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G.R. No.

L-47822 December 22, 1988 occupation — a sideline to his scrap iron business" and not as a common carrier. Petitioner came to
PEDRO DE GUZMAN, petitioner, this Court by way of a Petition for Review assigning as errors the following conclusions of the Court of
vs. Appeals:
COURT OF APPEALS and ERNESTO CENDANA, respondents.
1. that private respondent was not a common carrier;
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal
in Pangasinan. Upon gathering sufficient quantities of such scrap material, respondent would bring 2. that the hijacking of respondent's truck was force majeure; and
such material to Manila for resale. He utilized two (2) six-wheeler trucks which he owned for hauling
the material to Manila. On the return trip to Pangasinan, respondent would load his vehicles with
3. that respondent was not liable for the value of the undelivered cargo. (Rollo, p. 111)
cargo which various merchants wanted delivered to differing establishments in Pangasinan. For that
service, respondent charged freight rates which were commonly lower than regular commercial rates.
We consider first the issue of whether or not private respondent Ernesto Cendana may, under the
facts earlier set forth, be properly characterized as a common carrier.
Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealer of
General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted with respondent for the
hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to The Civil Code defines "common carriers" in the following terms:
petitioner's establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December
1970, respondent loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
truck driven by respondent himself, while 600 cartons were placed on board the other truck which business of carrying or transporting passengers or goods or both, by land, water, or air for
was driven by Manuel Estrada, respondent's driver and employee. compensation, offering their services to the public.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached The above article makes no distinction between one whose principal business activity is the carrying
petitioner, since the truck which carried these boxes was hijacked somewhere along the MacArthur of persons or goods or both, and one who does such carrying only as an ancillary activity (in local
Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and the Idiom as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or
cargo. 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
On 6 January 1971, petitioner commenced action against private respondent in the Court of First a carrier offering its services to the "general public," i.e., the general community or population, and
Instance of Pangasinan, demanding payment of P 22,150.00, the claimed value of the lost one who offers services or solicits business only from a narrow segment of the general population.
merchandise, plus damages and attorney's fees. Petitioner argued that private respondent, being a We think that Article 1733 deliberaom making such distinctions.
common carrier, and having failed to exercise the extraordinary diligence required of him by the law,
should be held liable for the value of the undelivered goods. So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly
with the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as
In his Answer, private respondent denied that he was a common carrier and argued that he could not amended) which at least partially supplements the law on common carriers set forth in the Civil Code.
be held responsible for the value of the lost goods, such loss having been due to force majeure. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:

On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to be a ... every person that now or hereafter may own, operate, manage, or control in the Philippines, for
common carrier and holding him liable for the value of the undelivered goods (P 22,150.00) as well as hire or compensation, with general or limited clientele, whether permanent, occasional or accidental,
for P 4,000.00 as damages and P 2,000.00 as attorney's fees. and done for general business purposes, any common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service of any class, express service, steamboat,
On appeal before the Court of Appeals, respondent urged that the trial court had erred in considering
or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or
him a common carrier; in finding that he had habitually offered trucking services to the public; in not
freight or both, shipyard, marine repair shop, wharf or dock, ice plant,
exempting him from liability on the ground of force majeure; and in ordering him to pay damages and
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and
attorney's fees.
power petroleum, sewerage system, wire or wireless communications systems, wire or wireless
broadcasting stations and other similar public services. ... (Emphasis supplied)
The Court of Appeals reversed the judgment of the trial court and held that respondent had been
engaged in transporting return loads of freight "as a casual
It appears to the Court that private respondent is properly characterized as a common carrier even In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the
though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to
such back-hauling was done on a periodic or occasional rather than regular or scheduled manner, and have acted negligently, unless they prove that they observed extraordinary diligence as required in
even though private respondent's principal occupation was not the carriage of goods for others. Article 1733. (Emphasis supplied)
There is no dispute that private respondent charged his customers a fee for hauling their goods; that
fee frequently fell below commercial freight rates is not relevant here. Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in
the instant case — the hijacking of the carrier's truck — does not fall within any of the five (5)
The Court of Appeals referred to the fact that private respondent held no certificate of public categories of exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of
convenience, and concluded he was not a common carrier. This is palpable error. A certificate of the carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the
public convenience is not a requisite for the incurring of liability under the Civil Code provisions private respondent as common carrier is presumed to have been at fault or to have acted negligently.
governing common carriers. That liability arises the moment a person or firm acts as a common This presumption, however, may be overthrown by proof of extraordinary diligence on the part of
carrier, without regard to whether or not such carrier has also complied with the requirements of the private respondent.
applicable regulatory statute and implementing regulations and has been granted a certificate of
public convenience or other franchise. To exempt private respondent from the liabilities of a common Petitioner insists that private respondent had not observed extraordinary diligence in the care of
carrier because he has not secured the necessary certificate of public convenience, would be petitioner's goods. Petitioner argues that in the circumstances of this case, private respondent should
offensive to sound public policy; that would be to reward private respondent precisely for failing to have hired a security guard presumably to ride with the truck carrying the 600 cartons of Liberty filled
comply with applicable statutory requirements. The business of a common carrier impinges directly milk. We do not believe, however, that in the instant case, the standard of extraordinary diligence
and intimately upon the safety and well being and property of those members of the general required private respondent to retain a security guard to ride with the truck and to engage brigands in
community who happen to deal with such carrier. The law imposes duties and liabilities upon a firelight at the risk of his own life and the lives of the driver and his helper.
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
The precise issue that we address here relates to the specific requirements of the duty of
obtain the necessary permits and authorizations.
extraordinary diligence in the vigilance over the goods carried in the specific context of hijacking or
armed robbery.
We turn then to the liability of private respondent as a common carrier.
As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under Article 1733,
Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a given additional specification not only by Articles 1734 and 1735 but also by Article 1745, numbers 4,
very high degree of care and diligence ("extraordinary diligence") in the carriage of goods as well as of 5 and 6, Article 1745 provides in relevant part:
passengers. The specific import of extraordinary diligence in the care of goods transported by a
common carrier is, according to Article 1733, "further expressed in Articles 1734,1735 and 1745,
Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to
numbers 5, 6 and 7" of the Civil Code.
public policy:

Article 1734 establishes the general rule that common carriers are responsible for the loss,
xxx xxx xxx
destruction or deterioration of the goods which they carry, "unless the same is due to any of the
following causes only:
(5) that the common carrier shall not be responsible for the acts or omissions of his or its employees;
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil; (6) that the common carrier's liability for acts committed by thieves, or of robbers who donot act
(3) Act or omission of the shipper or owner of the goods; with grave or irresistible threat, violence or force, is dispensed with or diminished; and
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority. (7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods on
account of the defective condition of the car vehicle, ship, airplane or other equipment used in the
It is important to point out that the above list of causes of loss, destruction or deterioration which contract of carriage. (Emphasis supplied)
exempt the common carrier for responsibility therefor, is a closed list. Causes falling outside the
foregoing list, even if they appear to constitute a species of force majeure fall within the scope of Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to
Article 1735, which provides as follows: 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." We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance
over the goods carried are reached where the goods are lost as a result of a robbery which is attended
by "grave or irresistible threat, violence or force."

In the instant case, armed men held up the second truck owned by private respondent which carried
petitioner's cargo. The record shows that an information for robbery in band was filed in the Court of
First Instance of Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the Philippines v. Felipe
Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one John Doe." There, the accused
were charged with willfully and unlawfully taking and carrying away with them the second truck,
driven by Manuel Estrada and loaded with the 600 cartons of Liberty filled milk destined for delivery
at petitioner's store in Urdaneta, Pangasinan. The decision of the trial court shows that the accused
acted with grave, if not irresistible, threat, violence or force.3 Three (3) of the five (5) hold-uppers
were armed with firearms. The robbers not only took away the truck and its cargo but also kidnapped
the driver and his helper, detaining them for several days and later releasing them in another
province (in Zambales). The hijacked truck was subsequently found by the police in Quezon City. The
Court of First Instance convicted all the accused of robbery, though not of robbery in band. 4

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

We, therefore, agree with the result reached by the Court of Appeals that private respondent
Cendana is not liable for the value of the undelivered merchandise which was lost because of an event
entirely beyond private respondent's control.

ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the Decision of the Court of
Appeals dated 3 August 1977 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.


G.R. No. 101089. April 7, 1993. robbers in fact acted "with grave of irresistible threat, violence of force," We believe and so hold that
ESTRELLITA M. BASCOS, petitioners, the limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached
vs. where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat,
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents. violence or force."

1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE COMMON CARRIER. — Article DECISION
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, CAMPOS, JR., J p:
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
This is a petition for review on certiorari of the decision ** of the Court of Appeals in "RODOLFO A.
out to the general public as his occupation rather than the quantity or extent of the business
CIPRIANO, doing business under the name CIPRIANO TRADING ENTERPRISES plaintiff-appellee, vs.
transacted." . . . The holding of the Court in De Guzman vs. Court of Appeals is instructive. In referring
ESTRELLITA M. BASCOS, doing business under the name of BASCOS TRUCKING, defendant-appellant,"
to Article 1732 of the Civil Code, it held thus: "The above article makes no distinction between one
C.A.-G.R. CV No. 25216, the dispositive portion of which is quoted hereunder:
whose principal business activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as a "sideline"). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service on a regular or "PREMISES considered, We find no reversible error in the decision appealed from, which is hereby
scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. affirmed in toto. Costs against appellant." 1
Neither does Article 1732 distinguished 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 The facts, as gathered by this Court, are as follows:
narrow segment of the general population. We think that Article 1732 deliberately refrained from
making such distinctions." Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short) entered into a
hauling contract 2 with Jibfair Shipping Agency Corporation whereby the former bound itself to haul
2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS TRANSPORTED; WHEN PRESUMPTION the latter's 2,000 m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to the warehouse
OF NEGLIGENCE ARISES; HOW PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. of Purefoods Corporation in Calamba, Laguna. To carry out its obligation, CIPTRADE, through Rodolfo
— Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods Cipriano, subcontracted with Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of
transported by them. Accordingly, they are presumed to have been at fault or to have acted soya bean meal worth P156,404.00 from the Manila Port Area to Calamba, Laguna at the rate of
negligently if the goods are lost, destroyed or deteriorated. There are very few instances when the P50.00 per metric ton. Petitioner failed to deliver the said cargo. As a consequence of that failure,
presumption of negligence does not attach and these instances are enumerated in Article 1734. In Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance with the contract
those cases where the presumption is applied, the common carrier must prove that it exercised which stated that:
extraordinary diligence in order to overcome the presumption . . . The presumption of negligence was
raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, "1. CIPTRADE shall be held liable and answerable for any loss in bags due to theft, hijacking and
private respondent need not introduce any evidence to prove her negligence. Her own failure to non-delivery or damages to the cargo during transport at market value, . . ." 3
adduce sufficient proof of extraordinary diligence made the presumption conclusive against her.

Cipriano demanded reimbursement from petitioner but the latter refused to pay. Eventually, Cipriano
3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT; HOW CARRIER ABSOLVED FROM filed a complaint for a sum of money and damages with writ of preliminary attachment 4 for breach of
LIABILITY. — In De Guzman vs. Court of Appeals, the Court held that hijacking, not being included in a contract of carriage. The prayer for a Writ of Preliminary Attachment was supported by an affidavit
the provisions of Article 1734, must be dealt with under the provisions of Article 1735 and thus, the 5 which contained the following allegations:
common carrier is presumed to have been at fault or negligent. To exculpate the carrier from liability
arising from hijacking, he must prove that the robbers or the hijackers acted with grave or irresistible
threat, violence, or force. This is in accordance with Article 1745 of the Civil Code which provides: "Art. "4. That this action is one of those specifically mentioned in Sec. 1, Rule 57 the Rules of Court,
1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and whereby a writ of preliminary attachment may lawfully issue, namely:
contrary to public policy . . . (6) That the common carrier's liability for acts committed by thieves, or of
robbers who do not act with grave or irresistible threat, violences or force, is dispensed with or "(e) in an action against a party who has removed or disposed of his property, or is about to do so,
diminished"; In the same case, the Supreme Court also held that: "Under Article 1745 (6) above, a with intent to defraud his creditors;"
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 5. That there is no sufficient security for the claim sought to be enforced by the present action;
6. That the amount due to the plaintiff in the above-entitled case is above all legal counterclaims;" III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF THE TRIAL COURT THAT
PETITIONER'S MOTION TO DISSOLVE/LIFT THE WRIT OF PRELIMINARY ATTACHMENT HAS BEEN
The trial court granted the writ of preliminary attachment on February 17, 1987. RENDERED MOOT AND ACADEMIC BY THE DECISION OF THE MERITS OF THE CASE." 7

In her answer, petitioner interposed the following defenses: that there was no contract of carriage The petition presents the following issues for resolution: (1) was petitioner a common carrier?; and (2)
since CIPTRADE leased her cargo truck to load the cargo from Manila Port Area to Laguna; that was the hijacking referred to a force majeure?
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; The Court of Appeals, in holding that petitioner was a common carrier, found that she admitted in her
that the hijacking was immediately reported to CIPTRADE and that petitioner and the police exerted answer that she did business under the name A.M. Bascos Trucking and that said admission dispensed
all efforts to locate the hijacked properties; that after preliminary investigation, an information for with the presentation by private respondent, Rodolfo Cipriano, of proofs that petitioner was a
robbery and carnapping were filed against Jose Opriano, et al.; and that hijacking, being a force common carrier. The respondent Court also adopted in toto the trial court's decision that petitioner
majeure, exculpated petitioner from any liability to CIPTRADE. was a common carrier, Moreover, 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
After trial, the trial court rendered a decision *** the dispositive portion of which reads as follows: 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.
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant ordering the
latter to pay the former:
In disputing the conclusion of the trial and appellate courts that petitioner was a common carrier, she
alleged in this petition that the contract between her and Rodolfo A. Cipriano, representing CIPTRADE,
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR HUNDRED FOUR PESOS (P156,404.00) as
was lease of the truck. She cited as evidence certain affidavits which referred to the contract as
an (sic) for actual damages with legal interest of 12% per cent per annum to be counted from
"lease". These affidavits were made by Jesus Bascos 8 and by petitioner herself. 9 She further averred
December 4, 1986 until fully paid;
that Jesus Bascos confirmed in his testimony his statement that the contract was a lease contract. 10
She also stated that: she was not catering to the general public. Thus, in her answer to the amended
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for attorney's fees; and complaint, she said that she does business under the same style of A.M. Bascos Trucking, offering her
trucks for lease to those who have cargo to move, not to the general public but to a few customers
3. The costs of the suit. only in view of the fact that it is only a small business. 11

The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated March 10, 1987 filed by We agree with the respondent Court in its finding that petitioner is a common carrier.
defendant is DENIED for being moot and academic.
Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or
SO ORDERED." 6 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
Petitioner appealed to the Court of Appeals but respondent Court affirmed the trial court's judgment. carrier is "whether the given undertaking is a part of the business engaged in by the carrier which he
has held out to the general public as his occupation rather than the quantity or extent of the business
transacted." 12 In this case, petitioner herself has made the admission that she was in the trucking
Consequently, petitioner filed this petition where she makes the following assignment of errors; to business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no
wit: evidence is required to prove the same. 13

"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE CONTRACTUAL RELATIONSHIP BETWEEN But petitioner argues that there was only a contract of lease because they offer their services only to
PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE OF GOODS AND NOT LEASE OF CARGO a select group of people and because the private respondents, plaintiffs in the lower court, did not
TRUCK. object to the presentation of affidavits by petitioner where the transaction was referred to as a lease
contract.
II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE RESPONDENT COURT THAT THE
CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE OF Regarding the first contention, the holding of the Court in De Guzman vs. Court of Appeals 14 is
GOODS IS CORRECT, NEVERTHELESS, IT ERRED IN FINDING PETITIONER LIABLE THEREUNDER BECAUSE instructive. In referring to Article 1732 of the Civil Code, it held thus:
THE LOSS OF THE CARGO WAS DUE TO FORCE MAJEURE, NAMELY, HIJACKING.
"The above article makes no distinction between one whose principal business activity is the carrying "Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to
of persons or goods or both, and one who does such carrying only as an ancillary activity (in local divest or to diminish such responsibility — even for acts of strangers like thieves or robbers except
idiom, as a "sideline"). Article 1732 also carefully avoids making any distinction between a person or where such thieves or robbers in fact acted with grave or irresistible threat, violence or force. We
enterprise offering transportation service on a regular or scheduled basis and one offering such believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish goods carried are reached where the goods are lost as a result of a robbery which is attended by
between a carrier offering its services to the "general public," i.e., the general community or "grave or irresistible threat, violence or force."
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." To establish grave and irresistible force, petitioner presented her accusatory affidavit, 22 Jesus
Bascos' affidavit, 23 and Juanito Morden's 24 "Salaysay". However, both the trial court and the Court
Regarding the affidavits presented by petitioner to the court, both the trial and appellate courts have of Appeals have concluded that these affidavits were not enough to overcome the presumption.
dismissed them as self-serving and petitioner contests the conclusion. We are bound by the appellate Petitioner's affidavit about the hijacking was based on what had been told her by Juanito Morden. It
court's factual conclusions. Yet, granting that the said evidence were not self-serving, the same were was not a first-hand account. While it had been admitted in court for lack of objection on the part of
not sufficient to prove that the contract was one of lease. It must be understood that a contract is private respondent, the respondent Court had discretion in assigning weight to such evidence. We are
what the law defines it to be and not what it is called by the contracting parties. 15 Furthermore, bound by the conclusion of the appellate court. In a petition for review on certiorari, We are not to
petitioner presented no other proof of the existence of the contract of lease. He who alleges a fact determine the probative value of evidence but to resolve questions of law. Secondly, the affidavit of
has the burden of proving it. 16 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
Likewise, We affirm the holding of the respondent court that the loss of the goods was not due to witness as could be gleaned from the contents of the petition. Affidavits are not considered the best
force majeure. evidence if the affiants are available as witnesses. 25 The subsequent filing of the information for
carnapping and robbery against the accused named in said affidavits did not necessarily mean that
the contents of the affidavits were true because they were yet to be determined in the trial of the
Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods
criminal cases.
transported by them. 17 Accordingly, they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. 18 There are very few instances when the
presumption of negligence does not attach and these instances are enumerated in Article 1734. 19 In The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome
those cases where the presumption is applied, the common carrier must prove that it exercised it. Thus, contrary to her assertion, private respondent need not introduce any evidence to prove her
extraordinary diligence in order to overcome the presumption. negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the
presumption conclusive against her.
In this case, petitioner alleged that hijacking constituted force majeure which exculpated her from
liability for the loss of the cargo. In De Guzman vs. Court of Appeals, 20 the Court held that hijacking, Having affirmed the findings of the respondent Court on the substantial issues involved, We find no
not being included in the provisions of Article 1734, must be dealt with under the provisions of Article reason to disturb the conclusion that the motion to lift/dissolve the writ of preliminary attachment
1735 and thus, the common carrier is presumed to have been at fault or negligent. To exculpate the has been rendered moot and academic by the decision on the merits.
carrier from liability arising from hijacking, he must prove that the robbers or the hijackers acted with
grave or irresistible threat, violence, or force. This is in accordance with Article 1745 of the Civil Code In the light of the foregoing analysis, it is Our opinion that the petitioner's claim cannot be sustained.
which provides: The petition is DISMISSED and the decision of the Court of Appeals is hereby AFFIRMED.

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

xxx xxx xxx

(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violences or force, is dispensed with or diminished;"

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


G.R. No. 131621 September 28, 1999 As stated at the outset, the court a quo rendered judgment in favor of MIC, prompting LOADSTAR to
elevate the matter to the court of Appeals, which, however, agreed with the trial court and affirmed
LOADSTAR SHIPPING CO., INC., petitioner, its decision in toto.
vs.
COURT OF APPEALS and THE MANILA INSURANCE CO., INC., respondents. In dismissing LOADSTAR's appeal, the appellate court made the following observations:

Petitioner Loadstar Shipping Co., Inc. (hereafter LOADSTAR), in this petition for review 1) LOADSTAR cannot be considered a private carrier on the sole ground that there was a single
on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, seeks to reverse and set aside the shipper on that fateful voyage. The court noted that the charter of the vessel was limited to the ship,
following: (a) the 30 January 1997 decision 1 of the Court of Appeals in CA-G.R. CV No. 36401, which but LOADSTAR retained control over its crew. 4
affirmed the decision of 4 October 1991 2 of the Regional Trial Court of Manila, Branch 16, in Civil
Case No. 85-29110, ordering LOADSTAR to pay private respondent Manila Insurance Co. (hereafter 2) As a common carrier, it is the Code of Commerce, not the Civil Code, which should be applied in
MIC) the amount of P6,067,178, with legal interest from the filing of the compliant until fully paid, determining the rights and liabilities of the parties.
P8,000 as attorney's fees, and the costs of the suit; and (b) its resolution of 19 November
1997, 3 denying LOADSTAR's motion for reconsideration of said decision.
3) The vessel was not seaworthy because it was undermanned on the day of the voyage. If it had been
seaworthy, it could have withstood the "natural and inevitable action of the sea" on 20 November
The facts are undisputed.1âwphi1.nêt 1984, when the condition of the sea was moderate. The vessel sank, not because of force majeure,
but because it was not seaworthy. LOADSTAR'S allegation that the sinking was probably due to the
On 19 November 1984, LOADSTAR received on board its M/V "Cherokee" (hereafter, the vessel) the "convergence of the winds," as stated by a PAGASA expert, was not duly proven at the trial. The
following goods for shipment: "limited liability" rule, therefore, is not applicable considering that, in this case, there was an actual
finding of negligence on the part of the carrier.5
a) 705 bales of lawanit hardwood;
4) Between MIC and LOADSTAR, the provisions of the Bill of Lading do not apply because said
b) 27 boxes and crates of tilewood assemblies and the others ;and provisions bind only the shipper/consignee and the carrier. When MIC paid the shipper for the goods
insured, it was subrogated to the latter's rights as against the carrier, LOADSTAR. 6
c) 49 bundles of mouldings R & W (3) Apitong Bolidenized.
5) There was a clear breach of the contract of carriage when the shipper's goods never reached their
destination. LOADSTAR's defense of "diligence of a good father of a family" in the training and
The goods, amounting to P6,067,178, were insured for the same amount with MIC against various
selection of its crew is unavailing because this is not a proper or complete defense in culpa
risks including "TOTAL LOSS BY TOTAL OF THE LOSS THE VESSEL." The vessel, in turn, was insured by
contractual.
Prudential Guarantee & Assurance, Inc. (hereafter PGAI) for P4 million. On 20 November 1984, on its
way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off
Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with 6) "Art. 361 (of the Code of Commerce) has been judicially construed to mean that when goods are
LOADSTAR which, however, ignored the same. As the insurer, MIC paid P6,075,000 to the insured in delivered on board a ship in good order and condition, and the shipowner delivers them to the
full settlement of its claim, and the latter executed a subrogation receipt therefor. shipper in bad order and condition, it then devolves upon the shipowner to both allege and prove that
the goods were damaged by reason of some fact which legally exempts him from liability."
Transportation of the merchandise at the risk and venture of the shipper means that the latter bears
On 4 February 1985, MIC filed a complaint against LOADSTAR and PGAI, alleging that the sinking of
the risk of loss or deterioration of his goods arising from fortuitous events, force majeure, or the
the vessel was due to the fault and negligence of LOADSTAR and its employees. It also prayed that
inherent nature and defects of the goods, but not those caused by the presumed negligence or fault
PGAI be ordered to pay the insurance proceeds from the loss the vessel directly to MIC, said amount
of the carrier, unless otherwise proved. 7
to be deducted from MIC's claim from LOADSTAR.

The errors assigned by LOADSTAR boil down to a determination of the following issues:
In its answer, LOADSTAR denied any liability for the loss of the shipper's goods and claimed that
sinking of its vessel was due to force majeure. PGAI, on the other hand, averred that MIC had no
cause of action against it, LOADSTAR being the party insured. In any event, PGAI was later dropped as (1) Is the M/V "Cherokee" a private or a common carrier?
a party defendant after it paid the insurance proceeds to LOADSTAR.
(2) Did LOADSTAR observe due and/or ordinary diligence in these premises.
Regarding the first issue, LOADSTAR submits that the vessel was a private carrier because it was not MIC, on the other hand, claims that LOADSTAR was liable, notwithstanding that the loss of the cargo
issued certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, was due toforce majeure, because the same concurred with LOADSTAR's fault or negligence.
and there was only "one shipper, one consignee for a special cargo."
Secondly, LOADSTAR did not raise the issue of prescription in the court below; hence, the same must
In refutation, MIC argues that the issue as to the classification of the M/V "Cherokee" was not timely be deemed waived.
raised below; hence, it is barred by estoppel. While it is true that the vessel had on board only the
cargo of wood products for delivery to one consignee, it was also carrying passengers as part of its Thirdly, the " limited liability " theory is not applicable in the case at bar because LOADSTAR was at
regular business. Moreover, the bills of lading in this case made no mention of any charter party but fault or negligent, and because it failed to maintain a seaworthy vessel. Authorizing the voyage
only a statement that the vessel was a "general cargo carrier." Neither was there any "special notwithstanding its knowledge of a typhoon is tantamount to negligence.
arrangement" between LOADSTAR and the shipper regarding the shipment of the cargo. The singular
fact that the vessel was carrying a particular type of cargo for one shipper is not sufficient to convert
We find no merit in this petition.
the vessel into a private carrier.

Anent the first assigned error, we hold that LOADSTAR is a common carrier. It is not necessary that
As regards the second error, LOADSTAR argues that as a private carrier, it cannot be presumed to
the carrier be issued a certificate of public convenience, and this public character is not altered by the
have been negligent, and the burden of proving otherwise devolved upon MIC. 8
fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled.

LOADSTAR also maintains that the vessel was seaworthy. Before the fateful voyage on 19 November
In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American
1984, the vessel was allegedly dry docked at Keppel Philippines Shipyard and was duly inspected by
Steamship Agencies, Inc., 11 where this Court held that a common carrier transporting special cargo or
the maritime safety engineers of the Philippine Coast Guard, who certified that the ship was fit to
chartering the vessel to a special person becomes a private carrier that is not subject to the provisions
undertake a voyage. Its crew at the time was experienced, licensed and unquestionably competent.
of the Civil Code. Any stipulation in the charter party absolving the owner from liability for loss due to
With all these precautions, there could be no other conclusion except that LOADSTAR exercised the
the negligence of its agent is void only if the strict policy governing common carriers is upheld. Such
diligence of a good father of a family in ensuring the vessel's seaworthiness.
policy has no force where the public at is not involved, as in the case of a ship totally chartered for the
use of a single party. LOADSTAR also cited Valenzuela Hardwood and Industrial Supply, Inc. v. Court of
LOADSTAR further claims that it was not responsible for the loss of the cargo, such loss being due Appeals 12 and National Steel Corp. v. Court of Appeals, 13 both of which upheld the Home Insurance
to force majeure. It points out that when the vessel left Nasipit, Agusan del Norte, on 19 November doctrine.
1984, the weather was fine until the next day when the vessel sank due to strong waves. MCI's
witness, Gracelia Tapel, fully established the existence of two typhoons, "WELFRING" and "YOLING,"
These cases invoked by LOADSTAR are not applicable in the case at bar for the simple reason that the
inside the Philippine area of responsibility. In fact, on 20 November 1984, signal no. 1 was declared
factual settings are different. The records do not disclose that the M/V "Cherokee," on the date in
over Eastern Visayas, which includes Limasawa Island. Tapel also testified that the convergence of
question, undertook to carry a special cargo or was chartered to a special person only. There was no
winds brought about by these two typhoons strengthened wind velocity in the area, naturally
charter party. The bills of lading failed to show any special arrangement, but only a general provision
producing strong waves and winds, in turn, causing the vessel to list and eventually sink.
to the effect that the M/V"Cherokee" was a "general cargo carrier." 14 Further, the bare fact that the
vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental,
LOADSTAR goes on to argue that, being a private carrier, any agreement limiting its liability, such as is not reason enough to convert the vessel from a common to a private carrier, especially where, as in
what transpired in this case, is valid. Since the cargo was being shipped at "owner's risk," LOADSTAR this case, it was shown that the vessel was also carrying passengers.
was not liable for any loss or damage to the same. Therefore, the Court of Appeals erred in holding
that the provisions of the bills of lading apply only to the shipper and the carrier, and not to the
Under the facts and circumstances obtaining in this case, LOADSTAR fits the definition of a common
insurer of the goods, which conclusion runs counter to the Supreme Court's ruling in the case of St.
carrier under Article 1732 of the Civil Code. In the case of De Guzman v. Court of Appeals,15 the Court
Paul Fire & Marine Co. v. Macondray & Co., Inc., 9 and National Union Fire Insurance Company of
juxtaposed the statutory definition of "common carriers" with the peculiar circumstances of that
Pittsburgh v. Stolt-Nielsen Phils., Inc. 10
case, viz.:

Finally, LOADSTAR avers that MIC's claim had already prescribed, the case having been instituted
The Civil Code defines "common carriers" in the following terms:
beyond the period stated in the bills of lading for instituting the same — suits based upon claims
arising from shortage, damage, or non-delivery of shipment shall be instituted within sixty days from
the accrual of the right of action. The vessel sank on 20 November 1984; yet, the case for recovery Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business
was filed only on 4 February 1985. 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 wind condition in the performance of its duties, LOADSTAR cannot hide behind the "limited liability"
of persons or goods or both, and one who does such carrying only as ancillary activity (in local idiom, doctrine to escape responsibility for the loss of the vessel and its cargo.
as "a sideline". Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one offering such LOADSTAR also claims that the Court of Appeals erred in holding it liable for the loss of the goods, in
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between utter disregard of this Court's pronouncements in St. Paul Fire & Marine Ins. Co. v. Macondray & Co.,
a carrier offering its services to the "general public," i.e., the general community or population, and Inc., 18 and National Union Fire Insurance v. Stolt-Nielsen Phils., Inc. 19 It was ruled in these two cases
one who offers services or solicits business only from a narrow segment of the general population. that after paying the claim of the insured for damages under the insurance policy, the insurer is
We think that Article 1733 deliberately refrained from making such distinctions. subrogated merely to the rights of the assured, that is, it can recover only the amount that may, in
turn, be recovered by the latter. Since the right of the assured in case of loss or damage to the goods
xxx xxx xxx is limited or restricted by the provisions in the bills of lading, a suit by the insurer as subrogee is
necessarily subject to the same limitations and restrictions. We do not agree. In the first place, the
It appears to the Court that private respondent is properly characterized as a common carrier even cases relied on by LOADSTAR involved a limitation on the carrier's liability to an amount fixed in the
though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although bill of lading which the parties may enter into, provided that the same was freely and fairly agreed
such backhauling was done on a periodic or occasional rather than regular or scheduled manner, and upon (Articles 1749-1750). On the other hand, the stipulation in the case at bar effectively reduces
eventhough private respondent's principal occupation was not the carriage of goods for others. There the common carrier's liability for the loss or destruction of the goods to a degree less than
is no dispute that private respondent charged his customers a fee for hauling their goods; that fee extraordinary (Articles 1744 and 1745), that is, the carrier is not liable for any loss or damage to
frequently fell below commercial freight rates is not relevant here. shipments made at "owner's risk." Such stipulation is obviously null and void for being contrary to
public policy." 20 It has been said:
The Court of Appeals referred to the fact that private respondent held no certificate of public
convenience, and concluded he was not a common carrier. This is palpable error. A certificate of Three kinds of stipulations have often been made in a bill of lading. The first one exempting the
public convenience is not a requisite for the incurring of liability under the Civil Code provisions carrier from any and all liability for loss or damage occasioned by its own negligence. The second is
governing common carriers. That liability arises the moment a person or firm acts as a common one providing for an unqualified limitation of such liability to an agreed valuation. And the third is one
carrier, without regard to whether or not such carrier has also complied with the requirements of the limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value
applicable regulatory statute and implementing regulations and has been granted a certificate of and pays a higher rate of. freight. According to an almost uniform weight of authority, the first and
public convenience or other franchise. To exempt private respondent from the liabilities of a common second kinds of stipulations are invalid as being contrary to public policy, but the third is valid and
carrier because he has not secured the necessary certificate of public convenience, would be enforceable. 21
offensive to sound public policy; that would be to reward private respondent precisely for failing to
comply with applicable statutory requirements The business of a common carrier impinges directly Since the stipulation in question is null and void, it follows that when MIC paid the shipper, it was
and intimately upon the safety and well being and property of those members of the general subrogated to all the rights which the latter has against the common carrier, LOADSTAR.
community who happen to deal with such carrier. The law imposes duties and liabilities upon
common carriers for the safety and protection of those who utilize their services and the law cannot Neither is there merit to the contention that the claim in this case was barred by prescription. MIC's
allow a common carrier to render such duties and liabilities merely facultative by simply failing to cause of action had not yet prescribed at the time it was concerned. Inasmuch as neither the Civil
obtain the necessary permits and authorizations. Code nor the Code of Commerce states a specific prescriptive period on the matter, the Carriage of
Goods by Sea Act (COGSA) — which provides for a one-year period of limitation on claims for loss of,
Moving on to the second assigned error, we find that the M/V "Cherokee" was not seaworthy when it or damage to, cargoes sustained during transit — may be applied suppletorily to the case at bar. This
embarked on its voyage on 19 November 1984. The vessel was not even sufficiently manned at the one-year prescriptive period also applies to the insurer of the goods. 22In this case, the period for
time. "For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with filing the action for recovery has not yet elapsed. Moreover, a stipulation reducing the one-year
a sufficient number of competent officers and crew. The failure of a common carrier to maintain in period is null and void; 23 it must, accordingly, be struck down.
seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty prescribed
in Article 1755 of the Civil Code." 16 WHEREFORE, the instant petition is DENIED and the challenged decision of 30 January 1997 of the
Court of Appeals in CA-G.R. CV No. 36401 is AFFIRMED. Costs against petitioner.1âwphi1.nêt
Neither do we agree with LOADSTAR's argument that the "limited liability" theory should be applied
in this case. The doctrine of limited liability does not apply where there was negligence on the part of SO ORDERED.
the vessel owner or agent. 17 LOADSTAR was at fault or negligent in not maintaining a seaworthy
vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In any
event, it did not sink because of any storm that may be deemed as force majeure, inasmuch as the
G.R. No. 148496 March 19, 2002 " . . . we opine that damages sustained by shipment is attributable to improper handling in transit
VIRGINES CALVO doing business under the name and style TRANSORIENT CONTAINER TERMINAL presumably whilst in the custody of the broker . . . ."
SERVICES, INC., petitioner,
vs. is a finding which cannot be traversed and overturned.
UCPB GENERAL INSURANCE CO., INC. (formerly Allied Guarantee Ins. Co., Inc.) respondent.
The evidence adduced by the defendants is not enough to sustain [her] defense that [she is] are not
This is a petition for review of the decision,1 dated May 31, 2001, of the Court of Appeals, affirming liable. Defendant by reason of the nature of [her] business should have devised ways and means in
the decision2 of the Regional Trial Court, Makati City, Branch 148, which ordered petitioner to pay order to prevent the damage to the cargoes which it is under obligation to take custody of and to
respondent, as subrogee, the amount of P93,112.00 with legal interest, representing the value of forthwith deliver to the consignee. Defendant did not present any evidence on what precaution [she]
damaged cargo handled by petitioner, 25% thereof as attorney's fees, and the cost of the performed to prevent [the] said incident, hence the presumption is that the moment the defendant
suit.1âwphi1.nêt accepts the cargo [she] shall perform such extraordinary diligence because of the nature of the cargo.

The facts are as follows: ....

Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a sole Generally speaking under Article 1735 of the Civil Code, if the goods are proved to have been lost,
proprietorship customs broker. At the time material to this case, petitioner entered into a contract destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted
with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and negligently, unless they prove that they have observed the extraordinary diligence required by law.
124 reels of kraft liner board from the Port Area in Manila to SMC's warehouse at the Tabacalera The burden of the plaintiff, therefore, is to prove merely that the goods he transported have been lost,
Compound, Romualdez St., Ermita, Manila. The cargo was insured by respondent UCPB General destroyed or deteriorated. Thereafter, the burden is shifted to the carrier to prove that he has
Insurance Co., Inc. exercised the extraordinary diligence required by law. Thus, it has been held that the mere proof of
delivery of goods in good order to a carrier, and of their arrival at the place of destination in bad order,
On July 14, 1990, the shipment in question, contained in 30 metal vans, arrived in Manila on board makes out a prima facie case against the carrier, so that if no explanation is given as to how the injury
"M/V Hayakawa Maru" and, after 24 hours, were unloaded from the vessel to the custody of the occurred, the carrier must be held responsible. It is incumbent upon the carrier to prove that the loss
arrastre operator, Manila Port Services, Inc. From July 23 to July 25, 1990, petitioner, pursuant to her was due to accident or some other circumstances inconsistent with its liability." (cited in Commercial
contract with SMC, withdrew the cargo from the arrastre operator and delivered it to SMC's Laws of the Philippines by Agbayani, p. 31, Vol. IV, 1989 Ed.)
warehouse in Ermita, Manila. On July 25, 1990, the goods were inspected by Marine Cargo Surveyors,
who found that 15 reels of the semi-chemical fluting paper were "wet/stained/torn" and 3 reels of Defendant, being a customs brother, warehouseman and at the same time a common carrier is
kraft liner board were likewise torn. The damage was placed at P93,112.00. supposed [to] exercise [the] extraordinary diligence required by law, hence the extraordinary
responsibility lasts from the time the goods are unconditionally placed in the possession of and
SMC collected payment from respondent UCPB under its insurance contract for the aforementioned received by the carrier for transportation until the same are delivered actually or constructively by the
amount. In turn, respondent, as subrogee of SMC, brought suit against petitioner in the Regional Trial carrier to the consignee or to the person who has the right to receive the same.3
Court, Branch 148, Makati City, which, on December 20, 1995, rendered judgment finding petitioner
liable to respondent for the damage to the shipment. Accordingly, the trial court ordered petitioner to pay the following amounts --

The trial court held: 1. The sum of P93,112.00 plus interest;

It cannot be denied . . . that the subject cargoes sustained damage while in the custody of defendants. 2. 25% thereof as lawyer's fee;
Evidence such as the Warehouse Entry Slip (Exh. "E"); the Damage Report (Exh. "F") with entries
appearing therein, classified as "TED" and "TSN", which the claims processor, Ms. Agrifina De Luna,
3. Costs of suit.4
claimed to be tearrage at the end and tearrage at the middle of the subject damaged cargoes
respectively, coupled with the Marine Cargo Survey Report (Exh. "H" - "H-4-A") confirms the fact of
the damaged condition of the subject cargoes. The surveyor[s'] report (Exh. "H-4-A") in particular, The decision was affirmed by the Court of Appeals on appeal. Hence this petition for review
which provides among others that: on certiorari.

Petitioner contends that:


I. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR [IN] DECIDING THE CASE traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed
NOT ON THE EVIDENCE PRESENTED BUT ON PURE SURMISES, SPECULATIONS AND MANIFESTLY route and whatever may be its classification, freight or carrier service of any class, express service,
MISTAKEN INFERENCE. steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
II. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR IN CLASSIFYING THE plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum,
PETITIONER AS A COMMON CARRIER AND NOT AS PRIVATE OR SPECIAL CARRIER WHO DID NOT HOLD sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations
ITS SERVICES TO THE PUBLIC.5 and other similar public services. x x x" 8

It will be convenient to deal with these contentions in the inverse order, for if petitioner is not a There is greater reason for holding petitioner to be a common carrier because the transportation of
common carrier, although both the trial court and the Court of Appeals held otherwise, then she is goods is an integral part of her business. To uphold petitioner's contention would be to deprive those
indeed not liable beyond what ordinary diligence in the vigilance over the goods transported by her, with whom she contracts the protection which the law affords them notwithstanding the fact that the
would require.6 Consequently, any damage to the cargo she agrees to transport cannot be presumed obligation to carry goods for her customers, as already noted, is part and parcel of petitioner's
to have been due to her fault or negligence. business.

Petitioner contends that contrary to the findings of the trial court and the Court of Appeals, she is not Now, as to petitioner's liability, Art. 1733 of the Civil Code provides:
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 Common carriers, from the nature of their business and for reasons of public policy, are bound to
whom she may contract in the conduct of her business. 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. . . .
The contention has no merit. In De Guzman v. Court of Appeals,7 the Court dismissed a similar
contention and held the party to be a common carrier, thus - In Compania Maritima v. Court of Appeals,9 the meaning of "extraordinary diligence in the vigilance
over goods" was explained thus:
The Civil Code defines "common carriers" in the following terms:
The extraordinary diligence in the vigilance over the goods tendered for shipment requires the
"Article 1732. Common carriers are persons, corporations, firms or associations engaged in the common carrier to know and to follow the required precaution for avoiding damage to, or destruction
business of carrying or transporting passengers or goods or both, by land, water, or air for of the goods entrusted to it for sale, carriage and delivery. It requires common carriers to render
compensation, offering their services to the public." 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."
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 In the case at bar, petitioner denies liability for the damage to the cargo. She claims that the "spoilage
transportation service on a regular or scheduled basis and one offering such service on an occasional, or wettage" took place while the goods were in the custody of either the carrying vessel "M/V
episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its Hayakawa Maru," which transported the cargo to Manila, or the arrastre operator, to whom the
services to the "general public," i.e., the general community or population, and one who offers goods were unloaded and who allegedly kept them in open air for nine days from July 14 to July 23,
services or solicits business only from a narrow segment of the general population. We think that 1998 notwithstanding the fact that some of the containers were deformed, cracked, or otherwise
Article 1732 deliberately refrained from making such distinctions. damaged, as noted in the Marine Survey Report (Exh. H), to wit:

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly MAXU-2062880 - rain gutter deformed/cracked
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. ICSU-363461-3 - left side rubber gasket on door distorted/partly loose
Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:
PERU-204209-4 - with pinholes on roof panel right portion
" 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 TOLU-213674-3 - wood flooring we[t] and/or with signs of water soaked
accidental, and done for general business purposes, any common carrier, railroad, street railway,
MAXU-201406-0 - with dent/crack on roof panel immediately to the consignee or make an exception on the delivery receipt or note the same in the
Warehouse Entry Slip (WES). None of these took place. To put it simply, the defendant-appellant
ICSU-412105-0 - rubber gasket on left side/door panel partly detached loosened.10 received the shipment in good order and condition and delivered the same to the consignee damaged.
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
In addition, petitioner claims that Marine Cargo Surveyor Ernesto Tolentino testified that he has no
obligor), it shall be presumed that the loss (or damage) was due to his fault, unless there is proof to
personal knowledge on whether the container vans were first stored in petitioner's warehouse prior
the contrary. No proof was proffered to rebut this legal presumption and the presumption of
to their delivery to the consignee. She likewise claims that after withdrawing the container vans from
negligence attached to a common carrier in case of loss or damage to the goods.13
the arrastre operator, her driver, Ricardo Nazarro, immediately delivered the cargo to SMC's
warehouse in Ermita, Manila, which is a mere thirty-minute drive from the Port Area where the cargo
came from. Thus, the damage to the cargo could not have taken place while these were in her Anent petitioner's insistence that the cargo could not have been damaged while in her custody as she
custody.11 immediately delivered the containers to SMC's compound, suffice it to say that 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
Contrary to petitioner's assertion, the Survey Report (Exh. H) of the Marine Cargo Surveyors indicates
ascertain the nature and characteristic of goods tendered for [transport] and that [it] exercise[d] due
that when the shipper transferred the cargo in question to the arrastre operator, these were covered
care in the handling [thereof]." Petitioner failed to do this.
by clean Equipment Interchange Report (EIR) and, when petitioner's 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. The Survey Report pertinently reads -- Nor is there basis to exempt petitioner from liability under Art. 1734(4), which provides --

Details of Discharge: 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:
Shipment, provided with our protective supervision was noted discharged ex vessel to dock of Pier
#13 South Harbor, Manila on 14 July 1990, containerized onto 30' x 20' secure metal vans, covered by ....
clean EIRs. Except for slight dents and paint scratches on side and roof panels, these containers were
deemed to have [been] received in good condition. (4) The character of the goods or defects in the packing or in the containers.

.... ....

Transfer/Delivery: 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
On July 23, 1990, shipment housed onto 30' x 20' cargo containers was [withdrawn] by Transorient nevertheless accepts the same without protest or exception notwithstanding such condition, he is not
Container Services, Inc. . . . without exception. relieved of liability for damage resulting therefrom.14 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
[The cargo] was finally delivered to the consignee's storage warehouse located at Tabacalera
that she is exempt from liability, the presumption of negligence as provided under Art. 173515 holds.
Compound, Romualdez Street, Ermita, Manila from July 23/25, 1990.12

WHEREFORE, the decision of the Court of Appeals, dated May 31, 2001, is AFFIRMED.1âwphi1.nêt
As found by the Court of Appeals:

SO ORDERED.
From the [Survey Report], it [is] clear that the shipment was discharged from the vessel to the
arrastre, Marina Port Services Inc., in good order and condition as evidenced by clean Equipment
Interchange Reports (EIRs). Had there been any damage to the shipment, there would have been a
report to that effect made by the arrastre operator. The cargoes were withdrawn by the
defendant-appellant from the arrastre still in good order and condition as the same were received by
the former without exception, that is, without any report of damage or loss. Surely, if the container
vans were deformed, cracked, distorted or dented, the defendant-appellant would report it
G.R. No. 147246 August 19, 2003 On September 14, 1990, a bidding was conducted to dispose of the damaged wheat retrieved and
ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, loaded on the three other barges.13 The total proceeds from the sale of the salvaged cargo
vs. was P201,379.75.14
COURT OF APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE, INC., respondents.
On the same date, September 14, 1990, consignee sent a claim letter to the petitioner, and another
On appeal is the Court of Appeals' May 11, 2000 Decision1 in CA-G.R. CV No. 49195 and February 21, letter dated September 18, 1990 to the private respondent for the value of the lost cargo.
2001 Resolution2 affirming with modification the April 6, 1994 Decision3 of the Regional Trial Court of
Manila which found petitioner liable to pay private respondent the amount of indemnity and On January 30, 1991, the private respondent indemnified the consignee in the amount
attorney's fees. of P4,104,654.22.15Thereafter, as subrogee, it sought recovery of said amount from the petitioner,
but to no avail.
First, the facts.
On July 3, 1991, the private respondent filed a complaint against the petitioner for recovery of the
On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at amount of indemnity, attorney's fees and cost of suit.16 Petitioner filed its answer with
US$423,192.354 was shipped by Marubeni American Corporation of Portland, Oregon on board the counterclaim.17
vessel M/V NEO CYMBIDIUM V-26 for delivery to the consignee, General Milling Corporation in Manila,
evidenced by Bill of Lading No. PTD/Man-4.5The shipment was insured by the private respondent The Regional Trial Court ruled in favor of the private respondent. The dispositive portion of its
Prudential Guarantee and Assurance, Inc. against loss or damage for P14,621,771.75 under Marine Decision states:
Cargo Risk Note RN 11859/90.6
WHEREFORE, premises considered, judgment is hereby rendered ordering defendant Asia Lighterage
On July 25, 1990, the carrying vessel arrived in Manila and the cargo was transferred to the custody of & Shipping, Inc. liable to pay plaintiff Prudential Guarantee & Assurance Co., Inc. the sum
the petitioner Asia Lighterage and Shipping, Inc. The petitioner was contracted by the consignee as of P4,104,654.22 with interest from the date complaint was filed on July 3, 1991 until fully satisfied
carrier to deliver the cargo to consignee's warehouse at Bo. Ugong, Pasig City. plus 10% of the amount awarded as and for attorney's fees. Defendant's counterclaim is hereby
DISMISSED. With costs against defendant.18
On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III, evidenced by
Lighterage Receipt No. 03647 for delivery to consignee. The cargo did not reach its destination. Petitioner appealed to the Court of Appeals insisting that it is not a common carrier. The appellate
court affirmed the decision of the trial court with modification. The dispositive portion of its decision
It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an reads:
incoming typhoon. On August 22, 1990, the petitioner proceeded to pull the barge to Engineering
Island off Baseco to seek shelter from the approaching typhoon. PSTSI III was tied down to other WHEREFORE, the decision appealed from is hereby AFFIRMED with modification in the sense that the
barges which arrived ahead of it while weathering out the storm that night. A few days after, the salvage value of P201,379.75 shall be deducted from the amount of P4,104,654.22. Costs against
barge developed a list because of a hole it sustained after hitting an unseen protuberance underneath appellant.
the water. The petitioner filed a Marine Protest on August 28, 1990.8 It likewise secured the services
of Gaspar Salvaging Corporation which refloated the barge.9 The hole was then patched with clay and
SO ORDERED.
cement.

Petitioner's Motion for Reconsideration dated June 3, 2000 was likewise denied by the appellate court
The barge was then towed to ISLOFF terminal before it finally headed towards the consignee's wharf
in a Resolution promulgated on February 21, 2001.
on September 5, 1990. Upon reaching the Sta. Mesa spillways, the barge again ran aground due to
strong current. To avoid the complete sinking of the barge, a portion of the goods was transferred to
three other barges.10 Hence, this petition. Petitioner submits the following errors allegedly committed by the appellate
court, viz:19
The next day, September 6, 1990, the towing bits of the barge broke. It sank completely, resulting in
the total loss of the remaining cargo.11 A second Marine Protest was filed on September 7, 1990.12 (1) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR
WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT HELD THAT PETITIONER IS A
COMMON CARRIER.
(2) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR others, but that of buying used bottles and scrap metal in Pangasinan and selling these items in
WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT AFFIRMED THE FINDING OF THE Manila.
LOWER COURT A QUO THAT ON THE BASIS OF THE PROVISIONS OF THE CIVIL CODE APPLICABLE TO
COMMON CARRIERS, "THE LOSS OF THE CARGO IS, THEREFORE, BORNE BY THE CARRIER IN ALL CASES We therefore hold that petitioner is a common carrier whether its carrying of goods is done on an
EXCEPT IN THE FIVE (5) CASES ENUMERATED." irregular rather than scheduled manner, and with an only limited clientele. A common carrier need
not have fixed and publicly known routes. Neither does it have to maintain terminals or issue tickets.
(3) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR
WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT EFFECTIVELY CONCLUDED THAT To be sure, petitioner fits the test of a common carrier as laid down in Bascos vs. Court of
PETITIONER FAILED TO EXERCISE DUE DILIGENCE AND/OR WAS NEGLIGENT IN ITS CARE AND CUSTODY Appeals.24 The test to determine a common carrier is "whether the given undertaking is a part of the
OF THE CONSIGNEE'S CARGO. 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."25 In the case at bar, the petitioner admitted
The issues to be resolved are: that it is engaged in the business of shipping and lighterage,26 offering its barges to the public, despite
its limited clientele for carrying or transporting goods by water for compensation.27
(1) Whether the petitioner is a common carrier; and,
On the second issue, we uphold the findings of the lower courts that petitioner failed to exercise
(2) Assuming the petitioner is a common carrier, whether it exercised extraordinary diligence in its extraordinary diligence in its care and custody of the consignee's goods.
care and custody of the consignee's cargo.
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods
On the first issue, we rule that petitioner is a common carrier. transported by them.28 They are presumed to have been at fault or to have acted negligently if the
goods are lost, destroyed or deteriorated.29 To overcome the presumption of negligence in the case of
loss, destruction or deterioration of the goods, the common carrier must prove that it exercised
Article 1732 of the Civil Code defines common carriers as persons, corporations, firms or associations
extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air,
enumerates the instances when the presumption of negligence does not attach:
for compensation, offering their services to the public.

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods,
Petitioner contends that it is not a common carrier but a private carrier. Allegedly, it has no fixed and
unless the same is due to any of the following causes only:
publicly known route, maintains no terminals, and issues no tickets. It points 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 services to the general public.20 (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

We disagree. (2) Act of the public enemy in war, whether international or civil;

In De Guzman vs. Court of Appeals,21 we held that the definition of common carriers in Article 1732 (3) Act or omission of the shipper or owner of the goods;
of the Civil Code makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity. We also did (4) The character of the goods or defects in the packing or in the containers;
not distinguish 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. Further, (5) Order or act of competent public authority.
we ruled that Article 1732 does not distinguish between a carrier offering its services to the general
public, and one who offers services or solicits business only from a narrow segment of the general
In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss of
population.
its cargo. Petitioner claims that this was caused by a typhoon, hence, it should not be held liable for
the loss of the cargo. However, petitioner failed to prove that the typhoon is the proximate and only
In the case at bar, the principal business of the petitioner is that of lighterage and drayage22 and it cause of the loss of the goods, and that it has exercised due diligence before, during and after the
offers its barges to the public for carrying or transporting goods by water for compensation. Petitioner occurrence of the typhoon to prevent or minimize the loss.30 The evidence show that, even before the
is clearly a common carrier. In De Guzman, supra,23 we considered private respondent Ernesto towing bits of the barge broke, it had already previously sustained damage when it hit a sunken object
Cendaña to be a common carrier even if his principal occupation was not the carriage of goods for while docked at the Engineering Island. It even suffered a hole. Clearly, this could not be solely
attributed to the typhoon. The partly-submerged vessel was refloated but its hole was patched with a - Since that time that the Barge was refloated, GMC (General Milling Corporation, the
only clay and cement. The patch work was merely a provisional remedy, not enough for the barge to consignee) as I have said was in a hurry for their goods to be delivered at their Wharf since they
sail safely. Thus, when petitioner persisted to proceed with the voyage, it recklessly exposed the cargo needed badly the wheat that was loaded in PSTSI-3. It was needed badly by the consignee.
to further damage. A portion of the cross-examination of Alfredo Cunanan, cargo-surveyor of
Tan-Gatue Adjustment Co., Inc., states: q - And this is the reason why you towed the Barge as you did?

CROSS-EXAMINATION BY ATTY. DONN LEE:31 a - Yes, sir.

xxx xxx xxx xxx xxx xxx

q - Can you tell us what else transpired after that incident? CROSS-EXAMINATION BY ATTY. IGNACIO:34

a - After the first accident, through the initiative of the barge owners, they tried to pull out xxx xxx xxx
the barge from the place of the accident, and bring it to the anchor terminal for safety, then after
deciding if the vessel is stabilized, they tried to pull it to the consignee's warehouse, now while on
q - And then from ISLOFF Terminal you proceeded to the premises of the GMC? Am I correct?
route another accident occurred, now this time the barge totally hitting something in the course.

a - The next day, in the morning, we hired for additional two (2) tugboats as I have stated.
q - You said there was another accident, can you tell the court the nature of the second
accident?
q - Despite of the threats of an incoming typhoon as you testified a while ago?
a - The sinking, sir.
a - It is already in an inner portion of Pasig River. The typhoon would be coming and it would
be dangerous if we are in the vicinity of Manila Bay.
q - Can you tell the nature . . . can you tell the court, if you know what caused the sinking?

q - But the fact is, the typhoon was incoming? Yes or no?
a - Mostly it was related to the first accident because there was already a whole (sic) on the
bottom part of the barge.
a - Yes.
xxx xxx xxx
q - And yet as a standard operating procedure of your Company, you have to secure a sort of
Certification to determine the weather condition, am I correct?
This is not all. Petitioner still headed to the consignee's wharf despite knowledge of an incoming
typhoon. During the time that the barge was heading towards the consignee's wharf on September 5,
1990, typhoon "Loleng" has already entered the Philippine area of responsibility.32 A part of the a - Yes, sir.
testimony of Robert Boyd, Cargo Operations Supervisor of the petitioner, reveals:
q - So, more or less, you had the knowledge of the incoming typhoon, right?
DIRECT-EXAMINATION BY ATTY. LEE:33
a - Yes, sir.
xxx xxx xxx
q - And yet you proceeded to the premises of the GMC?
q - Now, Mr. Witness, did it not occur to you it might be safer to just allow the Barge to lie
where she was instead of towing it? a - ISLOFF Terminal is far from Manila Bay and anytime even with the typhoon if you are
already inside the vicinity or inside Pasig entrance, it is a safe place to tow upstream.
Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force majeure to escape
liability for the loss sustained by the private respondent. Surely, meeting a typhoon head-on falls
short of due diligence required from a common carrier. More importantly, the officers/employees
themselves of petitioner admitted that when the towing bits of the vessel broke that caused its
sinking and the total loss of the cargo upon reaching the Pasig River, it was no longer affected by the
typhoon. The typhoon then is not the proximate cause of the loss of the cargo; a human factor, i.e.,
negligence had intervened.

IN VIEW THEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No.
49195 dated May 11, 2000 and its Resolution dated February 21, 2001 are hereby AFFIRMED. Costs
against petitioner.

SO ORDERED.
G.R. No. 138334 August 25, 2003 travel documents were given to petitioner two days ahead of the scheduled trip. Petitioner had only
ESTELA L. CRISOSTOMO, Petitioner, herself to blame for missing the flight, as she did not bother to read or confirm her flight schedule as
vs. printed on the ticket.
The Court of Appeals and CARAVAN TRAVEL & TOURS INTERNATIONAL, INC., Respondents.
Respondent explained that it can no longer reimburse the amount paid for "Jewels of Europe",
In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent Caravan Travel considering that the same had already been remitted to its principal in Singapore, Lotus Travel Ltd.,
and Tours International, Inc. to arrange and facilitate her booking, ticketing and accommodation in a which had already billed the same even if petitioner did not join the tour. Lotus’ European tour
tour dubbed "Jewels of Europe". The package tour included the countries of England, Holland, organizer, Insight International Tours Ltd., determines the cost of a package tour based on a minimum
Germany, Austria, Liechstenstein, Switzerland and France at a total cost of P74,322.70. Petitioner was number of projected participants. For this reason, it is accepted industry practice to disallow refund
given a 5% discount on the amount, which included airfare, and the booking fee was also waived for individuals who failed to take a booked tour.3
because petitioner’s niece, Meriam Menor, was respondent company’s ticketing manager.
Lastly, respondent maintained that the "British Pageant" was not a substitute for the package tour
Pursuant to said contract, Menor went to her aunt’s residence on June 12, 1991 – a Wednesday – to that petitioner missed. This tour was independently procured by petitioner after realizing that she
deliver petitioner’s travel documents and plane tickets. Petitioner, in turn, gave Menor the full made a mistake in missing her flight for "Jewels of Europe". Petitioner was allowed to make a partial
payment for the package tour. Menor then told her to be at the Ninoy Aquino International Airport payment of only US$300.00 for the second tour because her niece was then an employee of the travel
(NAIA) on Saturday, two hours before her flight on board British Airways. agency. Consequently, respondent prayed that petitioner be ordered to pay the balance of
P12,901.00 for the "British Pageant" package tour.
Without checking her travel documents, petitioner went to NAIA on Saturday, June 15, 1991, to take
the flight for the first leg of her journey from Manila to Hongkong. To petitioner’s dismay, she After due proceedings, the trial court rendered a decision,4 the dispositive part of which reads:
discovered that the flight she was supposed to take had already departed the previous day. She
learned that her plane ticket was for the flight scheduled on June 14, 1991. She thus called up Menor WHEREFORE, premises considered, judgment is hereby rendered as follows:
to complain.
1. Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty Three Thousand
Subsequently, Menor prevailed upon petitioner to take another tour – the "British Pageant" – which Nine Hundred Eighty Nine Pesos and Forty Three Centavos (P53,989.43) with legal interest thereon at
included England, Scotland and Wales in its itinerary. For this tour package, petitioner was asked the rate of twelve percent (12%) per annum starting January 16, 1992, the date when the complaint
anew to pay US$785.00 or P20,881.00 (at the then prevailing exchange rate of P26.60). She gave was filed;
respondent US$300 or P7,980.00 as partial payment and commenced the trip in July 1991.
2. Ordering the defendant to pay the plaintiff the amount of Five Thousand (P5,000.00) Pesos as and
Upon petitioner’s return from Europe, she demanded from respondent the reimbursement of for reasonable attorney’s fees;
P61,421.70, representing the difference between the sum she paid for "Jewels of Europe" and the
amount she owed respondent for the "British Pageant" tour. Despite several demands, respondent
3. Dismissing the defendant’s counterclaim, for lack of merit; and
company refused to reimburse the amount, contending that the same was
non-refundable.1 Petitioner was thus constrained to file a complaint against respondent for breach of
contract of carriage and damages, which was docketed as Civil Case No. 92-133 and raffled to Branch 4. With costs against the defendant.
59 of the Regional Trial Court of Makati City.
SO ORDERED.5
In her complaint, petitioner alleged that her failure to join "Jewels of Europe" was due to
2

respondent’s fault since it did not clearly indicate the departure date on the plane ticket. Respondent The trial court held that respondent was negligent in erroneously advising petitioner of her departure
was also negligent in informing her of the wrong flight schedule through its employee Menor. She date through its employee, Menor, who was not presented as witness to rebut petitioner’s testimony.
insisted that the "British Pageant" was merely a substitute for the "Jewels of Europe" tour, such that However, petitioner should have verified the exact date and time of departure by looking at her ticket
the cost of the former should be properly set-off against the sum paid for the latter. and should have simply not relied on Menor’s verbal representation. The trial court thus declared that
petitioner was guilty of contributory negligence and accordingly, deducted 10% from the amount
For its part, respondent company, through its Operations Manager, Concepcion Chipeco, denied being claimed as refund.
responsibility for petitioner’s failure to join the first tour. Chipeco insisted that petitioner was
informed of the correct departure date, which was clearly and legibly printed on the plane ticket. The
Respondent appealed to the Court of Appeals, which likewise found both parties to be at fault. Petitioner contends that respondent did not observe the standard of care required of a common
However, the appellate court held that petitioner is more negligent than respondent because as a carrier when it informed her wrongly of the flight schedule. She could not be deemed more negligent
lawyer and well-traveled person, she should have known better than to simply rely on what was told than respondent since the latter is required by law to exercise extraordinary diligence in the
to her. This being so, she is not entitled to any form of damages. Petitioner also forfeited her right to fulfillment of its obligation. If she were negligent at all, the same is merely contributory and not the
the "Jewels of Europe" tour and must therefore pay respondent the balance of the price for the proximate cause of the damage she suffered. Her loss could only be attributed to respondent as it was
"British Pageant" tour. The dispositive portion of the judgment appealed from reads as follows: the direct consequence of its employee’s gross negligence.

WHEREFORE, premises considered, the decision of the Regional Trial Court dated October 26, 1995 is Petitioner’s contention has no merit.
hereby REVERSED and SET ASIDE. A new judgment is hereby ENTERED requiring the plaintiff-appellee
to pay to the defendant-appellant the amount of P12,901.00, representing the balance of the price of By definition, a contract of carriage or transportation is one whereby a certain person or association
the British Pageant Package Tour, the same to earn legal interest at the rate of SIX PERCENT (6%) per of persons obligate themselves to transport persons, things, or news from one place to another for a
annum, to be computed from the time the counterclaim was filed until the finality of this decision. fixed price.9 Such person or association of persons are regarded as carriers and are classified as
After this decision becomes final and executory, the rate of TWELVE PERCENT (12%) interest per private or special carriers and common or public carriers.10 A common carrier is defined under Article
annum shall be additionally imposed on the total obligation until payment thereof is satisfied. The 1732 of the Civil Code as persons, corporations, firms or associations engaged in the business of
award of attorney’s fees is DELETED. Costs against the plaintiff-appellee. carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering
their services to the public.
SO ORDERED.6
It is obvious from the above definition that respondent is not an entity engaged in the business of
Upon denial of her motion for reconsideration,7 petitioner filed the instant petition under Rule 45 on transporting either passengers or goods and is therefore, neither a private nor a common carrier.
the following grounds: Respondent did not undertake to transport petitioner from one place to another since its covenant
with its customers is simply to make travel arrangements in their behalf. Respondent’s services as a
I travel agency include procuring tickets and facilitating travel permits or visas as well as booking
customers for tours.
It is respectfully submitted that the Honorable Court of Appeals committed a reversible error in
reversing and setting aside the decision of the trial court by ruling that the petitioner is not entitled to While petitioner concededly bought her plane ticket through the efforts of respondent company, this
a refund of the cost of unavailed "Jewels of Europe" tour she being equally, if not more, negligent does not mean that the latter ipso facto is a common carrier. At most, respondent acted merely as an
than the private respondent, for in the contract of carriage the common carrier is obliged to observe agent of the airline, with whom petitioner ultimately contracted for her carriage to Europe.
utmost care and extra-ordinary diligence which is higher in degree than the ordinary diligence Respondent’s obligation to petitioner in this regard was simply to see to it that petitioner was
required of the passenger. Thus, even if the petitioner and private respondent were both negligent, properly booked with the airline for the appointed date and time. Her transport to the place of
the petitioner cannot be considered to be equally, or worse, more guilty than the private respondent. destination, meanwhile, pertained directly to the airline.
At best, petitioner’s negligence is only contributory while the private respondent [is guilty] of gross
negligence making the principle of pari delicto inapplicable in the case; The object of petitioner’s contractual relation with respondent is the latter’s service of arranging and
facilitating petitioner’s booking, ticketing and accommodation in the package tour. In contrast, the
II object of a contract of carriage is the transportation of passengers or goods. It is in this sense that the
contract between the parties in this case was an ordinary one for services and not one of carriage.
Petitioner’s submission is premised on a wrong assumption.
The Honorable Court of Appeals also erred in not ruling that the "Jewels of Europe" tour was not
indivisible and the amount paid therefor refundable;
The nature of the contractual relation between petitioner and respondent is determinative of the
degree of care required in the performance of the latter’s obligation under the contract. For reasons
III
of public policy, a common carrier in a contract of carriage is bound by law to carry passengers as far
as human care and foresight can provide using the utmost diligence of very cautious persons and with
The Honorable Court erred in not granting to the petitioner the consequential damages due her as a due regard for all the circumstances.11 As earlier stated, however, respondent is not a common carrier
result of breach of contract of carriage.8 but a travel agency. It is thus not bound under the law to observe extraordinary diligence in the
performance of its obligation, as petitioner claims.
Since the contract between the parties is an ordinary one for services, the standard of care required clearly reflected the departure date and time, contrary to petitioner’s contention. The travel
of respondent is that of a good father of a family under Article 1173 of the Civil Code.12 This connotes documents, consisting of the tour itinerary, vouchers and instructions, were likewise delivered to
reasonable care consistent with that which an ordinarily prudent person would have observed when petitioner two days prior to the trip. Respondent also properly booked petitioner for the tour,
confronted with a similar situation. The test to determine whether negligence attended the prepared the necessary documents and procured the plane tickets. It arranged petitioner’s hotel
performance of an obligation is: did the defendant in doing the alleged negligent act use that accommodation as well as food, land transfers and sightseeing excursions, in accordance with its
reasonable care and caution which an ordinarily prudent person would have used in the same avowed undertaking.
situation? If not, then he is guilty of negligence.13
Therefore, it is clear that respondent performed its prestation under the contract as well as
In the case at bar, the lower court found Menor negligent when she allegedly informed petitioner of everything else that was essential to book petitioner for the tour. Had petitioner exercised due
the wrong day of departure. Petitioner’s testimony was accepted as indubitable evidence of Menor’s diligence in the conduct of her affairs, there would have been no reason for her to miss the flight.
alleged negligent act since respondent did not call Menor to the witness stand to refute the allegation. Needless to say, after the travel papers were delivered to petitioner, it became incumbent upon her
The lower court applied the presumption under Rule 131, Section 3 (e)14 of the Rules of Court that to take ordinary care of her concerns. This undoubtedly would require that she at least read the
evidence willfully suppressed would be adverse if produced and thus considered petitioner’s documents in order to assure herself of the important details regarding the trip.
uncontradicted testimony to be sufficient proof of her claim.
The negligence of the obligor in the performance of the obligation renders him liable for damages for
On the other hand, respondent has consistently denied that Menor was negligent and maintains that the resulting loss suffered by the obligee. Fault or negligence of the obligor consists in his failure to
petitioner’s assertion is belied by the evidence on record. The date and time of departure was legibly exercise due care and prudence in the performance of the obligation as the nature of the obligation
written on the plane ticket and the travel papers were delivered two days in advance precisely so that so demands.20 There is no fixed standard of diligence applicable to each and every contractual
petitioner could prepare for the trip. It performed all its obligations to enable petitioner to join the obligation and each case must be determined upon its particular facts. The degree of diligence
tour and exercised due diligence in its dealings with the latter. required depends on the circumstances of the specific obligation and whether one has been negligent
is a question of fact that is to be determined after taking into account the particulars of each
We agree with respondent. case.21 1âwphi1

Respondent’s failure to present Menor as witness to rebut petitioner’s testimony could not give rise The lower court declared that respondent’s employee was negligent. This factual finding, however, is
to an inference unfavorable to the former. Menor was already working in France at the time of the not supported by the evidence on record. While factual findings below are generally conclusive upon
filing of the complaint,15 thereby making it physically impossible for respondent to present her as a this court, the rule is subject to certain exceptions, as when the trial court overlooked, misunderstood,
witness. Then too, even if it were possible for respondent to secure Menor’s testimony, the or misapplied some facts or circumstances of weight and substance which will affect the result of the
presumption under Rule 131, Section 3(e) would still not apply. The opportunity and possibility for case.22
obtaining Menor’s testimony belonged to both parties, considering that Menor was not just
respondent’s employee, but also petitioner’s niece. It was thus error for the lower court to invoke the In the case at bar, the evidence on record shows that respondent company performed its duty
presumption that respondent willfully suppressed evidence under Rule 131, Section 3(e). Said diligently and did not commit any contractual breach. Hence, petitioner cannot recover and must bear
presumption would logically be inoperative if the evidence is not intentionally omitted but is simply her own damage.
unavailable, or when the same could have been obtained by both parties.16
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of Appeals in
In sum, we do not agree with the finding of the lower court that Menor’s negligence concurred with CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner is ordered to pay respondent the amount
the negligence of petitioner and resultantly caused damage to the latter. Menor’s negligence was not of P12,901.00 representing the balance of the price of the British Pageant Package Tour, with legal
sufficiently proved, considering that the only evidence presented on this score was petitioner’s interest thereon at the rate of 6% per annum, to be computed from the time the counterclaim was
uncorroborated narration of the events. It is well-settled that the party alleging a fact has the burden filed until the finality of this Decision. After this Decision becomes final and executory, the rate of 12%
of proving it and a mere allegation cannot take the place of evidence.17 If the plaintiff, upon whom per annum shall be imposed until the obligation is fully settled, this interim period being deemed to
rests the burden of proving his cause of action, fails to show in a satisfactory manner facts upon which be by then an equivalent to a forbearance of credit.23
he bases his claim, the defendant is under no obligation to prove his exception or defense.18
SO ORDERED.
Contrary to petitioner’s claim, the evidence on record shows that respondent exercised due diligence
in performing its obligations under the contract and followed standard procedure in rendering its Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.
services to petitioner. As correctly observed by the lower court, the plane ticket19 issued to petitioner
G.R. No. 149038 April 9, 2003 did, respondent would not be exempt from liability because its employees, particularly the tugmaster,
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, petitioner, have failed to exercise due diligence to prevent or minimize the loss.
vs.
PKS SHIPPING COMPANY, respondent. PKS Shipping, in its comment, urges that the petition should be denied because what Philamgen seeks
is not a review on points or errors of law but a review of the undisputed factual findings of the RTC
The petition before the Court seeks a review of the decision of the Court of Appeals in C.A. G.R. CV No. and the appellate court. In any event, PKS Shipping points out, the findings and conclusions of both
56470, promulgated on 25 June 2001, which has affirmed in toto the judgment of the Regional Trial courts find support from the evidence and applicable jurisprudence.
Court (RTC), Branch 65, of Makati, dismissing the complaint for damages filed by petitioner insurance
corporation against respondent shipping company. The determination of possible liability on the part of PKS Shipping boils down to the question of
whether it is a private carrier or a common carrier and, in either case, to the other question of
Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping whether or not it has observed the proper diligence (ordinary, if a private carrier, or extraordinary, if a
Company (PKS Shipping) for the shipment to Tacloban City of seventy-five thousand (75,000) bags of common carrier) required of it given the circumstances.
cement worth Three Million Three Hundred Seventy-Five Thousand Pesos (P3,375,000.00). DUMC
insured the goods for its full value with petitioner Philippine American General Insurance Company The findings of fact made by the Court of Appeals, particularly when such findings are consistent with
(Philamgen). The goods were loaded aboard the dumb barge Limar I belonging to PKS Shipping. On those of the trial court, may not at liberty be reviewed by this Court in a petition for review under
the evening of 22 December 1988, about nine o’clock, while Limar Iwas being towed by respondent’s Rule 45 of the Rules of Court.1The conclusions derived from those factual findings, however, are not
tugboat, MT Iron Eagle, the barge sank a couple of miles off the coast of Dumagasa Point, in necessarily just matters of fact as when they are so linked to, or inextricably intertwined with, a
Zamboanga del Sur, bringing down with it the entire cargo of 75,000 bags of cement. requisite appreciation of the applicable law. In such instances, the conclusions made could well be
raised as being appropriate issues in a petition for review before this Court. Thus, an issue whether a
DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly carrier is private or common on the basis of the facts found by a trial court or the appellate court can
made payment; it then sought reimbursement from PKS Shipping of the sum paid to DUMC but the be a valid and reviewable question of law.
shipping company refused to pay, prompting Philamgen to file suit against PKS Shipping with the
Makati RTC. The Civil Code defines "common carriers" in the following terms:

The RTC dismissed the complaint after finding that the total loss of the cargo could have been caused "Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
either by a fortuitous event, in which case the ship owner was not liable, or through the negligence of business of carrying or transporting passengers or goods or both, by land, water, or air for
the captain and crew of the vessel and that, under Article 587 of the Code of Commerce adopting the compensation, offering their services to the public."
"Limited Liability Rule," the ship owner could free itself of liability by abandoning, as it apparently so
did, the vessel with all her equipment and earned freightage.
Complementary to the codal definition is Section 13, paragraph (b), of the Public Service Act; it
defines "public service" to be –
Philamgen interposed an appeal to the Court of Appeals which affirmed in toto the decision of the
trial court. The appellate court ruled that evidence to establish that PKS Shipping was a common
"x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for
carrier at the time it undertook to transport the bags of cement was wanting because the peculiar
hire or compensation, with general or limited clientele, whether permanent, occasional or accidental,
method of the shipping company’s carrying goods for others was not generally held out as a business
and done for general business purposes, any common carrier, railroad, street railway, subway motor
but as a casual occupation. It then concluded that PKS Shipping, not being a common carrier, was not
vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its
expected to observe the stringent extraordinary diligence required of common carriers in the care of
classification, freight or carrier service of any class, express service, steamboat, or steamship, or
goods. The appellate court, moreover, found that the loss of the goods was sufficiently established as
steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or
having been due to fortuitous event, negating any liability on the part of PKS Shipping to the shipper.
freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage
In the instant appeal, Philamgen contends that the appellate court has committed a patent error in system, wire or wireless communication systems, wire or wireless broadcasting stations and other
ruling that PKS Shipping is not a common carrier and that it is not liable for the loss of the subject similar public services. x x x. (Underscoring supplied)."
cargo. The fact that respondent has a limited clientele, petitioner argues, does not militate against
respondent’s being a common carrier and that the only way by which such carrier can be held exempt
The prevailing doctrine on the question is that enunciated in the leading case of De Guzman vs. Court
for the loss of the cargo would be if the loss were caused by natural disaster or calamity. Petitioner
of Appeals.2Applying Article 1732 of the Code, in conjunction with Section 13(b) of the Public Service
avers that typhoon "APIANG" has not entered the Philippine area of responsibility and that, even if it
Act, this Court has held:
"The above article makes no distinction between one whose principal business activity is the carrying (5) Order or act of competent public authority.8
of persons or goods or both, and one who does such carrying only as an ancillary activity (in local
idiom, as `a sideline’). Article 1732 also carefully avoids making any distinction between a person or The appellate court ruled, gathered from the testimonies and sworn marine protests of the respective
enterprise offering transportation service on a regular or scheduled basis and one offering such vessel masters of Limar I and MT Iron Eagle, that there was no way by which the barge’s or the
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between tugboat’s crew could have prevented the sinking of Limar I. The vessel was suddenly tossed by waves
a carrier offering its services to the `general public,’ i.e., the general community or population, and of extraordinary height of six (6) to eight (8) feet and buffeted by strong winds of 1.5 knots resulting in
one who offers services or solicits business only from a narrow segment of the general population. the entry of water into the barge’s hatches. The official Certificate of Inspection of the barge issued by
We think that Article 1732 deliberately refrained from making such distinctions. the Philippine Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness
of Limar I and should strengthen the factual findings of the appellate court.
"So understood, the concept of `common carrier’ under Article 1732 may be seen to coincide neatly
with the notion of `public service,’ under the Public Service Act (Commonwealth Act No. 1416, as Findings of fact of the Court of Appeals generally conclude this Court; none of the recognized
amended) which at least partially supplements the law on common carriers set forth in the Civil exceptions from the rule - (1) when the factual findings of the Court of Appeals and the trial court are
Code." contradictory; (2) when the conclusion is a finding grounded entirely on speculation, surmises, or
conjectures; (3) when the inference made by the Court of Appeals from its findings of fact is
Much of the distinction between a "common or public carrier" and a "private or special carrier" lies in manifestly mistaken, absurd, or impossible; (4) when there is a grave abuse of discretion in the
the character of the business, such that if the undertaking is an isolated transaction, not a part of the appreciation of facts; (5) when the appellate court, in making its findings, went beyond the issues of
business or occupation, and the carrier does not hold itself out to carry the goods for the general the case and such findings are contrary to the admissions of both appellant and appellee; (6) when
public or to a limited clientele, although involving the carriage of goods for a fee,3 the person or the judgment of the Court of Appeals is premised on a misapprehension of facts; (7) when the Court
corporation providing such service could very well be just a private carrier. A typical case is that of a of Appeals failed to notice certain relevant facts which, if properly considered, would justify a
charter party which includes both the vessel and its crew, such as in a bareboat or demise, where the different conclusion; (8) when the findings of fact are themselves conflicting; (9) when the findings of
charterer obtains the use and service of all or some part of a ship for a period of time or a voyage or fact are conclusions without citation of the specific evidence on which they are based; and (10) when
voyages4 and gets the control of the vessel and its crew.5 Contrary to the conclusion made by the the findings of fact of the Court of Appeals are premised on the absence of evidence but such findings
appellate court, its factual findings indicate that PKS Shipping has engaged itself in the business of are contradicted by the evidence on record – would appear to be clearly extant in this instance.
carrying goods for others, although for a limited clientele, undertaking to carry such goods for a fee.
The regularity of its activities in this area indicates more than just a casual activity on its part.6 Neither All given then, the appellate court did not err in its judgment absolving PKS Shipping from liability for
can the concept of a common carrier change merely because individual contracts are executed or the loss of the DUMC cargo.
entered into with patrons of the carrier. Such restrictive interpretation would make it easy for a
common carrier to escape liability by the simple expedient of entering into those distinct agreements
WHEREFORE, the petition is DENIED. No costs.
with clients.

SO ORDERED.
Addressing now the issue of whether or not PKS Shipping has exercised the proper diligence
demanded of common carriers, Article 1733 of the Civil Code requires common carriers to observe
extraordinary diligence in the vigilance over the goods they carry. In case of loss, destruction or
deterioration of goods, common carriers are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on them.7 The provisions of Article 1733,
notwithstanding, common carriers are exempt from liability for loss, destruction, or deterioration of
the goods due to any of the following causes:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers; and
G.R. No. 125948 December 29, 1998 On March 8, 1994, the respondent City Treasurer denied the protest contending that petitioner
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, cannot be considered engaged in transportation business, thus it cannot claim exemption under
vs. Section 133 (j) of the Local Government Code.5
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C.
ARELLANO, in her official capacity as City Treasurer of Batangas, respondents. On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas City a complaint6 for tax
refund with prayer for writ of preliminary injunction against respondents City of Batangas and
This petition for review on certiorari assails the Decision of the Court of Appeals dated November 29, Adoracion Arellano in her capacity as City Treasurer. In its complaint, petitioner alleged, inter alia,
1995, in CA-G.R. SP No. 36801, affirming the decision of the Regional Trial Court of Batangas City, that: (1) the imposition and collection of the business tax on its gross receipts violates Section 133 of
Branch 84, in Civil Case No. 4293, which dismissed petitioners' complaint for a business tax refund the Local Government Code; (2) the authority of cities to impose and collect a tax on the gross
imposed by the City of Batangas. receipts of "contractors and independent contractors" under Sec. 141 (e) and 151 does not include
the authority to collect such taxes on transportation contractors for, as defined under Sec. 131 (h),
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, the term "contractors" excludes transportation contractors; and, (3) the City Treasurer illegally and
install and operate oil pipelines. The original pipeline concession was granted in 19671 and renewed erroneously imposed and collected the said tax, thus meriting the immediate refund of the tax paid.7
by the Energy Regulatory Board in 1992. 2
Traversing the complaint, the respondents argued that petitioner cannot be exempt from taxes under
Sometime in January 1995, petitioner applied for a mayor's permit with the Office of the Mayor of Section 133 (j) of the Local Government Code as said exemption applies only to "transportation
Batangas City. However, before the mayor's permit could be issued, the respondent City Treasurer contractors and persons engaged in the transportation by hire and common carriers by air, land and
required petitioner to pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to water." Respondents assert that pipelines are not included in the term "common carrier" which refers
the Local Government Code3. The respondent City Treasurer assessed a business tax on the petitioner solely to ordinary carriers such as trucks, trains, ships and the like. Respondents further posit that the
amounting to P956,076.04 payable in four installments based on the gross receipts for products term "common carrier" under the said code pertains to the mode or manner by which a product is
pumped at GPS-1 for the fiscal year 1993 which amounted to P181,681,151.00. In order not to delivered to its destination.8
hamper its operations, petitioner paid the tax under protest in the amount of P239,019.01 for the first
quarter of 1993. On October 3, 1994, the trial court rendered a decision dismissing the complaint, ruling in this wise:

On January 20, 1994, petitioner filed a letter-protest addressed to the respondent City Treasurer, the . . . Plaintiff is either a contractor or other independent contractor.
pertinent portion of which reads:
. . . the exemption to tax claimed by the plaintiff has become unclear. It is a rule that tax exemptions
Please note that our Company (FPIC) is a pipeline operator with a government concession granted are to be strictly construed against the taxpayer, taxes being the lifeblood of the government.
under the Petroleum Act. It is engaged in the business of transporting petroleum products from the Exemption may therefore be granted only by clear and unequivocal provisions of law.
Batangas refineries, via pipeline, to Sucat and JTF Pandacan Terminals. As such, our Company is
exempt from paying tax on gross receipts under Section 133 of the Local Government Code of Plaintiff claims that it is a grantee of a pipeline concession under Republic Act 387. (Exhibit A) whose
1991 . . . . concession was lately renewed by the Energy Regulatory Board (Exhibit B). Yet neither said law nor
the deed of concession grant any tax exemption upon the plaintiff.
Moreover, Transportation contractors are not included in the enumeration of contractors under
Section 131, Paragraph (h) of the Local Government Code. Therefore, the authority to impose tax "on Even the Local Government Code imposes a tax on franchise holders under Sec. 137 of the Local Tax
contractors and other independent contractors" under Section 143, Paragraph (e) of the Local Code. Such being the situation obtained in this case (exemption being unclear and equivocal) resort to
Government Code does not include the power to levy on transportation contractors. distinctions or other considerations may be of help:

The imposition and assessment cannot be categorized as a mere fee authorized under Section 147 of 1. That the exemption granted under Sec. 133 (j) encompasses only common carriers so as not to
the Local Government Code. The said section limits the imposition of fees and charges on business to overburden the riding public or commuters with taxes. Plaintiff is not a common carrier, but a special
such amounts as may be commensurate to the cost of regulation, inspection, and licensing. Hence, carrier extending its services and facilities to a single specific or "special customer" under a "special
assuming arguendo that FPIC is liable for the license fee, the imposition thereof based on gross contract."
receipts is violative of the aforecited provision. The amount of P956,076.04 (P239,019.01 per quarter)
is not commensurate to the cost of regulation, inspection and licensing. The fee is already a revenue
2. The Local Tax Code of 1992 was basically enacted to give more and effective local autonomy to
raising measure, and not a mere regulatory imposition.4
local governments than the previous enactments, to make them economically and financially viable to
serve the people and discharge their functions with a concomitant obligation to accept certain who choose to employ its services, and transports the goods by land and for compensation. The fact
devolution of powers, . . . So, consistent with this policy even franchise grantees are taxed (Sec. 137) that petitioner has a limited clientele does not exclude it from the definition of a common carrier.
and contractors are also taxed under Sec. 143 (e) and 151 of the Code.9 In De Guzman vs. Court of Appeals 16we ruled that:

Petitioner assailed the aforesaid decision before this Court via a petition for review. On February 27, The above article (Art. 1732, Civil Code) makes no distinction between one whose principal business
1995, we referred the case to the respondent Court of Appeals for consideration and activity is the carrying of persons or goods or both, and one who does such carrying only as an
adjudication. 10 On November 29, 1995, the respondent court rendered a decision 11 affirming the ancillary activity (in local idiom, as a "sideline"). Article 1732 . . . avoids making any distinction
trial court's dismissal of petitioner's complaint. Petitioner's motion for reconsideration was denied on between a person or enterprise offering transportation service on a regular or scheduled basis and
July 18, 1996. 12 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
Hence, this petition. At first, the petition was denied due course in a Resolution dated November 11, or population, and one who offers services or solicits business only from a narrow segment of the
1996. 13Petitioner moved for a reconsideration which was granted by this Court in a Resolution 14 of general population. We think that Article 1877 deliberately refrained from making such distinctions.
January 22, 1997. Thus, the petition was reinstated.
So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly
Petitioner claims that the respondent Court of Appeals erred in holding that (1) the petitioner is not a with the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as
common carrier or a transportation contractor, and (2) the exemption sought for by petitioner is not amended) which at least partially supplements the law on common carriers set forth in the Civil Code.
clear under the law. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:

There is merit in the petition. every person that now or hereafter may own, operate. manage, or control in the Philippines, for hire
or compensation, with general or limited clientele, whether permanent, occasional or accidental, and
done for general business purposes, any common carrier, railroad, street railway, traction railway,
A "common carrier" may be defined, broadly, as one who holds himself out to the public as engaged
subway motor vehicle, either for freight or passenger, or both, with or without fixed route and
in the business of transporting persons or property from place to place, for compensation, offering his
whatever may be its classification, freight or carrier service of any class, express service, steamboat,
services to the public generally.
or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or
freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,
Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association irrigation system gas, electric light heat and power, water supply andpower petroleum, sewerage
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, system, wire or wireless communications systems, wire or wireless broadcasting stations and other
for compensation, offering their services to the public." similar public services. (Emphasis Supplied)

The test for determining whether a party is a common carrier of goods is: 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
1. He must be engaged in the business of carrying goods for others as a public employment, and must vehicles or vessels either by land, sea or water, is erroneous.
hold himself out as ready to engage in the transportation of goods for person generally as a business
and not as a casual occupation; 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
2. He must undertake to carry goods of the kind to which his business is confined; that the transportation of the passengers or goods should be by motor vehicle. In fact, in the United
States, oil pipe line operators are considered common carriers. 17
3. He must undertake to carry by the method by which his business is conducted and over his
established roads; and Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common
carrier." Thus, Article 86 thereof provides that:
4. The transportation must be for hire. 15
Art. 86. Pipe line concessionaire as common carrier. — A pipe line shall have the preferential right to
Based on the above definitions and requirements, there is no doubt that petitioner is a common utilize installations for the transportation of petroleum owned by him, but is obligated to utilize the
carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for remaining transportation capacity pro rata for the transportation of such other petroleum as may be
hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons
offered by others for transport, and to charge without discrimination such rates as may have been Still on page 95, subparagraph 5, on taxes on the business of transportation. This appears to be one of
approved by the Secretary of Agriculture and Natural Resources. those being deemed to be exempted from the taxing powers of the local government units. May we
know the reason why the transportation business is being excluded from the taxing powers of the
Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of Article 7 local government units?
thereof provides:
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in Section 121 (now Sec. 131), line 16,
that everything relating to the exploration for and exploitation of petroleum . . . and everything paragraph 5. It states that local government units may not impose taxes on the business of
relating to the manufacture, refining, storage, or transportation by special methods of petroleum, is transportation, except as otherwise provided in this code.
hereby declared to be a public utility. (Emphasis Supplied)
Now, Mr. Speaker, if the Gentleman would care to go to page 98 of Book II, one can see there that
The Bureau of Internal Revenue likewise considers the petitioner a "common carrier." In BIR Ruling No. provinces have the power to impose a tax on business enjoying a franchise at the rate of not more
069-83, it declared: than one-half of 1 percent of the gross annual receipts. So, transportation contractors who are
enjoying a franchise would be subject to tax by the province. That is the exception, Mr. Speaker.
. . . since [petitioner] is a pipeline concessionaire that is engaged only in transporting petroleum
products, it is considered a common carrier under Republic Act No. 387 . . . . Such being the case, it is What we want to guard against here, Mr. Speaker, is the imposition of taxes by local government
not subject to withholding tax prescribed by Revenue Regulations No. 13-78, as amended. units on the carrier business. Local government units may impose taxes on top of what is already
being imposed by the National Internal Revenue Code which is the so-called "common carriers tax."
We do not want a duplication of this tax, so we just provided for an exception under Section 125 [now
From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and, therefore,
Sec. 137] that a province may impose this tax at a specific rate.
exempt from the business tax as provided for in Section 133 (j), of the Local Government Code, to wit:

MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . . 18
Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. — Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays
shall not extend to the levy of the following: It is clear that the legislative intent in excluding from the taxing power of the local government unit
the imposition of business tax against common carriers is to prevent a duplication of the so-called
"common carrier's tax."
xxx xxx xxx

Petitioner is already paying three (3%) percent common carrier's tax on its gross sales/earnings under
(j) Taxes on the gross receipts of transportation contractors and persons engaged in the
the National Internal Revenue Code. 19 To tax petitioner again on its gross receipts in its
transportation of passengers or freight by hire and common carriers by air, land or water, except as
transportation of petroleum business would defeat the purpose of the Local Government Code.
provided in this Code.

WHEREFORE, the petition is hereby GRANTED. The decision of the respondent Court of Appeals dated
The deliberations conducted in the House of Representatives on the Local Government Code of 1991
November 29, 1995 in CA-G.R. SP No. 36801 is REVERSED and SET ASIDE.
are illuminating:

SO ORDERED.
MR. AQUINO (A). Thank you, Mr. Speaker.

Mr. Speaker, we would like to proceed to page 95, line

1. It states: "SEC. 121 [now Sec. 131]. Common Limitations on the Taxing Powers of Local Government
Units." . . .

MR. AQUINO (A.). Thank you Mr. Speaker.


The Facts
[G.R. No. 112287. December 12, 1997]
NATIONAL STEEL CORPORATION, petitioner, vs. COURT OF APPEALS AND VLASONS SHIPPING,
INC., respondents. The MV Vlasons I is a vessel which renders tramping service and, as such, does not transport
cargo or shipment for the general public. Its services are available only to specific persons who enter
[G.R. No. 112350. December 12, 1997] into a special contract of charter party with its owner. It is undisputed that the ship is a private
VLASONS SHIPPING, INC., petitioner, vs. COURT OF APPEALS AND NATIONAL STEEL carrier. And it is in this capacity that its owner, Vlasons Shipping, Inc., entered into a contract of
CORPORATION, respondents. affreightment or contract of voyage charter hire with National Steel Corporation.

The Court finds occasion to apply the rules on the seaworthiness of a private carrier, its owners The facts as found by Respondent Court of Appeals are as follows:
responsibility for damage to the cargo and its liability for demurrage and attorneys fees. The Court
also reiterates the well-known rule that findings of facts of trial courts, when affirmed by the Court of (1) On July 17, 1974, plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons
Appeals, are binding on this Court. Shipping, Inc. (VSI) as Owner, entered into a Contract of Voyage Charter Hire (Exhibit B; also Exhibit 1)
whereby NSC hired VSIs vessel, the MV VLASONS I to make one (1) voyage to load steel products at
Iligan City and discharge them at North Harbor, Manila, under the following terms and conditions, viz:
The Case
1. x x x x x x.

Before us are two separate petitions for review filed by National Steel Corporation (NSC) and 2. Cargo: Full cargo of steel products of not less than 2,500 MT, 10% more or less at Masters option.
Vlasons Shipping, Inc. (VSI), both of which assail the August 12, 1993 Decision of the Court of
Appeals. [1] The Court of Appeals modified the decision of the Regional Trial Court of Pasig, Metro
3. x x x x x x
Manila, Branch 163 in Civil Case No. 23317. The RTC disposed as follows:

4. Freight/Payment: P30.00 /metric ton, FIOST basis. Payment upon presentation of Bill of Lading
WHEREFORE, judgment is hereby rendered in favor of defendant and against the plaintiff dismissing
within fifteen (15) days.
the complaint with cost against plaintiff, and ordering plaintiff to pay the defendant on the
counterclaim as follows:
5. Laydays/Cancelling: July 26, 1974/Aug. 5, 1974.
1. The sum of P75,000.00 as unpaid freight and P88,000.00 as demurrage with interest at
the legal rate on both amounts from April 7, 1976 until the same shall have been fully 6. Loading/Discharging Rate: 750 tons per WWDSHINC. (Weather Working Day of 24 consecutive
paid; hours, Sundays and Holidays Included).

2. Attorneys fees and expenses of litigation in the sum of P100,000.00; and 7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day.
3. Cost of suit.
8. x x x x x x
SO ORDERED. [2]

9. Cargo Insurance: Charterers and/or Shippers must insure the cargoes. Shipowners not responsible
On the other hand, the Court of Appeals ruled: for losses/damages except on proven willful negligence of the officers of the vessel.

WHEREFORE, premises considered, the decision appealed from is modified by reducing the award for 10. Other terms:(a) All terms/conditions of NONYAZAI C/P [sic] or other internationally recognized
demurrage to P44,000.00 and deleting the award for attorneys fees and expenses of litigation. Except Charter Party Agreement shall form part of this Contract.
as thus modified, the decision is AFFIRMED. There is no pronouncement as to costs.
xxxxxxxxx
SO ORDERED. [3]
The terms F.I.O.S.T. which is used in the shipping business is a standard provision in the NANYOZAI
Charter Party which stands for Freight In and Out including Stevedoring and Trading, which means
that the handling, loading and unloading of the cargoes are the responsibility of the Charterer. Under (Exhibit I) which in part, states, The analysis of bad order samples of packing materials xxx shows that
Paragraph 5 of the NANYOZAI Charter Party, it states, Charterers to load, stow and discharge the wetting was caused by contact with SEA WATER.
cargo free of risk and expenses to owners. x x x (Underscoring supplied).
(5) On September 6, 1974, on the basis of the aforesaid Report No. 1770, plaintiff filed with the
Under paragraph 10 thereof, it is provided that (o)wners shall, before and at the beginning of the defendant its claim for damages suffered due to the downgrading of the damaged tinplates in the
voyage, exercise due diligence to make the vessel seaworthy and properly manned, equipped and amount of P941,145.18. Then on October 3, 1974, plaintiff formally demanded payment of said claim
supplied and to make the holds and all other parts of the vessel in which cargo is carried, fit and safe but defendant VSI refused and failed to pay. Plaintiff filed its complaint against defendant on April 21,
for its reception, carriage and preservation. Owners shall not be liable for loss of or damage of the 1976 which was docketed as Civil Case No. 23317, CFI, Rizal.
cargo arising or resulting from: unseaworthiness unless caused by want of due diligence on the part of
the owners to make the vessel seaworthy, and to secure that the vessel is properly manned, equipped (6) In its complaint, plaintiff claimed that it sustained losses in the aforesaid amount of P941,145.18
and supplied and to make the holds and all other parts of the vessel in which cargo is carried, fit and as a result of the act, neglect and default of the master and crew in the management of the vessel as
safe for its reception, carriage and preservation; xxx; perils, dangers and accidents of the sea or other well as the want of due diligence on the part of the defendant to make the vessel seaworthy and to
navigable waters; xxx; wastage in bulk or weight or any other loss or damage arising from inherent make the holds and all other parts of the vessel in which the cargo was carried, fit and safe for its
defect, quality or vice of the cargo; insufficiency of packing; xxx; latent defects not discoverable by reception, carriage and preservation -- all in violation of defendants undertaking under their Contract
due diligence; any other cause arising without the actual fault or privity of Owners or without the fault of Voyage Charter Hire.
of the agents or servants of owners.
(7) In its answer, defendant denied liability for the alleged damage claiming that the MV VLASONS I
Paragraph 12 of said NANYOZAI Charter Party also provides that (o)wners shall not be responsible for was seaworthy in all respects for the carriage of plaintiffs cargo; that said vessel was not a common
split, chafing and/or any damage unless caused by the negligence or default of the master and crew. carrier inasmuch as she was under voyage charter contract with the plaintiff as charterer under the
charter party; that in the course of the voyage from Iligan City to Manila, the MV VLASONS I
(2) On August 6, 7 and 8, 1974, in accordance with the Contract of Voyage Charter Hire, the MV encountered very rough seas, strong winds and adverse weather condition, causing strong winds and
VLASONS I loaded at plaintiffs pier at Iligan City, the NSCs shipment of 1,677 skids of tinplates and 92 big waves to continuously pound against the vessel and seawater to overflow on its deck and hatch
packages of hot rolled sheets or a total of 1,769 packages with a total weight of about 2,481.19 metric covers; that under the Contract of Voyage Charter Hire, defendant shall not be responsible for
tons for carriage to Manila. The shipment was placed in the three (3) hatches of the ship. Chief Mate losses/damages except on proven willful negligence of the officers of the vessel, that the officers of
Gonzalo Sabando, acting as agent of the vessel[,] acknowledged receipt of the cargo on board and said MV VLASONS I exercised due diligence and proper seamanship and were not willfully negligent;
signed the corresponding bill of lading, B.L.P.P. No. 0233 (Exhibit D) on August 8, 1974. that furthermore the Voyage Charter Party provides that loading and discharging of the cargo was on
FIOST terms which means that the vessel was free of risk and expense in connection with the loading
(3) The vessel arrived with the cargo at Pier 12, North Harbor, Manila, on August 12, 1974. The and discharging of the cargo; that the damage, if any, was due to the inherent defect, quality or vice
following day, August 13, 1974, when the vessels three (3) hatches containing the shipment were of the cargo or to the insufficient packing thereof or to latent defect of the cargo not discoverable by
opened by plaintiffs agents, nearly all the skids of tinplates and hot rolled sheets were allegedly found due diligence or to any other cause arising without the actual fault or privity of defendant and without
to be wet and rusty. The cargo was discharged and unloaded by stevedores hired by the the fault of the agents or servants of defendant; consequently, defendant is not liable; that the
Charterer. Unloading was completed only on August 24, 1974 after incurring a delay of eleven (11) stevedores of plaintiff who discharged the cargo in Manila were negligent and did not exercise due
days due to the heavy rain which interrupted the unloading operations. (Exhibit E) care in the discharge of the cargo; and that the cargo was exposed to rain and seawater spray while
on the pier or in transit from the pier to plaintiffs warehouse after discharge from the vessel; and that
plaintiffs claim was highly speculative and grossly exaggerated and that the small stain marks or sweat
(4) To determine the nature and extent of the wetting and rusting, NSC called for a survey of the
marks on the edges of the tinplates were magnified and considered total loss of the cargo. Finally,
shipment by the Manila Adjusters and Surveyors Company (MASCO). In a letter to the NSC dated
defendant claimed that it had complied with all its duties and obligations under the Voyage Charter
March 17, 1975 (Exhibit G), MASCO made a report of its ocular inspection conducted on the cargo,
Hire Contract and had no responsibility whatsoever to plaintiff. In turn, it alleged the following
both while it was still on board the vessel and later at the NDC warehouse in Pureza St., Sta. Mesa,
counterclaim:
Manila where the cargo was taken and stored. MASCO reported that it found wetting and rusting of
the packages of hot rolled sheets and metal covers of the tinplates; that tarpaulin hatch covers were
noted torn at various extents; that container/metal casings of the skids were rusting all over. MASCO (a) That despite the full and proper performance by defendant of its obligations under the Voyage
ventured the opinion that rusting of the tinplates was caused by contact with SEA WATER sustained Charter Hire Contract, plaintiff failed and refused to pay the agreed charter hire of P75,000.00 despite
while still on board the vessel as a consequence of the heavy weather and rough seas encountered demands made by defendant;
while en route to destination (Exhibit F). It was also reported that MASCOs surveyors drew at random
samples of bad order packing materials of the tinplates and delivered the same to the M.I.T. Testing (b) That under their Voyage Charter Hire Contract, plaintiff had agreed to pay defendant the sum
Laboratories for analysis. On August 31, 1974, the M.I.T. Testing Laboratories issued Report No. 1770 of P8,000.00 per day for demurrage. The vessel was on demurrage for eleven (11) days in Manila
waiting for plaintiff to discharge its cargo from the vessel. Thus, plaintiff was liable to pay defendant (f) The stevedores hired by the plaintiff to discharge the cargo of tinplates were negligent in not
demurrage in the total amount of P88,000.00. closing the hatch openings of the MV VLASONS I when rains occurred during the discharging of the
cargo thus allowing rainwater to enter the hatches. It was proven that the stevedores merely set up
(c) For filing a clearly unfounded civil action against defendant, plaintiff should be ordered to pay temporary tents to cover the hatch openings in case of rain so that it would be easy for them to
defendant attorneys fees and all expenses of litigation in the amount of not less than P100,000.00. resume work when the rains stopped by just removing the tent or canvas. Because of this improper
covering of the hatches by the stevedores during the discharging and unloading operations which
were interrupted by rains, rainwater drifted into the cargo through the hatch openings. Pursuant to
(8) From the evidence presented by both parties, the trial court came out with the following findings
paragraph 5 of the NANYOSAI [sic] Charter Party which was expressly made part of the Contract of
which were set forth in its decision:
Voyage Charter Hire, the loading, stowing and discharging of the cargo is the sole responsibility of the
plaintiff charterer and defendant carrier has no liability for whatever damage may occur or maybe [sic]
(a) The MV VLASONS I is a vessel of Philippine registry engaged in the tramping service and is available caused to the cargo in the process.
for hire only under special contracts of charter party as in this particular case.
(g) It was also established that the vessel encountered rough seas and bad weather while en route
(b) That for purposes of the voyage covered by the Contract of Voyage Charter Hire (Exh. 1), the MV from Iligan City to Manila causing sea water to splash on the ships deck on account of which the
VLASONS I was covered by the required seaworthiness certificates including the Certification of master of the vessel (Mr. Antonio C. Dumlao) filed a Marine Protest on August 13, 1974 (Exh. 15)
Classification issued by an international classification society, the NIPPON KAIJI KYOKAI (Exh. 4); which can be invoked by defendant as a force majeure that would exempt the defendant from
Coastwise License from the Board of Transportation (Exh. 5); International Loadline Certificate from liability.
the Philippine Coast Guard (Exh. 6); Cargo Ship Safety Equipment Certificate also from the Philippine
Coast Guard (Exh. 7); Ship Radio Station License (Exh. 8); Certificate of Inspection by the Philippine
(h) Plaintiff did not comply with the requirement prescribed in paragraph 9 of the Voyage Charter Hire
Coast Guard (Exh. 12); and Certificate of Approval for Conversion issued by the Bureau of Customs
contract that it was to insure the cargo because it did not. Had plaintiff complied with the
(Exh. 9). That being a vessel engaged in both overseas and coastwise trade, the MV VLASONS I has a
requirement, then it could have recovered its loss or damage from the insurer. Plaintiff also violated
higher degree of seaworthiness and safety.
the charter party contract when it loaded not only steel products, i.e. steel bars, angular bars and the
like but also tinplates and hot rolled sheets which are high grade cargo commanding a higher
(c) Before it proceeded to Iligan City to perform the voyage called for by the Contract of Voyage freight. Thus plaintiff was able to ship high grade cargo at a lower freight rate.
Charter Hire, the MV VLASONS I underwent drydocking in Cebu and was thoroughly inspected by the
Philippine Coast Guard. In fact, subject voyage was the vessels first voyage after the drydocking. The
(I) As regards defendants counterclaim, the contract of voyage charter hire under paragraph 4 thereof,
evidence shows that the MV VLASONS I was seaworthy and properly manned, equipped and supplied
fixed the freight at P30.00 per metric ton payable to defendant carrier upon presentation of the bill of
when it undertook the voyage. It had all the required certificates of seaworthiness.
lading within fifteen (15) days. Plaintiff has not paid the total freight due of P75,000.00 despite
demands. The evidence also showed that the plaintiff was required and bound under paragraph 7 of
(d) The cargo/shipment was securely stowed in three (3) hatches of the ship. The hatch openings the same Voyage Charter Hire contract to pay demurrage of P8,000.00 per day of delay in the
were covered by hatchboards which were in turn covered by two or double tarpaulins. The hatch unloading of the cargoes. The delay amounted to eleven (11) days thereby making plaintiff liable to
covers were water tight. Furthermore, under the hatchboards were steel beams to give support. pay defendant for demurrage in the amount of P88,000.00.

(e) The claim of the plaintiff that defendant violated the contract of carriage is not supported by Appealing the RTC decision to the Court of Appeals, NSC alleged six errors:
evidence. The provisions of the Civil Code on common carriers pursuant to which there exists a
presumption of negligence in case of loss or damage to the cargo are not applicable. As to the damage I
to the tinplates which was allegedly due to the wetting and rusting thereof, there is unrebutted
The trial court erred in finding that the MV VLASONS I was seaworthy, properly manned, equipped
testimony of witness Vicente Angliongto that tinplates sweat by themselves when packed even
and supplied, and that there is no proof of willful negligence of the vessels officers.
without being in contract (sic) with water from outside especially when the weather is bad or
raining. The rust caused by sweat or moisture on the tinplates may be considered as a loss or damage II
but then, defendant cannot be held liable for it pursuant to Article 1734 of the Civil Case which
exempts the carrier from responsibility for loss or damage arising from the character of the goods x x The trial court erred in finding that the rusting of NSCs tinplates was due to the inherent nature or
x. All the 1,769 skids of the tinplates could not have been damaged by water as claimed by plaintiff. It character of the goods and not due to contact with seawater.
was shown as claimed by plaintiff that the tinplates themselves were wrapped in kraft paper lining
III
and corrugated cardboards could not be affected by water from outside.
The trial court erred in finding that the stevedores hired by NSC were negligent in the unloading of 2. Whether or not vessels officers and crew were negligent in handling and caring for
NSCs shipment. NSCs cargo;

IV 3. Whether or not NSCs cargo of tinplates did sweat during the voyage and, hence, rusted
on their own; and
The trial court erred in exempting VSI from liability on the ground of force majeure.
(4) Whether or not NSCs stevedores were negligent and caused the wetting[/]rusting of
V NSCs tinplates.
The trial court erred in finding that NSC violated the contract of voyage charter hire. In its separate petition, [9]
VSI submits for the consideration of this Court the following alleged
VI errors of the CA:

The trial court erred in ordering NSC to pay freight, demurrage and attorneys fees, to VSI.[4] A. The respondent Court of Appeals committed an error of law in reducing the award of demurrage
As earlier stated, the Court of Appeals modified the decision of the trial court by reducing the from P88,000.00 to P44,000.00.
demurrage from P88,000.00 to P44,000.00 and deleting the award of attorneys fees and expenses of
litigation. NSC and VSI filed separate motions for reconsideration. In a Resolution[5] dated October 20, B. The respondent Court of Appeals committed an error of law in deleting the award of P100,000 for
1993, the appellate court denied both motions.Undaunted, NSC and VSI filed their respective attorneys fees and expenses of litigation.
petitions for review before this Court. On motion of VSI, the Court ordered on February 14, 1994 the
consolidation of these petitions.[6] Amplifying the foregoing, VSI raises the following issues in its memorandum: [10]

I. Whether or not the provisions of the Civil Code of the Philippines on common carriers pursuant to
The Issues which there exist[s] a presumption of negligence against the common carrier in case of loss or
damage to the cargo are applicable to a private carrier.

In its petition[7] and memorandum,[8] NSC raises the following questions of law and fact: II. Whether or not the terms and conditions of the Contract of Voyage Charter Hire, including the
Nanyozai Charter, are valid and binding on both contracting parties.

Questions of Law The foregoing issues raised by the parties will be discussed under the following headings:

1. Questions of Fact
1. Whether or not a charterer of a vessel is liable for demurrage due to cargo unloading 2. Effect of NSCs Failure to Insure the Cargo
delays caused by weather interruption;
3. Admissibility of Certificates Proving Seaworthiness
2. Whether or not the alleged seaworthiness certificates (Exhibits 3, 4, 5, 6, 7, 8, 9, 11 and
12) were admissible in evidence and constituted evidence of the vessels 4. Demurrage and Attorneys Fees.
seaworthiness at the beginning of the voyages; and

3. Whether or not a charterers failure to insure its cargo exempts the shipowner from
liability for cargo damage. The Courts Ruling

The Court affirms the assailed Decision of the Court of Appeals, except in respect of the
Questions of Fact demurrage.

1. Whether or not the vessel was seaworthy and cargo-worthy;


Preliminary Matter: Common Carrier or Private Carrier?
At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier Burden of Proof
or as a private carrier. The resolution of this preliminary question determines the law, standard of
diligence and burden of proof applicable to the present case.
In view of the aforementioned contractual stipulations, NSC must prove that the damage to its
Article 1732 of the Civil Code defines a common carrier as persons, corporations, firms or shipment was caused by VSIs willful negligence or failure to exercise due diligence in making MV
associations engaged in the business of carrying or transporting passengers or goods or both, by land, Vlasons I seaworthy and fit for holding, carrying and safekeeping the cargo. Ineluctably, the burden of
water, or air, for compensation, offering their services to the public. It has been held that the true test proof was placed on NSC by the parties agreement.
of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to
avail themselves of its transportation service for a fee. [11] A carrier which does not qualify under the This view finds further support in the Code of Commerce which pertinently provides:
above test is deemed a private carrier. Generally, private carriage is undertaken by special agreement
and the carrier does not hold himself out to carry goods for the general public. The most typical, Art. 361. Merchandise shall be transported at the risk and venture of the shipper, if the contrary has
although not the only form of private carriage, is the charter party, a maritime contract by which the not been expressly stipulated.
charterer, a party other than the shipowner, obtains the use and service of all or some part of a ship
for a period of time or a voyage or voyages. [12]
Therefore, the damage and impairment suffered by the goods during the transportation, due to
In the instant case, it is undisputed that VSI did not offer its services to the general public. As fortuitous event, force majeure, or the nature and inherent defect of the things, shall be for the
found by the Regional Trial Court, it carried passengers or goods only for those it chose under a account and risk of the shipper.
special contract of charter party. [13] As correctly concluded by the Court of Appeals, the MV Vlasons
I was not a common but a private carrier. [14] Consequently, the rights and obligations of VSI and NSC, The burden of proof of these accidents is on the carrier.
including their respective liability for damage to the cargo, are determined primarily by stipulations in
their contract of private carriage or charter party. [15] Recently, in Valenzuela Hardwood and Industrial Art. 362. The carrier, however, shall be liable for damages arising from the cause mentioned in the
Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation, [16] the Court ruled:
preceding article if proofs against him show that they occurred on account of his negligence or his
omission to take the precautions usually adopted by careful persons, unless the shipper committed
x x x in a contract of private carriage, the parties may freely stipulate their duties and obligations fraud in the bill of lading, making him to believe that the goods were of a class or quality different
which perforce would be binding on them. Unlike in a contract involving a common carrier, private from what they really were.
carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on
common carriers protecting the general public cannot justifiably be applied to a ship transporting
Because the MV Vlasons I was a private carrier, the shipowners obligations are governed by the
commercial goods as a private carrier. Consequently, the public policy embodied therein is not foregoing provisions of the Code of Commerce and not by the Civil Code which, as a general rule,
contravened by stipulations in a charter party that lessen or remove the protection given by law in places the prima facie presumption of negligence on a common carrier. It is a hornbook doctrine that:
contracts involving common carriers.[17]

In an action against a private carrier for loss of, or injury to, cargo, the burden is on the plaintiff to
prove that the carrier was negligent or unseaworthy, and the fact that the goods were lost or
Extent of VSIs Responsibility and Liability Over NSCs Cargo damaged while in the carriers custody does not put the burden of proof on the carrier.

Since x x x a private carrier is not an insurer but undertakes only to exercise due care in the protection
It is clear from the parties Contract of Voyage Charter Hire, dated July 17, 1974, that VSI shall of the goods committed to its care, the burden of proving negligence or a breach of that duty rests on
not be responsible for losses except on proven willful negligence of the officers of the vessel. The plaintiff and proof of loss of, or damage to, cargo while in the carriers possession does not cast on it
NANYOZAI Charter Party, which was incorporated in the parties contract of transportation, further the burden of proving proper care and diligence on its part or that the loss occurred from an excepted
provided that the shipowner shall not be liable for loss of or damage to the cargo arising or resulting cause in the contract or bill of lading. However, in discharging the burden of proof, plaintiff is entitled
from unseaworthiness, unless the same was caused by its lack of due diligence to make the vessel to the benefit of the presumptions and inferences by which the law aids the bailor in an action against
seaworthy or to ensure that the same was properly manned, equipped and supplied, and to make the a bailee, and since the carrier is in a better position to know the cause of the loss and that it was not
holds and all other parts of the vessel in which cargo [was] carried, fit and safe for its reception, one involving its liability, the law requires that it come forward with the information available to it,
carriage and preservation. [18] The NANYOZAI Charter Party also provided that [o]wners shall not be and its failure to do so warrants an inference or presumption of its liability. However, such inferences
responsible for split, chafing and/or any damage unless caused by the negligence or default of the and presumptions, while they may affect the burden of coming forward with evidence, do not alter
master or crew.[19] the burden of proof which remains on plaintiff, and, where the carrier comes forward with evidence
explaining the loss or damage, the burden of going forward with the evidence is again on plaintiff.
Where the action is based on the shipowners warranty of seaworthiness, the burden of proving a seaworthy. We find no reason to modify or reverse this finding of both the trial and the appellate
breach thereof and that such breach was the proximate cause of the damage rests on plaintiff, and courts.
proof that the goods were lost or damaged while in the carriers possession does not cast on it the
burden of proving seaworthiness. x x x Where the contract of carriage exempts the carrier from
liability for unseaworthiness not discoverable by due diligence, the carrier has the preliminary burden
of proving the exercise of due diligence to make the vessel seaworthy. [20] Who Were Negligent: Seamen or Stevedores?

In the instant case, the Court of Appeals correctly found that NSC has not taken the correct As noted earlier, the NSC had the burden of proving that the damage to the cargo was caused
position in relation to the question of who has the burden of proof. Thus, in its brief (pp. 10-11), after by the negligence of the officers and the crew of MV Vlasons I in making their vessel seaworthy and
citing Clause 10 and Clause 12 of the NANYOZAI Charter Party (incidentally plaintiff-appellants [NSCs] fit for the carriage of tinplates. NSC failed to discharge this burden.
interpretation of Clause 12 is not even correct), it argues that a careful examination of the evidence
will show that VSI miserably failed to comply with any of these obligations as if defendant-appellee Before us, NSC relies heavily on its claim that MV Vlasons I had used an old and torn tarpaulin
[VSI] had the burden of proof.[21] or canvas to cover the hatches through which the cargo was loaded into the cargo hold of the ship. It
faults the Court of Appeals for failing to consider such claim as an uncontroverted fact [26] and denies
that MV Vlasons I was equipped with new canvas covers in tandem with the old ones as indicated in
the Marine Protest xxx. [27] We disagree.
First Issue: Questions of Fact
The records sufficiently support VSIs contention that the ship used the old tarpaulin, only in
addition to the new one used primarily to make the ships hatches watertight. The foregoing are clear
Based on the foregoing, the determination of the following factual questions is manifestly from the marine protest of the master of the MV Vlasons I, Antonio C. Dumlao, and the deposition of
relevant: (1) whether VSI exercised due diligence in making MV Vlasons I seaworthy for the intended the ships boatswain, Jose Pascua. The salient portions of said marine protest read:
purpose under the charter party; (2) whether the damage to the cargo should be attributed to the
willful negligence of the officers and crew of the vessel or of the stevedores hired by NSC; and (3) x x x That the M/V VLASONS I departed Iligan City or or about 0730 hours of August 8, 1974, loaded
whether the rusting of the tinplates was caused by its own sweat or by contact with seawater. with approximately 2,487.9 tons of steel plates and tin plates consigned to National Steel Corporation;
These questions of fact were threshed out and decided by the trial court, which had the that before departure, the vessel was rigged, fully equipped and cleared by the authorities; that on or
firsthand opportunity to hear the parties conflicting claims and to carefully weigh their respective about August 9, 1974, while in the vicinity of the western part of Negros and Panay, we encountered
evidence. The findings of the trial court were subsequently affirmed by the Court of Appeals. Where very rough seas and strong winds and Manila office was advised by telegram of the adverse weather
the factual findings of both the trial court and the Court of Appeals coincide, the same are binding on conditions encountered; that in the morning of August 10, 1974, the weather condition changed to
this Court. [22] We stress that, subject to some exceptional instances, [23] only questions of law -- not worse and strong winds and big waves continued pounding the vessel at her port side causing sea
questions of fact -- may be raised before this Court in a petition for review under Rule 45 of the Rules water to overflow on deck andhatch (sic) covers and which caused the first layer of the canvass
of Court. After a thorough review of the case at bar, we find no reason to disturb the lower courts covering to give way while the new canvass covering still holding on;
factual findings, as indeed NSC has not successfully proven the application of any of the aforecited
exceptions. That the weather condition improved when we reached Dumali Point protected by Mindoro; that we
re-secured the canvass covering back to position; that in the afternoon of August 10, 1974, while
entering Maricaban Passage, we were again exposed to moderate seas and heavy rains; that while
approaching Fortune Island, we encountered again rough seas, strong winds and big waves which
Was MV Vlasons I Seaworthy? caused the same canvass to give way and leaving the new canvass holding on;

In any event, the records reveal that VSI exercised due diligence to make the ship seaworthy xxx xxx xxx [28]

and fit for the carriage of NSCs cargo of steel and tinplates. This is shown by the fact that it was And the relevant portions of Jose Pascuas deposition are as follows:
drydocked and inspected by the Philippine Coast Guard before it proceeded to Iligan City for its
voyage to Manila under the contract of voyage charter hire. [24] The vessels voyage from Iligan to Q: What is the purpose of the canvas cover?
Manila was the vessels first voyage after drydocking. The Philippine Coast Guard Station in Cebu
A: So that the cargo would not be soaked with water.
cleared it as seaworthy, fitted andequipped; it met all requirements for trading as cargo vessel. [25] The
Court of Appeals itself sustained the conclusion of the trial court that MV Vlasons I was A: And will you describe how the canvas cover was secured on the hatch opening?
WITNESS Q: How tight?

A: It was placed flat on top of the hatch cover, with a little canvas flowing over the sides A: Very tight, sir.
and we place[d] a flat bar over the canvas on the side of the hatches and then we
place[d] a stopper so that the canvas could not be removed. Q: Now, on top of the hatch boards, according to you, is the canvas cover. How many
canvas covers?
ATTY DEL ROSARIO
A: Two, sir. [29]
Q: And will you tell us the size of the hatch opening? The length and the width of the
hatch opening. That due diligence was exercised by the officers and the crew of the MV Vlasons I was further
demonstrated by the fact that, despite encountering rough weather twice, the new tarpaulin did not
A: Forty-five feet by thirty-five feet, sir. give way and the ships hatches and cargo holds remained waterproof. As aptly stated by the Court of
Appeals, xxx we find no reason not to sustain the conclusion of the lower court based on
xxxxxxxxx overwhelming evidence, that the MV VLASONS I was seaworthy when it undertook the voyage on
Q: How was the canvas supported in the middle of the hatch opening? August 8, 1974 carrying on board thereof plaintiff-appellants shipment of 1,677 skids of tinplates and
92 packages of hot rolled sheets or a total of 1,769 packages from NSCs pier in Iligan City arriving
A: There is a hatch board. safely at North Harbor, Port Area, Manila, on August 12, 1974; xxx. [30]
ATTY DEL ROSARIO Indeed, NSC failed to discharge its burden to show negligence on the part of the officers and the
crew of MV Vlasons I. On the contrary, the records reveal that it was the stevedores of NSC who were
Q: What is the hatch board made of? negligent in unloading the cargo from the ship.
A: It is made of wood, with a handle. The stevedores employed only a tent-like material to cover the hatches when strong rains
Q: And aside from the hatch board, is there any other material there to cover the hatch? occasioned by a passing typhoon disrupted the unloading of the cargo. This tent-like covering,
however, was clearly inadequate for keeping rain and seawater away from the hatches of the
A: There is a beam supporting the hatch board. ship. Vicente Angliongto, an officer of VSI, testified thus:
Q: What is this beam made of? ATTY ZAMORA:
A: It is made of steel, sir. Q: Now, during your testimony on November 5, 1979, you stated on August 14 you went
on board the vessel upon notice from the National Steel Corporation in order to
Q: Is the beam that was placed in the hatch opening covering the whole hatch opening?
conduct the inspection of the cargo. During the course of the investigation, did you
A: No, sir. chance to see the discharging operation?

Q: How many hatch beams were there placed across the opening? WITNESS:

A: There are five beams in one hatch opening. A: Yes, sir, upon my arrival at the vessel, I saw some of the tinplates already discharged on
the pier but majority of the tinplates were inside the hall, all the hatches were
ATTY DEL ROSARIO opened.
Q: And on top of the beams you said there is a hatch board. How many pieces of wood Q: In connection with these cargoes which were unloaded, where is the place.
are put on top?
A: At the Pier.
A: Plenty, sir, because there are several pieces on top of the hatch beam.
Q: What was used to protect the same from weather?
Q: And is there a space between the hatch boards?
ATTY LOPEZ:
A: There is none, sir.
We object, your Honor, this question was already asked. This particular matter . . . the
Q: They are tight together? transcript of stenographic notes shows the same was covered in the direct
examination.
A: Yes, sir.
ATTY ZAMORA:
Precisely, your Honor, we would like to go on detail, this is the serious part of the the stevedores or the unloading operations. In fact, he was merely expressing concern for NSC which
testimony. was ultimately responsible for the stevedores it had hired and the performance of their task to unload
the cargo.
COURT:
We see no reason to reverse the trial and the appellate courts findings and conclusions on this
All right, witness may answer. point, viz:
ATTY LOPEZ:
In the THIRD assigned error, [NSC] claims that the trial court erred in finding that the stevedores hired
Q: What was used in order to protect the cargo from the weather? by NSC were negligent in the unloading of NSCs shipment. We do not think so. Such negligence
A: A base of canvas was used as cover on top of the tin plates, and tents were built at the according to the trial court is evident in the stevedores hired by [NSC], not closing the hatch of MV
opening of the hatches. VLASONS I when rains occurred during the discharging of the cargo thus allowing rain water and
seawater spray to enter the hatches and to drift to and fall on the cargo. It was proven that the
Q: You also stated that the hatches were already opened and that there were tents stevedores merely set up temporary tents or canvas to cover the hatch openings when it rained
constructed at the opening of the hatches to protect the cargo from the rain. Now, during the unloading operations so that it would be easier for them to resume work after the rains
will you describe [to] the Court the tents constructed. stopped by just removing said tents or canvass. It has also been shown that on August 20, 1974, VSI
President Vicente Angliongto wrote [NSC] calling attention to the manner the stevedores hired by
A: The tents are just a base of canvas which look like a tent of an Indian camp raise[d] high [NSC] were discharging the cargo on rainy days and the improper closing of the hatches which allowed
at the middle with the whole side separated down to the hatch, the size of the hatch continuous heavy rain water to leak through and drip to the tinplates covers and [Vicente Angliongto]
and it is soaks [sic] at the middle because of those weather and this can be used also suggesting that due to four (4) days continuos rains with strong winds that the hatches be totally
only to temporarily protect the cargo from getting wet by rains. closed down and covered with canvas and the hatch tents lowered. (Exh 13). This letter was received
Q: Now, is this procedure adopted by the stevedores of covering tents proper? by [NSC] on 22 August 1974 while discharging operations were still going on (Exhibit 13-A). [33]

A: No, sir, at the time they were discharging the cargo, there was a typhoon passing by The fact that NSC actually accepted and proceeded to remove the cargo from the ship during
and the hatch tent was not good enough to hold all of it to prevent the water unfavorable weather will not make VSI liable for any damage caused thereby.In passing, it may be
soaking through the canvas and enter the cargo. noted that the NSC may seek indemnification, subject to the laws on prescription, from the
Q: In the course of your inspection, Mr. Anglingto [sic], did you see in fact the water enter stevedoring company at fault in the discharge operations. A stevedore company engaged in
and soak into the canvas and tinplates. discharging cargo xxx has the duty to load the cargo xxx in a prudent manner, and it is liable for injury
to, or loss of, cargo caused by its negligence xxx and where the officers and members and crew of the
A: Yes, sir, the second time I went there, I saw it. vessel do nothing and have no responsibility in the discharge of cargo by stevedores xxx the vessel is
not liable for loss of, or damage to, the cargo caused by the negligence of the stevedores xxx [34] as in
Q: As owner of the vessel, did you not advise the National Steel Corporation [of] the the instant case.
procedure adopted by its stevedores in discharging the cargo particularly in this tent
covering of the hatches?

A: Yes, sir, I did the first time I saw it, I called the attention of the stevedores but the Do Tinplates Sweat?
stevedores did not mind at all, so, I called the attention of the representative of the
National Steel but nothing was done, just the same. Finally, I wrote a letter to
them. [31] The trial court relied on the testimony of Vicente Angliongto in finding that xxx tinplates sweat
NSC attempts to discredit the testimony of Angliongto by questioning his failure to complain by themselves when packed even without being in contact with water from outside especially when
immediately about the stevedores negligence on the first day of unloading, pointing out that he wrote the weather is bad or raining xxx. [35] The Court of Appeals affirmed the trial courts finding.
his letter to petitioner only seven days later. [32] The Court is not persuaded. Angliongtos candid A discussion of this issue appears inconsequential and unnecessary. As previously discussed, the
answer in his aforequoted testimony satisfactorily explained the delay. Seven days lapsed because he damage to the tinplates was occasioned not by airborne moisture but by contact with rain and
first called the attention of the stevedores, then the NSCs representative, about the negligent and seawater which the stevedores negligently allowed to seep in during the unloading.
defective procedure adopted in unloading the cargo. This series of actions constitutes a reasonable
response in accord with common sense and ordinary human experience. Vicente Angliongto could not
be blamed for calling the stevedores attention first and then the NSCs representative on location
before formally informing NSC of the negligence he had observed, because he was not responsible for Second Issue: Effect of NSCs Failure to Insure the Cargo
The obligation of NSC to insure the cargo stipulated in the Contract of Voyage Charter Hire is At any rate, it should be stressed that that NSC has the burden of proving that MV Vlasons I was
totally separate and distinct from the contractual or statutory responsibility that may be incurred by not seaworthy. As observed earlier, the vessel was a private carrier and, as such, it did not have the
VSI for damage to the cargo caused by the willful negligence of the officers and the crew of MV obligation of a common carrier to show that it was seaworthy. Indeed, NSC glaringly failed to
Vlasons I. Clearly, therefore, NSCs failure to insure the cargo will not affect its right, as owner and real discharge its duty of proving the willful negligence of VSI in making the ship seaworthy resulting in
party in interest, to file an action against VSI for damages caused by the latters willful negligence. We damage to its cargo. Assailing the genuineness of the certificate of seaworthiness is not sufficient
do not find anything in the charter party that would make the liability of VSI for damage to the cargo proof that the vessel was not seaworthy.
contingent on or affected in any manner by NSCs obtaining an insurance over the cargo.

Fourth Issue: Demurrage and Attorneys Fees


Third Issue: Admissibility of Certificates Proving Seaworthiness

The contract of voyage charter hire provides inter alia:


NSCs contention that MV Vlasons I was not seaworthy is anchored on the alleged inadmissibility
of the certificates of seaworthiness offered in evidence by VSI. The said certificates include the xxx xxx xxx
following:
2. Cargo: Full cargo of steel products of not less than 2,500 MT, 10% more or less at Masters option.
1. Certificate of Inspection of the Philippine Coast Guard at Cebu

2. Certificate of Inspection from the Philippine Coast Guard xxx xxx xxx

3. International Load Line Certificate from the Philippine Coast Guard


6. Loading/Discharging Rate : 750 tons per WWDSHINC.
4. Coastwise License from the Board of Transportation
7. Demurrage/Dispatch : P8,000.00/P4,000.00 per day. [39]
5. Certificate of Approval for Conversion issued by the Bureau of Customs. [36]

NSC argues that the certificates are hearsay for not having been presented in accordance with The Court defined demurrage in its strict sense as the compensation provided for in the contract
the Rules of Court. It points out that Exhibits 3, 4 and 11 allegedly are not written records or acts of of affreightment for the detention of the vessel beyond the laytime or that period of time agreed on
public officers; while Exhibits 5, 6, 7, 8, 9, 11 and 12 are not evidenced by official publications or for loading and unloading of cargo. [40] It is given to compensate the shipowner for the nonuse of the
certified true copies as required by Sections 25 and 26, Rule 132, of the Rules of Court. [37] vessel. On the other hand, the following is well-settled:
After a careful examination of these exhibits, the Court rules that Exhibits 3, 4, 5, 6, 7, 8, 9 and
12 are inadmissible, for they have not been properly offered as evidence.Exhibits 3 and 4 are Laytime runs according to the particular clause of the charter party. x x x If laytime is expressed in
certificates issued by private parties, but they have not been proven by one who saw the writing running days, this means days when the ship would be run continuously, and holidays are not
executed, or by evidence of the genuineness of the handwriting of the maker, or by a subscribing excepted. A qualification of weather permitting excepts only those days when bad weather
witness. Exhibits 5, 6, 7, 8, 9, and 12 are photocopies, but their admission under the best evidence reasonably prevents the work contemplated. [41]
rule have not been demonstrated.
In this case, the contract of voyage charter hire provided for a four-day laytime; it also qualified
We find, however, that Exhibit 11 is admissible under a well-settled exception to the hearsay laytime as WWDSHINC or weather working days Sundays and holidays included. [42] The running of
rule per Section 44 of Rule 130 of the Rules of Court, which provides that (e)ntries in official records laytime was thus made subject to the weather, and would cease to run in the event unfavorable
made in the performance of a duty by a public officer of the Philippines, or by a person in the weather interfered with the unloading of cargo. [43]Consequently, NSC may not be held liable for
performance of a duty specially enjoined by law, are prima facie evidence of the facts therein demurrage as the four-day laytime allowed it did not lapse, having been tolled by unfavorable
stated. [38] Exhibit 11 is an original certificate of the Philippine Coast Guard in Cebu issued by weather condition in view of the WWDSHINC qualification agreed upon by the parties. Clearly, it was
Lieutenant Junior Grade Noli C. Flores to the effect that the vessel VLASONS I was drydocked x x x and error for the trial court and the Court of Appeals to have found and affirmed respectively that NSC
PCG Inspectors were sent on board for inspection x x x. After completion of drydocking and duly incurred eleven days of delay in unloading the cargo. The trial court arrived at this erroneous finding
inspected by PCG Inspectors, the vessel VLASONS I, a cargo vessel, is in seaworthy condition, meets all by subtracting from the twelve days, specifically August 13, 1974 to August 24, 1974, the only day of
requirements, fitted and equipped for trading as a cargo vessel was cleared by the Philippine Coast unloading unhampered by unfavorable weather or rain which was August 22, 1974. Based on our
Guard and sailed for Cebu Port on July 10, 1974. (sic) NSCs claim, therefore, is obviously misleading previous discussion, such finding is a reversible error. As mentioned, the respondent appellate court
and erroneous. also erred in ruling that NSC was liable to VSI for demurrage, even if it reduced the amount by half.
Attorneys Fees

VSI assigns as error of law the Court of Appeals deletion of the award of attorneys fees. We
disagree. While VSI was compelled to litigate to protect its rights, such fact by itself will not justify an
award of attorneys fees under Article 2208 of the Civil Code when x x x no sufficient showing of bad
faith would be reflected in a partys persistence in a case other than an erroneous conviction of the
righteousness of his cause x x x. [44] Moreover, attorneys fees may not be awarded to a party for the
reason alone that the judgment rendered was favorable to the latter, as this is tantamount to
imposing a premium on ones right to litigate or seek judicial redress of legitimate grievances. [45]

Epilogue

At bottom, this appeal really hinges on a factual issue: when, how and who caused the damage
to the cargo? Ranged against NSC are two formidable truths. First, both lower courts found that such
damage was brought about during the unloading process when rain and seawater seeped through the
cargo due to the fault or negligence of the stevedores employed by it. Basic is the rule that factual
findings of the trial court, when affirmed by the Court of Appeals, are binding on the Supreme
Court. Although there are settled exceptions, NSC has not satisfactorily shown that this case is one of
them. Second, the agreement between the parties -- the Contract of Voyage Charter Hire -- placed the
burden of proof for such loss or damage upon the shipper, not upon the shipowner. Such stipulation,
while disadvantageous to NSC, is valid because the parties entered into a contract of private charter,
not one of common carriage. Basic too is the doctrine that courts cannot relieve a party from the
effects of a private contract freely entered into, on the ground that it is allegedly one-sided or unfair
to the plaintiff. The charter party is a normal commercial contract and its stipulations are agreed upon
in consideration of many factors, not the least of which is the transport price which is determined not
only by the actual costs but also by the risks and burdens assumed by the shipper in regard to possible
loss or damage to the cargo. In recognition of such factors, the parties even stipulated that the
shipper should insure the cargo to protect itself from the risks it undertook under the charter
party. That NSC failed or neglected to protect itself with such insurance should not adversely affect
VSI, which had nothing to do with such failure or neglect.

WHEREFORE, premises considered, the instant consolidated petitions are hereby DENIED. The
questioned Decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the demurrage
awarded to VSI is deleted. No pronouncement as to costs.

SO ORDERED.
G.R. No. 102316 June 30, 1997 On 24 January 1984, the plaintiff gave the check in payment of the premium on the insurance policy
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC., petitioner, to Mr. Victorio Chua.
vs.
COURT OF APPEALS AND SEVEN BROTHERS SHIPPING CORPORATION, respondents. In the meantime, the said vessel M/V Seven Ambassador sank on 25 January 1984 resulting in the loss
of the plaintiff's insured logs.
Is a stipulation in a charter party that the "(o)wners shall not be responsible for loss, split,
short-landing, breakages and any kind of damages to the cargo" 1 valid? This is the main question On 30 January 1984, a check for P5,625.00 (Exh. "E") to cover payment of the premium and
raised in this petition for review assailing the Decision of Respondent Court of Appeals 2 in CA-G.R. No. documentary stamps due on the policy was tendered due to the insurer but was not accepted.
CV-20156 promulgated on October 15, 1991. The Court of Appeals modified the judgment of the Instead, the South Sea Surety and Insurance Co., Inc. cancelled the insurance policy it issued as of the
Regional Trial Court of Valenzuela, Metro Manila, Branch 171, the dispositive portion of which reads: date of the inception for non-payment of the premium due in accordance with Section 77 of the
Insurance Code.
WHEREFORE, Judgment is hereby rendered ordering South Sea Surety and Insurance Co., Inc. to pay
plaintiff the sum of TWO MILLION PESOS (P2,000,000.00) representing the value of the policy of the On 2 February 1984, plaintiff demanded from defendant South Sea Surety and Insurance Co., Inc. the
lost logs with legal interest thereon from the date of demand on February 2, 1984 until the amount is payment of the proceeds of the policy but the latter denied liability under the policy. Plaintiff likewise
fully paid or in the alternative, defendant Seven Brothers Shipping Corporation to pay plaintiff the filed a formal claim with defendant Seven Brothers Shipping Corporation for the value of the lost logs
amount of TWO MILLION PESOS (2,000,000.00) representing the value of lost logs plus legal interest but the latter denied the claim.
from the date of demand on April 24, 1984 until full payment thereof; the reasonable attorney's fees
in the amount equivalent to five (5) percent of the amount of the claim and the costs of the suit.
After due hearing and trial, the court a quo rendered judgment in favor of plaintiff and against
defendants. Both defendants shipping corporation and the surety company appealed.
Plaintiff is hereby ordered to pay defendant Seven Brothers Shipping Corporation the sum of TWO
HUNDRED THIRTY THOUSAND PESOS (P230,000.00) representing the balance of the stipulated freight
Defendant-appellant Seven Brothers Shipping Corporation impute (sic) to the court a quo the
charges.
following assignment of errors, to wit:

Defendant South Sea Surety and Insurance Company's counterclaim is hereby dismissed.
A. The lower court erred in holding that the proximate cause of the sinking of the vessel Seven
Ambassadors, was not due to fortuitous event but to the negligence of the captain in stowing and
In its assailed Decision, Respondent Court of Appeals held: securing the logs on board, causing the iron chains to snap and the logs to roll to the portside.

WHEREFORE, the appealed judgment is hereby AFFIRMED except in so far (sic) as the liability of the B. The lower court erred in declaring that the non-liability clause of the Seven Brothers Shipping
Seven Brothers Shipping Corporation to the plaintiff is concerned which is hereby REVERSED and SET Corporation from logs (sic) of the cargo stipulated in the charter party is void for being contrary to
ASIDE. 3 public policy invoking article 1745 of the New Civil Code.

The Facts C. The lower court erred in holding defendant-appellant Seven Brothers Shipping Corporation liable in
the alternative and ordering/directing it to pay plaintiff-appellee the amount of two million
The factual antecedents of this case as narrated in the Court of Appeals Decision are as follows: (2,000,000.00) pesos representing the value of the logs plus legal interest from date of demand until
fully paid.
It appears that on 16 January 1984, plaintiff (Valenzuela Hardwood and Industrial Supply, Inc.)
entered into an agreement with the defendant Seven Brothers (Shipping Corporation) whereby the D. The lower court erred in ordering defendant-appellant Seven Brothers Shipping Corporation to pay
latter undertook to load on board its vessel M/V Seven Ambassador the former's lauan round logs appellee reasonable attorney's fees in the amount equivalent to 5% of the amount of the claim and
numbering 940 at the port of Maconacon, Isabela for shipment to Manila. the costs of the suit.

On 20 January 1984, plaintiff insured the logs against loss and/or damage with defendant South Sea E. The lower court erred in not awarding defendant-appellant Seven Brothers Corporation its
Surety and Insurance Co., Inc. for P2,000,000.00 and the latter issued its Marine Cargo Insurance counter-claim for attorney's fees.
Policy No. 84/24229 for P2,000,000.00 on said date.
F. The lower court erred in not dismissing the complaint against Seven Brothers Shipping Corporation.
Defendant-appellant South Sea Surety and Insurance Co., Inc. assigns the following errors: Under American jurisprudence, a common carrier undertaking to carry a special cargo or chartered to
a special person only, becomes a private carrier.
A. The trial court erred in holding that Victorio Chua was an agent of defendant-appellant South Sea
Surety and Insurance Company, Inc. and likewise erred in not holding that he was the representative As a private carrier, a stipulation exempting the owner from liability even for the negligence of its
of the insurance broker Columbia Insurance Brokers, Ltd. agent is valid (Home Insurance Company, Inc. vs. American Steamship Agencies, Inc., 23 SCRA 24).

B. The trial court erred in holding that Victorio Chua received compensation/commission on the The shipping corporation should not therefore be held liable for the loss of the logs. 6
premiums paid on the policies issued by the defendant-appellant South Sea Surety and Insurance
Company, Inc. South Sea and herein Petitioner Valenzuela Hardwood and Industrial Supply, Inc. ("Valenzuela") filed
separate petitions for review before this Court. In a Resolution dated June 2, 1995, this Court denied
C. The trial court erred in not applying Section 77 of the Insurance Code. the petition of South
Sea. 7 There the Court found no reason to reverse the factual findings of the trial court and the Court
D. The trial court erred in disregarding the "receipt of payment clause" attached to and forming part of Appeals that Chua was indeed an authorized agent of South Sea when he received Valenzuela's
of the Marine Cargo Insurance Policy No. 84/24229. premium payment for the marine cargo insurance policy which was thus binding on the insurer. 8

E. The trial court in disregarding the statement of account or bill stating the amount of premium and The Court is now called upon to resolve the petition for review filed by Valenzuela assailing the CA
documentary stamps to be paid on the policy by the plaintiff-appellee. Decision which exempted Seven Brothers from any liability for the lost cargo.

F. The trial court erred in disregarding the endorsement of cancellation of the policy due to The Issue
non-payment of premium and documentary stamps.
Petitioner Valenzuela's arguments resolve around a single issue: "whether or not respondent Court
G. The trial court erred in ordering defendant-appellant South Sea Surety and Insurance Company, Inc. (of Appeals) committed a reversible error in upholding the validity of the stipulation in the charter
to pay plaintiff-appellee P2,000,000.00 representing value of the policy with legal interest from 2 party executed between the petitioner and the private respondent exempting the latter from liability
February 1984 until the amount is fully paid, for the loss of petitioner's logs arising from the negligence of its (Seven Brothers') captain." 9

H. The trial court erred in not awarding to the defendant-appellant the attorney's fees alleged and The Court's Ruling
proven in its counterclaim.
The petition is not meritorious.
The primary issue to be resolved before us is whether defendants shipping corporation and the surety
company are liable to the plaintiff for the latter's lost logs. 4 Validity of Stipulation is Lis Mota

The Court of Appeals affirmed in part the RTC judgment by sustaining the liability of South Sea Surety The charter party between the petitioner and private respondent stipulated that the "(o)wners shall
and Insurance Company ("South Sea"), but modified it by holding that Seven Brothers Shipping not be responsible for loss, split, short-landing, breakages and any kind of damages to the
Corporation ("Seven Brothers") was not liable for the lost cargo. 5 In modifying the RTC judgment, the cargo." 10 The validity of this stipulation is the lis mota of this case.
respondent appellate court ratiocinated thus:
It should be noted at the outset that there is no dispute between the parties that the proximate cause
It appears that there is a stipulation in the charter party that the ship owner would be exempted from of the sinking of M/V Seven Ambassadors resulting in the loss of its cargo was the "snapping of the
liability in case of loss. iron chains and the subsequent rolling of the logs to the portside due to the negligence of the captain
in stowing and securing the logs on board the vessel and not due to fortuitous event." 11 Likewise
The court a quo erred in applying the provisions of the Civil Code on common carriers to establish the undisputed is the status of Private Respondent Seven Brothers as a private carrier when it contracted
liability of the shipping corporation. The provisions on common carriers should not be applied where to transport the cargo of Petitioner Valenzuela. Even the latter admits this in its petition. 12
the carrier is not acting as such but as a private carrier.
The trial court deemed the charter party stipulation void for being contrary to public policy, 13
citing
Article 1745 of the Civil Code which provides:
Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and The issue posed in this case and the arguments raised by petitioner are not novel; they were resolved
contrary to public policy: long ago by this Court in Home Insurance Co. vs. American Steamship Agencies, Inc. 18 In that case,
the trial court similarly nullified a stipulation identical to that involved in the present case for being
(1) That the goods are transported at the risk of the owner or shipper; contrary to public policy based on Article 1744 of the Civil Code and Article 587 of the Code of
Commerce. Consequently, the trial court held the shipowner liable for damages resulting for the
partial loss of the cargo. This Court reversed the trial court and laid down, through Mr. Justice Jose P.
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;
Bengzon, the following well-settled observation and doctrine:

(3) That the common carrier need not observe any diligence in the custody of the goods;
The provisions of our Civil Code on common carriers were taken from Anglo-American law. Under
American jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a
(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a special person only, becomes a private carrier. As a private carrier, a stipulation exempting the owner
family, or of a man of ordinary prudence in the vigilance over the movables transported; from liability for the negligence of its agent is not against public policy, and is deemed valid.

(5) That the common carrier shall not be responsible for the acts or omissions of his or its employees; Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied
where the carrier is not acting as such but as a private carrier. The stipulation in the charter party
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act absolving the owner from liability for loss due to the negligence of its agent would be void if the strict
with grave or irresistible threat, violence or force, is dispensed with or diminished; public policy governing common carriers is applied. Such policy has no force where the public at large
is not involved, as in this case of a ship totally chartered for the used of a single party. 19(Emphasis
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on supplied.)
account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the
contract of carriage. Indeed, where the reason for the rule ceases, the rule itself does not apply. The general public enters
into a contract of transportation with common carriers without a hand or a voice in the preparation
Petitioner Valenzuela adds that the stipulation is void for being contrary to Articles 586 and 587 of the thereof. The riding public merely adheres to the contract; even if the public wants to, it cannot submit
Code of Commerce 14 and Articles 1170 and 1173 of the Civil Code. Citing Article 1306 and paragraph its own stipulations for the approval of the common carrier. Thus, the law on common carriers
1, Article 1409 of the Civil Code, 15 petitioner further contends that said stipulation "gives no duty or extends its protective mantle against one-sided stipulations inserted in tickets, invoices or other
obligation to the private respondent to observe the diligence of a good father of a family in the documents over which the riding public has no understanding or, worse, no choice. Compared to the
custody and transportation of the cargo." general public, a charterer in a contract of private carriage is not similarly situated. It can — and in
fact it usually does — enter into a free and voluntary agreement. In practice, the parties in a contract
of private carriage can stipulate the carrier's obligations and liabilities over the shipment which, in
The Court is not persuaded. As adverted to earlier, it is undisputed that private respondent had acted turn, determine the price or consideration of the charter. Thus, a charterer, in exchange for
as a private carrier in transporting petitioner's lauan logs. Thus, Article 1745 and other Civil Code convenience and economy, may opt to set aside the protection of the law on common carriers. When
provisions on common carriers which were cited by petitioner may not be applied unless expressly the charterer decides to exercise this option, he takes a normal business risk.
stipulated by the parties in their charter party. 16
Petitioner contends that the rule in Home Insurance is not applicable to the present case because it
In a contract of private carriage, the parties may validly stipulate that responsibility for the cargo rests "covers only a stipulation exempting a private carrier from liability for the negligence of his agent, but
solely on the charterer, exempting the shipowner from liability for loss of or damage to the cargo it does not apply to a stipulation exempting a private carrier like private respondent from the
caused even by the negligence of the ship captain. Pursuant to Article 1306 17 of the Civil Code, such negligence of his employee or servant which is the situation in this case." 20 This contention of
stipulation is valid because it is freely entered into by the parties and the same is not contrary to law, petitioner is bereft of merit, for it raises a distinction without any substantive difference. The
morals, good customs, public order, or public policy. Indeed, their contract of private carriage is not case Home Insurance specifically dealt with "the liability of the shipowner for acts or negligence of its
even a contract of adhesion. We stress that in a contract of private carriage, the parties may freely captain and crew" 21 and a charter party stipulation which "exempts the owner of the vessel from any
stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract loss or damage or delay arising from any other source, even from the neglect or fault of the captain or
involving a common carrier, private carriage does not involve the general public. Hence, the stringent crew or some other person employed by the owner on
provisions of the Civil Code on common carriers protecting the general public cannot justifiably be board, for whose acts the owner would ordinarily be liable except for said
applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy paragraph." 22 Undoubtedly, Home Insurance is applicable to the case at bar.
embodied therein is not contravened by stipulations in a charter party that lessen or remove the
protection given by law in contracts involving common carriers.
The naked assertion of petitioner that the American rule enunciated in Home Insurance is not the rule Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is
in the Philippines 23 deserves scant consideration. The Court there categorically held that said rule required by the nature of the obligation and corresponds with the circumstances of the persons, of
was "reasonable" and proceeded to apply it in the resolution of that case. Petitioner miserably failed the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201,
to show such circumstances or arguments which would necessitate a departure from a well-settled shall apply.
rule. Consequently, our ruling in said case remains a binding judicial precedent based on the doctrine
of stare decisis and Article 8 of the Civil Code which provides that "(j)udicial decisions applying or If the law does not state the diligence which is to be observed in the performance, that which is
interpreting the laws or the Constitution shall form part of the legal system of the Philippines." expected of a good father of a family shall be required.

In fine, the respondent appellate court aptly stated that "[in the case of] a private carrier, a stipulation The Court notes that the foregoing articles are applicable only to the obligor or the one with an
exempting the owner from liability even for the negligence of its agents is valid." 24 obligation to perform. In the instant case, Private Respondent Seven Brothers is not an obligor in
respect of the cargo, for this obligation to bear the loss was shifted to petitioner by virtue of the
Other Arguments charter party. This shifting of responsibility, as earlier observed, is not void. The provisions cited by
petitioner are, therefore, inapplicable to the present case.
On the basis of the foregoing alone, the present petition may already be denied; the Court, however,
will discuss the other arguments of petitioner for the benefit and satisfaction of all concerned. Moreover, the factual milieu of this case does not justify the application of the second paragraph of
Article 1173 of the Civil Code which prescribes the standard of diligence to be observed in the event
Articles 586 and 587, Code of Commerce the law or the contract is silent. In the instant case, Article 362 of the Code of Commerce 28 provides
the standard of ordinary diligence for the carriage of goods by a carrier. The standard of diligence
under this statutory provision may, however, be modified in a contract of private carriage as the
Petitioner Valenzuela insists that the charter party stipulation is contrary to Articles 586 and 587 of
petitioner and private respondent had done in their charter party.
the Code of Commerce which confer on petitioner the right to recover damages from the shipowner
and ship agent for the acts or conduct of the captain. 25 We are not persuaded. Whatever rights
petitioner may have under the aforementioned statutory provisions were waived when it entered into Cases Cited by Petitioner Inapplicable
the charter party.
Petitioner cites Shewaram vs. Philippine Airlines, Inc. 29 which, in turn, quoted Juan Ysmael &
Article 6 of the Civil Code provides that "(r)ights may be waived, unless the waiver is contrary to law, Co. vs. Gabino Barreto & Co. 30 and argues that the public policy considerations stated
public order, public policy, morals, or good customs, or prejudicial to a person with a right recognized there vis-a-vis contractual stipulations limiting the carrier's liability be applied "with equal force" to
by law." As a general rule, patrimonial rights may be waived as opposed to rights to personality and this case. 31 It also cites Manila Railroad Co. vs.Compañia Transatlantica 32 and contends that
family rights which may not be made the subject of waiver. 26 Being patently and undoubtedly stipulations exempting a party from liability for damages due to negligence "should not be
patrimonial, petitioner's right conferred under said articles may be waived. This, the petitioner did by countenanced" and should be "strictly construed" against the party claiming its benefit. 33We
acceding to the contractual stipulation that it is solely responsible or any damage to the cargo, disagree.
thereby exempting the private carrier from any responsibility for loss or damage thereto. Furthermore,
as discussed above, the contract of private carriage binds petitioner and private respondent alone; it The cases of Shewaram and Ysmael both involve a common carrier; thus, they necessarily justify the
is not imbued with public policy considerations for the general public or third persons are not affected application of such policy considerations and concomitantly stricter rules. As already discussed above,
thereby. the public policy considerations behind the rigorous treatment of common carriers are absent in the
case of private carriers. Hence, the stringent laws applicable to common carriers are not applied to
Articles 1170 and 1173, Civil Code private carries. The case of Manila Railroad is also inapplicable because the action for damages there
does not involve a contract for transportation. Furthermore, the defendant therein made a "promise
to use due care in the lifting operations" and, consequently, it was "bound by its undertaking"';
Petitioner likewise argues that the stipulation subject of this controversy is void for being contrary to
besides, the exemption was intended to cover accidents due to hidden defects in the apparatus or
Articles 1170 and 1173 of the Civil Code 27 which read:
other unforseeable occurrences" not caused by its "personal negligence." This promise was thus
constructed to make sense together with the stipulation against liability for damages. 34 In the
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, present case, we stress that the private respondent made no such promise. The agreement of the
and those who in any manner contravene the tenor thereof, are liable for damages parties to exempt the shipowner from responsibility for any damage to the cargo and place
responsibility over the same to petitioner is the lone stipulation considered now by this Court.
Finally, petitioner points to Standard Oil Co. of New York vs. Lopez Costelo, 35 Walter A. Smith &
Co. vs.Cadwallader Gibson Lumber Co., 36 N. T . Hashim and Co. vs. Rocha and Co., 37 Ohta
Development Co. vs.Steamship "Pompey" 38 and Limpangco Sons vs. Yangco Steamship Co. 39 in
support of its contention that the shipowner be held liable for damages. 40 These however are not on
all fours with the present case because they do not involve a similar factual milieu or an identical
stipulation in the charter party expressly exempting the shipowner form responsibility for any damage
to the cargo.

Effect of the South Sea Resolution

In its memorandum, Seven Brothers argues that petitioner has no cause of action against it because
this Court has earlier affirmed the liability of South Sea for the loss suffered by petitioner. Private
respondent submits that petitioner is not legally entitled to collect twice for a single loss. 41 In view of
the above disquisition upholding the validity of the questioned charter party stipulation and holding
that petitioner may not recover from private respondent, the present issue is moot and academic. It
suffices to state that the Resolution of this Court dated June 2, 1995 42 affirming the liability of South
Sea does not, by itself, necessarily preclude the petitioner from proceeding against private
respondent. An aggrieved party may still recover the deficiency for the person causing the loss in the
event the amount paid by the insurance company does not fully cover the loss. Article 2207 of the
Civil Code provides:

Art. 2207. If the plaintiff's property has been insured, and he has received indemnity for the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the
insurance company shall be subrogated to the rights of the insured against the wrongdoer or the
person who has violated the contract. If the amount paid by the insurance company does not fully
cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency form the person
causing the loss or injury.

WHEREFORE, premises considered, the petition is hereby DENIED for its utter failure to show any
reversible error on the part of Respondent Court. The assailed Decision is AFFIRMED.

SO ORDERED.