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Pereña to transport their (Zarate‟s) son, Aaron Zara te, to

and from school. The Pereñas were owners of a van being used for private school transport.

At about 6:45am of August 22, 1996, the driver of the said private van, Clemente Alfaro, while the children were on board including

Aaron, decided to take a short cut in order to avoid traffic. The usual short cut was a railroad crossing of the Philippine National

Railway (PNR).

Alfaro saw that the barandilla (the pole used to block vehicles crossing the railway) was up which means it was okay to cross. He thentried to overtake a bus. However, there was in fact an oncoming train but Alfaro no longer saw the train as his view was already

 blocked by the bus he was trying to overtake. The bus was able to cross unscathed but the van‟s rear end was hit. During the collision,

Aaron, was thrown off the van. His body hit the railroad tracks and his head was severed. He was only 15 years old.

It turns out that Alfaro was not able to hear the train honking from 50 meters away before the collision because the van‟s stereo was

 playing loudly.

The Zarates sued PNR and the Pereñas (Alfaro became at-large). Their cause of action against PNR was based on quasi-delict. Their

cause of action against the Pereñas was based on breach of contract of common carriage.

In their defense, the Pereñas invoked that as private carriers they were not negligent in selecting Alfaro as their driver as they made

sure that he had a driver‟s license and that he was not involved in any accident prior to his being hired. In short, they obs erved the

diligence of a good father in selecting their employee.

PNR also disclaimed liability as they insist that the railroad crossing they placed there was not meant for railroad crossing (really,

that‟s their defense!). 

The RTC ruled in favor of the Zarates. The Court of Appeals affirmed the RTC. In the decision of the RTC and the CA, they awarded

damages in favor of the Zarates for the loss of earning capacity of their dead son.

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The Pereñas appealed. They argued that the award was improper as Aaron was merely a high school student, hence, the award of such

damages was merely speculative. They cited the case of People vs Teehankee where the Supreme Court did not award damages for the

loss of earning capacity despite the fact that the victim there was enrolled in a pilot school.

ISSUES: Whether or not the defense of due diligence of a good father by the Pereñas is untenable. Whether or not the award of

damages for loss of income is proper.

HELD: Yes, in both issues.

 Defense of Due Diligence of a Good Father  

This defense is not tenable in this case. The Pereñas are common carriers. They are not merely private carriers. (Prior to this case, the

status of private transport for school services or school buses is not well settled as to whether or not they are private or commoncarriers –  but they were generally regarded as private carriers). Private transport for schools are common carriers. The Pereñas, as the

operators of a school bus service were: (a) engaged in transporting passengers generally as a business, not just as a casual occupation;

(b) undertaking to carry passengers over established roads by the method by which the business was conducted; and (c) transporting

students for a fee. Despite catering to a limited clientèle, the Pereñas operated as a common carrier because they held themselves out

as a ready transportation indiscriminately to the students of a particular school living within or near where they operated the service

and for a fee.

Being a common carrier, what is required of the Pereñas is not mere diligence of a good father. What is specifically required from

them by law is extraordinary diligence –  a fact which they failed to prove in court. Verily, their obligation as common carriers did not

cease upon their exercise of diligently choosing Alfaro as their employee.

(It is recommended that you read the full text, the Supreme Court made an elaborate and extensive definition of common and private

carriers as well as their distinctions.) Award of Damages for Aaron’s loss of earning capacity despite he being a high school student at the time of his death  

The award is proper. Aaron was enrolled in a reputable school (Don Bosco). He was of normal health and was an able-bodied person.

Further, the basis of the computation of his earning capacity was not on what he would have become. It was based on the current

minimum wage. The minimum wage was validly used because with his circumstances at the time of his death, it is most certain that

had he lived, he would at least be a minimum wage earner by the time he starts working. This is not being speculative at all.

The Teehankee case was different because in that case, the reason why no damages were awarded for loss of earning capacity was

that the defendants there were already assuming that the victim would indeed become a pilot  –   hence, that made the assumption

speculative. But in the case of Aaron, there was no speculation as to what he might be  –   but whatever he‟ll become, it is certain that he

will at the least be earning minimum wage.