VIRGINES CALVO doing business under the name and style TRANSORIENT CONTAINER

TERMINAL SERVICES, INC., petitioner,

vs.
UCPB GENERAL INSURANCE CO., INC. (formerly Allied Guarantee Ins. Co., Inc.) respondent.

MENDOZA, J.:

Petition for review of Court of Appeals' decision affirming Regional Trial Court's order to pay P93,112.00
with legal interest, representing damaged cargo value, attorney's fees, and suit costs.

The facts are as follows:

Petitioner Virgines Calvo, owner of Transorient Container Terminal Services, Inc., contracted with San
Miguel Corporation to transfer 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board
from the Port Area to SMC's warehouse. The cargo was insured by UCPB General Insurance Co., Inc.
The shipment arrived in Manila on "M/V Hayakawa Maru" and was unloaded. The goods were inspected
by Marine Cargo Surveyors, and 15 reels of fluting paper were torn, resulting in a damage amount of
P93,112.00. SMC collected payment from UCPB under its insurance contract. Respondent sued
petitioner, finding her liable for the shipment's damage.

The trial court held:

The subject cargoes sustained damage while in defendants' custody, as evidenced by the Warehouse Entry
Slip, Damage Report, and Marine Cargo Survey Report. The surveyor's report confirms the damaged
condition of the cargoes.

" . . . we opine that damages sustained by shipment is attributable to improper handling in

transit presumably whilst in the custody of the broker . . . ."

is a finding which cannot be traversed and overturned.

The defendants' defense of not being liable is not supported by the evidence presented. The defendant's
business should have taken precautions to prevent damage to cargoes, and the presumption is that the
defendant must perform extraordinary diligence upon accepting the cargo. Under Article 1735 of the Civil
Code, common carriers are presumed to be at fault if goods are lost, destroyed, or deteriorated. The
burden of proof is on the plaintiff to prove the goods were lost, destroyed, or deteriorated. The carrier
must prove that the loss was due to accident or other circumstances inconsistent with their liability.

The defendant, a customs brother, warehouseman, and common carrier, must exercise extraordinary
diligence required by law. This responsibility extends from goods' possession and receipt until delivery to
consignee or receiver.

The trial court ordered the petitioner to pay P93,112.00 plus interest, 25% as lawyer's fee, and costs of
suit. The Court of Appeals affirmed the decision, leading to a petition for review on certiorari. The
petitioner argues that the court committed serious and reversible errors in determining the case and
classifying the petitioner as a common carrier.

The petitioner argues that she is not a common carrier, as the trial court and Court of Appeals held
otherwise. This means she is not liable beyond ordinary diligence for the goods transported. The
petitioner argues that she is a private carrier, offering services only to select parties, which is not meritful.
The Court dismissed similar contentions in 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."

Article 1732 does not differentiate between a carrier's primary business activity and an ancillary activity,
offering transportation service on a regular or scheduled basis or offering services on an occasional,
episodic, or unscheduled basis. It also does not distinguish between a carrier offering services to the
general public or a narrow segment of the general population. The concept of "common carrier" aligns
with the Public Service Act, which partially supplements the Civil Code's law on common carriers.

" 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" 

Petitioner is considered a common carrier due to her integral role in transportation of goods. Upholding
her contention would deprive her customers of the protection provided by law. Art. 1733 of the Civil
Code states that common carriers must observe extraordinary diligence for the safety of passengers
transported by them.

In Compania Maritima v. Court of Appeals,9 the meaning of "extraordinary diligence in the vigilance over
goods" was explained thus:

The extraordinary diligence in the 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. It requires common carriers to render
service with the greatest skill and foresight and "to 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."
The petitioner denies liability for cargo damage, claiming spoilage or wettage occurred while the goods
were in custody of either the carrying vessel or the arrastre operator. The containers were damaged, with
rain gutters, roof panels, and wood flooring wet and water soaked. The case at bar is a maritime accident
case.
The petitioner claims that Marine Cargo Surveyor Ernesto Tolentino has no personal knowledge about the
container vans' storage in the petitioner's warehouse before delivery to the consignee. She claims that
after withdrawing the vans from the arrastre operator, Ricardo Nazarro delivered the cargo to SMC's
warehouse in Ermita, Manila, which is a 30-minute drive from the Port Area. However, the Survey Report
shows that the shipper transferred the cargo to the arrastre operator, covered by clean Equipment
Interchange Reports, and withdrew the cargo without exception or protest. The cargo was delivered to the
consignee's storage warehouse in Ermita, Manila, on July 23/25, 1990.

As found by the Court of Appeals:

The survey report indicates that the shipment was discharged from the vessel to Marina Port Services Inc.
in good order and condition, as evidenced by clean Equipment Interchange Reports. The defendant-
appellant received the cargo without any reports of damage or loss, and the cargo was delivered to the
consignee damaged. The presumption of negligence attached to a common carrier in case of loss or
damage to the goods is presumed, unless there is proof to the contrary. The petitioner failed to prove the
exercise of extraordinary diligence, which requires the petitioner to use reasonable means to ascertain the
nature and characteristic of goods and exercise due care in handling them. The presumption of negligence
under Art. 1734(4) does not apply, as the carrier is not relieved of liability for damage resulting from
improper packing or defects in the containers. The Court of Appeals' decision, dated May 31, 2001, is
affirmed.