G.R. No. 165647, March 26, 2009 3.

Whether or not Wallems failure to answer the extra judicial demand by

Philippines First Insurance Co., Inc. vs Wallem Phils. Shipping, Inc. petitioner for the cost of the lost/damaged shipment is an implied admission
of the formers liability for said goods;
Facts: 4. Whether or not the courts below erred in giving credence to the
October 1995, Anhui Chemicals Import and Export Corp. loaded on board testimony of Mr. Talens.
M/S Offshore Master a shipment consisting of sodium sulphate anhydrous,
complete and in good order for transportation to and delivery at the port of
Manila for consignee, covered by a clean bill of lading.
Ruling:
On October 16, 1995, the shipment arrived in port of manila and was (1) Yes, the vessel is a common carrier, and thus the determination of the
discharged which caused various degrees of spillage and losses as existence or absence of liability will be gauged on the degree of diligence
evidence by the turn over survey of the arrastre operator. Asia Star Freight required of a common carrier. (2) The first and second issue will be
delivered the shipments from pier to the consignees in Quezon City, during resolved concurrently.
the unloading, it was found by the consignee that the shipment was
damaged and in bad condition. (3) The damage of the shipment was documented by the turn0over survey
and request for bad order survey, with these documents, petitioner insist
April 29, 1996, the consignee filed a claim with Wallem for the value of the that the shipment incurred damages while still in the care and responsibility
damaged shipment, to no avail. Since the shipment was insured with Phil. of Wallem before it was turned over to the arrastre operator.  However,
First Insurance against all risks in the amount of P2,470,213.50. The RTC found the testimony of Mr. Talens (cargo surveyor) that the loss was
consignee filed a claim against the First Insurance. First insurance after caused by the mishandling of the arrastre operator. This mishandling was
examining the turn-over survey, the bad order certificate and other affirmed by the CA which was the basis for declaring the arrastre operator
documents paid the consignee but later on sent a demand letter to Wallem solely liable for the damage.
for the recovery of the amount paid to the consignee (in exercise of its right
of subrogation). Wallem did not respond to the claim. It is established that damage or losses were incurred by the shipment
during the unloading. As common carrier, they are bound to observe
First Insurance then instituted an action before RTC for damages against extraordinary diligence in the vigilance over the goods transported by them.
Wallem. RTC held the shipping company and the arrastre operator Subject to certain exceptions enumerated under Article 1734 of the Civil
solidarily liable since both are charged with the obligation to deliver the Code, common carriers are responsible for the loss, destruction, or
goods in good order condition. deterioration of the goods. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the
The CA reversed and set aside the RTC's decision. CA says that there is possession of, and received by the carrier for transportation until the same
no solidary liability between the carrier and the  arrastre because it was are delivered, actually or constructively, by the carrier to the consignee, or
clearly established that the damage and losses of the shipment were to the person who has a right to receive them.
attributed to the mishandling by the arrastre operator in the discharge of
the shipment. For marine vessels, Article 619 of the Code of Commerce provides that the
ship captain is liable for the cargo from the time it is turned over to him at
Issues: the dock or afloat alongside the vessel at the port of loading, until he
1. Whether or not the Court of Appeals erred in not holding that as a delivers it on the shore or on the discharging wharf at the port of unloading,
common carrier, the carriers duties extend to the obligation to safely unless agreed otherwise.
discharge the cargo from the vessel;
2. Whether or not the carrier should be held liable for the cost of the COGSA provides that under every contract of carriage of goods by sea, the
damaged shipment; carrier in relation to the loading, handling, stowage, carriage, custody, care,
and discharge of such goods, shall be subject to the responsibilities and
liabilities and entitled to the rights and immunities set forth in the Act. Jose Cangco was in the employment of Manila Railroad Company. He
Section 3 (2) thereof then states that among the carriers responsibilities are lived in the pueblo of San Mateo, in the province of Rizal, which is located
to properly and carefully load, handle, stow, carry, keep, care for, and upon the line of the defendant railroad company; and in coming daily by
discharge the goods carried. train to the company’s office in the city of Manila where he worked, he used
a pass, supplied by the company, which entitled him to ride upon the
On the other hand, the functions of an arrastre operator involve the company’s trains free of charge.
handling of cargo deposited on the wharf or between the establishment of
the consignee or shipper and the ship's tackle. Being the custodian of the During his ride in the train he arose from his seat and makes his way to the
goods discharged from a vessel, an arrastre operator's duty is to take good exit while the train is still on travel. When the train has proceeded a little
care of the goods and to turn them over to the party entitled to their farther Jose Cangco step down into the cement platform but unfortunately
possession. step in to a sack of watermelon, fell down and rolled under the platform and
Handling cargo is mainly the arrastre operator's principal work so its was drawn under the moving car which resulting to his arm to be crashed
drivers/operators or employees should observe the standards and and lacerated. He was rushed to the hospital and sued the company and
measures necessary to prevent losses and damage to shipments under its the employee who put the sack of watermelon in the platform.
custody. Thus, in this case the appellate court is correct insofar as it ruled
that an arrastre operator and a carrier may not be held solidarily liable at all
times. But the precise question is which entity had custody of the shipment
during its unloading from the vessel?
The accident occurred between 7 and 8 o’ clock on the dark night. It is that
time of the year that may we considered as season to harvest watermelon
The records are replete with evidence which show that the damage to the
explaining why there are sacks of watermelon in the platform. The plaintiff
bags happened before and after their discharge and it was caused by the
contends that it is the negligence of the Manila Railroad Co. on why they let
stevedores of the arrastre operator who were then under the supervision of
their employees put a hindrance in the platform that may cause serious
Wallem.
accident. The defendant answered that it is the lack of diligence on behalf
of the plaintiff alone on why he did not wait for the train to stop before
It is settled in maritime law jurisprudence that cargoes while being
alighting the train.
unloaded generally remain under the custody of the carrier. In the instant
case, the damage or losses were incurred during the discharge of the
shipment while under the supervision of the carrier. Consequently, the ISSUE:
carrier is liable for the damage or losses caused to the shipment. As the
cost of the actual damage to the subject shipment has long been settled, Whether or not the company is liable or there is a contributory negligence
the trial courts finding of actual damages in the amount of P397,879.69 has on behalf of the plaintiff.
to be sustained.

Cangco v. Manila Railroad Co. RULING:

G. R. No. L-12191, 14 October 1918 There is no contributory negligence on behalf of the plaintiff. The Supreme
Court provides some test that may find the contributory negligence of a
person. Was there anything in the circumstances surrounding the plaintiff
at the time he alighted from the train which would have admonished a
FACTS: person of average prudence that to get off the train under the conditions
then existing was dangerous? If so, the plaintiff should have desisted from
alighting; and his failure so to desist was contributory negligence.
 by Bill of Lading No. KP-1 signed by the master of the vessel and issued on
the date of departure.
Alighting from a moving train while it is slowing down is a common practice On 17 May 1974, or prior to its voyage, a time charter-party on the vessel
and a lot of people are doing so every day without suffering injury. Cangco M/V “Sun Plum” pursuant to the Uniform General Charter2 was entered
has the vigor and agility of young manhood, and it was by no means so into between Mitsubishi as shipper/charterer and KKKK as shipowner, in
risky for him to get off while the train was yet moving as the same act Tokyo, Japan.3 Riders to the aforesaid charter-party starting from par. 16
would have been in an aged or feeble person. He was also ignorant of the to 40 were attached to the pre-printed agreement. Addenda Nos. 1, 2, 3
fact that sacks of watermelons were there as there were no appropriate and 4 to the charter-party were also subsequently entered into on the 18th,
warnings and the place was dimly lit. 20th, 21st and 27th of May 1974, respectively.

ISSUE:
Whether a common carrier becomes a private carrier by reason of a
charter-party.
Article 1173, first paragraph: The fault or negligence of the obligor consists
in the omission of that diligence which is required by the nature of the
HELD: NO. petition is DISMISSED
obligation and corresponds with the circumstances of that persons, of the
When PPI chartered the vessel M/V "Sun Plum", the ship captain, its
time and of the place. When negligence shows bad faith, the provisions of
officers and compliment were under the employ of the shipowner and
Article 1171 and 2201, paragraph 2, shall apply.
therefore continued to be under its direct supervision and control. Hardly
then can we charge the charterer, a stranger to the crew and to the ship,
with the duty of caring for his cargo when the charterer did not have any
control of the means in doing so carrier has sufficiently overcome, by clear
In the case the proximate cause of the accident is the lack of diligence of and convincing proof, the prima facie presumption of negligence. The
the company to inform their employees to not put any hindrance in the hatches remained close and tightly sealed while the ship was in transit as
platform like sacks of watermelon. The contract of defendant to transport the weight of the steel covers made it impossible for a person to open
plaintiff carried with it, by implication, the duty to carry him in safety and to without the use of the ship's boom. bulk shipment of highly soluble goods
provide safe means of entering and leaving its trains (civil code, article like fertilizer carries with it the risk of loss or damage. More so, with a
1258). That duty, being contractual, was direct and immediate, and its non- variable weather condition prevalent during its unloading.
performance could not be excused by proof that the fault was morally
imputable to defendant’s servants. Therefore, the company is liable for This is a risk the shipper or the owner of the goods has to face. Clearly,
damages against Cangco. KKKK has sufficiently proved the inherent character of the goods which
makes it highly vulnerable to deterioration; as well as the inadequacy of its
packaging which further contributed to the loss.

Planters Products, Inc. v. Court of Appeals On the other hand, no proof was adduced by the petitioner showing that
H. R. No. 101503, 15 September 1993, 226 SCRA 476 the carrier was remise in the exercise of due diligence in order to minimize
FACTS: the loss or damage to the goods it carried.
Planters Products, Inc. (PPI), purchased from Mitsubishi International
Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons MARINA PORT SERVICES, INC. vs. AMERICAN HOME ASSURANCE
(M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June CORPORATION G.R. No. 201822 August 12, 2015
1974 aboard the cargo vessel M/V “Sun Plum” owned by private
respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, FACTS
U.S.A., to Poro Point, San Fernando, La Union, Philippines, as evidenced Countercorp Trading shipped from SG to PH 10 container vans of soft
wheat flour with seals intact. The shipment was insured by AHAC and
consigned to MSC. Upon arrival, the shipment was discharged in good and accompanying B.O. certificate duly issued and noted on the face of Gate
complete order condition and with safety seals in place to the custody of Pass appears. The signature of the consignee’s representative on the gate
the herein petitioner arrastre operator, MPSI. After unloading and prior to pass is evidence of receipt of the shipment in good order and condition.
hauling, agents of the Bureau of Customs officially broke the seals and
examined the shipment for tax evaluation in the presence of MSC’s broker Also, that MPSI delivered the subject shipment to MSC’s representative in
and checker. Thereafter, the customs inspector closed the container vans good and complete condition and with lock and seals intact is established
and refastened them with safety wire seals while MSC’s broker padlocked by the testimonies of
the same. MSC’s representative, AD’s Customs Services (ACS), took the MPSFs employees who
five container vans for delivery to MSC. Upon receipt at its warehouse, were directly involved in
MSC discovered substantial shortages in the number of bags of flour the processing of the
delivered. Hence, it filed a formal claim for loss with MPSI. MPSI denied subject shipment. Verily,
both claims of MSC. As a result, MSC sought insurance indemnity for the the testimonies of the
lost cargoes from AHAC. AHAC paid MSC the value of the missing bags of aforementioned
flour, in turn, MSC issued a subrogation receipt in favor of AHAC. employees of MPSI
confirm that the
RTC dismissed the complaint. It held that while there was indeed a container vans, together
shortage of 1,650 sacks of soft wheat flour, AHAC’s evidence failed to with their padlocks and
clearly show that the loss happened while the subject shipment was still wirings, were in order at
under MPSI’s responsibility. the time the gate
passes were issued up
CA stressed that in a claim for loss filed by a consignee, the burden of to the time the said
proof to show due compliance with the obligation to deliver the goods to the container vans were
appropriate party devolves upon the arrastre operator. In consonance with turned over to ACS.
this, a presumption of fault or negligence for the loss of the goods arises
against the arrastre operator pursuant to Articles 1265 and 1981 of the Civil Even in the light of
Code. In this case, the CA found that MPSI failed to discharge such burden Article 1981, no
and to rebut the aforementioned presumption. Thus, it was held liable to presumption of fault on
AHAC for the value of the missing bags of flour. the part of MPSI arises
since it was not
ISSUE: sufficiently shown that
Whether MPSI is liable for the loss of the bags of flour the container vans were
re-opened or that their
HELD: locks and seals were
No. MPSI was able to prove delivery of the shipment to MSC in good and broken for the second
complete condition and with locks and seals intact. time.

MPSI, in order to prove that it properly delivered the subject shipment Indeed, Article 1981 of
consigned to MSC, presented 10 gate passes. Each of these gate passes the Civil Code also
bore the duly identified signature of MSC’s representative which serves, mandates a
among others, as an acknowledgement that: presumption of fault on
the part of the arrastre operator. However, no such presumption arises in
Issuance of Gate Pass constitutes delivery to and receipt by consignee of this case considering that it was not sufficiently shown that the container
the goods as described above in good order and condition, unless an vans were re-opened or that their locks and seals were broken for the
second time. As may be recalled, the container vans were opened by a probative value. It is precluded because the party against whom it is
customs official for examination of the subject shipment and were presented is deprived of the right and opportunity to cross-examine the
thereafter resealed with safety wires. While this fact is not disputed by both person to whom the statements or writings are attributed. Its executor or
parties, AHAC alleges that the container vans were re-opened and this author should be presented as a witness to provide the other party to the
gave way to the alleged pilferage. litigation the opportunity to question its contents. Being mere hearsay
evidence, failure to present the author of the letter renders its contents
The Court notes, however, that AHAC based such allegation solely on the suspect and of no probative value.”
survey report of the Manila Adjuster & Surveyors Company (MASCO).
However, the person who prepared the said report was not presented in There being no other competent evidence that the container vans were re-
court to testify on the same. Thus, the said survey report has no probative opened or that their locks and seals were broken for the second time, MPSI
value for being hearsay. “It is a basic rule that evidence, whether oral or cannot be held liable for damages due to the alleged loss of the bags of
documentary, is hearsay, if its probative value is not flour pursuant to Article 1981 of the Civil Code.
based on the personal knowledge of the witness but
on the knowledge of another person who is not on the
witness stand.” Moreover, “an unverified and
unidentified private document cannot be accorded
LEA MER INDUSTRIES INC VS MALAYAN CA reversed the ruling of the trial court for the
INSURANCE CO, INC. reason that said vessel was not seaworthy
GR No. 161745, SEPTEMBER 30, 2005 when it sailed to Manila.

FACTS: ISSUE:
Whether or not the petitioner is liable for the
Ilian Silica Mining entered into a contract of carriage loss of the cargo.
with the petitioner, Lea Mer Industries Inc. for the
shipment of 900 metric tons of silica sand worth HELD:
P565,000. The cargo was consigned to Vulcan
Industrial and Mining Corporation and was to be CA reversed. Common carriers are persons,
shipped from Palawan to Manila. The silica sand was corporations, firms or associations engaged in
boarded to Judy VII, the vessel leased by Lea Mer. the business of carrying or transporting
However, during the course of its voyage, the vessel passengers or goods, or both — by land,
sank which led to the loss of the cargo. water, or air — when this service is offered to
the public for compensation. Petitioner is
Consequently, the respondent, as the insurer, paid clearly a common carrier, because it offers to
Vulcan the value of the lost cargo. Malayan Insurance the public its business of transporting goods
Co., Inc. then collected from the petitioner the amount through its vessels. Thus, the Court corrects
it paid to Vulcan as reimbursement and as its exercise the trial court's finding that petitioner became a
on the right of subrogation. Lea Mer refused to pay private carrier when Vulcan chartered it.
which led Malayan to institute a complaint with the Charter parties are classified as contracts of
RTC. The RTC dismissed the complaint stating that demise (or bareboat) and affreightment, which
the loss was due to a fortuitous event, Typhoon are distinguished as follows:
Trining. Petitioner did not know that a typhoon was
coming and that it has been cleared by the Philippine "Under the demise or bareboat charter of the
Coast Guard to travel from Palawan to Manila. The vessel, the charterer will generally be
considered as owner for the voyage or service stipulated. The charterer event must have been the proximate and only cause of the loss. Moreover, it
mans the vessel with his own people and becomes, in effect, the owner pro should have exercised due diligence to prevent or minimize the loss before,
hac vice, subject to liability to others for damages caused by negligence. To during and after the occurrence of the fortuitous event. As required by the
create a demise, the owner of a vessel must completely and exclusively pertinent law, it was not enough for the common carrier to show that there
relinquish possession, command and navigation thereof to the charterer; was an unforeseen or unexpected occurrence. It had to show that it was free
anything short of such a complete transfer is a contract of affreightment (time from any fault — a fact it miserably failed to prove.
or voyage charter party) or not a charter party at all."
The distinction is significant, because a demise or bareboat charter indicates Schmitz Transport and Brokerage Corp v Transort Venture Inc., GR
a business undertaking that is private in character. Consequently, the rights 150255 April 22,2005
and obligations of the parties to a contract of private carriage are governed
principally by their stipulations, not by the law on common carriers. The Facts:
Contract in the present case was one of affreightment, as shown by the fact
that it was petitioner's crew that manned the tugboat M/V Ayalit and On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port
controlled the barge Judy VII. of Ilyichevsk, Russia on board M/V “Alexander Saveliev” 545 hot rolled steel
sheets in coil weighing 6,992,450 metric tons. The cargoes, which were to
Common carriers are bound to observe extraordinary diligence in their be discharged at the port of Manila in favor of the consignee, Little Giant
vigilance over the goods and the safety of the passengers they transport, as Steel Pipe Corporation (Little Giant), were insured against all risks with
required by the nature of their business and for reasons of public policy. Industrial Insurance Company Ltd. (Industrial Insurance) under Marine Policy
Extraordinary diligence requires rendering service with the greatest skill and No. M-91-3747-TIS. The vessel arrived at the port of Manila and the
foresight to avoid damage and destruction to the goods entrusted for Philippine Ports Authority (PPA) assigned it a place of berth at the outside
carriage and delivery. breakwater at the Manila South Harbor.

Common carriers are presumed to have been at fault or to have acted Schmitz Transport, whose services the consignee engaged to secure the
negligently for loss or damage to the goods that they have transported. This requisite clearances, to receive the cargoes from the shipside, and to deliver
presumption can be rebutted only by proof that they observed extraordinary them to its (the consignee’s) warehouse at Cainta, Rizal, in turn engaged the
diligence, or that the loss or damage was occasioned by any of the following services of TVI to send a barge and tugboat at shipside. TVI’s tugboat
causes: “Lailani” towed the barge “Erika V” to shipside. The tugboat, after
"(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; positioning the barge alongside the vessel, left and returned to the port
"(2) Act of the public enemy in war, whether international or civil; terminal. Arrastre operator Ocean Terminal Services Inc. commenced to
"(3) Act or omission of the shipper or owner of the goods; unload 37 of the 545 coils from the vessel unto the barge. By 12:30 a.m. of
"(4) The character of the goods or defects in the packing or in the October 27, 1991 during which the weather condition had become inclement
containers; due to an approaching storm, the unloading unto the barge of the 37 coils
"(5) Order or act of competent public authority." was accomplished. No tugboat pulled the barge back to the pier, however.
At around 5:30 a.m. of October 27, 1991, due to strong waves, the crew of
Jurisprudence defines the elements of a "fortuitous event" as follows: (a) the the barge abandoned it and transferred to the vessel. The barge pitched and
cause of the unforeseen and unexpected occurrence, or the failure of the rolled with the waves and eventually capsized, washing the 37 coils into the
debtors to comply with their obligations, must have been independent of sea.
human will; (b) the event that constituted the caso fortuito must have been
impossible to foresee or, if foreseeable, impossible to avoid; (c) the Little Giant thus filed a formal claim against Industrial Insurance which paid it
occurrence must have been such as to render it impossible for the debtors to the amount of P5,246,113.11. Little Giant thereupon executed a subrogation
fulfill their obligation in a normal manner; and (d) the obligor must have been receipt in favor of Industrial Insurance. Industrial Insurance later filed a
free from any participation in the aggravation of the resulting injury to the complaint against Schmitz Transport, TVI, and Black Sea through its
creditor. To excuse the common carrier fully of any liability, the fortuitous representative Inchcape (the defendants) before the RTC of Manila, they
faulted the defendants for undertaking the unloading of the cargoes while ancillary activity. The contention, therefore, of petitioner that it is not a
typhoon signal No. 1 was raised. The RTC held all the defendants negligent. common carrier but a customs broker whose principal function is to prepare
Defendants Schmitz Transport and TVI filed a joint motion for the correct customs declaration and proper shipping documents as required
reconsideration assailing the finding that they are common carriers. RTC by law is bereft of merit. It suffices that petitioner undertakes to deliver the
denied the motion for reconsideration. CA affirmed the RTC decision in toto, goods for pecuniary consideration.
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 And in Calvo v. UCPB General Insurance Co. Inc.,[46] this Court held that as
regular business and not as an isolated transaction, and Schmitz Transport the transportation of goods is an integral part of a customs broker, the
for entering into a contract with Little Giant to transport the cargoes from ship customs broker is also a common carrier. For to declare otherwise “would
to port for a fee. be to deprive those with whom [it] contracts the protection which the law
affords them notwithstanding the fact that the obligation to carry goods for
Issue: [its] customers, is part and parcel of petitioner’s business.”

Whether or not Black Sea and TVI are common carriers

Asia Lighterage and Shipping Inc. v. CA
Held : Gr, No. 147246, August 19, 2003

Contrary to petitioner’s insistence, this Court, as did the appellate court, finds FACTS:
that petitioner is a common carrier. For it undertook to transport the cargoes
from the shipside of “M/V Alexander Saveliev” to the consignee’s warehouse Petitioner was contracted as carrier by a corporation from Portland, Oregon
at Cainta, Rizal. As the appellate court put it, “as long as a person or to deliver a cargo to the consignee's warehouse at Pasig City. The cargo,
corporation holds [itself] to the public for the purpose of transporting goods however, never reached the consignee as the barge that carried the cargo
as [a] business, [it] is already considered a common carrier regardless if [it] sank completely, resulting in damage to the cargo. Private respondent, as
owns the vehicle to be used or has to hire one.” That petitioner is a common insurer, indemnified the consignee for the lost cargo and thus, as subrogee,
carrier, the testimony of its own Vice-President and General Manager Noel sought recovery from petitioner. Both the trial court and the appellate court
Aro that part of the services it offers to its clients as a brokerage firm ruled in favor of private respondent.
includes the transportation of cargoes reflects so.
The Court ruled in favor of private respondent. Whether or not petitioner is a
It is settled that under a given set of facts, a customs broker may be common carrier, the Court ruled in the affirmative. The principal business of
regarded as a common carrier. Thus, this Court, in A.F. Sanchez petitioner is that of lighterage and drayage, offering its barges to the public,
Brokerage, Inc. v. The Honorable Court of Appeals,[44] held: although for limited clientele, for carrying or transporting goods by water for
compensation. Whether or not petitioner failed to exercise extraordinary
The appellate court did not err in finding petitioner, a customs broker, to be diligence in its care and custody of the consignee's goods, the Court also
also a common carrier, as defined under Article 1732 of the Civil Code, to ruled in the affirmative. The barge completely sank after its towing bits broke,
wit, resulting in the loss of the cargo. Petitioner failed to prove that the typhoon
Art. 1732. Common carriers are persons, corporations, firms or associations was the proximate and only cause of the loss and that it has exercised due
engaged in the business of carrying or transporting passengers or goods or diligence before, during and after the occurrence. HCISED
both, by land, water, or air, for compensation, offering their services to the
public. ISSUE:
xxx
Whether or Not the petitioner is a common carrier.
Article 1732 does not distinguish between one whose principal business
activity is the carrying of goods and one who does such carrying only as an RULING: YES.
 causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster
Petitioner is a common carrier whether its carrying of goods is done on an or calamity; (2) Act of the public enemy in war, whether international or civil;
irregular rather than scheduled manner, and with an only limited clientele. A (3) Act or omission of the shipper or owner of the goods; (4) The character of
common carrier need not have fixed and publicly known routes. Neither does the goods or defects in the packing or in the containers; (5) Order or act of
it have to maintain terminals or issue tickets. To be sure, petitioner fits the competent public authority.
test of a common carrier as laid down in Bascos vs. Court of Appeals. The
test to determine a common carrier is "whether the given undertaking is a In the case at bar, the barge completely sank after its towing bits broke,
part of the business engaged in by the carrier which he has held out to the resulting in the total loss of its cargo. Petitioner claims that this was caused
general public as his occupation rather than the quantity or extent of the by a typhoon, hence, it should not be held liable for the loss of the cargo.
business transacted." In the case at bar, the petitioner admitted that it is However, petitioner failed to prove that the typhoon is the proximate and only
engaged in the business of shipping and lighterage, offering its barges to the cause of the loss of the goods, and that it has exercised due diligence
public, despite its limited clientele for carrying or transporting goods by water before, during and after the occurrence of the typhoon to prevent or minimize
for compensation. the loss. The evidence show that, even before the towing bits of the barge
broke, it had already previously sustained damage when it hit a sunken
Article 1732 of the Civil Code defines common carriers as persons, object while docked at the Engineering Island. It even suffered a hole.
corporations, firms or associations engaged in the business of carrying or Clearly, this could not be solely attributed to the typhoon. The partly-
transporting passengers or goods or both, by land, water, or air, for submerged vessel was refloated but its hole was patched with only clay and
compensation..offering their services to the public. Petitioner contends that it cement. The patch work was merely a provisional remedy, not enough for
is not a common carrier but a private carrier. Allegedly, it has no fixed and the barge to sail safely. Thus, when petitioner persisted to proceed with the
publicly known route, maintains no terminals, and issues no tickets. It points voyage, it recklessly exposed the cargo to further damage.
out that it is not obliged to carry indiscriminately for any person. It is not
bound to carry goods unless it consents. In short, it does not hold out its Cokaliong Shipping Lines v. UPCB G.R. No. 146018 / 25 June 2003
services to the general public. In De Guzman vs. Court of Appeals, we held
that the definition of common carriers in Article 1732 of the Civil Code makes FACTS:
no distinction between one whose principal business activity is the carrying On 11 December 1991, Nestor Angelia, both the shipper and
of persons or goods or both, and one who does such carrying only as an consignee, delivered to the petitioner, Cokaliong Shipping Lines, cargo
ancillary activity. We also did not distinguish between a person or enterprise consisting of one carton of Christmas decorations and two sacks of
offering transportation service on a regular or scheduled basis and one plastic toys, to be transported on board the M/V Tandag scheduled to depart
offering such service on an occasional, episodic or unscheduled basis. the following day from Cebu City to Surigao del Sur. Zosimo Mercado, also
Further, we ruled that Article 1732 does not distinguish between a carrier the shipper and consignee of cargo, likewise delivered to the petitioner two
offering its services to the general public, and one who offers services or cartons of plastic toys and Christmas decor, one roll of floor matting, and one
solicits business only from a narrow segment of the general population. bundle of assorted goods for transportation. The cargoes were both insured
against all risk by Feliciana Legaspi through the UCPB General Insurance
Common carriers are bound to observe extraordinary diligence in the Co. for PHP150,000.00.
vigilance over the goods transported by them. They are presumed to have
been at fault or to have acted negligently if the goods are lost, destroyed or When the vessel left port, it had thirty-four passengers and assorted cargo
deteriorated. To overcome the presumption of negligence in the case of loss, on board, including the goods of Legaspi. However, after the vessel had
destruction or deterioration of the goods, deterioration of the goods, the passed by the Mandaue-Mactan Bridge, a fire broke out in the engine room
common carrier must prove that it exercised extraordinary diligence. There which threatened the lives of everyone on board. Despite earnest efforts of
are, however, exceptions to this rule. Article 1734 of the Civil Code the officers and crew of the vessel to safeguard the cargoes, the fire
enumerates the instances when the presumption of negligence does not ultimately engulfed and destroyed the entire vessel resulting in the loss of
attach: Art. 1734. Common carriers are responsible for the loss, destruction, the vessel and the cargoes therein.
or deterioration of the goods, unless the same is due to any of the following
As a result of the sinking, Legaspi filed a claim with the respondent which from the engine room walling, thus precluding constant inspection and care
was subsequently approved with the issuance of a check for PHP by the crew.
P148,500.00 as payment for the lost goods. Having been issued a
Subrogation Receipt for both insured cargoes, the UPCB filed a claim The law provides that a common carrier is presumed to have been
anchored on torts against Cokaliong Shipping Lines and sought to collect negligent if it fails to prove that it exercised extraordinary vigilance over
the sum it payed to Legaspi plus legal interest, attorney’s fees, and the cost the goods it transported therewith. Where loss of cargo results from the
of the suit. They principal claim upon which UPCB anchors its case is that failure of the officers of a vessel to inspect their ship frequently so
the loss of the cargo was due to the negligence of the officers of the shipping that they would have discovered the existence of cracked, that loss
company which makes them liable to pay for damages by reason of their cannot be attributed to force majeure or even be considered as a caso
carelessness. fortuito, but solely to the negligence of those officials who were supposed to
have inspected the worthiness of their vessel before departure.
The petitioners, on the other hand, alleged that they had already been
cleared by the Board of Marine Inquiry of any negligence in the burning of With respect to the extent of its liability, the respondent contended that the
the vessel and the shippers/consignee had already been paid the value of petitioner’s liability should be based on the actual insured value of the
the goods as stated in the Bill of Lading and, hence, they cannot be held goods while the petitioner claimed that its liability should be limited to the
liable for the loss of the cargo beyond the value thereof declared in the Bills value declared by the shipper/consignee in the Bill of Lading.
of Lading – a total of PHP20,500.00 for both cargoes it had issued to
Legaspi Marketing Corporation and Nestor Angelia which supposedly A stipulation in a Bill of Lading limiting the common carrier’s liability for loss
extinguishes their liability with the respondent. or destruction of a cargo to a certain sum, unless the shipper or owner
declares a greater value, is sanctioned by Articles 1749 and 1750 of the New
Both the Regional Trial Court and the Court of Appeals found the case in Civil Code. The purpose of the limiting stipulations in Bills of Lading is to
favor of the respondent. While it was true that the petitioner had paid protect the common carrier from exorbitant liabilities since such it obliges the
PHP14,000.00 to Legaspi Marketing, the appellate court held that the shipper/consignee to notify the common carrier of the amount that the latter
payment did not extinguish the petitioner’s obligation to pay the insurance may be liable for in case of loss of the goods. The common carrier can then
price because there was no evidence that Feliciana Legaspi was the same take appropriate measures to protect itself from harm.
owner of Legaspi Marketing. They also pointed out the impropriety of
treating the claim covering the cargo valued therein at P6,500 as a setoff Pursuant to the aforementioned provisions of law, it then must be required
against Nestor Angelia’s account with Chester Enterprises, Inc. Finally, that the stipulation limiting the common carrier’s liability for loss must be
it ruled that the UPCB is not bound by the valuation of the cargo reasonable and just under the circumstances, and has been freely and
under the Bills of Lading issued because the goods were insured with fairly agreed upon. In the present case, however, in their desire to obtain
the respondent for the total amount of PHP150,000.00. lower freightage fees, Zosimo Mercado and Nestor Angelia willfully
misled the petitioner by undervaluing the goods in their respective Bills
ISSUE: of Lading, hence, the petitioner was exposed to a risk that was deliberately
Can the petitioner be liable for the lost goods? If it is, what is the extent of hidden from it, and from which it could not protect itself. Not only did it violate
their liability? a valid contractual stipulation, they likewise committed a fraudulent act which
sought to make the common carrier liable for more than the amount declared
RULING: in the Bills of Lading.
Yes, the petitioner is liable for the lost cargoes. The uncontroverted findings
of the Philippine Coast Guard show that the M/V Tandag sank due to a fire, Considering these circumstances then, in addition to the facts that the
which resulted from an unchecked and untended crack in the auxiliary insurance company was paid the correct higher premium by Feliciana
engine fuel oil service tank from which fuel spurted out and dripped to the Legaspi while the petitioner was paid a fee lower than what it was entitled to
heating exhaust manifold, causing the ship to burst into flames. The crack for transporting the goods that had been deliberately undervalued by the
was located on the side of the fuel oil tank, which had a mere two-inch gap shippers in the Bills of Lading they prepared, it is in accordance with justice
and equity that between the two of them, UPCB should bear the loss in fact that she was never a party to that case and, therefore, the principle of
excess of the value declared in the Bills of Lading. res judicata does not apply. Nor are the issues in Civil Case No. 3490 and in
the present case the same. The issue in Civil Case No. 3490 was whether
Calalas v Court of Appeals & Eliza Sunga Salva and his driver Verena were liable for quasi-delict for the damage
caused to petitioner's jeepney. On the other hand, the issue in this case is
Facts: whether petitioner is liable on his contract of carriage. The first, quasi-delict,
Private Respondent Eliza Saunga took a passenger jeepney owned and also known as culpa aquiliana or culpa extra contractual, has as its source
operated by Petitioner Vicente Calalas. As the jeepney was already full, she the negligence of the tortfeasor. The second, breach of contract or culpa
was just given an “extension seat”, a wooden stool, at the rear end of the contractual, is premised upon the negligence in the performance of a
vehicle. contractual obligation. Consequently, in quasi-delict, the negligence or fault
should be clearly established because it is the basis of the action, whereas
On the way, the jeepney stopped to let a passenger off. Since Sunga was in breach of contract, the action can be prosecuted merely by proving the
seated at the rear end, she gave way to the outgoing passenger. Just as she existence of the contract and the fact that the obligor, in this case the
was doing so, an Isuzu Elf Truck driven by Igclerio Verena and owned by common carrier, failed to transport his passenger safely to his destination. In
Francisco Salva, bumped to the left rear end of the jeepney. This incident case of death or injuries to passengers, Art. 1756 of the Civil Code provides
cause injury to Sunga. that common carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary diligence as
She filed a compliant for damages against Calalas on the ground of breach defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts
of contract of carriage. On the other hand, Calalas filed a third-party to the common carrier the burden of proof. It is immaterial that the proximate
complaint against Salva, the owner of the truck. cause of the collision between the jeepney and the truck was the negligence
of the truck driver. The doctrine of proximate cause is applicable only in
The Regional Trial Court (RTC) found Salva guilty and absolved Calalas actions for quasi-delict, not in actions involving breach of contract. The
from liability holding that it was the truck owner who is responsible for the doctrine is a device for imputing liability to a person where there is no
accident based on quasi-delict. relation between him and another party. In such a case, the obligation is
created by law itself. But, where there is a pre-existing contractual relation
However, on appeal to the Court of Appeals (CA), the appellate court between the parties, it is the parties themselves who create the obligation,
reversed the RTC’s decision, on the ground that Sunga’s cause of action and the function of the law is merely to regulate the relation thus created.
was based on a breach of contract of carriage and not on quasi-delict.
(2) We do not think so. First, the jeepney was not properly parked, its rear
Hence, this appeal from Calalas. portion being exposed about two meters from the broad shoulders of the
highway, and facing the middle of the highway in a diagonal angle. Second,
Issues: it is undisputed that petitioner's driver took in more passengers than the
(1) Whether the decision in the case for quasi delict between Calalas on one allowed seating capacity of the jeepney. The fact that Sunga was seated in
hand and Salva and Verena on the other hand, is res judicata to the issue in an "extension seat" placed her in a peril greater than that to which the other
this case passengers were exposed. Therefore, not only was petitioner unable to
overcome the presumption of negligence imposed on him for the injury
(2) Whether Calalas exercised the extraordinary diligence required in the sustained by Sunga, but also, the evidence shows he was actually negligent
contract of carriage in transporting passengers. We find it hard to give serious thought to
petitioner's contention that Sunga's taking an "extension seat" amounted to
Held: an implied assumption of risk. It is akin to arguing that the injuries to the
many victims of the tragedies in our seas should not be compensated merely
(1) The argument that Sunga is bound by the ruling in Civil Case No. 3490 because those passengers assumed a greater risk of drowning by boarding
finding the driver and the owner of the truck liable for quasi-delict ignores the an overloaded ferry. This is also true of petitioner's contention that the
jeepney being bumped while it was improperly parked constitutes caso The rules on extraordinary responsibility of common carriers remain basically
fortuito. A caso fortuito is an event which could not be foreseen, or which, unchanged even when the contract is breached by tort although
though foreseen, was inevitable. This requires that the following noncontradictory principles on quasi-delict may then be assimilated as also
requirements be present: (a) the cause of the breach is independent of the forming part of the governing law. (Sabena Belgian World Airlines vs. Court
debtor's will; (b) the event is unforeseeable or unavoidable; (c) the event is of Appeals, 255 SCRA 38 [1996])
such as to render it impossible for the debtor to fulfill his obligation in a
normal manner, and (d) the debtor did not take part in causing the injury to Proximate cause, which is determined by a mixed consideration of logic,
the creditor. Petitioner should have foreseen the danger of parking his common sense, policy and precedent, is that cause which, in natural and
jeepney with its body protruding two meters into the highway. continuous sequence, unbroken by any efficient intervening cause, produces
the injury, and without which the result would not have occured. (Bank of the
(3) As a general rule, moral damages are not recoverable in actions for Philippine Islands vs. Court of Appeals, 641 SCRA 326 [2000])
damages predicated on a breach of contract for it is not one of the items
enumerated under Art. 2219 of the Civil Code. As an exception, such While the driver of an improperly parked vehicle may be liable in case of
damages are recoverable: (1) in cases in which the mishap results in the collision, the driver of a moving vehicle who had no opportunity to avoid the
death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of collision due to his own making is not relieved of liability, such as when his
the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or negligence is the immediate and proximate cause of the collision. (Austria
bad faith, as provided in Art. 2220. In this case, there is no legal basis for vs. Court of Appeals, 327 SCRA 668 [2000])
awarding moral damages since there was no factual finding by the appellate  
court that petitioner acted in bad faith in the performance of the contract of G.V. FLORIDA TRANSPORT, INC. vs. HEIRS OF BATTUNG
carriage.
DOCTRINE
NOTES: Common carriers should be given sufficient leeway in assuming that the
passengers they take in will not brig anything that would prove dangerous to
In quasi-delict, the negligence or fault should be clearly established because himself, as well as his co-passengers, unless there is something that will
it s the basis of the action, whereas in breach of contract, the action can be indicate that a more stringent inspection should be made.
prosecuted merely by proving the existence of the contract and the fact that
the obligor, in this case the common carrier failed to transport his passenger FACTS
safely to his destination. Respondent alleged that Battung boarded petitioner’s bus bound to Manila.
When the bus driver stopped the bus and alighted to check the tires, a man
Doctrine of Proximate Cause who was seated at the fourth row of the bus stood up, shot Battung at his
The doctrine of proximate cause is applicable only in actions for quasi- head, and then left with a companion. The bus conductor notified the driver
delicts, not in actions involving breach of contract. of the incident and thereafter brought Battung at the hospital, but the latter
was pronounced dead on arrival. Hence, respondents filed a complaint for
Presumption of Negligence damages based on a breach of contract of carriage against petitioner before
Upon the happening of the accident, the presumption of negligence at once the RTC. Respondents contended that as a common carrier, petitioner and
arises, and it becomes the duty of a common carrier to prove that he its employees are bound to observe extraordinary diligence in ensuring the
observed extraordinary diligence in the care of his passengers. safety of the passengers; and in case of injuries and/or death on the part of a
passenger, they are presumed to be at fault. Petitioner maintained that they
Bad faith had exercised extraordinary diligence and they claimed that a common
The common carrier’s admission in open court that his driver failed to assist carrier is not an absolute insurer of its passengers and that Battung’s death
the injured passenger in going to a nearby hospital cannot be construed as should be properly deemed a fortuitous event. The RTC found that the
an admission of bad faith. petitioner were unable to rebut the presumed liability of common carriers in
case of injuries/death to its passenger due to their failure to show that they
implemented the proper security measures to prevent passengers from following the direction of the calesa; that upon seeing the Biñan bus the
carrying deadly weapons inside the bus which resulted to the killing of driver of the BTCO bus dimmed his light; that as the calesa and the BTCO
Battung. The CA affirmed the RTC’s Decision in toto. bus were passing each other from the opposite directions, the Biñan bus
following the calesa swerved to its left in an attempt to pass between the
ISSUE BTCO bus and the calesa; that without diminishing its speed of about
Whether or not the CA correctly affirmed the ruling of the RTC finding seventy (70) kilometers an hour, the Biñan bus passed through the space
petitioner liable for damages to respondent arising from culpa contractual. between the BTCO bus and the calesa hitting first the left side of the BTCO
bus with the left front corner of its body and then bumped and struck the
HELD calesa which was completely wrecked; that the driver was seriously injured
The complaint should be dismissed. Court clarified that where the injury and the horse was killed; that the second and all other posts supporting the
sustained by the passenger was in no way due (1) to any defect in the top of the left side of the BTCO bus were completely smashed and half of
means of transport or in the method of transporting, or (2) to the negligent or the back wall to the left was ripped open. The BTCO bus suffered damages
willful acts of the common carrier’s employees with respect to the foregoing for the repair of its damaged portion.As a consequence of this occurrence,
– such as when the injury arises wholly from causes created by strangers Caguimbal and Tolentino died, apart from others who were injured.
which the carrier had no control of or prior knowledge to prevent – there
would be no issue regarding the common carrier’s negligence in its duty to The widow and children of Caguimbal sued to recover damages from the
provide safe and suitable care, as well as competent employees in relation BTCO. The latter, in turn, filed a third-party complaint against the Biñan and
to its transport business, as such, the presumption of fault or negligence its driver, Ilagan. Subsequently, the Caguimbals amended their complaint, to
foisted under Article 1756 of the Civil Code should not apply.Battung’s death include therein, as defendants, said Biñan and Ilagan.
was neither caused by any defect in the means of transport or in the method
of transporting, or to the negligent or willful acts of petitioners. Instead, the CFI dismissed the complaint insofar as the BTCO is concerned, without
case involves the death of Battung wholly caused by the surreptitious act of prejudice to plaintiff's right to sue Biñan and Ilagan. CA reversed said
a co-passenger who hurriedly alighted from the vehicle. Common carriers decision and rendered judgment for Caguimbal. BTCO appealed to SC.
should be given sufficient leeway in assuming that the passengers they take
in will not brig anything that would prove dangerous to himself, as well as his Issue:
co-passengers, unless there is something that will indicate that a more Whether BTCO is liable to pay damages for failure to exercise extraordinary
stringent inspection should be made. diligence?
 
Batangas Tranportation vs Caguimbal Held:
YES. BTCO has not proven the exercise of extraordinary diligence on its
Facts: part.
Caguimbal who was a paying pasenger of Batangas Transportation
Company (BTCO) bus died when the bus of the Biñan Transportation The recklessness of the driver of Binan was, manifestly, a major factor in the
Company (Binan) which was coming from the opposite direction and a occurrence of the accident which resulted in the death of Pedro Caguimbal.
calesa managed by Makahiya, which was then ahead of the Biñan bus met Indeed, as driver of the Biñan bus, he overtook Makahiya's horse-driven rig
an accident. or calesa and passed between the same and the BTCO bus despite the fact
that the space available was not big enough therefor, in view of which the
A passenger requested the conductor of BTCO to stop as he was going to Biñan bus hit the left side of the BTCO bus and then the calesa.
alight, and when he heard the signal of the conductor, the driver slowed
down his bus swerving it farther to the right in order to stop; at this juncture, Article 1733 of the Civil Code provides the general rule that extraordinary
a calesa, then driven by Makahiya was at a distance of several meters facing diligence must be exercised by the driver of a bus in the vigilance for the
the BTCO bus coming from the opposite direction; that at the same time the safety of his passengers.
Biñan bus was about 100 meters away likewise going northward and
The record shows that, in order to permit one of them to disembark, the
BTCO bus driver drove partly to the right shoulder of the road and partly on
the asphalted portion thereof. Yet, he could have and should have seen to it
— had he exercised "extraordinary diligence" — that his bus was completely
outside the asphalted portion of the road, and fully within the shoulder
thereof, the width of which being more than sufficient to accommodate the
bus. When the BTCO bus driver slowed down his BTCO bus to permit said
passenger to disembark, he must have known, therefore, that the Biñan bus
would overtake the calesa at about the time when the latter and BTCO bus
would probably be on the same line, on opposite sides of the asphalted
portions of the road, and that the space between the BTCO bus new Civil
Code). By the contract of carriage.

It is true that the driver of the Biñan bus should have slowed down or
stopped. Perez was thus under obligation to avoid a situation which would
be hazardous for his passengers. This is an exception to the general rule
that negligence must be proved. was reckless in not doing so. and. but.and
the "calesa" would not be enough to allow the Biñan bus to go through make
their safety dependent upon the diligence of the Biñan driver. In an action
based on a contract of carriage. and. and it is therefore incumbent upon the
carrier to prove that it has exercised extraordinary diligence as prescribed in
Articles 1733 and 1755 of the new Civil Code . the court need not make an
express finding of fault or negligence on the part of the carrier in order to
hold it responsible to pay the damages sought for by the passenger. hence.
he had no especial obligations toward the passengers of the BTCO unlike
the BTCO bus driver whose duty was to exercise "utmost" or "extraordinary"
diligence for their safety. the carrier assumes the express obligation to
transport the passenger to his destination safely and to observe
extraordinary diligence with a due regard for all the circumstances. and any
injury that might be suffered by the passenger is right away attributable to
the fault or negligence of the carrier (Article 1756.