1. Baliwag Transit, Inc. v. CA and Sps.

Sotero Cailipan, Jr and Zenaida Lopez andGeorge Cailipan

G.R. No. 80447 January 31, 1989

Melencio-Herrera, J.

FACTS:

George – was a paying passenger on a Baliwag bus who suffered multiple serious physicalinjuries when he was thrown off said bus driven in a careless and negligent manner byLeonardo Cruz,
the bus driver, along Brgy. Patubig, Marilao, Bulacan; as a result, he wasconfined in the hospital for treatment, incurring medical expenses, which were borne byhis
parents in the sum of about P200,000.00 plus other incidental expenses of aboutP10,000.00

George’s parents, Spouses Cailipan filed a complaint for damages arising from breach of contract of carriage

Baliwag Transit alleged that the cause of the injuries sustained by George was solelyattributable to his own voluntary act in that, without warning and provocation, he suddenlystood up from his
seat and headed for the door of the bus as if in a daze, opened it and jumped off while said bus was in motion, in spite of the protestations by the driver andwithout the knowledge of the
conductor

a third-Party Complaint against Fortune Insurance & Surety Company, Inc., on its third-party liability insurance in the amount of P50,000.00; Fortune Insurance claimed limitedliability, the
coverage being subject to a Schedule of Indemnities forming part of theinsurance policy

Fortune Insurance and Baliwag filed Motions to Dismiss the complaint filed against themon the ground that George, in consideration of the sum of P8,020.50 had executed a“Release of Claims”

Sotero opposed the motion to dismiss; he testified that be is the father of George, who atthe time of the incident was a student, living with his parents and totally dependent onthem for their
support; that the expenses for his hospitalization were shouldered by hisparents; and that they had not signed the “Release of Claims”

RTC dismissed the complaint (dismissal was predicated on George’s execution of Releaseof Claims)
ISSUE:

what is the legal effect of the Release of Claims executed by George

HELD:

Since the suit is one for breach of contract of carriage, the Release of Claims executed byhim, as the injured party, discharging Fortune Insurance and Baliwag from any and allliability is valid. He
was then of legal age, a graduating student of Agricultural Engineering,and had the capacity to do acts with legal effect (Article 37 in relation to Article 402, CivilCode). Thus, he could sue and
be sued even without the assistance of his parents.

the contract of carriage was actually between George, as the paying passenger, andBaliwag, as the common carrier; since a contract may be violated only by the partiesthereto, as against each
other, in an action upon that contract, the real parties in interest,either as plaintiff or as defendant, must be parties to said contract (

real party-in-interest-plaintiff –

one who has a legal right;

real party-in-interest-defendant

– onewho has a correlative legal obligation whose act or omission violates the legal right of theformer); in the absence of any contract of carriage between Baliwag and George’s parents,the
latter are not real parties-in-interest in an action for breach of that contract

Release of Claims

– have the effect of a compromise agreement since it was entered intofor the purpose of making a full and final compromise adjustment and settlement of thecause of action involved

compromise

– contract whereby the parties, by making reciprocal concessions, avoid alitigation or put an end to one already compromised

2.)Mr. and Mrs. Engracio Fabre, Jr. and Porfirio Cabil v. CA, The Word for the WorldChristian Fellowship, Inc., Amyline Antonio, etc.
G.R. No. 111127 July 26, 1996

Mendoza, J.

FACTS:

Engracio Fabre, Jr. and his wife – owners of a 1982 model Mazda minibus; they used thebus principally in connection with a bus service for school children which they operated inManila; they
had a driver, Porfirio Cabil, whom they hired in 1981, after trying him out fortwo weeks; his job was to take school children to and from the St. Scholastica’s College inMalate, Manila

Word for the World Christian Fellowship Inc. arranged with Fabres for the transportation of 33 members of its Young Adults Ministry from Manila to La Union and back

usual route to Caba, La Union was through Carmen, Pangasinan; however, the bridge atCarmen was under repair, so that petitioner Cabil, who was unfamiliar with the area (itbeing his first trip
to La Union), was forced to take a detour through the town of Baay inLingayen, Pangasinan; Cabil came upon a sharp curve on the highway, running on a southto east direction, which he
described as “siete;” the road was slippery because it wasraining, causing the bus, which was running at the speed of 50 kph, to skid to the left roadshoulder; the bus hit the left traffic steel
brace and sign along the road and rammed thefence of Jesus Escano, then turned over and landed on its left side, coming to a full stoponly after a series of impacts

several passengers were injured; Amyline Antonio was thrown on the floor of the bus andpinned down by a wooden seat which came down by a wooden seat which came off afterbeing
unscrewed; she is now suffering from paraplegia (total inability to move both legsand usually the lower part of the trunk, often as a result of disease or injury of the spine)and is permanently
paralyzed from the waist down

Cabil’s answer: he did not see the curve until it was too late; he was not familiar with thearea and he could not have seen the curve despite the care he took in driving the bus,because it was
dark and there was no sign on the road; he saw the curve when he wasalready within 15 to 30 meters of it; he allegedly slowed down to 30 kilometers per hour,but it was too late

ISSUES:

1. WON petitioners (a. Cabil; b. employers Fabres) were negligent; 2. WONpetitioners were liable for the injuries suffered by private respondents

HELD:

1. On Cabil’s negligence: On the night of the accident, it was raining, and as aconsequence, the road was slippery, and it was dark. Cabil drove his bus at the speed of 50kilometers per hour
and only slowed down when he noticed the curve some 15 to 30 metersahead. By then it was too late for him to avoid falling off the road. Given the conditions of the road and
considering that the trip was Cabil’s first one outside of Manila
 3.CIA Maritima V. Insurance Co. Of North America (1964)

G.R. No. L-18965 October 30, 1964

Lessons Applicable: Actionable Document (Transportation)

FACTS:
 October, 1952: Macleod and Company of the Philippines (Macleod) contracted by telephone the services of the Compañia Maritima (CM), a shipping
corporation, for:
 shipment of 2,645 bales of hemp from the Macleod's Sasa private pier at Davao City to Manila
 subsequent transhipment to Boston, Massachusetts, U.S.A. on board the S.S. Steel Navigator.
 This oral contract was later on confirmed by a formal and written booking issued by Macleod's branch office in Sasa and handcarried to CM's branch
office in Davao in compliance with which the CM sent to Macleod's private wharf LCT Nos. 1023 and 1025 on which the loading of the hemp was
completed on October 29, 1952.
 The 2 lighters were manned each by a patron and an assistant patron.
 The patrons of both barges issued the corresponding carrier's receipts and that issued by the patron of Barge No. 1025 reads in part:
 Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao, for transhipment at
Manila onto S.S. Steel Navigator.
 FINAL DESTINATION: Boston.
 Early hours of October 30: LCT No. 1025 sank, resulting in the damage or loss of 1,162 bales of hemp loaded therein
 Macleod promptly notified the carrier's main office in Manila and its branch in Davao advising it of its liability
 The damaged hemp was brought to Odell Plantation in Madaum, Davao, for cleaning, washing, reconditioning, and redrying.
 total loss adds up to P60,421.02
 All abaca shipments of Macleod were insured with the Insurance Company of North America against all losses and damages
 Macleod filed a claim for the loss it suffered with the insurance company and was paid P64,018.55
 subrogation agreement between Macleod and the insurance company wherein the Macleod assigned its rights over the insured and damaged cargo
 October 28, 1953.: failing to recover from the carrier P60,421.02 (amount supported by receipts), the insurance company instituted the present action
 CA affirmed RTC: ordering CM to pay the insurance co.
ISSUE: W/N there was a contract of carriage bet. CM (carrier) and Macleod (shipper)

HELD: YES. Affirmed

 receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and deliver, and if actually no goods are received there can
be no such contract
 The liability and responsibility of the carrier under a contract for the carriage of goods commence on their actual delivery to, or receipt by, the carrier
or an authorized agent. ... and delivery to a lighter in charge of a vessel for shipment on the vessel, where it is the custom to deliver in that way
 Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper, then it can be said with certainty
that the relation of shipper and carrier has been established
 As regards the form of the contract of carriage it can be said that provided that there is a meeting of the minds and from such meeting arise rights and
obligations, there should be no limitations as to form
 The bill of lading is not essential
 Even where it is provided by statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance are sufficient to bind
the carrier
 marine surveyors, attributes the sinking of LCT No. 1025 to the 'non-water-tight conditions of various buoyancy compartments

4.) Transportation Case Digest: British Airways V. CA (1993)

G.R. No. 92288 February 9, 1993

Lessons Applicable: Actionable Document (Transportation)

FACTS:
 February 15, 1981: First International Trading and General Services Co. (First Int'l), a duly licensed domestic recruitment and placement agency,
received a telex message from its principal ROLACO Engineering and Contracting Services (ROLACO) in Jeddah, Saudi Arabia to recruit Filipino contract
workers in its behalf
 Early March 1981: ROLACO paid British Airways, Inc. (BA) Jeddah branch the airfare tickets for 93 contract workers with specific instruction to
transport the workers to Jeddah on or before March 30, 1981
 As soon as BA received a prepaid ticket advice from its Jeddah branch informed First Int'l.
 Thereafter, First Int'l instructed ADB Travel and Tours. Inc. (its travel agent) to book the 93 workers with BA but it failed
 So First Int'l had to borrow P304,416.00 for the purchase of airline tickets from the other airlines for the 93 workers who must leave immediately since the
visas are valid only for 45 days and the Bureau of Employment Services mandates that contract workers must be sent to the job site within a period of
30 days
 First week of June, 1981: First Int'l was again informed by BA that it had received a prepaid ticket advice from its Jeddah branch for the transportation of
27 contract workers.
 Immediately, First Int'l instructed its ADB to book the 27 contract workers with the BA but only 16 seats were confirmed and booked on its June 9,
1981 flight.
 June 9, 1981: only 9 workers were able to board said flight while the remaining 7 workers were rebooked to:
 June 30, 1981 - again cancelled by British without any prior notice to either First Int'l or the workers
 July 4,1981 - (6 + 7 workers) 13 workers were again cancelled and rebooked to July 7, 1981.
 July 6, 1981: First Int'l paid the travel tax of the workers as required by BA but when the receipt of the tax payments was submitted, only 12 seats
were confirmed for July 7, 1981 flight
 July 7, 1981: Flight was again cancelled without any prior notice
 12 workers were finally able to leave for Jeddah after First Int'l had bought tickets from the other airlines
 As a result of these incidents, First Int'l sent a letter to BA demanding compensation for the damages it had incurred by the repeated failure to
transport its contract workers despite confirmed bookings and payment of the corresponding travel taxes.
 July 23, 1981: the counsel of First Int'l sent another letter to BA demanding P350,000.00 damages and unrealized profit or income - denied
 August 8, 1981: First Int'l received a telex message from ROLACO cancelling the hiring of the remaining recruited workers due to the delay in
transporting the workers to Jeddah.
 January 27, 1982: First Int'l filed a complaint for damages against First Int'l
 CA Affirmed RTC: BA to pay First Int'l damages, attorneys fees and costs
ISSUE: W/N BA is not liable because there was no contract of carriage as no ticket was ever issued

HELD: Affirmed. MODIFICATION that the award of actual damages be deleted (reimbursed by ROLACO)
 In dealing with the contract of common carriage of passengers for purpose of accuracy, there are two (2) aspects of the same, namely:
 (a) the contract "to carry (at some future time)," which contract is consensual and is necessarily perfected by mere consent - applicable in this case
 (b) the contract "of carriage" or "of common carriage" itself which should be considered as a real contract for not until the carrier is actually used can
the carrier be said to have already assumed the obligation of a carrier
 Even if a prepaid ticket advice (PTA) is merely an advice from the sponsors that an airline is authorized to issue a ticket and thus no ticket was yet
issued, the fact remains that the passage had already been paid for by the principal of the appellee, and the appellant had accepted such payment
 Besides, appellant knew very well that time was of the essence as the prepaid ticket advice had specified the period of compliance therewith, and with
emphasis that it could only be used if the passengers fly on BA
 involvement of the BA in the contract "to carry" was well demonstrated when the it immediately advised First Int'l
 Acts of BA indeed constitute malice and evident bad faith which had caused damage and besmirched the reputation and business image fo First Int'l

7.) Everett Streamship Corp. V. CA (1998)

122494 October 8, 1998

Lessons Applicable: Contracting Parties (Transportation)

FACTS:

 Hernandez Trading Co., Inc. (Hernandez) imported 3 crates of bus spare parts (MARCO C/No. 12, MARCO C/No. 13 and MARCO C/No. 14), from
Maruman Trading Company, Ltd. (Maruman), a foreign corporation based in Japan.
 The crates (covered by Bill of Lading No. NGO53MN) were shipped on board “ADELFAEVERETTE,” a vessel owned by Everett Orient Lines
 Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was missing
 Hernandez made a formal claim for Y1,552,500.00, as shown in an Invoice No. MTM-941, dated November 14, 1991
 Everett Streamship Corp. offered to pay only Y100,000.00 the maximum amount stipulated under Clause 18 of the covering bill of lading
 Hernandez rejected the offer and thereafter instituted a suit for collection
 Trial Court: in favor of Hernandez
 CA: Affirmed but deleted the award of attorney’s fees
ISSUE:
1. W/N the limited liability clause in the Bill of Lading is valid
2. W/N Hernandez as consignee, who is not a signatory to the bill of lading is bound by the stipulations thereof
HELD:

1. YES.
 A stipulation in the bill of lading limiting the common carrier’s liability for loss or destruction of a cargo to a certain sum, unless the shipper or owner declares a greater value, is sanctioned by
law, particularly Articles 1749 and 1750 of the Civil Code which provide:

ART. 1749. A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

ART. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been freely and fairly agreed upon.
 Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with the stipulations.
 The trial court’s ratiocination that private respondent could not have “fairly and freely” agreed to the limited liability clause in the bill of lading because the said conditions were printed in
small letters does not make the bill of lading invalid.
 contracts of adhesion are valid and binding
 Greater vigilance, however, is required of the courts when dealing with contracts of adhesion in that the said contracts must be carefully scrutinized “in
order to shield the unwary (or weaker party) from deceptive schemes contained in ready-made covenant
 Article 24 of the Civil Code which mandates that “(i)n all contractual, property or other relations, when one of the parties is at a disadvantage on
account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection
 Maruman Trading, we assume, has been extensively engaged in the trading business. It can not be said to be ignorant of the business transactions it
entered into involving the shipment of its goods to its customers. The shipper could not have known, or should know the stipulations in the bill of
lading and there it should have declared a higher valuation of the goods shipped. Moreover, Maruman Trading has not been heard to complain that it
has been deceived or rushed into agreeing to ship the cargo in petitioner’s vessel. In fact, it was not even impleaded in this case.
2. YES.
 the right of a party in the same situation as Hernandez, to recover for loss of a shipment consigned to him under a bill of lading drawn up only by and
between the shipper and the carrier, springs from either a relation of agency that may exist between him and the shipper or consignor, or his status as
stranger in whose favor some stipulation is made in said contract, and who becomes a party thereto when he demands fulfillment of that stipulation, in
this case the delivery of the goods or cargo shipped
 When Hernandez formally claimed reimbursement for the missing goods from Everett and subsequently filed a case against the it based on the very
same bill of lading, it accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it.[
 The commercial Invoice No. MTM-941 does not in itself sufficiently and convincingly show that Everett has knowledge of the value of the cargo as contended by Hernandez

8.) FIRST PHILIPPINE INDUSTRIAL CORPORATION v. CA

GR. 125948, December 29, 1998

FACTS:
Petitioner First Philippine Industrial Corporation (FIPC) is a grantee of a pipeline concession under Republic Act No.
387, to contract, install and operate oil pipelines. Sometime in January 1995, petitioner applied for mayor’s permit in
Batangas. However, the Treasurer required petitioner to pay a local tax based on gross receipts amounting to
P956,076.04 payable in four installments. In order not to hamper its operations, petitioner paid the tax for the first
quarter of 1993. On January 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt
from local tax since it is engaged in transportation business. The respondent City Treasurer denied the protest
contending that petitioner cannot be considered engaged in trasportation business thus it cannot claim exemption
under Section 133 (j) of the Local Government Code. Petitioner filed a complaint before the Regional Trial Court of
Batangas for tax refund. Respondents assert that pipelines are not included in the term “common carrier” which refers
solely to ordinary carriers such as trucks, trains, ships and the like, that the term “common Carrier” pertains to the
mode or manner by which a product is delivered to its destination. The trial court dismissed the complaint, and such
was affirmed by the Court of Appeals.

ISSUE/S:
Whether or not FIPC is a common carrier?

HELD/RULING:
Yes, FIPC 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 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. 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.

9.) 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 Article
1732 of the Civil Code, Article 361 of the Code of Commerce, Article 362 of the Code of Commerce, common carrier, transportation
OCTOBER 6, 2017

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.
10.)

Estrelita Bascos v. CA and Rodolfo Cipriano

G.R. No. 101089 April 7, 1993
Campos, Jr., J.
FACTS:

Cipriano, representing Cipriano Trading Enterprise (CIPTRADE) entered into a haulingcontract with Jibfair Shipping Agency Corporation whereby the former bound
itself to haulthe latter’s 2,000 m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to thewarehouse of Purefoods Corporation in Calamba, Laguna.
To carry out its obligation,CIPTRADE subcontracted with Bascos to transport and to deliver 400 sacks of soya beanmeal worth P156,404.00 from the Manila Port
Area to Calamba, Laguna at the rate of P50.00 per metric ton. Petitioner failed to deliver the said cargo. As a consequence of thatfailure, Cipriano paid Jibfair Shipping
Agency the amount of the lost goods in accordancewith the contract which stated that: “CIPTRADE shall be held liable and answerable for anyl o s s i n b a g s d u e t o t h e f t ,
h i j a c k i n g a n d n o n - d e l i v e r y o r d a m a g e s t o t h e c a r g o d u r i n g transport at market value.”

C i p r i a n o f i l e d a c o m p l a i n t f o r a s u m o f m o n e y a n d d a m a g e s w i t h w r i t o f p r e l i m i n a r y attachment for breach of a contract of carriage

Basco’s answer to the complaint: truck carrying the cargo was hijacked along CanonigoSt., Paco, Manila; that hijacking, being a force majeure, exculpated her
from any liability toCIPTRADE; and that the contract they entered into was a mere lease of the truck
ISSUES:
1 . w a s p e t i t i o n e r a c o m m o n c a r r i e r ? ; 2 . w a s t h e h i j a c k i n g r e f e r r e d t o a f o r c e majeure?
HELD:
1 . Y e s . S e e A r t . 1 7 3 2 . ( t h e a r t i c l e m a k e s n o d i s t i n c t i o n b e t w e e n o n e whose principal business activity is the carrying of
persons or goods or both, and one whod o e s s u c h c a r r y i n g o n l y a s a n a n c i l l a r y a c t i v i t y ; n o d i s t i n c t i o n b e t w e e n a p e r s o n o r enterprise
offering transportation service on a regular or scheduled basis and one offeringsuch service on an occasional, episodic
or unscheduled basis; no distinction between acarrier offering its services to the general public and one who offers services or solicitsbusiness only from a
narrow segment of the general population)

the test to determine a common carrier is whether the given undertaking is a part of thebusiness engaged in by the carrier which he has held out to the general public
as hisoccupation rather than the quantity or extent of the business transacted

Basco herself has made the admission that she was in the trucking business under thename of A.M. Bascos Trucking, offering her trucks to those with cargo to
move (hence sheis a common carrier)

their contract was not one of lease: a contract is what the law defines it to be and not whatit is called by the contracting parties; furthermore, petitioner presented no other proof
of the existence of the contract of lease

2. Yes. Common carriers are obliged to observe extraordinary diligence in the vigilanceover the goods transported by them; they are presumed to have been at fault
or to haveacted negligently if the goods are lost, destroyed or deteriorated; in those cases where thepresumption of negligence is applied, the common carrier must
prove that it exercisedextraordinary diligence in order to overcome the presumption.
In this case, hijacking, not being included in the provisions of Article 1734, must be dealtwith under the provisions of Article 1735 and thus, the common carrier is
presumed toh a v e b e e n a t f a u l t o r n e g l i g e n t . T o e x c u l p a t e t h e c a r r i e r f r o m l i a b i l i t y a r i s i n g f r o m hijacking, he must prove that the robbers or the
hijackers acted with grave or irresistiblethreat, violence, or force. This is in accordance with Article 1745 of the Civil Code whichprovides: “Any of the following or similar
stipulations shall be considered unreasonable,unjust and contrary to public policy: x x x (6) That the common carrier’s liability for acts

c o m m i t t e d b y t h i e v e s , o r o f r o b b e r s w h o d o n o t a c t w i t h g r a v e o r i r r e s i s t i b l e t h r e a t , violence or force, is dispensed with or diminished.”

Under Article 1745 (6) above, a common carrier is held responsible — and will not bea l l o w e d t o d i v e s t
or to diminish such responsibility — even for acts of strangers likethieves or robbers except
w h e r e s u c h t h i e v e s o r r o b b e r s i n f a c t a c t e d w i t h g r a v e o r irresistible threat, violence or force. We believe and so hold that the limits of the duty of extraordinary
diligence in the vigilance over the goods carried are reached where thegoods are lost as a result of a robbery which is attended by “grave or irresistible threat,violence
or force.
11.) [G.R. No. 186312. June 29, 2010.]
SPOUSES DANTE CRUZ and LEONORA CRUZ, petitioners,
vs. SUN HOLIDAYS, INC., respondent.

Ponente: CARPIO MORALES, J p:

FACTS:
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 2001 against Sun
Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of Pasig City for damages arising from the death of their
son Ruelito C. Cruz (Ruelito) who perished with his wife on September 11, 2000 on board the boat M/B Coco Beach
III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the couple had stayed at Coco
Beach Island Resort (Resort) owned and operated by respondent.
The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11, 2000 was by virtue of
a tour package-contract with respondent that included transportation to and from the Resort and the point of
departure in Batangas. Miguel C. Matute (Matute), a scuba diving instructor and one of the survivors, gave his
account of the incident that led to the filing of the complaint as follows:
Matute stayed at the Resort from September 8 to 11, 2000. He was originally scheduled to leave the Resort in the
afternoon of September 10, 2000, but was advised to stay for another night because of strong winds and heavy
rains.On September 11, 2000, as it was still windy, Matute and 25 other Resort guests including petitioners' son and
his wife trekked to the other side of the Coco Beach mountain that was sheltered from the wind where they
boarded M/B Coco Beach III, which was to ferry them to Batangas.Shortly after the boat sailed, it started to rain. As it
moved farther away from Puerto Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt
from side to side and the captain to step forward to the front, leaving the wheel to one of the crew members.The
waves got more unwieldy. After getting hit by two big waves which came one after the other,M/B Coco Beach
III capsized putting all passengers underwater.The passengers, who had put on their life jackets, struggled to get out of
the boat. Upon seeing the captain, Matute and the other passengers who reached the surface asked him what they
could do to save the people who were still trapped under the boat. The captain replied "Iligtas niyo na lang ang sarili
niyo" (Just save yourselves). AcCTaD
Help came after about 45 minutes when two boats owned by Asia Divers in Sabang, Puerto Galera passed by the
capsized M/B Coco Beach III. Boarded on those two boats were 22 persons, consisting of 18 passengers and four crew
members, who were brought to Pisa Island. Eight passengers, including petitioners' son and his wife, died during the
incident.
At the time of Ruelito's death, he was 28 years old and employed as a contractual worker for Mitsui Engineering &
Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic monthly salary of $900.
Petitioners, by letter of October 26, 2000, demanded indemnification from respondent for the death of their son in
the amount of at least P4,000,000. Respondent denied any responsibility for the incident which it considered to be a
fortuitous event. It nevertheless offered, as an act of commiseration, the amount of P10,000 to petitioners upon their
signing of a waiver.Petitioners declined, they filed the Complaint, alleging that respondent, as a common carrier, was
guilty of negligence in allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by the
Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) as early as 5:00 a.m. of
September 11, 2000.
Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily requires four conditions to be met
before a boat is allowed to sail, to wit: (1) the sea is calm, (2) there is clearance from the Coast Guard, (3) there is
clearance from the captain and (4) there is clearance from the Resort's assistant manager. He added that M/B Coco
Beach III met all four conditions on September 11, 2000, but a subasco or squall, characterized by strong winds and
big waves, suddenly occurred, causing the boat to capsize.
By Decision of February 16, 2005, Branch 267 of the Pasig RTC dismissed petitioners' Complaint and respondent's
Counterclaim
Petitioners' Motion for Reconsideration having been denied by Order dated September 2, 2005, they appealed to the
Court of Appeals.
By Decision of August 19, 2008, the appellate court denied petitioners' appeal, holding, among other things, that the
trial court correctly ruled that respondent is a private carrier which is only required to observe ordinary diligence; that
respondent in fact observed extraordinary diligence in transporting its guests on board M/B Coco Beach III; and that
the proximate cause of the incident was a squall, a fortuitous event.
Petitioners' Motion for Reconsideration having been denied by Resolution dated January 16, 2009, they filed the
present Petition for Review
ISSUE:
1. WON respondent is a common carrier
2. WON respondent is guilty of negligence in allowing M/B Coco Beach III sail notwithstanding storm
warning bulletins issued by PAGASA.

HELD:
1. YES.
Petitioners correctly rely on De Guzman v. Court of Appeals in characterizing respondent as a common carrier.
The Civil Code defines "common carriers" in the following terms:
Article 1732.Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both,
by land, water, or air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as an ancillary
activity (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 1733 deliberately refrained from making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of
"public service," under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in the Civil Code.
Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly
considered ancillary thereto. The constancy of respondent's ferry services in its resort operations is underscored by its
having its own Coco Beach boats. And the tour packages it offers, which include the ferry services, may be availed of
by anyone who can afford to pay the same. These services are thus available to the public.
That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be imprudent to
suppose that it provides said services at a loss. The Court is aware of the practice of beach resort operators offering
tour packages to factor the transportation fee in arriving at the tour package price. That guests who opt not to avail of
respondent's ferry services pay the same amount is likewise inconsequential. These guests may only be deemed to
have overpaid.
2. YES.
A very cautious person exercising the utmost diligence would thus not brave such stormy weather and put other
people's lives at risk. The extraordinary diligence required of common carriers demands that they take care of the
goods or lives entrusted to their hands as if they were their own. This respondent failed to do.

Respondent cites the squall that occurred during the voyage as the fortuitous event that overturned M/B Coco Beach
III. As reflected above, however, the occurrence of squalls was expected under the weather condition of September
11, 2000. Moreover, evidence shows that M/B Coco Beach III suffered engine trouble before it capsized and sank. The
incident was, therefore, not completely free from human intervention.
The Court need not belabor how respondent's evidence likewise fails to demonstrate that it exercised due diligence to
prevent or minimize the loss before, during and after the occurrence of the squall.
As De Guzman instructs, Article 1732 of the Civil Code defining "common carriers" has deliberately
refrained from making distinctions on whether the carrying of persons or goods is the carrier's principal
business, whether it is offered on a regular basis, or whether it is offered to the general public. The intent
of the law is thus to not consider such distinctions. Otherwise, there is no telling how many other
distinctions may be concocted by unscrupulous businessmen engaged in the carrying of persons or goods in
order to avoid the legal obligations and liabilities of common carriers.
The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical cyclone warnings
for shipping on September 10 and 11, 2000 advising of tropical depressions in Northern Luzon which would also affect
the province of Mindoro. By the testimony of Dr. Frisco Nilo, supervising weather specialist of PAGASA, squalls are to
be expected under such weather condition.
Respondent's insistence that the incident was caused by a fortuitous event does not impress either.
The elements of a "fortuitous event" are: (a) the cause of the unforeseen and unexpected occurrence, or the failure of
the debtors to comply with their obligations, must have been independent of human will; (b) the event that
constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid; (c) the
occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal
manner; and (d) the obligor must have been free from any participation in the aggravation of the resulting injury to
the creditor.
To fully free a common carrier from any liability, the fortuitous event must have been the proximate and only cause of
the loss. And it should have exercised due diligence to prevent or minimize the loss before, during and after the
occurrence of the fortuitous event.
Article 1764 vis-à-vis Article 2206 of the Civil Code holds the common carrier in breach of its contract of carriage that
results in the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning
capacity and (3) moral damages.
Petitioners are entitled to indemnity for the death of Ruelito which is fixed at P50,000.
As for damages representing unearned income, the formula for its computation is:
Net Earning Capacity=life expectancy x (gross annual income - reasonable and necessary living
expenses).
Life expectancy is determined in accordance with the formula:
2/3 x [80 — age of deceased at the time of death]
Applying the above guidelines, the Court determines Ruelito's life expectancy as follows:
Life expectancy = 2/3 x [80 — age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35
Documentary evidence shows that Ruelito was earning a basic monthly salary of $900 which, when converted to
Philippine peso applying the annual average exchange rate of $1 = P44 in 2000, amounts to P39,600. Ruelito's net
earning capacity is thus computed as follows:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living
expenses).
= 35 x (P475,200 - P237,600)
= 35 x (P237,600)
Net Earning Capacity = P8,316,000
Respecting the award of moral damages, since respondent common carrier's breach of contract of carriage resulted in
the death of petitioners' son, following Article 1764 vis-à-vis Article 2206 of the Civil Code, petitioners are entitled to
moral damages. DAETHc
Since respondent failed to prove that it exercised the extraordinary diligence required of common carriers, it is
presumed to have acted recklessly, thus warranting the award too of exemplary damages, which are granted in
contractual obligations if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.
Under the circumstances, it is reasonable to award petitioners the amount of P100,000 as moral damages and
P100,000 as exemplary damages.
THE Court of Appeals Decision of August 19, 2008 is REVERSED and SET ASIDE. Judgment is rendered in favor of
petitioners ordering respondent to pay petitioners the following: (1) P50,000 as indemnity for the death of Ruelito
Cruz; (2) P8,316,000 as indemnity for Ruelito's loss of earning capacity; (3) P100,000 as moral damages; (4) P100,000
as exemplary damages; (5) 10% of the total amount adjudged against respondent as attorneys fees; and (6) the costs
of suit.
The total amount adjudged against respondent shall earn interest at the rate of 12% per annum computed from the
finality of this decision until full payment.
12.) Sps. Pereña vs. Sps. Zarate
G.R. No. 157917, August 29, 2012

FACTS:

Sps. Zarate, parents of Aaron Zarate, engaged the services of Sps. Pereña for the adequate and safe transportation
carriage of the former spouses’ son from their residence to his school. During the effectivity of the contract of
carriage, Aaron Zarate died in connection with a vehicular/train collision which occurred while Aaron was riding the
contracted carrier. At the time of the said collision, there were no safety warning signs and railings at the site
commonly used for railroad crossing. The site of the collision was not intended by the railroad operator for railroad
crossing at the time of the collision. PNR refused to acknowledge any liability for the collision. In Sps. Pereña’s
defense, they adduces evidence to show that they had exercised the diligence of a good father of a family in the
selection and supervision of Alfaro, the driver, by making sure that Alfaro had been issued a driver’s license and had
not been involved in any vehicular accident prior to the collision. The RTC ruled in favor of Sps. Zarate and held the
Pereñas and PNR jointly and severally liable for the death of Aaron plus damages. The CA upheld the award for the
loss of Aaron’s earning capacity, plus damages, and the award for Attorney’s fees was deleted. Hence, this petition.

ISSUE:

WON the Pereñas and PNR are jointly and severally liable for damages.

HELD:

YES. The defense of the Pereñas that they exercised the diligence of a good father of a family has no merit because
they operated as common carriers and that their standard of care was extraordinary diligence, not the ordinary
diligence of a good father of a family. The Pereñas, acting as a common carrier, were already presumed to be
negligent at the time of the accident because death had occurred to their passenger. The presumption for negligence,
being a presumption of law, laid the burden of evidence on their shoulders to establish that they had not been
negligent. There is no question that the Pereñas did not overturn the presumption of their negligence by credible
evidence. Their defense of having observed the diligence of a good father of a family in the selection and supervision
of their driver was not legally sufficient. PNR was also found guilty of negligence because it did not ensure the safety of
others through the placing of crossbars, signal lights, warning signs, and other permanent safety barriers to prevent
vehicles or pedestrians from crossing there. Hence, the Pereñas and PNR should jointly and severally be liable for the
death of Aaron Zarate.

14. LUZON STEVEDORING V. PUBLIC SERVICE COMMISSION (G.R. NO. L-5458)

Facts:
Petitioners are corporations mainly engaged in the stevedoring or lighterage and harbor towage business. At the same time, they are also engaged in interisland service which consists of hauling
cargoes such as sugar, oil, fertilizer and other commercial commodities which are loaded in their barges and towed by their tugboats, for which service petitioners charge freightage, but only serving
a limited portion of the public. Respondent Philippine Shipowners Association complains that petitioners were engaged in the transportation of cargo for hire or compensation without authority or
approval of the Commission, having adopted, filed and collected freight charges which said rates resulted in ruinous competition. PSC restrained petitioners “from further operating their watercraft
to transport goods for hire or compensation between points in the Philippines until the rates they propose to charge are approved by this Commission.”
Issue:
Whether or not petitioners can be considered public service.
Ruling: YES.
It is not necessary, under this definition, that one holds himself out as serving or willing to serve the public in order to be considered public service.
Commonwealth Act No. 146 declares in unequivocal language that an enterprise of any of the kinds therein enumerated is a public service if conducted for hire or compensation even if the operator
deals only with a portion of the public or limited clientele.
It has been seen that public utility, even where the term is not defined by statute, is not determined by the number of people actually served. Nor does the mere fact that service is rendered only under
contract prevent a company from being a public utility. On the other hand, casual or incidental service devoid of public character and interest, it must be admitted, is not brought within the category
of public utility. The demarcation line is not susceptible of exact description or definitions, each case being governed by its peculiar circumstances.
The transportation service which was the subject of complaint was not casual or incidental. It had been carried on regularly for years at almost uniform rates of charges. Although the number of the
petitioners’ customers was limited, the value of goods transported was not inconsiderable. Petitioners did not have the same customers all the time embraced in the complaint, and there was no
reason to believe that they would not accept, and there was nothing to prevent them from accepting, new customers that might be willing to avail of their service to the extent of their capacity.
16..

17. Phil Am Gen Insurance Co, Et Al. V. PKS Shipping Co (2003)

G.R. No. 149038 April 9, 2003

Lessons Applicable: Charter Party (Transportation)

FACTS:
 Davao Union Marketing Corporation (DUMC) contracted the services of PKS Shipping Company (PKS Shipping) for the shipment to Tacloban City of
75,000 bags of cement worth P3,375,000.
 DUMC insured the goods for its full value with Philippine American General Insurance Company (Philamgen).
 The goods were loaded aboard the dumb barge Limar I belonging to PKS Shipping.
 December 22, 1988 9 pm: While Limar I was being towed by PKS’ tugboat MT Iron Eagle, the barge sank a couple of miles off the coast of Dumagasa Point, in Zamboanga
del Sur, bringing down with it the entire cargo of 75,000 bags of cement.
 DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly made payment; it then sought reimbursement from PKS Shipping of the
sum paid to DUMC but the shipping company refused to pay so Philamgen to file suit against PKS Shipping
 RTC: dismissed the complaint - fortuitous event
 CA:Affirmed - not a common carrier but a casual occupation
ISSUE: W/N PKS Shipping is NOT liable since it was NOT a common carrier

HELD: NO. Petition is DENIED

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air for compensation, offering their services to the public
 Complementary is Section 13, paragraph (b), of the Public Service Act

public service" to be –
"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, 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, 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 communication systems, wire or wireless broadcasting stations and other similar
public services
 So understood, the concept of `common carrier’ under Article 1732 may be seen to coincide neatly with the notion of `public service,’ under the Public
Service Act
 distinction between:
 common or public carrier
 private or special carrier - character of the business, such that if the undertaking is an isolated transaction , not a part of the business or occupation,
and the carrier does not hold itself out to carry the goods for the general public or to a limited clientele, although involving the carriage of goods for a
fee
 EX: charter party which includes both the vessel and its crew, such as in a bareboat or demise, where the charterer obtains the use and service of all or
some part of a ship for a period of time or a voyage or voyages and gets the control of the vessel and its crew.
 The regularity of its activities in this area indicates more than just a casual activity on its part
 The appellate court ruled, gathered from the testimonies and sworn marine protests of the respective vessel masters ofLimar I and MT Iron Eagle, that
there was no way by which the barge’s or the tugboat’s crew could have prevented the sinking of Limar I. The vessel was suddenly tossed by waves of
extraordinary height of 6 to 8 feet and buffeted by strong winds of 1.5 knots resulting in the entry of water into the barge’s hatches. The official
 Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness
of Limar I and should strengthen the factual findings of the appellate court.
 Findings of fact of the Court of Appeals generally conclude this Court; none of the recognized exceptions from the rule - (1) when the factual findings of
the Court of Appeals and the trial court are contradictory; (2) when the conclusion is a finding grounded entirely on speculation, surmises, or
conjectures; (3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd, or impossible; (4) when
there is a grave abuse of discretion in the appreciation of facts; (5) when the appellate court, in making its findings, went beyond the issues of the case
and such findings are contrary to the admissions of both appellant and appellee; (6) when the judgment of the Court of Appeals is premised on a
misapprehension of facts; (7) when the Court of Appeals failed to notice certain relevant facts which, if properly considered, would justify a different
conclusion; (8) when the findings of fact are themselves conflicting; (9) when the findings of fact are conclusions without citation of the specific
evidence on which they are based; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such
findings are contradicted by the evidence on record – would appear to be clearly extant in this instance.

18. ASIA LIGHTERAGE AND SHIPPING v. CA

GR. 147246, August 19, 2003

FACTS:
Petitioner Asia Lighterage and Shipping, Inc. was contracted as carrier by the consignee, General Milling Corporation,
to deliver a cargo to the consignee's warehouse at Pasig City. The cargo, however, did not reach the consignee. The
transport of said cargo was suspended due to a warning of an incoming typhoon, however, the petitioner proceeded
to pull the barge to Engineering Island off Baseco to seek shelter from the approaching typhoon. A few days after, the
barge develop a list because of a hole it sustained after hitting an unseen protruberance underneath the water. Upon
reaching the Sta. Mesa spillways, the barge again ran aground due to strong current. To avoid the complete sinking of
the barge, a portion of the goods was transferred to three other barges. The next day, the towing bits of the barge
broke. It sank completely, resulting in the total loss of the remaining cargo. Private respondent, Prudential Guarantee
and Assurance, Inc., as insurer, indemnified the General Milling Corp. for the lost cargo and thus, as subrogee, sought
recovery from petitioner, Asia Lighterage. Both the trial court and the appellate court ruled in favor of private
respondent.

ISSUE:
1. Whether or not Asia Lighterage is a common carrier?
2. Whether or not Asia Lighterage exercised extraordinary diligence in it’s care and custody of the consignee’s
cargo?

HELD:
1. Yes, Asia Lighterage 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. 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; that there was no distinguishment between a person or enterprise offering transporation
service on a regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis, that Article 1732 does not distinguish between a carrier offering its services to the
general public, and one who offers services or solicits business only from a narrow segment of the general
population. In the case at bar, the principal business of the petitioner is that of lighterage and drayage and
it offers its barges to the public for carrying or transporting goods by water for compensation. Petitioner is
clearly a common carrier, whether its carrying of goods is done on an irregular rather than scheduled
manner, and with an only limited clientele. A common carrier need not have fixed and publicly known
routes. Neither does it have to maintain terminals or issue tickets. 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 and lighterage,
offering its barges to the public, despite its limited clientele for carrying or transporting goods by water for
compensation.

2. No, petitioner failed to exercise extraordinary diligence in its care and custody of the consignee's goods.
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported
by them. They are presumed to have been at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated. To overcome the presumption of negligence in the case of loss, destruction or
deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There
are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instances when the
presumption of negligence does not attach:
Art. 1734.Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only:
(1)Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2)Act of the public enemy in war, whether international or civil;
(3)Act or omission of the shipper or owner of the goods;
(4)The character of the goods or defects in the packing or in the containers;
(5)Order or act of competent public authority.
In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss of its cargo.
Petitioner claims that this was caused by a typhoon, hence, it should not be held liable for the loss of the cargo.
However, petitioner failed to prove that the typhoon is the proximate and only cause of the loss of the goods, and that
it has exercised due diligence before, during and after the occurrence of the typhoon to prevent or minimize the loss.
The evidence show that, even before the towing bits of the barge broke, it had already previously sustained damage
when it hit a sunken object while docked at the Engineering Island. It even suffered a hole. Clearly, this could not be
solely attributed to the typhoon. The partly-submerged vessel was refloated but its hole was patched with only clay
and cement. The patch work was merely a provisional remedy, not enough for the barge to sail safely. Thus, when
petitioner persisted to proceed with the voyage, it recklessly exposed the cargo to further damage.

20.) HOME INSURANCE COMPANY vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING CORPORATION

MARCH 26, 2011 ~ VBDIAZ

HOME INSURANCE COMPANY vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING CORPORATION
G.R. No. L-25599
April 4, 1968
FACTS: “Consorcio Pesquero del Peru of South America” shipped freight pre-paid at Peru, jute bags of Peruvian fish meal through SS Crowborough, covered by clean bills of lading. The cargo,
consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and insured by Home Insurance Company arrived in Manila and was discharged into the lighters of Luzon Stevedoring
Company. When the cargo was delivered to consignee San Miguel Brewery Inc., there were shortages causing the latter to lay claims against Luzon Stevedoring Corporation, Home Insurance
Company and the American Steamship Agencies (shipowner), owner and operator of SS Crowborough.
Because the others denied liability, Home Insurance Company paid SMBI the insurance value of the loss, as full settlement of the claim. Having been refused reimbursement by both the Luzon
Stevedoring Corporation and American Steamship Agencies, Home Insurance Company, as subrogee to the consignee, filed against them before the CFI of Manila a complaint for recovery of the
payment paid with legal interest, plus attorney’s fees.

In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods in the same quantity and quality that it had received the same from the carrier.

The CFI, after trial, absolved Luzon Stevedoring Corporation, having found the latter to have merely delivered what it received from the carrier in the same condition and quality, and ordered
American Steamship Agencies to pay Home Insurance Company the amount demanded with legal interest plus attorney’s fees.

Disagreeing with such judgment, American Steamship Agencies appealed directly to Us.

ISSUE: Is the stipulation in the charter party of the owner’s non-liability valid so as to absolve the American Steamship Agencies from liability for loss?
HELD: The judgment appealed from is hereby reversed and appellant is absolved from liability to plaintiff.
YES

The bills of lading, covering the shipment of Peruvian fish meal provide at the back thereof that the bills of lading shall be governed by and subject to the terms and conditions of the charter party,
if any, otherwise, the bills of lading prevail over all the agreements. On the bills are stamped “Freight prepaid as per charter party. Subject to all terms, conditions and exceptions of charter party
dated London, Dec. 13, 1962.”

Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods caused by personal want of due diligence on its part or its manager to make the
vessel in all respects seaworthy and to secure that she be properly manned, equipped and supplied or by the personal act or default of the owner or its manager. Said paragraph,
however, exempts the owner of the vessel from any loss or damage or delay arising from any other source, even from the neglect or fault of the captain or crew or some other person employed
by the owner on board, for whose acts the owner would ordinarily be liable except for said paragraph..
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 the case of a ship totally chartered for the use of a single party.

And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the charterer, as shipper, is in fact and legal contemplation merely a receipt and a document of title not a
contract, for the contract is the charter party. The consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the same. Accordingly, the consignees
under the bills of lading must likewise abide by the terms of the charter party. And as stated, recovery cannot be had thereunder, for loss or damage to the cargo, against the shipowners, unless the
same is due to personal acts or negligence of said owner or its manager, as distinguished from its other agents or employees. In this case, no such personal act or negligence has been proved.

21.)
DE GUZMAN VS. COURT OF APPEALS
168 SCRA 612
Facts: Cendena was a junk dealer and was engaged in buying used bottles and scrap materials in Pangasinan and brought these to Manila for resale. He used two 6-wheeler
trucks. On the return trip to Pangasinan, he would load his vehicles with cargo which various merchants wanted delivered to Pangasinan. For that service, he charged freight lower
than regular rates. General Milk Co. contacted with him for the hauling of 750 cartons of milk. On the way to Pangasinan, one of the trucks was hijacked by armed men who took
with them the truck and its cargo and kidnapped the driver and his helper. Only 150 cartons of milk were delivered. The Milk Co. sued to claim the value of the lost merchandise
based on an alleged contract of carriage. Cendena denied that he was a common carrier and contended that he could not be liable for the loss it was due to force majeure. The
trial court ruled that he was a common carrier. The CA reversed.

Issue: Whether or not Cendena is a common carrier?

Held: Yes, Cendena is properly characterized as a common carrier even though he merely backhauled goods for other merchants, and even if it was done on a periodic basis
rather than on a regular basis, and even if his principal occupation was not the carriage of goods.

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. It also avoids making a distinction between a person or enterprise offering transportation services on a regular or scheduled basis and one offering service on an occasional,
episodic or unscheduled basis. Neither does it make a distinction between a carrier offering its services to the general public and one who offers services or solicits business only
from a narrow segment of population

23.) Benedicto vs.CA

(187 SCRA 547)

Facts: Private respondent Greenhills Wood Industries Company, Inc. a lumber manufacturing firm in Dagupan City, operates a sawmill in Maddela, Quirino.

In May 1980, private respondent bound himself to sell and deliver to Bluestar Mahogony, Inc. 100,000 board feet of sawn lumber with the understanding that the initial delivery would be
made on 15 May 1980. To effect its first delivery, private respondent’s resident manager in Maddela, Dominador Cruz, contracted Virgilio Licuden, the driver of a cargo truck to transport its
sawn lumber to the consignee Blue Star in Valenzuela, Bulacan. This cargo truck was registered in the name of petitioner Ma. Luis Benedicto, the proprietor of Macoven Trucking, business
enterprise engaged in hauling freight, with the main office in B.F. Homes, Parañaque.

On 15 May 1980, Cruz in the presence and with the consent of driver Licuden, supervised the loading of 7,690 board feet of sawn lumber with invoice value of P16, 918.00 aboard the
cargo truck. The cargo never reached Blue Star.

Issue: Whether the registered owner is liable even though the vehicle have been transferred to another person?

Held: Supreme Court held that the prevailing rule on common carrier makes the registered owner liable for consequences flowing from the operations of the common carrier, even though
the specific vehicle involve may already have been transferred to another person. This doctrine rest upon the principle that in dealing with the vehicles registered under the Public Service
Law, the public has the right to assume that the registered owner is the actual or lawful owner thereof.

The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations of the carrier, even though the specific vehicle involved may
already have been transferred to another person. This doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law, the public has the right to
assume that the registered owner is the actual or lawful owner thereof. It would be very difficult and often impossible as a practical matter, for members of the general public to enforce the
rights of action that they may have for injuries inflicted by the vehicles being negligently operated if they should be required to prove who the actual owner is. The registered owner is not
allowed to deny liability by proving the identity of the alleged transferee. Thus, contrary to petitioner’s claim, private respondent is not required to go beyond the vehicle’s certificate of
registration to ascertain the owner of the carrier.

Clearly, to permit a common carrier to escape its responsibility for the passengers or goods transported by its proving a prior sale of the vehicle or means of transportation to an alleged
vendee would be to attenuate drastically the carrier’s duty of extraordinary diligence.

24. MINDANAO TERMINAL AND BROKERAGE SERVICE, INC., vs. PHOENIX ASSURANCE COMPANY OF NEW YORK/MCGEE
& CO., INC.,
G.R. No. 162467. May 8, 2009.
FACTS:
Del Monte Phils.contracted Mindanao Terminal, a stevedoring company, to load and stow ashipment of fresh green
bananas and pineapples into the vessel M/V Mistrau docked at the port of Davao City andbound for Incheon, South
Korea. The goods were insured with Phoenix Assurance. Upon discharge of thecargo in Korea, several cartons of the
fresh green bananas and pineapples were damaged and no longer had anycommercial value. Del Monte filed an
insurance claim and was paid by Phoenix Assurance. The lattersued Mindanao Terminal for damages before the RTC of
Davao City. The RTC dismissed the complaintfor lack of cause of action against Mindanao Terminal because its services
were contracted by Del Monteand not by the insurer; in addition to that, Mindanao had acted merely as a labor
provider. The CA reversed the ruling and held Mindanao Terminal to be liable for damages.
ISSUE/S:
Whether or not Phoenix and McGee have a cause of action and whether Mindanao Terminal is liable for not having
exercise extraordinary diligence in the transport and storage of the cargo.
HELD/RULING:
No. It was neither alleged nor proven by Phoenix and McGee that Mindanao Terminal was bound by contractual
stipulation to observe a higher degree of diligence than that required of a good father of a family. Hence, the Supreme
Court concluded that following Article 1173, Mindanao Terminal was required to observe ordinary diligence only in
loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau. There is a distinction between
an arrastre and a stevedore. Arrastre, a Spanish word which refers to hauling of cargo, comprehends the handling of
cargo on the wharf or between the establishment of the consignee or shipper and the ship’s tackle. The responsibility
of the arrastre operator lasts until the delivery of the cargo to the consignee. The service is usually performed by
longshoremen. On the other hand, stevedoring refers to the handling of the cargo from the pier to the ship’s cargo
hold. The responsibility of the stevedore ends upon the loading and stowing of the cargo in the vessel. It is not
disputed that Mindanao Terminal was performing purely stevedoring function while the private respondent
in thesummarized case was performing arrastre function.

KILUSANG MAYO UNO LABOR CENTERv HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING AND
REGULATORY BOARD, and the PROVINCIAL BUSES OPERATORS ASSOCIATION OF THE PHILIPPINES
G.R. No. 115381. December 23, 1994.
FACTS:
Then Secretary of DOTC, Oscar M. Orbos, issued Memorandum Circular No. 90-395 to then LTFRB Chairman, Remedios
A.S. Fernando allowing provincial bus operators to charge passengers rates within a range of 15% above and 15%
below the LTFRB official rate for a period of one (1) year.
This range was later increased by LTFRB thru a Memorandum Circular No. 92-009 providing, among others, that "The
existing authorized fare range system of plus or minus 15 per cent for provincial buses and jeepneys shall be widened
to 20% and -25% limit in 1994 with the authorized fare to be replaced by an indicative or reference rate as the basis
for the expanded fare range."
Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation policy of the DOTC allowing
provincial bus operators to collect plus 20% and minus 25% of the prescribed fare without first having filed a petition
for the purpose and without the benefit of a public hearing, announced a fare increase of twenty (20%) percent of the
existing fares.
On March 16, 1994, petitioner KMU filed a petition before the LTFRB opposing the upward adjustment of bus fares,
which the LTFRB dismissed for lack of merit.
ISSUE/S:
Whether or not the absence of notice and hearing and the delegation of authority in the increase or decrease of
transportation fares to provincial bus and jeepney operators is unlawful?
HELD/RULING:
Yes. Under Section 16 (c) of the Public Service Act, as amended, the legislature delegated to the defunct Public Service
Commission the power of fixing the rates of public services. LTFRB, the existing regulatory body today, is likewise
vested with the same under Executive Order 202.

The authority given by the LTFRB to the bus operators to set fares over and above the authorized existing fare is
unlawful and invalid, as it is tantamount to undue delegation of legislative authority. Under the maxim potestas
delegate non delegaripotest – “what has been delegated cannot be delegated.”

The policy allowing provincial bus operators to change and increase their fares would result not only to a chaotic
situation but to an anarchic state of affairs. This would leave the riding public at the mercy of transport operators who
may increase fares, every hour, and every day, every month or every year, whenever it pleases them or whenever they
deem it necessary to do so. Furthermore, under the Section 16 (a) of Public Service Act, there must be proper notice
and hearing in the fixing of rates, to arrive at a just and reasonable rate acceptable to both the public utility and the
public.

31. Kabit System

[G.R. No. 64693. April 27, 1984.]
LITA ENTERPRISES, INC., petitioner, vs. SECOND CIVIL CASES DIVISION, INTERMEDIATE APPELLATE COURT, NICASIO
M. OCAMPO and FRANCISCA P. GARCIA, respondents.
Escolin.J. p:
Facts:
Spouses Ocampo, herein private respondent, purchased in instalment from Delta Motor Sales Corporation 5 Toyota
Corona Standard cars to be used as taxicabs. Since they had no franchise to operate the taxicabs, the contracted with
petitioner Lita Enterprises for the use of the latter’s certificate of public convenience in consideration of an initial
payment of P1,000 and a monthly rental of P200 per taxicab unit.
Aforesaid cars were registered in the name of Lita Enterprises, the possession however remain with the spouses
Ocampo who operated and maintained the same unde the namen of “ACME “ Taxi.
About a year later, one of the said taxicabs driven by their employee collided with a motorcycle whose driver died thus
a civil case is filed for damages which was instituted against Lita Enterprise as registered owner of the taxicab.
Thus when the decision of the damages became final and executor, one of the vehicles of the spouses was levied upon
the public auction thereafter; respondent Ocampo decided to register his taxicabs under his name but declined. Thus a
case for reconveryance of motor vehicle.
RTC: ordered Lita Enterprises to transfer the registration certificate of the three Toyota cars not levied upon.
CA: modified decision: in the event the condition of the three Toyota cars will no longer serve the purpose of the deed
of conveyance because of their deterioration, or because they are no longer serviceable, or because they are no
longer available, the LitaEnterprises, Inc. is ordered to pay the plaintiffs their fair market value as of July 22, 1975
Issue:
Whether or not the private respondent is liable for the amount which the petitioner has paid in relation to gross
negligence of private respondent’s drivers
Held:
The relationship between the respondent and the petitioner is Kabit system whereby a person who has been granted
a certificate of convenience allows another person who owns motor vehicles to operate under such franchise for a fee.
“kabit system" is invariably recognized as being contrary to public policy and, therefore, void and inexistent under
Artic1e 1409 of the Civil Code. It is a fundamental principle that the court will not aid either party to enforce an illegal
contract, but will leave them both where it finds them.
Thus Making them IN PARI DELICTO. Inexistent and Void Contract.
32.) G.R. No. L-65510 March 9, 1987TEJA MARKETING AND/OR ANGEL JAUCIAN, petitioner, vs. HONORABLE INTERMEDIATEAPPELLATE COURT * AND PEDRO N. NALE,
respondents.PARAS, J.:FACTS:
On May 9, 1975, Angel Jaucian bought a motorcycle with complete accessories and a sidecar for apurchase price of P8,000 from Pedro Nale. Jaucian gave a down payment of
P1,700 with a promise topay the balance within sixty (60) days. A chattel mortgage was constituted as a security for the paymentof the purchase price. Having failed to comply
with his promise and so upon his own request, the periodwas extended to one year in monthly installments until January 1976 when he stopped paying. Nalemade demands but
Jaucian still failed to comply.Jaucian did not dispute the sale and the outstanding balance of P1,700. He claims that he was persuadedto buy because of the condition that Nale
would be the one to register every year with the LandTransportation Commission (LTC). In 1976, however, Nale failed to register both the chattel mortgageand the motorcycle
notwithstanding the fact that Jaucian gave him payment for the mortgage fee andregistration fee and had the motorcycle insured. Because of this failure to register the
motorcycle, Jaucianclaims he suffered damages on insurance indemnity for the more than two times that the motorcyclefigured in accidents aside from the loss of the daily
income of P15.00 as boundary fee beginning October1976 when the motorcycle was impounded.Nale, in his answer, claimed that
his failure to register the motorcycle was due to Jaucian’s non
-paymentof insurance premiums and that Jaucian was hiding the motorcycle from him.Upon investigation, the records of the LTC show that the same motorcycle was first
mortgaged topetitioner herein, Teja Marketing, by Jaucian though the Teja Marketing and Angel Jaucian are one and he same. It was made to appear that way because Jaucian
had no franchise of his own and he attachedthe unit to Nale's own transportation line which is duly registered.Petitioner filed an action for "Sum of Money with Damages" against
Nale in the City Court of Naga City.The Court rendered judgment in favor of the petitioner. IAC affirmed the judgment and dismissed the caseciting both parties are in "pari
delicto". Thus, Nale filed a petition for review.
ISSUE:
Whether or not respondent court erred in applying the doctrine of "pari delicto."
RULING:
No. Unquestionably, the parties herein operated under an arrangement, commonly known as the "kabitsystem" whereby a person who has been granted a certificate of public
convenience allows anotherperson who owns motor vehicles to operate under such franchise for a fee. A certificate of publicconvenience is a special privilege conferred by the
government. Abuse of this privilege by the granteesthereof cannot be countenanced. The "kabit system" has been identified as one of the root causes of theprevalence of graft
and corruption in the government transportation offices. Although not outrightly penalized as a criminal
offense, the ―kabit system‖ is invariably recognized as
being contrary to public policy and, therefore, void and in existent under Article 1409 of the Civil Code.The defect of in existence of a contract is permanent and cannot be cured
by ratification or byprescription. The mere lapse of time cannot give efficacy to contracts that are null and void.'Ex pacto illicito' non oritur actio" (No action arises out of illicit
bargain) is the time-honored maxim thatmust be applied to the parties in the case at bar. Having entered into an illegal contract, neither can seekrelief from the courts, and each
must bear the consequences of his acts."

……G.R. No. 200289

PERALTA, J.:

These two consolidated cases challenge, by way of petition for certiorari under Rule 45 of the 1997 Rules of Civil Procedure, the September 13, 2011 Decision[1] and January
19, 2012 Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 86752, which reversed and set aside the January 27, 2006 Decision[3] of the Manila City Regional Trial
Court Branch (RTC) 30.

The facts, as established by the records, are as follows:

On August 23, 1993, Kinsho-Mataichi Corporation shipped from the port of Kobe, Japan, 197 metal containers/skids of tin-free steel for delivery to the consignee, San Miguel
Corporation (SMC). The shipment, covered by Bill of Lading No. KBMA-1074,[4] was loaded and received clean on board M/V Golden Harvest Voyage No. 66, a vessel owned
and operated by Westwind Shipping Corporation (Westwind).

SMC insured the cargoes against all risks with UCPB General Insurance Co., Inc. (UCPB) for US Dollars: One Hundred Eighty-Four Thousand Seven Hundred Ninety-Eight and
Ninety-Seven Centavos (US$184,798.97), which, at the time, was equivalent to Philippine Pesos: Six Million Two Hundred Nine Thousand Two Hundred Forty-Five and Twenty-
Eight Centavos (P6,209,245.28).

The shipment arrived in Manila, Philippines on August 31, 1993 and was discharged in the custody of the arrastre operator, Asian Terminals, Inc. (ATI), formerly Marina Port
Services, Inc.[5] During the unloading operation, however, six containers/skids worth Philippine Pesos: One Hundred Seventeen Thousand Ninety-Three and Twelve Centavos
(P117,093.12) sustained dents and punctures from the forklift used by the stevedores of Ocean Terminal Services, Inc. (OTSI) in centering and shuttling the containers/skids. As
a consequence, the local ship agent of the vessel, Baliwag Shipping Agency, Inc., issued two Bad Order Cargo Receipt dated September 1, 1993.

On September 7, 1993, Orient Freight International, Inc. (OFII), the customs broker of SMC, withdrew from ATI the 197 containers/skids, including the six in damaged condition,
and delivered the same at SMC's warehouse in Calamba, Laguna through J.B. Limcaoco Trucking (JBL). It was discovered upon discharge that additional nine containers/skids
valued at Philippine Pesos: One Hundred Seventy-Five Thousand Six Hundred Thirty-Nine and Sixty-Eight Centavos (P175,639.68) were also damaged due to the forklift
operations; thus, making the total number of 15 containers/skids in bad order.

Almost a year after, on August 15, 1994, SMC filed a claim against UCPB, Westwind, ATI, and OFII to recover the amount corresponding to the damaged 15 containers/skids.
When UCPB paid the total sum of Philippine Pesos: Two Hundred Ninety-Two Thousand Seven Hundred Thirty-Two and Eighty Centavos (P292,732.80), SMC signed the
subrogation receipt. Thereafter, in the exercise of its right of subrogation, UCPB instituted on August 30, 1994 a complaint for damages against Westwind, ATI, and OFII.[6]

After trial, the RTC dismissed UCPB's complaint and the counterclaims of Westwind, ATI, and OFII. It ruled that the right, if any, against ATI already prescribed based on the
stipulation in the 16 Cargo Gate Passes issued, as well as the doctrine laid down in International Container Terminal Services, Inc. v. Prudential Guarantee & Assurance Co.
Inc.[7] that a claim for reimbursement for damaged goods must be filed within 15 days from the date of consignee's knowledge. With respect to Westwind, even if the action
against it is not yet barred by prescription, conformably with Section 3 (6) of the Carriage of Goods by Sea Act (COGSA) and Our rulings in E.E. Elser, Inc., et al. v. Court of
Appeals, et al.[8] and Belgian Overseas Chartering and Shipping N.V. v. Phil. First Insurance Co., Inc.,[9] the court a quo still opined that Westwind is not liable, since the
discharging of the cargoes were done by ATI personnel using forklifts and that there was no allegation that it (Westwind) had a hand in the conduct of the stevedoring operations.
Finally, the trial court likewise absolved OFII from any liability, reasoning that it never undertook the operation of the forklifts which caused the dents and punctures, and that it
merely facilitated the release and delivery of the shipment as the customs broker and representative of SMC.
On appeal by UCPB, the CA reversed and set aside the trial court. The fallo of its September 13, 2011 Decision directed:

WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The Decision dated January 27, 2006 rendered by the court a quo is REVERSED AND SET
ASIDE. Appellee Westwind Shipping Corporation is hereby ordered to pay to the appellant UCPB General Insurance Co., Inc., the amount of One Hundred Seventeen Thousand
and Ninety-Three Pesos and Twelve Centavos (Php117,093.12), while Orient Freight International, Inc. is hereby ordered to pay to UCPB the sum of One Hundred Seventy-Five
Thousand Six Hundred Thirty-Nine Pesos and Sixty-Eight Centavos (Php175,639.68). Both sums shall bear interest at the rate of six (6%) percent per annum, from the filing of
the complaint on August 30, 1994 until the judgment becomes final and executory. Thereafter, an interest rate of twelve (12%) percent per annum shall be imposed from the time
this decision becomes final and executory until full payment of said amounts.

SO ORDERED.[10]

While the CA sustained the RTC judgment that the claim against ATI already prescribed, it rendered a contrary view as regards the liability of Westwind and OFII. For the
appellate court, Westwind, not ATI, is responsible for the six damaged containers/skids at the time of its unloading. In its rationale, which substantially followed Philippines First
Insurance Co., Inc. v. Wallem Phils. Shipping, Inc.,[11] it concluded that the common carrier, not the arrastre operator, is responsible during the unloading of the cargoes from the
vessel and that it is not relieved from liability and is still bound to exercise extraordinary diligence at the time in order to see to it that the cargoes under its possession remain in
good order and condition. The CA also considered that OFII is liable for the additional nine damaged containers/skids, agreeing with UCPB's contention that OFII is a common
carrier bound to observe extraordinary diligence and is presumed to be at fault or have acted negligently for such damage. Noting the testimony of OFII's own witness that the
delivery of the shipment to the consignee is part of OFII's job as a cargo forwarder, the appellate court ruled that Article 1732 of the New Civil Code (NCC) does not distinguish
between one whose principal business activity is the carrying of persons or goods or both and one who does so as an ancillary activity. The appellate court further ruled that OFII
cannot excuse itself from liability by insisting that JBL undertook the delivery of the cargoes to SMC's warehouse. It opined that the delivery receipts signed by the inspector of
SMC showed that the containers/skids were received from OFII, not JBL. At the most, the CA said, JBL was engaged by OFII to supply the trucks necessary to deliver the
shipment, under its supervision, to SMC.

Only Westwind and OFII filed their respective motions for reconsideration, which the CA denied; hence, they elevated the case before Us via petitions docketed as G.R. Nos.
200289 and 200314, respectively.

Westwind argues that it no longer had actual or constructive custody of the containers/skids at the time they were damaged by ATI's forklift operator during the unloading
operations. In accordance with the stipulation of the bill of lading, which allegedly conforms to Article 1736 of the NCC, it contends that its responsibility already ceased from the
moment the cargoes were delivered to ATI, which is reckoned from the moment the goods were taken into the latter's custody. Westwind adds that ATI, which is a completely
independent entity that had the right to receive the goods as exclusive operator of stevedoring and arrastre functions in South Harbor, Manila, had full control over its employees
and stevedores as well as the manner and procedure of the discharging operations.

As for OFII, it maintains that it is not a common carrier, but only a customs broker whose participation is limited to facilitating withdrawal of the shipment in the custody of ATI by
overseeing and documenting the turnover and counterchecking if the quantity of the shipments were in tally with the shipping documents at hand, but without participating in the
physical withdrawal and loading of the shipments into the delivery trucks of JBL. Assuming that it is a common carrier, OFII insists that there is no need to rely on the presumption
of the law that, as a common carrier, it is presumed to have been at fault or have acted negligently in case of damaged goods considering the undisputed fact that the damages
to the containers/skids were caused by the forklift blades, and that there is no evidence presented to show that OFII and Westwind were the owners/operators of the forklifts. It
asserts that the loading to the trucks were made by way of forklifts owned and operated by ATI and the unloading from the trucks at the SMC warehouse was done by way of
forklifts owned and operated by SMC employees. Lastly, OFII avers that neither the undertaking to deliver nor the acknowledgment by the consignee of the fact of delivery makes
a person or entity a common carrier, since delivery alone is not the controlling factor in order to be considered as such.

Both petitions lack merit.

The case of Philippines First Insurance Co., Inc. v. Wallem Phils. Shipping, Inc.[12] applies, as it settled the query on which between a common carrier and an arrastre operator
should be responsible for damage or loss incurred by the shipment during its unloading. We elucidated at length:

Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by
them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The
extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until
the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them.

For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from the time it is turned over to him at the dock or afloat alongside
the vessel at the port of loading, until he delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed otherwise. In Standard Oil Co. of New York v.
Lopez Castelo, the Court interpreted the ship captain's liability as ultimately that of the shipowner by regarding the captain as the representative of the shipowner.

Lastly, Section 2 of the COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care,
and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2) thereof then states
that among the carriers' responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
xxxx

On the other hand, the functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the
ship's tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled
to their possession.

Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or employees should observe the standards and measures necessary to prevent losses
and damage to shipments under its custody.

In Fireman's Fund Insurance Co. v. Metro Port Service, Inc., the Court explained the relationship and responsibility of an arrastre operator to a consignee of a cargo, to quote:

The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman. The relationship between the consignee and the
common carrier is similar to that of the consignee and the arrastre operator. Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to
deliver them in good condition to the consignee, such responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore charged with and
obligated to deliver the goods in good condition to the consignee. (Emphasis supplied) (Citations omitted)

The liability of the arrastre operator was reiterated in Eastern Shipping Lines, Inc. v. Court of Appeals with the clarification that the arrastre operator and the carrier are not always
and necessarily solidarily liable as the facts of a case may vary the rule.

Thus, in this case, the appellate court is correct insofar as it ruled that an arrastre operator and a carrier may not be held solidarily liable at all times. But the precise question is
which entity had custody of the shipment during its unloading from the vessel?

The aforementioned Section 3 (2) of the COGSA states that among the carriers' responsibilities are to properly and carefully load, care for and discharge the goods carried. The
bill of lading covering the subject shipment likewise stipulates that the carrier's liability for loss or damage to the goods ceases after its discharge from the vessel. Article 619 of
the Code of Commerce holds a ship captain liable for the cargo from the time it is turned over to him until its delivery at the port of unloading.

In a case decided by a U.S. Circuit Court, Nichimen Company v. M/V Farland, it was ruled that like the duty of seaworthiness, the duty of care of the cargo is non-delegable, and
the carrier is accordingly responsible for the acts of the master, the crew, the stevedore, and his other agents. It has also been held that it is ordinarily the duty of the master of a
vessel to unload the cargo and place it in readiness for delivery to the consignee, and there is an implied obligation that this shall be accomplished with sound machinery,
competent hands, and in such manner that no unnecessary injury shall be done thereto. And the fact that a consignee is required to furnish persons to assist in unloading a
shipment may not relieve the carrier of its duty as to such unloading.

xxxx

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier x x x.[13]

In Regional Container Lines (RCL) of Singapore v. The Netherlands Insurance Co. (Philippines), Inc.[14] and Asian Terminals, Inc. v. Philam Insurance Co., Inc.,[15] the Court
echoed the doctrine that cargoes, while being unloaded, generally remain under the custody of the carrier.

We cannot agree with Westwind's disputation that "the carrier in Wallem clearly exercised supervision during the discharge of the shipment and that is why it was faulted and held
liable for the damage incurred by the shipment during such time." What Westwind failed to realize is that the extraordinary responsibility of the common carrier lasts until the time
the goods are actually or constructively delivered by the carrier to the consignee or to the person who has a right to receive them. There is actual delivery in contracts for the
transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods.[16] In this
case, since the discharging of the containers/skids, which were covered by only one bill of lading, had not yet been completed at the time the damage occurred, there is no
reason to imply that there was already delivery, actual or constructive, of the cargoes to ATI. Indeed, the earlier case of Delsan Transport Lines, Inc. v. American Home
Assurance Corp.[17] serves as a useful guide, thus:

Delsan's argument that it should not be held liable for the loss of diesel oil due to backflow because the same had already been actually and legally delivered to Caltex at the time
it entered the shore tank holds no water. It had been settled that the subject cargo was still in the custody of Delsan because the discharging thereof has not yet been finished
when the backflow occurred. Since the discharging of the cargo into the depot has not yet been completed at the time of the spillage when the backflow occurred, there is no
reason to imply that there was actual delivery of the cargo to the consignee. Delsan is straining the issue by insisting that when the diesel oil entered into the tank of Caltex on
shore, there was legally, at that moment, a complete delivery thereof to Caltex. To be sure, the extraordinary responsibility of common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by, the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee,
or to a person who has the right to receive them. The discharging of oil products to Caltex Bulk Depot has not yet been finished, Delsan still has the duty to guard and to preserve
the cargo. The carrier still has in it the responsibility to guard and preserve the goods, a duty incident to its having the goods transported.

To recapitulate, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in vigilance over the goods and
for the safety of the passengers transported by them, according to all the circumstances of each case. The mere proof of delivery of goods in good order to the carrier, and their
arrival in the place of destination in bad order, make out a prima facie case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier must be
held responsible. It is incumbent upon the carrier to prove that the loss was due to accident or some other circumstances inconsistent with its liability.[18]

The contention of OFII is likewise untenable. A customs broker has been regarded as a common carrier because transportation of goods is an integral part of its business.[19] In
Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc.,[20] the Court already reiterated:

It is settled that under a given set of facts, a customs broker may be regarded as a common carrier. Thus, this Court, in A.F. Sanchez Brokerage, Inc. v. The Honorable Court of
Appeals held:
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, to wit,

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public.

xxxx

Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying only as an ancillary activity. The
contention, therefore, of petitioner that it is not a common carrier but a customs broker whose principal function is to prepare the correct customs declaration and proper shipping
documents as required by law is bereft of merit. It suffices that petitioner undertakes to deliver the goods for pecuniary consideration.
And in Calvo v. UCPB General Insurance Co. Inc., this Court held that as the transportation of goods is an integral part of a customs broker, the customs broker is also a
common carrier. For to declare otherwise "would be to deprive those with whom [it] contracts the protection which the law affords them notwithstanding the fact that the obligation
to carry goods for [its] customers, is part and parcel of petitioner's business."[21]

That OFII is a common carrier is buttressed by the testimony of its own witness, Mr. Loveric Panganiban Cueto, that part of the services it offers to clients is cargo forwarding,
which includes the delivery of the shipment to the consignee.[22] Thus, for undertaking the transport of cargoes from ATI to SMC's warehouse in Calamba, Laguna, OFII is
considered a common carrier. 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 of whether it owns the vehicle to be used or has to actually hire one.
As a common carrier, OFII is mandated to observe, under Article 1733 of the Civil Code,[23] extraordinary diligence in the vigilance over the goods[24] it transports according to
the peculiar circumstances of each case. In the event that the goods are lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently, unless it
proves that it observed extraordinary diligence.[25] In the case at bar, it was established that, except for the six containers/skids already damaged, OFII received the cargoes
from ATI in good order and condition; and that upon its delivery to SMC, additional nine containers/skids were found to be in bad order, as noted in the Delivery Receipts issued
by OFII and as indicated in the Report of Cares Marine & Cargo Surveyors. Instead of merely excusing itself from liability by putting the blame to ATI and SMC, it is incumbent
upon OFII to prove that it actively took care of the goods by exercising extraordinary diligence in the carriage thereof. It failed to do so. Hence, its presumed negligence under
Article 1735 of the Civil Code remains unrebutted.

WHEREFORE, premises considered, the petitions of Westwind and OFII in G.R. Nos. 200289 and 200314, respectively, are DENIED. The September 13, 2011 Decision and
January 19, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 86752, which reversed and set aside the January 27, 2006 Decision of the Manila City Regional Trial
Court, Branch 30, are AFFIRMED.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin,* Abad, and Mendoza, JJ., concur.