COMMON CARRIERS

Transportation Law
Case Digests
2-Manresa
SY 2015-2016

What is a Common Carrier?

First Philippine Industrial Corp. vs. CA
FACTS:
First Philippine Industrial Corporation is a grantee of a
pipeline concession under Republic Act No. 387.
Sometime in January 1995, petitioner applied for
mayors permit in Batangas. However, the Treasurer
required petitioner to pay a local tax based on gross
receipts amounting to P956,076.04. In order not to
hamper its operations, petitioner paid the taxes for the
first quarter of 1993 amounting to P239,019.01 under
protest.
On January 20, 1994, petitioner filed a letter-protest to
the City Treasurer, claiming that it is exempt from local
tax since it is a pipeline operator with a government
concession engaged in the business of transporting
petroleum products from the Batangas refineries, via
pipeline, to Sucat and JTF Pandacana Terminals.
The respondent City Treasurer denied the protest,
thus, petitioner filed a complaint before the Regional
Trial Court of Batangas for tax refund. In its complaint,
petitioner alleged that the authority of cities to impose
and collect a tax on the gross receipts of contractors
and independent contractors under Sec. 141 (e) and
1511does not include the authority to collect such taxes
on transportation contractors for, as defined under Sec.
131 (h), the term "contractors" excludes transportation
contractors
Respondents assert that pipelines cannot be exempt
from taxes under Section 133 (j) of the Local
Government Code as said exemption applies only to
"transportation contractors and persons engaged in the
transportation by hire and common carriers by air, land
and water." 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.
ISSUE:
Whether or not a pipeline business is included in the
term common carrier so as to entitle the petitioner to
the tax exemption. Yes.
RULING:
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.
Article 1732 of the Civil Code defines a "common
carrier" as "any person, corporation, firm or

association engaged in the business of carrying or

transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services
to the public."
The test for determining whether a party is a common
carrier of goods is:
(1) He must be engaged in the business of carrying
goods for others as a public employment, and must
hold himself out as ready to engage in the
transportation of goods for person generally as a
business and not as a casual occupation;
(2) He must undertake to carry goods of the kind to
which his business is confined;
(3) He must undertake to carry by the method by
which his business is conducted and over his
established roads; and
(4) The transportation must be for hire.

Based on the above definitions and requirements,

there is no doubt that petitioner is a common carrier. It
is engaged in the business of transporting or carrying
goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons
indifferently, that is, to all persons who choose to
employ its services, and transports the goods by land
and for compensation. The fact that petitioner has a
limited clientele does not exclude it from the definition
of a common carrier.
In De Guzman vs. Court of Appeals the Supreme Court
ruled that:
The above article (Art. 1732, Civil Code) makes no
distinction between one whose principal business
activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary
activity (in local idiom, as a "sideline"). Article
1732 . . . 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 1877 deliberately refrained from making such
distinctions.
Also, respondent's argument that the term "common
carrier" as used in Section 133 (j) of the Local
Government Code refers only to common carriers
transporting goods and passengers through moving

COMMON CARRIERS

Transportation Law
Case Digests
2-Manresa
SY 2015-2016

vehicles or vessels either by land, sea or water, is

erroneous.
As correctly pointed out by petitioner, the definition of
"common carriers" in the Civil Code makes no
distinction as to the means of transporting, as long as
it is by land, water or air. It does not provide that the
transportation of the passengers or goods should be by
motor vehicle.

COMMON CARRIERS

Transportation Law
Case Digests
2-Manresa
SY 2015-2016

PEDRO DE GUZMAN vs. CA and ERNESTO

CENDANA
FACTS:
Cendana is a junk dealer from Pangasinan who
brings such material to Manila for resale. On the return
trip to Pangasinan, respondent would load his vehicles
with cargo which various merchants deliver to
Pangasinan. For that service Cendana charged freight
rates commonly lower than the regular rates.
In 1970, de Guzman a dealer of General Milk
contracted Cendana to deliver 750 cartons of Liberty
milk to Pangasinan. The controversy arose when 600
cartons never reached Pangasinan as the truck which
carried these boxes was hijacked.
De Guzman sued Cendana seeking to recover
the value of the goods. It is the contention of de
Guzman that as a common carrier Cendana failed to
exercise extra-ordinary diligence in dealing with the
goods. As a defense, Cendana alleged that he is not a
common carrier for the reason that this is not his
principal line of business, he only do this occasionally,
and3that he has no certificate of convenience.
ISSUES:
1.
Whether or not Cendana is a common carrier.
2.
Whether or not a Certificate of Convenience is
a prerequisite before one can become a common
carrier.
3.
Whether or not Cendana should be held liable.
RULING:
1.

Yes.

Cendana is a common carrier. Article 1732 defines

common carriers as persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods or both, by land,
water, or air for compensation, offering their services
to the public. The article makes no distinction between
one whose principal business activity is the carrying of
persons or goods or both, and who does such carrying
only as an ancillary activity or as sideline. Article 1732
carefully avoids making distinctions between a person
and/or enterprise offering transportation 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, one who offers services or
solicit business only from a narrow segment of the
general population.

Common carrier may coincide neatly with the

notion of public service under the Public Service Act
which at least supplements the law on common
carriers set forth in the Civil Code. Public service
includes, xxx any person that now or hereafter may
own , operate, manage, or control in the Philippines,
for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental,
and done for general business purposes xxx
2.

No.

A certificate of public convenience is not a requisite for

the incurring of liability under the Civil Code provisions
governing common carriers. That liability arises the
moment a person or a firm acts as common carrier,
without regard whether or not such carrier has also
complied with the requirements of applicable
regulatory statute and implementing regulations and
has been granted a certificate of public convenience or
other franchise.
The law imposes duties and liabilities upon
common carriers for the safety and protection of those
who utilize their services and the law cannot allow a
common carrier to render such duties and liabilities
merely facultative by simply failing to obtain the
necessary permits and authorizations.
3.

No.

The Supreme Court held that Cendana should not be

held liable under the circumstances. The hijacking of
the carriers truck does not fall within any of the five
(5) categories enumerated in Article 1734 and that list
is exclusive. Therefore, there is a presumption as
provided under Article 1735, in other words, the
private respondent as common carrier is presumed to
have been at fault or have acted negligently. This
presumption, however, may be overthrown by proof of
extraordinary diligence on the part of Cendana.
Article 1745 (6) provides that a common
carrier is held responsible and will not be allowed to
divest or to diminish such responsibility even for acts
of strangers like thieves or robbers, except where such
thieves or robbers in fact acted with grave or
irresistible threat, violence or force. The Court
believes and so hold that should there be grave and
irresistible threat, violence or force the limits of
extraordinary diligence would be reached. In this case
ARMED robbers held up the truck of Cendana and in
fact these men were apprehended and were tried
before the CFI and were convicted for robbery.
In these circumstances, the SC hold that the
occurrence of the loss must reasonably be regarded as
quite beyond the control of the common carrier and
properly regarded as a fortuitous event.

COMMON CARRIERS

Transportation Law
Case Digests
2-Manresa
SY 2015-2016

Therefore, Cendana is not liable for the value

of the undelivered merchandise which was lost because
of an event entirely beyond his control.

ESTRELLITA M. BASCOS, petitioners, vs.

COURT OF APPEALS and RODOLFO A.
CIPRIANO, respondents.
FACTS:
Rodolfo A. Cipriano representing Cipriano Trading
Enterprise (CIPTRADE for short) entered into a
hauling contract with Jibfair Shipping Agency
Corporation whereby the former bound itself to
haul the latter's 2,000 m/tons of soya bean meal
from Magallanes Drive, Del Pan, Manila to the
warehouse of Purefoods Corporation in Calamba,
Laguna.
To carry out its obligation, CIPTRADE, through
Rodolfo Cipriano, subcontracted with Estrellita
Bascos to transport and to deliver 400 sacks of
soya bean meal worth P156,404.00 from the
Manila Port Area to Calamba, Laguna at the rate
of P50.00 per metric ton. Petitioner failed to
deliver
the said cargo. As a consequence of that
4
failure, Cipriano paid Jibfair Shipping Agency the
amount of the lost goods in accordance with the
contract which held the former ...liable and
answerable for any loss in bags due to theft,
hijacking and non-delivery or damages to the
cargo during transport at market value..."
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.
Petitioner contends that there was no contract of
carriage but a contract of lease since CIPTRADE
leased her cargo truck to load the cargo from
Manila Port Area to Laguna and that they offer
their services only to a select group of people and
do not cater to the general public; that CIPTRADE
was liable to petitioner in the amount of
P11,000.00 for loading the cargo; that the truck
carrying the cargo was hijacked along Canonigo
St., Paco, Manila on the night of October 21,
1988; that the hijacking was immediately
reported to CIPTRADE and that petitioner and the
police exerted all efforts to locate the hijacked

properties; that after preliminary investigation,

an information for robbery and carnapping were
filed against Jose Opriano, et al.; and that
hijacking, being a force majeure, exculpated
petitioner from any liability to CIPTRADE.
RTC rendered a decision in favor of Cipriano and
ordered Bascos to pay damages to the former.
CA affirmed the said decision.
ISSUES:
(1) was petitioner a common carrier?; and
(2) was the
majeure?

hijacking

referred

to

force

(1) YES. Article 1732 of the Civil Code defines a

common carrier as "(a) person, corporation or
firm, or association engaged in the business of
carrying or transporting passengers or goods or
both, by land, water or air, for compensation,
offering their services to the public." The test to
determine a common carrier is "whether the
given undertaking is a part of the business
engaged in by the carrier which he has held out
to the general public as his occupation rather
than the quantity or extent of the business
transacted."
In this case, petitioner herself has made the
admission that she was in the trucking business
under the name A.M. Bascos Trucking offering
her trucks to those with cargo to move. Both
courts appreciated the following pieces of
evidence as indicators that petitioner was a
common carrier: the fact that the truck driver of
petitioner, Maximo Sanglay, received the cargo
consisting of 400 bags of soya bean meal as
evidenced by a cargo receipt signed by Maximo
Sanglay; the fact that the truck helper, Juanito
Morden, was also an employee of petitioner; and
the fact that control of the cargo was placed in
petitioner's care.
Article 1732 makes no distinction between one
whose principal business activity is the carrying
of persons or goods or both, and one who does
such carrying only as an ancillary activity (in local
idiom, as a "sideline"). 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

COMMON CARRIERS

Transportation Law
Case Digests
2-Manresa
SY 2015-2016

services or solicits business only from a narrow

segment of the general population.
(2) NO. 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. Such presumption does not attach
in instances enumerated in Article 1734. In those
cases where the presumption is applied, the
common carrier must prove that it exercised
extraordinary diligence in order to overcome the
presumption.
In De Guzman vs. CA, SC held that hijacking, not
being included in Article 1734, must be dealt with
under 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 which is in accordance with
Article 1745 of the Civil Code.
Affidavits of petitioner, Jesus Bascos, and Juanito
5
Morden's
"Salaysay" were presented before the
court. However, petitioner's affidavit about the
hijacking was based on what had been told her
by Juanito Morden and thus, was not a first-hand
account. Secondly, the affidavit of Jesus Bascos
did not dwell on how the hijacking took place.
Thirdly, while the affidavit of Juanito Morden, the
truck helper in the hijacked truck, was presented
as evidence in court, he himself was a witness as
could be gleaned from the contents of the
petition. These affidavits were not enough to
overcome the presumption. The subsequent filing
of the information for carnapping and robbery
against the accused named in said affidavits did
not necessarily mean that the contents of the
affidavits were true because they were yet to be
determined in the trial of the criminal cases.
The presumption of negligence was raised against
petitioner. It was petitioner's burden to overcome
it. Thus, contrary to her assertion, private
respondent need not introduce any evidence to
prove her negligence. Her own failure to adduce
sufficient proof of extraordinary diligence made
the presumption conclusive against her.

COMMON CARRIERS

Transportation Law
Case Digests
2-Manresa
SY 2015-2016

Petitioner contends that contrary to the findings of RTC

and CA, she is not a common carrier but a private
carrier
because,
as
a
customs
broker
and
warehouseman, she does not indiscriminately hold her
services out to the public but only offers the same to
select parties with whom she may contract in the
conduct of her business.
VIRGINES CALVO doing business under the name
and style TRANSORIENT CONTAINER TERMINAL
SERVICES, INC. v. UCPB GENERAL INSURANCE
CO., INC.
March 19, 2002

ISSUE:
WON Calvo is a common carrier

FACTS:

RULING:

Petitioner Virgines Calvo is the owner of Transorient

Container Terminal Services, Inc. (TCTSI), a sole
proprietorship customs broker.

Yes. Calvo is a common carrier.

Calvo entered into a contract with San Miguel

Corporation (SMC) for the transfer of 114 reels of
semi-chemical fluting paper and 124 reels of kraft liner
board from the Port Area in Manila to SMCs warehouse
at the Tabacalera Compound, Ermita, Manila.
The cargo was insured by respondent UCPB General
Insurance Co., Inc.

The shipment in question, contained in 30 metal vans,

arrived in Manila on board M/V Hayakawa Maru and
were unloaded from the vessel to the custody of the
arrastre operator, Manila Port Services, Inc.
Calvo, pursuant to her contract with SMC, withdrew
the cargo from the arrastre operator and delivered it to
SMCs warehouse in Ermita, Manila.
Upon delivery, the goods were inspected by Marine
Cargo Surveyors, who found that 15 reels of the semichemical fluting paper were wet/stained/torn and 3
reels of kraft liner board were likewise torn. The
damage was placed at P93,112.00.
SMC collected payment from respondent UCPB under
its insurance contract for the aforementioned amount.
In turn, UCPB as subrogee of SMC, brought suit
against Calvo before RTC. It rendered judgment finding
Calvo liable to UCPB for the damage to the shipment.
RTC [as affirmed by CA] opined that damages
sustained by shipment are attributable to improper
handling whilst in the custody of the broker. It ruled
that Calvo is a customs broker, warehouseman and at
the same time a common carrier who is supposed to
exercise the extraordinary diligence required by law.
Having failed to exercise such diligence, she must be
held liable.

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. . . 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.
The concept of common carrier under Article 1732 also
coincides with the notion of public service, under the
Public Service Act (Commonwealth Act No. 1416, as
amended) which at least partially supplements the law
on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service
Act, public service includes:
x x x every person that now or hereafter may own,
operate, manage, or control in the Philippines, for hire
or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and
done for general business purposes, any common

COMMON CARRIERS

Transportation Law
Case Digests
2-Manresa
SY 2015-2016

carrier, railroad, street railway, traction railway,

subway motor vehicle, either for freight or passenger,
or both, with or without fixed route and whatever may
be its classification, freight or carrier service of any
class, express serviceand other similar public
services. x x x
There is greater reason for holding petitioner Calvo to
be a common carrier because the transportation of
goods is an integral part of her business. To uphold
Calvos contention would be to deprive those with
whom she contracts the protection which the law
affords them notwithstanding the fact that the
obligation to carry goods for her customers, as already
noted, is part and parcel of petitioners business.
ON CALVOS LIABILITY AS COMMON CARRIER
Now, being classified as common carrier, Calvos
liability in Art. 1733 of the Civil Code provides:
Common carriers, from the nature of their business
and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by
them, according to all the circumstances of each
case. . . .
Meaning of Extraordinary Diligence:
As 7
defined 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 characteristic of
goods tendered for shipment, and to exercise due care
in the handling and stowage, including such methods
as their nature requires.
Calvo in this case did not exercise extraordinary
diligence. Despite her insistence that the cargo could
not have been damaged while in her custody, to prove
the exercise of extraordinary diligence, petitioner must
do more than merely show the possibility that some
other party could be responsible for the damage. It
must prove that it used all reasonable means to
ascertain the nature and characteristic of goods
tendered for [transport] and that it exercised due care
in the handling thereof. Petitioner failed to do this.
Contrary to Calvos assertion, when petitioners
employees withdrew the cargo from the arrastre
operator, they did so without exception or protest
either with regard to the condition of container vans
or their contents. Surely, if the container vans were

deformed, cracked, distorted or dented, Calvo would

have reported it immediately to the consignee but she
did not.
We can only conclude that the damages to the cargo
occurred while it was in the possession of the
defendant-appellant. Whenever the thing is lost (or
damaged) in the possession of the debtor (or obligor),
it shall be presumed that the loss (or damage) was due
to his fault, unless there is proof to the contrary.
On Calvos contention that she is still exempted from
liability even assuming arguendo that she is a common
carrier:
Petitioner contends that she must be exempted from
liability under Art. 1734(4), which provides:
Common carriers are responsible for the loss,
destruction, or deterioration of the goods, UNLESS the
same is due to any of the following causes only:
....
(4) The character of the goods or defects in the
packing or in the containers. xxx
But Calvo is STILL NOT EXEMPTED FROM LIABILITY.
For this provision to apply, the rule is that if the
improper packing or, in this case, the defect/s in the
container, is/are known to the carrier or his employees
or apparent upon ordinary observation, but he
nevertheless accepts the same without protest or
exception notwithstanding such condition, he is not
relieved of liability for damage resulting therefrom.
In this case, petitioner accepted the cargo without
exception despite the apparent defects in some of the
container vans.
Hence, for failure of petitioner to prove that she
exercised extraordinary diligence in the carriage of
goods in this case or that she is exempt from liability,
the presumption of negligence as provided under Art.
1735 holds.

COMMON CARRIERS

Transportation Law
Case Digests
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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.

PLANTERS v. CA
Planters Products Inc (PPI) versus Court of Appeals
(CA), Soriamont Steamship Agencies (SSA) and Kyosei
Kisen Kabushiki Kaisha (KKKK)
FACTS:
Planters Products Inc (PPI) purchased from Mitsubishi
9, 329.7069 metric tons (MT) of urea 46% fertilizer to
be shipped in bulk by cargo vessel M/V Sun Plum
owned by KKKK from Alaska, USA to La Union,
Philippines. Prior to its voyage, a time charter party
on MV Sun Plum was executed between Mitsubishi as
shipper/charterer and KKKK as shipowner. The ship
was inspected and found fit to take a load of urea in
bulk. The urea was loaded in bulk under the
supervision of Mitsubishi and the cargo vessel went on
voyage. Upon its arrival in La Union, PPI unloaded the
cargo to dump trucks and transported them to a
8
warehouse
50 meters away from the wharf. 11 days
after, the unloading finished. PPI found out that there
was shortage of about 94-106 MT of urea and about
18-23 MT were contaminated with dirt thus unfit for
commerce.
PPI then sent a claim letter to SSA, KKKKs resident
agent amounting to P245,969.31 representing the cost
of the shortage and contaminated urea. SSA denied
the claim because they had nothing to do with the
discharge of shipment. PPI thus filed an action for
damages with CFI Manila. KKKK defended that the
strict public policy governing common carriers does not
apply to them because they become private carriers by
reason of the charter-party. CFI ruled in favor of PPI.
Upon appeal in CA, the appellate court absolved KKKK
from liability and ruled that it was a private carrier
thus there was no presumption of negligence. Hence,
this appeal via petition for review.
ISSUES:
(1) WON a common carrier becomes a private carrier
by reason of a charter party. NO
(2) WON KKKK is liable for damages. NO
RULING:
(1) Article 1732 of NCC defines common
carriers as persons, corporations, firms or associations

The distinction between a "common or public carrier"

and a "private or special carrier" lies in the character of
the business, such that if the undertaking is a single
transaction, not a part of the general business or
occupation, although involving the carriage of goods
for a fee, the person or corporation offering such
service is a private carrier.
It is undisputed that KKKK is a common carrier,
transporting goods indiscriminately to all persons in its
ordinary course of business. What happens in a charter
party is that an entire ship or some principal part
thereof is let by the owner to another person for a
specified time or use. There are 2 types, (a) contract
of affreightment which involves the use of shipping
space on vessels leased by the owner in part or as a
whole, to carry goods for others; and, (b) charter by
demise or bareboat charter, by the terms of which the
whole vessel is let to the charterer with a transfer to
him of its entire command and possession and
consequent control over its navigation, including the
master and the crew, who are his servants. Contract of
affreightment may either be time charter, wherein the
vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for
a single voyage.
In this case, the charter party executed on MV Sun
Plum is a time charter party wherein KKKK lets the use
of the ship to PPI but the ship captain and the crew
remained to be under the direct supervision and
control of KKKK. Thus, a public carrier shall remain
as such, notwithstanding the charter of the
whole or portion of a vessel by one or more
persons, provided the charter is limited to the
ship only, as in the case of a time-charter or
voyage charter. It is only when the charter
includes both the vessel and its crew, as in a
bareboat or demise that a common carrier
becomes private, at least insofar as the
particular voyage covering the charter party is
concerned. Indubitably, a shipowner in a time or
voyage charter retains possession and control of
the ship, although her holds may, for the
moment, be the property of the charterer.
(2) Article 1733 of NCC mandates that common
carriers, by reason of the nature of their business,
should observe extraordinary diligence in the vigilance
over the goods they carry. In the case of private
carriers, however, the exercise of ordinary diligence in
the carriage of goods will suffice. Moreover, in the case
of loss, destruction or deterioration of the goods,
common carriers are presumed to have been at fault
or to have acted negligently, and the burden of proving
otherwise rests on them. On the contrary, no such

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presumption applies to private carriers, for whosoever

alleges damage to or deterioration of the goods carried
has the onus of proving that the cause was the
negligence of the carrier.
While it may be true that KKKK remains to be a
common carrier despite the time charter party, it is still
not liable for damages because it has successfully
overcome the presumption of negligence. The carrier
proved that it has exercised extraordinary zeal and
diligence in the care of the cargo. The vessel was in
good condition and all the seals intact making it
impossible for any contamination during the voyage.
Also, shipment of highly soluble fertilizer such as urea
in bulk carries with it the risk of loss or damage. The
weather was variable during the unloading and the
packaging of urea was insufficient which all contributed
to the loss. PPI has not adduced evidence of
negligence on the part of KKKK thus it cannot claim for
damages for the loss it suffered.

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occasional or accidental, and done for general business

purposes, any CC, x x x
In applying Article 1732, in conjunction with
Sec.13 (b) of the Public Service Act, the Court ruled in
the leading case of De Guzman vs. CA that there is no
distinction between:
PHILAMGEN v. PKS SHIPPING COMPANY
FACTS:
Davao Union Marketing Corporation (DUMC) contracted
the services of PKS Shipping Company (PKS Shipping)
for the shipment of 75,000 bags of cement worth
Php3, 375, 000.00 to Tacloban City. DUMC insured the
goods for its full value with Philippine American
General Insurance Company (Philamgen).

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 (sideline);
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; and
a carrier offering its services to the general
public and one who offers services or solicits
business only from the narrow segment of
the general population.

The goods were loaded aboard dumb barge

Limar I which belonged to PKS Shipping. On the
evening of December 22, 1988, while Limar I was
being towed by MT Iron Eagle (PKS tugboat), the
barge sank a couple of miles off the coast of Dumagas
Point, in Zamboanga del Sur, bringing down with it the
entire cargo of cement.

Much of the distinction between a CC and a

private carrier lies in the character of the business. If it
undertakes an isolated transaction (not part of the
business), and the carrier does not hold itself out to
carry goods for the general public or to a limited
clientele, although involving the carriage of goods for a
fee, the carrier could very well be a private one.

DUMC filed a formal claim with Philamgen for

the10
full amount of the insurance. Philamgen promptly
made payment. However, PKS Shipping refused to
reimburse Philamgen which prompted the latter to file
suit against the former before the Makati RTC.

PKS Shipping has engaged itself in the

business of carrying goods for others, although for a
limited clientele, undertaking to carry such goods for a
fee. The regularity of its activities in this area indicates
more than just casual activity on its part. Even if
individual contracts are entered into, the concept of a
CC would not change, otherwise, it will be easy for one
to evade liability by simply entering into those distinct
agreements with clients.

PKS Shipping contends it is not a common

carrier and therefore not liable for the loss of the
cement due to a fortuitous event (Typhoon APIANG).
ISSUES:
1. Whether PKS Shipping is a common carrier or
private carrier.
2. In either case, WON it has observed the proper
diligence (ordinary-private, extraordinary-common)
required in the circumstances to be exempt from
liability.
RULING:
1. PKS Shipping is a Common Carrier (CC). Article
1732 of the Civil Code: CCs 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. Complementary to the codal
definition is Section 13, paragraph (b), of the Public
Service Act: public service is x x x every person that
now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation,
with general or limited clientele, whether permanent,

2. YES, PKS observed extraordinary diligence,

hence, not liable for the loss. Article 1733 of the
Civil Code requires CC to observe extraordinary
diligence in the vigilance over the goods they carry. In
case of loss, destruction or deterioration of goods, CC
are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests
on them. However, CC are exempt from liability for the
loss, destruction, etc. due to Flood, storm, earthquake,
lightning, or natural disaster or calamity; act of the
public enemy in war, whether intl or civil; act or
omission of the shipper or owner of the goods; the
character of the goods or defects in the packing or in
the containers; and order or act of competent public
authority.
The Court upheld the finding of the CA that
based on the testimonies and sworn marine protests of
the respective vessel masters of Limar I and MT Iron
Eagle that there was no way by which the crew of both
the barge and tugboat could have prevented the
sinking of Limar I. The vessel was suddenly tossed by

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6-8 foot tall waves (extraordinary height) buffeted by

strong winds which resulted to the entry of water into
the barges hatches. The official certificate of
inspection done by the Philippine Coastguard and the
Coastwise Load Line certificate would attest to the
seaworthiness of Limar I.

ASIA LIGHTERAGE vs. CA

(August 19, 2003)
FACTS:
In 1990, Marubeni American Corporation of Portland
Oregon shipped 3,150 metric tons of Better Western
White Wheat valued at over USD400, 000 on board a
marine vessel. The shipment was bound for General
Milling Corporation in Manila and was insured by
Prudential Guarantee and Assurance, Inc. against loss
or damage for Php14, 621,771.75.
Upon arrival of the vessel in Manila, the cargo was
transferred to the custody of Asia Lighterage and
Shipping, Inc., whose services were engaged by
General Milling Corporation to deliver said cargo to the
latters warehouse in Pasig City.

11

En route to Pasig, the barge on which the cargo was

loaded received several warnings of an incoming
typhoon and thus it sought shelter in an ship
engineering facility where it sustained damaged caused
by an unseen protuberance and partially sank.
Subsequently, the hole on the barge was patched with
clay and cement. It was refloated and continued on its
voyage to Pasig City. During transit, the barge ran
aground due to strong currents. To avoid complete
sinking of the barge, portions of the cargo were loaded
to three other barges.
The next day, the barge sank completely together with
its cargo. Prudential Guarantee and Assurance, paid
General Milling Corp., the amount insured and
thereafter, as subrogee, it pursued Asia Lighterage for
the same amount. Asia Lighterage contends that it is
not a common carrier for the following reasons:
a) It has no fixed and publicly known route;
b) It maintains no terminals;
c) It issues no tickets;
d) It is obliged to carry indiscriminately for any
person; and
e) It does not hold out its services to the general
public
ISSUES:

Whether or not Asia Lighterage and Shipping, Inc., is

a common carrier. YES.
Whether or not Asia Lighterage and Shipping, Inc.,
exercised extra-ordinary diligence. NO
RULING:
Yes, Asia Lighterage and Shipping, Inc., was adjudged
by the Supreme Court as a common carrier. Article
1732 provides for the definition of common carrier.
It may be noted that the above-provision does not
make distinction between one whose principal business
is carrying of persons or goods or both, and one
carrying only as an ancillary activity (in support of an
industry).
Furthermore, it does not distinguish between a carrier
offering its services to the general public and one who
offers services only to a narrow segment of the general
public; as in the instant case.
In the case of Bascos vs. Court of Appeals, the SC laid
down the test to determine a common carrier and that
iswhether the given undertaking is a part of the
business engaged in by the carrier which he has held
out to the general public as his occupation rather than
the quantity or extent of the business transacted.
In the instant case, Asia Lighterage admitted that it is
in the business of shipping and lighterage and it offers
such services to a limited group of clients.
As regards to the second issue, Asia Lighterage failed
to exercise extra-ordinary diligence as expected from
common carriers. Common carriers are presumed to
have been at fault or to have acted negligently if the
goods are lost or destroyed. Article 1734 of the Civil
Code, however, provides for exceptions wherein the
presumption of negligence does not attach. To hurdle
this presumption, the carrier must prove that it
exercised extraordinary diligence which Asia Lighterage
miserably failed to do.
The facts of the case and testimonial evidence of the
crew reveal that the proximate cause of the sinking
was not the storm itself but several occurrences. The
first was that the barge already partially submerged
and the damaged portion thereof was sealed merely by
clay and cement- this is only a temporary fix;
insufficient to assure the safety of the barge in voyage.
Thus, the crews persistence to carry-on with the
voyage despite the damage sustained by the vessel
and several warnings of incoming typhoons is contrary
to the exercise of extraordinary diligence. Asia
Lighterage, therefore, cannot escape liability by
invoking force majeure.

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claimed that it had been subrogated "to the right of

the consignee to recover from the party/parties who
may be held legally liable for the loss."
On November 19, 2003, the RTC rendered a
decision holding Glodel liable for damages for the loss
of the subject cargo and dismissing Loadmasters
counterclaim for damages and attorneys fees against
R&B Insurance.

LOADMASTERS CUSTOMS SERVICES, INC., vs.

GLODEL BROKERAGE CORPORATION and R&B
INSURANCE CORPORATION,
G.R. No. 179446, January 10, 2011
FACTS:
The case is a petition for review on certiorari
under Rule 45 of the Revised Rules of Court assailing
the August 24, 2007 Decision of the Court of Appeals
(CA) in CA-G.R. CV No. 82822.
On August 28, 2001, R&B Insurance issued
Marine Policy No. MN-00105/2001 in favor of Columbia
to insure the shipment of 132 bundles of electric
copper cathodes against All Risks. On August 28, 2001,
the cargoes were shipped on board the vessel "Richard
Rey"
12from Isabela, Leyte, to Pier 10, North Harbor,
Manila. They arrived on the same date.
Columbia engaged the services of Glodel for
the release and withdrawal of the cargoes from the
pier
and
the
subsequent
delivery
to
its
warehouses/plants. Glodel, in turn, engaged the
services of Loadmasters for the use of its delivery
trucks to transport the cargoes to Columbias
warehouses/plants in Bulacan and Valenzuela City.
The goods were loaded on board twelve (12)
trucks owned by Loadmasters, driven by its employed
drivers and accompanied by its employed truck
helpers. Of the six (6) trucks route to Balagtas,
Bulacan, only five (5) reached the destination. One (1)
truck, loaded with 11 bundles or 232 pieces of copper
cathodes, failed to deliver its cargo.
Later on, the said truck, was recovered but
without the copper cathodes. Because of this incident,
Columbia filed with R&B Insurance a claim for
insurance indemnity in the amount ofP1,903,335.39.
After the investigation, R&B Insurance paid Columbia
the amount ofP1,896,789.62 as insurance indemnity.
R&B Insurance, thereafter, filed a complaint
for damages against both Loadmasters and Glodel
before the Regional Trial Court, Branch 14, Manila
(RTC), It sought reimbursement of the amount it had
paid to Columbia for the loss of the subject cargo. It

Both R&B Insurance and Glodel appealed the

RTC decision to the CA.
On August 24, 2007, the CA rendered that the
appellee is an agent of appellant Glodel, whatever
liability the latter owes to appellant R&B Insurance
Corporation as insurance indemnity must likewise be
the amount it shall be paid by appellee Loadmasters.
Hence, Loadmasters filed the present petition for
review on certiorari.
ISSUE:
Whether or not Loadmasters and Glodel are common
carriers to determine their liability for the loss of the
subject cargo.
RULING:
The petition is PARTIALLY GRANTED. Judgment is
rendered declaring petitioner Loadmasters Customs
Services, Inc. and respondent Glodel Brokerage
Corporation jointly and severally liable to respondent
Under Article 1732 of the Civil Code, common carriers
are persons, corporations, firms, or associations
engaged in the business of carrying or transporting
passenger or goods, or both by land, water or air for
compensation, offering their services to the public.
Loadmasters is a common carrier because it is
engaged in the business of transporting goods by land,
through its trucking service. It is a common carrier as
distinguished from a private carrier wherein the
carriage is generally undertaken by special agreement
and it does not hold itself out to carry goods for the
general public. Glodel is also considered a common
carrier within the context of Article 1732. For as
stated and well provided in the case of Schmitz
Transport & Brokerage Corporation v. Transport
Venture, Inc., a customs broker is also regarded as a
common carrier, the transportation of goods being an
integral part of its business.
Loadmasters and Glodel, being both common carriers,
are mandated from the nature of their business and for
reasons of public policy, to observe the extraordinary
diligence in the vigilance over the goods transported by
them according to all the circumstances of such case,
as required by Article 1733 of the Civil Code. When the
Court speaks of extraordinary diligence, it is that

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extreme measure of care and caution which persons of

unusual prudence and circumspection observe for
securing and preserving their own property or rights.
With respect to the time frame of this extraordinary
responsibility, the Civil Code provides that the exercise
of extraordinary diligence lasts from the time the
goods are unconditionally placed in the possession of,
and received by, the carrier for transportation until the
same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a
right to receive them.
The Court is of the view that both Loadmasters and
Glodel are jointly and severally liable to R & B
Insurance for the loss of the subject cargo.
Loadmasters claim that it was never privy to the
contract entered into by Glodel with the consignee
Columbia or R&B Insurance as subrogee, is not a valid
defense.
For under ART. 2180. The obligation imposed by Article
2176 is demandable not only for ones own acts or
omissions, but also for those of persons for whom one
is responsible.
xxxx
Employers shall be liable for the damages caused by
their employees and household helpers acting within
the scope of their assigned tasks, even though the
13 are not engaged in any business or industry.
former
It is not disputed that the subject cargo was lost while
in the custody of Loadmasters whose employees (truck
driver and helper) were instrumental in the hijacking
or robbery of the shipment. As employer, Loadmasters
should be made answerable for the damages caused
by its employees who acted within the scope of their
assigned task of delivering the goods safely to the
warehouse.
Glodel is also liable because of its failure to exercise
extraordinary diligence. It failed to ensure that
Loadmasters would fully comply with the undertaking
to safely transport the subject cargo to the designated
destination. Glodel should, therefore, be held liable
with Loadmasters. Its defense of force majeure is
unavailing.
For the consequence, Glodel has no one to blame but
itself. The Court cannot come to its aid on equitable
grounds. "Equity, which has been aptly described as a
justice outside legality, is applied only in the absence
of, and never against, statutory law or judicial rules of
procedure." The Court cannot be a lawyer and take the
cudgels for a party who has been at fault or negligent.

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2. In short, they observed the diligence of a good

father in selecting their employee.
DEFENSE of PNR:
1. Alfaro was reckless for crossing, who did not first
stop, look and listen for the incoming train.
2. That the narrow path traversed by the van had not
been intended to be a railroad crossing for motorists.
PERENA v. ZARATE
Private school bus (carpool) is a common carrier in the
eyes of the law. They must observe extraordinary
diligence.
FACTS:
The PERENAS were engaged in the business of
transporting students from their respective residences
in Paraaque City to Don Bosco in Pasong Tamo,
Makati City, and back. (private school trasnport ..
murag car pool)
They hired ALFARO as driver of the van. The ZARATES
contracted the PERENAS to transport the latters son to
and from school.
While on their way to school on Aug 12, 1996, ALFARO
14 to make a shortcut using the railroad crossing
decided
of the Philippine National Railway due to heavy traffic
and their were running late.
ALFARO saw that the barandilla (the pole used to block
vehicles crossing the railway) was up which means it
was okay to cross. He also tried to overtake a bus that
is why he did not see the incoming train. He also did
not hear the honks of the train kay kusog daw ang
music sa van.
The bus was able to cross unscathed but the vans rear
end was hit. During the collision, Aaron, was thrown
off the van. His body hit the railroad tracks and his
head was severed.
ZARATES sued PNR (PH NATL RAILROAD), PERENAS
and ALFARO (at large) and filed a complaint for breach
of contract of common carriage.
DEFENSE OF PERENAS:
1. Being private carriers, they were not negligent in
selecting Alfaro as their driver as they made sure that:

ALFARO has a drivers license

he was not involved in any

accident prior to his being hired

ISSUE:
WON the PERENAS fall under the definition of a
COMMON CARRIER which would require the XO
DILIGENCE of a GOOD FATHER.
RULING:
YES. Despite catering to a limited clientle, the
Pereas operated as a common carrier because they
held themselves out as a ready transportation
indiscriminately to the students of a particular school
living within or near where they operated the service
and for a fee.
1. A carrier is a person or corporation who undertakes
to transport or convey goods or persons from one
place to another, gratuitously or for hire. It can be
private/special or public/common.
2. A private carrier is one who, without making the
activity a vocation, or without holding himself or itself
out to the public as ready to act for all who may desire
his or its services, undertakes, by special agreement in
a particular instance only, to transport goods or
persons from one place to another either gratuitously
or for hire.

in Civil Code

governed by ordinary contracts

diligence required = ordinary

diligence of a good father
3. In contrast, a common carrier is a 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 such services to the public.

governed by provisions
common carriers in CIVIL CODE

on

diligence
=
extraordinary
diligence, and is presumed to be at fault
or to have acted negligently in case of the

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loss of the effects of passengers, or the

death or injuries to passengers.

opposite side of the bus and lead to his

miscalculations of getting clear from the train.

4. TRUE TEST to know if COMMON CARRIER = not the

quantity or extent of the business actually transacted,
or the number and character of the conveyances used
in the activity, but whether the undertaking is a
part of the activity engaged in by the carrier that
he has held out to the general public as his
business or occupation.

e.
Lastly, he did not slow down nor go to
a full stop before traversing the railroad tracks despite
knowing that his slackening of speed and going to a
full stop were in observance of the right of way at
railroad tracks as defined by the traffic laws and
regulations.

5. If not advertised, there was single transaction only

= private
If advertised/held out to the public = public
6. Applying these considerations to the case before us,
there is no question that the Pereas as the operators
of a school bus service were:
a.
engaged
in
transporting
passengers generally as a business, not
just as a casual occupation;
b.
undertaking
to
carry
passengers over established roads by the
method by which the business was
conducted; and

15

c.

transporting students for a

fee.

7. Despite catering to a limited clientle, the Peras

operated as a common carrier because they held
themselves
out
as
a
ready
transportation
indiscriminately to the students of a particular school
living within or near where they operated the service
and for a fee.
Nota bene:
Proof of negligence:
a.
PNR did not permit motorists
going into the Makati area to cross the railroad
tracks, but ALFARO did. Though it was used by
some motorists as a shortcut, it did not excuse
ALFARO.
b.
he pursued.

He knows that it was risky yet

c.
Loudness of music in the van
reduced his ability to hear the warning horns
made by the train.
d.
His act of overtaking caused
him not to see the incoming train from the

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separately from the CONTRIBUTORY NEGLIGENCE of

Cangco.
On the one hand, there is the contract of carriage on
the part of MRR to bring Cangco safely to his
destination. There is the presumption of responsibility
on the part of MRR to make sure that in order to bring
Cangco
and
other
passengers
safely
to their
destination, MRR should have exercised the proper
discretion in selecting and directing its employees
and workers. MRR is deemed negligent if is proven that
they failed in their discretion in selecting and directing
its employees.

Degree of Care Required of A Common Carrier

CANGCO v. MANILA RAILROAD
FACTS:
On January 20, 1915 at around 7-8pm, Jose Cangco
was riding the train of Manila Railroad Company where
he was an employed as a clerk. As the train drew near
to his destination, he arose from his seat. When
Cangco was about to alight from the train, Cangco
accidentally stepped on a sack of watermelons which
he failed to notice because it was already dim when it
happened.
As a result, he slipped and fell violently on
16
the platform. His right arm was badly crushed and
lacerated which was eventually amputated. The
operation was unsatisfactory so he had second
operation at another hospital and was again amputated
higher up near the shoulder expending a total of
P790.25
On August 1915, Cangco sued Manila Railroad
Company (recovery of damages) on the ground of
negligence of its employees placing the sacks of
melons upon the platform. The sacks were placed so
as to jeopardize the safety of passengers.
The MRRs defense was that granting that its
employees were negligent in placing an obstruction
upon the platform, the direct and proximate cause of
the injury suffered by plaintiff was his own contributing
negligence. CFI: favored Manila Railroad Co.
Cangco had failed to use due caution in alighting from
the coach and was therefore precluded from recovering
damages.
ISSUE:
WON MRR should be held liable.
RULING:
YES, CFI is reversed, and MRR is ordered to pay
Cangco the sum of P3,290.25. SC said that the
PRIMARY RESPONSIBILITY of MRR should be examined

It cannot be doubted that the employees of the

railroad company were guilty of negligence. It
necessarily follows that the defendant company is
liable for the damage thereby occasioned unless
recovery is barred by the plaintiff's own contributory
negligence.
As ruled by the Court, Article 1903 of the Civil Code is
not applicable to obligations arising ex contractu, but
only to extra-contractual obligations or to use the
technical form of expression, that article relates only
to culpa aquiliana and not to culpa contractual
Article 1903 of the Civil Code is not applicable to acts
of negligence which constitute the breach of a contract
two things are apparent:
(1) That when an injury is caused by
the negligence of a servant or
employee there instantly arises a
presumption of law that there was
negligence on the part of the master or
employer either in selection of the
servant or employee, or in supervision
over him after the selection, or both;
and
(2) that that presumption is juris
tantum and not juris et de jure, and
consequently, may be rebutted. It
follows necessarily that if the employer
shows to the satisfaction of the court
that in selection and supervision he has
exercised the care and diligence of a
good
father
of
a
family,
the
presumption is overcome and he is
relieved from liability.
On the other hand, In determining the question of
contributory negligence in performing such act that
is to say, whether the passenger acted prudently or
recklessly the age, sex, and physical condition of the
passenger are circumstances necessarily affecting the
safety of the passenger, and should be considered.

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The place was perfectly familiar to the plaintiff as it

was his daily custom to get on and off the train at the
station. There could, therefore, be no uncertainty in his
mind with regard either to the length of the step which
he was required to take or the character of the
platform where he was alighting. The Supreme Courts
conclusion was that the conduct of the plaintiff in
undertaking to alight while the train was yet slightly
under way was not characterized by imprudence and
that therefore he was not guilty of contributory
negligence.

PHILIPPINE AIRLINES, INC., v. COURT OF

APPEALS and PEDRO ZAPATOS
FACTS:
On August 2, 1976, Pedro Zapatos was among the 21
passengers of PAL Flight 477 that took off from Cebu
bound for Ozamiz City. The routing of this flight was
Cebu-Ozamiz-Cotabato. While on flight and just about
17
15 minutes before landing at Ozamiz City, the pilot
received a radio message that the airport was closed
due to heavy rains and inclement weather and that he
should proceed to Cotabato City instead.
Upon arrival at Cotabato City, the PAL Station Agent
informed the passengers of the following options:
1) to return to Cebu on flight 560 of the same day and
thence to Ozamiz City on 4 August 1975, or
2) take the next flight to Cebu the following day, or
3) remain at Cotabato and take the next available flight
to Ozamiz City on 5 August 1975.
Zapatos chose to return to Cebu but was not
accommodated because only 6 seats were available
and he checked-in as passenger No. 9 on Flight 477.
He insisted on being given priority over the confirmed
passengers in the accommodation, but the Station
Agent refused Zapatos demand.
Private respondent tried to stop the departure of Flight
560 as his personal belongings were still on board. His
plea fell on deaf ears. PAL then issued to him a free
ticket to Iligan city, which the latter received under
protest. Private respondent was left at the airport and

could not even hitch a ride in the car loaded with PAL
personnel. PAL neither provided private respondent
with transportation from the airport to the city proper
nor food and accommodation for his stay in Cotabato
City. Subsequently, Zapatos went to Iligan City; his
personal belongings were no longer recovered.
Zapatos filed a complaint for damages for breach of
contract of carriage against Philippine Airlines, Inc.
(PAL), before the Regional Trial Court, of Misamis
Occidental, at Ozamiz City.
PAL filed its answer denying that it unjustifiably
refused to accommodate private respondent. It alleged
that there was simply no more seat for private
respondent on Flight 560 since there were only six (6)
seats available and the priority of accommodation on
Flight 560 was based on the check-in sequence in
Cebu; that the first six (6) priority passengers on Flight
477 chose to take Flight 560.
Regional Trial Court ruled in favor of Zapatos and
awarded damages in his favor.
PAL argues that the award for damages is unfounded,
asserting that it should not be charged with the task of
looking after the passengers' comfort and convenience
because the diversion of the flight was due to a
fortuitous event, and that if made liable, an added
burden is given to PAL which is over and beyond its
duties under the contract of carriage. It submits that
granting arguendo that negligence exists, PAL cannot
be liable in damages in the absence of fraud or bad
faith.
ISSUE:
WON PAL is liable for damages for its breach of
contract of carriage
RULING:
YES. The position taken by PAL in this case clearly
illustrates its failure to grasp the exacting standard
required by law. Undisputably, PAL's diversion of its
flight due to inclement weather was a fortuitous event.
Nonetheless, such occurrence did not terminate PAL's
contract with its passengers. Being in the business of
air carriage and the sole one to operate in the country,
PAL is deemed equipped to deal with situations as in
the case at bar. What we said in one case once again
must be stressed, i.e., the relation of carrier and
passenger continues until the latter has been landed at
the port of destination and has left the carrier's
premises. Hence, PAL necessarily would still have to
exercise extraordinary diligence in safeguarding the
comfort, convenience and safety of its stranded

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passengers until they have reached their final

destination. On this score, PAL grossly failed
considering the then ongoing battle between
government forces and Muslim rebels in Cotabato City
and the fact that the private respondent was a
stranger to the place.
The contract of air carriage is a peculiar one. Being
imbued with public interest, the law requires common
carriers to carry the passengers safely as far as human
care and foresight can provide, using the utmost
diligence of very cautious persons, with due regard for
all the circumstances. In Air France v. Carrascoso, we
held that
A contract to transport passengers is quite different in
kind and degree from any other contractual relation.
And this, because of the relation which an air carrier
sustains with the public. Its business is mainly with the
travelling public. It invites people to avail of the
comforts and advantages it offers. The contract of air
carriage, therefore, generates a relation attended with
a public duty.
REPUBLIC VS LORENZO SHIPPING CORP.
FACTS:
The18
government entered into a contract of carriage of
goods with the National Trucking and Forwarding
Corporation (NTFC). The NTFC shipped 4,868 bags of
non-fat dried milk through the Lorenzo Shipping
Corporation (LSC). The consignee named in the bills of
lading issued by the LSC was Abdurahman Jama, the
NTFCs branch supervisor in Zamboanga City.
Upon reaching the port of Zamboanga City, LSCs
agent, Efren Ruste Shipping Agency, unloaded the bags
and delivered the goods to the NTFCs warehouse.
Before each delivery, both delivery checkers of the
agency requested Jama to surrender the original bills
of lading but Jama merely presented the certified true
copies thereof. Hence, they made Jama sign the
delivery receipts and at times he wasnt around, he
instructed his subordinates to sign the delivery receipts
for him.
The NTFC alleged that they did not receive the subject
goods. Thus, it filed a formal claim for non-delivery of
the goods shipped thru respondent. It also conducted
an investigation but before it was over, Jama resigned
as the branch supervisor of NTFC.
The government then filed an action for breach of
contract of carriage against LSC.
ISSUE:

W/N LSC is guilty for breach of contract of carriage

RULING:
NO. Article 1733 of the CC demands that a common
carrier observe extra-ordinary diligence over the goods
transported by it. Extraordinary diligence is that
extreme measure of care and caution which persons of
unusual prudence and circumspection use for securing
and preserving their own property or rights. This
exacting standard imposed on common carriers in a
contract of carriage of goods is intended to tilt the
scales in favor of the shipper who is at the mercy of
the common carrier once the goods have been lodged
for shipment. Hence, in case of loss of goods in transit,
the common carrier is presumed under the law to have
been at fault or negligent. However, the presumption
of fault or negligence, may be overturned by
competent evidence showing that the common carrier
has observed extraordinary diligence over the goods.
In this case, the SC found that the LSC adequately
proved that it exercised extraordinary diligence.
Although the original bills of lading remained with the
NTFC, LSCs agents demanded from Jama the certified
true copies of the bills of lading. They even made Jama
and in his absence, his designated subordinates, to
sign the cargo delivery receipts. This practice which is
their standard operating procedure finds support in
Article 353 of the Code of Commerce.
Under said article, it is enough that the delivery receipt
is signed if the surrender of the original bill of lading is
not possible. Since it was what was done by LSC, then
it could be said that they have sufficiently and
substantially complied with the requirements.
Hence, LSC is not guilty for breach of contract of
carriage.

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The cargo was withdrawn by STIP and delivered to Don

Bosco High School, and received by Mr. Willig. Two
days later, Willig, through a telephone call, informed
Perez, the Claims Head of Aboitiz, that the cargo
sustained water damage.
Perez inspected the contrainer and found that the
container van and other cargoes were completely dry.
Perez found that except for the bottom of the crate
which was slightly broken, the crate itself appeared to
be completely dry and had no water marks. But he
confirmed that the tools which were stored inside the
crate were already corroded. He further explained that
the "grounded outside warehouse" notation in the bill
of lading referred only to the container van bearing the
cargo.

Aboitiz Shipping Corp. v Insurance Company of

North America (ICNA)

19

August 6, 2008

FACTS:
MSAS procured an all risk marine insurance
policy from ICNA for transshipment of certain wooden
work tools and workbenches purchased for consignee
Science Teaching Improvement Project (STIP). The
cargo, packed inside a container van, was shipped
freight prepaid from Germany on board M/S
Katsuragi. A clean bill of lading was issued by HapagLloyd which stated the consignee to be STIP, Cebu City.
The container van was off-loaded at Singapore and
transshipped on board M/S Vigour Singapore. When
the ship arrived and docked at Manila, the container
van was again off-loaded. The cargo was received by
Aboitiz, which issued a bill of lading containing the
notation grounded outside warehouse.
The container van was stripped and transferred to
another crate/container van without any notation on
the condition of the cargo on the Stuffing/Stripping
Report. The container van was loaded on board
Aboitizs vessel en route to Cebu.
The shipment arrived in Cebu City and discharged. It
was brought to the Cebu Bonded Warehousing
Corporation pending clearance from the Customs. In
the Stripping Report, Aboitizs checker noted that the
crates were slightly broken or cracked at the bottom.

STIP filed insurance claims with ICNA. The inspection

showed the goods sustained water damage, molds,
and corrosion which were discovered upon delivery to
consignee. STIP filed a formal claim with Aboitiz. A
supplemental report showed that PAGASA reported
heavy rains that caused water damage to the
shipment, which were placed outside the warehouse of
the Pier in Manila as can be gleaned from the bill of
lading which contained the notation grounded outside
warehouse. It was only 4 days after that the shipment
was stuffed inside another container van for shipment
to Cebu.
ICNA paid the amount, and formally advised Aboitiz of
the claim, which the latter did not settle. The RTC
rendered judgment against ICNA ruling that it failed to
prove personality to sue because it was ICNA UK who
issued the policy not ICNA Phils. ICNA failed to produce
evidence that it was a foreign corporation duly licensed
to do business in the Philippines. Thus, it lacked the
capacity to sue before Philippine Courts. On appeal,
the CA reversed the RTC ruling holding that the right of
subrogation accrues simply upon payment by the
insurance company of the insurance claim. As
subrogee, ICNA is entitled to reimbursement from
Aboitiz, even assuming that it is an unlicensed foreign
corporation. The CA ruled that the presumption that
the carrier was at fault or that it acted negligently was
not overcome by any countervailing evidence. Hence,
Aboitiz brought the present petition.
ISSUE:
Whether or not Aboitiz Shipping Corporation exercised
extraordinary diligence?
*To determine if they are liable for damages
RULING:
No. They did not exercise extraordinary diligence.

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The rule as stated in Article 1735 of the Civil Code is

that in cases where 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
required by law.
Extraordinary diligence is that extreme measure of
care and caution which persons of unusual prudence
and circumspection use for securing and preserving
their own property rights.This standard is intended to
grant favor to the shipper who is at the mercy of the
common carrier once the goods have been entrusted
to the latter for shipment.
Here, the shipment delivered
sustained water damage.

to

the

consignee

The shipment arrived in the port of Manila and was

received by petitioner for carriage on July 26, 1993.
On the same day, it was stripped from the container
van. Five days later, on July 31, 1993, it was re-stuffed
inside another container van. On August 1, 1993, it
was loaded onto another vessel bound for Cebu.
During the period between July 26 to 31, 1993, the
shipment was outside a container van and kept in
storage by petitioner.
The20
bill of lading issued by petitioner on July 31, 1993
contains the notation grounded outside warehouse,
suggesting that from July 26 to 31, the goods were
kept outside the warehouse. And since evidence
showed that rain fell over Manila during the same
period, We can conclude that this was when the
shipment sustained water damage.
To prove the exercise of extraordinary diligence,
petitioner must do more than merely show the
possibility that some other party could be responsible
for the damage. It must prove that it used all
reasonable means to ascertain the nature and
characteristic of the goods tendered for transport and
that it exercised due care in handling them.
Extraordinary diligence must include safeguarding the
shipment from damage coming from natural elements
such as rainfall.
Aside from denying that the grounded outside
warehouse notation referred not to the crate for
shipment but only to the carrier van, petitioner failed
to mention where exactly the goods were stored during
the period in question. It failed to show that the crate
was properly stored indoors during the time when it
exercised custody before shipment to Cebu.
Petitioner is thus liable for the water damage sustained
by the goods due to its failure to satisfactorily prove

that it exercised the extraordinary diligence required of

common carriers.

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Asia starfreight undertook the delivery of the shipment

from the peir to the consignees in quezon city. The
final inspection was conducted jointly by the
consignees representative and the cargo surveyor.
During the unloading, it was found and noted that the
bags had been discharged in damaged and bad order
condition. Upon inspection, it was discovered that
63,065.00 kilograms of the shipment had sustained
unrecovered spillages, while 58,235.00 kilograms had
been exposed and contaminated, resulting in losses
due to depreciation and downgrading.
Consignee later on filed a formal complaint against
wallem for the value of the damaged shipments but to
no avail since it was insured with Philippines first
insurance against all risk in the amount of
P2,470,213.50. Consequently, Philippines first paid the
consignee the sum of P397,879.69 and the latter
signed a subrogation receipt.
Philippines first in its exercise of his right of
subrogation sent demand letter to wallem but it was
unheeded. Thus, Philippines first filed with the RTC an
action for damages including the payment of principal
amount.

21
PHILIPPINES FIRST v. WALLEM
FACTS:
On October 2, 1995 Anhui Chemicals Import & Export
Corporation loaded on board M/S Offshore Master a
shipment consisting of 10,000 bags of sodium sulphate
complete and in good order for transportation to and
delivery at the port of Manila for consignee, L.G.
Atkimson Import-Export. The Bill of Lading reflects the
gross weight of the total cargo at 500,200 kilograms.
The Owner and/or Charterer of M/V Offshore Master is
unknown while the shipper of the shipment is Shanghai
Fareast Ship Business Company. Both are foreign firms
doing business in the Philippines, thru its local ship
agent, respondent Wallem Philippines Shipping, Inc.
(Wallem).
On October 16, 1995 the shipment arrived at the port
of Manila on board the vessel M/S Offshore Master
from which it was subsequently discharged. It was
disclosed during the discharge of the shipment from
the carrier that 2,426 poly bags (bags) were in bad
order and condition, having sustained various degrees
of spillages and losses. This is evidenced by the turn
survey and bad order survey of the arrastre operator
Asian Terminals Inc.

RTC held that Wallem shipping and the arrastre

operator solidarily liable since both the arrastre
operator and the carrier are charged with and
obligated to deliver the goods in good order condition
to the consignee citing the case of Eastern Shipping
Lines, Inc. v. Court of Appeals.
CA reversed RTCs decision;
there is no solidary
liability between the carrier and the arrastre operator
because it was clearly established by the court a quo
that the damage and losses of the shipment were
attributed to the mishandling by the arrastre operator
in the discharge of the shipment. The appellate court
ruled that the instant case falls under an exception
recognized in Eastern Shipping Lines.
ISSUES:
1.) Whether or not the Court of Appeals erred in
not holding that as a common carrier, the
carriers duties extend to the obligation to
safely discharge the cargo from the vessel
2.) Whether or not the carrier should be held liable
for the cost of the damaged shipment
RULING:
As to the first issue, Common carriers, from
the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in
the vigilance over the goods transported by them.
Subject to certain exceptions enumerated under Article
1734 of the Civil Code, common carriers are

COMMON CARRIERS

Transportation Law
Case Digests
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SY 2015-2016

responsible for the loss, destruction, or deterioration of

the goods. The extraordinary responsibility of the
common carrier lasts from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the
same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a
right to receive them.
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 the
dock or afloat alongside the vessel at the port of
loading, until he delivers it on the shore or on the
discharging wharf at the port of unloading, unless
agreed otherwise.
Lastly, Section 2 of the COGSA provides that
under every contract of carriage of goods by sea, the
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. Section 3 (2) thereof then states that among
the carriers responsibilities are to properly and
carefully load, handle, stow, carry, keep, care for, and
discharge the goods carried.
The above doctrines are in fact expressly
incorporated
in the bill of lading between the shipper
22
Shanghai Fareast Business Co., and the consignee, to
wit:
4.
PERIOD
OF
RESPONSIBILITY.
The
responsibility of the carrier shall commence from the
time when the goods are loaded on board the vessel
and shall cease when they are discharged from the
vessel.
The Carrier shall not be liable of loss of or
damage to the goods before loading and after
discharging from the vessel, howsoever such loss or
damage arises.
Handling cargo is mainly the arrastre
operator's principal work so its drivers/operators or
employees should observe the standards and measures
necessary to prevent losses and damage to shipments
under its 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.
As to the second issue, according to the
testimony of Mr. Talens, it is the master of the vessel
who supervises the unloading of the goods and reports
them to the head checker who is a contractor or
checker of wallem shipping.
The records are replete with evidence which show that
the damage to the bags happened before and after

their discharge and it was caused by the stevedores of

the arrastre operator who were then under the
supervision of Wallem.
It is settled in maritime law jurisprudence that
cargoes while being 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 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, the trial courts finding of actual damages
in the amount of P397,879.69 has to be sustained.

COMMON CARRIERS

Transportation Law
Case Digests
2-Manresa
SY 2015-2016

$20.00 based on weigh as Co did not declare the

contents of his baggage nor pay additional charges
before flight.
ISSUE:
Whether or not the Warsaw Convention applies.
RULING:
No, the Warsaw Convention does not apply.

23

APPLICABLE
LAWS
COMMON CARRIERS

IN

CASES

INVOLVING

PAL v. CA
207 SCRA 100
FACTS:
Isidro Co arrived at Manila International Airport aboard
Philippine Air Lines from California, USA. After
embarking, he proceeded to the baggage retrieval area
to claim his nine pieces of checked-in-luggage with
corresponding claim checks in his possession. However,
he failed to find one luggage. The said item is a
Samsonite suitcase measuring worth about $200.00
and contained personal items.
Consequently, Co filed a complaint. The RTC and CA
found PAL liable and awarded Co damages. Upon
reaching the SC, PAL contended that under the
Warsaw Convention, its liability, if any, cannot exceed

The liability of the common carrier for the loss,

destruction or deterioration of goods transported from
a foreign country to the Philippines is governed
primarily by the New Civil Code. In all matters not
regulated by said Code, the rights and obligations of
common carriers shall be governed by the Code of
Commerce and by Special Laws.
The following applicable provisions of the New
Civil Code applicable are Articles 1733, 1735 and 1753
which provide:
Article 1733. Common carriers, from the
nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in
the vigilance over the goods and for the safety of the
passengers transported by them, according to all the
circumstances of each case.
Article 1735. In all cases other than those
mentioned in Nos. 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.
Article 1753. The law of the country to which
the goods are to be transported shall govern the
liability of the common carrier for their loss,
destruction or deterioration.
Since the passengers destination in this case
was the Philippines. Philippine law governs the liability
of the carrier for the loss of the passengers luggage.
In this case, PAL failed to overcome, not only the
presumption, but more importantly, Cos evidence,
proving that the carriers negligence was the proximate
cause of the loss of his baggage. Furthermore, the
award of damages is bolstered by the fact that PAL
acted in bad faith in faking a retrieval receipt to bail
itself out of having to Pay Cos claim.