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WHEREFORE, in view of the foregoing, judgment is hereby

LOADSTAR SHIPPING VS PIONEER ASIA rendered in favor of plaintiff and against defendant Loadstar
DECISION Shipping Co., Inc. ordering the latter to pay as follows:

QUISUMBING, J.: 1. To pay plaintiff the sum of P1,900,000.00 with legal rate
of interest per annum from date of complaint until fully paid;
For review on certiorari are (1) the Decision[1] dated October
15, 2002 and (2) the Resolution[2] dated February 27, 2003, 2. To pay the sum equal to 25% of the claim as and for
of the Court of Appeals in CA-G.R. CV No. 40999, which attorneys fees and litigation expenses; and,
affirmed with modification the Decision[3] dated February 15,
1993 of the Regional Trial Court of Manila, Branch 8 in Civil 3. To pay the costs of suit.
Case No. 86-37957.
IT IS SO ORDERED.[6]
The pertinent facts are as follows:
The RTC reasoned that petitioner, as a common carrier, bears
Petitioner Loadstar Shipping Co., Inc. (Loadstar for brevity) is the burden of proving that it exercised extraordinary diligence
the registered owner and operator of the vessel M/V Weasel. It in its vigilance over the goods it transported. The trial court
holds office at 1294 Romualdez St., Paco, Manila. explained that in case of loss or destruction of the goods, a
statutory presumption arises that the common carrier was
On June 6, 1984, Loadstar entered into a voyage-charter with negligent unless it could prove that it had observed
Northern Mindanao Transport Company, Inc. for the carriage of extraordinary diligence.
65,000 bags of cement from Iligan City to Manila. The shipper
was Iligan Cement Corporation, while the consignee in Manila Petitioners defense of force majeure was found bereft of
was Market Developers, Inc. factual basis. The RTC called attention to the PAG-ASA report
that at the time of the incident, tropical storm Asiang had
On June 24, 1984, 67,500 bags of cement were loaded on moved away from the Philippines. Further, records showed
board M/V Weasel and stowed in the cargo holds for delivery that the sea and weather conditions in the area of Hinubaan,
to the consignee. The shipment was covered by petitioners Negros Occidental from 8:00 p.m. of June 24, 1984 to 8:00
Bill of Lading[4] dated June 23, 1984. a.m. the next day were slight and smooth. Thus, the trial court
concluded that the cause of the loss was not tropical storm
Prior to the voyage, the consignee insured the shipment of Asiang or any other force majeure, but gross negligence of
cement with respondent Pioneer Asia Insurance Corporation petitioner.
for P1,400,000, for which respondent issued Marine Open
Policy No. MOP-006 dated September 17, 1980, covering all Petitioner appealed to the Court of Appeals.
shipments made on or after September 30, 1980.[5]
In its Decision dated October 15, 2002, the Court of Appeals
At 12:50 in the afternoon of June 24, 1984, M/V Weasel left affirmed the RTC Decision with modification that Loadstar shall
Iligan City for Manila in good weather. However, at 4:31 in the only pay the sum of 10% of the total claim for attorneys fees
morning of June 25, 1984, Captain Vicente C. Montera, master and litigation expenses. It ruled,
of M/V Weasel, ordered the vessel to be forced aground.
Consequently, the entire shipment of cement was good as WHEREFORE, premises considered, the Decision dated
gone due to exposure to sea water. Petitioner thus failed to February 15, 1993, of the Regional Trial Court of Manila,
deliver the goods to the consignee in Manila. National Capital Judicial Region, Branch 8, in Civil Case No. 86-
37957 is hereby AFFIRMED with the MODIFICATION that the
The consignee demanded from petitioner full reimbursement appellant shall only pay the sum of 10% of the total claim as
of the cost of the lost shipment. Petitioner, however, refused and for attorneys fees and litigation expenses. Costs against
to reimburse the consignee despite repeated demands. the appellant.

Nonetheless, on March 11, 1985, respondent insurance SO ORDERED.[7]


company paid the consignee P1,400,000 plus an additional
amount of P500,000, the value of the lost shipment of Petitioners Motion for Reconsideration was denied.[8]
cement. In return, the consignee executed a Loss and
Subrogation Receipt in favor of respondent concerning the The instant petition is anchored now on the following
latters subrogation rights against petitioner. assignments of error:

Hence, on October 15, 1986, respondent filed a complaint I


docketed as Civil Case No. 86-37957, against petitioner with
the Regional Trial Court of Manila, Branch 8. It alleged that: (1) THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
the M/V Weasel was not seaworthy at the commencement of THAT PETITIONER IS A COMMON CARRIER UNDER ARTICLE
the voyage; (2) the weather and sea conditions then 1732 OF THE CIVIL CODE.
prevailing were usual and expected for that time of the year
and as such, was an ordinary peril of the voyage for which the II
M/V Weasel should have been normally able to cope with; and
(3) petitioner was negligent in the selection and supervision of ASSUMING ARGUENDO THAT PETITIONER IS A COMMON
its agents and employees then manning the M/V Weasel. CARRIER, THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PROXIMATE CAUSE OF THE LOSS OF
In its Answer, petitioner alleged that no fault nor negligence CARGO WAS NOT A FORTUITOUS EVENT BUT WAS ALLEGEDLY
could be attributed to it because it exercised due diligence to DUE TO THE FAILURE OF PETITIONER TO EXERCISE
make the ship seaworthy, as well as properly manned and EXTRAORDINARY DILIGENCE.
equipped. Petitioner insisted that the failure to deliver the
subject cargo to the consignee was due to force majeure. III
Petitioner claimed it could not be held liable for an act or
omission not directly attributable to it. THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING
THE AWARD BY THE TRIAL COURT OF ATTORNEYS FEES AND
On February 15, 1993, the RTC rendered a Decision in favor of LITIGATION EXPENSES IN FAVOR OF HEREIN RESPONDENT.[9]
respondent, to wit:
On the first and second issues, petitioner contends that at the Conformably, petitioner remains a common carrier
time of the voyage the carriers voyage-charter with the notwithstanding the existence of the charter agreement with
shipper converted it into a private carrier. Thus, the the Northern Mindanao Transport Company, Inc. since the said
presumption of negligence against common carriers could not charter is limited to the ship only and does not involve both
apply. Petitioner further avers that the stipulation in the the vessel and its crew. As elucidated in Planters Products, its
voyage-charter holding it free from liability is valid and binds charter is only a voyage-charter, not a bareboat charter.
the respondent. In any event, petitioner insists that it had
exercised extraordinary diligence and that the proximate As a common carrier, petitioner is required to observe
cause of the loss of the cargo was a fortuitous event. extraordinary diligence in the vigilance over the goods it
transports.[13] When the goods placed in its care are lost,
With regard to the third issue, petitioner points out that the petitioner is presumed to have been at fault or to have acted
award of attorneys fees and litigation expenses appeared only negligently. Petitioner therefore has the burden of proving that
in the dispositive portion of the RTC Decision with nary a it observed extraordinary diligence in order to avoid
justification. Petitioner maintains that the Court of Appeals responsibility for the lost cargo.[14]
thus erred in affirming the award.
In Compania Maritima v. Court of Appeals,[15] we said:
For its part, respondent dismisses as factual issues the inquiry
on (1) whether the loss of the cargo was due to force majeure it is incumbent upon the common carrier to prove that the
or due to petitioners failure to exercise extraordinary loss, deterioration or destruction was due to accident or some
diligence; and (2) whether respondent is entitled to recover other circumstances inconsistent with its liability.
attorneys fees and expenses of litigation.
...
Respondent further counters that the Court of Appeals was
correct when it held that petitioner was a common carrier The extraordinary diligence in the vigilance over the goods
despite the charter of the whole vessel, since the charter was tendered for shipment requires the common carrier to know
limited to the ship only. and to follow the required precaution for avoiding damage to,
or destruction of the goods entrusted to it for safe carriage
Prefatorily, we stress that the finding of fact by the trial court, and delivery. It requires common carriers to render service
when affirmed by the Court of Appeals, is not reviewable by with the greatest skill and foresight and to use all reasonable
this Court in a petition for review on certiorari. However, the means to ascertain the nature and characteristics of goods
conclusions derived from such factual finding are not tendered for shipment, and to exercise due care in the
necessarily pure issues of fact when they are inextricably handling and stowage, including such methods as their nature
intertwined with the determination of a legal issue. In such requires.[16]
instances, the conclusions made may be raised in a petition
for review before this Court.[10] Article 1734 enumerates the instances when a carrier might
be exempt from liability for the loss of the goods. These are:
The threshold issues in this case are: (1) Given the
circumstances of this case, is petitioner a common or a (1) Flood, storm, earthquake, lightning, or other natural
private carrier? and (2) In either case, did petitioner exercise disaster or calamity;
the required diligence i.e., the extraordinary diligence of a
common carrier or the ordinary diligence of a private carrier? (2) Act of the public enemy in war, whether international or
civil;
Article 1732 of the Civil Code defines a common carrier as
follows: (3) Act or omission of the shipper or owner of the goods;

Article 1732. Common carriers are persons, corporations, (4) The character of the goods or defects in the packing or in
firms or associations engaged in the business of carrying or the containers; and
transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public. (5) Order or act of competent public authority.[17]

Petitioner is a corporation engaged in the business of Petitioner claims that the loss of the goods was due to a
transporting cargo by water and for compensation, offering its fortuitous event under paragraph 1. Yet, its claim is not
services indiscriminately to the public. Thus, without doubt, it substantiated. On the contrary, we find supported by evidence
is a common carrier. However, petitioner entered into a on record the conclusion of the trial court and the Court of
voyage-charter with the Northern Mindanao Transport Appeals that the loss of the entire shipment of cement was
Company, Inc. Now, had the voyage-charter converted due to the gross negligence of petitioner.
petitioner into a private carrier?
Records show that in the evening of June 24, 1984, the sea
We think not. The voyage-charter agreement between and weather conditions in the vicinity of Negros Occidental
petitioner and Northern Mindanao Transport Company, Inc. did were calm. The records reveal that petitioner took a shortcut
not in any way convert the common carrier into a private route, instead of the usual route, which exposed the voyage to
carrier. We have already resolved this issue with finality in unexpected hazard. Petitioner has only itself to blame for its
Planters Products, Inc. v. Court of Appeals[11] where we ruled misjudgment.
that:
Petitioner heavily relies on Home Insurance Co. v. American
It is therefore imperative that a public carrier shall remain as Steamship Agencies, Inc.[18] and Valenzuela Hardwood and
such, notwithstanding the charter of the whole or portion of a Industrial Supply, Inc. v. Court of Appeals.[19] The said cases
vessel by one or more persons, provided the charter is limited involved a private carrier, not a common carrier. Moreover,
to the ship only, as in the case of a time-charter or voyage- the issue in both cases is not the effect of a voyage-charter on
charter. It is only when the charter includes both the vessel a common carrier, but the validity of a stipulation absolving
and its crew, as in a bareboat or demise that a common the private carrier from liability in case of loss of the cargo
carrier becomes private, at least insofar as the particular attributable to the negligence of the private carrier.
voyage covering the charter-party is concerned. Indubitably, a
shipowner in a time or voyage charter retains possession and Lastly, on the third issue, we find consistent with law and
control of the ship, although her holds may, for the moment, prevailing jurisprudence the Court of Appeals award of
be the property of the charterer.[12] attorneys fees and expenses of litigation equivalent to ten
percent (10%) of the total claim. The contract between the
parties in this case contained a stipulation that in case of suit, Battung's death should be properly deemed a fortuitous
attorneys fees and expenses of litigation shall be limited to event. Thus, they prayed for the dismissal of the complaint, as
only ten percent (10%) of the total monetary award. Given the well as the payment of their counterclaims for damages and
circumstances of this case, we deem the said amount just and attorney's fees.10
equitable.
The RTC Ruling
WHEREFORE, the petition is DENIED. The assailed Decision
dated October 15, 2002 and the Resolution dated February In a Decision11 dated August 29, 2011, the RTC ruled in
27, 2003, of the Court of Appeals in CA-G.R. CV No. 40999, are respondents' favor and, accordingly, ordered petitioner, et al.
AFFIRMED. to pay respondent the amounts of: (a) P1,586,000.00 as
compensatory damages for unearned income; (b) P50,000.00
Costs against petitioner. as actual damages; and (c) P50,000.00 as moral damages. 12

SO ORDERED. The RTC found that petitioner, et al. were unable to rebut the
presumed liability of common carriers in case of injuries/death
to its passengers due to their failure to show that they
implemented the proper security measures to prevent
passengers from carrying deadly weapons inside the bus
which, in this case, resulted in the killing of Battung. As such,
petitioner, et al. were held civilly liable for the latter's death
based on culpa contractual.13

Dissatisfied, petitioner, et al. appealed to the CA.14

The CA Ruling
G.V. FLORIDA TRANSPORT, INC., Petitioner, v. HEIRS OF
ROMEO L. BATTUNG, JR., REPRESENTED BY ROMEO BATTUNG, In a Decision15 dated May 31, 2013, the CA affirmed the ruling
SR., Respondents. of the RTC in toto.16 It held that the killing of Battung cannot
be deemed as a fortuitous event, considering that such killing
DECISION happened right inside petitioner's bus and that petitioner, et
al. did not take any safety measures in ensuring that no
deadly weapon would be smuggled inside the bus.17
PERLAS-BERNABE, J.:
Aggrieved, only petitioner moved for reconsideration 18 which
1
Assailed in this petition for review on certiorari are the was, however, denied in a Resolution19 dated August 23, 2013;
Decision2 dated May 31, 2013 and the Resolution3 dated hence, the instant petition.chanrobleslaw
August 23, 2013 of the Court of Appeals (CA) in CA-G.R. CV
No. 97757, which affirmed in toto the Decision4 dated August The Issue Before the Court
29, 2011 of the Regional Trial Court of Cabagan, Isabela,
Branch 22 (RTC) in Civil Case No. 22-1103 finding petitioner The core issue for the Court's resolution is whether or not the
G.V. Florida Transport, Inc. (petitioner), Federico M. Duplio, Jr. CA correctly affirmed the ruling of the RTC finding petitioner
(Duplio), and Christopher Daraoay (Daraoay) jointly and liable for damages to respondent arising from culpa
severally liable to respondents heirs of Romeo L. Battung, Jr. contractual.
(respondents) for damages arising from culpa contractual.
The Court's Ruling
The Facts
The petition is meritorious.chanrobleslaw
Respondents alleged that in the evening of March 22, 2003,
Romeo L. Battung, Jr. (Battung) boarded petitioner's bus with The law exacts from common carriers (i.e., those persons,
body number 037 and plate number BVJ-525 in Delfin Albano, corporations, firms, or associations engaged in the business of
Isabela, bound for Manila.5 Battung was seated at the first row carrying or transporting passengers or goods or both, by land,
behind the driver and slept during the ride. When the bus water, or air, for compensation, offering their services to the
reached the Philippine Carabao Center in Muoz, Nueva Ecija, public20) the highest degree of diligence (i.e., extraordinary
the bus driver, Duplio, stopped the bus and alighted to check diligence) in ensuring the safety of its passengers. Articles
the tires. At this point, a man who was seated at the fourth 1733 and 1755 of the Civil Code state:
row of the bus stood up, shot Battung at his head, and then Art. 1733. Common carriers, from the nature of their business
left with a companion. The bus conductor, Daraoay, notified and for reasons of public policy, are bound to observe
Duplio of the incident and thereafter, brought Romeo to the extraordinary diligence in the vigilance over the goods and for
hospital, but the latter was pronounced dead on arrival. 6 the safety of the passengers transported by them, according
Hence, respondents filed a complaint7 on July 15, 2008 for to all the circumstances of each case.
damages in the aggregate amount of P1,826,000.00 8 based
on a breach of contract of carriage against petitioner, Duplio, Art. 1755. A common carrier is bound to carry the passengers
and Baraoay (petitioner, et al.) before the RTC, docketed as safely as far as human care and foresight can provide, using
Civil Case No. 22-1103. Respondents contended that as a the utmost diligence of very cautious persons, with a due
common carrier, petitioner and its employees are bound to regard for all the circumstances.
observe extraordinary diligence in ensuring the safety of
passengers; and in case of injuries and/or death on the part of
a passenger, they are presumed to be at fault and, thus, In this relation, Article 1756 of the Civil Code provides that
responsible therefor. As such, petitioner, et al. should be held "[i]n case of death of or injuries to passengers, common
civilly liable for Battung's death.9 carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed
In their defense, petitioner, et al. maintained that they had extraordinary diligence as prescribed in Articles 1733 and
exercised the extraordinary diligence required by law from 1755." This disputable presumption may also be overcome by
common carriers. In this relation, they claimed that a common a showing that the accident was caused by a fortuitous
carrier is not an absolute insurer of its passengers and that event.21
The foregoing provisions notwithstanding, it should be pointed carrier had no control or even knowledge or could not have
out that the law does not make the common carrier an insurer prevented, the presumption is rebutted and the carrier is not
of the absolute safety of its passengers. In Mariano, Jr. v. and ought not to be held liable. To rule otherwise would make
Callejas,22 the Court explained that: the common carrier the insurer of the absolute safety of its
passengers which is not the intention of the lawmakers.
While the law requires the highest degree of diligence from (Emphasis and underscoring supplied)
common carriers in the safe transport of their passengers and
creates a presumption of negligence against them, it does In this case, Battung's death was neither caused by any defect
not, however, make the carrier an insurer of the absolute in the means of transport or in the method of transporting, or
safety of its passengers. to the negligent or willful acts of petitioner's employees,
namely, that of Duplio and Daraoay, in their capacities as
Article 1755 of the Civil Code qualifies the duty of driver and conductor, respectively. Instead, the case involves
extraordinary care, vigilance[,] and precaution in the carriage the death of Battung wholly caused by the surreptitious act of
of passengers by common carriers to only such as human care a co-passenger who, after consummating such crime,
and foresight can provide. What constitutes compliance with hurriedly alighted from the vehicle.25 Thus, there is no proper
said duty is adjudged with due regard to all the issue on petitioner's duty to observe extraordinary diligence in
circumstances. ensuring the safety of the passengers transported by it, and
the presumption of fault/negligence against petitioner under
Article 1756 of the Civil Code, in creating a presumption of Article 1756 in relation to Articles 1733 and 1755 of the Civil
fault or negligence on the part of the common carrier when its Code should not apply.
passenger is injured, merely relieves the latter, for the time
being, from introducing evidence to fasten the negligence on
II.
the former, because the presumption stands in the place of
evidence. Being a mere presumption, however, the same is
On the other hand, since Battung's death was caused by a co-
rebuttable by proof that the common carrier had exercised
passenger, the applicable provision is Article 1763 of the Civil
extraordinary diligence as required by law in the performance
Code, which states that "a common carrier is responsible for
of its contractual obligation, or that the injury suffered by the
injuries suffered by a passenger on account of the willful acts
passenger was solely due to a fortuitous event.
or negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of the
In fine, we can only infer from the law the intention of the
diligence of a good father of a family could have prevented or
Code Commission and Congress to curb the recklessness of
stopped the act or omission." Notably, for this obligation, the
drivers and operators of common carriers in the conduct of
law provides a lesser degree of diligence, i.e., diligence of a
their business.
good father of a family, in assessing the existence of any
culpability on the common carrier's part.
Thus, it is clear that neither the law nor the nature of the
business of a transportation company makes it an insurer of
Case law states that the concept of diligence of a good father
the passenger's safety, but that its liability for personal
of a family "connotes reasonable care consistent with that
injuries sustained by its passenger rests upon its negligence,
which an ordinarily prudent person would have observed
its failure to exercise the degree of diligence that the law
when confronted with a similar situation. The test to
requires.23 (Emphases and underscoring
determine whether negligence attended the performance of
supplied)ChanRoblesVirtualawlibrary
an obligation is: did the defendant in doing the alleged
negligent act use that reasonable care and caution which an
Therefore, it is imperative for a party claiming against a ordinarily prudent person would have used in the same
common carrier under the above-said provisions to show that situation? If not, then he is guilty of negligence."26
the injury or death to the passenger/s arose from the
negligence of the common carrier and/or its employees in In ruling on this case, the CA cited Fortune Express, Inc. v.
providing safe transport to its passengers. Court of Appeals27 (Fortune) in ascribing negligence on the
part of petitioner, ratiocinating that it failed to implement
In Pilapil v. CA,24 the Court clarified that where the injury measures to detect if its passengers were carrying firearms or
sustained by the passenger was in no way due (1) to any deadly weapons which would pose a danger to the other
defect in the means of transport or in the method of passengers.28 However, the CA's reliance was plainly
transporting, or (2) to the negligent or willful acts of the misplaced in view of Fortune's factual variance with the case
common carrier's employees with respect to the foregoing - at bar.
such as when the injury arises wholly from causes created by
strangers which the carrier had no control of or prior In Fortune, the common carrier had already received
knowledge to prevent there would be no issue regarding intelligence reports from law enforcement agents that certain
the common carrier's negligence in its duty to provide safe lawless elements were planning to hijack and burn some of its
and suitable care, as well as competent employees in relation buses; and yet, it failed to implement the necessary
to its transport business; as such, the presumption of precautions to ensure the safety of its buses and its
fault/negligence foisted under Article 1756 of the Civil Code passengers. A few days later, one of the company's buses was
should not apply: indeed hijacked and burned by the lawless elements
pretending as mere passengers, resulting in the death of one
First, as stated earlier, the presumption of fault or negligence of the bus passengers. Accordingly, the Court held that the
against the carrier is only a disputable presumption.[The common carrier's failure to take precautionary measures to
presumption] gives in where contrary facts are established protect the safety of its passengers despite warnings from law
proving either that the carrier had exercised the degree of enforcement agents showed that it failed to exercise the
diligence required by law or the injury suffered by the diligence of a good father of a family in preventing the attack
passenger was due to a fortuitous event. Where, as in the against one of its buses; thus, the common carrier was
instant case, the injury sustained by the petitioner was in no rightfully held liable for the death of the aforementioned
way due to any defect in the means of transport or in the passenger.
method of transporting or to the negligent or wilful acts of
[the common carrier'sl employees, and therefore involving no In contrast, no similar danger was shown to exist in this case
issue of negligence in its duty to provide safe and suitable so as to impel petitioner or its employees to implement
[care] as well as competent employees, with the injury arising heightened security measures to ensure the safety of its
wholly from causes created by strangers over which the passengers. There was also no showing that during the course
of the trip, Battung's killer made suspicious actions which
would have forewarned petitioner's employees of the need to hereby REVERSED and SET ASIDE. Accordingly, the complaint
conduct thorough checks on him or any of the passengers. for damages filed by respondents heirs of Romeo L. Battung,
Relevantly, the Court, in Nocum v. Laguna Tayabas Bus Jr. is DISMISSED for lack of merit.
Company,29 has held that common carriers should be given
sufficient leeway in assuming that the passengers they take in SO ORDERED.chanroblesvirtuallawlibrary
will not bring anything that would prove dangerous to himself,
as well as his co-passengers, unless there is something that
will indicate that a more stringent inspection should be made, DSR-SENATOR vs. FEDERAL
viz.:
FACTS
In this particular case before Us, it must be considered that
while it is true the passengers of appellant's bus should not be Berde Plants delivered 632 units of artificial trees to C.F.
made to suffer for something over which they had no control, Sharp, the General Ship Agent of DSR-Senator Lines, a foreign
as enunciated in the decision of this Court cited by His Honor, shipping corporation, for transportation and delivery to the
fairness demands that in measuring a common carrier's duty consignee, Al-Mohr International Group, in Riyadh, Saudi
towards its passengers, allowance must be given to the Arabia.
reliance that should be reposed on the sense of responsibility
of all the passengers in regard to their common safety. It is to C.F. Sharp issued International Bill of Lading for the cargo
be presumed that a passenger will not take with him anything the port of discharge for the cargo was at the Khor Fakkan
dangerous to the lives and limbs of his co-passengers, not to port and the port of delivery was Riyadh, Saudi Arabia, via
speak of his own. Not to be lightly considered must be the Port Dammam. The cargo was loaded in M/S Arabian
right to privacy to which each passenger is entitled. He cannot Senator.
be subjected to any unusual search, when he protests the
innocuousness of his baggage and nothing appears to indicate Federal Phoenix Assurance insured the cargo against all risks.
the contrary, as in the case at bar. In other words, inquiry may
be verbally made as to the nature of a passenger's baggage On June 7, 1993, M/S Arabian Senator left the Manila South
when such is not outwardly perceptible, but beyond this, Harbor for Saudi Arabia with the cargo on board. When the
constitutional boundaries are already in danger of being vessel arrived in Khor Fakkan Port, the cargo was reloaded on
transgressed. Calling a policeman to his aid, as suggested by board DSR-Senator Lines feeder vessel, M/V Kapitan
the service manual invoked by the trial judge, in compelling Sakharov, bound for Port Dammam, Saudi Arabia.
the passenger to submit to more rigid inspection, after the
passenger had already declared that the box contained mere However, while in transit, the vessel and all its cargo caught
clothes and other miscellaneous, could not have justified fire.
invasion of a constitutionally protected domain. Police officers
acting without judicial authority secured in the manner On July 5, 1993, DSR-Senator Lines informed Berde Plants that
provided by law are not beyond the pale of constitutional M/V Kapitan Sakharov with its cargo was gutted by fire and
inhibitions designed to protect individual human rights and sank on or about July 4, 1993. On December 16, 1993, C.F.
liberties. Withal, what must be importantly considered here is Sharp issued a certification to that effect
not so much the infringement of the fundamental sacred
rights of the particular passenger herein involved, but the Consequently, Federal Phoenix Assurance paid Berde Plants
constant threat any contrary ruling would pose on the right of P941,429.61 corresponding to the amount of insurance for the
privacy of all passengers of all common carriers, considering cargo. In turn Berde Plants executed in its favor a
how easily the duty to inspect can be made an excuse for Subrogation Receipt dated January 17, 1994.
mischief and abuse. Of course, when there are sufficient
indications that the representations of the passenger On February 8, 1994, Federal Phoenix Assurance sent a letter
regarding the nature of his baggage may not be true, in the to C.F. Sharp demanding payment of P941,429.61 on the basis
interest of the common safety of all, the assistance of the of the Subrogation Receipt. C.F. Sharp denied any liability on
police authorities may be solicited, not necessarily to force the the ground that such liability was extinguished when the
passenger to open his baggage, but to conduct the needed vessel carrying the cargo was gutted by fire.
investigation consistent with the rules of propriety and, above On March 11, 1994, Federal Phoenix Assurance filed with the
all, the constitutional rights of the passenger. It is in this sense RTC, Branch 16, Manila a complaint for damages against DSR-
that the mentioned service manual issued by appellant to its Senator Lines and C.F. Sharp, praying that the latter be
conductors must be understood.30 (Emphases and ordered to pay actual damages of P941,429.61, compensatory
underscoring supplied) damages of P100,000.00 and costs.
ISSUE
In this case, records reveal that when the bus stopped at San
W/N DSR-Senator is liable YES
Jose City to let four (4) men ride petitioner's bus (two [2] of
which turned out to be Battung's murderers), the bus driver,
RULING
Duplio, saw them get on the bus and even took note of what
they were wearing. Moreover, Duplio made the bus conductor,
Under Article 1734, Fire is not one of those enumerated under
Daraoay, approach these men and have them pay the
the above provision which exempts a carrier from liability for
corresponding fare, which Daraoay did.31 During the foregoing,
loss or destruction of the cargo. Since the peril of fire is not
both Duplio and Daraoay observed nothing which would rouse
comprehended within the exceptions in Article 1734, then the
their suspicion that the men were armed or were to carry out
common carrier shall be presumed to have been at fault or to
an unlawful activity. With no such indication, there was no
have acted negligently, unless it proves that it has observed
need for them to conduct a more stringent search (i.e., bodily
the extraordinary diligence required by law.
search) on the aforesaid men. By all accounts, therefore, it
cannot be concluded that petitioner or any of its employees
The natural disaster must have been the proximate and only
failed to employ the diligence of a good father of a family in
cause of the loss, and that the carrier has exercised due
relation to its responsibility under Article 1763 of the Civil
diligence to prevent or minimize the loss before,
Code. As such, petitioner cannot altogether be held civilly
during or after the occurrence of the disaster.
liable.
When the goods shipped either are lost or arrive in damaged
WHEREFORE, the petition is GRANTED. Accordingly, the
condition, a presumption arises against the carrier of its
Decision dated May 31, 2013 and the Resolution dated August
23, 2013 of the Court of Appeals in CA-G.R. CV No. 97757 are
failure to observe that diligence, and there need not be an The natural disaster must have been the proximate and only
express finding of negligence to hold it liable cause of the loss, and that the carrier has exercised due
diligence to prevent or minimize the loss before,
Common carriers are obliged to observe extraordinary during or after the occurrence of the disaster.
diligence in the vigilance over the goods transported by
them. Accordingly, they are presumed to have been at fault When the goods shipped either are lost or arrive in damaged
or to have acted negligently if the goods are lost, destroyed or condition, a presumption arises against the carrier of its
deteriorated. failure to observe that diligence, and there need not be an
express finding of negligence to hold it liable.
Respondent Federal Phoenix Assurance raised the
presumption of negligence against petitioners. However, they Common carriers are obliged to observe extraordinary
failed to overcome it by sufficient proof of extraordinary diligence in the vigilance over the goods transported by
diligence. them. Accordingly, they are presumed to have been at fault
or to have acted negligently if the goods are lost, destroyed or
deteriorated.
DSR-SENATOR vs. FEDERAL
Respondent Federal Phoenix Assurance raised the
presumption of negligence against petitioners. However, they
FACTS
failed to overcome it by sufficient proof of extraordinary
diligence.
Berde Plants delivered 632 units of artificial trees to C.F.
Sharp, the General Ship Agent of DSR-Senator Lines, a foreign
shipping corporation, for transportation and delivery to the
consignee, Al-Mohr International Group, in Riyadh, Saudi AF SANCHEZ BROKERAGE VS CA
Arabia.

C.F. Sharp issued International Bill of Lading for the cargo


the port of discharge for the cargo was at the Khor Fakkan
Before this Court on a petition for Certiorari is the appellate
port and the port of delivery was Riyadh, Saudi Arabia, via
Port Dammam. The cargo was loaded in M/S Arabian courts Decision[1] of August 10, 2000 reversing and setting
Senator. aside the judgment of Branch 133, Regional Trial Court of
Makati City, in Civil Case No. 93-76B which dismissed the
Federal Phoenix Assurance insured the cargo against all risks. complaint of respondent FGU Insurance Corporation (FGU
Insurance) against petitioner A.F. Sanchez Brokerage, Inc.
On June 7, 1993, M/S Arabian Senator left the Manila South (Sanchez Brokerage).
Harbor for Saudi Arabia with the cargo on board. When the
vessel arrived in Khor Fakkan Port, the cargo was reloaded on
board DSR-Senator Lines feeder vessel, M/V Kapitan
Sakharov, bound for Port Dammam, Saudi Arabia.
On July 8, 1992, Wyeth-Pharma GMBH shipped on board an
However, while in transit, the vessel and all its cargo caught aircraft of KLM Royal Dutch Airlines at Dusseldorf, Germany
fire. oral contraceptives consisting of 86,800 Blisters Femenal
tablets, 14,000 Blisters Nordiol tablets and 42,000 Blisters
On July 5, 1993, DSR-Senator Lines informed Berde Plants that Trinordiol tablets for delivery to Manila in favor of the
M/V Kapitan Sakharov with its cargo was gutted by fire and
consignee, Wyeth-Suaco Laboratories, Inc.[2] The Femenal
sank on or about July 4, 1993. On December 16, 1993, C.F.
Sharp issued a certification to that effect tablets were placed in 124 cartons and the Nordiol tablets
were placed in 20 cartons which were packed together in one
Consequently, Federal Phoenix Assurance paid Berde Plants (1) LD3 aluminum container, while the Trinordial tablets were
P941,429.61 corresponding to the amount of insurance for the packed in two pallets, each of which contained 30 cartons.[3]
cargo. In turn Berde Plants executed in its favor a
Subrogation Receipt dated January 17, 1994.

On February 8, 1994, Federal Phoenix Assurance sent a letter


Wyeth-Suaco insured the shipment against all risks with FGU
to C.F. Sharp demanding payment of P941,429.61 on the basis
of the Subrogation Receipt. C.F. Sharp denied any liability on Insurance which issued Marine Risk Note No. 4995 pursuant to
the ground that such liability was extinguished when the Marine Open Policy No. 138.[4]
vessel carrying the cargo was gutted by fire.
On March 11, 1994, Federal Phoenix Assurance filed with the
RTC, Branch 16, Manila a complaint for damages against DSR-
Senator Lines and C.F. Sharp, praying that the latter be Upon arrival of the shipment on July 11, 1992 at the Ninoy
ordered to pay actual damages of P941,429.61, compensatory
Aquino International Airport (NAIA),[5] it was discharged
damages of P100,000.00 and costs.
ISSUE without exception[6] and delivered to the warehouse of the
Philippine Skylanders, Inc. (PSI) located also at the NAIA for
W/N DSR-Senator is liable YES safekeeping.[7]

RULING

Under Article 1734, Fire is not one of those enumerated under In order to secure the release of the cargoes from the PSI and
the above provision which exempts a carrier from liability for
the Bureau of Customs, Wyeth-Suaco engaged the services of
loss or destruction of the cargo. Since the peril of fire is not
comprehended within the exceptions in Article 1734, then the Sanchez Brokerage which had been its licensed broker since
common carrier shall be presumed to have been at fault or to 1984.[8] As its customs broker, Sanchez Brokerage calculates
have acted negligently, unless it proves that it has observed and pays the customs duties, taxes and storage fees for the
the extraordinary diligence required by law. cargo and thereafter delivers it to Wyeth-Suaco.[9]
On August 4, 1992, the Hizon Laboratories Inc. issued a
Destruction Report[26] confirming that 38 x 700 blister packs
On July 29, 1992, Mitzi Morales and Ernesto Mendoza, of Femenal tablets, 3 x 700 blister packs of Femenal tablets
representatives of Sanchez Brokerage, paid PSI storage fee and 3 x 700 blister packs of Nordiol tablets were heavily
amounting to P8,572.35 a receipt for which, Official Receipt damaged with water and emitted foul smell.
No. 016992,[10] was issued. On the receipt, another
representative of Sanchez Brokerage, M. Sison,[11]
acknowledged that he received the cargoes consisting of
three pieces in good condition.[12] On August 5, 1992, Wyeth-Suaco issued a Notice of Materials
Rejection[27] of 38 cartons of Femenal and 3 cartons of
Nordiol on the ground that they were delivered to Hizon
Laboratories with heavy water damaged (sic) causing the
Wyeth-Suaco being a regular importer, the customs examiner cartons to sagged (sic) emitting a foul order and easily
did not inspect the cargoes[13] which were thereupon attracted flies.[28]
stripped from the aluminum containers[14] and loaded inside
two transport vehicles hired by Sanchez Brokerage.[15]

Wyeth-Suaco later demanded, by letter[29] of August 25,


1992, from Sanchez Brokerage the payment of P191,384.25
Among those who witnessed the release of the cargoes from representing the value of its loss arising from the damaged
the PSI warehouse were Ruben Alonso and Tony Akas,[16] tablets.
employees of Elite Adjusters and Surveyors Inc. (Elite
Surveyors), a marine and cargo surveyor and insurance claim
adjusters firm engaged by Wyeth-Suaco on behalf of FGU
Insurance. As the Sanchez Brokerage refused to heed the demand,
Wyeth-Suaco filed an insurance claim against FGU Insurance
which paid Wyeth-Suaco the amount of P181,431.49 in
settlement of its claim under Marine Risk Note Number 4995.
Upon instructions of Wyeth-Suaco, the cargoes were delivered
to Hizon Laboratories Inc. in Antipolo City for quality control
check.[17] The delivery receipt, bearing No. 07037 dated July
29, 1992, indicated that the delivery consisted of one Wyeth-Suaco thus issued Subrogation Receipt[30] in favor of
container with 144 cartons of Femenal and Nordiol and 1 FGU Insurance.
pallet containing Trinordiol.[18]

On demand by FGU Insurance for payment of the amount of


On July 31, 1992, Ronnie Likas, a representative of Wyeth- P181,431.49 it paid Wyeth-Suaco, Sanchez Brokerage, by
Suaco, acknowledged the delivery of the cargoes by affixing letter[31] of January 7, 1993, disclaimed liability for the
his signature on the delivery receipt.[19] Upon inspection, damaged goods, positing that the damage was due to
however, he, together with Ruben Alonzo of Elite Surveyors, improper and insufficient export packaging; that when the
discovered that 44 cartons containing Femenal and Nordiol sealed containers were opened outside the PSI warehouse, it
tablets were in bad order.[20] He thus placed a note above his was discovered that some of the loose cartons were wet,[32]
signature on the delivery receipt stating that 44 cartons of prompting its (Sanchez Brokerages) representative Morales to
oral contraceptives were in bad order. The remaining 160 inform the Import-Export Assistant of Wyeth-Suaco, Ramir
cartons of oral contraceptives were accepted as complete and Calicdan, about the condition of the cargoes but that the latter
in good order. advised to still deliver them to Hizon Laboratories where an
adjuster would assess the damage.[33]

Ruben Alonzo thus prepared and signed, along with Ronnie


Likas, a survey report[21] dated July 31, 1992 stating that 41 Hence, the filing by FGU Insurance of a complaint for damages
cartons of Femenal tablets and 3 cartons of Nordiol tablets before the Regional Trial Court of Makati City against the
were wetted (sic).[22] Sanchez Brokerage.

The Elite Surveyors later issued Certificate No. CS-0731- The trial court, by Decision[34] of July 29, 1996, dismissed the
1538/92[23] attached to which was an Annexed Schedule complaint, holding that the Survey Report prepared by the
whereon it was indicated that prior to the loading of the Elite Surveyors is bereft of any evidentiary support and a
cargoes to the brokers trucks at the NAIA, they were inspected mere product of pure guesswork.[35]
and found to be in apparent good condition.[24] Also noted
was that at the time of delivery to the warehouse of Hizon
Laboratories Inc., slight to heavy rains fell, which could
account for the wetting of the 44 cartons of Femenal and On appeal, the appellate court reversed the decision of the
Nordiol tablets.[25] trial court, it holding that the Sanchez Brokerage engaged not
only in the business of customs brokerage but also in the
transportation and delivery of the cargo of its clients, hence, a
common carrier within the context of Article 1732 of the New On the merits, respondent FGU Insurance contends that
Civil Code.[36] petitioner, as a common carrier, failed to overcome the
presumption of negligence, it being documented that
petitioner withdrew from the warehouse of PSI the subject
shipment entirely in good order and condition.[39]
Noting that Wyeth-Suaco adduced evidence that the cargoes
were delivered to petitioner in good order and condition but
were in a damaged state when delivered to Wyeth-Suaco, the
appellate court held that Sanchez Brokerage is presumed The petition fails.
negligent and upon it rested the burden of proving that it
exercised extraordinary negligence not only in instances when
negligence is directly proven but also in those cases when the
cause of the damage is not known or unknown.[37] Rule 45 is clear that decisions, final orders or resolutions of
the Court of Appeals in any case, i.e., regardless of the nature
of the action or proceedings involved, may be appealed to this
Court by filing a petition for review, which would be but a
The appellate court thus disposed: continuation of the appellate process over the original case.
[40]

IN THE LIGHT OF ALL THE FOREGOING, the appeal of the


Appellant is GRANTED. The Decision of the Court a quo is The Resolution of the Court of Appeals dated December 8,
REVERSED. Another Decision is hereby rendered in favor of 2000 denying the motion for reconsideration of its Decision of
the Appellant and against the Appellee as follows: August 10, 2000 was received by petitioner on January 5,
2001. Since petitioner failed to appeal within 15 days or on or
before January 20, 2001, the appellate courts decision had
become final and executory. The filing by petitioner of a
1. The Appellee is hereby ordered to pay the Appellant the petition for certiorari on March 6, 2001 cannot serve as a
principal amount of P181, 431.49, with interest thereupon at substitute for the lost remedy of appeal.
the rate of 6% per annum, from the date of the Decision of the
Court, until the said amount is paid in full;

In another vein, the rule is well settled that in a petition for


certiorari, the petitioner must prove not merely reversible
2. The Appellee is hereby ordered to pay to the Appellant the error but also grave abuse of discretion amounting to lack or
amount of P20,000.00 as and by way of attorneys fees; and excess of jurisdiction.

3. The counterclaims of the Appellee are DISMISSED.[38] Petitioner alleges that the appellate court erred in reversing
and setting aside the decision of the trial court based on its
finding that petitioner is liable for the damage to the cargo as
a common carrier. What petitioner is ascribing is an error of
Sanchez Brokerages Motion for Reconsideration having been judgment, not of jurisdiction, which is properly the subject of
denied by the appellate courts Resolution of December 8, an ordinary appeal.
2000 which was received by petitioner on January 5, 2001, it
comes to this Court on petition for certiorari filed on March 6,
2001.
Where the issue or question involves or affects the wisdom or
legal soundness of the decision not the jurisdiction of the
court to render said decision the same is beyond the province
In the main, petitioner asserts that the appellate court of a petition for certiorari.[41] The supervisory jurisdiction of
committed grave and reversible error tantamount to abuse of this Court to issue a cert writ cannot be exercised in order to
discretion when it found petitioner a common carrier within review the judgment of lower courts as to its intrinsic
the context of Article 1732 of the New Civil Code. correctness, either upon the law or the facts of the case.[42]

Respondent FGU Insurance avers in its Comment that the Procedural technicalities aside, the petition still fails.
proper course of action which petitioner should have taken
was to file a petition for review on certiorari since the sole The appellate court did not err in finding petitioner, a customs
office of a writ of certiorari is the correction of errors of broker, to be also a common carrier, as defined under Article
jurisdiction including the commission of grave abuse of 1732 of the Civil Code, to wit:
discretion amounting to lack or excess of jurisdiction and does
not include correction of the appellate courts evaluation of the
evidence and factual findings thereon.
Art. 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or handling and stowage, including such methods as their nature
air, for compensation, offering their services to the public. requires.[48]

Anacleto F. Sanchez, Jr., the Manager and Principal Broker of In the case at bar, it was established that petitioner received
Sanchez Brokerage, himself testified that the services the firm the cargoes from the PSI warehouse in NAIA in good order and
offers include the delivery of goods to the warehouse of the condition;[49] and that upon delivery by petitioner to Hizon
consignee or importer. Laboratories Inc., some of the cargoes were found to be in bad
order, as noted in the Delivery Receipt[50] issued by
petitioner, and as indicated in the Survey Report of Elite
Surveyors[51] and the Destruction Report of Hizon
ATTY. FLORES: Laboratories, Inc.[52]

Q: What are the functions of these license brokers, license In an attempt to free itself from responsibility for the damage
customs broker? to the goods, petitioner posits that they were damaged due to
the fault or negligence of the shipper for failing to properly
pack them and to the inherent characteristics of the
goods[53]; and that it should not be faulted for following the
WITNESS: instructions of Calicdan of Wyeth-Suaco to proceed with the
delivery despite information conveyed to the latter that some
of the cartons, on examination outside the PSI warehouse,
were found to be wet.[54]
As customs broker, we calculate the taxes that has to be paid
in cargos, and those upon approval of the importer, we
prepare the entry together for processing and claims from
customs and finally deliver the goods to the warehouse of the While paragraph No. 4 of Article 1734[55] of the Civil Code
importer.[43] exempts a common carrier from liability if the loss or damage
is due to the character of the goods or defects in the packing
or in the containers, the rule is that if the improper packing is
known to the carrier or his employees or is apparent upon
Article 1732 does not distinguish between one whose principal
ordinary observation, but he nevertheless accepts the same
business activity is the carrying of goods and one who does
without protest or exception notwithstanding such condition,
such carrying only as an ancillary activity.[44] The contention,
he is not relieved of liability for the resulting damage.[56]
therefore, of petitioner that it is not a common carrier but a
customs broker whose principal function is to prepare the
correct customs declaration and proper shipping documents
as required by law is bereft of merit. It suffices that petitioner If the claim of petitioner that some of the cartons were
undertakes to deliver the goods for pecuniary consideration. already damaged upon delivery to it were true, then it should
naturally have received the cargo under protest or with
reservations duly noted on the receipt issued by PSI. But it
made no such protest or reservation.[57]
In this light, petitioner as a common carrier is mandated to
observe, under Article 1733[45] of the Civil Code,
extraordinary diligence in the vigilance over the goods it
transports according to all the circumstances of each case. In Moreover, as observed by the appellate court, if indeed
the event that the goods are lost, destroyed or deteriorated, it petitioners employees only examined the cargoes outside the
is presumed to have been at fault or to have acted PSI warehouse and found some to be wet, they would
negligently, unless it proves that it observed extraordinary certainly have gone back to PSI, showed to the
diligence.[46] warehouseman the damage, and demanded then and there
for Bad Order documents or a certification confirming the
damage.[58] Or, petitioner would have presented, as witness,
the employees of the PSI from whom Morales and Domingo
The concept of extra-ordinary diligence was explained in
took delivery of the cargo to prove that, indeed, part of the
Compania Maritima v. Court of Appeals:[47]
cargoes was already damaged when the container was
allegedly opened outside the warehouse.[59]

The extraordinary diligence in the vigilance over the goods


tendered for shipment requires the common carrier to know
Petitioner goes on to posit that contrary to the report of Elite
and to follow the required precaution for avoiding damage to,
Surveyors, no rain fell that day. Instead, it asserts that some
or destruction of the goods entrusted to it for sale, carriage
of the cargoes were already wet on delivery by PSI outside the
and delivery. It requires common carriers to render service
PSI warehouse but such notwithstanding Calicdan directed
with the greatest skill and foresight and to use all reasonable
Morales to proceed with the delivery to Hizon Laboratories,
means to ascertain the nature and characteristics of goods
Inc.
tendered for shipment, and to exercise due care in the
A: Yes sir, there was an instance that one cartoon (sic) were
wetted (sic) but Wyeth-Suaco did not claim anything against
While Calicdan testified that he received the purported us.
telephone call of Morales on July 29, 1992, he failed to
specifically declare what time he received the call. As to
whether the call was made at the PSI warehouse when the
shipment was stripped from the airport containers, or when ATTY. FLORES:
the cargoes were already in transit to Antipolo, it is not
determinable. Aside from that phone call, petitioner admitted
that it had no documentary evidence to prove that at the time
it received the cargoes, a part of it was wet, damaged or in Q: HOW IS IT?
bad condition.[60]

WITNESS:
The 4-page weather data furnished by PAGASA[61] on request
of Sanchez Brokerage hardly impresses, no witness having
identified it and interpreted the technical terms thereof.
A: We experienced, there was a time that we experienced that
there was a cartoon (sic) wetted (sic) up to the bottom are wet
specially during rainy season.[62]
The possibility on the other hand that, as found by Hizon
Laboratories, Inc., the oral contraceptives were damaged by
rainwater while in transit to Antipolo City is more likely then.
Sanchez himself testified that in the past, there was a similar Since petitioner received all the cargoes in good order and
instance when the shipment of Wyeth-Suaco was also found to condition at the time they were turned over by the PSI
be wet by rain. warehouseman, and upon their delivery to Hizon Laboratories,
Inc. a portion thereof was found to be in bad order, it was
incumbent on petitioner to prove that it exercised
extraordinary diligence in the carriage of the goods. It did not,
ATTY. FLORES: however. Hence, its presumed negligence under Article 1735
of the Civil Code remains unrebutted.

Q: Was there any instance that a shipment of this nature, oral


contraceptives, that arrived at the NAIA were damaged and WHEREFORE, the August 10, 2000 Decision of the Court of
claimed by the Wyeth-Suaco without any question? Appeals is hereby AFFIRMED.

WITNESS: Costs against petitioner.