Alitalia v.
IAC The convention however denies to the carrier
Facts:
Dr. Felipa Pablo, an associate professor in the
University of the Philippines and a research grantee
of the Philippine Atomic Energy Agency, was invited
to take part at a meeting of the Department of
Research and Isotopes in Italy in view of her
specialized knowledge in “foreign substances in food
and the agriculture environment”. She would be the
second speaker on the first day of the meeting. Dr.
Pablo booked passage on petitioner Alitalia. She
arrived in Milan on the day before the meeting, but
was told that her luggage was delayed and was in a
succeeding flight from Rome to Milan. The luggage
included her materials for the presentation. The
succeeding flights did not carry her luggage.
Desperate, she went to Rome to try to locate the
luggage herself, but to no avail. She returned to
Manila without attending the meeting. She
demanded reparation for the damages. She rejected
Alitalia’s offer of free airline tickets and commenced
an action for damages. As it turned out, the luggage
was actually forwarded to Ispra, but only a day after
the scheduled appearance. It was returned to her
after 11 months. The trial court ruled in favor of Dr.
Pablo, and this was affirmed by the Court of Appeals.
Issues:
(1) Whether the Warsaw Convention should be
applied to limit Alitalia’s liability
(2) Whether Dr. Pablo is entitled to nominal damages
Held:
(1) Under the Warsaw Convention, an air carrier is
made liable for damages for:
a. The death, wounding or other bodily injury of a
passenger if the accident causing it took place on
board the aircraft or I the course of its operations of
embarking or disembarking;
b. The destruction or loss of, or damage to, any
registered luggage or goods, if the occurrence causing
it took place during the carriage by air; and
c. Delay in the transportation by air of passengers,
luggage or goods.
availment of the provisions which exclude or limit his
liability, if the damage is caused by his wilful
misconduct, or by such default on his part as is
considered to be equivalent to wilful misconduct. The
Convention does not thus operate as an exclusive
enumeration of the instances of an airline's liability,
or as an absolute limit of the extent of that liability. It
should be deemed a limit of liability only in those
cases where the cause of the death or injury to
person, or destruction, loss or damage to property or
delay in its transport is not attributable to or attended
by any wilful misconduct, bad faith, recklessness, or
otherwise improper conduct on the part of any
official or employee for which the carrier is
responsible, and there is otherwise no special or
extraordinary form of resulting injury.
In the case at bar, no bad faith or otherwise improper
conduct may be ascribed to the employees of
petitioner airline; and Dr. Pablo's luggage was
eventually returned to her, belatedly, it is true, but
without appreciable damage. The fact is,
nevertheless, that some species of injury was caused
to Dr. Pablo because petitioner ALITALIA misplaced
her baggage and failed to deliver it to her at the time
appointed - a breach of its contract of carriage.
Certainly, the compensation for the injury suffered by
Dr. Pablo cannot under the circumstances be
restricted to that prescribed by the Warsaw
Convention for delay in the transport of baggage.
(2) She is not, of course, entitled to be compensated
for loss or damage to her luggage. She is however
entitled to nominal damages which, as the law says,
is adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant,
may be vindicated and recognized, and not for the
purpose of indemnifying the plaintiff that for any loss
suffered and this Court agrees that the respondent
Court of Appeals correctly set the amount thereof at
PhP 40,000.00.
The Court also agrees that respondent Court of
Appeals correctly awarded attorney’s fees to Dr.
Pablo and the amount of PhP 5,000.00 set by it is
reasonable in the premises. The law authorizes
recovery of attorney’s fees inter alia where, as here,
the defendant’s act or omission has compelled the
plaintiff to litigate with third persons or to incur
expenses to protect his interest or where the court RULING:
deems it just and equitable.
YES.

The Supreme Court reversed the decisions of both the

American Home Assurance vs. CA GR 94149, 5 May Court of Appeals and the Regional Trial Court of
1992 common carrier, insurance, Article 1733 of the Manila, Branch 41, appealed from; and ordered NMC
Civil Code to reimburse the subrogee, American Home
Assurance, the amount of P31,506.75.
FACTS:
Under Article 1733 of the Civil Code, common carriers
American Home Assurance Co. and the National
from the nature of their business and for reasons of
Marine Corporation (NMC) are foreign corporations
public policy are bound to observe extraordinary
licensed to do business in the Philippines. On or about
diligence in the vigilance over the goods and for the
19 June 1988, Cheng Hwa Pulp Corporation shipped
safety of passengers transported by them according
5,000 bales (1,000 ADMT) of bleached kraft pulp from
to all circumstances of each case. Thus, under Article
Haulien, Taiwan on board “SS Kaunlaran”, which is
1735 of the same Code, in all cases other than those
owned and operated by NMC. The said shipment was
mentioned in Article 1734 thereof, the common
consigned to Mayleen Paper, Inc. of Manila, which
carrier shall be presumed to have been at fault or to
insured the shipment with American Home Assurance
have acted negligently, unless it proves that it has
Co..
observed the extraordinary diligence required by law.
On 22 June 1988, the shipment arrived in Manila and
Common carriers cannot limit their liability for injury
was discharged into the custody of the Marina Port
or loss of goods where such injury or loss was caused
Services, Inc., for eventual delivery to the consignee-
by its own negligence. Otherwise stated, the law on
assured.
averages under the Code of Commerce cannot be
However, upon delivery of the shipment to Mayleen applied in determining liability where there is
Paper, Inc., it was found that 122 bales had either negligence.
been damaged or lost. The loss was calculated to be
Under the foregoing principle and in line with the Civil
4,360 kilograms with an estimated value of
Code’s mandatory requirement of extraordinary
P61,263.41. Mayleen Paper, Inc. then duly demanded
diligence on common carriers in the care of goods
indemnification from NMC for the damages and
placed in their stead, it is but reasonable to conclude
losses in the shipment but to no avail. Mayleen Paper,
that the issue of negligence must first be addressed
Inc. sought recovery from American Home Assurance
before the proper provisions of the Code of
Co.. Upon demand and submission of proper
Commerce on the extent of liability may be applied.
documentation, American Home Assurance paid
Mayleen Paper, Inc. the adjusted amount of P31, As resolved in National Development Co. v. C.A. (164
506.75 for the damages/losses suffered by the SCRA 593 [1988]; citing Eastern Shipping Lines, Inc. v.
shipment, hence, AHA was subrogated to the rights I.A.C., 150 SCRA 469, 470 [1987], “the law of the
and interests of Mayleen Paper, Inc. country to which the goods are to be transported
governs the liability of the common carrier in case of
AHA brought a suit against respondent NMC for the
their loss, destruction or deterioration.” (Article 1753,
amount it paid Mayleen Paper, Inc.
Civil Code). Herein, thus, for cargoes transported to
The RTC rendered a decision dismissing the the Philippines, the liability of the carrier is governed
complaint, such decision was affirmed by the CA. primarily by the Civil Code and in all matters not
regulated by said Code, the rights and obligations of
ISSUE: common carrier shall be governed by the Code of
Commerce and by special laws (Article 1766, Civil
Is American Home Assurance Company is entitled to
Code).
reimbursement from NMC of what it paid to Mayleen
Paper?
The filing of a motion to dismiss on the ground of lack
of cause of action carries with it the admission of the
material facts pleaded in the complaint (Sunbeam
Convenience Foods, Inc. v. C.A., 181 SCRA 443
[1990]). Herein, upon delivery of the shipment in
question at Mayleen’s warehouse in Manila, 122
bales were found to be damaged/lost with straps cut
or loose, calculated by the so-called “percentage
method” at 4,360 kilograms and amounting to
P61,263.41. Instead of presenting proof of the
exercise of extraordinary diligence as required by law,
NMC filed its Motion to Dismiss dated 7 August 1989,
hypothetically admitting the truth of the facts alleged
in the complaint to the effect that the loss or damage
to the 122 bales was due to the negligence or fault of
NMC. Such being the case, it is evident that the Code
of Commerce provisions on averages cannot apply.
Article 1734 of the Civil Code provides that common
carriers are responsible for loss, destruction or
deterioration of the goods, unless due to any of the
causes enumerated therein. Herein, it is obvious that
the present case does not fall under any of the
exceptions. Thus, American Home Assurance
Company is entitled to reimbursement of what it paid
to Mayleen Paper, Inc. as insurer.
G.R. No. 166250 July 26, 2010
UNSWORTH TRANSPORT INTERNATIONAL (PHILS.),
INC., Petitioner,
vs.
COURT OF APPEALS and PIONEER INSURANCE AND
SURETY CORPORATION, Respondents.
Facts: On August 31, 1992, the shipper Sylvex
Purchasing Corporation delivered to UTI a shipment
of 27 drums of various raw materials for
pharmaceutical manufacturing, consisting of: "1) 3
drums (of) extracts, flavoring liquid, flammable liquid
x x x banana flavoring; 2) 2 drums (of) flammable
liquids x x x turpentine oil; 2 pallets. STC: 40 bags
dried yeast; and 3) 20 drums (of) Vitabs: Vitamin B
Complex Extract." UTI issued Bill of Lading No.
C320/C15991-2, covering the aforesaid shipment.
The subject shipment was insured with private
respondent Pioneer Insurance and Surety
Corporation in favor of Unilab against all risks in the
amount of P1,779,664.77 under and by virtue of
Marine Risk Note Number MC RM 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 a sealed 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 in favor 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 to Deliver
Imported Goods procured by the Champs Customs
Brokerage. Three days thereafter, or on October 9,
1992, Oceanica Cargo Marine Surveyors Corporation
(OCMSC) conducted a stripping survey of the
shipment located in petitioner’s warehouse.
Consequently, Unilab’s quality control
representative rejected one paper bag containing
dried yeast and one steel drum containing Vitamin B
Complex as unfit for the intended purpose. On
November 7, 1992, Unilab filed a formal claim for the
damage against private respondent and UTI. On
November 20, 1992, UTI denied liability on the basis
of the gate pass issued by Jardine that the goods were
in complete and good condition; while private
respondent paid the claimed amount on March 23,
1993. By virtue of the Loss and Subrogation
Receipt issued by Unilab in favor of private
respondent, the latter filed a complaint 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 water carrier) 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 transportation a carrier subject to the federal law
pertaining to common carriers.
 A freight forwarder’s liability is limited to
damages arising from its own negligence, including
negligence in choosing the carrier; however, where
the forwarder contracts to deliver goods to their
destination instead of merely arranging for their
transportation, it becomes liable as a common carrier
for loss or damage to goods. A freight forwarder
assumes the responsibility of a carrier, which actually
executes the transport, even though the forwarder
does not carry the merchandise itself.
Undoubtedly, UTI is liable as a common
carrier. Common carriers, as a general rule, are
presumed to have been at fault or negligent if the
goods they transported deteriorated or got lost or
destroyed. That is, unless they prove that they
exercised extraordinary diligence in transporting the
goods. In order to avoid responsibility for any loss or
damage, therefore, they have the burden of proving
that they observed such diligence. Mere proof of
delivery of the goods in good order to a common
carrier and of their arrival in bad order at their
destination constitutes a prima facie case of fault or
negligence against the carrier. If no adequate
explanation is given as to how the deterioration, loss,
or destruction of the goods happened, the
transporter shall be held responsible.
National Steel vs. CA G.R. No. 112287 December
12,1997 VLASONS SHIPPING, INC. vs. CA AND
NATIONAL STEEL CORPORATION G.R. No. 112350.
December 12, 1997
FACTS:
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 into a
special contract of charter party with its owner. The
ship is a private carrier, and it is in this capacity that
its owner, Vlasons Shipping, Inc. (VSA), entered into a
contract of affreightment or contract of voyage
charter hire with National Steel Corporation (NSC) on
17 July 1974, whereby NSC hired VSI’s vessel, the MV
‘VLASONS I’ to make 1 voyage to load steel products
at Iligan City and discharge them at North Harbor,
Manila
The shipment was placed in the 3 hatches of the ship
which arrived with the cargo at Pier 12, North Harbor,
Manila, on 12 August 1974. The following day, when
the vessel’s 3 hatches containing the shipment were
opened by NSC’s agents, nearly all the skids of
tinplates and hot rolled sheets were allegedly found
to be wet and rusty. The cargo was discharged and
unloaded by stevedores hired by the Charterer.
On 6 September 1974 NSC filed with VSI its claim for
damages suffered due to the downgrading of the
damaged tinplates in the amount of P941,145.18.
Then on 3 October 1974, NSC formally demanded
payment of said claim but VSI refused and failed to
pay.
On appeal, and on 12 August 1993, the Court of
Appeals modified the decision of the trial court by
reducing the 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. The CA denied both
motions. NSC and VSI filed their respective petitions
for review before the Supreme Court.
ISSUE: Whether or not VSI contracted with NSC as a
common carrier or a private carrier.
RULING:
Article 1732 of the Civil Code defines a common
carrier as “persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services
to the public.” It has been held that the true test 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.
A carrier which does not qualify under the test of a
common carrier 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, although not the only form of private carriage,
is the charter party, a maritime contract by which the
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.”Herein, VSI did
not offer its services to the general public. It carried
passengers or goods only for those it chose under a
“special contract of charter party.” The MV Vlasons I
“was not a common but a private carrier.”
Consequently, the rights and obligations of VSI and
NSC, including their respective liability for damage to
the cargo, are determined primarily by stipulations in
their contract of private carriage or charter party.
In Valenzuela Hardwood and Industrial Supply, Inc.,
vs. Court of Appeals and Seven Brothers Shipping
Corporation, the Court ruled that “in a contract of
private carriage, the parties may freely stipulate their
duties and obligations which perforce would be
binding on them. Unlike in a contract involving a
common carrier, private 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 commercial goods as a private carrier.
Consequently, the public policy 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.”
From the parties’ Contract of Voyage Charter Hire,
dated 17 July 1974, VSI “shall not be responsible for
losses except on proven willful negligence of the
officers of the vessel.” The NANYOZAI Charter Party,
which was incorporated in the parties’ contract of
transportation further provided that the shipowner
shall not be liable for loss of or damage to the cargo
arising or resulting from unseaworthiness, unless the
same was caused by its lack of due diligence to make
the vessel seaworthy or to ensure that the same was
“properly manned, equipped and supplied,” and to
“make the holds and all other parts of the vessel in
which cargo was carried, fit and safe for its reception,
carriage and preservation.” The NANYOZAI Charter
Party also provided that “owners shall not be
responsible for split, chafing and/or any damage
unless caused by the negligence or default of the
master or crew.”
Herein, NSC must prove that the damage to its
shipment was caused by VSI’s willful negligence or
failure to exercise due diligence in making MV Vlasons
I seaworthy and fit for holding, carrying and
safekeeping the cargo. Ineluctably, the burden of
proof was placed on NSC by the parties’ agreement.
Article 361 of the Code of Commerce provides that
“Merchandise shall be transported at the risk and
venture of the shipper, if the contrary has not been
expressly stipulated. Therefore, the damage and
impairment suffered by the goods during the
transportation, due to fortuitous event, force
majeure, or the nature and inherent defect of the
things, shall be for the account and risk of the shipper.
The burden of proof of these accidents is on the
carrier.”
Article 362 of the Code of Commerce provides that
“The carrier, however, shall be liable for damages
arising from the cause mentioned in the 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 fraud in the bill of
lading, making him to believe that the goods were of
a class or quality different from what they really
were.”
As the MV Vlasons I was a private carrier, the
shipowner’s obligations are governed by the
foregoing provisions of the Code of Commerce and
not by the Civil Code which, as a general rule, places
the prima facie presumption of negligence on a
common carrier.
The Supreme Court denied the consolidated
petitions; and affirmed the questioned Decision of
the Court of Appeals with the modification that the
demurrage awarded to VSI is deleted. No
pronouncement as to costs.
Malayan Insurance Co., Inc vs Philippines First
Insurance Co., Inc
G.R. No. 184300 July 11, 2012
Facts:
Since 1989, Wyeth Philippines, Inc. (Wyeth) and
respondent Reputable Forwarder Services, Inc.
(Reputable) had been annually executing a contract
of carriage, whereby the latter undertook to
transport and deliver the former’s products to its
customers, dealers or salesmen. On November 18,
1993, Wyeth procured Marine Policy No. MAR 13797
(Marine Policy) from respondent Philippines First
Insurance Co., Inc. (Philippines First) to secure its
interest over its own products. Philippines First
thereby insured Wyeth’s nutritional, pharmaceutical
and other products usual or incidental to the
insured’s business while the same were being
transported or shipped in the Philippines. The policy
covers all risks of direct physical loss or damage from
any external cause, if by land, and provides a limit of
P6,000,000.00 per any one land vehicle. On
December 1, 1993, Wyeth executed its annual
contract of carriage with Reputable. It turned out,
however, that the contract was not signed by Wyeth’s
representative/s. Nevertheless, it was admittedly
signed by Reputable’s representatives, the terms
thereof faithfully observed by the parties and, as
previously stated, the same contract of carriage had
been annually executed by the parties every year
since 1989. Under the contract, Reputable undertook
to answer for “all risks with respect to the goods and
shall be liable to the COMPANY (Wyeth), for the loss,
destruction, or damage of the goods/products due to
any and all causes whatsoever, including theft,
robbery, flood, storm, earthquakes, lightning, and
other force majeure while the goods/products are in
transit and until actual delivery to the customers,
salesmen, and dealers of the COMPANY”. The
contract also required Reputable to secure an
insurance policy on Wyeth’s goods. Thus, on February
11, 1994, Reputable signed a Special Risk Insurance
Policy (SR Policy) with petitioner Malayan for the
amount of P1,000,000.00. On October 6, 1994, during
the effectivity of the Marine Policy and SR Policy,
Reputable received from Wyeth 1,000 boxes of
Promil infant formula worth P2,357,582.70 to be
delivered by Reputable to Mercury Drug Corporation
in Libis, Quezon City. Unfortunately, on the same
date, the truck carrying Wyeth’s products was
hijacked by about 10 armed men. They threatened to
kill the truck driver and two of his helpers should they
refuse to turn over the truck and its contents to the
said highway robbers. The hijacked truck was
recovered two weeks later without its cargo. Malayan
questions its liability based on sections 5 and 12 of the
SR Policy.
ISSUE:
Whether Reputable is a private carrier;
HELD:
Under Article 1732 of the Civil Code, common carriers
are persons, corporations, firms, or associations
engaged in the business of carrying or transporting
passenger or goods, or both by land, water or air for
compensation, offering their services to the public.
On the other hand, a private carrier is one wherein
the carriage is generally undertaken by special
agreement and it does not hold itself out to carry
goods for the general public.28 A common carrier
becomes a private carrier when it undertakes to carry
a special cargo or chartered to a special person
only.29 For all intents and purposes, therefore,
Reputable operated as a private/special carrier with
regard to its contract of carriage with Wyeth.
Reputable is a private carrier. Well-entrenched in
jurisprudence is the rule that factual findings of the
trial court, especially when affirmed by the appellate
court, are accorded the highest degree of respect and
considered conclusive between the parties, save for
certain exceptional and meritorious circumstances,
none of which are present in this case.
BRITISH AIRWAYS VS CA
FACTS:
On April 16, 1989, Mahtani decided to visit his
relatives in Bombay, India. He asked Mr. Gumar to
prepare his travel plans. Mr. Gumar purchased a
ticket from British Airways (BA). Since BA had no
direct flights from Manila to Bombay, Mahtani had to
take a flight to Hongkong via PAL, and upon arrival in
Hongkong he had to take a connecting flight to
Bombay on board BA. Before departure, Mahtani
checked in at PAL counter his two pieces of luggage
containing his clothings and personal effects,
confident that upon reaching Hongkong, the same
would be transferred to the BA flight bound for
Bombay. When Mahtani arrived in Bombay he
discovered that his luggage was missing and that
upon inquiry from the BA representatives, he was
told that the same might have been diverted to
London. After waiting for 1 week, BA finally advised
him to file a claim by accomplishing the "Property
Irregularity Report. In the Philippines, on June 11,
1990 Mahtani filed his complaint for damages and
attorney's fees against BA and Mr.Gumar before the
RTC.L alleging that the reason for the non-transfer of
the luggage was due to the latter's late arrival in
Hongkong, thus leaving hardly any time for the proper
transfer of Mahtani's luggage to the BA aircraft bound
for Bombay. The RTC rendered its decision in favor of
Mahtani.BA is ordered to pay Mahtani P7,000 for the
value of the 2 suitcases$400 for the value of the
contents of the luggageP50,000 for moral and
exemplary damages and 20% for attorney’s fees
and cost of the action.
This decision was affirmed by CA.
ISSUE:
WON the award of the damages was without basis
since Mahtani failed to declare a higher valuation w/
respect to his luggage.
RULING:
The SC ruled in the negative. the nature of an airline's
contract of carriage partakes of two types, namely: a
contract to deliver a cargo or merchandise to its
destination and a contract to transport passengers to
their destination. A business intended to serve the
traveling public primarily, it is imbued with public
interest, hence, the law governing common carriers
imposes an exacting standard. Neglect or
malfeasance by the carrier's employees could
predictably furnish bases for an action for damages.
Admittedly, in a contract of air carriage a declaration
by the passenger of a higher value is needed to
recover a greater amount. Article 22(1) of the
Warsaw Convention However, , we have held that
benefits of limited liability are subject to waiver such
as when the air carrier failed to raise timely objections
during the trial when questions and answers
regarding the actual claims and damages sustained
by the passenger were asked.
Given the foregoing postulates, the inescapable
conclusion is that BA had waived the defense of
limited liability when it allowed Mahtani to testify as
to the actual damages he incurred due to the
misplacement of his luggage, without any objection.
Indeed, it is a well-settled doctrine that where the
proponent offers evidence deemed by counsel of the
adverse party to be inadmissible for any reason, the
latter has the right to object. However, such right is a
mere privilege which can be waived. Necessarily, the
objection must be made at the earliest opportunity,
lest silence when there is opportunity to speak may
operate as a waiver of objections. BA has precisely
failed in this regard. To compound matters for BA, its
counsel failed, not only to interpose a timely
objection, but even conducted his own cross-
examination as well.
De Guzman v. CA
Facts:
Respondent Ernesto Cendana was a junk dealer. He
buys scrap materials and brings those that he
gathered to Manila for resale using 2 six-wheeler
trucks. On the return trip to Pangasinan, respondent
would load his vehicle with cargo which various
merchants wanted delivered, charging fee lower than
the commercial rates. Sometime in November 1970,
petitioner Pedro de Guzman contracted with
respondent for the delivery of 750 cartons of Liberty
Milk. On December 1, 1970, respondent loaded the
cargo. Only 150 boxes were delivered to petitioner
because the truck carrying the boxes was hijacked
along the way. Petitioner commenced an action
claiming the value of the lost merchandise. Petitioner
argues that respondent, being a common carrier, is
bound to exercise extraordinary diligence, which it
failed to do. Private respondent denied that he was a
common carrier, and so he could not be held liable for
force majeure. The trial court ruled against the
respondent, but such was reversed by the Court of
Appeals.
Issues:
(1) Whether or not private respondent is a common
carrier
(2) Whether private respondent is liable for the loss
of the goods
Held:
(1) Article 1732 makes no distinction between one
whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity. Article 1732 also
carefully avoids making any distinction between a
person or enterprise offering transportation service
on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between
a carrier offering its services to the "general public,"
i.e., the general community or population, and one
who offers services or solicits business only from a
narrow segment of the general population. 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
backhauling was done on a periodic or occasional
rather than regular or scheduled manner, and even
though private respondent's principal occupation was
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.
(2) Article 1734 establishes the general rule that
common carriers are responsible for the loss,
destruction or deterioration of the goods which they
carry, "unless the same is due to any of the following
causes only:
a. Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
b. Act of the public enemy in war, whether
international or civil;
c. Act or omission of the shipper or owner of the
goods;
d. The character of the goods or defects in the
packing or in the containers; and
e. Order or act of competent public authority."
The hijacking of the carrier's truck - does not fall
within any of the five (5) categories of exempting
causes listed in Article 1734. 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. 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." 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.
First Philippine Industrial Corp. vs CA Case Digest
First Philippine Industrial Corp. vs. Court of Appeals
300 SCRA 661, 1998
Facts: Petitioner is a grantee of a pipeline concession
under R.A. No. 387, as amended, a contract, install
and operate oil pipelines. The original pipeline
concession was granted in 1967 and renewed by the
Energy Regulatory Board in 1992.
Sometime in January 1995, 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
Treasure assessed a business tax on the petitioner
amounting to P956,076.04 payable in four
installments based on the gross receipts for products
pumped at GPS-1 for the fiscal year 1993 which
amounted to P181,681,151.00. in order not to
hamper its operations, petitioner paid the tax under
protest in the amount of P239, 019.01 for the first
quarter of 1993.
On June 15, 1994, 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. In its complaint, petitioner
alleged, inter alia, that: (1) the imposition and
collection of the business tax on its gross receipts
violates Sec. 133 of the Local Government Code; (2)
the authority of cities to impose and collect a tax on
the gross 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), the term “contractors” excludes
transportation contactors; and (3) the City Treasurer
illegally and erroneously imposed and collected the
said tax, thus meriting the immediate refund of the
tax paid.
Traversing the complaint, the respondents argued
that petitioner cannot be exempt from taxes under
Sec. 133 (J) of the Local Government Code as said
exemption applied only to “transportation
contractors and persons engaged in the
transportation by hire and common carriers by air
land and water.” Respondents assert that pipelines
are not included in the term “common carrier” which
refers solely to ordinary carriers as trucks, trains,
ships and the like. Respondents further posit that the
term “common carrier” under the said Code pertains
to the mode or manner by which a product is
delivered to its destination.
Issue: Whether or not the petitioner is a common
carrier so that in the affirmative, he is not liable to pay
the carriers tax under the Local Government Code of
1991?
Held: Petitioner is a common carrier.
A “common carrier” may be defined, broadly, as one
who holds himself out to the public as engaged in the
business of transporting persons or property from
place to place, for compensation, offering his services
to the public generally.
Article 1732 of the Civil Code defines a “common
carrier” as “any person, corporation, firm or
association engaged in the business of carrying or
transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services
to the public.
The test for determining whether a party is a common
carrier of goods is:
1. He must be engaged in the carrying of goods for
others as a public employment, and must hold himself
out as ready to engage in the transportation of goods
or persons 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.
Asia Lighterage and Shipping, Inc vs CA
FACTS:
Asia Lighterage and Shipping, Inc was contracted as
carrier to deliver 3,150 metric tons of Better Western
White Wheat in bulk, (US$423,192.35) to the
consignee‘s (General Milling Corporation) warehouse
at Bo. Ugong, Pasig City insured by Prudential
Guarantee and Assurance, Inc. against loss/damage
for P14,621,771.75.It appears that on August 17,
1990, the transport of said cargo was suspended due
to a warning of an incoming typhoon. PSTSI III was
tied down to other barges which arrived ahead of it
while weathering out the storm that night. A few days
after, the barge developed a list because of a hole it
sustained after hitting an unseen protuberance
underneath the water. It filed a Marine Protest on
August 28, 1990 and also secured the services of
Gaspar Salvaging Corporation to refloat the barge.
The barge was then towed to ISLOFF terminal before
it finally headed towards the consignee’s wharf on
September 5, 1990. Upon reaching the Sta. Mesa
spillways, the barge again ran aground due to
strongcurrent.7 days later, a bidding was conducted
to dispose of the damaged wheat retrieved & loaded
on the 3 other barges. The total proceeds from the
sale of the salvaged cargo was P201,379.75.
ISSUES:1.
Whether petitioner is a common carrier.
HELD:1. Petitioner is a common carrier. Article 1732
of the Civil Code defines common carriers as persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air, for
compensation, offering their services to the public. In
De Guzman vs. CA it was held that the definition of
common carriers in Article 1732 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. There is also no distinction between
a person or enterprise offering transportation service
on a regular/scheduled basis and one offering such
service on an occasional, episodic or unscheduled
basis.]The test to determine a common carrier is
“whether the given undertaking is a part of the
business engaged in by the carrier which he has held
out to the general public as his occupation rather than
the quantity or extent of the business transacted.” In
the case at bar, the petitioner admitted that it is
engaged in the business of shipping, lighterage and
drayage, offering its barges to the public, despite its
limited clientele for carrying/transporting goods by
water for compensation.
BASCOS vs. COURT OF APPEALS and RODOLFO A.
CIPRIANO
G.R. No. 101089
FACTS: Rodolfo A. Cipriano representing Cipriano
Trading Enterprise (CIPTRADE for short) entered into
a hauling contract with Jibfair Shipping Agency Corp
whereby the former bound itself to haul the latter’s
2,000 m/tons of soya bean meal to the warehouse in
Calamba, Laguna. To carry out its obligation,
CIPTRADE, through Cipriano, subcontracted with
Bascos to transport and to deliver 400 sacks of soya
bean meal from the Manila Port Area to Calamba,
Laguna. Petitioner failed to deliver the said cargo. As
a consequence of that failure, Cipriano paid Jibfair
Shipping Agency the amount of the lost goods in
accordance with their contract.
Cipriano demanded reimbursement from petitioner
but the latter refused to pay. Eventually, Cipriano
filed a complaint for a sum of money and damages
with writ of preliminary attachment for breach of a
contract of carriage. The trial court granted the writ
of preliminary attachment.
In her answer, petitioner interposed the defense that
there was no contract of carriage since CIPTRADE
leased her cargo truck to load the cargo from Manila
Port Area to Laguna and that the truck carrying the
cargo was hijacked and being a force majeure,
exculpated petitioner from any liability
After trial, the trial court rendered a decision in favor
of Cipriano and against Bascos ordering the latter to
pay the former for actual damages for attorney’s fees
and cost of suit.
The “Urgent Motion To Dissolve/Lift preliminary
Attachment” Bascos is DENIED for being moot and
academic.
Petitioner appealed to the Court of Appeals but
respondent Court affirmed the trial court’s judgment.
Hence this petition for review on certiorari
ISSUE:
(1) WON petitioner a common carrier
(2) WON the hijacking referred to a force majeure
HELD: The petition is DISMISSED and the decision of
the Court of Appeals is hereby AFFIRMED.
1. YES
In disputing the conclusion of the trial and appellate
courts that petitioner was a common carrier, she
alleged in this petition that the contract between her
and Cipriano was lease of the truck. She also stated
that: she was not catering to the general public. Thus,
in her answer to the amended complaint, she said
that she does business under the same style of A.M.
Bascos Trucking, offering her trucks for lease to those
who have cargo to move, not to the general public but
to a few customers only in view of the fact that it is
only a small business.
We agree with the respondent Court in its finding that
petitioner is a common carrier.
Article 1732 of the Civil Code defines a common
carrier as “(a) person, corporation or firm, or
association engaged in the business of carrying or
transporting passengers or goods or both, by land,
water or air, for compensation, offering their services
to the public.” The test to determine a common
carrier is “whether the given undertaking is a part of
the business engaged in by the carrier which he has
held out to the general public as his occupation rather
than the quantity or extent of the business
transacted.” 12 In this case, petitioner herself has
made the admission that she was in the trucking
business, offering her trucks to those with cargo to
move. Judicial admissions are conclusive and no
evidence is required to prove the same. 13
But petitioner argues that there was only a contract
of lease because they offer their services only to a
select group of people. Regarding the first
contention, the holding of the Court in De Guzman vs.
Court of Appeals 14 is instructive. In referring to
Article 1732 of the Civil Code, it held thus:
“The above article makes no distinction between one
whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as
a “sideline”). Article 1732 also carefully avoids making
any distinction between a person or enterprise
offering transportation service on a regular or
scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither
does Article 1732 distinguish between a carrier
offering its services to the “general public,” i.e., the
general community or population, and one who
offers services or solicits business only from a narrow
segment of the general population. We think that
Article 1732 deliberately refrained from making such
distinctions.”
2. NO
Likewise, We affirm the holding of the respondent
court that the loss of the goods was not due to force
majeure.
Common carriers are obliged to observe
extraordinary diligence in the vigilance over the
goods transported by them. Accordingly, they are
presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when the
presumption of negligence does not attach and these
instances are enumerated in Article 1734. 19 In those
cases where the presumption is applied, the common
carrier must prove that it exercised extraordinary
diligence in order to overcome the presumption.
In this case, petitioner alleged that hijacking
constituted force majeure which exculpated her from
liability for the loss of the cargo. In De Guzman vs.
Court of Appeals, the Court held that hijacking, not
being included in the provisions of Article 1734, must
be dealt with under the provisions of Article 1735 and
thus, the common carrier is presumed to have been
at fault or negligent. To exculpate the carrier from
liability arising from hijacking, he must prove that the
robbers or the hijackers acted with grave or
irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which
provides:
“Art. 1745. Any of the following or similar stipulations
shall be considered unreasonable, unjust and
contrary to public policy; xx
(6) That the common 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;” xx
Calvo v. UCPB General Insurance
G.R. No. 148496 March 19, 2002
Facts: Petitioner Virgines Calvo, owner of Transorient
Container Terminal Services, Inc. (TCTSI), and a
custom broker, entered into a contract with San
Miguel Corporation (SMC) for the transfer of 114
reels of semi-chemical fluting paper and 124 reels of
kraft liner board from the port area to the Tabacalera
Compound, Ermita, Manila. The cargo was insured by
respondent UCPB General Insurance Co., Inc.
On July 14, 1990, contained in 30 metal vans, arrived
in Manila on board “M/V Hayakawa Maru”. After 24
hours, they were unloaded from vessel to the custody
of the arrastre operator, Manila Port Services, Inc.
From July 23 to 25, 1990, petitioner, pursuant to her
contract with SMC, withdrew the cargo from the
arrastre operator and delivered it to SMC’s
warehouse in Manila. On July 25, the goods were
inspected by Marine Cargo Surveyors, reported that
15 reels of the semi-chemical fluting paper were
“wet/stained/torn” and 3 reels of kraft liner board
were also torn. The damages cost P93,112.00.
SMC collected the said amount from respondent
UCPB under its insurance contract. Respondent on
the other hand, as a subrogee of SMC, brought a suit
against petitioner in RTC, Makati City. On December
20, 1995, the RTC rendered judgment finding
petitioner liable for the damage to the shipment. The
decision was affirmed by the CA.
Issue: Whether or not Calvo is a common carrier?
Held: In this case the contention of the petitioner,
that he is not a common carrier but a private carrier,
has no merit.
Article 1732 makes no distinction between one
whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as ancillary activity. Article 1732 also
carefully avoids making any distinction between a
person or enterprise offering transportation service
on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between
a carrier offering its services to the "general public,"
i.e., the general community or population, and one
who offers services or solicits business only from a
narrow segment of the general population. We think
that Article 1733 deliberately refrained from making
such distinction. (De Guzman v. CA, 68 SCRA 612)
Te concept of “common carrier” under Article 1732
coincide with the notion of “public service”, under the
Public Service Act which partially supplements the
law on common carrier. Under Section 13, paragraph
(b) of the Public Service Act, it includes:
“ x x x every person that now or hereafter may own,
operate, manage, or control in the Philippines, for
hire or compensation, with general or limited
clientele, whether permanent, occasional or
accidental, and done for general business purposes,
any common 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, 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,
irrigation system, gas, electric light, heat and power,
water supply and power petroleum, sewerage
system, wire or wireless communications systems,
wire or wireless broadcasting stations and other
similar public services. x x x”
SCHMITZ TRANSPORT & BROKERAGE CORPORATION
vs. TRANSPORT VENTURE, INC., INDUSTRIAL
INSURANCE COMPANY, LTD., and BLACK SEA
SHIPPING AND DODWELL now INCHCAPE SHIPPING
SERVICES
G.R. No. 150255. April 22, 2005
FACTS OF THE CASE:
SYTCO Pte Ltd. Singapore shipped from Russia on
board a ship owned by Black Sea, 545 hot rolled steel
sheets. The cargoes to be discharged at the port of
Manila in favor of the consignee, Little Giant Steel
Pipe Corporation (Little Giant), were insured against
all risks with Industrial Insurance Company Ltd.
The vessel arrived at the port of Manila on October
24, 1991 and Schmitz Transport, whose services the
consignee engaged to secure the requisite clearances,
to receive the cargoes from the shipside, and to
deliver them to its (the consignees) warehouse, in
turn engaged the services of TVI to send a barge and
tugboat at shipside.
By 7:00 p.m. also of October 26, 1991, the tugboat,
after positioning the barge alongside the vessel, left
and returned to the port terminal. At 9:00 p.m., 37 of
the 545 coils were unloaded from the vessel unto the
barge which was finished by 12:30 am of October 27.
At around 5:30 a.m., due to strong waves due to an
approaching storm, the crew of the barge abandoned
it and transferred to the vessel. The barge eventually
capsized, washing the 37 coils into the sea. At 7:00
a.m., a tugboat finally arrived to pull the already
empty and damaged barge back to the pier.
Little Giant thus filed a formal claim against Industrial
Insurance which paid it the amount of P5,246,113.11.
Little Giant thereupon executed a subrogation
receipt in favor of Industrial Insurance.
Industrial Insurance later filed a complaint against
Schmitz Transport, TVI, and Black Sea through its
representative Inchcape (the defendants) before the
RTC of Manila. Industrial Insurance faulted the
defendants for undertaking the unloading of the
cargoes while typhoon signal No. 1 was raised in
Metro Manila.
The RTC held all the defendants negligent for
unloading the cargoes outside of the breakwater
notwithstanding the storm signal.
Schmitz Transport and TVI filed a joint motion for
reconsideration assailing the finding that they are
common carriers. And they argued that they were not
motivated by gross or evident bad faith and that the
incident was caused by a fortuitous event.
The trial court denied the motion for reconsideration.
All the defendants appealed to the Court of Appeals
which affirmed in toto the decision of the trial court.
Petitioner asserts that in chartering the barge and
tugboat of TVI, it was acting for its principal,
consignee Little Giant, hence, the transportation
contract was by and between Little Giant and TVI.
Black Sea argued that the cargoes were received by
the consignee through petitioner in good order
hence, it cannot be faulted.
For its part, TVI maintained that it acted as a passive
party as it merely received the cargoes and
transferred them unto the barge upon the instruction
of petitioner.
ISSUE:
Whether or not Petitioner is a common carrier
HELD:
The Supreme Court finds that petitioner is a common
carrier. For it undertook to transport the cargoes
from the shipside of M/V Alexander Saveliev to the
consignees warehouse. As long as a person or
corporation holds [itself] to the public for the purpose
of transporting goods as [a] business, [it] is already
considered a common carrier regardless if [it] owns
the vehicle to be used or has to hire one. That
petitioner is a common carrier, the testimony of its
own Vice-President and General Manager that part of
the services it offers as a brokerage firm includes the
transportation of cargoes reflects so.
The appellate court did not err in finding petitioner, a
customs broker, to be also a common carrier, as
defined under Article 1732 of the Civil Code.
AF Sanchez Brokerage vs CA
(Dec 21, 2004)
Facts:
AF Sanchez is engaged in a broker business wherein
its main job is to calculate customs duty, fees and
charges as well as storage fees for the cargoes. Part
also of the services being given by AF Sanchez is the
delivery of the shipment to the consignee upon the
instruction of the shipper.
Wyett engaged the services of AF Sanchez where the
latter delivered the shipment to Hizon Laboratories
upon instruction of Wyett. Upon inspection, it was
found out that at least 44 cartons containing
contraceptives were in bad condition. Wyett claimed
insurance from FGU. FGU exercising its right of
subrogation claims damages against AF Sanchez who
delivered the damaged goods. AF Sanchez contended
that it is not a common carrier but a brokerage firm.
Issue: Is AF Sanchez a common carrier?
Held:
SC held that Art 1732 of the Civil Code in defining
common carrier does not distinguish whether the
activity is undertaken as a principal activity or merely
as an ancillary activity. In this case, while it is true that
AF Sanchez is principally engaged as a broker, it
cannot be denied from the evidence presented that
part of the services it offers to its customers is the
delivery of the goods to their respective consignees.
Note:
AF Sanchez claimed that the proximate cause of the
damage is improper packing. Under the CC, improper
packing of the goods is an exonerating circumstance.
But in this case, the SC held that though the goods
were improperly packed, since AF Sanchez knew of
the condition and yet it accepted the shipment
without protest or reservation, the defense is
deemed waived.
FGU INSURANCE v. G.P. SARMIENTO
Facts: G.P. Sarmiento Trucking Corporation (GPS)
undertook to deliver on 18 June 1994 thirty (30) units of
Condura S.D. white refrigerators aboard one of its Isuzu
truck, driven by Lambert Eroles, from the plant site of
Concepcion Industries, Inc., along South Superhighway in
Alabang, Metro Manila, to the Central Luzon Appliances in
Dagupan City. While the truck was traversing the north
diversion road along McArthur highway in Barangay
Anupol, Bamban, Tarlac, it collided with an unidentified
truck, causing it to fall into a deep canal, resulting in
damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the
shipment, paid to Concepcion Industries, Inc., the value
of the covered cargoes in the sum of P204,450.00. FGU,
in turn, being the subrogee of the rights and interests of
Concepcion Industries, Inc., sought reimbursement of the
amount it had paid to the latter from GPS. Since the
trucking company failed to heed the claim, FGU filed a
complaint for damages and breach of contract of carriage
against GPS and its driver Lambert Eroles with the
Regional Trial Court, Branch 66, of Makati City. In its
answer, respondents asserted that GPS was the exclusive
hauler only of Concepcion Industries, Inc., since 1988, and
it was not so engaged in business as a common carrier.
Respondents further claimed that the cause of damage
was purely accidental.
Issues: WON GPS was a common carrier.
Ruling: On the first issue, the Court finds the conclusion
of the trial court and the Court of Appeals to be amply
justified. GPS, being an exclusive contractor and hauler of
Concepcion Industries, Inc., rendering or offering its
services to no other individual or entity, cannot be
considered a common carrier. Common carriers are
persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or
goods or both, by land, water, or air, for hire or
compensation, offering their services to the public,8
whether to the public in general or to a limited clientele in
particular, but never on an exclusive basis.9 The true test
of a common carrier is the carriage of passengers or
goods, providing space for those who opt to avail
themselves of its transportation service for a fee.10 Given
accepted standards, GPS scarcely falls within the term
"common carrier."
The above conclusion nothwithstanding, GPS cannot
escape from liability.
In culpa contractual, upon which the action of petitioner
rests as being the subrogee of Concepcion Industries,
Inc., the mere proof of the existence of the contract and
the failure of its compliance justify, prima facie, a
corresponding right of relief.11 The law, recognizing the
obligatory force of contracts,12 will not permit a party to
be set free from liability for any kind of misperformance of
the contractual undertaking or a contravention of the
tenor thereof.13 A breach upon the contract confers upon
the injured party a valid cause for recovering that which
may have been lost or suffered. The remedy serves to
preserve the interests of the promisee that may include
his "expectation interest," which is his interest in having
the benefit of his bargain by being put in as good a
position as he would have been in had the contract been
performed, or his "reliance interest," which is his interest
in being reimbursed for loss caused by reliance on the
contract by being put in as good a position as he would
have been in had the contract not been made; or his
"restitution interest," which is his interest in having
restored to him any benefit that he has conferred on the
other party.14 Indeed, agreements can accomplish little,
either for their makers or for society, unless they are made
the basis for action.15 The effect of every infraction is to
create a new duty, that is, to make recompense to the one
who has been injured by the failure of another to observe
his contractual obligation16 unless he can show
extenuating circumstances, like proof of his exercise of
due diligence (normally that of the diligence of a good
father of a family or, exceptionally by stipulation or by law
such as in the case of common carriers, that of
extraordinary diligence) or of the attendance of fortuitous
event, to excuse him from his ensuing liability.
Respondent trucking corporation recognizes the existence
of a contract of carriage between it and petitioner’s
assured, and admits that the cargoes it has assumed to
deliver have been lost or damaged while in its custody. In
such a situation, a default on, or failure of compliance
with, the obligation – in this case, the delivery of the goods
in its custody to the place of destination - gives rise to a
presumption of lack of care and corresponding liability on
the part of the contractual obligor the burden being on
him to establish otherwise. GPS has failed to do so.
Respondent driver, on the other hand, without concrete
proof of his negligence or fault, may not himself be
ordered to pay petitioner. The driver, not being a party to
the contract of carriage between petitioner’s principal and
defendant, may not be held liable under the agreement. A
contract can only bind the parties who have entered into
it or their successors who have assumed their personality
or their juridical position.17 Consonantly with the axiom
res inter alios acta aliis neque nocet prodest, such contract
can neither favor nor prejudice a third person. Petitioner’s
civil action against the driver can only be based on culpa
aquiliana, which, unlike culpa contractual, would require
the claimant for damages to prove negligence or fault on
the part of the defendant
CRISOSTOMO V. CA
Facts: In May 1991, petitioner Estela L. Crisostomo
contracted the services of respondent Caravan Travel and
Tours International, Inc. to arrange and facilitate her
booking, ticketing and accommodation in a tour dubbed
Jewels of Europe. The package tour included the countries
of England, Holland, Germany, Austria, Liechstenstein,
Switzerland and France at a total cost of P74,322.70.
Petitioner was given a 5% discount on the amount, which
included airfare, and the booking fee was also waived
because petitioners niece, Meriam Menor, was respondent
companys ticketing manager.
Pursuant to said contract, Menor went to her aunts
residence on June 12, 1991 a Wednesday to deliver
petitioners travel documents and plane tickets. Petitioner,
in turn, gave Menor the full payment for the package tour.
Menor then told her to be at the Ninoy Aquino
International Airport (NAIA) on Saturday, two hours
before her flight on board British Airways.
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
petitioners dismay, she 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 to
complain.
Subsequently, Menor prevailed upon petitioner to take
another tour the British Pageant which included England,
Scotland and Wales in its itinerary. For this tour package,
petitioner was asked anew to pay US$785.00 or
P20,881.00 (at the then prevailing exchange rate of
P26.60). She gave respondent US$300 or P7,980.00 as
partial payment and commenced the trip in July 1991.
Upon petitioners return from Europe, she demanded from
respondent the reimbursement of 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 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 59 of the Regional Trial Court of
Makati City.
In her complaint,[2] petitioner alleged that her failure to
join Jewels of Europe was due to respondents fault since
it did not clearly indicate the departure date on the plane
ticket. Respondent was also negligent in informing her of
the wrong flight schedule through its employee Menor.
She insisted that the British Pageant was merely a
substitute for the Jewels of Europe tour, such that the cost
of the former should be properly set-off against the sum
paid for the latter.
For its part, respondent company, through its Operations
Manager, Concepcion Chipeco, denied responsibility for
petitioners 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 travel documents were given to petitioner two days
ahead of the scheduled trip. Petitioner had only herself to
blame for missing the flight, as she did not bother to read
or confirm her flight schedule as printed on the ticket.
Respondent explained that it can no longer reimburse the
amount paid for Jewels of Europe, considering that the
same had already been remitted to its principal in
Singapore, Lotus Travel Ltd., which had already billed the
same even if petitioner did not join the tour. Lotus
European tour organizer, Insight International Tours Ltd.,
determines the cost of a package tour based on a
minimum number of projected participants. For this
reason, it is accepted industry practice to disallow refund
for individuals who failed to take a booked tour.[3]
Lastly, respondent maintained that the British Pageant
was not a substitute for the package tour that petitioner
missed. This tour was independently procured by
petitioner after realizing that she made a mistake in
missing her flight for Jewels of Europe. Petitioner was
allowed to make a partial payment of only US$300.00 for
the second tour because her niece was then an employee
of the travel agency. Consequently, respondent prayed
that petitioner be ordered to pay the balance of
P12,901.00 for the British Pageant package tour.
Ruling: By definition, a contract of carriage or
transportation is one whereby a certain person or
association of persons obligate themselves to transport
persons, things, or news from one place to another for a
fixed price.[9] Such person or association of persons are
regarded as carriers and are classified as private or special
carriers and common or public carriers.[10] A common
carrier is defined under Article 1732 of the Civil Code as
persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or
goods or both, by land, water or air, for compensation,
offering their services to the public.
It is obvious from the above definition that respondent is
not an entity engaged in the business of transporting
either passengers or goods and is therefore, neither a
private nor a common carrier. 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. Respondents
services as a travel agency include procuring tickets and
facilitating travel permits or visas as well as booking
customers for tours.
While petitioner concededly bought her plane ticket
through the efforts of respondent company, this does not
mean that the latter ipso facto is a common carrier. At
most, respondent acted merely as an agent of the airline,
with whom petitioner ultimately contracted for her
carriage to Europe. Respondents obligation to petitioner
in this regard was simply to see to it that petitioner was
properly booked with the airline for the appointed date
and time. Her transport to the place of destination,
meanwhile, pertained directly to the airline.
The object of petitioners contractual relation with
respondent is the latters service of arranging and
facilitating petitioners booking, ticketing and
accommodation in the package tour. In contrast, the
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. Petitioners submission is
premised on a wrong assumption.
The nature of the contractual relation between petitioner
and respondent is determinative of the degree of care
required in the performance of the latters obligation under
the contract. For reasons 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 due regard for all the circumstances.[11]
As earlier stated, however, respondent is not a common
carrier 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 of respondent
is that of a good father of a family under Article 1173 of
the Civil Code.[12] This connotes reasonable care
consistent with that which an ordinarily prudent person
would have observed when confronted with a similar
situation. The test to determine whether negligence
attended the performance of an obligation is: did the
defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then
he is guilty of negligence.[13]
In the case at bar, the lower court found Menor negligent
when she allegedly informed petitioner of the wrong day
of departure. Petitioners testimony was accepted as
indubitable evidence of Menors alleged negligent act since
respondent did not call Menor to the witness stand to
refute the allegation. The lower court applied the
presumption under Rule 131, Section 3 (e)[14] of the
Rules of Court that evidence willfully suppressed would be
adverse if produced and thus considered petitioners
uncontradicted testimony to be sufficient proof of her
claim.
On the other hand, respondent has consistently denied
that Menor was negligent and maintains that petitioners
assertion is belied by the evidence on record. The date
and time of departure was legibly written on the plane
ticket and the travel papers were delivered two days in
advance precisely so that petitioner could prepare for the
trip. It performed all its obligations to enable petitioner to
join the tour and exercised due diligence in its dealings
with the latter.
We agree with respondent.
Respondents failure to present Menor as witness to rebut
petitioners testimony could not give rise to an inference
unfavorable to the former. Menor was already working in
France at the time of the filing of the complaint,[15]
thereby making it physically impossible for respondent to
present her as a witness. Then too, even if it were possible
for respondent to secure Menors testimony, the
presumption under Rule 131, Section 3(e) would still not
apply. The opportunity and possibility for obtaining
Menors testimony belonged to both parties, considering
that Menor was not just respondents employee, but also
petitioners niece. It was thus error for the lower court to
invoke the presumption that respondent willfully
suppressed evidence under Rule 131, Section 3(e). Said
presumption would logically be inoperative if the evidence
is not intentionally omitted but is simply unavailable, or
when the same could have been obtained by both
parties.[16]
In sum, we do not agree with the finding of the lower
court that Menors negligence concurred with the
negligence of petitioner and resultantly caused damage to
the latter. Menors negligence was not sufficiently proved,
considering that the only evidence presented on this score
was petitioners uncorroborated narration of the events. It
is well-settled that the party alleging a fact has the burden
of proving it and a mere allegation cannot take the place
of evidence.[17] If the plaintiff, upon whom rests the
burden of proving his cause of action, fails to show in a
satisfactory manner facts upon which he bases his claim,
the defendant is under no obligation to prove his
exception or defense.
SPS. PERENA V. SPS. ZARATE
Facts: The Pereñas were engaged in the business of
transporting students from their respective residences in
Parañaque City to Don Bosco in Pasong Tamo, Makati City,
and back. In their business, the Pereñas used a KIA Ceres
Van (van) with Plate No. PYA 896, which had the capacity
to transport 14 students at a time, two of whom would be
seated in the front beside the driver, and the others in the
rear, with six students on either side. They employed
Clemente Alfaro (Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereñas to
transport Aaron to and from Don Bosco. On August 22,
1996, as on previous school days, the van picked Aaron
up around 6:00 a.m. from the Zarates’ residence. Aaron
took his place on the left side of the van near the rear
door. The van, with its air-conditioning unit turned on and
the stereo playing loudly, ultimately carried all the 14
student riders on their way to Don Bosco. Considering that
the students were due at Don Bosco by 7:15 a.m., and
that they were already running late because of the heavy
vehicular traffic on the South Superhighway, Alfaro took
the van to an alternate route at about 6:45 a.m. by
traversing the narrow path underneath the Magallanes
Interchange that was then commonly used by Makati-
bound vehicles as a short cut into Makati. At the time, the
narrow path was marked by piles of construction materials
and parked passenger jeepneys, and the railroad crossing
in the narrow path had no railroad warning signs, or
watchmen, or other responsible persons manning the
crossing. In fact, the bamboo barandilla was up, leaving
the railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad
crossing, PNR Commuter No. 302 (train), operated by
Jhonny Alano (Alano), was in the vicinity of the Magallanes
Interchange travelling northbound. As the train neared the
railroad crossing, Alfaro drove the van eastward across the
railroad tracks, closely tailing a large passenger bus. His
view of the oncoming train was blocked because he
overtook the passenger bus on its left side. The train blew
its horn to warn motorists of its approach. When the train
was about 50 meters away from the passenger bus and
the van, Alano applied the ordinary brakes of the train. He
applied the emergency brakes only when he saw that a
collision was imminent. The passenger bus successfully
crossed the railroad tracks, but the van driven by Alfaro
did not. The train hit the rear end of the van, and the
impact threw nine of the 12 students in the rear, including
Aaron, out of the van. Aaron landed in the path of the
train, which dragged his body and severed his head,
instantaneously killing him. Alano fled the scene on board
the train, and did not wait for the police investigator to
arrive.
Devastated by the early and unexpected death of Aaron,
the Zarates commenced this action for damages against
Alfaro, the Pereñas, PNR and Alano. The Pereñas and PNR
filed their respective answers, with cross-claims against
each other, but Alfaro could not be served with summons.
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff and against the
defendants.
Issues: WON the petitioners are common carrier.
Ruling: We find no adequate cause to differ from the
conclusions of the lower courts that the Pereñas operated
as a common carrier; and that their standard of care was
extraordinary diligence, not the ordinary diligence of a
good father of a family.
Although in this jurisdiction the operator of a school bus
service has been usually regarded as a private
carrier,9primarily because he only caters to some specific
or privileged individuals, and his operation is neither open
to the indefinite public nor for public use, the exact nature
of the operation of a school bus service has not been
finally settled. This is the occasion to lay the matter to
rest.
A carrier is a person or corporation who undertakes to
transport or convey goods or persons from one place to
another, gratuitously or for hire. The carrier is classified
either as a private/special carrier or as a common/public
carrier.10 A private carrier is one who, without making the
activity a vocation, or without holding himself or itself out
to the public as ready to act for all who may desire his or
its services, undertakes, by special agreement in a
particular instance only, to transport goods or persons
from one place to another either gratuitously or for
hire.11The provisions on ordinary contracts of the Civil
Code govern the contract of private carriage.The diligence
required of a private carrier is only ordinary, that is, the
diligence of a good father of the family. In contrast, a
common carrier is a person, corporation, firm or
association engaged in the business of carrying or
transporting passengers or goods or both, by land, water,
or air, for compensation, offering such services to the
public.12Contracts of common carriage are governed by
the provisions on common carriers of the Civil Code, the
Public Service Act,13 and other special laws relating to
transportation. A common carrier is required to observe
extraordinary diligence, and is presumed to be at fault or
to have acted negligently in case of the loss of the effects
of passengers, or the death or injuries to passengers.14
In relation to common carriers, the Court defined public
use in the following terms in United States v. Tan
Piaco,15viz:
"Public use" is the same as "use by the public". The
essential feature of the public use is not confined to
privileged individuals, but is open to the indefinite public.
It is this indefinite or unrestricted quality that gives it its
public character. In determining whether a use is public,
we must look not only to the character of the business to
be done, but also to the proposed mode of doing it. If the
use is merely optional with the owners, or the public
benefit is merely incidental, it is not a public use,
authorizing the exercise of the jurisdiction of the public
utility commission. There must be, in general, a right
which the law compels the owner to give to the general
public. It is not enough that the general prosperity of the
public is promoted. Public use is not synonymous with
public interest. The true criterion by which to judge the
character of the use is whether the public may enjoy it by
right or only by permission.
In De Guzman v. Court of Appeals,16 the Court noted that
Article 1732 of the Civil Code avoided any distinction
between a person or an enterprise offering transportation
on a regular or an isolated basis; and has not distinguished
a carrier offering his services to the general public, that is,
the general community or population, from one offering
his services only to a narrow segment of the general
population.
Nonetheless, the concept of a common carrier embodied
in Article 1732 of the Civil Code coincides neatly with the
notion of public service under the Public Service Act, which
supplements the law on common carriers found in the Civil
Code. Public service, according to Section 13, paragraph
(b) of the Public Service Act, includes:
x x x every person that now or hereafter may own,
operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientèle, whether
permanent or occasional, and done for the 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, or
steamship line, pontines, ferries and water craft, engaged
in the transportation of passengers or freight or both,
shipyard, marine repair shop, ice-refrigeration plant,
canal, irrigation system, gas, electric light, heat and
power, water supply and power petroleum, sewerage
system, wire or wireless communications systems, wire or
wireless broadcasting stations and other similar public
services. x x x.17
Given the breadth of the aforequoted characterization of
a common carrier, the Court has considered as common
carriers pipeline operators,18 custom brokers and
warehousemen,19 and barge operators20 even if they
had limited clientèle.
As all the foregoing indicate, 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. If the undertaking is a single
transaction, not a part of the general business or
occupation engaged in, as advertised and held out to the
general public, the individual or the entity rendering such
service is a private, not a common, carrier. The question
must be determined by the character of the business
actually carried on by the carrier, not by any secret
intention or mental reservation it may entertain or assert
when charged with the duties and obligations that the law
imposes.21
Applying these considerations to the case before us, there
is no question that the Pereñas as the operators of a
school bus service were: (a) engaged in transporting
passengers generally as a business, not just as a casual
occupation; (b) undertaking to carry passengers over
established roads by the method by which the business
was conducted; and (c) transporting students for a fee.
Despite catering to a limited clientèle, the Pereñas
operated as a common carrier because they held
themselves out as a ready transportation indiscriminately
to the students of a particular school living within or near
where they operated the service and for a fee.
VALENZUELA HARDWOOD AND INDUSTRIAL
SUPPLY v. CA
FACTS:
Plaintiff shipped at Maconcon Port, Isabela 940 round logs
on board M/V Seven Ambassador, a vessel owned by
defendant Seven Brothers Shipping Corporation. Plaintiff
insured the logs against loss and/or damage with
defendant South Sea Surety and Insurance Co., Inc. for
P2M and the latter issued its Marine Cargo Insurance
Policy on said date. In the meantime, the M/V Seven
Ambassador sank resulting in the loss of the plaintiff’s
insured logs.
Plaintiff demanded from defendant South Sea Surety and
Insurance Co., Inc. the payment of the proceeds of the
policy but the latter denied liability under the policy.
Plaintiff likewise filed a formal claim with defendant Seven
Brothers Shipping Corporation for the value of the lost logs
but the latter denied the claim.
Court of Appeals affirmed in part the RTC judgment by
sustaining the liability of South Sea Surety and Insurance
Company ("South Sea"), but modified it by holding that
Seven Brothers Shipping Corporation ("Seven Brothers")
was not liable for the lost cargo.
ISSUE:
Whether defendants shipping corporation and the surety
company are liable to the plaintiff for the latter's lost logs.
HELD:
The charter party between the petitioner and private
respondent stipulated that the "(o)wners shall not be
responsible for loss, split, short-landing, breakages and
any kind of damages to the cargo" –VALID
There is no dispute between the parties that the proximate
cause of the sinking of M/V Seven Ambassadors resulting
in the loss of its cargo was the "snapping of the 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." Likewise undisputed is the status of Private
Respondent Seven Brothers as a private carrier when it
contracted to transport the cargo of Petitioner Valenzuela.
Even the latter admits this in its petition.
Private respondent had acted as a private carrier in
transporting petitioner's lauan logs. Thus, Article 1745 and
other Civil Code provisions on common carriers which
were cited by petitioner may not be applied unless
expressly stipulated by the parties in their charter party.
In a contract of private carriage, the parties may validly
stipulate that responsibility for the cargo rests solely on
the charterer, exempting the shipowner from liability for
loss of or damage to the cargo caused even by the
negligence of the ship captain. Pursuant to Article 1306 of
the Civil Code, such stipulation is valid because it is freely
entered into by the parties and the same is not contrary
to law, morals, good customs, public order, or public
policy. Indeed, their contract of private carriage is not
even a contract of adhesion. We stress that in a contract
of private carriage, the parties may freely stipulate their
duties and obligations which perforce would be binding on
them. Unlike in contract involving a common carrier,
private 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 commercial
goods as a private carrier. Consequently, the public policy
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 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 special person only,
becomes a private carrier. As a private carrier a stipulation
exempting the owner from liability for the negligence of
its agent is not against public policy and is deemed valid.
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 absolving the
owner from liability for loss due to the negligence of its
agent would be void only if the strict 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 use of a single
party. (Home Insurance Co. vs. American Steamship
Agencies Inc., 23 SCRA 24, April 4, 1968)