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CONTENTS

1Mendoza v. PAL – AQUINO........................................................................................................................1

2Maritime Company v. CA – BENEDICTO............................................................................................2
Medina v. Cresencia - CHAN........................................................................................................................4
Benedicto v. IAC – CORTEZ..........................................................................................................................4
First Malayan Leasing v. CA – NENZO CRUZ........................................................................................7
BA Finance v. CA – DE LA PAZ....................................................................................................................8
3De Guzman v. CA – GERALDEZ.............................................................................................................10
4Bascos v. CA – KING...................................................................................................................................11
5First Philippine Industrial Corp v. CA - LAGOS............................................................................14
6Calvo v. UCPB – LOPA...............................................................................................................................15
7Home Insurance v. American Steamship – LUCENARIO.........................................................18
8Valenzuela Hardwood v. CA - MAGTAGNOB.................................................................................19
9National Steel Corp v. CA – MUTI........................................................................................................21
10FGU Insurance v. GP Sarmiento – NARVASA.............................................................................23
11Loadstar Shipping v. CA – PEREZ DE TAGLE.............................................................................25
12Arada v. CA – RAZON.............................................................................................................................27
13Eastern Shipping v. CA – SANTOS...................................................................................................28
14Delsan v. CA – SUPERABLE................................................................................................................30
15Bankers and Manufacturers Assurance v. CA – TANDOC....................................................31
16Sarkies Tours v. CA – TIU....................................................................................................................32

MENDOZA V. PAL – AQUINO Emergency Recit: Mendoza contracted with LVN Pictures for him to exhibit “Himala ng
Birhen” in his theater during the town fiesta. The can of film was loaded on a PAL plane.
JOSE MENDOZA, plaintiff-appellant, vs.PHILIPPINE AIR LINES, INC., defendant- However, the same was not unloaded upon arrival at the airport. Mendoza was not able
appellee. to exhibit the film on time, causing him unrealized profits. He filed a case against PAL
but the trial court dismissed his complaint. The SC held that common carriers are not

obligated by law to carry and to deliver merchandise, and persons are not vested with
the right of prompt delivery, unless such common carriers previously assume the
obligation. In this case, Mendoza did not inform PAL of the special circumstances
surrounding the film delivery
Facts:
 Mendoza was the owner of the Cita Theater in Naga City, Camarines Sur, where he
used to exhibit movie pictures booked from movie producers or film owners in
Manila.
 The Naga fiesta was usually attended by many people, mostly from the Bicol region,
especially since the Patron Saint Virgin of Peñ a Francia was believed by many to be
miraculous.
 Mendoza, taking advantage of these circumstances, decided to exhibit a film which
would fit the occasion and have a special attraction and significance to the people
attending said fiesta.
 A month before the holiday, he contracted with the LVN pictures, Inc., a movie
producer in Manila for him to show during the town fiesta the Tagalog film entitled
"Himala ng Birhen"
 He made extensive preparations; he had two thousand posters printed and later
distributed not only in the City of Naga but also in the neighboring towns. He also
advertised in a weekly of general circulation in the province.
 The advertisements state that the film would be shown in the Cita theater on the
eve and day of the fiesta itself.
 LVN Pictures Inc. delivered to Philippine Airlines (PAL) a can containing the film
"Himala ng Birhen" consigned to the Cita Theater.
 PAL issued its Air Way Bill No. 317133. This can of films was loaded on flight 113 of
the defendant, the plane arriving at the Air Port at Pili a little after four o'clock in
the afternoon of the same day.
 However, the can of film was not unloaded at Pili Air Port and it was brought back
to Manila.
 Mendoza inquired about the can of film but it could not be found. When they finally
located it, and delivered the same to Mendoza, it was too late. He had missed his
opportunity to realize a large profit since the fiesta-goers had already gone home.
 Mendoza brought an action against the PAL. The court dismissed the complaint.
 To avoid liability, PAL, showed the terms and conditions of paragraph 6 of the Way
Bill printed on the back thereof which paragraph reads as follows:
o 6. The Carrier does not obligate itself to carry the Goods by any specified
aircraft or on a specified time. Said Carrier being hereby authorized to
deviate from the route of the shipment without any liability therefor.
 The trial court found and held that although the defendant was not obligated to
load the film on any specified plane or on any particular day, once said can film was
loaded and shipped on one of its planes making trip to Camarines, then it assumed
the obligation to unload it at its point of destination and deliver it to the consignee,
and its unexplained failure to comply with this duty constituted negligence.
o It however found that fraud was not involved and that the defendant was
a debtor in good faith.
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o The trial court held that inasmuch as these damages suffered by Mendoza
were not foreseen or could not have been foreseen at the time that the
defendant accepted the can of film for shipment, for the reason that
neither the shipper LVN Pictures Inc. nor the consignee Mendoza had
called its attention to the special circumstances attending the shipment
and the showing of the film during the town fiesta of Naga, plaintiff may
not recover the damages sought.
 Counsel for Mendoza insists that the articles of the Code of Commerce rather than
those of the Civil Code should have been applied in deciding this case for the reason
that the shipment of the can of film is an act of commerce;
o that the contract of transportation in this case should be considered
commercial under Art. 349 of the Code of Commerce because it only
involves merchandise or an object of commerce but also the
transportation company, PAL, was a common carrier, that is to say,
customarily engaged in transportation for the public,
o and that although the contract of transportation was not by land or
waterways as defined in said Art. 349, nevertheless, air transportation
being analogous to land and water transportation, should be considered
as included, especially in view of the second paragraph of Art. 2 of the
same Code which says that transactions covered by the Code of Commerce
and all others of analogous character shall be deemed acts of commerce.
Issue: Whether or not the trial court made an error in dismissing the complaint.
Held: No.
Ratio:
 A contract of transportation by air may be regarded as commercial.
 The reason is that the transportation company (PAL) is a common carrier; besides,
air transportation is clearly similar or analogous to land and water transportation.
The obvious reason for its non-inclusion in the Code of Commerce was that at the
time of its promulgation, transportation by air on a commercial basis was not yet
known.
 The test of whether one is a common carrier by air is whether he holds out that he
will carry for hire, so long as he has room, goods for everyone bringing goods to
him for carriage, not whether he is carrying as a public employment or whether he
carries to a fixed place.
 Under Art. 1107 of the Civil Code, a debtor in good faith like PAL, may be held liable
only for damages that were foreseen or might have been foreseen at the time the
contract of the transportation was entered into.
o The trial court correctly found that PAL could not have foreseen the
damages that would be suffered by Mendoza upon failure to deliver the
can of film on the 17th of September, 1948 for the reason that the plans of
Mendoza to exhibit that film during the town fiesta and his preparations,
specially the announcement of said exhibition by posters and
advertisement in the newspaper, were not called to the PAL's attention.

 In order to impose on the defaulting party further liability than for damages
naturally and directly arising from a breach of contract, such unusual or
extraordinary damages must have been brought within the contemplation of the
parties as the probable result of a breach at the time of or prior to contracting.
Generally, notice then of any special circumstances which will show that the
damages to be anticipated from a breach would be enhanced has been held
sufficient for this effect.
 Common carriers are not obligated by law to carry and to deliver merchandise, and
persons are not vested with the right of prompt delivery, unless such common
carriers previously assume the obligation. Said rights and obligations are created
by a specific contract entered into by the parties.
In situations like the present where failure to exhibit films on a certain day would spell
substantial damages or considerable loss of profits, including waste of efforts on
preparations and expenses incurred in advertisements, exhibitors, for their security,
may either get hold of the films well ahead of the time of exhibition in order to make
allowance for any hitch in the delivery, or else enter into a special contract or make a
suitable arrangement with the common carrier for the prompt delivery of the films,
calling the attention of the carrier to the circumstances surrounding the case and the
approximate amount of damages to be suffered in case of delay.
MARITIME COMPANY V. CA – BENEDICTO
MARITIME COMPANY OF THE PHILIPPINES, petitioner, v. CA and RIZAL SURETY &
INSURANCE CO., respondents.
G.R. No. 47004            March 8, 1989 Ponente: NARVASA, J.:
EMERGENCY DIGEST: Rizal Surety was the insurer of 800 packages of PVC compound
loaded on the SS Doña Nati at Yokohama, Japan and consigned to Acme Electrical
Manufacturing Company. SS Doña Nati was owned by NDC and Maritime Co. was NDC's
agent. SS Doña Nati collided with M/V Yasushima Maru in Nagoya Bay, causing damage
to the hull of the SS Doña Nati and the resultant flooding of the holds damaged beyond
repair the goods of the consignee in question. The goods were never delivered to the
consignee and Rizal Surety, as insurer paid Acme. Rizal Surety sued NDC and Maritime
Co. for the recovery of a sum of money paid for the value of goods lost in transit. Issue:
Whether the Civil Code will apply and hold Maritime and NDC liable. Held: SC upheld
CA decision. Article 1753 of the Civil Code to the effect that it is the "law of the country
to which the goods are to be transported which shall govern the liability of the common
carrier for their loss, destruction or deterioration." Since there are specific provisions
regulating the matter of such liability in the Civil Code in Art. 1734, the Code of
Commerce, or the Carriage of Goods by Sea Act is not relevant to determine the carrier's
liability. NDC and Maritime are liable.
COMPLETE DIGEST
 Rizal Surety sued National Development Company (NDC) and Maritime Co. for the
recovery of a sum of money paid by it as insurer for the value of goods lost in transit
on board vessel known as the SS Doña Nati in the CFI of Manila. After due
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proceedings and trial, the complaint was "dismissed with costs against plaintiff."
Trial Court's judgment was founded upon the following findings and conclusions:
1. Rizal Surety 'was the insurer of 800 packages of PVC compound loaded on the
SS Doña Nati at Yokohama and consigned to the Acme Electrical Manufacturing
Company."
2. " The SS Doña Nati was owned by the NDC whereas the Maritime Company of
the Philippines was its Agent. This appears indubitably in the Bill of Lading.
Exhibit D."
3. The goods were never delivered to the consignee (Acme Electrical, etc., supra)
so that x x (Rizal) as Insurer, paid x x (said) consignee the sum of P38,758.50."
4. The cause of the non-delivery of the goods, from the evidence presented by
NDC and Maritime is that in Nagoya Bay, while the SS Doña Nati was being
piloted by a Japanese pilot, the SS Doña Nati was rammed by M/V Yasushima
Maru, causing damage to the hull of the SS Doña Nati and the resultant flooding
of the holds damaged beyond repair the goods of the consignee in question."
5. There is no doubt that under our Code of Commerce, it would be the vessel at
fault in this collision, that would be responsible for the damage to the cargo. And
the evidence of NDC and Maritime, which has not been rebutted, is that the M/V
Yasushima Maru was at fault in the collision, so that the cause of action of
plaintiff should be directed to the owners of the negligent vessel. However, as
Rizal has brought this action in good faith, attorney's fees are not recoverable."
 Rizal Surety went to CA. CA found merit in its appeal. It set aside Trial Court's
judgment and ordered NDC and Maritime jointly and severally to pay Rizal Surety
the sum of P38,758.50 with legal rate of interest from the filing of the complaint .
Issues: Whether NDC and Maritime Co. are liable to Rizal Surety - YES
Whether the Civil Code and not the COGSA is applicable in this case - YES
Held: CA Judgment affirmed. NDC and Maritime Co. jointly and severally to pay Rizal
Surety the sum of P 38,758.50 with legal rate of interest from the filling of the complaint.
 NDC appointed Maritime as its agent to manage and operate its 3 vessels including SS
Doña Nati. Under their written agreement, Maritime Co. to render a complete report of
the operations of the vessels within 60 days after conclusion of each voyage; it was
also authorized to appoint sub-agents at any ports or places that it might deem
necessary, remaining however responsible to NDC for the timely and satisfactory
performance of said sub-agents. Maritime Co. is ship agent under the Code of
Commerce, a ship agent, accordingly to that Code, being "the person entrusted with
provisioning or representing the vessel in the port in which it may be found."
 Maritime Co. insists that it was not the ship agent of NDC in Japan but "the Fuji Asano
Co., Ltd., which supplied her with provisions, and represented Maritime and which
issued the bill of lading for the owner NDC. The claim is contradicted by the bill of
lading below. The letterhead of the bill of lading is in two (2) parts, and is printed in

the following manner:
PHILIPPINE NATIONAL LINES
NATIONAL DEVELOPMENT COMPANY
MARITIME COMPANY OF THE PHILIPPINES
AGENT
PHILIPPINES-HONGKONG, JAPAN, U.S. PACIFIC
COAST-GULF PORTS
HONGKONG-COSMOS DEVELOPMENT COMPANY
* JAPAN-FUJI ASANO KAIUN CO, LTD.
* U.S.A-NORTH AMERICAN MARITIME AGENCIES
 The bill shows on its face that it was issued 'FOR THE MASTER' by "Maritime Company
of the Philippines, Agent."
 Acme Electrical Manufacturing is entitled to the proceeds of the insurance against loss
of the goods in question. Rizal Surety was subrogated to Acme's rights against the
shipowner and the ship agent arising from the loss of the goods. The bill of lading
states that the goods are "consigned to the Shipper's Order"-and the bill is so
consigned: "to the order of China Banking Corporation, Manila, or assigns"-the "Acme
Electrical Manufacturing, Manila," shall be notified. Acme was the importer and China
Banking Corporation was the financing agency. It was "by order and for account of
Messrs. Acme Electrical Manufacturing, Manila" that the 800 bags of PVC compound
were shipped from Yokohama to Manila.
 According to the CA, Acme's rights are to be determined by the Civil Code, not the Code
of Commerce. This conclusion derives from Article 1753 of the Civil Code to the effect
that it is the "law of the country to which the goods are to be transported which shall
govern the liability of the common carrier for their loss, destruction or deterioration."
It is only in "matters not regulated by x x the Civil Code," according to Article 1766,
that "the rights and obligations of common carriers shall be governed by the Code of
Commerce and by special laws." Since there are specific provisions regulating the
matter of such liability in the Civil Code in Art. 1734, the Code of Commerce, or the
Carriage of Goods by Sea Act is not relevant to determine the carrier's liability. In
American President Lines v. Klepper, SC ruled that in view of Articles 1753 and 1766,
the provisions of the COGSA are merely suppletory to the Civil Code.
 Using Art 1734, Maritime Co. and NDC, as "common carriers," are liable to Acme for
"the loss, destruction or deterioration of the goods," and may be relieved of
responsibility if the loss, etc., "is due to any of the following causes only:
1. Flood, storm, earthquakes, 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.'
Since none of the specified absolutory causes is present, NDC and Maritime are liable.
Maritime attributes entire fault to the Japanese vessel. CA found, as a fact, that Doña Nati
"did not exercise even due diligence to avoid the collision.' Having failed to exercise
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extraordinary diligence to avoid any loss of life and property, not having in fact
exercised "even due diligence to avoid the collision,' it must be held responsible for the
loss of the goods in question. Besides, as CA said, "the principal cause of action is not
derived from a maritime collision, but rather, from a contract of carriage, as evidenced
by the bill of lading."
MEDINA V. CRESENCIA - CHAN
EMERENCIANA M. VDA. DE MEDINA, ET AL., Plaintiffs-Appellees, vs. GUILLERMO
CRESENCIA, ET AL., Defendants. GUILLERMO CRESENCIA, Appellant.
G.R. No. L-8194
July 11, 1956
EMERGENCY RECIT
Brigido was driving a passenger jeepney, which bumped a Meralco post. As a result,
Vicente Medina died. His wife Emerenciana filed against Brigido a criminal case, wherein
he pleaded guilty. Emerenciana also filed a separate action for damages against Brigido
and the registered owner of the Jeepney, Cresencia. Brigido didn’t reply. Cresencia
disclaimed liability by saying that she sold the jeepney to another person, who in turn
sold it to other people until it ended up in the hands of a certain Rosario. Cresencia and
Rosario manifested that the former was, indeed, the registered owner and that the latter
was the actual owner of the jeepney. The issue now is who should be held liable. The
Court says that Cresencia should be the one liable.
In the case of Montoya vs Ignacio, the law requires the approval of the Public Service
Commission in order that a franchise, or any privilege pertaining thereto, may be sold or
leased. If property covered by the franchise is transferred without the requisite
approval, the transfer is not binding against the public. The sale of the jeepney was
without the approval of the Public Service Commission. Hence, Cresencia continued to
be liable to the Commission and the public for consequences incident to its operation.
DETAILED DIGEST
FACTS
- May 31, 1953, passenger jeepney driven by Brigido Avorque (Brigido), smashed
into a Meralco post on Azcarraga Street. As a result, Vicente Medina (husband of
plaintiff-appellee Emerenciana de Medina) died.
- A criminal case was filed against Brigido. Brigido pleaded guilty.
- Heirs of the deceased also filed a separate action for damages against Brigido and
Cresencia, the registered owner and operator of the jeepney.
- Brigido did not file an answer. Cresencia disclaimed liability on the ground that he
had sold the jeepney in 1950 to a person who, in turn, sold it to other people until it
ended up in the hands of a certain Rosario Avorque (Rosario), the absolute owner
of the jeepney at the time of the accident.
- Emerenciana filed leave to amend the complaint. She made Rosario a co-defendant.
Rosario alleged in defense that she was never the public utility operator thereof.
Cresencia and Rosario made manifestations that:

o Cresencia was still the registered operator of the jeepney in question in
the records of the Motor Vehicles Office and the Public Service
Commission
o Rosario was the owner of the jeepney at the time of the accident
ISSUE – WHO, between Cresencia and Rosario, should be held liable to Emerenciana for
damages? CRESENCIA, the registered owner, SHOULD BE HELD LIABLE.
RATIO
- The lower court held that, as far as the public is concerned, Cresencia continued to
be the legal owner of the jeepney in question. Rosario was absolved. Therefore,
Cresencia appealed.
- In the case of Montoya vs Ignacio, the law requires the approval of the Public
Service Commission in order that a franchise or any privilege pertaining thereto,
may be sold or leased.
o If property covered by the franchise is transferred or leased without the
requisite approval, the transfer is not binding against the public or the
Service Commission. HENCE, in contemplation of law, the grantee of
record continues to be responsible under the franchise.
- The sale of the jeepney here in question was admittedly without the approval of the
Public Service Commission. Hence, Cresencia, who is the registered owner and
operator thereof, continued to be liable to the Commission and the public for the
consequences incident to its operation.
- Lastly, Cresencia claims that since Emerenciana’s action is based on the employer’s
subsidiary liability, Rosario should be the one to answer subsidiarily because she
admitted that she’s the employer of the driver.
o THIS ARGUMENT IS UNTENABLE. The action for damages is independent
from the criminal case. It is based on a breach of the carrier’s contractual
obligation to carry his passengers safely (culpa contractual).
BENEDICTO V. IAC – CORTEZ
Benedicto vs IAC (187 SCRA 547)
DOCTRINE:
See bold part in the ratio of the full digest.
EMERGENCY DIGEST:
FACTS:Sometime in May 1980, private respondent Greenhills bound itself to sell and
deliver to Blue Star 100,000 board feet of saw lumber with the understanding that every
initial delivery would be made on May 15, 1980. To effect the 1 st delivery, Greenhills’
manager in Quirino, Mr. Cruz contracted Licuden, the driver of the cargo truck (plate no.
225 GA TH) to transport its sawn lumber to the consignee Blue Star. Such cargo truck
was registered to petitioner Benedicto, the proprietor of Macoven Trucking.
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On May 15, 1980, Cruz, in the presence and with consent of the truck driver, supervised
the loading of sawn lumber with invoice value of P16, 918. Before the cargo truck left
Quirino for Valenzuela, Cruz issued the driver 2 Charge Invoices, both of which were
initialed by the latter at the bottom left corner. He then instructed the driver to give the
original copies of the 2 invoices to the consignee upon arrival in Valenzuela and to retain
the duplicate copies in order that he could afterwards claim the freightage from
Greenhills’ Manila office. However, Blue Star did not receive the delivery and due to this
delay, they were “constrained to look for other suppliers”.
Greenhills filed a case for estafa against the truck driver and against Benedicto for
recovery of the value of lost sawn lumber plus damages before RTC of Dagupan City.
RTC ruled against Benedicto and ordered her to pay up. Upon appeal, IAC affirmed.
ISSUE: whether or not Benedicto, being the registered owner of the carrier, should be
held liable for the value of the undelivered or lost sawn lumber
HELD AND RATIO: IAC ruling, affirmed; petition denied. There is no dispute that
petitioner Benedicto has been holding herself out to the public as engaged in the
business of hauling or transporting goods for hire or compensation. Petitioner
Benedicto is, in brief, a common carrier. A common carrier, both from the nature of
its business and for insistent reasons of public policy, is burdened by the law with
the duty of exercising extraordinary diligence not only in ensuring the safety
of passengers but also in caring for goods transported by it. The loss or
destruction or deterioration of goods turned over to the common carrier for
conveyance to a designated destination, raises instantly a presumption of fault or
negligence on the part of the carrier, save only where such loss, destruction or
damage arises from extreme circumstances such as a natural disaster or calamity
or act of the public enemy in time of war, or from an act or omission of the shipper
himself or from the character of the goods or their packaging or container. This
presumption may be overcome only by proof of extraordinary diligence on the
part of the carrier.  Thus, to sustain petitioner Benedicto's contention, that is, to
require the shipper to go behind a certificate of registration of a public utility vehicle,
would be utterly subversive of the purpose of the law and doctrine.
FACTS:
Private respondent Greenhills Wood Industry Company, Inc. (Greenhills), a lumber
manufacturing firm with business address at Dagupan City, operates a sawmill in
Quirino. Blue Star Mahogany Inc. (Blue Star) is a company with business operations in
Valenzuela, Bulacan. Sometime in May 1980, Greenhills bound itself to sell and deliver to
Blue Star 100,000 board feet of saw lumber with the understanding that every initial
delivery would be made on May 15, 1980.
To effect the 1st delivery, Greenhills’ manager in Quirino, Dominador Cruz (Cruz)
contracted Virgilio Licuden (Licuden), the driver of the cargo truck (plate no. 225 GA
TH) to transport its sawn lumber to the consignee Blue Star. Such cargo truck was
registered to petitioner, Ma. Luisa Benedicto (Benedicto), the proprietor of Macoven

Trucking, a business enterprise engaged in hauling freight, with main office in B.F.
Homes Parañ aque.
On May 15, 1980, Cruz, in the presence and with consent of the truck driver, supervised
the loading of 1,790 board feet of sawn lumber with invoice value of P16, 918. Before
the cargo truck left Quirino for Valenzuela, Cruz issued the driver Charge Invoices Nos.
3259 (amounting to P11,822.80) and 3260 (amounting to P5,095.20) both of which
were initialed by the latter at the bottom left corner. He then instructed the driver to
give the original copies of the 2 invoices to the consignee upon arrival in Valenzuela and
to retain the duplicate copies in order that he could afterwards claim the freightage from
Greenhills’ Manila office.
On May 16, 1980, Blue Star’s Manager called Greenhills’ president, Mr. Chuy informing
him that the sawn lumber had not yet arrived in Valenzuela. My. Chuy informed the
Manager in their Quirino office of what had happened. On May 18, 1980, Blue Star’s
manager, Mr. Bautista, wrote a letter to formally inform Greenhills that they still have
not received the sawn lumber and due to this delay, they were “constrained to look for
other suppliers”.
Greenhills then filed Criminal Case No. 668 against driver Licuden for estafa and Civil
Case No. D-5206 against Benedicto for recovery of the value of lost sawn lumber plus
damages before RTC of Dagupan City.
Benedicto, in her answer, denied liability alleging that she was a complete stranger to
the contract of carriage- the subject truck having been earlier sold by her to Benjamin
Tee, on 28 February 1980 as evidenced by a deed of sale.  She claimed that the truck had
remained registered in her name notwithstanding its earlier sale to Tee because the
latter had paid her only P50,000.00 out of the total agreed price of P68,000.00 However,
she averred that Tee had been operating the said truck in Central Luzon from that date
(28 February 1980) onwards, and that, therefore, Licuden was Tee's employee and not
hers.
RTC Dagupan found that Benedictio was still the registered owner of the cargo truck,
and holding that truck driver, Licuden was her employee rendered judgment, ordering
her to pay Greenhills (P16,016 plus interest, attorney’s fees, and costs of the suit).
Upon appeal, IAC affirmed the RTC decision. It held that Benedicto was the registered
owner of the subject vehicle, Licuden the driver of the truck, was her employee, and that
accordingly petitioner should be responsible for the negligence of said driver and bear
the loss of the sawn lumber plus damages. Benedicto moved for reconsideration but got
denied.
ISSUE: whether or not Benedicto, being the registered owner of the carrier, should be
held liable for the value of the undelivered or lost sawn lumber
HELD: Petition is denied for lack of merit. IAC ruling is AFFIRMED.
01 Transpo Compiled Digests. 3C. Atty. 6
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RATIO:
There is no dispute that petitioner Benedicto has been holding herself out to the public
as engaged in the business of hauling or transporting goods for hire or compensation.
Petitioner Benedicto is, in brief, a common carrier.
Petitioner Benedicto, however, insists that the said principle should apply only to cases
involving negligence and resulting injury to or death of passengers, and not to cases
involving merely carriage of goods. We believe otherwise.
A common carrier, both from the nature of its business and for insistent reasons
of public policy, is burdened by the law with the duty of exercising extraordinary
diligence not only in ensuring the safety of passengers but also in caring for goods
transported by it. The loss or destruction or deterioration of goods turned over to
the common carrier for conveyance to a designated destination, raises instantly a
presumption of fault or negligence on the part of the carrier, save only where such
loss, destruction or damage arises from extreme circumstances such as a natural
disaster or calamity or act of the public enemy in time of war, or from an act or
omission of the shipper himself or from the character of the goods or their
packaging or container. 
This presumption may be overcome only by proof of extraordinary diligence on
the part of the carrier.  Clearly, to permit a common carrier to escape its
responsibility for the passengers or goods transported by it by 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. It would also
open wide the door to collusion between the carrier and the supposed vendee and
to shifting liability from the carrier to one without financial capability to respond
for the resulting damages. In other words, the thrust of the public policy here
involved is as sharp and real in the case of carriage of goods as it is in the
transporting of human beings. Thus, to sustain petitioner Benedicto's contention, that
is, to require the shipper to go behind a certificate of registration of a public utility
vehicle, would be utterly subversive of the purpose of the law and doctrine.
Petitioner further insists that there was no perfected contract of carriage for the reason
that there was no proof that her consent or that of Tee had been obtained; no proof that
the driver, Licuden was authorized to bind the registered owner; and no proof that the
parties had agreed on the freightage to be paid.
Once more, we are not persuaded by petitioner's arguments which appear to be a
transparent attempt to evade statutory responsibilities. Driver Licuden was entrusted
with possession and control of the freight truck by the registered owner (and by the
alleged secret owner, for that matter). Driver Licuden, under the circumstances, was
clothed with at least implied authority to contract to carry goods and to accept delivery
of such goods for carriage to a specified destination. That the freight to be paid may-
not have been fixed before loading and carriage, did not prevent the contract of
carriage from arising, since the freight was at least determinable if not fixed by the
tariff schedules in petitioner's main business office. Put in somewhat different terms,
driver Licuden is in law regarded as the employee and agent of the petitioner, for whose

acts petitioner must respond. A contract of carriage of goods was shown; the sawn
lumber was loaded on board the freight truck; loss or non-delivery of the lumber at Blue
Star's premises in Valenzuela, Bulacan was also proven; and petitioner has not proven
either that she had exercised extraordinary diligence to prevent such loss or non-
delivery or that the loss or non-delivery was due to some casualty or force
majeure inconsistent with her liability. Petitioner's liability to private respondent
Greenhills was thus fixed and complete, without prejudice to petitioner's right to
proceed against her putative transferee Benjamin Tee and driver Licuden for
reimbursement or contribution.
*NOTE (in case sir asks about the Public Service Law and to get a better understanding
with the case since this one and nature of common carrier are intertwined):
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. In this regard,
the letter presented by petitioner allegedly written by Benjamin Tee admitting that
Licuden was his driver, had no evidentiary value not only because Benjamin Tee was not
presented in court to testify on this matter but also because of the aforementioned
doctrine. To permit the ostensible or registered owner to prove who the actual owner is,
would be to set at naught the purpose or public policy which infuses that doctrine.
In fact, private respondent had no reason at all to doubt the authority of Licuden to
enter into a contract of carriage on behalf of the registered owner. It appears that,
earlier, in the first week of May 1980, private respondent Greenhills had contracted
Licuden who was then driving the same cargo truck to transport and carry a load of
sawn lumber from the Maddela sawmill to Dagupan City. No one came forward to
question that contract or the authority of Licuden to represent the owner of the carrier
truck.
Moreover, assuming the truth of her story, petitioner Benedicto retained registered
ownership of the freight truck for her own benefit and convenience, that is, to secure the
payment of the balance of the selling price of the truck. She may have been unaware of
the legal security device of chattel mortgage; or she, or her buyer, may have been
unwilling to absorb the expenses of registering a chattel mortgage over the truck. In
either case, considerations both of public policy and of equity require that she bear the
consequences flowing from registered ownership of the subject vehicle.
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FIRST MALAYAN LEASING V. CA – NENZO CRUZ
First Malayan Leasing v. CA
[G.R. No. 91378 . June 9, 1992.]
FIRST MALAYAN LEASING AND FINANCE CORPORATION, petitioner, vs. THE
HON. COURT OF APPEALS, CRISOSTOMO B. VITUG and ESTATE OF VICENTE
TRINIDAD, represented by widow GLORIA D. TRINIDAD, respondents.
SUMMARY / EMERGENCY DIGEST
Vitug (Petitioner) was in a three way vehicle accident between his own car, another car
and an Isuzu truck which was at the time of the accident, registered in the name of First
Malayan Leasing and Finance or FMLF ( respondents ). Vitug suffered physical injuries
and incurred losses upon his property which prompted him to sue FMLF for damages.
FMLF’s defense was that: even before the three way, they were had already sold the
Isuzu truck to one Trinidad, in addition, they were not the employer of the truck’s
driver. (Thus not liable)
The trial court sentenced FMLFC to pay Vitug the sum of P133,950. The CA altered the
decision only in that the estate of Trinidad (by this time he has already died) had to
indemnify FMLFC – the rest was affirmed. FMLFC petitioned for review. The SC denied
it.
The SC explained that that regardless of who the actual owner of a motor vehicle might
be, the registered owner is the operator of the same with respect to the public and third
persons, and as such, directly and primarily responsible for the consequences of its
operation. Further the SC pointed out : In order for a transfer of ownership of a motor
vehicle to be valid against third persons, it must be recorded in the Land Transportation
Office (which FMLFC didn’t do).
FACTS
This case brings to the force the importance of motor vehicle registration in determining
who should be liable for the death or injuries suffered by passengers or third persons as
a consequence of the operation of a motor vehicle.
On December 14, 1983 Crisostomo B. Vitug (Vitug) got into a three-vehicle collision
involving :
 His Car
 another car

 and an Isuzu Cargo truck
o this was the vehicle registered in the name of First Malayan Leasing
and Finance Corporation (FMLFC)
o The truck was driven by Crispin Sicat.
On June 26, 1984, Vitug filed Civil suit against First Malayan to recover damages:
 for physical injuries,
 loss of personal effects, and
 wreck of his car
The Incident: three way collision
The evidence shows that while Vitug's car was at a full stop
 at the intersection of New York Street and EDSA in Cubao, Quezon City,
northward-bound,
The on-coming Isuzu cargo truck bumped a Ford Granada car behind him with such
force that the Ford car was thrown on top of Vitug's car crushing its roof.
The cargo truck thereafter struck Vitug's car in the rear causing the gas tank to explode
and setting the car ablaze.
 Stunned by the impact, Vitug was fortunately extricated from his car by
solicitous bystanders before the vehicle exploded. However, two of his
passengers were burned to death.
Value lost
Vitug's car, valued at P70,000, was a total loss.
Vitug lost various personal articles valued at P48,950, namely
 a necklace with a diamond pendant, a GP watch, a pair of Christian Dior
eyeglasses, a gold Cross pen and a pair of Bally shoes.
Vitug also suffered injuries producing recurring pains in his neck and back.
 Upon his physician's advice, he received further medical treatment in the
United States which cost him US$2373.64 for his first trip, and US$5,596.64 for
the second.
Main Important facts: FMLFC’s defense
At the time of the accident the Isuzu cargo truck was registered in the name of the
FMLFC. However, FMLFC denied any liability,
 alleging that it was not the owner of the truck,
 neither the employer of the driver Crispin Sicat, because it had sold the truck
to Vicente Trinidad on September 24, 1980, after the latter had paid all his
monthly amortizations under the financing lease agreement between FMLFC
and Trinidad. 
Lower Court Grants third party complaint
The lower court granted FMLFC's leave to file a third-party complaint against Trinidad
(the buyer of the truck) and admitted the third-party complaint filed therewith.
 Answering the third-party complaint, the Estate of Vicente Trinidad admitted
that the truck was operated by the deceased during his lifetime.
01 Transpo Compiled Digests. 3C. Atty. 8
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 Nevertheless, it raised the defense that the estate of Vicente Trinidad was no
longer existing because the same had long been settled and partitioned
extrajudicially by his heirs.
Lower Court / CA sentences FMLFC to Pay
On August 25, 1986, the trial court rendered a decision sentencing FMLFC to pay Vitug
the sum of P133,950 with interest at the legal rate from the filing of the complaint until
fully paid, plus the sum of P10,000 as attorneys fees and costs.
FMLFC appealed in due time to the Court of Appeals which rendered a decision on
November 27, 1989 modifying the appealed judgment by ordering the third-party
defendant-appellee (Estate of Vicente Trinidad) to indemnify the appellant, FMLFC, for
whatever amount the latter may pay Vitug under the judgment. In all other respects, the
trial court's decision was affirmed.
FMLFC has filed this petition for review on certiorari praying that the decision of the
appellate court be reversed and set aside.
ISSUES
1. WON the registered owner is the operator of a vehicle and thus directly and
primarily responsible for the consequences of its operation (or is it the actual
owner). YES, it is the registered owner.
2. WON a transfer of ownership without registration in the LTO can bin third
persons. NO, it cannot.
RATIO
The registered owner / operator is Liable to third parties
1. This Court has consistently ruled that regardless of who the actual owner of a
motor vehicle might be, the registered owner is the operator of the same with
respect to the public and third persons, and as such, directly and primarily
responsible for the consequences of its operation.
 In contemplation of law, the owner/operator of record is the employer of
the driver, the actual operator and employer being considered merely as
his agent (MYC-Agro-Industrial Corporation vs. Vda. de Caldo, 132 SCRA
10, citing Vargas vs. Langcay, 6 SCRA 174; Tamayo vs. Aquino, 105 Phil.
949).
i. "We believe that it is immaterial whether or not the driver was
actually employed by the operator of record. It is even not
necessary to prove who the actual owner of the vehicle and the
employer of the driver is. Granting that, in this case, the father of
the driver is the actual owner and that he is the actual employer,
following the well-settled principle that the operator of record
continues to be the operator of the vehicle in contemplation of
law, as regards the public and third persons, and as such is
responsible for the consequences incident to its operation, we
must hold and consider such owner-operator of record as the

employer, in contemplation of law, of the driver. And, to give
effect to this policy of law as enunciated in the above cited
decisions of this Court, we must now extend the same and
consider the actual operator and employer as the agent of the
operator of record." (Vargas vs. Langcay, 6 SCRA 178; citing
Montoya vs. Ignacio, G.R. No. L-5868, Dec. 29, 1953,
Timbol vs. Osias, G.R. No. L-7547, April 30, 1955; Vda. de
Medina vs. Cresencia, G.R. No. L-8194, July 11, 1956; Necesito vs.
Paras, G.R. No. L-10605, June 30, 1955.)
ii. ". . . Were the registered owner allowed to evade responsibility
by proving who the supposed transferee or owner is, it would be
easy for him by collusion with others or otherwise, to escape
said responsibility and transfer the same to an indefinite person,
or to one who possesses no property with which to respond
financially for the damage or injury done." (Eerezo vs. Jepte. 102
Phil. 103.)
iii. ". . . The registered owner or operator of record is the one liable
for damages caused by a vehicle regardless of any alleged sale or
lease made thereon." (MYC-Agro-Industrial Corp. vs. Vda. de
Caldo, 132 SCRA 11.)
Transfer of ownership; must be recorded in the LTO to bind third persons
2. In order for a transfer of ownership of a motor vehicle to be valid against third
persons, it must be recorded in the Land Transportation Office.
 For, although valid between the parties, the sale cannot affect third
persons who rely on the public registration of the motor vehicle as
conclusive evidence of ownership.
 In law, FMLFC was the owner and operator of the Izusu cargo truck,
hence, fully liable to third parties injured by its operation due to the fault
or negligence of the driver thereof.
WHEREFORE, the petition for review is DENIED for lack of merit. Costs against the
petitioner.
SO ORDERED.
BA FINANCE V. CA – DE LA PAZ
BA FINANCE CORPORATION, petitioner, vs.HON. COURT OF APPEALS, REGIONAL
TRIAL COURT OF ANGELES CITY, BRANCH LVI, CARLOS OCAMPO, INOCENCIO
TURLA, SPOUSES MOISES AGAPITO and SOCORRO M. AGAPITO and NICOLAS CRUZ,
respondents.
Emergency Digest:
01 Transpo Compiled Digests. 3C. Atty. 9
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An accident involving an Isuzu ten –wheeler truck registered under BA Finance resulted
in the death of three victims and other physical injuries. In light of this, the RTC
rendered the decision ordered BA Finance to pay for the damages incurred. BA Finance
poses the question that the liability should be imposed on Rock Component Philippines
with whom there exists a contract of lease. At the time of the accident, the truck was
under the control of Rock Component. The CA ruled the BA Finance is liable as the
registered owner of the vehicle with the right to reimbursement to be claimed against
Rock Component pursuant to their lease agreement.
BA Finance questions the liability imposed on it when the truck in question was leased
to Rock Component at the time of the accident. The SC affirmed the CA decision holding
BA Finance liable as the registered owner subject to the right of reimbursement.
The main aim of motor vehicle registration is to identify the owner so that if any
accident happens, or that any damage or injury is caused by the vehicle on the public
highways, responsibility therefor can be fixed on a definite individual, the registered
owner. If the policy of the law is to be enforced and carried out, the registered owner
should not be allowed to prove the contrary to the prejudice of the person injured,
that is, to prove that a third person or another has become the owner, so that he
may thereby be relieved of the responsibility to the injured person.
Complete Digest:
Facts:An accident involving BA Finance’s Isuzu ten-wheeler truck resulting in the death
of three victims and multiple injuries.
RTC found
1. Rogelio Villar y Amare, the driver of the Isuzu truck, was at fault when the
mishap occurred. He was found guilty beyond reasonable doubt of reckless
imprudence resulting in triple homicide with multiple physical injuries with
damage to property.
2. BA Finance was adjudged liable for damages in as much as the truck
was registered in its name during the incident in question
3. Rock Component Philippines, Inc. was ordered to reimburse petitioner for
any amount that the latter may be adjudged liable to pay herein private
respondents as expressly stipulated in the contract of lease between petitioner
and Rock Component Philippines, Inc. Moreover, the trial court applied Article
2194 of the new Civil Code on solidary accountability of join tortfeasors insofar
as the liability of the driver, herein petitioner and Rock Component Philippines
was concerned
Court of Appeals affirmed the appealed disposition in toto Hence, the instant petition.
BA Finance asseverates that it should not have been haled to court and ordered to
respond for the damage in the manner arrived at by both the trial and appellate courts
since paragraph 5 of the complaint lodged by the plaintiffs below would indicate that
petitioner was not the employer of the negligent driver who was under the control an
supervision of Lino Castro at the time of the accident, apart from the fact that the Isuzu
truck was in the physical possession of Rock Component Philippines by virtue of the
lease agreement.

Issue: Whether or not BA Finance Corporation is liable though the truck was leased to
Rock Component when the incident occurred.
Held: WHEREFORE, the petition is hereby DISMISSED and decision under review
AFFIRMED without special pronouncement as to costs.
Ratio: There is a presumption that the owner of the guilty vehicle is the defendant-
appellant as he is the registered owner in the Motor Vehicle Office.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that the vehicle
may be used or operated upon any public highway unless the same is properly
registered.
The main aim of motor vehicle registration is to identify the owner so that if any
accident happens, or that any damage or injury is caused by the vehicle on the public
highways, responsibility therefor can be fixed on a definite individual, the registered
owner. Whatever purpose there may be in these statutes, it is subordinate at the last to
the primary purpose of rendering it certain that the violator of the law or of the rules of
safety shall not escape because of lack of means to discover him.
With the above policy in mind, the question that defendant-appellant poses is:
should not the registered owner be allowed at the trial to prove who the actual
and real owner is, and in accordance with such proof escape or evade
responsibility and lay the same on the person actually owning the vehicle?
We hold with the trial court that the law does not allow him to do so; the law, with its
aim and policy in mind, does not relieve him directly of the responsibility that the law
fixes and places upon him as an incident or consequence of registration. Were a
registered owner allowed to evade responsibility by proving who the supposed
transferee or owner is, it would be easy for him, by collusion with others or
otherwise, to escape said responsibility and transfer the same to an indefinite
person, or to one who possesses no property with which to respond financially for
the damage or injury done.
A victim of recklessness on the public highways is usually without means to discover or
Identify the person actually causing the injury or damage. He has no means other then
by a recourse to the registration in the Motor Vehicles Office to determine who is the
owner. The protection that the law aims to extend to him would become illusory
were the registered owner given the opportunity to escape liability by disproving
his ownership. If the policy of the law is to be enforced and carried out, the registered
owner should not be allowed to prove the contrary to the prejudice of the person
injured, that is, to prove that a third person or another has become the owner, so
that he may thereby be relieved of the responsibility to the injured person.
We hold that the registered owner, the defendant-appellant herein, is primarily
responsible for the damage caused to the vehicle of the plaintiff-appellee, but he
(defendant-appellant) has a right to be indemnified by the real or actual owner of the
amount that he may be required to pay as damage for the injury caused to the plaintiff-
01 Transpo Compiled Digests. 3C. Atty. 10
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appellant.
There is no need for Us to discuss the matter of imputed negligence because petitioner
merely presumed, erroneously, however, that judgment was rendered against it on the
basis of such doctrine embodied under Article 2180 of the new Civil Code.
DE GUZMAN V. CA – GERALDEZ
PEDRO DE GUZMAN, vs. COURT OF APPEALS and ERNESTO CENDANA (1988) –
Geraldez
ER: Cendana is a junk dealer. He buys bottles and scrap from Pangasinan and sells them
in Manila. On the trip back, he is engaged in a sideline of hauling stuff from people for
delivery in Pangasinan. De Guzman is a dealer of a milk company who used Cendana to
send 750 boxes of milk. It was shipped in two trucks, the second of which contained 600
boxes. This second truck was hijacked along the way. De Guzman now sues Cendana,
alleging him to be a common carrier. SC rules that Cendana is a common carrier, as Art.
1732 does not distinguish between general or sideline business, between offering
services to the general public or a narrow segment thereof, or on a regular or scheduled
basis. However, De Guzman is not liable. Even though hijacking is not covered by Art.
1734, under Art. 1735, common carriers are not liable if they exercise extraordinary
diligence. Cendana did this, with the SC ruling that extraordinary diligence of vigilance
over the goods is met when such goods are lost through "grave or irresistible threat,
violence or force."
Facts:
 Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles
and scrap metal in Pangasinan. Upon gathering sufficient quantities of such scrap
material, respondent would bring such material to Manila for resale. He utilized two
(2) six-wheeler trucks which he owned for hauling the material to Manila.
o On the return trip to Pangasinan, respondent would load his vehicles with
cargo which various merchants wanted delivered to differing
establishments in Pangasinan. For that service, respondent charged
freight rates which were commonly lower than regular commercial rates.
 Sometime in November 1970, petitioner Pedro de Guzman a merchant and
authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta,
Pangasinan, contracted with respondent for the hauling of 750 cartons of Liberty
filled milk from a warehouse of General Milk in Makati, Rizal, to petitioner's
establishment in Urdaneta on or before 4 December 1970.
 Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600
boxes never reached petitioner, since the truck which carried these boxes was
hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed
men who took with them the truck, its driver, his helper and the cargo.
 On 6 January 1971, petitioner commenced action against private respondent in the
Court of First Instance of Pangasinan.

 Trial Court found Cendana to be a Common Carrier and liable.
 Court of Appeals reversed, ruled that Cendana engaged in transporting return loads
of freight "as a casual occupation — a sideline to his scrap iron business" and not as
a common carrier.
Issues: Is he a common carrier? YES. Is he liable? NO. Who wins? CENDANA. CA
Affirmed.
Ratio:
On being a common carrier
We consider first the issue of whether or not private respondent Ernesto Cendana may,
under the facts earlier set forth, be properly characterized as a common carrier.
The Civil Code defines "common carriers" under Art. 1732.
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 deliberaom [NG: maybe it’s deliberately
abstained 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. Under Section 13, paragraph (b) of the
Public Service Act, "public service" includes:
... every person that now or hereafter may own, operate, manage, or control in
the Philippines, for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction railway, xxx.
It appears to the Court that private respondent is properly characterized as a common
carrier even though he merely "back-hauled" goods for other merchants from Manila to
Pangasinan, although such back-hauling was done on a periodic or occasional rather
than regular or scheduled manner, and even though private respondent's principal
occupation was not the carriage of goods for others. There is no dispute that private
01 Transpo Compiled Digests. 3C. Atty. 11
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respondent charged his customers a fee for hauling their goods; that fee frequently fell
below commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held no certificate of
public convenience, and concluded he was not a common carrier. This is palpable error.
A certificate of public convenience is not a requisite for the incurring of liability under
the Civil Code provisions governing common carriers. That liability arises the moment a
person or firm acts as a common carrier, without regard to whether or not such carrier
has also complied with the requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate of public convenience or
other franchise. To exempt private respondent from the liabilities of a common carrier
because he has not secured the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward private respondent precisely
for failing to comply with applicable statutory requirements. The business of a common
carrier impinges directly and intimately upon the safety and well being and property of
those members of the general community who happen to deal with such carrier. The law
imposes duties and liabilities upon common carriers for the safety and protection of
those who utilize their services and the law cannot allow a common carrier to render
such duties and liabilities merely facultative by simply failing to obtain the necessary
permits and authorizations.
On his liability as common carrier
It is important to point out that the above list [Art. 1734] of causes of loss, destruction or
deterioration which exempt the common carrier for responsibility therefor, is a closed
list. Causes falling outside the foregoing list, even if they appear to constitute a species of
force majeure fall within the scope of Article 1735, which provides as follows:
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of
the preceding article, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as required in Article 1733. (Emphasis supplied)
Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific
cause alleged in the instant case — the hijacking of the carrier's truck — does not fall
within any of the five (5) categories of exempting causes listed in Article 1734. It would
follow, therefore, that the hijacking of the carrier's vehicle must be dealt with under the
provisions of Article 1735, in other words, that the private respondent as common
carrier is presumed to have been at fault or to have acted negligently. This presumption,
however, may be overthrown by proof of extraordinary diligence on the part of private
respondent.
Petitioner De Guzman argues that in the circumstances of this case, private respondent
should have hired a security guard presumably to ride with the truck carrying the 600
cartons of Liberty filled milk. We do not believe, however, that in the instant case, the

standard of extraordinary diligence required private respondent to retain a security
guard to ride with the truck and to engage brigands in a firelight at the risk of his own
life and the lives of the driver and his helper.
As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under
Article 1733, given additional specification not only by Articles 1734 and 1735 but also
by Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:
Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
(6) that the common carrier's liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is
dispensed with or diminished; and
Under Article 1745 (6) above, a common carrier is held responsible — and will not be
allowed to divest or to diminish such responsibility — even for acts of strangers like
thieves or robbers, except where such thieves or robbers in fact acted "with grave or
irresistible threat, violence or force." We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are reached where the
goods are lost as a result of a robbery which is attended by "grave or irresistible threat,
violence or force."
In the instant case, armed men held up the second truck owned by private respondent
which carried petitioner's cargo. The record shows that an information for robbery in
band was filed in the Court of First Instance of Tarlac, Branch 2, in Criminal Case No. 198
entitled "People of the Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina,
Oscar Oria and one John Doe." The men were shown to be armed, to have taken the milk,
and even detained the truck driver. The Court of First Instance convicted all the accused
of robbery, though not of robbery in band.
In these circumstances, we hold that the occurrence of the loss must reasonably be
regarded as quite beyond the control of the common carrier and properly regarded as a
fortuitous event. It is necessary to recall that even common carriers are not made
absolute insurers against all risks of travel and of transport of goods, and are not held
liable for acts or events which cannot be foreseen or are inevitable, provided that they
shall have complied with the rigorous standard of extraordinary diligence.
BASCOS V. CA – KING
G.R. No. 101089. April 7, 1993.
Petitioner: Estrellita Bascos
01 Transpo Compiled Digests. 3C. Atty. 12
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Private Respondent: Rodolfo Cipriano
CAMPOS, JR., J p:
-Keith King
Emergency:
Jibfair hired Cipriano to haul goods (soya bean meal) from Manila to be deposited in the
warehouse of Purefoods in Calamba, Laguna. Cipriano subcontracted Bascos. Bascos was
not able to deliver the goods. Hence, Cipriano had to pay Jibfair for the unfinished job.
Cipriano sued Bascos for the recovery of the payment and for damages.
Bascos’ defenses:
1) She does not offer her services to the public. Hence, she is not a common carrier and
therefore, no presumption of fault in case of loss, destruction or deterioration of goods
should rise against her.
2) She also alleges the contract between her and Cipriano was only for lease. She alleges
that she only lent her truck.
3) Another defense was force majeure. She said that the truck was hi-jacked that’s why
the goods were not delivered.
RTC and CA held that she is a common carrier, there was a contract of carriage and that
the hi-jacking was not force majeure.
SC affirmed.
Defense 1 fails. Article 1732 does not 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. A
presumption of fault arises, which Bascos failed to overturn.
Defense 2 fails for failure of Bascos to substantiate that there was only a lease contract.
Defense 3 fails. To exculpate the carrier from liability arising from hijacking, she must
prove that the robbers or the hijackers acted with grave or irresistible threat, violence,
or force. She was not able to do so.
Facts:
 Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPRIANO) entered
into a hauling contract with Jibfair Shipping Agency Corporation whereby the
former bound itself to haul the latter's 2,000 m/tons of soya bean meal from
Magallanes Drive, Del Pan, Manila to the warehouse of Purefoods Corporation in
Calamba, Laguna.

 To carry out its obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted
with Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya
bean meal worth P156,404.00 from the Manila Port Area to Calamba, Laguna at the
rate of P50.00 per metric ton.
 Bascos failed to deliver the said cargo.
 As a consequence of that failure, Cipriano paid Jibfair Shipping Agency the amount
of the lost goods in accordance with their contract which stated that:
o "1. CIPRIANO shall be held liable and answerable for any loss in bags due
to theft, hijacking and non-delivery or damages to the cargo during
transport at market value, . . ."
 Cipriano demanded reimbursement from Bascos but the latter refused to pay.
 Eventually, Cipriano filed a complaint for a sum of money and damages with writ of
preliminary attachment for breach of a contract of carriage. The prayer for a Writ of
Preliminary Attachment was included by Cipriano because he alleges that Bascos
removed or disposed of her property, or is about to do so, with intent to defraud
her creditors and that there was no sufficient security for the claim sought to be
enforced by the present action.
 The trial court granted the writ of preliminary attachment on February 17, 1987.
 In her answer, petitioner interposed the following defenses:
o no contract of carriage since CIPRIANO leased her cargo truck to load the
cargo from Manila Port Area to Laguna;
o that the truck carrying the cargo was hijacked along Canonigo St., Paco,
Manila on the night of October 21, 1988;
o and that hijacking, being a force majeure, exculpated petitioner from any
liability to CIPRIANO.
o That it was CIPRIANO who is liable to her.
 RTC rendered a decision in favor Cipriano. CA affirmed. They ruled:
o She admitted in her answer that she did business under the name A.M.
Bascos Trucking and that said admission dispensed with the presentation
by private respondent, Rodolfo Cipriano, of proofs that petitioner was a
common carrier.
o The following pieces of evidence indicate that Bascos was a common
carrier: the fact that the truck driver of petitioner, Maximo Sanglay,
received the cargo consisting of 400 bags of soya bean meal as evidenced
by a cargo receipt signed by Maximo Sanglay; the fact that the truck
helper, Juanito Morden, was also an employee of petitioner; and the fact
that control of the cargo was placed in petitioner's care.
 Hence, the petition.
 Bascos raised the following defense:
o No contract of carriage. Rather, there was a lease contract only. They only
leased their truck in the shipping of goods.
o She also stated that she was not catering to the general public. She said
that she does business under the same style of A.M. Bascos Trucking,
offering her trucks for lease to those who have cargo to move, not to the
general public but to a few customers only in view of the fact that it is only
a small business.
o No matter what, she is excused by Force Majeure due to hi-jacking.
01 Transpo Compiled Digests. 3C. Atty. 13
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Issue: Whether or not Bascos is considered a common carrier? - YES
Whether or not the hijacking referred to a force majeure? - NO
Ratio:
Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or
firm, or association engaged in the business of carrying or transporting passengers or
goods or both, by land, water or air, for compensation, offering their services to the
public."
The test to determine a common carrier is "whether the given undertaking is a part of
the business engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted."
In this case, petitioner herself has made the admission that she was in the trucking
business, offering her trucks to those with cargo to move. Judicial admissions are
conclusive and no evidence is required to prove the same.
She is considered to have offered her services to the public, making her a common
carrier.
The holding of the Court in De Guzman vs. Court of Appeals is instructive. In referring to
Article 1732 of the Civil Code, it held thus:
"The above article makes no distinction between one whose principal business activity
is the carrying of persons or goods or both, and one who does such carrying only as an
ancillary activity (in local idiom, as a "sideline").
Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that Article
1732 deliberately refrained from making such distinctions." (emphasis by KK)
Regarding the affidavits made by Jesus Bascos and herself (which stated that the
contract was only for lease) presented by Bascos to the court, both the trial and
appellate courts have dismissed them as self-serving. We are bound by the appellate
court's factual conclusions.
Assuming the said evidence were not self-serving, the same were not sufficient to prove
that the contract was one of lease.

SC also held that the loss of the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in the vigilance over
the goods transported by them. Accordingly, they are presumed to have been at fault or
to have acted negligently if the goods are lost, destroyed or deteriorated.
There are very few instances when the presumption of negligence does not attach and
these instances are enumerated in Article 1734 (5 exceptions to the presumption). In
those cases where the presumption is applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome the presumption.
In De Guzman vs. Court of Appeals, the Court held that hijacking, not being included in
the provisions of Article 1734, must be dealt with under the provisions of Article 1735
and thus, the common carrier is presumed to have been at fault or negligent. To
exculpate the carrier from liability arising from hijacking, he must prove that the
robbers or the hijackers acted with grave or irresistible threat, violence, or force. This is
in accordance with Article 1745 of the Civil Code which provides:
"Art. 1745. Any of the following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who
do not act with grave or irresistible threat, violences or force, is dispensed with or
diminished;"
"Under Article 1745 (6) above, a common carrier is held responsible — and will not be
allowed to divest or to diminish such responsibility — even for acts of strangers like
thieves or robbers except where such thieves or robbers in fact acted with grave or
irresistible threat, violence or force.
We believe and so hold that the limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the goods are lost as a result of a
robbery which is attended by "grave or irresistible threat, violence or force."
To establish grave and irresistible force, petitioner presented her accusatory affidavit,
Jesus Bascos' affidavit, and Juanito Morden's "Salaysay".
However, both the trial court and the Court of Appeals have concluded that these
affidavits were not enough to overcome the presumption. Petitioner's affidavit about the
hijacking was based on what had been told her by Juanito Morden. It was not a first-
hand account. While it had been admitted in court for lack of objection on the part of
private respondent, the respondent Court had discretion in assigning weight to such
evidence. We are bound by the conclusion of the appellate court. In a petition for review
on certiorari, We are not to determine the probative value of evidence but to resolve
questions of law.
Secondly, the affidavit of Jesus Bascos did not dwell on how the hijacking took place.
01 Transpo Compiled Digests. 3C. Atty. 14
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Thirdly, while the affidavit of Juanito Morden, the truck helper in the hijacked truck, was
presented as evidence in court, he himself was a witness as could be gleaned from the
contents of the petition. Affidavits are not considered the best evidence if the affiants are
available as witnesses. The subsequent filing of the information for carnapping and
robbery against the accused named in said affidavits did not necessarily mean that the
contents of the affidavits were true because they were yet to be determined in the trial
of the criminal cases.
The presumption of negligence was raised against Bascos, as common carrier. It was her
burden to overcome it. Thus, contrary to her assertion, Cipriano need not introduce any
evidence to prove her negligence. Her own failure to adduce sufficient proof of
extraordinary diligence made the presumption conclusive against her. She is thus liable.
FIRST PHILIPPINE INDUSTRIAL CORP V. CA - LAGOS
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, vs. COURT OF APPEALS,
HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in
her official capacity as City Treasurer of Batangas, respondents. 29 Dec 1998 - Lagos
ER:
FPIC was granted a pipeline concession to operate pipelines. It applied for a mayor’s
permit but was asked first to pay local taxes on its gross receipts. It paid under protest
and filed a complaint for refund afterwards. In its claim for refund, it mainly alleged that
under the LGC, it should be exempt from local taxes as a common carrier, transporting
petroleum via pipelines. RTC dismissed the complaint and CA affirmed. In its appeal to
the SC, it put in issue WON it was a common carrier.
The SC held that yes, FPIC is a common carrier. There is no doubt that FPIC 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 FPIC has a limited clientele does not
exclude it from the definition of a common carrier. 
Facts:
 FPIC is a grantee of a pipeline concession to contract, install and operate oil
pipelines.  The original pipeline concession was granted in 1967 and renewed
by the Energy Regulatory Board in 1992.
 FPIC, in 1995, applied for a mayor’s permit but before it was issued such, the
City Treasurer required FPIC to pay a local tax based on its gross receipts for
1993. FPIC was assessed around P950k in taxes. It paid under protest so as not
to hamper its operations.
 FPIC then filed a letter-protest with the City Treasurer but this was denied.
Thus FPIC filed a complaint for tax refund with RTC Batangas alleging that
o it is exempt from paying tax on gross receipts under Sec 133 of the
1991 LGC as it is a common carrier (in the business of transporting

petroleum from Batangas via pipeline to Sucat and Pandacan
Terminals)
o the authority of cities to impose and collect a tax on the gross receipts
of “contractors and independent contractors” under Sec. 141 (e) and
151 does not include the authority to collect such taxes on
transportation contractors under Sec 131 which excludes
transportation contractors.
o the City Treasurer illegally and erroneously imposed and collected
the said tax, thus meriting the immediate refund of the tax paid
 RTC dismissed FPIC complaint saying:
o That the exemption granted under Sec. 133 (j) encompasses
only common carriers so as not to overburden the riding public or
commuters with taxes.  Plaintiff is not a common carrier, but a special
carrier extending its services and facilities to a single specific or
"special customer" under a "special contract
o The Local Tax Code of 1992 was basically enacted to give more and
effective local autonomy to local governments than the previous
enactments, to make them economically and financially viable to
serve the people and discharge their functions with a concomitant
obligation to accept certain devolution of powers, x x x So, consistent
with this policy even franchise grantees are taxed (Sec. 137) and
contractors are also taxed under Sec. 143 (e) and 151 of the Code
 CA affirmed the RTC’s decision. Hence this petition.
ISSUE: WON FPIC is a common carrier? YES
HELD: Petition is GRANTED.
RATIO
 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:
o 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;
o He must undertake to carry goods of the kind to which his business is
confined;
o He must undertake to carry by the method by which his business is
conducted and over his established roads; and
o The transportation must be for hire.
01 Transpo Compiled Digests. 3C. Atty. 15
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 Based on the above definitions and requirements, there is no doubt that FPIC 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 FPIC has a limited clientele does not exclude it
from the definition of a common carrier. 
 In De Guzman vs. Court of Appeals we ruled that:
o "The above article (Art. 1732, 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 (in local idiom, as a 'sideline').  Article 1732 x x
x 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 1877 deliberately
refrained from making such distinctions.
 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 in which
Section 13, paragraph (b) states:
o 'every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and
done for general business purposes, any common carrier, railroad,
street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service of any
class, express service, steamboat, or steamship line, pontines, ferries
and water craft, engaged in the transportation of passengers or
freight or both, shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system gas, electric light heat
and power, water supply and power petroleum, sewerage system,
wire or wireless communications systems, wire or wireless
broadcasting stations and other similar public services.'
 Republic Act 387 also regards petroleum operation as a public
utility.  Pertinent portion of Article 7 thereof provides:
o "that everything relating to the exploration for and exploitation of
petroleum x x and everything relating to the manufacture, refining,
storage, ortransportation by special methods of petroleum, is
hereby declared to be a public utility
 Further, the definition of "common carriers" in the Civil Code makes no
distinction as to the means of transporting, as long as it is by land, water or
air.  It does not provide that the transportation of the passengers or goods

should be by motor vehicle.  In fact, in the United States, oil pipe line operators
are considered common carriers
 The Bureau of Internal Revenue likewise considers the petitioner a "common
carrier."  In BIR Ruling No. 069-83, it declared:
o since [petitioner] is a pipeline concessionaire that is engaged only in
transporting petroleum products, it is considered a common carrier
under Republic Act No. 387 x x x.  Such being the case, it is not subject
to withholding tax prescribed by Revenue Regulations No. 13-78, as
amended."
o From the foregoing disquisition, there is no doubt that petitioner is a
"common carrier" and, therefore, exempt from the business tax as
provided for in Section 133 (j), of the Local Government Code
 Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is
considered a "common carrier."  Thus, Article 86 thereof provides that:
o "Art. 86. Pipe line concessionaire as a common carrier. - A pipe
line shall have the preferential right to utilize installations for the
transportation of petroleum owned by him, but is obligated to utilize
the remaining transportation capacity pro rata for the transportation
of such other petroleum as may be offered by others for transport,
and to charge without discrimination such rates as may have been
approved by the Secretary of Agriculture and Natural Resources."
CALVO V. UCPB – LOPA
VIRGINES CALVO doing business under the name and style TRANSORIENT
CONTAINER TERMINAL SERVICES, INC vs. UCPB GENERAL INSURANCE CO., INC.
(formerly Allied Guarantee Ins. Co., Inc.)
Keyword: reels of semi-chemical fluting paper and reels of kraft. TCTSI is a common
carrier
Topic: Definition of common carrier, who is one, who is not one
Date: March 19, 2002
Emergency Digest: Facts: Petitioner Virgines Calvo, owner of Transorient Container
Terminal Services, Inc. (TCTSI), and a custom broker, entered into a contract with San
Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper
and 124 reels of kraft liner board from the port area to the Tabacalera Compound,
Ermita, Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc.
On July 14, 1990, contained in 30 metal vans, arrived in Manila on board “M/V
Hayakawa Maru”. After 24 hours, they were unloaded from vessel to the custody of the
arrastre operator, Manila Port Services, Inc. From July 23 to 25, 1990, petitioner,
01 Transpo Compiled Digests. 3C. Atty. 16
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pursuant to her contract with SMC, withdrew the cargo from the arrastre operator and
delivered it to SMC’s warehouse in Manila. On July 25, the goods were inspected by
Marine Cargo Surveyors, reported that 15 reels of the semi-chemical fluting paper were
“wet/stained/torn” and 3 reels of kraft liner board were also torn. The damages cost
P93,112.00.
SMC collected the said amount from respondent UCPB under its insurance contract.
Respondent on the other hand, as a subrogee of SMC, brought a suit against petitioner in
RTC, Makati City. On December 20, 1995, the RTC rendered judgment finding petitioner
liable for the damage to the shipment. The decision was affirmed by the CA.
Issue: Whether or not Calvo is a common carrier?
Held: In this case the contention of the petitioner, that he is not a common carrier but a
private carrier, has no merit.
Article 1732 makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as ancillary
activity. Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that Article
1733 deliberately refrained from making such distinction. (De Guzman v. CA, 68 SCRA
612)
Te concept of “common carrier” under Article 1732 coincide with the notion of “public
service”, under the Public Service Act which partially supplements the law on common
carrier. Under Section 13, paragraph (b) of the Public Service Act, it includes:
“ x x x every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, subway motor vehicle, either
for freight or passenger, or both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service, steamboat, or

steamship line, pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water
supply and power petroleum, sewerage system, wire or wireless communications
systems, wire or wireless broadcasting stations and other similar public services. x x x”
MENDOZA, J.:
FACTS:
 Virgines Calvo is the owner of Transorient Container Terminal Services, Inc.
(TCTSI), a sole proprietorship customs broker.
 Calvo entered into a contract with San Miguel Corporation (SMC) for the transfer of
114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the
Port Area in Manila to SMC’s warehouse at the Tabacalera Compound, Romualdez
St., Ermita, Manila. The cargo was insured by respondent UCPB General Insurance
Co., Inc.
 The shipment in question, contained in 30 metal vans, arrived in Manila on board
“M/V Hayakawa Maru” and, after 24 hours, were unloaded from the vessel to the
custody of the arrastre operator, Manila Port Services, Inc.
 From July 23 to July 25, 1990, petitioner, pursuant to her contract with SMC,
withdrew the cargo from the arrastre operator and delivered it to SMC’s warehouse
in Ermita, Manila.
 On July 25, 1990, the goods were inspected by Marine Cargo Surveyors, who
found that 15 reels of the semi-chemical fluting paper were
“wet/stained/torn” and 3 reels of kraft liner board were likewise torn. The
damage was placed at P93,112.00.
 SMC collected payment from respondent UCPB under its insurance contract for the
aforementioned amount. In turn, respondent, as subrogee of SMC, brought suit
against Calvo.
 Regional Trial Court rendered judgment finding petitioner liable to respondent for
the damage to the shipment.
 The decision was affirmed by the Court of Appeals on appeal. Hence this petition
for review on certiorari.
ISSUES:
I. W/N THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR [IN]
DECIDING THE CASE NOT ON THE EVIDENCE PRESENTED BUT ON PURE SURMISES,
SPECULATIONS AND MANIFESTLY MISTAKEN INFERENCE.
II. WHETHER TCTSI IS A COMMON CARRIER OR A PRIVATE OR SPECIAL CARRIER WHO
DID NOT HOLD ITS SERVICES TO THE PUBLIC.
HELD:
01 Transpo Compiled Digests. 3C. Atty. 17
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 De Guzman v. Court of Appeals - 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.”
 Some ambiguities in Art 1732
o 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
o 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.
o fails to 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.
 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. Under Section 13, paragraph (b) of the Public Service Act, “public
service” includes:
o “ x x x every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and done
for general business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for freight or
passenger, or both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged in
the transportation of passengers or freight or both, shipyard, marine
repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply and
power petroleum, sewerage system, wire or wireless communications
systems, wire or wireless broadcasting stations and other similar public
services. x x x” [8]
 There is greater reason for holding petitioner to be a common carrier because the
transportation of goods is an integral part of her business
 Now, as to petitioner’s liability, Art. 1733 of the Civil Code provides:
 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 and for the safety of the passengers transported
by them, according to all the circumstances of each case
 Compania Maritima v. Court of Appeals - the meaning of “extraordinary
diligence in the vigilance over goods” was explained thus:
o vigilance over the goods tendered for shipment requires the
common carrier to know and to follow the required precaution
for avoiding damage to, or destruction of the goods entrusted to
it for sale, carriage and delivery.

o render service with the greatest skill and foresight
o use all reasonable means to ascertain the nature and
characteristic of goods tendered for shipment, and to exercise
due care in the handling and stowage, including such methods as
their nature requires.”
 In the case at bar, petitioner denies liability for the damage to the cargo. She
claims that the “spoilage or wettage” took place while the goods were in the
custody of either the carrying vessel “M/V Hayakawa Maru,” which
transported the cargo to Manila, or the arrastre operator, to whom the goods
were unloaded and who allegedly kept them in open air for nine days.
 Contrary to petitioner’s assertion, the Survey Report of the Marine Cargo
Surveyors indicates that when the shipper transferred the cargo in question to
the arrastre operator, these were covered by clean Equipment Interchange
Report (EIR) and, when petitioner’s employees withdrew the cargo from the
arrastre operator, they did so without exception or protest either with regard
to the condition of container vans or their contents.
 From the [Survey Report], it [is] clear that the shipment was discharged from
the vessel to the arrastre, Marina Port Services Inc., in good order and
condition as evidenced by clean Equipment Interchange Reports (EIRs). Had
there been any damage to the shipment, there would have been a report to that
effect made by the arrastre operator.
 to prove the exercise of extraordinary diligence, petitioner must do more than
merely show the possibility that some other party could be responsible for the
damage. It must prove that it used “all reasonable means to ascertain the
nature and characteristic of goods tendered for [transport] and that [it]
exercise[d] due care in the handling [thereof].” Petitioner failed to do this.
 Nor is there basis to exempt petitioner from liability under Art. 1734(4), which
provides
o 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: (4) The character of the goods or defects in the
packing or in the containers.
o For this provision to apply, the rule is that if the improper packing or,
in this case, the defect/s in the container, is/are known to the carrier
or his employees or apparent upon ordinary observation, but he
nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for
damage resulting therefrom.
HOME INSURANCE V. AMERICAN STEAMSHIP – LUCENARIO
Home Insurance Co. v. American Steamship Agencies Inc.
Emergency Recitation:
01 Transpo Compiled Digests. 3C. Atty. 18
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Definition: charter party – instrument by which a vessel is leased; a special contract
between the shipowner and charterer, especially for the carriage of goods at sea.
 CONSORCIO (charterer) shipped 2
 1,740 jute bags of Peruvian fish meal to SAN MIGUEL (consignee) through the SS
Crowbrough (owned and operated by AMERICAN STEAMSHIP).
o Note: the cargo was insured by HOME INSURANCE
o Note: CONSORCIO’s shipment comprised the entire capacity of the SS
Crowbrough and was the only shipper.
 When the cargo was delivered to SAN MIGUEL, there was a shortage of approx..
$12,000. SAN MIGUEL sued so HOME INSURANCE paid it. HOME INSURANCE now
sues AMERICAN STEAMSHIP for indemnity.
 AMERICAN STEAMSHIP’s main defense is that the charter party entered into (as
evidenced in the bills of lading) has a provision that exempts it from liability for the
loss or destruction of the goods due to the negligence or fault of its agents or
employees. Its liability was only limited to the results of its negligence/fault as an
owner or manager.
 CFI ruled that this provision was void for being contrary to public policy and
directed it to pay. AMERICAN STEAMSHIP now appeals this ruling.
 ISSUE: W/N the provision is valid  YES. W/N AMERICAN STEAMSHIP is liable 
NO.
 Our civil code provisions on common carriers come from American law. In
American case law, a common carrier undertaking to carry a special cargo or
chartered to a special person only, becomes a private carrier. Hence in this case,
AMERICAN STEAMSHIP was acting as a private carrier.
 Consequently, the law on common carriers cannot apply. The provision absolving
the owner would have been void as against public policy if SS Crowbrough was
acting as a common carrier as it is imbued with public interest. However, acting as a
private carrier, the parties can agree on what they want. And in this case, the
provision is valid.
FACTS:
Parties:
 Shipper/Charterer– Consorcio Pesquero del Peru of South America (CONSORCIO)
 Common carrier - SS Crowbrough, through its owner and operator American
Steamship Agencies, Inc.
 Consignee – San Miguel Corp.
 Lighters – Luzon Stevedoring Company
 Insurer – Home Insurance Company
 CONSORCIO shipped 21,740 jute bags of Peruvian fish meal through SS Crowbrough
to Manila covered by Bills of Lading No. 1 and 2. This cargo was insured by Home
Insurance Co. for $202,505.

 When the cargo arrived in Manila, it was discharged into the lighters of LUZON
STEVEDORING and delivered to SAN MIGUEL Brewery.
 However, when the cargo arrived to SAN MIGUEL, there were shortages amounting
to $12,033.85. SAN MIGUEL filed claims against LUZON, HOME INSURANCE, and
AMERICAN STEAMSHIP. They all denied.
 HOME INSURANCE first paid SAN MIGUEL and was subrogated to its rights. It now
sues both LUZON and AMERICAN STEAMSHIP for indemnity.
 LUZON defense –
o Due diligence in delivering the goods. It merely unloaded and loaded the
goods the carrier brought to it in the same quality and quantity.
o Prescription. – Art. 366 of Code of Commerce states that a claim must be
made within 24 hours from receipt of the cargo.
 AMERICAN STEAMSHIP defense: provisions of the Charter party referred to in the
bills of lading that the charterer, not the shipowner, was responsible for any loss or
damage to the cargo. Also, due diligence.
 At the back of the bills of lading, it is provided that they shall be governed by and
subject to the terms and conditions of the charter party contract. The charter party
provided:
o While the possession and control of the ship were not entirely transferred
to the charterer, the vessel was chartered to its full and complete capacity
(meaning CONSORCIO was its only client in such shipment).
o Sec. 2 Par. 2  The owner (AMERICAN STEAMSHIP) is liable for loss or
damage to the goods caused by personal want of 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.
o This provision exempts AMERICAN STEAMSHIP from any loss or damage
or delay arising from any other source, even from the neglect or fault of
the captain or crew, or for someone else on board.
 CFI decision: absolved LUZON STEVEDORING but held AMERICAN STEAMSHIP
guilty to pay the amount of $14,870.71 to HOME INSURANCE.
o Basis: Art. 587 Code of Commerce makes the ship agent also civilly liable
for damages in favour of third persons due to the conduct of the captain of
the carrier.
o The provision in the charter party exempting the owner from liability is
against public policy.
 AMERICAN STEAMSHIP appealed.
ISSUE: W/N the stipulation is valid  YES. W/N AMERICAN STEAMSHIP is liable  NO.
HELD: CFI decision reversed and set aside.
RATIO:
Philippine Civil Code on common carriers were taken from Anglo-American law.
01 Transpo Compiled Digests. 3C. Atty. 19
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 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.
 It would only be void if the SS Crowbrough was acting as a common carrier.
Hence, the Civil Code provisions on common carriers should not be applied where the
carrier is not acting as such but as a private carrier.
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
and not a contract – for the contract is the charter party.
Abiding by the charter party, AMERICAN STEAMSHIP is liable only for its personal acts
and negligence as said owner or manager, and not from its agents or employees. In this
case, no such personal act or negligence has been proved.
VALENZUELA HARDWOOD V. CA - MAGTAGNOB
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY, INC., petitioner, vs. COURT
OF APPEALS AND SEVEN BROTHERS SHIPPING CORPORATION, respondents.
Keyword: Logs; Private Carrier
Topic: Common Carrier vs Private Carrier; Prohibited stipulations
Date: June 30, 1997
EMERGENCY DIGEST:
VHIS entered into an agreement with Seven Brothers to transport VHIS’ logs through
Seven Brothers’ vessel, M/V Seven Ambassador, from Isabela to Manila. VHIS insured
the logs with South Sea. M/V Seven Ambassadors sank because the irons chains snapped
causing the logs to roll to the portside due to the negligence of the captain in not
securing the logs properly (no fortuitous event). VHIS demanded from South Sea the
proceeds of the policy, but it refused on the ground that the policy has been cancelled
due to non-payment of premium. VHIS also demanded from Seven Brothers for the
amount of the lost logs, but it refused on the ground that there is a stipulation in the
charter party that the owners (Seven Brothers) are not liable for loss, split, short-
landing, breakages and any kind of damages to the cargo.
RTC- in favor of VHIS.
CA- Modified RTC’s decision. Absolved Seven Brothers from liability.
The question is WON the provision in the charter party absolving Seven Brothers from
liability in case of loss is valid.
The SC held that the provision is VALID, and hence Seven Brothers is NOT LIABLE. When
the parties entered into the contract, Seven Brothers acted as a PRIVATE CARRIER. The
provisions of Art 1745, which voids a stipulation that the common carrier is not liable in
case of loss, does NOT APPLY to private carriers. In cases of private carriers, the parties
are free to agree on anything, as long as it is not contrary to law, morals, public policy,
etc.

COMPLETE DIGEST
 Valenzuela Hardwood and Industrial Supply, Inc. (VHIS) entered into an
agreement with the defendant Seven Brothers (Shipping Corporation)
whereby the latter undertook to load on board its vessel M/V Seven
Ambassador the former’s lauan round logs numbering 940 at the port of
Isabela for shipment to Manila.
 VHIS insured the logs against loss and/or damage with defendant South Sea
Surety and Insurance Co., Inc. (South Sea) for P2,000,000.00 and the latter
issued its Marine Cargo Insurance Policy. VHIS gave the check in payment of
the premium on the insurance policy to Mr. Chua.
 In the meantime, M/V Seven Ambassador sank resulting in the loss of the VHIS’
insured logs.
 South Sea Surety and Insurance Co., Inc. cancelled the insurance policy it
issued for non-payment of the premium due.
 VHIS demanded from South Sea Surety and Insurance Co., Inc. the payment of
the proceeds of the policy but the latter denied liability under the policy.   VHIS
likewise filed a formal claim with defendant Seven Brothers Shipping
Corporation for the value of the lost logs but the latter denied the claim.
 RTC- in favor of VHIS. Ordered Seven Brothers and South Sea to pay VHIS the
value of logs and the proceeds of policy, respectively.
 CA- affirmed in part the RTC judgment by sustaining the liability of South Sea
but modified it by holding that Seven Brothers was not liable for the lost cargo.
“It appears that there is a stipulation in the charter party that the ship owner
(Seven Brothers) would be exempted from liability in case of loss. The RTC
erred in applying the provisions of the Civil Code on common carriers to
establish the liability of the shipping corporation.  The provisions on common
carriers should not be applied where the carrier is not acting as such but as a
private carrier. 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 even for the negligence of its agent is valid.”
ISSUE: Is a stipulation in a charter party that the “(o)wners (Seven Brothers) shall not
be responsible for loss, split, short-landing, breakages and any kind of damages to the
cargo” valid?  - YES, VALID.
HELD: WHEREFORE, premises considered, the petition is hereby DENIED for its utter
failure to show any reversible error on the part of Respondent Court.  The assailed
Decision is AFFIRMED.
RATIO:
 The charter party between the VHIS and Seven Brothers provided that the
“(o)wners shall not be responsible for loss, split, short-landing, breakages and any
kind of damages to the cargo.” The validity of this  stipulation is the lis mota of this
case.
 It should be noted that there is no dispute between the parties that the proximate
cause of the sinking of M/V Seven Ambassadors resulting in the loss of its
01 Transpo Compiled Digests. 3C. Atty. 20
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cargo was the “snapping of the iron chains and the subsequent rolling of the
logs to the portside due to the negligence of the captain in stowing and
securing the logs on board the vessel and not due to fortuitous event.”
Likewise undisputed is the status of Seven Brothers as a private carrier when it
contracted to transport the cargo of VHIS. 
 Thus, Article 1745 and other Civil Code provisions on common carriers which were
cited by VHIS may not be applied unless expressly stipulated by the parties in their
charter party.
 In a contract of private carriage, the parties may validly stipulate that
responsibility for the cargo rests solely on the charterer, exempting the shipowner
from liability for loss of or damage to the cargo caused even by the negligence of the
ship captain.  Pursuant to Article 1306 of the Civil Code,  such stipulation is valid
because it is freely entered into by the parties and the same is not contrary to law,
morals, good customs, public order, or public policy.  Indeed, their contract of
private carriage is not even a contract of adhesion. 
 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.
 ”…As a private carrier, a stipulation exempting the owner from liability for the
negligence of its agent is not against public policy, and is deemed valid.
 Such doctrine We find reasonable.  The Civil Code provisions on common carriers
should not be applied where the carrier is not acting as such but as a private
carrier.  The stipulation in the charter party absolving the owner from liability for
loss due to the negligence of its agent would be void only if the strict public policy
governing common carriers is applied.  Such policy has no force where the public at
large is not involved, as in this case of a ship totally chartered for the use of a single
party.”1
 The general public enters into a contract of transportation with common carriers
without a hand or a voice in the preparation thereof.  The riding public merely
adheres to the contract; even if the public wants to, it cannot submit its own
stipulations for the approval of the common carrier.  Thus, the law on common
carriers extends its protective mantle against one-sided stipulations inserted in
tickets, invoices or other documents over which the riding public has no
understanding or, worse, no choice. 
 Compared to the general public, a charterer in a contract of private carriage is not
similarly situated.  It can -- and in fact it usually does -- enter into a free and
voluntary agreement.  In practice, the parties in a contract of private carriage can
stipulate the carrier’s obligations and liabilities over the shipment which, in turn,
determine the price or consideration of the charter.  Thus, a charterer, in exchange
for convenience and economy, may opt to set aside the protection of the law on
common carriers.  When the charterer decides to exercise this option, he takes a
1 Home Insurance Co. vs. American Steamship Agencies, Inc

normal business risk.
 In fine, the respondent appellate court aptly stated that “[in the case of] a private
carrier, a stipulation exempting the owner from liability even for the negligence of
its agent is valid.”
Other Arguments
Articles 586 and 587, Code of Commerce
Petitioner Valenzuela insists that the charter party stipulation is contrary to Articles 586
and 587 of the Code of Commerce which confer on petitioner the right to recover
damages from the shipowner and ship agent for the acts or conduct of the captain.
We are not persuaded.  Whatever rights VHIS may have under the aforementioned
statutory provisions were waived when it entered into the charter party. Article 6 of the
Civil Code provides that “(r)ights may be waived, unless the waiver is contrary to law,
public order, public policy, morals, or good customs, or prejudicial to a person with a
right recognized by law.”  (7)        That the common carrier is not responsible for the loss, destruction, or
Articles 1170 and 1173, Civil Code
Petitioner likewise argues that the stipulation subject of this controversy is void for
being contrary to Articles 1170 and 1173 of the Civil Code which read:
“Art. 1170.      Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof, are
liable for damages
Art. 1173.        The fault or negligence of the obligor consists in the omission of that
diligence which is required by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place.  When negligence shows bad
faith, the provisions of articles 1171 and 2201, shall apply.
If the law does not state the diligence which is to be observed in the performance, that
which is expected of a good father of a family shall be required.”
The Court notes that the foregoing articles are applicable only to the obligor or the one
with an obligation to perform.  In the instant case, Seven Brothers is not an obligor in
respect of the cargo, for this obligation to bear the loss was shifted to VHIS by virtue of
the charter party.  This shifting of responsibility, as earlier observed, is not void.  HELD: MV Vlasons I (VSI’s vessel) is a private carrier. The true test of a common
Effect of the South Sea Resolution
An aggrieved party may still recover the deficiency from the person causing the loss in
the event the amount paid by the insurance company does not fully cover the loss.  undertaken by special agreement and the carrier does not hold himself out to carry
Article 2207 of the Civil Code provides:
“ART. 2207.  If the plaintiff’s property has been insured, and he has received indemnity
from the insurance company for the injury or loss arising out of the wrong or breach of
contract complained of, the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the contract.  If the
amount paid by the insurance company does not fully cover the injury or loss, the
aggrieved party shall be entitled to recover the deficiency from the person causing the
loss or injury.”
Reference:
Art 1745 of Civil Code.
“Art. 1745.      Any of the following or similar stipulations shall be considered
01 Transpo Compiled Digests. 3C. Atty. 21
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unreasonable, unjust and contrary to public policy:
(1)        That the goods are transported at the risk of the owner or shipper;
(2)        That the common carrier will not be liable for any loss, destruction, or
deterioration of the goods;
(3)        That the common carrier need not observe any diligence in the custody of the
goods;
(4)        That the common carrier shall exercise a degree of diligence less than that of a
good father of a family, or of a man of ordinary prudence in the vigilance over the
movables transported;
(5)        That the common carrier shall not be responsible for the acts or omissions of his
or its employees;
(6)        That the common carrier’s liability for acts committed by thieves, or of robbers
who do not act with grave or irresistible threat, violence or force, is dispensed with or
diminished;
deterioration of goods on account of the defective condition of the car, vehicle, ship,
airplane or other equipment used in the contract of carriage.”
NATIONAL STEEL CORP V. CA – MUTI
NATIONAL STEEL CORP. vs. CA, G.R. No. 112287, Dec. 12, 1997.
ER: NSC is the shipper and VSI is the carrier. Steel products (skids of tinplates and hot
rolled sheets) are to be transported from Iligan to Manila. Upon arrival of the vessel, the
products were wet and rusty. NSC filed a complaint for damages claiming lack of due
diligence on the part of VSI to make the vessel seaworthy. VSI denied liability claiming
that the vessel was seaworthy and she was not a common carrier inasmuch as she was
under voyage charter contract.
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 above test is deemed a private carrier. “Generally, private carriage is
goods for the general public.” Because the vessel was a private carrier, the ship owner’s
obligations are governed by the 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. Pursuant to the Code of Commerce and the parties’ agreement, the
burden of proof is placed on NSC, the shipper.
Facts: (long case, tried my best to shorten it)
 National Steel Corporation (NSC) as Charterer and Vlasons Shipping, Inc. (VSI) as
Owner, entered into a Contract of Voyage Charter Hire whereby NSC hired VSI’s
vessel, the MV ‘VLASONS I’ to make voyage to load steel products at Iligan City and
discharge them at North Harbor, Manila. Among the conditions are:

o Freight/Payment:  P30.00 /metric ton, FIOST basis.
o Demurrage/Dispatch:  P8,000.00/P4,000.00 per day.
o Other terms:(a)  All terms/conditions of NONYAZAI C/P or other
internationally recognized Charter Party Agreement shall form part of this
Contract.
 The terms ‘F.I.O.S.T.’ which is used in the shipping business is a standard provision
in the NANYOZAI Charter Party which stands for ‘Freight In and Out including
Stevedoring and Trading’, which means that the handling, loading and unloading of
the cargoes are the responsibility of the Charterer.  .
 The vessel arrived in its destination and on 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.  topic.)
 The cargo was discharged and unloaded by stevedores hired by the NSC. Unloading
was completed only after incurring a delay of eleven (11) days due to the heavy
rain which interrupted the unloading operations.  Ratio:
 NSC filed its complaint against VSI claiming that
o it sustained losses as a result of the act, neglect and default of the master
and crew in the management of the vessel as well as the want of due
diligence on the part of the VSI to make the vessel seaworthy and to make
the holds and all other parts of the vessel in which the cargo was carried,
fit and safe for its reception, carriage and preservation  
 VSI denied liability for the alleged damage claiming that
o the vessel was seaworthy and was not a ‘common carrier’ inasmuch as she
was under voyage charter contract with VSI as charterer under the
charter party. It also filed counterclaim for the payment of the agreed
charter hire and demurrage fee.
 TRIAL COURT in favor of VSI. Among its findings are:
o The vessel was seaworthy, properly manned, equipped and supplied, and
that there is no proof of willful negligence of the vessel’s officers.
o The rusting of NSC’s tinplates was due to the inherent nature or character
of the goods and not due to contact with seawater.
o The stevedores hired by NSC were negligent in the unloading of NSC’s
shipment.
o VSI is exempted from liability on the ground of force majeure.
o NSC violated the contract of voyage charter hire.
 CA modified the decision of the trial court by reducing the demurrage and deleting
the award of attorneys fees and expenses of litigation.  NSC and VSI filed separate
motions for reconsideration which were denied. Hence, these consolidated
petitions for review before this Court
01 Transpo Compiled Digests. 3C. Atty. 22
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Issues:
MAIN ISSUE: Whether MV ‘VLASONS I’ is a common carrier or a private carrier.
PRIVATE CARRIER!
o Whether or not the provisions of the Civil Code on common carriers pursuant
to which there exists a presumption of negligence against the common carrier
in case of loss or damage to the cargo are applicable to a private carrier. NO!
o Whether or not the terms and conditions of the Contract of Voyage Charter
Hire, including the Nanyozai Charter, are valid and binding on both contracting
parties.” YES!
(There are so many issues in the case but I only chose those which are relevant to our
Common Carrier or Private Carrier?
 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 above
test is deemed a private carrier. 
“Generally, private carriage is undertaken by special agreement and the carrier
does not hold himself out to carry goods for the general public.  The most typical,
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.” 
 In the instant case, it is undisputed that 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.” As correctly concluded by CA, 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. CA, the Court ruled:
o “ x x x 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.”

Extent of VSI’s Responsibility and Liability Over NSC’s Cargo
 It is clear from the parties’ Contract of Voyage Charter Hire that 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.”
Burden of Proof
 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.
 This view finds further support in the Code of Commerce which pertinently
provides:
o “Art. 361.  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.”
o “Art. 362.  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.”
 Because 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.  It is a hornbook doctrine that:
o “In an action against a private carrier for loss of, or injury to, cargo, the
burden is on the plaintiff to prove that the carrier was negligent or
unseaworthy, and the fact that the goods were lost or damaged while in
the carrier’s custody does not put the burden of proof on the carrier.
 However, in discharging the burden of proof, plaintiff is entitled to the benefit of the
presumptions and inferences by which the law aids the bailor in an action against a
bailee, and since the carrier is in a better position to know the cause of the loss and
01 Transpo Compiled Digests. 3C. Atty. 23
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that it was not one involving its liability, the law requires that it come forward with
the information available to it, and its failure to do so warrants an inference or
presumption of its liability. However, such inferences and presumptions, while they
may affect the burden of coming forward with evidence, do not alter the burden of
proof which remains on plaintiff, and, where the carrier comes forward with
evidence explaining the loss or damage, the burden of going forward with the
evidence is again on plaintiff.
 Where the action is based on the shipowner’s warranty of seaworthiness, the
burden of proving a breach thereof and that such breach was the proximate cause
of the damage rests on plaintiff, and proof that the goods were lost or damaged
while in the carrier’s possession does not cast on it the burden of proving
seaworthiness. x x x Where the contract of carriage exempts the carrier from
liability for unseaworthiness not discoverable by due diligence, the carrier has the
preliminary burden of proving the exercise of due diligence to make the vessel
seaworthy.”
OTHER FINDINGS AND DOCTRINES (Court’s pronouncements on issues not related to our
topic, in case you are bitin from what you read so far..)
 The records reveal that VSI exercised due diligence to make the ship seaworthy and
fit for the carriage of NSC’s cargo of steel and tinplates.  The Philippine Coast Guard
Station in Cebu cleared it as seaworthy, fitted and  equipped; it met all
requirements for trading as cargo vessel.
 NSC failed to discharge its burden to show negligence on the part of the officers and
the crew of MV Vlasons I.  The records reveal that it was the stevedores of NSC who
were negligent in unloading the cargo from the ship. The stevedores employed only
a tent-like material to cover the hatches when strong rains occasioned by a passing
typhoon disrupted the unloading of the cargo.  This tent-like covering, however,
was clearly inadequate for keeping rain.
 NSC’s failure to insure the cargo will not affect its right, as owner and real party in
interest, to file an action against VSI for damages caused by the latter’s willful
negligence. 
 Assailing the genuineness of the certificate of seaworthiness is not sufficient proof
that the vessel was not seaworthy.
 The Court defined demurrage in its strict sense as the compensation provided for in
the contract of affreightment for the detention of the vessel beyond the laytime or
that period of time agreed on for loading and unloading of cargo.
o In this case, the contract of voyage charter hire provided for a four-day
laytime; it also qualified laytime as WWDSHINC or weather working days
Sundays and holidays included. Consequently, NSC may not be held liable
for demurrage as the four-day laytime allowed it did not lapse, having
been tolled by unfavorable weather condition in view of the WWDSHINC
qualification agreed upon by the parties. 
WHEREFORE, premises considered, the instant consolidated petitions are hereby DENIED. 

The questioned Decision of the Court of Appeals is AFFIRMED with the MODIFICATION that
the demurrage awarded to VSI is deleted.  No pronouncement as to costs.
FGU INSURANCE V. GP SARMIENTO – NARVASA
FGU Insurance Corp. vs. GP Sarmiento Trucking Corp. Narvasa
ER:
Trucking corp. contracted to deliver 30 refrigerators from Alabang to Dagupan. In
McArthur Highway, it collided with a truck and fell into a canal damaging the refs.
Insurance Corp, paid to Conception Industries the value of the cargo. And as subrogee
sought reimbursement from the Trucking corp and filed a complaint for breach of
contract of carriage and damages.
Trial Court and CA dismissed because Insurance co. didn’t prove trucking co. was a
common carrier.
W/N trucking co. is a common carrier?
GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc.,
rendering or offering its services to no other individual or entity, cannot be
considered a common carrier.
Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water,
or air, for hire or compensation, offering their services to the public, whether to
the public in general or to a limited clientele in particular, but never on an
exclusive basis.
Nevertheless, Trucking corp. is liable for breach of contract of carriage.
A default on, or failure of compliance with, the obligation – in this case, the delivery
of the goods in its custody to the place of destination - gives rise to a presumption of
lack of care and corresponding liability on the part of the contractual obligor the
burden being on him to establish otherwise.
In culpa contractual, the mere proof of the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding right of relief.
The law, recognizing the obligatory force of contracts, will not permit a party to be set
free from liability for any kind of misperformance of the contractual undertaking or a
contravention of the tenor thereof.
Facts:
 G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver thirty (30) units of
Condura S.D. white refrigerators.
01 Transpo Compiled Digests. 3C. Atty. 24
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 Using one of its Isuzu truck from the plant site of Concepcion Industries, Inc., along
South Superhighway in Alabang, Metro Manila, to the Central Luzon Appliances in
Dagupan City.
o Driven by Lambert Eroles.
 While the truck was traversing the north diversion road along McArthur highway in
Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal,
resulting in damage to the cargoes.
 FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion
Industries, Inc., the value of the covered cargoes in the sum of P204,450.00.
 FGU, in turn, being the subrogee of the rights and interests of Concepcion
Industries, Inc., sought reimbursement of the amount it had paid to the latter from
GPS.
o Since the trucking company failed to heed the claim, FGU filed a complaint
for damages and breach of contract of carriage against GPS and its driver
Lambert Eroles.
 In its answer, respondents asserted that GPS was the exclusive hauler only of
Concepcion Industries, Inc., since 1988, and it was not so engaged in business as a
common carrier.
 GPS, instead of submitting its evidence, filed with leave of court a motion to dismiss
the complaint by way of demurrer to evidence on the ground that petitioner had
failed to prove that it was a common carrier.
 TC: Granted the motion to dismiss due to Section 1 of Rule 131 of the Rules of
Court, it is provided that ‘Each party must prove his own affirmative allegation, xxx.’
o In the instant case, plaintiff did not present any single evidence that would
prove that defendant is a common carrier.
o the application of the law on common carriers is not warranted and the
presumption of fault or negligence on the part of a common carrier in case
of loss, damage or deterioration of goods during transport under 1735 of
the Civil Code is not availing.
o Therefore the law that governs is the laws on obligation and contract of
the Civil Code as well as the law on quasi delicts.
 “Under the law on obligation and contract, negligence or fault is not presumed. The
law on quasi delict provides for some presumption of negligence but only upon the
attendance of some circumstances. Thus, Article 2185 provides:
o ‘Art. 2185. Unless there is proof to the contrary, it is presumed that a
person driving a motor vehicle has been negligent if at the time of the
mishap, he was violating any traffic regulation.’
o “Evidence for the plaintiff shows no proof that defendant was violating
any traffic regulation. Hence, the presumption of negligence is not
obtaining.
 CA: Affirmed TC
o the appellant must first prove that the appellee is a common carrier.
Should the appellant fail to prove that the appellee is a common carrier,
the presumption would not arise; consequently, the appellant would have
to prove that the carrier was negligent.

Issues:
WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIER AS
DEFINED UNDER THE LAW AND EXISTING JURISPRUDENCE. NO.
WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE
CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN THE GOODS IT
UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN ITS
PROTECTIVE CUSTODY AND POSSESSION. YES, as private carrier.
WHETHER RES IPSA LOQUITUR APPLIES. NO.
Held: The truck driver is not liable, but the trucking co. is ordered to pay insurance co.
I.
 GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc.,
rendering or offering its services to no other individual or entity, cannot be
considered a common carrier.
o Common carriers are persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers or goods or both,
by land, water, or air, for hire or compensation, offering their services to
the public, whether to the public in general or to a limited clientele in
particular, but never on an exclusive basis.
o The true test of a common carrier is the carriage of passengers or goods,
providing space for those who opt to avail themselves of its transportation
service for a fee.
o Given accepted standards, GPS doesn’t fall within the term “common
carrier.”
II.
 The above conclusion nothwithstanding, GPS cannot escape from liability.
 In culpa contractual, the mere proof of the existence of the contract and the failure
of its compliance justify, prima facie, a corresponding right of relief.
o The law, recognizing the obligatory force of contracts, will not permit a
party to be set free from liability for any kind of misperformance of the
contractual undertaking or a contravention of the tenor thereof.
o A breach upon the contract confers upon the injured party a valid cause
for recovering that may have been lost or suffered.
o The remedy serves to preserve the interests of the promisee that may
include:
 “expectation interest,” which is his interest in having the benefit
of his bargain by being put in as good a position as he would
have been in had the contract been performed, or
 his “reliance interest,” which is his interest in being reimbursed
for loss caused by reliance on the contract by being put in as
01 Transpo Compiled Digests. 3C. Atty. 25
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good a position as he would have been in had the contract not
been made; or
 his “restitution interest,” which is his interest in having restored
to him any benefit that he has conferred on the other party.
 The effect of every infraction is to create a new duty, that is, to make recompense to
the one who has been injured by the failure of another to observe his contractual
obligation unless he can show extenuating circumstances, like proof of his exercise
of due diligence or of the attendance of fortuitous event, to excuse him from his
ensuing liability.
Applied to the case
 Respondent trucking corporation recognizes the existence of a contract of carriage
between it and petitioner’s assured, and admits that the cargoes it has assumed to
deliver have been lost or damaged while in its custody.
 A default on, or failure of compliance with, the obligation – in this case, the
delivery of the goods in its custody to the place of destination - gives rise to a
presumption of lack of care and corresponding liability on the part of the
contractual obligor the burden being on him to establish otherwise. GPS has
failed to do so.
 Respondent driver, on the other hand, without concrete proof of his negligence or
fault, may not himself be ordered to pay petitioner.
o The driver, not being a party to the contract of carriage between
petitioner’s principal and defendant, may not be held liable under the
agreement.
III. Res Ipsa Loquitur
 Res ipsa loquitur, a doctrine being invoked by petitioner, holds a defendant liable
where the thing which caused the injury complained of is shown to be under the
latter’s management and the accident is such that, in the ordinary course of things,
cannot be expected to happen if those who have its management or control use
proper care.
o It affords reasonable evidence, in the absence of explanation by the
defendant, that the accident arose from want of care.
o It is not a rule of substantive law and, as such, it does not create an
independent ground of liability—it is a procedural tool.
o Resort to the doctrine, however, may be allowed only when (a) the event
is of a kind which does not ordinarily occur in the absence of negligence;
(b) other responsible causes, including the conduct of the plaintiff and
third persons, are sufficiently eliminated by the evidence; and (c) the
indicated negligence is within the scope of the defendant's duty to the
plaintiff
 Not applicable when an unexplained accident may be attributable to one of several
causes, for some of which the defendant could not be responsible.[22]
 For doctrine to apply, should be understood as being confined only to cases of
pure (non-contractual) tort since obviously the presumption of negligence in
culpa contractual, as previously so pointed out, immediately attaches by a failure of
the covenant or its tenor.

 In the case of the truck driver, it is not equally shown, however, that the accident
could have been exclusively due to his negligence, a matter that can allow,
forthwith, res ipsa loquitur to work against him.
LOADSTAR SHIPPING V. CA – PEREZ DE TAGLE
LOADSTAR SHIPPING CO., INC., petitioner, vs. COURT OF APPEALS and THE MANILA
INSURANCE CO., INC., respondents.
ER:
 LOADSTAR received goods (Manila Insurance aka MIC) on board its vessel (PGAI).
Subsequently the vessel sank.
 LOADSTAR collected insurance on account of the loss of goods.
 MIC filed a complaint against LOADSTAR and the other insurer (PGAI) for
negligence resulting in the vessel’s sinking. The court a quo and the CA ruled in
favor of MIC.
 Court found that LOADSTAR is a common carrier and that it did not exercise the
proper due diligence. (see ratio)
Facts:
 1984, LOADSTAR received on board its M/V “Cherokee” (hereafter, the vessel) the
following goods
o lawanit hardwood
o tilewood assemblies and others
o mouldings R & W (3) Apitong Bolidenized.
 Both the goods (Manila Insurance) and the vessel (Prudential) were insured.
 On its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along
with its cargo, sank off Limasawa Island.
 The consignee made a claim with LOADSTAR which, however, ignored the same. As
the insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and
the latter executed a subrogation receipt therefor.
 1985, MIC filed a complaint against LOADSTAR and PGAI, alleging that the sinking
of the vessel was due to the fault and negligence of LOADSTAR and its employees.
 The court a quo rendered judgment in favor of MIC, prompting LOADSTAR to
elevate the matter to the Court of Appeals, which, however, agreed with the trial
court and affirmed its decision in toto.
Issues:
1. Is the M/V “Cherokee” a private or a common carrier? (Common Carrier)
2. Did LOADSTAR observe due and/or ordinary diligence in these premises? (No)
Held:
01 Transpo Compiled Digests. 3C. Atty. 26
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WHEREFORE, the instant petition is DENIED and the challenged decision of 30 January
1997 of the Court of Appeals in CA-G.R. CV No. 36401 is AFFIRMED. Costs against
petitioner.
Ratio:
Issue 1 – LOADSTAR is a COMMON CARRIER
 LOADSTAR is a common carrier. It is not necessary that the carrier be issued a
certificate of public convenience, and this public character is not altered by the fact
that the carriage of the goods in question was periodic, occasional, episodic or
unscheduled.
 LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship
Agencies, Inc., where this Court held that a common carrier transporting special
cargo or chartering the vessel to a special person becomes a private carrier that is
not subject to the provisions of the Civil Code
o The records do not disclose that the M/V “Cherokee,” on the date in
question, undertook to carry a special cargo or was chartered to a special
person only.
o There was no charter party. The bills of lading failed to show any special
arrangement, but only a general provision to the effect that the M/V
“Cherokee” was a “general cargo carrier.”
o Further, the bare fact that the vessel was carrying a particular type of
cargo for one shipper, which appears to be purely coincidental, is not
reason enough to convert the vessel from a common to a private carrier,
especially where, as in this case, it was shown that the vessel was also
carrying passengers.
 Moreover, Article 1732 makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such carrying
only as an ancillary activity. Article 1732 also carefully avoids making any
distinction between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis.
 Neither does Article 1732 distinguish between a carrier offering its services to the
“general public,” i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of the generalpopulation.
 The Court of Appeals referred to the fact that private respondent held no certificate
of public convenience, and concluded he was not a common carrier. This is palpable
error
o A certificate of public convenience is not a requisite for the incurring of
liability under the Civil Code provisions governing common carriers. That
liability arises the moment a person or firm acts as a common carrier,
without regard to whether or not such carrier has also complied with the
requirements of the applicable regulatory statute and implementing
regulations and has been granted a certificate of public convenience or
other franchise.
o To exempt private respondent from the liabilities of a common carrier

because he has not secured the necessary certificate of public
convenience, would be offensive to sound public policy; that would be to
reward private respondent precisely for failing to comply with applicable
statutory requirements.
Issue 2 – LOADSTAR did not exercise proper due diligence
 The M/V “Cherokee” was not seaworthy when it embarked on its voyage on 19
November 1984
o The failure of a common carrier to maintain in seaworthy condition its
vessel involved in a contract of carriage is a clear breach of its duty
prescribed in Article 1755 of the Civil Code.
 LOADSTAR also claims that the Court of Appeals erred in holding it liable for the
loss of the goods, in utter disregard of this Court’s pronouncements in St. Paul Fire
& Marine Ins. Co. v. Macondray & Co., Inc.,[18] and National Union Fire Insurance v.
Stolt-Nielsen Phils., Inc. It was ruled in these two cases that after paying the claim of
the insured for damages under the insurance policy, the insurer is subrogated
merely to the rights of the assured, that is, it can recover only the amount that may,
in turn, be recovered by the latter. Since the right of the assured in case of loss or
damage to the goods is limited or restricted by the provisions in the bills of lading, a
suit by the insurer as subrogee is necessarily subject to the same limitations and
restrictions.
o We do not agree.
o The stipulation in the case at bar effectively reduces the common carrier’s
liability for the loss or destruction of the goods to a degree less than
extraordinary (Articles 1744 and 1745), that is, the carrier is not liable for
any loss or damage to shipments made at “owner’s risk.” Such stipulation
is obviously null and void for being contrary to public policy
o Since the stipulation in question is null and void, it follows that when MIC
paid the shipper, it was subrogated to all the rights which the latter has
against the common carrier, LOADSTAR.
ARADA V. CA – RAZON
ALEJANDRO ARADA, doing business under the name and style "SOUTH NEGROS
ENTERPRISES", petitioner, vs. Hon. Court of Appeals, respondents.
Keyword: M/L Maya carrying san Miguel beer empties; sunk due to storm
Topic: Common Carrier
Date: July 1, 1992
Ponente: Paras
EMERGENCY DIGEST: Alejandro Arada was the proprietor and operator of a firm
engaged in the business of small scale shipping as a common carrier, servicing the
hauling of cargoes of different corporations and companies with the five (5) vessels it
was operating. He entered into contract with San Miguel Corporation to safely transport
01 Transpo Compiled Digests. 3C. Atty. 27
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as a common carrier, cargoes of the latter from San Carlos City, Negros Occidental to
Mandaue City using one of his vessels, M/L Maya. The cargoes consisted of 9,824 cases
of beer empties valued at P176,824.80.
On March 24, 1982, M/L Maya was not cleared by Philippine Coast Guard to leave the
port of San Carlos City, due to a typhoon. On March 25, it was given clearance as there
was no storm and the sea was calm. However, while it was navigating, a typhoon
developed, and destroyed the vessel and eventually sank with all the cargoes in it. The
crew was rescued and the master filed the marine protest. The Board of Marine Inquiry
conducted investigation, and recommended exoneration of the crew members.
Philippine Coast Guard rendered decision, exonerating the crew and owners of the
vessel M/L Maya from any administrative liability.
Thereafter, San Miguel Corporation filed a complaint in the Regional Trial Court its first
cause of action being for the recovery of the value of the cargoes anchored on breach of
contract of carriage. RTC rendered decision in favor of Arada, dismissing claim of San
Miguel for recovery of value of cargoes. On appeal to CA, the court reversed and held
Arada liable for the value of the lost cargoes. Arada appealed to SC.
The Court held Arada liable as a common carrier, for the value of the cargoes of San
Miguel Corporation for its failure to exercise extraordinary diligence required of it in
vigilance of the goods loaded to it.
COMPLETE DIGEST:
 Alejandro Arada, is the proprietor and operator of the firm South Negros
Enterprises which has been organized and established for more than ten (10) years.
It is engaged in the business of small scale shipping as a common carrier, servicing
the hauling of cargoes of different corporations and companies with the five (5)
vessels it was operating.
 On March 24, 1982. Arada entered into a contract with San Miguel Corporation to
safely transport as a common carrier, cargoes of the latter from San Carlos City,
Negros Occidental to Mandaue City using one of petitioner's vessels, M/L Maya. The
cargoes consisted of 9,824 cases of beer empties valued at P176,824.80, These were
itemized.
 On March 24, 1982, Arada thru its crew master, Mr. Vivencio Babao, applied for a
clearance with the Philippine Coast Guard for M/L Maya to leave the port of San
Carlos City, but due to a typhoon, it was denied clearance by SNI Antonio Prestado
PN who was then assigned at San Carlos City Coast Guard Detachment.
 On March 25, 1982 M/L Maya was given clearance as there was no storm and the
sea was calm. Hence, said vessel left for Mandaue City. While it was navigating
towards Cebu, a typhoon developed and said vessel was buffeted on all its sides by
big waves. Its rudder was destroyed and it drifted for sixteen (16) hours although
its engine was running.
 On March 27, 1982 at about 4:00 a.m., the vessel sank with whatever was left of its
cargoes. The crew was rescued by a passing pump boat and was brought to

Calanggaman Island. Later in the afternoon, they were brought to Palompon, Leyte,
where Vivencio Babao filed a marine protest.
 On the basis of such marine protest, the Board of Marine Inquiry conducted a
hearing of the sinking of M/L Maya wherein San Miguel Corporation was duly
represented. Said Board made its findings and recommendation dated November 7,
1983 that the owner/operator, officers and crew of M/L Maya be exonerated or
absolved from any administrative liability on account of the incident.
 The Board's report containing its findings and recommendation was then
forwarded to the headquarters of the Philippine Coast Guard for appropriate action.
On the basis of such report, the Commandant of the Philippine Coast Guard
rendered a decision dated December 21, 1984 in SBMI Adm. Case No. 88-82
exonerating the owner/operator officers and crew of the ill-fated M/L Maya from
any administrative liability on account of said incident.
 On March 25, 1983, San Miguel filed a complaint in the Regional Trial Court its first
cause of action being for the recovery of the value of the cargoes anchored on
breach of contract of carriage.
 RTC ruled in favor of Arada. CA reversed.
ISSUE: Whether or not Arada is liable as common carrier? YES.
HELD: Petition dismissed.
RATIO:
 In the case at bar, there is no doubt that petitioner Arada was exercising its
function as a common carrier when it entered into a contract with private
respondent San Miguel to carry and transport the latter's cargoes. This fact is
best supported by the admission of petitioner's son, Mr. Eric Arada, who
testified as the officer-in-charge for operations of South Negros Enterprises in
Cebu City.
 A common carrier, both from the nature of its business and for insistent
reasons of public policy is burdened by law with the duty of exercising
extraordinary diligence not only in ensuring the safety of passengers, but in
caring for the goods transported by it. The loss or destruction or deterioration
of goods turned over to the common carrier for the conveyance to a designated
destination raises instantly a presumption of fault or negligence on the part of
the carrier, save only where such loss, destruction or damage arises from
extreme circumstances such as a natural disaster or calamity.
 In order that the common carrier may be exempted from responsibility, the
natural disaster must have been the proximate and only cause of the loss.
However, the common carrier must exercise due diligence to prevent or
minimize the loss before, during and after the occurrence of flood, storm or
other natural disaster in order that the common carrier may be exempted from
liability for the destruction or deterioration of the goods.
 In the instant case, the appellate court was correct in finding that petitioner
failed to observe the extraordinary diligence over the cargo in question and he
or the master in his employ was negligent previous to the sinking of the
carrying vessel.
01 Transpo Compiled Digests. 3C. Atty. 28
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 It will be noted that Vivencio Babao knew of the impending typhoon on March
24, 1982 when the Philippine Coast Guard denied M/L Maya the issuance of a
clearance to sail. Less than 24 hours elapsed since the time of the denial of said
clearance and the time a clearance to sail was finally issued on March 25, 1982.
Records will show that Babao did not ascertain where the typhoon was headed
by the use of his vessel's barometer and radio. Neither did the captain of the
vessel monitor and record the weather conditions everyday as required by Art,
612 of the Code of Commerce. Had he done so while navigating for 31 hours, he
could have anticipated the strong winds and big waves and taken shelter.
 A common carrier is obliged to observe extraordinary diligence and the failure
of Babao to ascertain the direction of the storm and the weather condition of
the path they would be traversing, constitute lack of foresight and minimum
vigilance over its cargoes taking into account the surrounding circumstances of
the case.
 While the goods are in the possession of the carrier, it is but fair that it
exercises extraordinary diligence in protecting them from loss or damage, and
if loss occurs, the law presumes that it was due to the carrier's fault or
negligence; that is necessary to protect the interest of the shipper which is at
the mercy of the carrier.
 Furthermore, the records show that the crew of M/L Maya did not have the
required qualifications provided for in P.D. No. 97 or the Philippine Merchant
Marine Officers Law, all of whom were unlicensed. While it is true that they
were given special permit to man the vessel, such permit was issued at the risk
and responsibility of the owner.
 Finally, petitioner claims that the factual findings of the Special Board of
Marine Inquiry exonerating the owner/operator, crew officers of the ill-fated
vessel M/L Maya from any administrative liability is binding on the court.
 In rejecting petitioner's claim, respondent court was correct in ruling that
"such exoneration was but with respect to the administrative liability of the
owner/operator, officers and crew of the ill-fated" vessel. It could not have
meant exoneration of appellee from liability as a common carrier for his failure
to observe extraordinary diligence in the vigilance over the goods it was
transporting and for the negligent acts or omissions of his employees. Such is
the function of the Court, not the Special Board of Marine Inquiry."
EASTERN SHIPPING V. CA – SANTOS
Eastern Shipping v. CA (1991)
EASTERN SHIPPING LINES, INC., vs. CA and THE FIRST NATIONWIDE ASSURANCE
CORPORATION
 ER:
1. Eastern Shipping’s ship Japri Venture delivered goods from Kobe Japan to Manila.

2. The cargo (coils of uncoated 7-wire stress relieved wire strand for prestressed
concrete) was insured by FNAC.
3. The cargo was damaged, thus FNAC indemnified the consignee for damage and loss
to the insure cargo.
4. FNAC filed a case against EASTERN SHIPPING to get what they paid.
5. RTC DISMISSED their complaint. CA REVERSED and ordered EASTERN SHIPPING
TO PAY. EASTERN SHIPPING APPEALS to SC.
6. SC - the heavy seas and rains referred to in the master's report were not caso
fortuito, but normal occurrences that an ocean-going vessel, particularly in the
month of September which, in our area, is a month of rains and heavy seas would
encounter as a matter of routine. They are not unforeseen nor unforeseeable. These
are conditions that ocean-going vessels would encounter and provide for, in the
ordinary course of a voyage. That rain water (not sea water) found its way into the
holds of the Jupri Venture is a clear indication that care and foresight did not attend
the closing of the ship's hatches so that rain water would not find its way into the
cargo holds of the ship.
7. Moreover, under Article 1733 of the Civil Code, common carriers are bound to
observe "extra-ordinary vigilance over goods . . . .according to all circumstances of
each case," and Article 1735 of the same Code states, to wit:
8. Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the
preceding article, if the goods are lost, destroyed or deteriorated, common carriers
are presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as required in article 1733.
9. Since the carrier has failed to establish any  caso fortuito, the presumption by
law of fault or negligence on the part of the carrier applies; and the carrier
must present evidence that it has observed the extraordinary diligence
required by Article 1733 of the Civil Code in order to escape liability for
damage or destruction to the goods that it had admittedly carried in this case.
No such evidence exists of record. Thus, the carrier cannot escape liability
FACTS:
 The extent of the liability of the common carrier and its insurer for damage to the
cargo upon its delivery to the arrastre operator is the center of this controversy.
 Thirteen (13) coils of uncoated 7-wire stress relieved wire strand for prestressed
concrete were shipped on board the vessel "Japri Venture," owned and operated by
Eastern Shipping Lines, Inc. (EASTERN SHIPPING).
 These were insured First Nationwide Assurance Corporation (FNAC)
 The carrying vessel arrived in Manila and discharged the cargo to the custody of E.
Razon, Inc. from whom the consignee's customs broker received it for delivery to
the consignee's warehouse.
 FNAC indemnified the consignee for damage and loss to the insured cargo,
whereupon FNAC was subrogated for the latter.
01 Transpo Compiled Digests. 3C. Atty. 29
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 FNAC now seeks to recover from EASTERN SHIPPING what it has indemnified the
consignee, less, the salvage value of the cargo.
 It appears that while enroute from Kobe to Manila, the carrying vessel
"encountered very rough seas and stormy weather" for three days, more or less,
which caused it to roll and pound heavily, moving its master to execute a marine
note of protest upon arrival at the port of Manila.
 That the coils wrapped in burlap cloth and cardboard paper were stored in the
lower hold of the hatch of the vessel which was flooded with water about one foot
deep; that the water entered the hatch when the vessel encountered heavy weather
enroute to Manila.
 that upon request, a survey of bad order cargo was conducted at the pier in the
presence of the representatives of the consignee and E. Razon, Inc. and it was found
that seven coils were rusty on one side each; that upon survey conducted at the
consignee's warehouse it was found that the "wetting (of the cargo) was caused by
fresh water" that entered the hatch when the vessel encountered heavy weather
enroute to Manila; and that all thirteen coils were extremely rusty and totally
unsuitable for the intended purpose.
 The complaint that was filed by FNAC (insurer) against EASTERN SHIPPING. and E.
Razon, Inc., in the RTC of Manila, was dismissed.
 An appeal therefrom was interposed by the insurer to the CA: EASTERN SHIPPING
and E. RAZON was ordered to pay FNAC.
 Only Eastern Shipping Lines, Inc. filed this petition for review by certiorari.
ISSUE: WON Eastern shipping should be liable for the goods? - YES
HELD: DISMISSED.
RATIO:
 EASTERN SHIPPING claims it should not be held liable as the shipment was
discharged and delivered complete into the custody of the arrastre operator under
clean tally sheets.
 While it is true the cargo was delivered to the arrastre operator in apparent good
order condition, it is also undisputed that while en route from Kobe to Manila, the
vessel encountered "very rough seas and stormy weather", the coils wrapped in
burlap cloth and cardboard paper were stored in the lower hatch of the vessel
which was flooded with water about one foot deep; that the water entered the
hatch; that a survey of bad order cargo which was conducted in the pier in the
presence of representatives of the consignee and E. Razon, Inc., showed that seven
coils were rusty on one side; that a survey conducted at the consignee's warehouse
also showed that the "wetting (of the cargo) was caused by fresh water" that
entered the hatch when the vessel encountered heavy rain en route to Manila and
that all thirteen coils were extremely rusty and totally unsuitable for the intended
purpose.
 Consequently, based on these facts, the appellate court made the following findings
and conclusions:

Plainly, the heavy seas and rains referred to in the master's report were
not caso fortuito, but normal occurrences that an ocean-going vessel,
particularly in the month of September which, in our area, is a month of
rains and heavy seas would encounter as a matter of routine. They are not
unforeseen nor unforeseeable. These are conditions that ocean-going
vessels would encounter and provide for, in the ordinary course of a
voyage. That rain water (not sea water) found its way into the holds of the
Jupri Venture is a clear indication that care and foresight did not attend the
closing of the ship's hatches so that rain water would not find its way into
the cargo holds of the ship.
Moreover, under Article 1733 of the Civil Code, common carriers are
bound to observe "extra-ordinary vigilance over goods . . . .according to all
circumstances of each case," and Article 1735 of the same Code states, to
wit:
Art. 1735. In all cases other than those mentioned in
Nos. 1, 2, 3, 4, and 5 of the preceding article, if the
goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed
extraordinary diligence as required in article 1733.
Since the carrier has failed to establish any caso fortuito, the presumption
by law of fault or negligence on the part of the carrier applies; and the
carrier must present evidence that it has observed the extraordinary
diligence required by Article 1733 of the Civil Code in order to escape
liability for damage or destruction to the goods that it had admittedly
carried in this case. No such evidence exists of record. Thus, the carrier
cannot escape liability.
 The Court agrees with and is bound by the foregoing findings of fact made by the
appellate court.
 The presumption, therefore, that the cargo was in apparent good condition when it
was delivered by the vessel to the arrastre operator by the clean tally sheets has
been overturned and traversed.
 The evidence is clear to the effect that the damage to the cargo was suffered while
aboard EASTERN SHIPPING's vessel.
DELSAN V. CA – SUPERABLE
DELSAN TRANSPORT LINES, INC. v CA; November 15, 2001 (NONS)
KEYWORD: sinking of ship in Panay gulf
DIVISION: Second Division
PONENTE: De Leon, Jr.
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EMERGENCY RECIT
 Caltex contracted Delsan to transport oil from Batangas-Bataan refinery to Caltex
Oil Terminal in Zamboanga City. The ship contracted to transport the oil, MT
Maysun, sank on the Panay Gulf, carrying 2k kiloliter of oil.
 American Home Assurance, Caltex’s insurer, paid Caltex the value of the oil lost and
was subrogated to Caltex’s rights against Delsan. AHA demanded payment from
Delsan.
 Delsan failed to pay so AHA instituted a collection for sum of money case against
Delsan in the Makati RTC.
 The RTC ruled in favor of Delsan, believing its claims that the ship is seaworthy per
the coast guard certification and the testimony of its captain and first mate that the
ship sank due to strong winds and huge waves.
 On appeal, the CA reversed the RTC ruling. It believed the PAGASA report stating
that the weather was calm and there were no huge waves at the time the ship sank.
 ISSUE: Whether Delsan can claim force majeure to evade liability as a common
carrier. HELD: NO! There is no force majeure and the ship was not seaworthy.
 The tale of strong winds and big waves by Jarabe and Berina was effectively
rebutted and belied by the weather report from PAGASA. MT Maysun, sank with its
entire cargo for the reason that it was not seaworthy. There was no squall or bad
weather or extremely poor sea condition in the vicinity when the said vessel sank.
 Also, the fact that the ship was certified by the coast guard as seaworthy do not
negate the presumption of unseaworthiness triggered by an unexplained sinking.
 Authorities are clear that diligence in securing certificates of seaworthiness does
not satisfy the vessel owner’s obligation. Also securing the approval of the shipper
of the cargo, or his surveyor, of the condition of the vessel or her stowage does not
establish due diligence if the vessel was in fact unseaworthy, for the cargo owner
has no obligation in relation to seaworthiness.
FACTS:
 Caltex Philippines contracted with Delsan Transport Lines to transport the
2,277.317 kiloliters of industrial oil fuel from the Batangas-Bataan Refinery to the
Caltex Oil Terminal in Zamboanga City. The shipment was insured with American
Home Assurance.
 On August 14, 1986, MT Maysun set sail for Batangas from Zamboanga, carrying
Caltex Oil. The ship sank on August 16, 1986.
 American Home Assurance (AHA) paid Caltex P5, 096,635.57 representing the
insured oil. AHA exercised its right of subrogation under Art. 2207 of the Civil Code
and demanded payment from Delsan.
 AHA filed a collection of sum of money case against Delsan in the RTC of Makati,
Branch 137 because of Delsan’s failure to pay the demanded amount.
 The RTC dismissed the case on Nov. 29, 1990. It found that the sinking of the ship
was due to force majeure, believing the testimony of the Jaime Jarabe (captain) and
Francisco Berina (first mate of the ship), that the ship sank to huge waves that
suddenly formed on the gulf of Panay around 3am.
 The RTC also believed that because o f the seaworthiness of the ship, as attested by
the Coast Guard certificate, issued during its annual dry-docking, Delsan cannot be
made liable for the loss.

 On appeal, the CA reversed the RTC and ruled in favor of AHA. The CA did not
believe the self-serving statements of Jarabe and Berina. Rather, it gave credence to
the weather report issued by PAGASA that between 2am-6am of the day that the
sank.
 According to PAGASA, during that time, the height of the waves was 2 meters
maximum. Thus, the CA held that Delsan is liable on its obligation as common
carrier.
 Delsan argues before the SC that it cannot be made liable because the ship sank to
force majeure, relying on the testimony of the ship captain and the first mate that
giant waves caused the sinking of the ship. Delsan also argues that by virtue of the
Coast Guard’s certification of the ship’s seaworthiness, AHA cannot collect any sum
from it.
ISSUES: Whether Delsan can claim force majeure to evade liability for the sinking of the
ship.
HELD: NO. Delsan failed to observe the diligence required of it as a common
carrier. There is no force majeure. WHEREFORE, the instant petition is DENIED. The
Decision dated June 17, 1996 of the Court of Appeals in CA-G.R. CV No. 39836 is
AFFIRMED. Costs against the petitioner.
RATIO:
 AHA validly exercised its right of subrogation under the law. The payment
made to Caltex cannot be validly interpreted as an automatic admission of the
vessel’s seaworthiness by the AHA as to foreclose recourse against the Delsan
for any liability under its contractual obligation as a common carrier.
 The fact of payment grants AHA subrogatory right which enables it to exercise
legal remedies that would otherwise be available to Caltex as owner of the lost
cargo against the Delsan.
 Under the law on common carriers, common carriers are bound to observe
extraordinary diligence in the vigilance of the goods transported by them. In
the event of loss, destruction or deterioration of the insured goods, common
carriers shall be responsible unless the same is brought about, among others,
by flood, storm, earthquake, lightning or other natural disaster or calamity.
 In all other cases, if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence.
 The tale of strong winds and big waves by Jarabe and Berina was effectively
rebutted and belied by the weather report from PAGASA the independent
government agency charged with monitoring weather and sea conditions,
showing that from 2:00 o’clock to 8:00 o’clock in the morning on August 16,
1986, the wind speed remained at ten (10) to twenty (20) knots per hour while
the height of the waves ranged from .7 to two (2) meters in the vicinity of Cuyo
East Pass and Panay Gulf where the subject vessel sank.
 Thus, as the CA correctly ruled, Delsan’s vessel, MT Maysun, sank with its
entire cargo for the reason that it was not seaworthy. There was no squall or
bad weather or extremely poor sea condition in the vicinity when the said
vessel sank.
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 The CA also correctly opined that Delsan’s witnesses could not be expected to
testify against the interest of their employer, the herein petitioner common
carrier.
 Delsan cannot also escape liability by showing that MT Maysun, per the
inspection of the coast guard, was fit for voyage. The inspection and
certification do not necessarily take into account the actual condition of the
vessel at the time of the commencement of the voyage.
 The CA correctly held that the certification and inspection do not negate the
presumption of unseaworthiness triggered by an unexplained sinking.
 Authorities are clear that diligence in securing certificates of seaworthiness
does not satisfy the vessel owner’s obligation. Also securing the approval of the
shipper of the cargo, or his surveyor, of the condition of the vessel or her
stowage does not establish due diligence if the vessel was in fact unseaworthy,
for the cargo owner has no obligation in relation to seaworthiness.
BANKERS AND MANUFACTURERS ASSURANCE V. CA – TANDOC
ER:
Ali Trading imported 108 cases of copper tubings to Manila. These were insured by
Bankers and Manufacturers Corp. These cases were placed in three container vans.
When the copper tubings arrived in Manila, only one of the three container vans was
inspected in the pier yard. The two container vans were brought to the consignee’s
warehouse without undergoing inspection in the pier yard. In the consignee’s
warehouse, the loss of seven cases was found out. The missing cases came from the
uninspected containers. Bankers and Manufacturers paid Ali Trading. Subrogating the
rights of Ali Trading, Bankers and Manufacturers was claiming for reimbursement from
F.E Zuellig, the representative of the carrier. According to Bankers and Manufacturers,
Zuellig has the burden of proof in showing that it exercised extra-ordinary diligence in
the carrying of the copper tubings.
ISSUE: W/on the burden of proof is on Zuellig to show that it exercised extra-ordinary
diligence
HELD: Nope
RATIO: the two containers should have been inspected in the pier where the carrier still
has custody over them. Without the inspection, it is deemed that the consignee accepted
the containers in good condition. Hence the burden of proof is on Bankers and
Manufacturers Corp
FACTS:
-108 cases of copper tubings were imported by Ali Trading Company

- The tubings were insured by petitioner BANKERS & MANUFACTURERS ASSURANCE
CORP (“Bankers”) and arrived in Manila on board and vessel S/S "Oriental
Ambassador”
- The 108 cases were turned over to the private respondent E. Razon, the Manila
arrastre operator upon discharge at the waterfront.
-The carrying vessel is represented in the Philippines by its agent, the other private
respondent, F. E. Zuellig and Co., Inc., Upon inspection by the importer, the shipment
was allegedly found to have sustained loses by way of theft and pilferage for which
Bankers, as insurer, compensated the importer in the amount of P31,014.00.
-Bankers in subrogation of the importer-consignee and on the basis of what it asserts
had been already established — that a portion of that shipment was lost through theft
and pilferage — forthwith concludes that the burden of proof of proving a case of non-
liability shifted to private respondents, one of whom, the carrier, being obligated to
exercise extraordinary diligence in the transport and care of the shipment. The
implication of Banker's statement is that private respondents have not shown why they
are not liable. The premises of the argument of petitioner may be well-taken but the
conclusions are not borne out or supported by the record.
-It must be underscored that the shipment involved in the case at bar was
"containerized"..
-A shipment under this arrangement is not inspected or inventoried by the carrier
whose duty is only to transport and deliver the containers in the same condition as
when the carrier received and accepted the containers for transport
- Upon arrival in Manila on November 4, 1978, the shipment was discharged in apparent
good order and condition and from the pier's docking apron, the containers were shifted
to the container yard of Pier 3 for safekeeping.
-Three weeks later, one of the container vans, said to contain 19 cases of the cargo, was
"stripped" in the presence of petitioner's surveyors, and three cases were found to be in
bad order. The 19 cases of the van stripped were then kept inside Warehouse No. 3 of
Pier 3 pending delivery. It should be stressed at this point, that the three cases found in
bad order are not the cases for which the claim below was presented, for although the
three cases appeared to be in bad order, the contents remained good and intact.
The two other container vans were not moved from the container yard and they were
not stripped. On December 8, 1978, the cargo was released to the care of the consignee's
authorized customs broker, the RGS Customs Brokerage. The broker, accepting the
shipment without exception as to bad order, caused the delivery of the vans to the
consignee's warehouse in Makati. It was at that place, when the contents of the two
containers were removed and inspected, that petitioner's surveyors reported, that
01 Transpo Compiled Digests. 3C. Atty. 32
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checked against the packing list, the shipment in Container No. OOLU2552969 was short
of seven cases (see p. 18, Rollo).
ISSUE: W/on the burden of proof rests on Zuellig, the representative agent of the carrier
who brought the goods
HELD: NOPE
Under the prevailing circumstances, it is therefore, not surprising why the Court of
Appeals in sustaining the trial court, simply quoted the latter, thus:
It must be also considered that the subject container was not stripped
of its content at the pier zone. The two unstripped containers
(together with the 19 cases removed from the stripped third
container) were delivered to, and received by, the customs broker for
the consignee without any exception or notation of bad order of
shortlanding (Exhs. 1, 2 and 3 Vessel). If there was any suspicion or
indication of irregularity or theft or pilferage, plaintiff or consignee's
representatives should have noted the same on the gate passes or
insisted that some form of protest form part of the documents
concerning the shipment. Yet, no such step was taken. The shipment
appears to have been delivered to the customs broker in good order
and condition and complete save for the three cases noted as being
apparently in bad order.
Consider further that the stripping of the subject container was done
at the consignee's warehouse where, according to plaintiff's surveyor,
the loss of the seven cases was discovered. The evidence is not settled
as whether the defendants' representative (Zuellig) were notified of,
and were present at, the unsealing and opening of the container in
the bodega. Nor is the evidence clear how much time elapsed
between the release of the shipment from the pier and the stripping
of the containers at consignee bodega. All these fail to discount the
possibility that the loss in question could have taken place after the
container had left the pier. (pp. 20-21, Rollo)
Verily, if any of the vans found in bad condition, or if any inspection of the
goods was to be done in order to determine the condition thereof, the same
should have been done at the pierside, the pier warehouse, or at any time and
place while the vans were under the care and custody of the carrier or of the
arrastre operator. Unfortunately for petitioner, even as one of the three vans
was inspected and stripped, the two other vans and the contents of the owner
previously stripped were accepted without exception as to any supposed bad
order or condition by petitioner's own broker. To all appearances, therefore,
the shipment was accepted by petitioner in good order.

It logically follows that the case at bar presents no occasion for the necessity of
discussing the diligence required of a carrier or of the theory of prima facie
liability of the carrier, for from all indications, the shipment did not suffer loss
or damage while it was under the care of the carrier, or of the arrastre
operator, it must be added
SARKIES TOURS V. CA – TIU
ER: Fatima Fortades and her siblings boarded a Sarkies Tours bus from Manila to
Legazpi. Fatima loaded 3 pieces of luggage, containing all of her optometry materials,
her mother’s US green card, as well as other important documents and personal
belongings. However, the baggage compartment was not securely fastened, such that all
but one bag remained in the compartment. Sarkies initially offered 1K for each piece of
luggage lost, but later wrote the Fortades’ that it was doing its best to remedy the
situation. After the lapse of 9 months, the Fortades’ filed a damage suit for breach of
contract of carriage against Sarkies. Sarkies contends that Fatima did not load any
luggage on that trip and even if she did, such was not properly declared upon loading. Is
Sarkies liable as a common carrier? The SC held that all the pieces of evidence
adduced at trial are contradictory to Sarkies’ defense. As a common carrier, it was bound
to observe extraordinary diligence in the vigilance over the goods transported by them,
which diligence starts from the time the goods are unconditionally placed in its
possession and ends only when the same are delivered to the person who has a right to
receive them. In this case, the clear negligence of Sarkies was in the fact that it did not
ensure that baggage compartment was not properly locked, leading to the loss of several
luggages.
COMPLETE DIGEST
Facts: Private respondents Elino, Marisol, and Fatima Minerva, all surnamed Fortades
(Fortades et al.) filed a damage suit against petitioner Sarkies Tours Philippines
(Sarkies) for breach of contract of carriage allegedly attended by bad faith.
- On 31 August 1984, Fatima boarded Sarkie’s De Luxe Bus No. 5 in Manila to Legazpi
City.  Brother Raul helped her load 3 pieces of luggage containing all of her optometry
review books, materials and equipment, trial lenses, trial contact lenses, passport and
visa, as well as her mother Marisol’s US immigration green card, among other important
documents and personal belongings.  the baggage compartment of its bus were securely fastened.  As a result of this lack of
- Her belongings were kept in the baggage compartment of the bus, but during a
stopover at Daet, it was discovered that all but one bag remained in the open
compartment.  The others, including Fatima’s things, were missing and could have
dropped along the way.  Some of the passengers suggested retracing the route to try to
recover the lost items, but the driver ignored them and proceeded to Legazpi City.
- Fatima immediately reported the loss to her mother who went to Sarkies’ office for
recourse, but the latter merely offered her 1K for each piece of luggage lost, which she
01 Transpo Compiled Digests. 3C. Atty. 33
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turned down.  After returning to Bicol, they asked assistance from the radio stations and
even from Philtranco bus drivers who plied the same route on August 31st.  The effort
paid off when one of Fatima’s bags was recovered.  Marisol also reported the incident to
the NBI’s field office in Legazpi City, and to the local police.
- Eventually, Fortades et al., through counsel, formally demanded satisfaction of their
complaint from Sarkies.  In a letter, Sarkies apologized for the delay and said that a team
has been sent out to Bicol for the purpose of recovering or at least getting the full detail
of the incident.
- After more than 9 months of fruitless waiting, Fortades et al. decided to file a claim for
damges to recover the value of the remaining lost items, as well as moral and exemplary
damages, attorney’s fees and expenses of litigation.  They claimed that the loss was due
to Sarkies’ failure to observe extraordinary diligence in the care of Fatima’s luggage and
that Sarkies dealt with them in bad faith from the start. 
- Sarkies, on the other hand, disowned any liability for the loss on the ground that
Fatima did not bring any piece of luggage with her and even if she did, none was
declared upon boarding its bus.
- The RTC ruled in favor of Fortades et al. The CA affirmed the judgment, but deleted the
award of moral and exemplary damages. The CA also denied the motion for
reconsideration filed by Sarkies, which prompted it to bring the case to the SC.
Issue: Whether or not Sarkies is liable for the loss of the goods as a common carrier?
Yup.
Held: (1) Under the Civil Code, 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, and this liability 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 for
transportation until the same are delivered, actually or constructively, by the carrier to 
the person who has a right to receive them, unless the loss is due to any of the excepted
causes under Article 1734 thereof.
 Here, the cause of the loss was Sarkies’ negligence in not ensuring that the doors of
care, almost all the luggage was lost to the prejudice of the paying passengers.  
(2) Where the common carrier accepted its passenger’s baggage for transportation and
even had it placed in the vehicle by its own employee, its failure to collect the freight
charge is the common carrier’s own lookout. It is responsible for the consequent loss of
the baggage. 
 01 Transpo Compiled Digests. 3C. Atty. 34
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 Here, Sarkies’ employee even helped Fatima Minerva Fortades and her brother load
the luggages in the bus’ baggage compartment, without asking that they be weighed,
declared, receipted or paid for. Neither was this required of the other passengers.

(3) Bonus factual discussions:

 Here, based on the documentary and testimonial evidence presented at the trial, it
was established that Fatima indeed boarded Sarkies’ bus and she brought 3 pieces of
luggage with her, as testified by her brother Raul, who helped her pack her things and
load them on said bus.  One of the bags was even recovered with the help of a Philtranco
bus driver.  In its letter, Sarkies tacitly admitted its liability by apologizing to Fortades et
al. and assuring them that efforts were being made to recover the lost items.

 Fatima was not the only one who lost her luggage.   Other passengers suffered a
similar fate.  Dr. Lita Samarista testified that Sarkies offered her 1K for her lost baggage
and she accepted it. Carleen Carullo-Magno also lost her chemical engineering review
materials, while her brother lost abaca products he was transporting to Bicol.