BASCOS vs. COURT OF APPEALS and RODOLFO A.
CIPRIANO HELD: The petition is DISMISSED and the decision of the Court of
G.R. No. 101089
April 7, 1993
FACTS: Rodolfo A. Cipriano representing Cipriano Trading Enterprise
(CIPTRADE for short) entered into a hauling contract with Jibfair
Shipping Agency Corp whereby the former bound itself to haul the
latters 2,000 m/tons of soya bean meal to the warehouse in
Calamba, Laguna. To carry out its obligation, CIPTRADE, through
Cipriano, subcontracted with Bascos to transport and to deliver 400
sacks of soya bean meal from the Manila Port Area to Calamba,
Laguna. 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 their contract.
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 of preliminary attachment for breach
of a contract of carriage. The trial court granted the writ of preliminary
attachment.
In her answer, petitioner interposed the defense that there was no
contract of carriage since CIPTRADE leased her cargo truck to load
the cargo from Manila Port Area to Laguna and that the truck
carrying the cargo was hijacked and being a force majeure,
exculpated petitioner from any liability
After trial, the trial court rendered a decision in favor of Cipriano and
against Bascos ordering the latter to pay the former for actual
damages for attorneys fees and cost of suit.
The Urgent Motion To Dissolve/Lift preliminary Attachment Bascos is
DENIED for being moot and academic.
Petitioner appealed to the Court of Appeals but respondent Court
affirmed the trial courts judgment.
Hence this petition for review on certiorari
ISSUE:
(1) WON petitioner a common carrier
(2) WON the hijacking referred to a force majeure
Appeals is hereby AFFIRMED.
1. YES
In disputing the conclusion of the trial and appellate courts that
petitioner was a common carrier, she alleged in this petition that the
contract between her and Cipriano was lease of the truck. 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, offering her trucks for
lease to those who have cargo to move, not to the general public but
to a few customers only in view of the fact that it is only a small
business.
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 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. 12 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. 13
But petitioner argues that there was only a contract of lease because
they offer their services only to a select group of people. Regarding
the first contention, the holding of the Court in De Guzman vs. Court of
Appeals 14 is instructive. In referring to Article 1732 of the Civil Code, it
held thus:
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as
a sideline). 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 1732 deliberately refrained
from making such distinctions.
2. NO
Likewise, We affirm the holding of the respondent court that the loss of
the goods was not due to force majeure.
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. 19 In those cases where the
presumption is applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome the
presumption.
In this case, petitioner alleged that hijacking constituted force
majeure which exculpated her from liability for the loss of the cargo. In
De Guzman vs. Court of Appeals, the Court held that hijacking, not
being included in the provisions of Article 1734, must be dealt with
under the provisions of Article 1735 and thus, the common carrier is
presumed to have 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; xx
(6) That the common carriers liability for acts committed by thieves, or
of robbers who do not act with grave or irresistible threat, violences or
force, is dispensed with or diminished; xx
NOTES:
1. She cited as evidence certain affidavits which referred to the
contract as lease. These affidavits were made by Jesus Bascos and
by petitioner herself and Cipriano and CIPTRADE did not object to the
presentation of affidavits by petitioner where the transaction was
referred to as a lease contract. Both the trial and appellate courts
have dismissed them as self-serving and petitioner contests the
conclusion. We are bound by the appellate courts factual
conclusions. Yet, granting that the said evidence were not self-serving,
the same were not sufficient to prove that the contract was one of
lease. It must be understood that a contract is what the law defines it
to be and not what it is called by the contracting parties. Furthermore,
petitioner presented no other proof of the existence of the contract of
lease. He who alleges a fact has the burden of proving it.
2. 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 of preliminary attachment has
been rendered moot and academic by the decision on the merits.
B. COMMON CARRIERS (Arts. 1731 to 1766 NCC) 1. Definitions of
domestic shipping under R.A. No. 9295 and of public service under
Commonwealth Act No. 146 2. Common Carriage
PEDRO DE GUZMAN vs.COURT OF APPEALS and ERNESTO CENDANA
FACTS: Ernesto Cendana, a junk dealer, was engaged in buying up
used bottles and scrap metal in Pangasinan, and bring such material to
Manila for resale. He utilized two (2) six-wheeler trucks which he owned
for hauling the material to Manila. He charged freight rates which were
commonly lower than regular commercial rates for the cargo loaded
in his vehicle. Pedro de Guzman a merchant and authorized dealer of
General Milk Company contracted with Cendana for the hauling of 750
cartons of Liberty filled milk from a warehouse of General Milk in Makati,
Rizal. 150 cartons were loaded on a truck driven by Cendana himself,
while 600 cartons were placed on board the other truck which was
driven by Manuel Estrada, Cendanas driver and employee. The other
600 boxes never reached de Guzman, since the truck which carried
these boxes was hijacked somewhere along the MacArthur Highway in
Paniqui, Tarlac, by armed men who took with them the truck, its driver,
his helper and the cargo. Having failed to exercise the extraordinary
diligence required of him by the law, he is held liable for the value of
the undelivered goods. Cendana denied that he was a common
carrier and argued that he could not be held responsible for the value
of the lost goods, such loss having been due to force majeure.
ISSUE: Whether or not Ernesto Cendana may, under the facts earlier set
forth, be properly characterized as a common carrier? Whether or not
high jacking with robbery can be properly regarded as a fortuitous
event that can exempt the carrier?
HELD: The trial court rendered a Decision finding private respondent to
be a common carrier and holding him liable for the value of the
undelivered goods as damages and as attorney's fees. The Court of
Appeals 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. Liability arises the moment a person or firm acts
as a common carrier, without regard to whether or not such carrier has
also complied with the requirements of the applicable regulatory
statute and implementing regulations and has been granted a
certificate of public convenience or other franchise. To exempt private
respondent from the liabilities of a common carrier because he has not
secured the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward private
respondent precisely for failing to comply with applicable statutory
requirements. Common carriers, "by the nature of their business and for
reasons of public policy" 2 are held to a very high degree of care and
diligence ("extraordinary diligence") in the carriage of goods as well as
of passengers. Article 1734 establishes the general rule 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: (1) Flood, storm, earthquake, lightning or other natural
disaster or calamity; (2) Act of the public enemy in war, whether
international or civil; (3) Act or omission of the shipper or owner of the
goods; (4) The character-of the goods or defects in the packing or-in
the containers; and (5) Order or act of competent public authority. The
above list of causes of loss, destruction or deterioration which exempt
the common carrier for responsibility therefor, is a closed list. Causes
falling outside the foregoing list, even if they appear to constitute a
species of force majeure fall within the scope of Article 1735, which
provides as follows: 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 diligence as required in Article 1733. (Emphasis supplied)
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." In the instant case, armed men held up the second truck owned
by private respondent which carried petitioner's cargo. 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. Cendana is not liable for the value
of the undelivered merchandise which was lost because of an event
entirely beyond private respondent's control. Petition for Review on
certiorari is hereby DENIED and the Decision of the Court of Appeals
dated 3 August 1977 is AFFIRMED. No pronouncement as to costs.
First Philippine Industrial Corporation vs. Court of Appeals G.R. No.
125948 December 29, 1998
Facts: Petitioner, First Phil. Industrial Corporation (FirstPhil for brevity) is a
grantee of a pipeline concession under Republic Act No. 387, as
amended, to contract, install and operate oil pipelines. FirstPhil applied
for a mayor's permit, but before the mayor's permit could be issued, the
respondent City Treasurer required petitioner to pay a local tax
pursuant to the Local Government Code. Petitioner filed a letter-protest
addressed to the respondent City Treasurer, but the latter denied the
same contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under Section
133 (j) of the Local Government Code. FirstPhil filed with the RTC
Batangas a complaint for tax refund with prayer for writ of preliminary
injunction against respondents, contending that the imposition of tax
upon them violates Sec 133 of the Local Government Code. On the
other hand, respondents assert that pipelines are not included in the
term "common carrier" which refers solely to ordinary carriers such as
trucks, trains, ships and the like. Respondents further posit that the term
"common carrier" under the said code pertains to the mode or manner
by which a product is delivered to its destination. RTC dismissed the
complaint, ruling that exemption granted under Sec. 133 (j)
encompasses only "common carriers" so as not to overburden the riding
public or commuters with taxes. And that petitioner is not a common
carrier, but a special carrier extending its services and facilities to a
single specific or "special customer" under a "special contract." The
case was elevated by the petitioner to the CA, but CA affirmed the
decision of the RTC. Hence this petition.
Issue: WON the petitioner is a "common carrier" and, therefore, exempt
from the business tax
Held: Petition was granted. CA decision was REVERSED and SET ASIDE.
SC ruled in this case that petitioner is a common carrier and thus,
exempt from business tax. A "common carrier" may be defined, broadly,
as one who holds himself out to the public as engaged in the business
of transporting persons or property from place to place, for
compensation, offering his services to the public generally. Art. 1732 of
the Civil Code defines a "common carrier" as "any person, corporation,
firm or association engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public." The test for determining whether a
party is a common carrier of goods is: 1. He must be engaged in the
business of carrying goods for others as a public employment, and must
hold himself out as ready to engage in the transportation of goods for
person generally as a business and not as a casual occupation; 2. He
must undertake to carry goods of the kind to which his business is
confined; 3. He must undertake to carry by the method by which his
business is conducted and over his established roads; and 4. The
transportation must be for hire. Based on the above definitions and
requirements, there is no doubt that petitioner is a common carrier. It is
engaged in the business of transporting or carrying goods, i.e.
petroleum products, for hire as a public employment. It undertakes to
carry for all persons indifferently, that is, to all persons who choose to
employ its services, and transports the goods by land and for
compensation. The fact that petitioner has a limited clientele does not
exclude it from the definition of a common carrier. The definition of
"common carriers" in the Civil Code makes no distinction as to the
means of transporting, as long as it is by land, water or air. It does not
provide that the transportation of the passengers or goods should be
by motor vehicle. In fact, in the United States, oil pipe line operators are
considered common carriers. Under the Petroleum Act of the
Philippines (Republic Act 387), petitioner is considered a "common
carrier.", and at the same time, said act also regards petroleum
operation as a public utility. BIR likewise considers the petitioner a
"common carrier." In so ruling, it held that, since petitioner is a pipeline
concessionaire that is engaged only in transporting petroleum
products, it is considered a common carrier under Republic Act No. 387.
Such being the case, it is not subject to withholding tax prescribed by
Revenue Regulations No. 13-78, as amended. Section 133 (j), of the
Local Government Code, provides: Sec. 133. Common Limitations on
the Taxing Powers of Local Government Units. Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the
following: (j) Taxes on the gross receipts of transportation contractors
and persons engaged in the transportation of passengers or freight by
hire and common carriers by air, land or water, except as provided in
this Code. SC held that the legislative intent in excluding from the taxing
power of the local government unit the imposition of business tax
against common carriers is to prevent a duplication of the so-called
"common carrier's tax."
CALVO VS. UCPB GENERAL INSURANCE TERMINAL SERVICE, INC.G.R. No.
148496. March 19, 2002
Facts: A contract was entered into between Calvo and San Miguel
Corporation (SMC) for the transfer of certain cargoes from theport area
in Manila to the warehouse of SMC. The cargo was insured by UCPB
General Insurance Co., Inc. When theshipment arrived and unloaded
from the vessel, Calvo withdrew the cargo from the arrastre operator
and delivered thesame to SMCs warehouse. When it was inspected, it
was found out that some of the goods were torn. UCPB, being
theinsurer, paid for the amount of the damages and as subrogee
thereafter, filed a suit against Calvo.Petitioner, on the other hand,
contends that it is a private carrier not required to observe such
extraordinary diligence in thevigilance over the goods.As customs
broker, she does not indiscriminately hold her services out to the public
but only to selected parties.
Issue: Whether or not Calvo is a common carrier liable for the damages
for failure to observe extraordinary diligence in thevigilance over the
goods.
Held: The contention has no merit. In De Guzman v. Court of Appeals,
the Court dismissed a similar contention and held the partyto be a
common carrier, thus -The Civil Code defines "common carriers" in the
following terms:"Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public."The law makes no
distinction between a carrier offering its services to the general
community or solicits business only from anarrow segment of the
general population. Note that the transportation of goods holds an
integral part of Calvos business,it cannot indeed be doubted that it is
a common carrier A.F. SANCHEZ BROKERAGE vs CA
Case Digest A.F. SANCHEZ BROKERAGE INC., v. THE HON. COURT OF
APPEALS and FGU INSURANCE CORPORATION 447 SCRA 427 (2004),
THIRD DIVISION (Carpio Morales, J.) 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.
Schmitz Transport and Brokerage Corp v Transort Venture Inc., GR
150255 April 22,2005
 Facts: On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from Issue: Whether or not Black Sea and TVI are common carriers
the port of Ilyichevsk, Russia on board M/V Alexander Saveliev 545 hot
Held : Contrary to petitioners insistence, this Court, as did the appellate
rolled steel sheets in coil weighing 6,992,450 metric tons. The cargoes,
court, finds that petitioner is a common carrier. For it undertook to
which were to be discharged at the port of Manila in favor of the
transport the cargoes from the shipside of M/V Alexander Saveliev to
consignee, Little Giant Steel Pipe Corporation (Little Giant), were
the consignees warehouse at Cainta, Rizal. As the appellate court put
insured against all risks with Industrial Insurance Company Ltd. (Industrial
it, as long as a person or corporation holds [itself] to the public for the
Insurance) under Marine Policy No. M-91-3747-TIS. The vessel arrived at
purpose of transporting goods as [a] business, [it] is already considered
the port of Manila and the Philippine Ports Authority (PPA) assigned it a
a common carrier regardless if [it] owns the vehicle to be used or has to
place of berth at the outside breakwater at the Manila South Harbor.
hire one. That petitioner is a common carrier, the testimony of its own
Schmitz Transport, whose services the consignee engaged to secure
Vice-President and General Manager Noel Aro that part of the services
the requisite clearances, to receive the cargoes from the shipside, and
it offers to its clients as a brokerage firm includes the transportation of
to deliver them to its (the consignees) warehouse at Cainta, Rizal, in
cargoes reflects so. It is settled that under a given set of facts, a customs
turn engaged the services of TVI to send a barge and tugboat at
broker may be regarded as a common carrier. Thus, this Court, in A.F.
shipside. TVIs tugboat Lailani towed the barge Erika V to shipside.
Sanchez Brokerage, Inc. v. The Honorable Court of Appeals,[44] held:
The tugboat, after positioning the barge alongside the vessel, left and
The appellate court did not err in finding petitioner, a customs broker,
returned to the port terminal. Arrastre operator Ocean Terminal Services
to be also a common carrier, as defined under Article 1732 of the Civil
Inc. commenced to unload 37 of the 545 coils from the vessel unto the
Code, to wit, Art. 1732. Common carriers are persons, corporations, firms
barge. By 12:30 a.m. of October 27, 1991 during which the weather
or associations engaged in the business of carrying or transporting
condition had become inclement due to an approaching storm, the
passengers or goods or both, by land, water, or air, for compensation,
unloading unto the barge of the 37 coils was accomplished. No
offering their services to the public. x x x Article 1732 does not distinguish
tugboat pulled the barge back to the pier, however. At around 5:30
between one whose principal business activity is the carrying of goods
a.m. of October 27, 1991, due to strong waves, the crew of the barge
and one who does such carrying only as an ancillary activity. The
abandoned it and transferred to the vessel. The barge pitched and
contention, therefore, of petitioner that it is not a common carrier but a
rolled with the waves and eventually capsized, washing the 37 coils into
customs broker whose principal function is to prepare the correct
the sea. Little Giant thus filed a formal claim against Industrial Insurance
customs declaration and proper shipping documents as required by
which paid it the amount of P5,246,113.11. Little Giant thereupon
law is bereft of merit. It suffices that petitioner undertakes to deliver the
executed a subrogation receipt in favor of Industrial Insurance.
goods for pecuniary consideration. And in Calvo v. UCPB General
Industrial Insurance later filed a complaint against Schmitz Transport,
Insurance Co. Inc.,[46] this Court held that as the transportation of
TVI, and Black Sea through its representative Inchcape (the
goods is an integral part of a customs broker, the customs broker is also
defendants) before the RTC of Manila, they faulted the defendants for
a common carrier. For to declare otherwise would be to deprive those
undertaking the unloading of the cargoes while typhoon signal No. 1
with whom [it] contracts the protection which the law affords them
was raised. The RTC held all the defendants negligent. Defendants
notwithstanding the fact that the obligation to carry goods for [its]
Schmitz Transport and TVI filed a joint motion for reconsideration
customers, is part and parcel of petitioners business.
assailing the finding that they are common carriers. RTC denied the
motion for reconsideration. CA affirmed the RTC decision in toto, finding
that all the defendants were common carriers Black Sea and TVI for
engaging in the transport of goods and cargoes over the seas as a PHIL CHARTER vs. M/V "NATIONAL HONOR," [G.R. No. 161833. July 8,
regular business and not as an isolated transaction, and Schmitz 2005.]
Transport for entering into a contract with Little Giant to transport the
FACTS: On November 5, 1995, J. Trading Co. Ltd. of Seoul, Korea,
cargoes from ship to port for a fee.
loaded a shipment of four units of parts and accessories on board the
vessel M/V "National Honor," represented in the Philippines by its agent,
National Shipping Corporation of the Philippines (NSCP). The shipment
was contained in two wooden crates, namely, Crate No. 1 and Crate
No. 2, complete and in good order condition. Crate No. 1 contained
the following articles: one (1) unit Lathe Machine complete with parts
and accessories; one (1) unit Surface Grinder complete with parts and
accessories; and one (1) unit Milling Machine complete with parts and
accessories. On the flooring of the wooden crates were three wooden
battens placed side by side to support the weight of the cargo. It was
insured for P2,547,270.00 with the Philippine Charter Insurance
Corporation (PCIC). The M/V "National Honor" arrived at the Manila
International Container Terminal (MICT). The International Container
Terminal Services, Incorporated (ICTSI) was the exclusive arrastre
operator of MICT and was charged with discharging the cargoes from
the vessel. Claudio Cansino, the stevedore of the ICTSI, placed two sling
cables on each end of Crate No. 1. No sling cable was fastened on the
mid-portion of the crate. As the crate was being hoisted from the
vessel's hatch, the mid-portion of the wooden flooring suddenly
snapped in the air, about five feet high from the vessel's twin deck,
sending all its contents crashing down hard, resulting in extensive
damage to the shipment. Blue Mono International Company,
Incorporated (BMICI) subsequently filed separate claims against the
NSCP, the ICTSI, and its insurer, the PCIC, for US$61,500.00. When the
other companies denied liability, PCIC paid the claim and was issued a
Subrogation Receipt for P1,740,634.50. On March 22, 1995, PCIC, as
subrogee, filed with the RTC of Manila a Complaint for Damages
against the "Unknown owner of the vessel M/V National Honor," NSCP
and ICTSI, as defendants. ICTSI, for its part, filed its Answer with
Counterclaim and Cross-claim against its co-defendant NSCP, claiming
that the loss/damage of the shipment was caused exclusively by the
defective material of the wooden battens of the shipment, insufficient
packing or acts of the shipper. The trial court rendered judgment for
PCIC and ordered the complaint dismissed. According to the trial court,
the loss of the shipment contained in Crate No. 1 was due to the internal
defect and weakness of the materials used in the fabrication of the
crates. The CA affirmed in TOTO the decision of the RTC.
ISSUE: WHETHER OR NOT THE COMMON CARRIER IS LIABLE FOR THE
DAMAGE SUSTAINED BY THE SHIPMENT IN THE HANDS OF THE ARRASTRE
OPERATOR.
HELD: THE RULING OF THE RTC AND CA WAS UPHELD. The petitioner
posits that the loss/damage was caused by the mishandling of the
shipment by therein respondent ICTSI, the arrastre operator, and not by
its negligence. The petition has no merit. We agree with the contention
of the petitioner that common carriers, from the nature of their business
and for reasons of public policy, are mandated to observe
extraordinary diligence in the vigilance over the goods according to all
the circumstances of each case. The extraordinary diligence in the
vigilance over the goods 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." When the goods
shipped are either lost or arrive in damaged condition, a presumption
arises against the carrier of its failure to observe that diligence, and
there need not be an express finding of negligence to hold it liable.
However, under Article 1734 of the New Civil Code, the presumption of
negligence does not apply to any of the following causes: 1. Flood,
storm, earthquake, lightning or other natural disaster or calamity; 2. Act
of the public enemy in war, whether international or civil; 3. Act or
omission of the shipper or owner of the goods; 4. The character of the
goods or defects in the packing or in the containers; 5. Order or act of
competent public authority. It bears stressing that the enumeration in
Article 1734 of the New Civil Code which exempts the common carrier
for the loss or damage to the cargo is a closed list. Crate No. 1 was
provided by the shipper of the machineries in Seoul, Korea. There is
nothing in the record which would indicate that defendant ICTSI had
any role in the choice of the materials used in fabricating this crate. Said
defendant, therefore, cannot be held as blame worthy for the loss of
the machineries contained in Crate No. 1. The CA affirmed the ruling of
the RTC, thus: The case at bar falls under one of the exceptions
mentioned in Article 1734 of the Civil Code, particularly number (4)
thereof, i.e., the character of the goods or defects in the packing or in
the containers. The trial court found that the breakage of the crate was
not due to the fault or negligence of ICTSI, but to the inherent defect
and weakness of the materials used in the fabrication of the said crate.
Upon examination of the records, We find no compelling reason to
depart from the factual findings of the trial court. It appears that the
wooden batten used as support for the flooring was not made of good
materials, which caused the middle portion thereof to give way when
it was lifted. The shipper also failed to indicate signs to notify the ISSUE: Whether or not the petitioner is liable for the loss of the cargo.
stevedores that extra care should be employed in handling the
HELD: CA reversed. Common carriers are persons, corporations, firms or
shipment. Appellant's allegation that since the cargo arrived safely
associations engaged in the business of carrying or transporting
from the port of [P]usan, Korea without defect, the fault should be
passengers or goods, or both by land, water, or air when this
attributed to the arrastre operator who mishandled the cargo; is without
service is offered to the public for compensation. Petitioner is clearly a
merit. The cargo fell while it was being carried only at about five (5) feet
common carrier, because it offers to the public its business of
high above the ground. It would not have so easily collapsed had the
transporting goods through its vessels. Thus, the Court corrects the trial
cargo been properly packed. The shipper should have used materials
court's finding that petitioner became a private carrier when Vulcan
of stronger quality to support the heavy machines. Not only did the
chartered it. Charter parties are classified as contracts of demise (or
shipper fail to properly pack the cargo, it also failed to indicate an
bareboat) and affreightment, which are distinguished as follows: "Under
arrow in the middle portion of the cargo where additional slings should
the demise or bareboat charter of the vessel, the charterer will
be attached. While it is true that the crate contained machineries and
generally be considered as owner for the voyage or service stipulated.
spare parts, it cannot thereby be concluded that the respondents knew
The charterer mans the vessel with his own people and becomes, in
or should have known that the middle wooden batten had a hole, or
effect, the owner pro hac vice, subject to liability to others for damages
that it was not strong enough to bear the weight of the shipment. The
caused by negligence. To create a demise, the owner of a vessel must
statement in the Bill of Lading, that the shipment was in apparent good
completely and exclusively relinquish possession, command and
condition, is sufficient to sustain a finding of absence of defects in the
navigation thereof to the charterer; anything short of such a complete
merchandise. Case law has it that such statement will create a prima
transfer is a contract of affreightment (time or voyage charter party) or
facie presumption only as to the external condition and not to that not
not a charter party at all." The distinction is significant, because a
open to inspection.
demise or bareboat charter indicates a business undertaking that is
LEA MER INDUSTRIES INC VS MALAYAN INSURANCE CO, INC. GR No. private in character. Consequently, the rights and obligations of the
161745, SEPTEMBER 30, 2005 parties to a contract of private carriage are governed principally by
their stipulations, not by the law on common carriers. The Contract in
FACTS: Ilian Silica Mining entered into a contract of carriage with the
the present case was one of affreightment, as shown by the fact that it
petitioner, Lea Mer Industries Inc. for the shipment of 900 metric tons of
was petitioner's crew that manned the tugboat M/V Ayalit and
silica sand worth P565,000. The cargo was consigned to Vulcan
controlled the barge Judy VII. Common carriers are bound to observe
Industrial and Mining Corporation and was to be shipped from Palawan
extraordinary diligence in their vigilance over the goods and the safety
to Manila. The silica sand was boarded to Judy VII, the vessel leased by
of the passengers they transport, as required by the nature of their
Lea Mer. However, during the course of its voyage, the vessel sank
business and for reasons of public policy. Extraordinary diligence
which led to the loss of the cargo. Consequently, the respondent, as
requires rendering service with the greatest skill and foresight to avoid
the insurer, paid Vulcan the value of the lost cargo. Malayan Insurance
damage and destruction to the goods entrusted for carriage and
Co., Inc. then collected from the petitioner the amount it paid to
delivery. Common carriers are presumed to have been at fault or to
Vulcan as reimbursement and as its exercise on the right of subrogation.
have acted negligently for loss or damage to the goods that they have
Lea Mer refused to pay which led Malayan to institute a complaint with
transported. This presumption can be rebutted only by proof that they
the RTC. The RTC dismissed the complaint stating that the loss was due
observed extraordinary diligence, or that the loss or damage was
to a fortuitous event, Typhoon Trining. Petitioner did not know that a
occasioned by any of the following causes: "(1) Flood, storm,
typhoon was coming and that it has been cleared by the Philippine
earthquake, lightning, or other natural disaster or calamity; "(2) Act of
Coast Guard to travel from Palawan to Manila. The CA reversed the
the public enemy in war, whether international or civil; "(3) Act or
ruling of the trial court for the reason that said vessel was not seaworthy
omission of the shipper or owner of the goods; "(4) The character of the
when it sailed to Manila.
goods or defects in the packing or in the containers; "(5) Order or act
of competent public authority." Jurisprudence defines the elements of ISSUES: 1. Whether there is a contract of carriage between CSC and
a "fortuitous event" as follows: (a) the cause of the unforeseen and MCCII. 2. Whether CSC is a common carrier despite not being the
unexpected occurrence, or the failure of the debtors to comply with owner of the vessel it used. 3. Whether the bill of lading should prevail
their obligations, must have been independent of human will; (b) the over the voyage charter as the contract of carriage between the
event that constituted the caso fortuito must have been impossible to parties. 4. Whether MCCII should be held liable for its own loss 5.
foresee or, if foreseeable, impossible to avoid; (c) the occurrence must Whether a carrier that enters into a contract of carriage is not liable to
have been such as to render it impossible for the debtors to fulfill their the charterer/shipper if it does not own the vessel it chooses to use.
obligation in a normal manner; and (d) the obligor must have been free
HELD: 1. Yes. The cargo was loaded on board the vessel; loss/non-
from any participation in the aggravation of the resulting injury to the
delivery of the cargo was proven; and petitioner failed to prove that it
creditor. To excuse the common carrier fully of any liability, the fortuitous
exercised extraordinary diligence to prevent such loss or that it was due
event must have been the proximate and only cause of the loss.
to some casualty or force majeure. The voyage charter here being a
Moreover, it should have exercised due diligence to prevent or
contract of affreightment, the carrier was answerable for the loss of the
minimize the loss before, during and after the occurrence of the
goods received for transportation. 2. CSC was the one which
fortuitous event. As required by the pertinent law, it was not enough for
contracted with MCCII for the transport of the cargo. It had control over
the common carrier to show that there was an unforeseen or
what vessel it would use. All throughout its dealings with MCCII, it
unexpected occurrence. It had to show that it was free from any fault
represented itself as a common carrier. The fact that it did not own the
a fact it miserably failed to prove.
vessel it decided to use to consummate the contract of carriage did
Cebu Salvage Corporation (CSC) vs Philippine Home Assurance Corp., not negate its character & duties as a common carrier. The MCCII could
(PHAC) G.R. No. 150403 January 25, 2007 not be reasonably expected to inquire about the ownership of the
vessels which petitioner carrier offered to utilize. It is very difficult & often
FACTS: On November 12, 1984, CSC & Maria Christina Chemicals
impossible for the general public to enforce its rights of action under a
Industries, Inc., (MCCII) entered into a voyage charter wherein CSC was
contract of carriage if it should be required to know who the actual
to load 800-1,100 metric tons of silica quartz on board the M/T Espiritu
owner of the vehicle is. In this case, the voyage charter itself
Santo at Ayungon, Negros Occidental for transport to and discharge at
denominated the petitioner as the owner/operator of the vessel. 3.
Tagoloan, Misamis Oriental to consigned Ferrochrome Phils., Inc.
No. The bill of lading was merely a receipt issued by ALS to evidence
Pursuant to the contract, on December 23, 1984, CSC received &
the fact that the goods had been received for transportation. It was not
loaded 1,100 metric tons of silica quartz on board the M/T Espiritu Santo
signed by MCCII, as in fact it was simply signed by the supercargo of
which left Ayungon for Tagoloan the next day. However, the shipment
ALS. This is consistent with the fact that MCCII did not contract directly
never reached its destination because the M/T Espiritu Santo sank in the
with ALS. While it is true that a bill of lading may serve as the contract of
afternoon of December 24, 1984 off the beach of Opol, Misamis
carriage between the parties, it cannot prevail over the express
Oriental, resulting in the total loss of the cargo. MCCII filed a claim for
provision of the voyage charter that MCCII and petitioner executed. 4.
the loss of the shipment with its insurer, PHAC. PHAC paid the claim in
No. It deserves scant consideration that the voyage charter stipulated
the amount of P211,500 and was surrogated to MCCIIs rights. It
that cargo insurance was for the charterers account. This meant that
thereafter filed a case in the RTC against CSC for reimbursement of the
the charterer would take care of having the goods insured. It could not
amount it paid MCCII. However, CSC claims no liability insisting that the
exculpate the carrier from liability for the breach of its contract of
agreement was merely a contract of hire wherein MCCII hired the
carriage. The law prohibits it and condemns it as unjust & contrary to
vessel from its owner, ALS Timber Enterprises. Not being the owner of the
public policy. 5. The idea proposed by CSC is preposterous &
M/T Espiritu Santo, petitioner did not have control over the vessel, its
dangerous. MCCII never dealt with ALS and yet petitioner insists that
master & crew. Thus, it could not allegedly be held liable for the loss of
MCCII should sue ALS for reimbursement for its loss. Certainly, to permit
the shipment caused by the sinking of a ship it didnt own.
a common carrier to escape its responsibility for the goods it agreed to
transport (by expedient of alleging non-ownership of the vessel it
employed) would radically derogate from the carriers duty of
extraordinary diligence. It would also open the door to collusion
between the carrier & the supposed owner and to the possible shifting
of liability from the carrier to one without any financial capability to
answer for the resulting damages.
G.R. No. 186312 June 29, 2010 SPOUSES DANTE CRUZ and LEONORA
CRUZ, Petitioners, vs. SUN HOLIDAYS, INC., Respondent.
Facts: Spouses Dante and Leonora Cruz (petitioners) lodged a
Complaint on January 25, 2001 against Sun Holidays, Inc. (respondent)
with the Regional Trial Court (RTC) of Pasig City for damages arising from
the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife
on September 11, 2000 on board the 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. On September 11, 2000, as it was
still windy, Matute and 25 other Resort guests including petitioners son
and his wife trekked to the other side of the Coco Beach mountain that
was sheltered from the wind where they boarded M/B Coco Beach III,
which was to ferry them to Batangas. Shortly after the boat sailed, it
started to rain. As it moved farther away from Puerto Galera and into
the open seas, the rain and wind got stronger, causing the boat to tilt
from side to side and the captain to step forward to the front, leaving
the wheel to one of the crew members. The waves got more unwieldy.
After getting hit by two big waves which came one after the other, M/B
Coco Beach III capsized putting all passengers underwater. The
passengers, who had put on their life jackets, struggled to get out of the
boat. Upon seeing the captain, Matute and the other passengers who
reached the surface asked him what they could do to save the people
who were still trapped under the boat. The captain replied "Iligtas niyo
na lang ang sarili niyo" (Just save yourselves). Help came after about 45
minutes when two boats owned by Asia Divers in Sabang, Puerto
Galera passed by the capsized M/B Coco Beach III. Boarded on those
two boats were 22 persons, consisting of 18 passengers and four crew
members, who were brought to Pisa Island. Eight passengers, including
petitioners son and his wife, died during the incident.
Issue: Whether or not respondent is a common carrier.
Held: The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public. The above article makes no
distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as "a sideline"). 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 distinctions. 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.