DE GUZMAN V CARespondent 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 Pangasinan contracted 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.

TC ruled that Cendana was a common carrier & liable for the value of the undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages and P 2,000.00 as attorney's fees.CA reversed the judgment of the trial court and held that respondent had been engaged in transporting return loads of freight "as a casual occupation a sideline to his scrap iron business" and not as a common carrier.

Held: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. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberaom making such distinctions"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.

Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:... 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,

Also, 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.

Furthermore, 1735 provides that: In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligenceas required in Article 1733. We do not believe, however, that in the instant case, the standard of extraordinary diligence required private respondent to retain a security guard to ride with the truck and to engage brigands in a firelight at the risk of his own life and the lives of the driver and his helper.

Under Article 1745 (6) above, a common carrier is held responsible and will not be allowed to divest or to diminish such responsibility even for acts of strangers like thieves or robbers,exceptwhere such thieves or robbers in fact acted "with grave or irresistible threat, violence or force." We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or force."( Three (3) of the five (5) hold-uppers were armed with firearms.)

In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary diligence.

NATIONAL STEEL CORPORATION vs. CA and VLASONS SHIPPING, INC.Presumption of Negligence does not apply to VSI, presumption of negligence must be proved by NSCBurden of proof shifts on NSC

National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract of Voyage Charter Hire (Affreightment) whereby NSC hired VSIs 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 vessels three (3) hatches containing the shipment were opened, nearly all the 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, neglect and default 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 to make the vessel seaworthy -- all in violation of defendants 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 respects for the carriage of plaintiffs cargo; that said vessel was not a common carrier inasmuch as she was under voyage charter contract 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 resolution of 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 business of carrying 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 avail themselves of its transportation service for a fee. A carrier which does not qualify under the above test is deemed a private carrier. Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. The most typical, although not the only form of private carriage, is the charter party, a maritime contract by which the charterer, 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 or voyages.

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, it carried 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 carriage or charter party. Recently, in Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation, 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.Therefore, the damage and impairment suffered by the goods during the transportation, due to fortuitous event, force majeure, or the nature and inherent defect of the things, shall be for the account and risk of the shipper.The burden of proof of these accidents is on the carrier.Art. 362.The carrier, however, shall be liable for damages arising from the cause mentioned in the preceding article if proofs against him show that they occurred on account of his negligence or his omission to take the precautions usually adopted by careful persons, unless the shipper committed fraud in the bill of lading, making him to believe that the goods were of a class or quality different from what they really were.Because theMV Vlasons Iwas a private carrier, the shipowners obligations are governed by the foregoing provisions of the Code of Commerce and not by the Civil Code which, as a general rule, places theprima faciepresumption of negligence on a common carrier.It is a hornbook doctrine that:In an action against a private carrier for loss of, or injury to, cargo, the burden is on the plaintiff to prove that the carrier was negligent or unseaworthy, and the fact that the goods were lost or damaged while in the carriers custody does not put the burden of proof on the carrier.Since x x x a private carrier is not an insurer but undertakes only to exercise due care in the protection of the goods committed to its care, the burden of proving negligence or a breach of that duty rests on plaintiff and proof of loss of, or damage to, cargo while in the carriers possession does not cast on it the burden of proving proper care and diligence on its part or that the loss occurred from an excepted cause in the contract or bill of lading.

Where the action is based on the shipowners warranty of seaworthiness, the burden of proving a breach thereof and that such breach was the proximate cause of the damage rests on plaintiff, and proof that the goods were lost or damaged while in the carriers possession does not cast on it the burden of proving seaworthiness. x x x Where the contract of carriage exempts the carrier from liability for unseaworthiness not discoverable by due diligence, the carrier has the preliminary burden of proving the exercise of due diligence to make the vessel seaworthy.

Indeed, NSC failed to discharge its burden to show negligence on the part of the officers and the crew ofMV Vlasons I.On the contrary, the records reveal that it was the stevedores of NSC who were negligent in unloading the cargo from the ship.

First Philippine Industrial Corp. vs. CAPetitioner is a grantee of a pipeline concession under Republic Act No. 387. 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. In order not to hamper its operations, petitioner paid the taxes for the first quarter of 1993 amounting to P239,019.01 under protest. 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, thus, 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 or motor vehicles. The trial court dismissed the complaint, and such was affirmed by the Court of Appeals.

TC denied the tax refundCA affirmed TCs decisionIssue: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 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.

Also, respondent's argument that the term "common carrier" as used in Section 133 (j) of the Local Government Code refers only to common carriers transporting goods and passengers through moving vehicles or vessels either by land, sea or water, is erroneous.As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no distinction as to the means of transporting, as long as it is by land, water or air.It does not provide that the transportation of the passengers or goods should be by motor vehicle.In fact, in the United States, oil pipe line operators are considered common carriers.[17]Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common carrier."Thus, Article 86 thereof provides that:"Art. 86.Pipe line concessionaire as a common carrier.- A pipe line shall have the preferential right to utilize installations for the transportation of petroleum owned by him, but is obligated to utilize the remaining transportation capacity pro rata for the transportation of such other petroleum as may be offered by others for transport, and to charge without discrimination such rates as may have been approved by the Secretary of Agriculture and Natural Resources."Republic Act 387 also regards petroleum operation as a public utility.Pertinent portion of Article 7 thereof provides:"that everything relating to the exploration for and exploitation of petroleum x x and everything relating to the manufacture, refining, storage, ortransportation by special methods of petroleum,is hereby declared to be apublic utility." (Underscoring Supplied)

Calvo v. UCPB General InsuranceG.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 Insurance Co., Inc.

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

SMC collected the said amount from respondent UCPB under its insurance contract. Respondent on the other hand, as a subrogee of SMC, brought a suit against petitioner in RTC, Makati City. On December 20, 1995, the RTC rendered judgment finding petitioner liable for the damage to the shipment. The decision was affirmed by the CA.

Petitioner contends that contrary to the findings of the trial court and the Court of Appeals, she is not a common carrier but a private carrier because, as a customs broker and warehouseman, she does not indiscriminately hold her services out to the public but only offers the sameto select parties with whom she may contract in the conduct of her business.

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.

Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as ancillary activity. Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think 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, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction 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 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 communications systems, wire or wireless broadcasting stations and other similar public services. x x x

There is greater reason for holding petitioner to be a common carrier because the transportation of goods is an integral part of her business. To uphold petitioners contention would be to deprive those with whom she contracts the protection which the law affords themnotwithstanding the fact that the obligation to carry goods for her customers, as already noted, is part and parcel of petitioners business.EXTRAORDINARY DILIGENCE:The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for sale, carriage and delivery.It requires common carriers to render service with the greatest skill and foresight and to use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.Contrary to petitioners assertion, the Survey Report (Exh. H) of the Marine Cargo Surveyors indicates that when the shipper transferred the cargo in question to the arrastre operator, these were covered by clean Equipment Interchange Report (EIR) and, when petitioners employees withdrew the cargo from the arrastre operator, they did so without exception or protest either with regard to the condition of container vans ortheircontents.TheSurvey Reportpertinently readsNor is there basis to exempt petitioner from liability under Art. 1734(4), which providesCommon carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:(4) The character of the goods or defects in the packing or in the containers.For this provision to apply, the rule is that if the improper packing or, in this case, the defect/s in the container, is/are known to the carrier or his employees or apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such condition, he is not relieved of liability for damage resultingtherefrom.[14]In this case, petitioner accepted thecargo without exception despite the apparent defects in some of the container vans.Hence, for failure of petitioner to prove that she exercised extraordinary diligence in the carriage of goods in this case or that she is exempt from liability, the presumption of negligence as provided under Art. 1735[15]holdsFGU Insurance Corporation vs. G.P. Sarmiento Trucking Corporation and LambertEroles

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 CIIs 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 FGUs appeal & ruled in favor of GPS. It also denied petitioners 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 ofRes ipsa loquituris 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 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 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/juridical position. Consonantly with the axiom res inter alios acta aliis neque nocet prodest, such contract can neither favor nor prejudice a third person. Petitioners civil action against the driver can only be based on culpa aquiliana, which would require the claimant for damages to prove the defendants negligence/fault.3.Res ipsa loquiturholds a defendant liable where the thing which caused the injury complained of is shown to be under the latters 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 defendants 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 regarded as 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 defendants 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 relation of the parties. Nevertheless,for the doctrine to apply, the requirement that responsible causes (other than those due to defendants 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.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 CompanyFacts:Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping Company (PKS Shipping) for the shipment to Tacloban City of seventy-five thousand (75,000) bags of cement worth Three Million Three Hundred Seventy-Five Thousand Pesos (P3,375,000.00). DUMC insured the goods for its full value with petitioner Philippine American General Insurance Company (Philamgen). During the transport, the barge where the bags of cement were loaded, sank. Upon demand of payment by DUMC, 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 to carry such goods for a fee. The regularity of its activities in this area indicates more than just a casual activity on its part. Neither can the concept of a common carrier change merely because individual contracts are executed or entered into with patrons of the carrier.(2)PKS Shipping is not liable.The vessel was suddenly tossed by waves of extraordinary height of six (6) to eight (8) feet and buffeted by strong winds of 1.5 knots resulting in the entry of water into the barges 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 ofLimar 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 AND SHIPPING V CAAsia Lighterage and Shipping, Inc was contracted as carrier to deliver 3,150 metric tons of Better Western White Wheat in bulk, to theconsignees (General Milling Corporation) warehouse at Bo. Ugong,Pasig City. The cargo was transferred to its custody on July 25, 1990. The shipment was insured by Prudential Guarantee and Assurance, Inc. against loss/damage for P14,621,771.75.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 otherbargeswhich 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.The barge was then towed to ISLOFF terminal before it finally headed towards the consignees wharf on September 5, 1990. Upon reaching theSta. Mesaspillways, 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 consignees cargo.HELD:1.Petitioner is a common carrier.Article 1732of theCivil Codedefinescommon carriersaspersons, 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.InDe Guzman vs. CA(G.R. No. L-47822, 22 December 1988) it was held thatthe 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 doesnot distinguish between a carrier offering its services to thegeneral public, and one who offers services or solicits business only from a narrow segment of the general population.Private respondent Ernesto Cendaa was considered to be a common carrier even if his principal occupation was not thecarriage of goodsfor others, but that of buying used bottles and scrap metal in Pangasinan and selling these items in Manila.To be sure, petitioner fits thetest of a common carrieras laid down inBascos vs. CA(G.R. No. 101089, 07 April 1993, 221 SCRA 318). The test to determine a common carrier iswhether 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 carrierwhether its carrying of goods is done on an irregular rather than scheduled manner, andwith an only limited clientele. Acommon carrierneed 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 consignees goods.Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them.They arepresumed to have been at faultorto haveacted negligentlyif the goods arelost,destroyedordeteriorated.To overcome the presumption of negligencein the case of loss, destruction or deterioration of the goods,the common carrier must prove that it exercised extraordinary diligence.There are, however,exceptionsto this rule.Article 1734of theCivil Codeenumerates theinstances 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/omission of the shipper/ownerof the goods;(4) Thecharacter of the goodsordefects in the packing orin thecontainers;(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 consignees wharf despite knowledge of an incoming typhoon. During the time that the barge was heading towards the consignees wharf on September 5, 1990, typhoon Loleng has already entered the Philippine area of responsibility.Accordingly, thepetitioner cannot invoke the occurrence of the typhoon as force majeure to escape liabilityfor 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 intervenedBascos v. CAFacts:Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latters 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 a consequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract. Cipriano demanded reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage. Petitioner denied that there was no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force majeure. The trial court ruled against 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 business of carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their services to the public." The test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted." In this case, petitioner herself has made the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same.(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 few instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption. The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the presumption conclusive against her.

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 employees 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. Sanchez Brokerage Inc. (Sanchez Brokerage) to collect the amount paid by the former to Wyeth-Suaco Laboratories Inc. (Wyeth-Suaco) as insurance payment for the goods delivered in bad condition.

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

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

ISSUE: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 in the business of carrying or transporting passengers or goods or both by land, water or air for compensation, offering their services to the public. It does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying only as an ancillary activity. The contention therefore of Sanchez Brokerage that it is not a common carrier but a customs broker whose principal function is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that petitioner undertakes to deliver the goods for pecuniary consideration.

In this light, Sanchez Brokerage as a common carrier is mandated to observe, under Article 1733 of the Civil Code, extraordinary diligence in the vigilance over the goods it transports according to all the circumstances of each case. In the event that the goods are lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence.

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 for avoiding damage to or destruction of the goods entrusted to it for sale, carriage and delivery. It requires common carriers to render service with the greatest skill and foresight and to use all reasonable means to ascertain the nature and 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 upon delivery by petitioner some of the cargoes were found to be in bad order as noted in the Delivery Receipt and as indicated in the Survey and Destruction Report.

While paragraph no. 4 of Article 1734 of the Civil Code exempts a common carrier from liability if the loss or damage is due to the character of the goods or defects in the packaging or in the containers, the rule is that if the improper packaging is known to the carrier or his employees or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such condition, he is not relieved of liability for the resulting damage. If the claim of Sanchez Brokerage that some of the cartons were already damaged upon delivery to it were true, then it should naturally have received the cargo under protest or with reservation duly noted on the receipt issued by PSI but it made no such protest or reservation.

Asian Terminals, Inc. vs.DaehanFire and Marine Insurance Co., Ltdwhere it was observed that the relationship between the consignee and thearrastreoperator 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 ZARATEIn June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Perea to transport their (Zarates) son, Aaron Zarate, to and from school. The Pereas 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 thebarandilla(the pole used to block vehicles crossing the railway) was up which means it was okay to cross. He then tried to overtake a bus. However, there was in fact an oncoming train but Alfaro no longer saw the train as his view was already blocked by the bus he was trying to overtake. The bus was able to cross unscathed but the vans 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 vans stereo was playing loudly.The Zarates sued PNR and the Pereas (Alfaro became at-large). Their cause of action against PNR was based on quasi-delict. Their cause of action against the Pereas was based on breach of contract of common carriage.In their defense, the Pereas invoked that as private carriers they were not negligent in selecting Alfaro as their driver as they made sure that he had a drivers license and that he was not involved in any accident prior to his being hired. In short, they observed 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, thats 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.The Pereas 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 Pereas 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 FatherThis defense is not tenable in this case. The Pereas 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 common carriers but they were generally regarded as private carriers). Private transport for schools are common carriers. The Pereas, 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 clientle, the Pereas 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 Pereas 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 Aarons loss of earning capacity despite he being a high school student at the time of his deathThe 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 hell become, it is certain that he will at the least be earning minimum wage.

SPS CRUZ V SUN HOLIDAYSSpouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 20011against 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 boat M/B Coco Beach III that 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.As petitioners declined respondents offer, they filed the Complaint, as earlier reflected, alleging that respondent, as a common carrier, was guilty of negligence in allowing M/B Coco Beach III to 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, 2000.6In its Answer,7respondent denied being a common carrier, alleging that its boats are not available to the general public as they only ferry Resort guests and crew members. Nonetheless, it claimed that it exercised the utmost diligence in ensuring the safety of its passengers; contrary to petitioners allegation, there was no storm on September 11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco Beach III was not filled to capacity and had sufficient life jackets for its passengers.

TC: denied SPS Cruzs complaint. It held that Sun Holidays is a private carrierCA: affirmed TCs ruling

Upon the other hand, respondent contends that petitioners failed to present evidence to prove that it is a common carrier; that the Resorts ferry services for guests cannot be considered as ancillary to its business as no income is derived therefrom; that it exercised extraordinary diligence as shown by the conditions it had imposed before allowing M/B Coco Beach III to sail; that the incident was caused by a fortuitous event without any contributory negligence on its part; and that the other case wherein the appellate court held it liable for damages involved different plaintiffs, issues and evidence.16The 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 distinctionbetweenone whoseprincipal businessactivityis 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 between a person or enterprise offering transportation service on aregular or scheduled basisand one offering such service on anoccasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the"general public,"i.e., the general community or population, and one who offers services or solicits business only from 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. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:. . . 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, traction 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 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 communications systems, wire or wireless broadcasting stations and other similar public services . . .18(emphasis and underscoring supplied.)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 respondents ferry services in its resort operations is underscored by its having its own Coco Beach boats. 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 respondents ferry services pay the same amount is likewise inconsequential. These guests may only be deemed to have overpaid.As De Guzman instructs, 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 carriers 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 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 the caso fortuito must 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.24To 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.25Respondent cites the squall that occurred during the voyage as the fortuitous event that overturned M/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 that M/B Coco Beach III suffered engine trouble before it capsized and sank.26The incident was, therefore, not completely free from human intervention.

Issue: WON SUN Holidays is a common carrier?WON SUN Holidays exercised EOD?

SC RULING:SUN Holidays is a common carrier.