transpo law cases 1

8/14/2019 Transpo Law Cases 1

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Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 148496 March 19, 2002

VIRGINES CALVO doing business under the name and style TRANSORIENTCONTAINER TERMINAL SERVICES, INC., petitioner,vs.

UCPB GENERAL INSURANCE CO., INC. (formerly Allied Guarantee Ins. Co.,Inc.) respondent.

MENDOZA, J. :

This is a petition for review of the decision,1 dated May 31, 2001, of the Court of

Appeals, affirming the decision2of the Regional Trial Court, Makati City, Branch 148,

which ordered petitioner to pay respondent, as subrogee, the amount of P93,112.00with legal interest, representing the value of damaged cargo handled by petitioner,25% thereof as attorney's fees, and the cost of the suit.

The facts are as follows:

Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services,Inc. (TCTSI), a sole proprietorship customs broker. At the time material to this case,

petitioner entered into a contract with San Miguel Corporation (SMC) for the transferof 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from thePort Area in Manila to SMC's warehouse at the Tabacalera Compound, RomualdezSt., Ermita, Manila. The cargo was insured by respondent UCPB General InsuranceCo., Inc.

On July 14, 1990, the shipment in question, contained in 30 metal vans, arrived inManila on board "M/V Hayakawa Maru" and, after 24 hours, were unloaded from thevessel to the custody of the arrastre operator, Manila Port Services, Inc. From July 23to July 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargofrom the arrastre operator and delivered it to SMC's warehouse in Ermita, Manila. OnJuly 25, 1990, the goods were inspected by Marine Cargo Surveyors, who found that15 reels of the semi-chemical fluting paper were "wet/stained/torn" and 3 reels of kraftliner board were likewise torn. The damage was placed at P93,112.00.

SMC collected payment from respondent UCPB under its insurance contract for theaforementioned amount. In turn, respondent, as subrogee of SMC, brought suitagainst petitioner in the Regional Trial Court, Branch 148, Makati City, which, onDecember 20, 1995, rendered judgment finding petitioner liable to respondent for thedamage to the shipment.

The trial court held:

It cannot be denied . . . that the subject cargoes sustained damage while inthe custody of defendants. Evidence such as the Warehouse Entry Slip(Exh. "E"); the Damage Report (Exh. "F") with entries appearing therein,classified as "TED" and "TSN", which the claims processor, Ms. Agrifina DeLuna, claimed to be tearrage at the end and tearrage at the middle of the

subject damaged cargoes respectively, coupled with the Marine CargoSurvey Report (Exh. "H" - "H-4-A") confirms the fact of the damaged

condition of the subject cargoes. The surveyor[s'] report (Exh. "H-4-A") inparticular, which provides among others that:

" . . . we opine that damages sustained by shipment is attributableto improper handling in transit presumably whilst in the custody ofthe broker . . . ."

is a finding which cannot be traversed and overturned.

The evidence adduced by the defendants is not enough to sustain [her]defense that [she is] are not liable. Defendant by reason of the nature of[her] business should have devised ways and means in order to prevent thedamage to the cargoes which it is under obligation to take custody of and toforthwith deliver to the consignee. Defendant did not present any evidenceon what precaution [she] performed to prevent [the] said incident, hence thepresumption is that the moment the defendant accepts the cargo [she] shallperform such extraordinary diligence because of the nature of the cargo.

. . . .

Generally speaking under Article 1735 of the Civil Code, if the goods areproved to have been lost, destroyed or deteriorated, common carriers arepresumed to have been at fault or to have acted negligently, unless theyprove that they have observed the extraordinary diligence required by law.The burden of the plaintiff, therefore, is to prove merely that the goods he

transported have been lost, destroyed or deteriorated. Thereafter, theburden is shifted to the carrier to prove that he has exercised theextraordinary diligence required by law. Thus, it has been held that the mereproof of delivery of goods in good order to a carrier, and of their arrival at theplace of destination in bad order, makes out a prima facie case against thecarrier, so that if no explanation is given as to how the injury occurred, thecarrier must be held responsible. It is incumbent upon the carrier to provethat the loss was due to accident or some other circumstances inconsistentwith its liability." (cited in Commercial Laws of the Philippines by Agbayani,p. 31, Vol. IV, 1989 Ed.)

Defendant, being a customs brother, warehouseman and at the same time acommon carrier is supposed [to] exercise [the] extraordinary diligencerequired by law, hence the extraordinary responsibility lasts from the time

the goods are unconditionally placed in the possession of and received bythe carrier for transportation until the same are delivered actually orconstructively by the carrier to the consignee or to the person who has theright to receive the same.

3

Accordingly, the trial court ordered petitioner to pay the following amounts --

1. The sum of P93,112.00 plus interest;

2. 25% thereof as lawyer's fee;

3. Costs of suit.4

The decision was affirmed by the Court of Appeals on appeal. Hence this petition forreview on certiorari.

Petitioner contends that:


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I. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLEERROR [IN] DECIDING THE CASE NOT ON THE EVIDENCEPRESENTED BUT ON PURE SURMISES, SPECULATIONS ANDMANIFESTLY MISTAKEN INFERENCE.

II. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLEERROR IN CLASSIFYING THE PETITIONER AS A COMMON CARRIERAND NOT AS PRIVATE OR SPECIAL CARRIER WHO DID NOT HOLD ITSSERVICES TO THE PUBLIC.5

It will be convenient to deal with these contentions in the inverse order, for if petitioneris not a common carrier, although both the trial court and the Court of Appeals heldotherwise, then she is indeed not liable beyond what ordinary diligence in thevigilance over the goods transported by her, would require.6 Consequently, anydamage to the cargo she agrees to transport cannot be presumed to have been dueto her fault or negligence.

Petitioner contends that contrary to the findings of the trial court and the Court ofAppeals, she is not a common carrier but a private carrier because, as a customsbroker and warehouseman, she does not indiscriminately hold her services out to thepublic but only offers the same to select parties with whom she may contract in theconduct of her business.

The contention has no merit. In De Guzman v. Court of Appeals,7the Court dismissed

a similar contention and held the party to be a common carrier, thus -

The Civil Code defines "common carriers" in the following terms:

"Article 1732. Common carriers are persons, corporations, firms orassociations engaged in the business of carrying or transporting passengersor goods or both, by land, water, or air for compensation, offering theirservices to the public."

The above article makes no distinction between one whose principalbusiness activity is the carrying of persons or goods or both, and one whodoes such carrying only as an ancillaryactivity . . . Article 1732 also carefullyavoids making any distinction between a person or enterprise offeringtransportation service on a regular or scheduled basis and one offering suchservice on an occasional, episodic or unscheduled basis. Neither does

Article 1732 distinguish between a carrier offering its services to the "generalpublic," i.e., the general community or population, and one who offersservices or solicits business only from a narrow segment of the generalpopulation. We think that Article 1732 deliberately refrained from makingsuch distinctions.

So understood, the concept of "common carrier" under Article 1732 may beseen to coincide neatly with the notion of "public service," under the PublicService Act (Commonwealth Act No. 1416, as amended) which at leastpartially 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:

" 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 motorvehicle, either for freight or passenger, or both, with or without fixedroute and whatever may be its classification, freight or carrierservice of any class, express service, steamboat, or steamship line,pontines, ferries and water craft, engaged in the transportation ofpassengers or freight or both, shipyard, marine repair shop, wharfor 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 communicationssystems, wire or wireless broadcasting stations and other similarpublic services. x x x"

8

There is greater reason for holding petitioner to be a common carrier because thetransportation of goods is an integral part of her business. To uphold petitioner'scontention would be to deprive those with whom she contracts the protection whichthe law affords them notwithstanding the fact that the obligation to carry goods for hercustomers, as already noted, is part and parcel of petitioner's business.

Now, as to petitioner's liability, Art. 1733 of the Civil Code provides:

Common carriers, from the nature of their business and for reasons of publicpolicy, are bound to observe extraordinary diligence in the vigilance over thegoods and for the safety of the passengers transported by them, according

to all the circumstances of each case. . . .In Compania Maritima v. Court of Appeals,

9the meaning of "extraordinary diligence in

the vigilance over goods" was explained thus:

The extraordinary diligence in the vigilance over the goods tendered forshipment requires the common carrier to know and to follow the requiredprecaution for avoiding damage to, or destruction of the goods entrusted to itfor sale, carriage and delivery. It requires common carriers to render servicewith the greatest skill and foresight and "to use all reasonable means toascertain the nature and characteristic of goods tendered for shipment, andto exercise due care in the handling and stowage, including such methodsas their nature requires."

In the case at bar, petitioner denies liability for the damage to the cargo. She claims

that the "spoilage or wettage" took place while the goods were in the custody of eitherthe carrying vessel "M/V Hayakawa Maru," which transported the cargo to Manila, orthe arrastre operator, to whom the goods were unloaded and who allegedly kept themin open air for nine days from July 14 to July 23, 1998 notwithstanding the fact thatsome of the containers were deformed, cracked, or otherwise damaged, as noted inthe Marine Survey Report (Exh. H), to wit:

MAXU-2062880 - rain gutter deformed/cracked

ICSU-363461-3 - left side rubber gasket on door distorted/partly loose

PERU-204209-4 - with pinholes on roof panel right portion

TOLU-213674-3 - wood flooring we[t] and/or with signs of watersoaked

MAXU-201406-0 - with dent/crack on roof panel


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ICSU-412105-0 - rubber gasket on left side/door panel partlydetached loosened.

10

In addition, petitioner claims that Marine Cargo Surveyor Ernesto Tolentino testifiedthat he has no personal knowledge on whether the container vans were first stored inpetitioner's warehouse prior to their delivery to the consignee. She likewise claimsthat after withdrawing the container vans from the arrastre operator, her driver,Ricardo Nazarro, immediately delivered the cargo to SMC's warehouse in Ermita,Manila, which is a mere thirty-minute drive from the Port Area where the cargo camefrom. Thus, the damage to the cargo could not have taken place while these were in

her custody.11

Contrary to petitioner's assertion, the Survey Report (Exh. H) of the Marine CargoSurveyors indicates that when the shipper transferred the cargo in question to thearrastre operator, these were covered by clean Equipment Interchange Report (EIR)and, when petitioner's employees withdrew the cargo from the arrastre operator, theydid so without exception or protest either with regard to the condition of containervans or their contents. The Survey Report pertinently reads --

Details of Discharge:

Shipment, provided with our protective supervision was noted discharged exvessel to dock of Pier #13 South Harbor, Manila on 14 July 1990,containerized onto 30' x 20' secure metal vans, covered by clean EIRs.Except for slight dents and paint scratches on side and roof panels, thesecontainers were deemed to have [been] received in good condition.

. . . .

Transfer/Delivery:

On July 23, 1990, shipment housed onto 30' x 20' cargo containers was[withdrawn] by Transorient Container Services, Inc. . . . without exception.

[The cargo] was finally delivered to the consignee's storage warehouselocated at Tabacalera Compound, Romualdez Street, Ermita, Manila fromJuly 23/25, 1990.12

As found by the Court of Appeals:

From the [Survey Report], it [is] clear that the shipment was discharged fromthe vessel to the arrastre, Marina Port Services Inc., in good order andcondition as evidenced by clean Equipment Interchange Reports (EIRs).Had there been any damage to the shipment, there would have been areport to that effect made by the arrastre operator. The cargoes werewithdrawn by the defendant-appellant from the arrastre still in good orderand condition as the same were received by the former without exception,that is, without any report of damage or loss. Surely, if the container vanswere deformed, cracked, distorted or dented, the defendant-appellant wouldreport it immediately to the consignee or make an exception on the deliveryreceipt or note the same in the Warehouse Entry Slip (WES). None of thesetook place. To put it simply, the defendant-appellant received the shipmentin good order and condition and delivered the same to the consigneedamaged. We can only conclude that the damages to the cargo occurred

while it was in the possession of the defendant-appellant. Whenever thething is lost (or damaged) in the possession of the debtor (or obligor), it shall

be presumed that the loss (or damage) was due to his fault, unless there isproof to the contrary. No proof was proffered to rebut this legal presumptionand the presumption of negligence attached to a common carrier in case ofloss or damage to the goods.13

Anent petitioner's insistence that the cargo could not have been damaged while in hercustody as she immediately delivered the containers to SMC's compound, suffice it tosay that to prove the exercise of extraordinary diligence, petitioner must do more thanmerely show the possibility that some other party could be responsible for thedamage. It must prove that it used "all reasonable means to ascertain the nature and

characteristic of goods tendered for [transport] and that [it] exercise[d] due care in thehandling [thereof]." Petitioner failed to do this.

Nor is there basis to exempt petitioner from liability under Art. 1734(4), which provides--

Common carriers are responsible for the loss, destruction, or deterioration ofthe 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 apparentupon ordinary observation, but he nevertheless accepts the same without protest orexception notwithstanding such condition, he is not relieved of liability for damageresulting therefrom.

14 In this case, petitioner accepted the cargo without exception

despite the apparent defects in some of the container vans. Hence, for failure ofpetitioner to prove that she exercised extraordinary diligence in the carriage of goodsin this case or that she is exempt from liability, the presumption of negligence asprovided under Art. 1735

15holds.

WHEREFORE, the decision of the Court of Appeals, dated May 31, 2001, isAFFIRMED.1wphi1.nt

SO ORDERED.


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Manila

FIRST DIVISION

G.R. No. 141910 August 6, 2002

FGU INSURANCE CORPORATION, petitioner,vs.G.P. SARMIENTO TRUCKING CORPORATION and LAMBERT M. EROLES, respondents.

VITUG, J.:G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30)units of Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles,from the plant site of Concepcion Industries, Inc., along South Superhighway in Alabang, MetroManila, to the Central Luzon Appliances in Dagupan City. While the truck was traversing thenorth diversion road along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collidedwith an unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes.

FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries,Inc., the value of the covered cargoes in the sum of P204,450.00. FGU, in turn, being thesubrogee of the rights and interests of Concepcion Industries, Inc., sought reimbursement of theamount it had paid to the latter from GPS. Since the trucking company failed to heed the claim,FGU filed a complaint for damages and breach of contract of carriage against GPS and its driverLambert Eroles with the Regional Trial Court, Branch 66, of Makati City. In its answer,respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc.,

since 1988, and it was not so engaged in business as a common carrier. Respondents furtherclaimed that the cause of damage was purely accidental.1wphi1.nt

The issues having thus been joined, FGU presented its evidence, establishing the extent ofdamage to the cargoes and the amount it had paid to the assured. GPS, instead of submitting itsevidence, filed with leave of court a motion to dismiss the complaint by way of demurrer toevidence on the ground that petitioner had failed to prove that it was a common carrier.

The trial court, in its order of 30 April 1996,1granted the motion to dismiss, explaining thusly:

"Under Section 1 of Rule 131 of the Rules of Court, it is provided that Each party mustprove his own affirmative allegation, xxx.

"In the instant case, plaintiff did not present any single evidence that would prove thatdefendant is a common carrier.

"x x x x x x x x x

"Accordingly, the application of the law on common carriers is not warranted and thepresumption of fault or negligence on the part of a common carrier in case of loss,damage or deterioration of goods during transport under 1735 of the Civil Code is notavailing.

"Thus, the laws governing the contract between the owner of the cargo to whom theplaintiff was subrogated and the owner of the vehicle which transports the cargo arethe laws on obligation and contract of the Civil Code as well as the law on quasidelicts.

"Under the law on obligation and contract, negligence or fault is not presumed. Thelaw on quasi delict provides for some presumption of negligence but only upon theattendance of some circumstances. Thus, Article 2185 provides:

Art. 2185. Unless there isproof to the contrary, it is presumed that a person

driving a motor vehicle has been negligent if at the time of the mishap, hewas violating any traffic regulation.

"Evidence for the plaintiff shows no proof that defendant was violating any trafficregulation. Hence, the presumption of negligence is not obtaining.

"Considering that plaintiff failed to adduce evidence that defendant is a commoncarrier and defendants driver was the one negligent, defendant cannot be made liablefor the damages of the subject cargoes."2

The subsequent motion for reconsideration having been denied,3plaintiff interposed an appeal

to the Court of Appeals, contending that the trial court had erred (a) in holding that the appelleecorporation was not a common carrier defined under the law and existing jurisprudence; and (b)in dismissing the complaint on a demurrer to evidence.

The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. The appellatecourt, in its decision of 10 June 1999,4discoursed, among other things, that -

"x x x in order for the presumption of negligence provided for under the law governingcommon carrier (Article 1735, Civil Code) to arise, the appellant must first prove thatthe appellee is a common carrier. Should the appellant fail to prove that the appelleeis a common carrier, the presumption would not arise; consequently, the appellantwould have to prove that the carrier was negligent.

"x x x x x x x x x

"Because it is the appellant who insists that the appellees can still be considered as acommon carrier, despite its `limited clientele, (assuming it was really a commoncarrier), it follows that it (appellant) has the burden of proving the same. It (plaintiff-appellant) must establish his case by a preponderance of evidence, which means thatthe evidence as a whole adduced by one side is superior to that of the other. (Summa

Insurance Corporation vs. Court of Appeals, 243 SCRA 175). This, unfortunately, theappellant failed to do -- hence, the dismissal of the plaintiffs complaint by the trialcourt is justified.

"x x x x x x x x x

"Based on the foregoing disquisitions and considering the circumstances that theappellee trucking corporation has been `its exclusive contractor, hauler since 1970,defendant has no choice but to comply with the directive of its principal, the inevitableconclusion is that the appellee is a private carrier.

"x x x x x x x x x

"x x x the lower court correctly ruled that 'the application of the law on commoncarriers is not warranted and the presumption of fault or negligence on the part of acommon carrier in case of loss, damage or deterioration of good[s] during transport

under [article] 1735 of the Civil Code is not availing.' x x x."Finally, We advert to the long established rule that conclusions and findings of fact ofa trial court are entitled to great weight on appeal and should not be disturbed unlessfor strong and valid reasons."

5

Petitioner's motion for reconsideration was likewise denied;6hence, the instant petition,

7raising

the following issues:

I

WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIERAS DEFINED UNDER THE LAW AND EXISTING JURISPRUDENCE.

II

WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR APRIVATE CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHENTHE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLYDAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION.


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III

WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN THEINSTANT CASE.

On the first issue, the Court finds the conclusion of the trial court and the Court of Appeals to beamply justified. GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc.,rendering or offering its services to no other individual or entity, cannot be considered a commoncarrier. Common carriers are persons, corporations, firms or associations engaged in thebusiness of carrying or transporting passengers or goods or both, by land, water, or air, for hireor compensation, offering their services to the public,8whether to the public in general or to a

limited clientele in particular, but never on an exclusive basis.

9

The true test of a common carrieris the carriage of passengers or goods, providing space for those who opt to avail themselves ofits transportation service for a fee.10Given accepted standards, GPS scarcely falls within theterm "common carrier."

The above conclusion nothwithstanding, GPS cannot escape from liability.

In culpa contractual, upon which the action of petitioner rests as being the subrogee ofConcepcion Industries, Inc., the mere proof of the existence of the contract and the failure of itscompliance justify, prima facie, a corresponding right of relief.11 The law, recognizing theobligatory force of contracts,12will not permit a party to be set free from liability for any kind ofmisperformance of the contractual undertaking or a contravention of the tenor thereof. 13 Abreach upon the contract confers upon the injured party a valid cause for recovering that whichmay have been lost or suffered. The remedy serves to preserve the interests of the promiseethat may include his "expectation interest," which is his interest in having the benefit of hisbargain by being put in as good a position as he would have been in had the contract been

performed, or his "reliance interest," which is his interest in being reimbursed for loss caused byreliance on the contract by being put in as good a position as he would have been in had thecontract not been made; or his "restitution interest," which is his interest in having restored tohim any benefit that he has conferred on the other party.14Indeed, agreements can accomplishlittle, either for their makers or for society, unless they are made the basis for action.15The effectof every infraction is to create a new duty, that i s, to make recompense to the one who has beeninjured by the failure of another to observe his contractual obligation

16 unless he can show

extenuating circumstances, like proof of his exercise of due diligence (normally that of thediligence of a good father of a family or, exceptionally by stipulation or by law such as in thecase of common carriers, that of extraordinary diligence) or of the attendance of fortuitous event,to excuse him from his ensuing liability.

Respondent trucking corporation recognizes the existence of a contract of carriage between itand petitioners assured, and admits that the cargoes it has assumed to deliver have been lost

or damaged while in its custody. In such a situation, a default on, or failure of compliance with,the obligationin this case, the delivery of the goods in its custody to the place of destination -

gives rise to a presumption of lack of care and corresponding liability on the part of thecontractual obligor the burden being on him to establish otherwise. GPS has failed to do so.

Respondent driver, on the other hand, without concrete proof of his negligence or fault, may nothimself be ordered to pay petitioner. The driver, not being a party to the contract of carriagebetween petitioners principal and defendant, may not be held liable under the agreement. Acontract can only bind the parties who have entered into it or their successors who haveassumed their personality or their juridical position.17Consonantly with the axiom res inter aliosacta 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, unlikeculpa contractual, would require the claimant for damages to prove negligence or fault on thepart of the defendant.

18

A word in passing. Res ipsa loquitur, a doctrine being invoked by petitioner, holds a defendantliable where the thing which caused the injury complained of is s hown to be under the lattersmanagement and the accident is such that, in the ordinary course of things, cannot be expectedto happen if those who have its management or control use proper care. It affords reasonableevidence, in the absence of explanation by the defendant, that the accident arose from want of

care.19It is not a rule of substantive law and, as such, it does not create an independent groundof liability. Instead, it is regarded as a mode of proof, or a mere procedural convenience since itfurnishes a substitute for, and relieves the plaintiff of, the burden of producing specific proof ofnegligence. The maxim simply places on the defendant the burden of going forward with theproof.20Resort to the doctrine, however, may be allowed only when (a) the event is of a kindwhich does not ordinarily occur in the absence of negligence; (b) other responsible causes,including the conduct of the plaintiff and third persons, are sufficiently eliminated by theevidence; and (c) the indicated negligence is within the scope of the defendant's duty to theplaintiff.21Thus, it is not applicable when an unexplained accident may be attributable to one ofseveral causes, for some of which the defendant could not be responsible.22

Res ipsa loquitur generally finds relevance whether or not a contractual relationship existsbetween the plaintiff and the defendant, for the inference of negligence arises from thecircumstances and nature of the occurrence and not from the nature of the relation of theparties.23 Nevertheless, the requirement that responsible causes other than those due todefendants conduct must first be eliminated, for the doctrine to apply, should be understood as

being confined only to cases of pure (non-contractual) tort since obviously the presumption ofnegligence in culpa contractual, as previously so pointed out, immediately attaches by a failureof the covenant or its tenor. In the case of the truck driver, whose liability in a civil action ispredicated on culpa acquiliana, while he admittedly can be said to have been in control andmanagement of the vehicle which figured in the accident, it is not equally shown, however, thatthe accident could have been exclusively due to his negligence, a matter that can allow,forthwith, res ipsa loquitur to work against him.

If a demurrer to evidence is granted but on appeal the order of dismissal is reversed, the movantshall be deemed to have waived the right to present evidence. 24Thus, respondent corporationmay no longer offer proof to establish that it has exercised due care in transporting the cargoesof the assured so as to still warrant a remand of the case to the trial court.1wphi1.nt

WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court, Branch 66, of MakatiCity, and the decision, dated 10 June 1999, of the Court of Appeals, are AFFIRMED only insofaras respondent Lambert M. Eroles is concerned, but said assailed order of the trial court anddecision of the appellate court are REVERSED as regards G.P. Sarmiento Trucking Corporationwhich, instead, is hereby ordered to pay FGU Insurance Corporation the value of the damagedand lost cargoes in the amount of P204,450.00. No costs.

SO ORDERED.


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Manila

SECOND DIVISION

G.R. No. 101089. April 7, 1993.

ESTRELLITA M. BASCOS, petitioners,vs.COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.

Modesto S. Bascos for petitioner.

Pelaez, Adriano & Gregorio for private respondent.

SYLLABUS

1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE COMMONCARRIER. 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 transportingpassengers or goods or both, by land, water or air, for compensation, offering theirservices to the public." The test to determine a common carrier is "whether the givenundertaking is a part of the business engaged in by the carrier which he has held out to thegeneral public as his occupation rather than the quantity or extent of the business

transacted." . . . The holding of the Court in De Guzman vs. Court of Appeals is instructive.In referring to Article 1732 of the Civil Code, it held thus: "The above article makes nodistinction between one whose principal business activity is the carrying of persons orgoods or both, and one who does such carrying only as an ancillary activity (in local idiom,as a "sideline"). Article 1732 also carefully avoids making any distinction between a personor enterprise offering transportation service on a regular or scheduled basis and oneoffering such service on an occasional, episodic or unscheduled basis. Neither does Article1732 distinguished between a carrier offering its services to the "general public," i.e., thegeneral community or population, and one who offers services or solicits business onlyfrom a narrow segment of the general population. We think that Article 1732 deliberatelyrefrained from making such distinctions."

2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS TRANSPORTED;WHEN PRESUMPTION OF NEGLIGENCE ARISES; HOW PRESUMPTION OVERCAME;WHEN PRESUMPTION MADE ABSOLUTE. 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 ofnegligence does not attach and these instances are enumerated in Article 1734. In thosecases where the presumption is applied, the common carrier must prove that it exercisedextraordinary diligence in order to overcome the presumption . . . The presumption ofnegligence 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 hernegligence. Her own failure to adduce sufficient proof of extraordinary diligence made thepresumption conclusive against her.

3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT; HOWCARRIER ABSOLVED FROM LIABILITY. In De Guzman vs. Court of Appeals, theCourt held that hijacking, not being included in the provisions of Article 1734, must be dealtwith under the provisions of Article 1735 and thus, the common carrier is presumed tohave been at fault or negligent. To exculpate the carrier from liability arising from hijacking,he must prove that the robbers or the hijackers acted with grave or irresistible threat,

violence, or force. This is in accordance with Article 1745 of the Civil Code which provides:"Art. 1745. Any of the following or similar stipulations shall be considered unreasonable,unjust and contrary to public policy . . . (6) That the common carrier's liability for actscommitted by thieves, or of robbers who do not act with grave or irresistible threat,violences or force, is dispensed with or diminished"; In the same case, the Supreme Courtalso held that: "Under Article 1745 (6) above, a common carrier is held responsible andwill not be allowed to divest or to diminish such responsibility even for acts of strangerslike thieves or robbers, except where such thieves or robbers in fact acted "with grave ofirresistible threat, violence of force," We believe and so hold that the limits of the duty ofextraordinary 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."

4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE. In this case,petitioner herself has made the admission that she was in the trucking business, offeringher trucks to those with cargo to move. Judicial admissions are conclusive and noevidence is required to prove the same.

5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A FACT. Petitioner presented no other proof of the existence of the contract of lease. He whoalleges a fact has the burden of proving it.

6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF AFFIANTS AVAILABLEAS WITNESSES. While the affidavit of Juanito Morden, the truck helper in the hijackedtruck, was presented as evidence in court, he himself was a witness as could be gleanedfrom the contents of the petition. Affidavits are not considered the best evidence if theaffiants are available as witnesses.

7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS WHAT LAW DEFINESIT TO BE. Granting that the said evidence were not self-serving, the same were notsufficient to prove that the contract was one of lease. It must be understood that a contractis what the law defines it to be and not what it is called by the contracting parties.

D E C I S I O N

CAMPOS, JR., J p:

This is a petition for review on certiorari of the decision ** of the Court of Appeals in"RODOLFO A. CIPRIANO, doing business under the name CIPRIANO TRADINGENTERPRISES plaintiff-appellee, vs. ESTRELLITA M. BASCOS, doing business underthe name of BASCOS TRUCKING, defendant-appellant," C.A.-G.R. CV No. 25216, the

dispositive portion of which is quoted hereunder:"PREMISES considered, We find no reversible error in the decision appealed from, whichis hereby affirmed in toto. Costs against appellant." 1

The facts, as gathered by this Court, are as follows:

Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short)entered into a hauling contract 2 with Jibfair Shipping Agency Corporation whereby theformer bound itself to haul the latter's 2,000 m/tons of soya bean meal from MagallanesDrive, Del Pan, Manila to the warehouse of Purefoods Corporation in Calamba, Laguna.To carry out its obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted withEstrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya bean meal worthP156,404.00 from the Manila Port Area to Calamba, Laguna at the rate of P50.00 permetric ton. Petitioner failed to deliver the said cargo. As a consequence of that failure,Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance with thecontract which stated that:


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"1. CIPTRADE shall be held liable and answerable for any loss in bags due to theft,hijacking and non-delivery or damages to the cargo during transport at market value, . . ." 3

Cipriano demanded reimbursement from petitioner but the latter refused to pay.Eventually, Cipriano filed a complaint for a sum of money and damages with writ ofpreliminary attachment 4 for breach of a contract of carriage. The prayer for a Writ ofPreliminary Attachment was supported by an affidavit 5 which contained the followingallegations:

"4. That this action is one of those specifically mentioned in Sec. 1, Rule 57 the Rules ofCourt, whereby a writ of preliminary attachment may lawfully issue, namely:

"(e) in an action against a party who has removed or disposed of his property, or is aboutto do so, with intent to defraud his creditors;"

5. That there is no sufficient security for the claim sought to be enforced by the presentaction;

6. That the amount due to the plaintiff in the above-entitled case is above all legalcounterclaims;"

The trial court granted the writ of preliminary attachment on February 17, 1987.

In her answer, petitioner interposed the following defenses: that there was no contract ofcarriage since CIPTRADE leased her cargo truck to load the cargo from Manila Port Areato Laguna; that CIPTRADE was liable to petitioner in the amount of P11,000.00 for loadingthe cargo; that the truck carrying the cargo was hijacked along Canonigo St., Paco, Manila

on the night of October 21, 1988; that the hijacking was immediately reported toCIPTRADE and that petitioner and the police exerted all efforts to locate the hijackedproperties; that after preliminary investigation, an information for robbery and carnappingwere filed against Jose Opriano, et al.; and that hijacking, being a force majeure,exculpated petitioner from any liability to CIPTRADE.

After trial, the trial court rendered a decision *** the dispositive portion of which reads asfollows:

"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendantordering the latter to pay the former:

1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR HUNDRED FOURPESOS (P156,404.00) as an (sic) for actual damages with legal interest of 12% per centper annum to be counted from December 4, 1986 until fully paid;

2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for attorney's fees; and

3. The costs of the suit.

The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated March 10, 1987 filed bydefendant is DENIED for being moot and academic.

SO ORDERED." 6

Petitioner appealed to the Court of Appeals but respondent Court affirmed the trial court'sjudgment.

Consequently, petitioner filed this petition where she makes the following assignment oferrors; to wit:

"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE CONTRACTUAL

RELATIONSHIP BETWEEN PETITIONER AND PRIVATE RESPONDENT WASCARRIAGE OF GOODS AND NOT LEASE OF CARGO TRUCK.

II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE RESPONDENTCOURT THAT THE CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER ANDPRIVATE RESPONDENT WAS CARRIAGE OF GOODS IS CORRECT,NEVERTHELESS, IT ERRED IN FINDING PETITIONER LIABLE THEREUNDERBECAUSE THE LOSS OF THE CARGO WAS DUE TO FORCE MAJEURE, NAMELY,HIJACKING.

III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF THE TRIALCOURT THAT PETITIONER'S MOTION TO DISSOLVE/LIFT THE WRIT OFPRELIMINARY ATTACHMENT HAS BEEN RENDERED MOOT AND ACADEMIC BY THEDECISION OF THE MERITS OF THE CASE." 7

The petition presents the following issues for resolution: (1) was petitioner a commoncarrier?; and (2) was the hijacking referred to a force majeure?

The Court of Appeals, in holding that petitioner was a common carrier, found that sheadmitted in her answer that she did business under the name A.M. Bascos Trucking andthat said admission dispensed with the presentation by private respondent, RodolfoCipriano, of proofs that petitioner was a common carrier. The respondent Court alsoadopted in toto the trial court's decision that petitioner was a common carrier, Moreover,both courts appreciated the following pieces of evidence as indicators that petitioner was acommon carrier: the fact that the truck driver of petitioner, Maximo Sanglay, received thecargo consisting of 400 bags of soya bean meal as evidenced by a cargo receipt signed byMaximo Sanglay; the fact that the truck helper, Juanito Morden, was also an employee ofpetitioner; and the fact that control of the cargo was placed in petitioner's care.

In disputing the conclusion of the trial and appellate courts that petitioner was a commoncarrier, she alleged in this petition that the contract between her and Rodolfo A. Cipriano,representing CIPTRADE, was lease of the truck. She cited as evidence certain affidavitswhich referred to the contract as "lease". These affidavits were made by Jesus Bascos 8and by petitioner herself. 9 She further averred that Jesus Bascos confirmed in histestimony his statement that the contract was a lease contract. 10 She also stated that:she was not catering to the general public. Thus, in her answer to the amended complaint,she said that she does business under the same style of A.M. Bascos Trucking, offeringher trucks for lease to those who have cargo to move, not to the general public but to a fewcustomers only in view of the fact that it is only a small business. 11

We agree with the respondent Court in its finding that petitioner is a common carrier.

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 testto determine a common carrier is "whether the given undertaking is a part of the businessengaged in by the carrier which he has held out to the general public as his occupationrather than the quantity or extent of the business transacted." 12 In this case, petitionerherself has made the admission that she was in the trucking business, offering her trucksto those with cargo to move. Judicial admissions are conclusive and no evidence isrequired to prove the same. 13

But petitioner argues that there was only a contract of lease because they offer theirservices only to a select group of people and because the private respondents, plaintiffs inthe lower court, did not object to the presentation of affidavits by petitioner where thetransaction was referred to as a lease contract.

Regarding the first contention, the holding of the Court in De Guzman vs. Court of Appeals14 is instructive. In referring to Article 1732 of the Civil Code, it held thus:


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"The above article makes no distinction between one whose principal business activity isthe 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 makingany distinction between a person or enterprise offering transportation service on a regularor scheduled basis and one offering such service on an occasional, episodic orunscheduled basis. Neither does Article 1732 distinguish between a carrier offering itsservices to the "general public," i.e., the general community or population, and one whooffers services or solicits business only from a narrow segment of the general population.We think that Article 1732 deliberately refrained from making such distinctions."

Regarding the affidavits presented by petitioner to the court, both the trial and appellatecourts have dismissed them as self-serving and petitioner contests the conclusion. We arebound by the appellate court's factual conclusions. Yet, granting that the said evidencewere not self-serving, the same were not sufficient to prove that the contract was one oflease. It must be understood that a contract is what the law defines it to be and not what itis called by the contracting parties. 15 Furthermore, petitioner presented no other proof ofthe existence of the contract of lease. He who alleges a fact has the burden of proving it.16

Likewise, We affirm the holding of the respondent court that the loss of the goods was notdue to force majeure.

Common carriers are obliged to observe extraordinary diligence in the vigilance over thegoods transported by them. 17 Accordingly, they are presumed to have been at fault or tohave acted negligently if the goods are lost, destroyed or deteriorated. 18 There are veryfew instances when the presumption of negligence does not attach and these instancesare enumerated in Article 1734. 19 In those cases where the presumption is applied, thecommon carrier must prove that it exercised extraordinary diligence in order to overcomethe presumption.

In this case, petitioner alleged that hijacking constituted force majeure which exculpatedher from liability for the loss of the cargo. In De Guzman vs. Court of Appeals, 20 the Courtheld that hijacking, not being included in the provisions of Article 1734, must be dealt withunder the provisions of Article 1735 and thus, the common carrier is presumed to havebeen at fault or negligent. To exculpate the carrier from liability arising from hijacking, hemust prove that the robbers or the hijackers acted with grave or irresistible threat, violence,or force. This is in accordance with Article 1745 of the Civil Code which provides:

"Art. 1745. Any of the following or similar stipulations shall be considered unreasonable,unjust and contrary to public policy;

xxx xxx xxx

(6) That the common carrier's liability for acts committed by thieves, or of robbers who donot act with grave or irresistible threat, violences or force, is dispensed with or diminished;"

In the same case, 21 the Supreme Court also held that:

"Under Article 1745 (6) above, a common carrier is held responsible and will not beallowed to divest or to diminish such responsibility even for acts of strangers like thievesor robbers except where such thieves or robbers in fact acted with grave or irresistiblethreat, violence or force. We believe and so hold that the limits of the duty of extraordinarydiligence in the vigilance over the goods carried are reached where the goods are lost as aresult of a robbery which is attended by "grave or irresistible threat, violence or force."

To establish grave and irresistible force, petitioner presented her accusatory affidavit, 22Jesus Bascos' affidavit, 23 and Juanito Morden's 24 "Salaysay". However, both the trialcourt and the Court of Appeals have concluded that these affidavits were not enough toovercome the presumption. Petitioner's affidavit about the hijacking was based on what

had been told her by Juanito Morden. It was not a first-hand account. While it had beenadmitted in court for lack of objection on the part of private respondent, the respondentCourt had discretion in assigning weight to such evidence. We are bound by theconclusion of the appellate court. In a petition for review on certiorari, We are not todetermine the probative value of evidence but to resolve questions of law. Secondly, theaffidavit of Jesus Bascos did not dwell on how the hijacking took place. Thirdly, while theaffidavit of Juanito Morden, the truck helper in the hijacked truck, was presented asevidence in court, he himself was a witness as could be gleaned from the contents of thepetition. Affidavits are not considered the best evidence if the affiants are available aswitnesses. 25 The subsequent filing of the information for carnapping and robbery against

the accused named in said affidavits did not necessarily mean that the contents of theaffidavits were true because they were yet to be determined in the trial of the criminalcases.

The presumption of negligence was raised against petitioner. It was petitioner's burden toovercome it. Thus, contrary to her assertion, private respondent need not introduce anyevidence to prove her negligence. Her own failure to adduce sufficient proof ofextraordinary diligence made the presumption conclusive against her.

Having affirmed the findings of the respondent Court on the substantial issues involved,We find no reason to disturb the conclusion that the motion to lift/dissolve the writ ofpreliminary attachment has been rendered moot and academic by the decision on themerits.

In the light of the foregoing analysis, it is Our opinion that the petitioner's claim cannot besustained. The petition is DISMISSED and the decision of the Court of Appeals is hereby

AFFIRMED.

SO ORDERED.


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THIRD DIVISION

G.R. No. 150255. April 22, 2005

SCHMITZ TRANSPORT & BROKERAGE CORPORATION,Petitioners,vs.TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., andBLACK SEA SHIPPING AND DODWELL now INCHCAPE SHIPPING SERVICES,

Respondents.

D E C I S I O N

CARPIO-MORALES, J.:

On petition for review is the June 27, 2001 Decision1of the Court of Appeals, as well

as its Resolution2dated September 28, 2001 denying the motion for reconsideration,

which affirmed that of Branch 21 of the Regional Trial Court (RTC) of Manila in CivilCase No. 92-631323 holding petitioner Schmitz Transport Brokerage Corporation(Schmitz Transport), together with Black Sea Shipping Corporation (Black Sea),represented by its ship agent Inchcape Shipping Inc. (Inchcape), and TransportVenture (TVI), solidarily liable for the loss of 37 hot rolled steel sheets in coil that werewashed overboard a barge.

On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port ofIlyichevsk, Russia on board M/V "Alexander Saveliev" (a vessel of Russian registryand owned by Black Sea) 545 hot rolled steel sheets in coil weighing 6,992,450metric tons.

The cargoes, which were to be discharged at the port of Manila in favor of theconsignee, Little Giant Steel Pipe Corporation (Little Giant),

4were insured against all

risks with Industrial Insurance Company Ltd. (Industrial Insurance) under MarinePolicy No. M-91-3747-TIS.

5

The vessel arrived at the port of Manila on October 24, 1991 and the Philippine PortsAuthority (PPA) assigned it a place of berth at the outside breakwater at the ManilaSouth Harbor.6

Schmitz Transport, whose services the consignee engaged to secure the requisiteclearances, to receive the cargoes from the shipside, and to deliver them to its (theconsignees) warehouse at Cainta, Rizal,

7in turn engaged the services of TVI to senda barge and tugboat at shipside.

On October 26, 1991, around 4:30 p.m., TVIs tugboat "Lailani" towed the barge"Erika V" to shipside.

8

By 7:00 p.m. also of October 26, 1991, the tugboat, after positioning the bargealongside the vessel, left and returned to the port terminal.9At 9:00 p.m., arrastreoperator Ocean Terminal Services Inc. commenced to unload 37 of the 545 coils fromthe vessel unto the barge.

By 12:30 a.m. of October 27, 1991 during which the weather condition had becomeinclement due to an approaching storm, the unloading unto the barge of the 37 coils

was accomplished.

10

No tugboat pulled the barge back to the pier, however.

At around 5:30 a.m. of October 27, 1991, due to strong waves,11 the crew of thebarge abandoned it and transferred to the vessel. The barge pitched and rolled withthe waves and eventually capsized, washing the 37 coils into the sea .

12At 7:00 a.m.,

a tugboat finally arrived to pull the already empty and damaged barge back to thepier.13

Earnest efforts on the part of both the consignee Little Giant and Industrial Insuranceto recover the lost cargoes proved futile.

14

Little Giant thus filed a formal claim against Industrial Insurance which paid it the

amount of P5,246,113.11. Little Giant thereupon executed a subrogation receip t

15

infavor of Industrial Insurance.

Industrial Insurance later filed a complaint against Schmitz Transport, TVI, and BlackSea through its representative Inchcape (the defendants) before the RTC of Manila,for the recovery of the amount it paid to Little G iant plus adjustment fees, attorneysfees, and litigation expenses.

16

Industrial Insurance faulted the defendants for undertaking the unloading of thecargoes while typhoon signal No. 1 was raised in Metro Manila.17

By Decision of November 24, 1997, Branch 21 of the RTC held all the defendantsnegligent for unloading the cargoes outside of the breakwater notwithstanding thestorm signal.

18The dispositive portion of the decision reads:

WHEREFORE, premises considered, the Court renders judgment in favor of theplaintiff, ordering the defendants to pay plaintiff jointly and severally the sum ofP5,246,113.11 with interest from the date the complaint was filed until fully satisfied,as well as the sum of P5,000.00 representing the adjustment fee plus the sum of 20%of the amount recoverable from the defendants as attorneys fees plus the costs ofsuit. The counterclaims and cross claims of defendants are hereby DISMISSED forlack of [m]erit.

19

To the trial courts decision, the defendants Schmitz Transport and TVI filed a jointmotion for reconsideration assailing the finding that they are common carriers and theaward of excessive attorneys fees of more than P1,000,000. And they argued thatthey were not motivated by gross or evident bad faith and that the incident wascaused by a fortuitous event.

20

By resolution of February 4, 1998, the trial court denied the motion for

reconsideration.21

All the defendants appealed to the Court of Appeals which, by decision of June 27,2001, affirmed in toto the decision of the trial court,

22it finding that all the defendants

were common carriers Black Sea and TVI for engaging in the transport of goodsand cargoes over the seas as a regular business and not as an isolated transaction,

23

and Schmitz Transport for entering into a contract with Little Giant to transport thecargoes from ship to port for a fee.

24

In holding all the defendants solidarily liable, the appellate court ruled that "each onewas essential such that without each others contributory negligence the incidentwould not have happened and so much so that the person principally liable cannot bedistinguished with sufficient accuracy."

25

In discrediting the defense of fortuitous event, the appellate court held that "althoughdefendants obviously had nothing to do with the force of nature, they however had
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control of where to anchor the vessel, where discharge will take place and even whenthe discharging will commence."

26

The defendants respective motions for reconsideration having been denied byResolution

27 of September 28, 2001, Schmitz Transport (hereinafter referred to as

petitioner) filed the present petition against TVI, Industrial Insurance and Black Sea.

Petitioner asserts that in chartering the barge and tugboat of TVI, it was acting for itsprincipal, consignee Little Giant, hence, the transportation contract was by andbetween Little Giant and TVI.28

By Resolution of January 23, 2002, herein respondents Industrial Insurance, BlackSea, and TVI were required to file their respective Comments.29

By its Comment, Black Sea argued that the cargoes were received by the consigneethrough petitioner in good order, hence, it cannot be faulted, it having had no controland supervision thereover.30

For its part, TVI maintained that it acted as a passive party as it merely received thecargoes and transferred them unto the barge upon the instruction of petitioner.31

In issue then are:

(1) Whether the loss of the cargoes was due to a fortuitous event, independent of anyact of negligence on the part of petitioner Black Sea and TVI, and

(2) If there was negligence, whether liability for the loss may attach to Black Sea,petitioner and TVI.

When a fortuitous event occurs, Article 1174 of the Civil Code absolves any partyfrom any and all liability arising therefrom:

ART. 1174. Except in cases expressly specified by the law, or when it is otherwisedeclared by stipulation, or when the nature of the obligation requires the assumptionof risk, no person shall be responsible for those events which could not be foreseen,or which though foreseen, were inevitable.

In order, to be considered a fortuitous event, however, (1) the cause of theunforeseen and unexpected occurrence, or the failure of the debtor to comply with hisobligation, must be independent of human will; (2) it must be impossible to foreseethe event which constitute the caso fortuito, or if it can be foreseen it must be

impossible to avoid; (3) the occurrence must be such as to render it impossible for thedebtor to fulfill his obligation in any manner; and (4) the obligor must be free from anyparticipation in the aggravation of the injury resulting to the creditor.

32

[T]he principle embodied in the act of God doctrine strictly requires that the act mustbe occasioned solely by the violence of nature. Human intervention is to be excludedfrom creating or entering into the cause of the mischief. When the effect is found to bein part the result of the participation of man, whether due to his active intervention orneglect or failure to act, the whole occurrence is then humanized and removed fromthe rules applicable to the acts of God.33

The appellate court, in affirming the finding of the trial court that human intervention inthe form of contributory negligence by all the defendants resulted to the loss of thecargoes,34 held that unloading outside the breakwater, instead of inside the

breakwater, while a storm signal was up constitutes negligence.

35

It thus concluded

that the proximate cause of the loss was Black Seas negligence in deciding to unloadthe cargoes at an unsafe place and while a typhoon was approaching.

36

From a review of the records of the case, there is no indication that there was greaterrisk in loading the cargoes outside the breakwater. As the defendants proffered, theweather on October 26, 1991 remained normal with moderate sea condition such thatport operations continued and proceeded normally.

37

The weather data report,38

furnished and verified by the Chief of the Climate DataSection of PAG-ASA and marked as a common exhibit of the parties, states that while

typhoon signal No. 1 was hoisted over Metro Manila on October 23-31, 1991, the seacondition at the port of Manila at 5:00 p.m. - 11:00 p.m. of October 26, 1991 wasmoderate. It cannot, therefore, be said that the defendants were negligent in notunloading the cargoes upon the barge on October 26, 1991 inside the breakwater.

That no tugboat towed back the barge to the pier after the cargoes were completelyloaded by 12:30 in the morning

39is, however, a material fact which the appellate court

failed to properly consider and appreciate40

the proximate cause of the loss of thecargoes. Had the barge been towed back promptly to the pier, the deteriorating seaconditions notwithstanding, the loss could have been avoided. But the barge was leftfloating in open sea until big waves set in at 5:30 a.m., causing it to sink along withthe cargoes.

41The loss thus falls outside the "act of God doctrine."

The proximate cause of the loss having been determined, who among the partiesis/are responsible therefor?

Contrary to petitioners insistence, this Court, as did the appellate court, finds thatpetitioner is a common carrier. For it undertook to transport the cargoes from theshipside of "M/V Alexander Saveliev" to the consignees warehouse at Cainta, Rizal.As the appellate court put it, "as long as a person or corporation holds [ itself] to thepublic for the purpose of transporting goods as [a] business, [it] is already considereda common carrier regardless if [it] owns the vehicle to be used or has to hire one. "

42

That petitioner is a common carrier, the testimony of its own Vice-President andGeneral Manager Noel Aro that part of the services it offers to its clients as abrokerage firm includes the transportation of cargoes reflects so.

Atty. Jubay: W ill you please tell us what [are you] functions x x x as Executive Vice-President and General Manager of said Company?

Mr. Aro: Well, I oversee the entire operation of the brokerage and transport businessof the company. I also handle the various division heads of the company for operationmatters, and all other related functions that the President may assign to me from timeto time, Sir.

Q: Now, in connection [with] your duties and functions as you mentioned, will youplease tell the Honorable Court if you came to know the company by the name LittleGiant Steel Pipe Corporation?

A: Yes, Sir. Actually, we are the brokerage firm of that Company.

Q: And since when have you been the brokerage firm of that company, if you canrecall?

A: Since 1990, Sir.

Q: Now, you said that you are the brokerage firm of this Company. What work or dutydid you perform in behalf of this company?
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A: We handled the releases (sic) of their cargo[es] from the Bureau of Customs. We[are] also in-charged of the delivery of the goods to their warehouses. We alsohandled the clearances of their shipment at the Bureau of Customs, Sir.

x x x

Q: Now, what precisely [was] your agreement with this Little Giant Steel PipeCorporation with regards to this shipment? What work did you do with this shipment?

A: We handled the unloading of the cargo[es] from vessel to lighter and then thedelivery of [the] cargo[es] from lighter to BASECO then to the truck and to the

warehouse, Sir.

Q: Now, in connection with this work which you are doing, Mr. Witness, you aresupposed to perform, what equipment do (sic) you require or did you use in order toeffect this unloading, transfer and delivery to the warehouse?

A: Actually, we used the barges for the ship side operations, this unloading [from]vessel to lighter, and on this we hired or we sub-contracted with [T]ransport Ventures,Inc. which [was] in-charged (sic) of the barges. Also, in BASECO compound we areleasing cranes to have the cargo unloaded from the barge to trucks, [and] then weused trucks to deliver [the cargoes] to the consignees warehouse, Sir.

Q: And whose trucks do you use from BASECO compound to the consigneeswarehouse?

A: We utilized of (sic) our own trucks and we have some other contracted trucks, Sir.

x x x

ATTY. JUBAY: Will you please explain to us, to the Honorable Court why is it youhave to contract for the barges of Transport Ventures Incorporated in this particularoperation?

A: Firstly, we dont own any barges. That is whywe hired the services of another firmwhom we know [al]ready for quite sometime, which is Transport Ventures, Inc.(Emphasis supplied)43

It is settled that under a given set of facts, a customs broker may be regarded as acommon carrier. Thus, this Court, inA.F. Sanchez Brokerage, Inc. v. The HonorableCourt of Appeals,

44held:

The appellate court did not err in finding petitioner, a customs broker, to be also acommon carrier, as defined under Article 1732 of the Civil Code, to wit,

Art. 1732. Common carriers are persons, corporations, firms or associations engagedin the business of carrying or transporting passengers or goods or both, by land,water, or air, for compensation, offering their services to the public.

x x x

Article 1732 does not distinguish between one whose principal business activity is thecarrying of goods and one who does such carrying only as an ancillary activity. Thecontention, therefore, of petitioner that it is not a common carrier but a customsbroker whose principal function is to prepare the correct customs declaration andproper shipping documents as required by law is bereft of merit. It suffices that

petitioner undertakes to deliver the goods for pecuniary consideration.45

And in Calvo v. UCPB General Insurance Co. Inc.,46

this Court held that as thetransportation of goods is an integral part of a customs broker, the customs broker isalso a common carrier. For to declare otherwise "would be to deprive those withwhom [it] contracts the protection which the law affords them notwithstanding the factthat the obligation to carry goods for [its] customers, is part and parcel of petitionersbusiness."

47

As for petitioners argument that being the agent of Little Giant, any negligence itcommitted was deemed the negligence of its principal, it does not persuade.

True, petitioner was the broker-agent of Little Giant in securing the release of thecargoes. In effecting the transportation of the cargoes from the shipside and into LittleGiants warehouse, however, petitioner was discharging its own personal obligationunder a contact of carriage.

Petitioner, which did not have any barge or tugboat, engaged the services of TVI ashandler

48to provide the barge and the tugboat. In their Service Contract,

49while Little

Giant was named as the consignee, petitioner did not disclose that it was acting oncommission and was chartering the vessel for Little Giant .50Little Giant did not thusautomatically become a party to the Service Contract and was not, therefore, boundby the terms and conditions therein.

Not being a party to the service contract, Little Giant cannot directly sue TVI basedthereon but it can maintain a cause of action for negligence.51

In the case of TVI, while it acted as a private carrier for which it was under no duty toobserve extraordinary diligence, it was still required to observe ordinary diligence toensure the proper and careful handling, care and discharge of the carried goods.

Thus, Articles 1170 and 1173 of the Civil Code provide:

ART. 1170. Those who in the performance of their obligations are guilty of fraud,negligence, or delay, and those who in any manner contravene the tenor thereof, areliable for damages.

ART. 1173. The fault or negligence of the obligor consists in the omission of thatdiligence which is required by the nature of the obligation and corresponds with thecircumstances of the persons, of the time and of the place. When negligence showsbad faith, the provisions of articles 1171 and 2202, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in theperformance, that which is expected of a good father of a family shall be required.

Was the reasonable care and caution which an ordinarily prudent person would haveused in the same situation exercised by TVI?

52

This Court holds not.

TVIs failure to promptly provide a tugboat did not only increase the risk that mighthave been reasonably anticipated during the shipside operation, but was theproximate causeof the loss. A man of ordinary prudence would not leave a heavilyloaded barge floating for a considerable number of hours, at such a precarious time,and in the open sea, knowing that the barge does not have any power of its own andis totally defenseless from the ravages of the sea. That it was nighttime and,therefore, the members of the crew of a tugboat would be charging overtime pay did

not excuse TVI from calling for one such tugboat.
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As for petitioner, for it to be relieved of liability, it should, following Article 173953of theCivil Code, prove that it exercised due diligence to prevent or minimize the loss,before, during and after the occurrence of the storm in order that it may be exemptedfrom liability for the loss of the goods.

While petitioner sent checkers54 and a supervisor55on board the vessel to counter-check the operations of TVI, it failed to take all available and reasonable precautionsto avoid the loss. After noting that TVI failed to arrange for the prompt towage of thebarge despite the deteriorating sea conditions, it should have summoned the same oranother tugboat to extend help, but it did not.

This Court holds then that petitioner and TVI are solidarily liable56 for the loss of thecargoes. The following pronouncement of the Supreme Court is instructive:

The foundation of LRTAs liability is the contract of carriage and its obligation toindemnify the victim arises from the breach of that contract by reason of its failure toexercise the high diligence required of the common carrier. In the discharge of itscommitment to ensure the safety of passengers, a carrier may choose to hire its ownemployees or avail itself of the services of an outsider or an independent firm toundertake the task. In either case, the common carrier is not relieved of itsresponsibilities under the contract of carriage.

Should Prudent be made likewise liable? If at all, that liability could only be for tortunder the provisions of Article 2176 and related provisions, in conjunction with Article2180 of the Civil Code. x x x [O]ne might ask further, how then must the liability of the

common carrier, on one hand, and an independent contractor, on the other hand, bedescribed? It would be solidary. A contractual obligation can be breached by tort andwhen the same act or omission causes the injury, one resulting in culpa contractualand the other in culpa aquiliana, Article 2194 of the Civil Code can well apply. In fine,a liability for tort may arise even under a contract, where tort is that which breachesthe contract. Stated differently, when an act which constitutes a breach of contractwould have itself constituted the source of a quasi-delictual liability had no contractexisted between the parties, the contract can be said to have been breached by tort,thereby allowing the rules on tort to apply.57

As for Black Sea, its duty as a common carrier extended only from the time the goodswere surrendered or unconditionally placed in its possession and received fortransportation until they were delivered actually or constructively to consignee LittleGiant.58

Parties to a contract of carriage may, however, agree upon a definition of delivery thatextends the services rendered by the carrier. In the case at bar, Bill of Lading No. 2covering the shipment provides that delivery be made "to the port of discharge or sonear thereto as she may safely get, always afloat."59The delivery of the goods to theconsignee was not from "pier to pier" but from the shipside of "M/V AlexanderSaveliev" and into barges, for which reason the consignee contracted the servi

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