De Guzman v.
CA and Cendana RULING:
FACTS:
Respondent Ernesto Cendana, a junk dealer, was engaged in
buying up used bottles and scrap metal in Pangasinan which
he would bring 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 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.
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 petitioner's establishment in Urdaneta on or before 4
December 1970.
Accordingly, respondent loaded in Makati the merchandise
on to his trucks: 150 cartons were loaded on a truck driven
by respondent himself, while 600 cartons were placed on
board the other truck which was driven by Manuel Estrada,
respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to
petitioner. The other 600 boxes never reached
petitioner, since the truck which carried these boxes
was hijacked somewhere along the MacArthur Highway
in Paniqui, Tarlac, by armed men who took with them
the truck, its driver, his helper and the cargo.
De Guzman commenced action against Cendena in the CFI
of Pangasinan, demanding payment of P 22,150
representing the claimed value of the lost merchandise, plus
damages and attorney's fees. Petitioner argued that private
respondent, being a 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.
Cendena denied that he was a common carrier and argued
that he could not be held responsible for the value of the
lost goods, such loss having been due to force majeure.
RTC found private respondent to be a common carrier and
held him liable for the value of the undelivered goods as
well as P4K as damages and P 2K as attorney's fees.
CA reversed the judgment of the trial court and held that
respondent had been engaged in transporting return loads
of freight "as a casual occupation — a sideline to his scrap
iron business" and not as a common carrier.
ISSUE/S:
- W/N Cendena may, under the facts presented, be
properly characterized as a common carrier?
- W/N Cendena, assuming it is a common carrier,
may be held liable for the loss of goods?
1. YES. It appears to the Court that private respondent is
properly characterized as a common carrier even though he
merely "back-hauled" goods for other merchants from
Manila to Pangasinan, although such back-hauling was
done on a periodic or occasional rather than regular or
scheduled manner, and even though private
respondent's principal occupation not the carriage of
goods for others. 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.
A certificate of public convenience is not a requisite for
the incurring of liability under the Civil Code provisions
governing common carriers. That liability arises the
moment a person or firm acts as a common carrier,
without regard to whether or not such carrier has also
complied with the requirements of the applicable
regulatory statute and implementing regulations and
has been granted a certificate of public convenience or
other franchise. To exempt private respondent from the
liabilities of a common carrier because he has not
secured the necessary certificate of public convenience,
would be offensive to sound public policy; that would be
to reward private respondent precisely for failing to
comply with applicable statutory requirements.
2. NO. The specific cause alleged in the instant case — the
hijacking of the carrier's truck — does not fall within any of
the five (5) categories of exempting causes listed in Article
1734. It would follow, therefore, that the hijacking of the
carrier's vehicle must be dealt with under the provisions of
Article 1735, in other words, that the private respondent as
common carrier is presumed to have been at fault or to have
acted negligently. This presumption, however, may be
overthrown by proof of extraordinary diligence on the part
of private respondent.
The duty of extraordinary diligence in the vigilance over
goods is, under Article 1733, given additional specification
not only by Articles 1734 and 1735 but also by Article 1745,
was numbers 4, 5 and 6.
Under Article 1745 (6) above, a common carrier is held
responsible —and will not be allowed to divest or to
diminish such responsibility— even for acts of strangers
like thieves or robbers, except where such thieves or
robbers in fact acted "with grave or irresistible threat,
violence or force."
The 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 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. 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. CFI
convicted all the accused of robbery, though not of robbery
in band.
Thus, 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.
First Philippine Industrial Corp v. CA
FACTS:
Petitioner is a grantee of a pipeline concession under RA No.
387, as amended, to contract, install and operate oil
pipelines. The original pipeline concession was granted in
1967 and renewed by the Energy Regulatory Board in
1992.
Petitioner applied for a mayor's permit with the Office of
the Mayor of Batangas City. However, before the mayor's
permit could be issued, the respondent City Treasurer
required petitioner to pay a local tax based on its gross
receipts for the fiscal year 1993 pursuant to the Local
Government Code .The respondent City Treasurer assessed
a business tax on the petitioner based on the gross receipts
for products pumped at GPS-1 for the fiscal year 1993. In
order not to hamper its operations, petitioner paid the tax
under protest for the first quarter of 1993.
Petitioner filed a letter-protest addressed to the respondent
City Treasurer which asserts the fact that FPIC is a pipeline
operator granted with a government concession under the
Petroleum Act and as such, is exempt from paying tax on
gross receipts under Sec. 133(h) of the LGC. It also asserted
that transportation contractors are not included in the
enumeration of contractors under Sec. 131(e) of the LGC,
thus, the authority to impose tax "on contractors and other
independent contractors" under this provision does not
include
Respondent City Treasurer denied the protest contending
that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption
under Section 133 (j) of the Local Government Code.
Petitioner filed with the RTC of Batangas City a complaint
for tax refund with prayer for writ of preliminary injunction
against respondents City of Batangas and Adoracion
Arellano in her capacity as City Treasurer.
Respondents argued that petitioner cannot be exempt from
taxes under Section 133 (j) of the Local Government Code
as said exemption applies only to "transportation
contractors and persons engaged in the transportation by
hire and common carriers by air, land and water." They
assert that pipelines are not included in the term "common
carrier" which refers solely to ordinary carriers such as
trucks, trains, ships and the like and that the term "common
carrier" under the said code pertains to the mode or
manner by which a product is delivered to its destination.
RTC dismissed the complaint and ruled that FIPC is not a
common carrier but a special carrier extending its services
and facilities to a single specific customer under a special
contract.
CA affirmed RTC’s Decision.
ISSUE: W/N petitioner – an oil pipeline owner – is a
common carrier?
RULING:
YES. A "common carrier" may be defined, broadly, as one
who holds himself out to the public as engaged in the
business of transporting persons or property from place to
place, for compensation, offering his services to the public
generally.
Art. 1732 of the Civil Code defines a "common carrier" as
"any person, corporation, firm or association engaged in the
business of carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, offering their
services to the public."
The test for determining whether a party is a common
carrier of goods is:
1. He must be engaged in the business of carrying goods for
others as a public employment, and must hold himself out
as ready to engage in the transportation of goods for person
generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his
business is confined;
3. He must undertake to carry by the method by which his
business is conducted and over his established roads; and
4. The transportation must be for hire.
Based on the above definitions and requirements, there is
no doubt that petitioner is a common carrier. It is engaged
in the business of transporting or carrying goods, i.e.
petroleum products, for hire as a public employment. It
undertakes to carry for all persons indifferently, that is, to
all persons who choose to employ its services, and
transports the goods by land and for compensation. The fact
that petitioner has a limited clientele does not exclude it
from the definition of a common carrier.
As correctly pointed out by petitioner, the definition of
"common carriers" in the Civil Code makes no distinction as
to the means of transporting, as long as it is by land, water
or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle. In fact, in
the United States, oil pipe line operators are considered
common carriers.
Under the Petroleum Act of the Philippines (RA 387),
petitioner is considered a "common carrier." Thus, Article
86 thereof provides that:
Art. 86. Pipe line concessionaire as common carrier. — A
pipe line shall have the preferential right to utilize
installations for the transportation of petroleum owned by
him, but is obligated to utilize the remaining transportation
capacity pro rata for the transportation of such other
petroleum as may be offered by others for transport, and to
charge without discrimination such rates as may have been
approved by the Secretary of Agriculture and Natural
Resources.
Republic Act 387 also regards petroleum operation as a
public utility. Pertinent portion of Article 7 thereof
provides:
that everything relating to the exploration for and
exploitation of petroleum . . . and everything relating to the
manufacture, refining, storage, or transportation by special
methods of petroleum, is hereby declared to be a public
utility.
The Bureau of Internal Revenue likewise considers the
petitioner a "common carrier." In BIR Ruling No. 069-83, it
declared:
. . . since [petitioner] is a pipeline concessionaire
that is engaged only in transporting petroleum
products, it is considered a common carrier
under Republic Act No. 387 . . . . Such being the
case, it is not subject to withholding tax
prescribed by Revenue Regulations No. 13-78, as
amended.
From the foregoing disquisition, there is no doubt that
petitioner is a "common carrier" and, therefore, exempt
from the business tax as provided for in Section 133 (j), of
the Local Government Code, to wit:
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:
xxx
(j) Taxes on the gross receipts of transportation contractors
and persons engaged in the transportation of passengers or
freight by hire and common carriers by air, land or water,
except as provided in this Code.
Spouses Teodoro and Nanette Perena, vs. Spouses
Nicolas and Teresita Zarate
GR no. 157917 August 29, 2012
The facts of the case are as follows:
Spouses Perena were engaged in school bus service,
transporting students from Paranaque to Don Bosco
Technical Institute in Makati. In June 1996, spouses Zarate
contracted spouses Perena to transport their son, Aaron
Zarate, from their residence in Paranaque to Don Bosco. As
on the usual days of school in August 22, 1996, the van
picked-up Aaron in their house, he then took the left side
seat near the rear door of the said vehicle. Considering that
the students were due by 7:15am at Don Bosco, and
because of heavy traffic at the South Superhighway, the
driver, Clemente Alfaro, decided to take the narrow path
underneath the Magallanes interchange which then is being
used by Makati bound vehicles as short cut. The said
narrow path has a railroad crossing, and while traversing
the said narrow path, closely tailing a huge passenger bus,
the driver of the school service decided to overtake the said
bus at about 50 meters away from the railroad crossing.
Considering that the stereo is playing loudly and blinded by
the bus, he did not hear the blowing of horn of the
oncoming train as a warning to the vehicles. The bus
successfully crossed the railroad crossing but the van did
not. The train hit the rear side of the van and the impact
threw 9 of the 12 students including Aaron. His body landed
in the path of the train, which dragged him, severed his
head, instantaneously killing him. Devastated by the sudden
death of their son, spouses Zarate commenced this action
for damages. The Regional Trial Court ruled in favor of the
spouses Zarate. On appeal, The Court of Appeals affirmed
the decision of the lower court but lowered the moral
damages to php 2,500,000.00.
ISSUE:
Whether or not there is a breach of contract of a
common carrier and whether there is negligence.
HELD:
The Supreme Court ruled in favor spouses Zarate,
affirming the decision of the Court of Appeals.
In this case, the Supreme Court, once and for all lay
the matter to rest that the school service is a common
carrier and not a private carrier, and as such, they are
required to observe the extraordinary diligence as provided
under Article 1733 of the Civil Code.
According to the Supreme Court, the true test for a
common carrier is not the quantity or extent of the business
actually transacted, or the number and character of the
conveyances used in the activity, but whether the
undertaking is a part of the activity engaged in by the
carrier that he has held out to the general public as his
business or occupation. Otherwise stated, making the
activity or holding himself or itself out to the public as a
ready to act for all who may desire his or its services to
transport goods or persons for a fee.
Applying the considerations mentioned above,
there is no question that Perenas as the operators of a
school service were: a) engaged in transporting passengers
generally as a business not just as a casual occupation; b)
undertaking to carry passengers over established roads; c)
transporting students for a fee. Despite catering limited
clientele, the Perenas operated as a common carrier
because they hold themselves out as a ready transportation
indiscriminately to the students of a particular school living
within or near where they operated the service and for a
fee.
On the second issue, Article 1756 of the Civil code
provides that, In case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and
1755. In this case, Aaron Zarate died, and thus as provided
under the above-mentioned law, they are negligent.
G.R. No. 166250 July 26, 2010UNSWORTH TRANSPORT
INTERNATIONAL (PHILS.), INC.,
Petitioner,vs. transportation a carrier subject to the federal law
COURT OF APPEALS and PIONEER INSURANCE AND pertaining to common carriers. A freight forwarder’s
SURETY CORPORATION, liability is limited to damages arising from its own
Respondents.
negligence, including negligence in choosing the carrier;
Facts: On August 31, 1992, the shipper Sylvex Purchasing however, where the forwarder contracts to deliver goods to
Corporation delivered to UTI ashipment of 27 drums of their destination instead of merely arranging for their
various raw materials for pharmaceutical manufacturing, transportation, it becomes liable as a common carrier for
consistingof: "1) 3 drums (of) extracts, flavoring liquid, loss or damage to goods. A freight forwarder assumes the
flammable liquid x x x banana flavoring; 2) 2drums (of) responsibility of a carrier, which actually executes the
flammable liquids x x x turpentine oil; 2 pallets. STC: 40 transport, even though the forwarder does not carry the
bags dried yeast; and 3)20 drums (of) Vitabs: Vitamin B merchandise itself. Undoubtedly, UTI is liable as a common
Complex Extract." UTI issued Bill of Lading carrier. Common carriers, as a general rule, are presumed to
No.C320/C15991-2, covering the aforesaid shipment. The have been at fault or negligent if the goods they transported
subject shipment was insured withprivate respondent deteriorated or got lost or destroyed. That is, unless they
Pioneer Insurance and Surety Corporation in favor of Unilab prove that they exercised extraordinary
against allrisks in the amount of P1,779,664.77 under and
by virtue of Marine Risk Note Number MCRM UL 0627 92
and Open Cargo Policy No. HO-022-RIU.On the same day
that the bill of lading was issued, the shipment was loaded
in asealed 1x40 container van, with no. APLU-982012,
boarded on APL’s vessel M/V "Pres. Jackson," Voyage 42, and
transshipped to APL’s M/V "Pres. Taft" for delivery to
petitioner infavor of the consignee United Laboratories, Inc.
(Unilab).On September 30, 1992, the shipment arrived at
the port of Manila. On October 6,1992, petitioner received
the said shipment in its warehouse after it stamped the
Permit toDeliver Imported Goods procured by the Champs
Customs Brokerage. Three days thereafter,or on October 9,
1992, Oceanica Cargo Marine Surveyors Corporation
(OCMSC) conducted astripping survey of the shipment
located in petitioner’s warehouse.Consequently, Unilab’s
quality control representative rejected one paper
bagcontaining dried yeast and one steel drum containing
Vitamin B Complex as unfit for theintended purpose. On
November 7, 1992, Unilab filed a formal claim for the
damage againstprivate respondent and UTI. On November
20, 1992, UTI denied liability on the basis of thegate pass
issued by Jardine that the goods were in complete and good
condition; whileprivate respondent paid the claimed
amount on March 23, 1993. By virtue of the Loss
andSubrogation Receipt issued by Unilab in favor of private
respondent, the latter filed acomplaint for Damages against
APL, UTI and petitioner with the RTC of Makati.

Issue: Whether or not petitioner is a common carrier.

Held: Admittedly, petitioner is a freight forwarder. The term

"freight forwarder" refers to a firm holding itself out to the
general public (other than as a pipeline, rail, motor, or
watercarrier) to provide transportation of property for
compensation and, in the ordinary course of its business,
(1) to assemble and consolidate, or to provide for
assembling and consolidating, shipments, and to perform or
provide for break-bulk and distribution operations of the
shipments; (2) to assume responsibility for the
transportation of goods from the place of receipt to the
place of destination; and (3) to use for any part of the