SCHMITZ TRANSPORT & BROKERAGE CORPORATION v.

TRANSPORT
VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., et al.

456 SCRA 557 (2005)

A common carrier shall exercise extraordinary diligence to prevent and/or minize the
loss or destruction of goods.

SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V
―Alexander Saveliev‖ (a vessel of Russian registry and owned by respondent Black Sea)
545 hot rolled steel sheets. The vessel arrived at the port of Manila and the Philippine
Ports Authority (PPA) assigned it a place of berth at the outside breakwater at the
Manila South Harbor. Petitioner Schmitz Transport, engaged to secure the requisite
clearances, to receive the cargoes from the shipside, and to deliver them to Little Giant
Steelpipe Corporation‘s warehouse at Cainta, Rizal. It likewise engaged the services of
respondent Transport Venture Inc. (TVI) to send a barge and tugboat at shipside.

The tugboat, after positioning the barge alongside the vessel, left and returned to the
port terminal. Later on, arrastre operator commenced to unload 37 of the 545 coils from
the vessel unto the barge. By noon the next day, during which the weather condition had
become inclement due to an approaching storm, the unloading unto the barge of the 37
coils was accomplished. However, there was no tugboat that pulled the barge back to the
pier. Eventually, because of the strong waves, the crew of the barge abandoned it and
transferred to the vessel. The barge capsized, washing the 37 coils into the sea. Earnest
efforts on the part of both the consignee Little Giant and Industrial Insurance to recover
the lost cargoes proved futile.

Industrial Insurance later filed a complaint against Schmitz Transport, TVI and Black
Sea through its representative Inchcape (the defendants) before the RTC of Manila, for
the recovery of the amount it paid to Little Giant plus adjustment fees, attorney‘s fees,
and litigation expenses. Industrial Insurance won and the Schmitz et al.’s motion for
reconsideration is denied.

In effect, Schmitz now filed charges against TVI et al. It asserts that in chartering the
barge and tugboat of TVI, it was acting for its principal, consignee Little Giant, hence,
the transportation contract was by and between Little Giant and TVI. The Court
rendered a decision holding Schmitz and TVI liable.

ISSUES:

Whether or not the liability for the loss may attach to Black Sea, Schmitz and TVI

HELD:

TVI‘s failure to promptly provide a tugboat did not only increase the risk that might
have been reasonably anticipated during the shipside operation, but was the proximate
cause of the loss. A man of ordinary prudence would not leave a heavily loaded barge
floating for a considerable number of hours, at such a precarious time, and in the open
sea, knowing that the barge does not have any power of its own and is totally defenseless
from the ravages of the sea. That it was nighttime and, therefore, the members of the
crew of a tugboat would be charging overtime pay did not excuse TVI from calling for
one such tugboat.

As for Schmitz, for it to be relieved of liability, it should, following Article 1739 of the
Civil Code, prove that it exercised due diligence to prevent or minimize the loss, before,
during and after the occurrence of the storm in order that it may be exempted from
liability for the loss of the goods.

While Schmitz sent checkers and a supervisor on board the vessel to counter-check the
operations of TVI, it failed to take all available and reasonable precautions to avoid the
loss. After noting that TVI failed to arrange for the prompt towage of the barge despite
the deteriorating sea conditions, it should have summoned the same or another tugboat
to extend help, but it did not.

The Court holds then that Schmitz and TVI are solidarily liable for the loss of the
cargoes. As for Black Sea, its duty as a common carrier extended only from the time the
goods were surrendered or unconditionally placed in its possession and received for
transportation until they were delivered actually or constructively to consignee Little
Giant

Parties to a contract of carriage may, however, agree upon a definition of delivery that
extends the services rendered by the carrier. In the case at bar, Bill of Lading No. 2
covering the shipment provides that delivery be made ―to the port of discharge or so
near thereto as she may safely get, always afloat.‖ The delivery of the goods to the
consignee was not from ―pier to pier‖ but from the shipside of ―M/V Alexander
Saveliev‖ and into barges, for which reason the consignee contracted the services of
petitioner. Since Black Sea had constructively delivered the cargoes to Little Giant,
through Schmitz, it had discharged its duty.

In fine, no liability may thus attach to Black Sea.

Schmitz Transport & Brokerage Corporation vs. Transport Venture, Inc. (458 SCRA 557)

FACTS:

Petitioner, who was in charge of securing requisite clearances, receive the cargoes from
the shipside and deliver it to the consignee Little Giant Steel Pipe Corporation
warehouse at Cainta, Rizal, hired the services of respondent Transport Venture
Incorporation (TVI)’s tugboat for the hot rolled steel sheets in coil. Coils were unloaded
to the barge but there was no tugboat to pull the barge to the pier. Due to strong waves
caused by approaching storm, the barge was abandoned. Later, the barge capsized
washing 37 coils into the sea. Consignee was executed a subrogation receipt by
Industrial Insurance after the former’s filing of formal claim. Industrial Insurance filed a
complaint against both petitioner and respondent herein. The trial court held that
petitioner and respondent TVI were jointly and severally liable for the subrogation.

ISSUE:

Whether or not the loss of cargoes was due to fortuitous event.

RULING:

NO. In order, to be considered a fortuitous event: (1) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtor to comply with his obligation, must
be independent of human will; (2) it must be impossible to foresee the event which
constitute the caso fortuito, or if it can be foreseen it must be impossible to avoid; (3)
the occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in any manner; and (4) the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor.

Petitioner and respondent TVI were jointly and severally liable for the amount of paid
by the consignee plus interest computed from the date of decision of the trial court.
G.R. No. 157917 : August 29, 2012

SPOUSES TEODORO and NANETTE PERENA, Petitioners, v. SPOUSES NICOLAS and

TERESITA L. ZARATE, PHILIPPINE NATIONAL RAILWAYS, and the COURT OF
APPEALS, Respondents.

BERSAMIN, J.:

FACTS:

Spouses Teodoro and Nanette Peres (Peres) were engaged in the business of
transporting students from their respective residences in Paraque City to Don Bosco in
Pasong Tamo, Makati City, and back. They employed Clemente Alfaro (Alfaro) as driver
of the van. Spouses Nicolas and Teresita Zarate (Zarates) contracted the Peres to
transport their son Aaron to and from Don Bosco.

Considering that the students were due at Don Bosco by 7:15 a.m., and that they were
already running late because of the heavy vehicular traffic on the South Superhighway,
Alfaro took the van to an alternate route at about 6:45 a.m. by traversing the narrow
path underneath the Magallanes Interchange. The railroad crossing in the narrow path
had no railroad warning signs, or watchmen, or other responsible persons manning the
crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing open to
traversing motorists.

At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302
(train), was in the vicinity of the Magallanes Interchange travelling northbound. As the
train neared the railroad crossing, Alfaro drove the van eastward across the railroad
tracks, closely tailing a large passenger bus. His view of the oncoming train was blocked
because he overtook the passenger bus on its left side. The train blew its horn to warn
motorists of its approach. The passenger bus successfully crossed the railroad tracks,
but the van driven by Alfaro did not. The impact threw nine of the 12 students in the
rear, including Aaron, out of the van. Aaron landed in the path of the train, which
dragged his body and severed his head, instantaneously killing him.

Thus, the Zarates sued the Peres for breach of contract of carriage and the PNR for
quasi-delict. The RTC ruled in favor of the Zarates. On appeal, the CA affirmed the
findings of the RTC.

ISSUE: Whether or not the Peres are liable for breach of contract of carriage?

HELD: The petition has no merit.

CIVIL LAW: common carrier; extraordinary diligence

A common carrier is a person, corporation, firm or association engaged in the business

of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering such services to the public. Contracts of common carriage are
governed by the provisions on common carriers of the Civil Code, the Public Service Act,
and other special laws relating to transportation. A common carrier is required to
observe extraordinary diligence, and is presumed to be at fault or to have acted
negligently in case of the loss of the effects of passengers, or the death or injuries to
passengers. The true test for a common carrier is not the quantity or extent of the
business actually transacted, or the number and character of the conveyances used in
the activity, but whether the undertaking is a part of the activity engaged in by the
carrier that he has held out to the general public as his business or occupation.

Applying these considerations to the case before us, there is no question that the Peres
as the operators of a school bus service were: (a) engaged in transporting passengers
generally as a business, not just as a casual occupation; (b) undertaking to carry
passengers over established roads by the method by which the business was conducted;
and (c) transporting students for a fee. Despite catering to a limited clientele, the Peres
operated as a common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular school living within or
near where they operated the service and for a fee.

Article 1755 of the Civil Code specifies that the common carrier should "carry the
passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the circumstances." To
successfully fend off liability in an action upon the death or injury to a passenger, the
common carrier must prove his or its observance of that extraordinary diligence;
otherwise, the legal presumption that he or it was at fault or acted negligently would
stand.

According to Article 1759 of the Civil Code, their liability as a common carrier did not
cease upon proof that they exercised all the diligence of a good father of a family in the
selection and supervision of their employee. The Peres were liable for the death of Aaron
despite the fact that their driver might have acted beyond the scope of his authority or
even in violation of the orders of the common carrier. DENIED.
PERENA VS. ZARATE

G.R. NO. 157917

August 29, 2012

Bersamin, J.

FACTS:

Perenas were engaged in the business of transporting students to Don Bosco. The
Zarates engaged Perenas services to transport their son, Aaron, to school.

While on the way to school, the van’s air-conditioned unit was turned on and the stereo
playing loudly. The driver took a detour because they were running late due to the traffic
in SLEX. The detour was through a narrow path underneath the Magallanes
Interchange used as short cut into Makati. When the van was to traverse the PNR
railroad crossing, the van was tailing a large passenger bus so the driver’s view of the
oncoming train was blocked. The train hit the van at the rear end and the impact threw
9 students including Aaron out of the van. Aaron landed in the path of the train which
dragged his body and severed his head, instantaneously killing him.

The Zarates filed for damages against Alfaro, Perenas, PNR, and the train driver. The
cause of action against Perena was for contract of carriage while for PNR, quasi delict.
Perena posited the defense of diligence of a good father in the selection and supervision
of their driver

ISSUE/S: Were Perenas and PNR jointly and severally liable for damages? Is the
petitioner a common carrier?

RULING:

YES. A school bus operator is a common carrier.

Perena’s defense of diligence of a good father in the selection and supervision of their
driver is unavailable for breach of contract of carriage. Perenas operated as a common
carrier; and their standard of care was extraordinary diligence, not only diligence of a
good father.

A carrier is a person or corporation who undertakes to transport or convey goods from

one place to another, gratuitously or for hire. They may be private or common
Private carrier is one who, without holding himself or itself out to the public as ready to
act for all who may desire his or its services, undertakes, by special agreement in a
particular instance only, to transport goods or persons from one place to another either
gratutitously or for hire. The diligence required of a private carrier is only ordinary

Common Carrier is a person, corporation, firm or association engaged in the business of

carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering such services to the public. Diligence required is to observe
extraordinary diligence, and is presumed to be at fault or to have acted negligently in
case of the loss of effects of passengers, or death or injuries to passengers

The true test for a common carrier is not the quantity or extent of business actually
transacted, or the number of conveyances, BUT WHETHER the undertaking is a part of
the activity that he has held out to the general public as his business or occupation.

The Perenas held themselves out as a ready transportation indiscriminately to the

students of a particular school living within or near where they operated the service and
for a fee. Perena, being a common carrier, was already presumed to be negligent at the
time of the accident because death occurred to their passenger. The omissions of care on
the part of the driver constituted negligence.