01#Transpo#Compiled#Digests.#3C.#Atty.
#Ampil# #1#
#
CONTENTS#
Mendoza#v.#PAL#–#AQUINO#.......................................................................................................................#1!
Maritime#Company#v.#CA#–#BENEDICTO#.............................................................................................#2!
Medina#v.#Cresencia#H#CHAN#.....................................................................................................................#4!
Benedicto#v.#IAC#–#CORTEZ#.......................................................................................................................#4!
First#Malayan#Leasing#v.#CA#–#NENZO#CRUZ#.....................................................................................#7!
BA#Finance#v.#CA#–#DE#LA#PAZ#.................................................................................................................#8!
De#Guzman#v.#CA#–#GERALDEZ#............................................................................................................#10!
Bascos#v.#CA#–#KING#..................................................................................................................................#11!
First#Philippine#Industrial#Corp#v.#CA#H#LAGOS#.............................................................................#14!
Calvo#v.#UCPB#–#LOPA#..............................................................................................................................#15!
Home#Insurance#v.#American#Steamship#–#LUCENARIO#..........................................................#18!
Valenzuela#Hardwood#v.#CA#H#MAGTAGNOB#..................................................................................#19!
National#Steel#Corp#v.#CA#–#MUTI#........................................................................................................#21!
FGU#Insurance#v.#GP#Sarmiento#–#NARVASA#.................................................................................#23!
Loadstar#Shipping#v.#CA#–#PEREZ#DE#TAGLE#.................................................................................#25!
Arada#v.#CA#–#RAZON#................................................................................................................................#27!
Eastern#Shipping#v.#CA#–#SANTOS#.......................................................................................................#28!
Delsan#v.#CA#–#SUPERABLE#....................................................................................................................#30!
Bankers#and#Manufacturers#Assurance#v.#CA#–#TANDOC#.........................................................#31!
Sarkies#Tours#v.#CA#–#TIU#.......................................................................................................................#32!
# •
MENDOZA#V.#PAL#–#AQUINO#
JOSE% MENDOZA,# plaintiffHappellant,# !vs.!PHILIPPINE% AIR% LINES,% INC.,# defendantH
appellee.#
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.#
However,#the#same#was#not#unloaded#upon#arrival#at#the#airport.#Mendoza#was#not#able#
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#Peña#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#fiestaHgoers#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.#
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#nonHinclusion#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#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #2#
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#
proceedings# and# trial,# the# complaint# was# "dismissed# with# costs# against# plaintiff."##
Trial#Court's#judgment#was#founded#upon#the#following#findings#and#conclusions:#
 01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #3#
#
1.#Rizal#Surety#'was#the#insurer#of#800#packages#of#PVC#compound#loaded#on#the# PHILIPPINE#NATIONAL#LINES#
SS#Doña'Nati'at#Yokohama#and#consigned#to#the#Acme#Electrical#Manufacturing# NATIONAL#DEVELOPMENT#COMPANY#
Company."# MARITIME#COMPANY#OF#THE#PHILIPPINES#
# AGENT#
2.#"#The#SS'Doña'Nati#was#owned#by#the#NDC#whereas#the#Maritime#Company#of# PHILIPPINESHHONGKONG,#JAPAN,#U.S.#PACIFIC#
the# Philippines# was# its# Agent.# This# appears# indubitably# in# the# Bill# of# Lading.# COASTHGULF#PORTS#
Exhibit#D."# HONGKONGHCOSMOS#DEVELOPMENT#COMPANY#
# *#JAPANHFUJI#ASANO#KAIUN#CO,#LTD.#
3.#The#goods#were#never#delivered#to#the#consignee#(Acme#Electrical,#etc.,#supra)# *#U.S.AHNORTH#AMERICAN#MARITIME#AGENCIES#
so#that#x#x#(Rizal)#as#Insurer,#paid#x#x#(said)#consignee#the#sum#of#P38,758.50."# #
# • The#bill#shows#on#its#face#that#it#was#issued#'FOR#THE#MASTER'#by#"Maritime#Company#
4.# The# cause# of# the# nonHdelivery# of# the# goods,# from# the# evidence# presented# by# of#the#Philippines,#Agent."#
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# • Acme#Electrical#Manufacturing#is#entitled#to#the#proceeds#of#the#insurance#against#loss#
Maru,#causing#damage#to#the#hull#of#the#SS#Doña'Nati#and#the#resultant#flooding# of# the# goods# in# question.# Rizal# Surety# was# subrogated# to# Acme's# rights# against# the#
of#the#holds#damaged#beyond#repair#the#goods#of#the#consignee#in#question."# 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"Hand# the# bill# is# so#
5.#There#is#no#doubt#that#under#our#Code#of#Commerce,#it#would#be#the#vessel#at# consigned:#"to#the#order#of#China#Banking#Corporation,#Manila,#or#assigns"Hthe#"Acme#
fault#in#this#collision,#that#would#be#responsible#for#the#damage#to#the#cargo.#And# Electrical#Manufacturing,#Manila,"#shall#be#notified.##Acme#was#the#importer#and#China#
the#evidence#of#NDC#and#Maritime,#which#has#not#been#rebutted,#is#that#the#M/V# Banking# Corporation# was# the# financing# agency.# It# was# "by# order# and# for# account# of#
Yasushima' Maru' was# at# fault# in# the# collision,# so# that# the# cause# of# action# of# Messrs.# Acme# Electrical# Manufacturing,# Manila"# that# the# 800# bags# of# PVC# compound#
plaintiff# should# be# directed# to# the# owners# of# the# negligent# vessel.# However,# as# were#shipped#from#Yokohama#to#Manila.##
Rizal#has#brought#this#action#in#good#faith,#attorney's#fees#are#not#recoverable."# • 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#
• Rizal# Surety# went# to# CA.# CA# found# merit# in# its# appeal.# It# set# aside# Trial# Court's# that#it#is#the#"law#of#the#country#to#which#the#goods#are#to#be#transported#which#shall#
judgment# and# ordered# NDC# and# Maritime# jointly# and# severally# to# pay# Rizal# Surety# govern#the#liability#of#the#common#carrier#for#their#loss,#destruction#or#deterioration."#
the#sum#of#P38,758.50#with#legal#rate#of#interest#from#the#filing#of#the#complaint#.# 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#
Issues:#Whether#NDC#and#Maritime#Co.#are#liable#to#Rizal#Surety#H#YES# Commerce# and# by# special# laws."# Since# there# are# specific# provisions# regulating# the#
#############Whether#the#Civil#Code#and#not#the#COGSA#is#applicable#in#this#case#H#YES# 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#
Held:%CA# Judgment# affirmed.#NDC# and# Maritime# Co.# jointly# and# severally# to# pay# Rizal# American'President'Lines'v.#Klepper,#SC#ruled#that#in#view#of##Articles#1753#and#1766,#
Surety#the#sum#of#P#38,758.50#with#legal#rate#of#interest#from#the#filling#of#the#complaint.# the#provisions#of#the#COGSA#are#merely#suppletory#to#the#Civil#Code.#
# #
• NDC#appointed#Maritime#as#its#agent#to#manage#and#operate#its#3#vessels#including#SS# • Using# Art# 1734,# Maritime# Co.# and# NDC,# as# "common# carriers,"# are# liable# to# Acme# for#
Doña'Nati.#Under#their#written#agreement,#Maritime#Co.#to#render#a#complete#report#of# "the# loss,# destruction# or# deterioration# of# the# goods,"# and# may# be# relieved# of#
the# operations# of# the# vessels# within# 60# days# after# conclusion# of# each# voyage;# it# was# responsibility#if#the#loss,#etc.,#"is#due#to#any#of#the#following#causes#only:##
also# authorized# to# appoint# subHagents# at# any# ports# or# places# that# it# might# deem# 1.#Flood,#storm,#earthquakes,#lightning#or#other#natural#disaster#or#calamity;#
necessary,# remaining# however# responsible# to# NDC# for# the# timely# and# satisfactory# 2.#Act#of#the#public#enemy#in#war,#whether#international#or#civil;#
performance# of# said# subHagents.# Maritime# Co.# is# ship# agent# under# the# Code# of# 3.#Act#or#omission#of#the#shipper#or#owner#of#the#goods;#
Commerce,# a# ship# agent,# accordingly# to# that# Code,# being# "the# person# entrusted# with# 4.#The#character#of#the#goods#or#defects#in#the#packing#or#in#the#containers;#
provisioning#or#representing#the#vessel#in#the#port#in#which#it#may#be#found."## 5.#Order#or#act#of#competent#public#authority.'#
• Maritime#Co.#insists#that#it#was#not#the#ship#agent#of#NDC#in#Japan#but#"the#Fuji#Asano# Since#none#of#the#specified#absolutory#causes#is#present,#NDC#and#Maritime#are#liable.#
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# Maritime#attributes#entire#fault#to#the#Japanese#vessel.#CA#found,#as#a#fact,#that#Doña'Nati#
lading#below.###The#letterhead#of#the#bill#of#lading#is#in#two#(2)#parts,#and#is#printed#in# "did# not# exercise# even# due# diligence# to# avoid# the# collision.'# Having# failed# to# exercise#
the#following#manner:# 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#H#CHAN#
EMERENCIANA% M.% VDA.% DE% MEDINA,% ET% AL.,%PlaintiffsJAppellees,% vs.% GUILLERMO%
CRESENCIA,%ET%AL.,%Defendants.%GUILLERMO%CRESENCIA,%Appellant.%
G.R.%No.%LJ8194%
July%11,%1956%
# Cresencia#appealed.%
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.#
# consequences#incident#to#its#operation.#%
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#
plaintiffHappellee#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#coHdefendant.#
Rosario# alleged# in# defense# that# she# was# never# the# public# utility# operator# thereof.#
Cresencia#and#Rosario#made#manifestations#that:%
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #4#
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,#
" 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#
" 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# 1st# 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.###
#
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#
 01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #5#
#
Quirino# for# Valenzuela,# Cruz# issued# the# driver# 2# Charge# Invoices,# both# of# which# were# On#May#15,#1980,#Cruz,#in#the#presence#and#with#consent#of#the#truck#driver,#supervised#
initialed#by#the#latter#at#the#bottom#left#corner.#He#then#instructed#the#driver#to#give#the# the# loading# of# 1,790# board# feet# of# sawn# lumber# with# invoice# value# of# P16,# 918.# Before#
original#copies#of#the#2#invoices#to#the#consignee#upon#arrival#in#Valenzuela#and#to#retain# the#cargo#truck#left#Quirino#for#Valenzuela,#Cruz#issued#the#driver#Charge#Invoices#Nos.#
the# duplicate# copies# in# order# that# he# could# afterwards# claim# the# freightage# from# 3259# (amounting# to# P11,822.80)# and# 3260# (amounting# to# P5,095.20)# both# of# which#
Greenhills’#Manila#office.#However,#Blue#Star#did#not#receive#the#delivery#and#due#to#this# were# initialed# by# the# latter# at# the# bottom# left# corner.# He# then# instructed# the# driver# to#
delay,#they#were#“constrained#to#look#for#other#suppliers”.## 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# filed# a# case# for# estafa# against# the# truck# driver# and# against# Benedicto# for# Greenhills’#Manila#office.#
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.## 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#
ISSUE:# whether# or# not# Benedicto,# being# the# registered# owner# of# the# carrier,# should# be# Manager# in# their# Quirino# office# of# what# had# happened.# On# May# 18,# 1980,# Blue# Star’s#
held#liable#for#the#value#of#the#undelivered#or#lost#sawn#lumber# 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#
HELD% AND% RATIO:# IAC# ruling,# affirmed;# petition# denied.# There# is# no# dispute# that# other#suppliers”.##
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# Greenhills# then# filed# Criminal# Case# No.# 668# against# driver# Licuden# for#estafa# and# Civil#
Benedicto#is,#in#brief,#a#common#carrier.#A% common% carrier,% both% from% the% nature% of% Case# No.# DH5206# against# Benedicto# for# recovery# of# the# value# of# lost# sawn# lumber# plus#
its%business%and%for%insistent%reasons%of%public%policy,%is%burdened%by%the%law%with% damages#before#RTC#of#Dagupan#City.#
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% Benedicto,# in# her# answer,# denied# liability# alleging# that# she# was# a# complete# stranger# to#
destruction% or% deterioration% of%goods%turned% over% to% the% common% carrier% for% the#contract#of#carriageH#the#subject#truck#having#been#earlier#sold#by#her#to#Benjamin#
conveyance%to%a%designated%destination,%raises%instantly%a%presumption%of%fault%or% Tee,#on#28#February#1980#as#evidenced#by#a#deed#of#sale.##She#claimed#that#the#truck#had#
negligence% on% the% part% of% the% carrier,% save% only% where% such% loss,% destruction% or% remained# registered# in# her# name# notwithstanding# its# earlier# sale# to# Tee# because# the#
damage%arises%from%extreme%circumstances%such%as%a%natural%disaster%or%calamity% latter#had#paid#her#only#P50,000.00#out#of#the#total#agreed#price#of#P68,000.00#However,#
or%act%of%the%public%enemy%in%time%of%war,%or%from%an%act%or%omission%of%the%shipper% she#averred#that#Tee#had#been#operating#the#said#truck#in#Central#Luzon#from#that#date#
himself% or% from% the% character% of% the% goods% or% their% packaging% or% container.#This% (28#February#1980)#onwards,#and#that,#therefore,#Licuden#was#Tee's#employee#and#not#
presumption% may% be% overcome% only% by% proof% of% extraordinary% diligence% on% the% hers.#
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,# RTC# Dagupan# found# that# Benedictio# was# still# the# registered# owner# of# the# cargo# truck,#
would#be#utterly#subversive#of#the#purpose#of#the#law#and#doctrine.% 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).##
# #
FACTS:6 Upon# appeal,# IAC# affirmed# the# RTC# decision.# It# held# that# Benedicto# was# the# registered#
Private# respondent# Greenhills# Wood# Industry# Company,# Inc.# (Greenhills),# a# lumber# owner#of#the#subject#vehicle,#Licuden#the#driver#of#the#truck,#was#her#employee,#and#that#
manufacturing# firm# with# business# address# at# Dagupan# City,# operates# a# sawmill# in# accordingly#petitioner#should#be#responsible#for#the#negligence#of#said#driver#and#bear#
Quirino.#Blue#Star#Mahogany#Inc.#(Blue#Star)#is#a#company#with#business#operations#in# the#loss#of#the#sawn#lumber#plus#damages.#Benedicto#moved#for#reconsideration#but#got#
Valenzuela,#Bulacan.#Sometime#in#May#1980,#Greenhills#bound#itself#to#sell#and#deliver#to# denied.#
Blue# Star# 100,000# board# feet# of# saw# lumber# with# the# understanding# that# every# initial# #
delivery#would#be#made#on#May#15,#1980.## #
# ISSUE:6 whether# or# not# Benedicto,# being# the# registered# owner# of# the# carrier,# should# be#
To# effect# the# 1st# delivery,# Greenhills’# manager# in# Quirino,# Dominador# Cruz# (Cruz)# held#liable#for#the#value#of#the#undelivered#or#lost#sawn#lumber#
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# HELD:6Petition#is#denied#for#lack#of#merit.#IAC#ruling#is#AFFIRMED.#
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.# RATIO:6
Homes#Parañaque.###
##

#
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.#
# delivery# or# that# the# loss# or# nonHdelivery# was# due# to# some# casualty# or#force'
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.#
# reimbursement#or#contribution.#
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.#%
# actual%or%lawful%owner%thereof%It%would%be%very%difficult%and%often%impossible%as%a%
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.#
# In# fact,# private# respondent# had# no# reason# at# all# to# doubt# the# authority# of# Licuden# to#
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.#
# question#that#contract#or#the#authority#of#Licuden#to#represent#the#owner#of#the#carrier#
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%mayJ
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#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #6#
lumber#was#loaded#on#board#the#freight#truck;#loss#or#nonHdelivery#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# nonH
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#
#
#
*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%
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.#
#
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#
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.#
#
##
 01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #7#
#
FIRST#MALAYAN#LEASING#V.#CA#–#NENZO#CRUZ# On#June#26,#1984,#Vitug#filed#Civil#suit#against#First#Malayan#to#recover#damages:##
• for#physical#injuries,##
First%Malayan%Leasing%v.%CA% • loss#of#personal#effects,#and##
# • wreck#of#his#car##
#[G.R.#No.#91378#.#June#9,#1992.]# #
FIRST# MALAYAN# LEASING# AND# FINANCE# CORPORATION,'petitioner,#vs.#THE# The%Incident:%three%way%collision%
HON.# COURT# OF# APPEALS,# CRISOSTOMO# B.# VITUG# and# ESTATE# OF# VICENTE# The#evidence#shows#that#while#Vitug's#car#was#at#a#full#stop##
TRINIDAD,#represented#by#widow#GLORIA#D.#TRINIDAD,'respondents.# • at# the# intersection# of# New# York# Street# and# EDSA# in# Cubao,# Quezon# City,#
% northwardHbound,##
% The# onHcoming# Isuzu# cargo# truck# bumped# a# Ford# Granada# car# behind# him# with# such#
SUMMARY%/%EMERGENCY%DIGEST% 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#
Vitug#(Petitioner)#was#in#a#three#way#vehicle#accident#between#his#own#car,#another#car# and#setting#the#car#ablaze.#
and#an#Isuzu#truck#which#was#at#the#time#of#the#accident,#registered#in#the#name#of#First# • Stunned# by# the# impact,# Vitug# was# fortunately# extricated# from# his# car# by#
Malayan#Leasing#and#Finance#or#FMLF#(#respondents#).#Vitug#suffered#physical#injuries# solicitous# bystanders# before# the# vehicle# exploded.# However,# two# of# his#
and#incurred#losses#upon#his#property#which#prompted#him#to#sue#FMLF#for#damages.## passengers#were#burned#to#death.##
# #
FMLF’s# defense# was# that:# even# before# the# three# way,# they# were# had# already# sold# the# Value%lost%
Isuzu# truck# to# one# Trinidad,# in# addition,# they# were# not# the# employer# of# the# truck’s# Vitug's#car,#valued#at#P70,000,#was#a#total#loss.#
driver.#(Thus#not#liable)## Vitug#lost#various#personal#articles#valued#at#P48,950,#namely##
# • a# necklace# with# a# diamond# pendant,# a# GP# watch,# a# pair# of# Christian# Dior#
The#trial#court#sentenced#FMLFC#to#pay#Vitug#the#sum#of#P133,950.#The#CA#altered#the# eyeglasses,#a#gold#Cross#pen#and#a#pair#of#Bally#shoes.##
decision# only# in# that# the# estate# of# Trinidad# (by# this# time# he# has# already# died)# had# to# Vitug#also#suffered#injuries#producing#recurring#pains#in#his#neck#and#back.##
indemnify#FMLFC#–#the#rest#was#affirmed.#FMLFC#petitioned#for#review.#The#SC#denied# • Upon# his# physician's# advice,# he# received# further# medical# treatment# in# the#
it.## United#States#which#cost#him#US$2373.64#for#his#first#trip,#and#US$5,596.64#for#
# the#second.#
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# Main%Important%facts:%FMLFC’s%defense%
persons,# and# as# such,# directly# and# primarily# responsible# for# the# consequences# of# its# At# the# time# of# the# accident# the# Isuzu# cargo# truck# was# registered# in# the# name# of# the#
operation.#Further#the#SC#pointed#out#:#In#order#for#a#transfer#of#ownership#of#a#motor# FMLFC.#However,#FMLFC#denied#any#liability,##
vehicle#to#be#valid#against#third#persons,#it#must#be#recorded#in#the#Land#Transportation# • alleging#that#it#was#not#the#owner#of#the#truck,##
Office#(which#FMLFC#didn’t#do).## • 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#
FACTS% and#Trinidad.##
# #
This#case#brings#to#the#force#the#importance#of#motor#vehicle#registration#in#determining# Lower%Court%Grants%third%party%complaint%%
who#should#be#liable#for#the#death#or#injuries#suffered#by#passengers#or#third#persons#as# The#lower#court#granted#FMLFC's#leave#to#file#a#thirdHparty#complaint#against#Trinidad#
a#consequence#of#the#operation#of#a#motor#vehicle.# (the#buyer#of#the#truck)#and#admitted#the#thirdHparty#complaint#filed#therewith.#
# • Answering#the#thirdHparty#complaint,#the#Estate#of#Vicente#Trinidad#admitted#
On# December# 14,# 1983# Crisostomo# B.# Vitug# (Vitug)# got# into# a# threeHvehicle# collision# that#the#truck#was#operated#by#the#deceased#during#his#lifetime.##
involving#:# • Nevertheless,# it# raised# the# defense# that# the# estate# of# Vicente# Trinidad# was# no#
• His#Car# longer# existing# because# the# same# had# long# been# settled# and# partitioned#
• another#car# extrajudicially#by#his#heirs.#
• and#an#Isuzu#Cargo#truck## #
o this#was#the#vehicle#registered#in#the#name#of#First#Malayan#Leasing# Lower%Court%/%CA%sentences%FMLFC%to%Pay%
and#Finance#Corporation#(FMLFC)#
o The#truck#was#driven#by#Crispin#Sicat.#

#
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.#
# Paras,#G.R.#No.#LH10605,#June#30,#1955.)##
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# thirdHparty#
defendantHappellee#(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.#
# financially#for#the#damage#or#injury#done."#(Eerezo#vs.#Jepte.#102#
FMLFC# has# filed# this# petition# for# review# on# certiorari# praying# that# the# decision# of# the#
appellate#court#be#reversed#and#set#aside.#
# for#damages#caused#by#a#vehicle#regardless#of#any#alleged#sale#or#
ISSUES%
# Caldo,#132#SCRA#11.)#
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%
# conclusive#evidence#of#ownership.##
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# (MYCHAgroHIndustrial# 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# wellHsettled# 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# ownerHoperator# 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#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #8#
Montoya#vs.#Ignacio,# G.R.# No.# LH5868,# Dec.# 29,# 1953,#
Timbol#vs.#Osias,# G.R.# No.# LH7547,# April# 30,# 1955;# Vda.# de#
Medina#vs.#Cresencia,#G.R.#No.#LH8194,#July#11,#1956;#Necesito#vs.#
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#
Phil.#103.)##
iii. ".#.#.#The#registered#owner#or#operator#of#record#is#the#one#liable#
lease# made# thereon."# (MYCHAgroHIndustrial# Corp.#vs.# Vda.# de#
#
#
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#
• 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:##
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#
 01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #9#
#
registered# owner# of# the# vehicle# with# the# right# to# reimbursement# to# be# claimed# against# Ratio:# There# is# a# presumption# that# the# owner# of# the# guilty# vehicle# is# the# defendantH
Rock#Component#pursuant#to#their#lease#agreement.## appellant#as#he#is#the#registered#owner#in#the#Motor#Vehicle#Office.##
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# The# Revised# Motor# Vehicle# Law# (Act# No.# 3992,# as# amended)# provides# that# the# vehicle#
BA#Finance#liable#as#the#registered#owner#subject#to#the#right#of#reimbursement.## may# be# used# or# operated# upon# any# public# highway# unless# the# same# is# properly#
The# main# aim# of# motor# vehicle# registration# is# to# identify# the# owner# so# that# if# any# registered.##
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# The# main# aim# of# motor# vehicle# registration# is# to# identify# the# owner# so# that# if# any#
owner.#If#the#policy#of#the#law#is#to#be#enforced#and#carried#out,#the#registered% owner% accident# happens,# or# that# any# damage# or# injury# is# caused# by# the# vehicle# on# the# public#
should%not%be%allowed%to%prove%the%contrary%to%the%prejudice%of%the%person%injured,% highways,# responsibility# therefor# can# be# fixed# on# a# definite# individual,# the# registered#
that%is,%to%prove%that%a%third%person%or%another%has%become%the%owner,%so%that%he% owner.#Whatever#purpose#there#may#be#in#these#statutes,#it#is#subordinate#at#the#last#to#
may%thereby%be%relieved%of%the%responsibility%to%the%injured%person.# 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.##
Complete#Digest:## #
Facts:An#accident#involving#BA#Finance’s#Isuzu#tenHwheeler#truck#resulting#in#the#death# With% the% above% policy% in% mind,% the% question% that% defendantJappellant% poses% is:%
of#three#victims#and#multiple#injuries.## 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%
#RTC#found# responsibility%and%lay%the%same%on%the%person%actually%owning%the%vehicle?##
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# We#hold#with#the#trial#court#that#the#law#does#not#allow#him#to#do#so;#the#law,#with#its#
imprudence# resulting# in# triple# homicide# with# multiple# physical# injuries# with# aim#and#policy#in#mind,#does#not#relieve#him#directly#of#the#responsibility#that#the#law#
damage#to#property.## fixes# and# places# upon# him# as# an# incident# or# consequence# of# registration.# Were% a%
2.% BA% Finance% was% adjudged% liable% for% damages% in% as% much% as% the% truck% registered% owner% allowed% to% evade% responsibility% by% proving% who% the% supposed%
was%registered%in%its%name%during%the%incident%in%question# transferee% or% owner% is,% it% would% be% easy% for% him,% by% collusion% with% others% or%
3.# Rock# Component# Philippines,# Inc.# was# ordered# to# reimburse# petitioner# for# otherwise,% to% escape% said% responsibility% and% transfer% the% same% to% an% indefinite%
any# amount# that# the# latter# may# be# adjudged# liable# to# pay# herein# private# person,%or%to%one%who%possesses%no%property%with%which%to%respond%financially%for%
respondents#as#expressly#stipulated#in#the#contract#of#lease#between#petitioner# the%damage%or%injury%done.##
and#Rock#Component#Philippines,#Inc.#Moreover,#the#trial#court#applied#Article# #
2194#of#the#new#Civil#Code#on#solidary#accountability#of#join#tortfeasors#insofar# A#victim#of#recklessness#on#the#public#highways#is#usually#without#means#to#discover#or#
as#the#liability#of#the#driver,#herein#petitioner#and#Rock#Component#Philippines# Identify#the#person#actually#causing#the#injury#or#damage.#He#has#no#means#other#then#
was#concerned## 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%
Court#of#Appeals#affirmed#the#appealed#disposition#in'toto#Hence,#the#instant#petition.# 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%
BA# Finance# asseverates# that# it# should# not# have# been# haled# to# court# and# ordered# to# owner%should%not%be%allowed%to%prove%the%contrary%to%the%prejudice%of%the%person%
respond#for#the#damage#in#the#manner#arrived#at#by#both#the#trial#and#appellate#courts# injured,%that%is,%to%prove%that%a%third%person%or%another%has%become%the%owner,%so%
since# paragraph# 5# of# the# complaint# lodged# by# the# plaintiffs# below# would# indicate# that# that%he%may%thereby%be%relieved%of%the%responsibility%to%the%injured%person.%
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# We# hold# that# the# registered# owner,# the# defendantHappellant# herein,# is# primarily#
truck# was# in# the# physical# possession# of# Rock# Component# Philippines# by# virtue# of# the# responsible# for# the# damage# caused# to# the# vehicle# of# the# plaintiffHappellee,# but# he#
lease#agreement.# (defendantHappellant)# 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#plaintiffH
Issue:#Whether#or#not##BA#Finance#Corporation#is#liable#though#the#truck#was#leased#to# appellant.#
Rock#Component#when#the#incident#occurred.# 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#
Held:# WHEREFORE,# the# petition# is# hereby# DISMISSED# and# decision# under# review# basis#of#such#doctrine#embodied#under#Article#2180#of#the#new#Civil#Code.#
AFFIRMED#without#special#pronouncement#as#to#costs.# #
#

#
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)#sixHwheeler#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.#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #10#
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#"backHhauled"#goods#for#other#merchants#from#Manila#to#
Pangasinan,# although# such# backHhauling# 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#
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# aboveHquoted# 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.##
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #11#
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##
Private#Respondent:#Rodolfo#Cipriano#
CAMPOS,#JR.,#J#p:#
HKeith#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#hiHjacked#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#hiHjacking#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.#
# o No#contract#of#carriage.#Rather,#there#was#a#lease#contract#only.#They#only#
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.##
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #12#
• 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# nonHdelivery# 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:#
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#hiHjacking.#
#
Issue:#Whether#or#not#Bascos#is#considered#a#common#carrier?#H#YES#
Whether#or#not#the#hijacking#referred#to#a#force#majeure?#H#NO#

#
# SC#also#held#that#the#loss#of#the#goods#was#not#due#to#force#majeure.#
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.#
# and# thus,# the# common# carrier# is# presumed# to# have# been# at# fault# or# negligent.# To#
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# selfHserving.# We# are# bound# by# the# appellate#
court's#factual#conclusions.##
Assuming#the#said#evidence#were#not#selfHserving,#the#same#were#not#sufficient#to#prove#
that#the#contract#was#one#of#lease.##
# evidence.#We#are#bound#by#the#conclusion#of#the#appellate#court.#In#a#petition#for#review#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #13#
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#
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# firstH
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#

#
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.#
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.#
# transportation# contractors# under# Sec# 131# which# excludes#
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#H#LAGOS#
FIRST# PHILIPPINE# INDUSTRIAL# CORPORATION,#petitioner,' vs.#COURT# OF# APPEALS,#
HONORABLE#PATERNO#V.#TACHAN,#BATANGAS#CITY#and#ADORACION#C.#ARELLANO,#in#
her#official#capacity#as#City#Treasurer#of#Batangas,#respondents.#29#Dec#1998#H#Lagos#
# serve# the# people# and# discharge# their# functions# with# a# concomitant#
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.#
# HELD:#Petition#is#GRANTED.#
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.#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #14#
• 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# letterHprotest# 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.##
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#
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#
#
#
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.#
• 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%regular6 or6 scheduled6
basis%and% one% offering% such% service% on% an%occasional,6episodic6or6
unscheduled6 basis.%%Neither% does% Article% 1732% distinguish%
between%a%carrier%offering%its%services%to%the%'general6public,'%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,#
iceHrefrigeration#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:#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #15#
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.#069H83,#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.# 13H78,# 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.#H# 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# semiHchemical# 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# semiHchemical# 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.##
# Philippines,# for# hire# or# compensation,# with# general# or# limited# clientele,# whether#
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,#
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#semiHchemical#fluting#paper#were#
“wet/stained/torn”# and# 3# reels# of# kraft# liner# board# were# also# torn.# The# damages# cost#
P93,112.00.##
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #16#
#
“#x#x#x#every#person#that#now#or#hereafter#may#own,#operate,#manage,#or#control#in#the#
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,#iceH
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”#

# %

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.##
# (TCTSI),#a#sole#proprietorship#customs#broker.###
Issue:#Whether#or#not#Calvo#is#a#common#carrier?##
# St.,#Ermita,#Manila.#The#cargo#was#insured#by#respondent#UCPB#General#Insurance#
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:##
MENDOZA,%J.:%
FACTS:%
• Virgines# Calvo# is# the# owner# of# Transorient# Container# Terminal# Services,# Inc.#
• Calvo#entered#into#a#contract#with#San#Miguel#Corporation#(SMC)#for#the#transfer#of#
114#reels#of#semiHchemical#fluting#paper#and#124#reels#of#kraft#liner#board#from#the#
Port#Area#in#Manila#to#SMC’s#warehouse#at#the#Tabacalera#Compound,#Romualdez#
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% semiJchemical% 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:%%
• De# Guzman# v.# Court# of# Appeals# H# 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,# iceHrefrigeration# 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:#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #17#
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# H# # 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:##
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# 21,740# 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.##
# o Basis:#Art.#587#Code#of#Commerce#makes#the#ship#agent#also#civilly#liable#
FACTS:#
Parties:##
• Shipper/Charterer–#Consorcio#Pesquero#del#Peru#of#South#America#(CONSORCIO)#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #18#
• Common# carrier# H# 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.##
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.#
# RTCH#in#favor#of#VHIS.#
HELD:#CFI#decision#reversed#and#set#aside.##
# The#SC#held#that#the#provision#is#VALID,#and#hence#Seven#Brothers#is#NOT#LIABLE.#When#
RATIO:#
Philippine#Civil#Code#on#common#carriers#were#taken#from#AngloHAmerican#law.##
• Under# American# jurisprudence,# a# common# carrier# undertaking# to# carry# a# special#
cargo#or#chartered#to#a#special#person#only,#becomes#a#private#carrier.##
• As# a# private# carrier,# a# stipulation# exempting# the# owner# from# liability# for# the#
negligence#of#its#agent#is#NOT#against#public#policy#and#is#deemed#valid.##
• 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.#
# Surety# and# Insurance# Co.,# Inc.# (South# Sea)# for# P2,000,000.00# and# the# latter#
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#H#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#
% erred# in# applying# the# provisions# of# the# Civil# Code# on# common# carriers# to#
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# nonHpayment# 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%
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #19#
charter%party%that%the%owners%(Seven%Brothers)%are%not%liable%for%loss,%split,%shortJ
landing,%breakages%and%any%kind%of%damages%to%the%cargo.%
CAH#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#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#
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#nonHpayment#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.#
• RTCH#in#favor#of#VHIS.#Ordered#Seven#Brothers#and#South#Sea#to#pay#VHIS#the#
value#of#logs#and#the#proceeds#of#policy,#respectively.#
• CAH#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#
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,# shortHlanding,# breakages# and# any# kind# of# damages# to# the#
cargo”#valid?##H#YES,#VALID.%

#
# without# a# hand# or# a# voice# in# the# preparation# thereof.## The# riding# public# merely#
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.%
# tickets,# invoices# or# other# documents# over# which# the# riding# public# has# no#
RATIO:%
• The# charter# party# between# the# VHIS# and# Seven# Brothers# provided# that# the#
“(o)wners#shall#not#be#responsible#for#loss,#split,#shortHlanding,#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/V6 Seven6 Ambassadors% resulting% in% the% loss% of% its%
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#
#############################################################
1!Home'Insurance'Co.'vs.'American'Steamship'Agencies,'Inc!
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #20#
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# oneHsided# stipulations# inserted# in#
understanding#or,#worse,#no#choice.###
• Compared#to#the#general#public,#a#charterer#in#a#contract#of#private%carriage#is#not#
similarly# situated.## It# can# HH# and# in# fact# it# usually# does# HH# 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#
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%
Articles65866and6587,6Code6of6Commerce%
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.”##
6
Articles611706and61173,6Civil6Code%
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.###
#
Effect6of6the6South%Sea6Resolution%
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.##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.”#
% Facts:%(long'case,'tried'my'best'to'shorten'it)'
Reference:##
Art#1745#of#Civil#Code.#
“Art.# 1745.###### Any# of# the# following# or# similar# stipulations# shall# be# considered#
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;#
(7)###### ## That# the# common# carrier# is# not# responsible# for# the# loss,# destruction,# or#
deterioration# of# goods# on# account# of# the# defective# condition# of# the# car,# vehicle,# ship,#
airplane#or#other#equipment#used#in#the#contract#of#carriage.”#
# rain#which#interrupted#the#unloading#operations.###
NATIONAL#STEEL#CORP#V.#CA#–#MUTI#
NATIONAL%STEEL%CORP.%vs.%CA,%G.R.6No.6112287,6Dec.612,61997.6
# fit#and#safe#for#its#reception,#carriage#and#preservation###
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.%
HELD:# MV6 Vlasons6 I% (VSI’s% vessel)% is% a% private% carrier.# 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#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #21#
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.”#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.#
%
• 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.###
• 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#
• 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,#
• 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#
#
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'
topic.)%
# '
Ratio:%
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#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #22#
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#
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.”##
# contract#of#carriage#and#damages.#
OTHER6FINDINGS6AND6DOCTRINES6(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#tentHlike#material#to#cover#the#hatches#when#strong#rains#occasioned#by#a#passing#
typhoon# disrupted# the# unloading# of# the# cargo.## This# tentHlike# 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.###
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #23#
• 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# fourHday#
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# fourHday# 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#
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#H#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.#
• 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.#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #24#
• “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. # o #It# affords# reasonable# evidence,# in# the# absence# of# explanation# by# the#
• 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#
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# H# 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,#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #25#
cannot# be# expected# to# happen# if# those# who# have# its# management# or# control# use#
proper#care.##
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% (nonJcontractual)% 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,6vs.6COURT%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?#(Common6Carrier)#
2. Did#LOADSTAR#observe#due#and/or#ordinary#diligence#in#these#premises?#(No)#
Held:#
WHEREFORE,%the#instant#petition#is#DENIED#and#the#challenged#decision#of#30#January#
1997# of# the# Court# of# Appeals# in# CAHG.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#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #26#
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#general population.#
• 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.'
StoltjNielsen'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#
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.##
# any#administrative#liability#on#account#of#said#incident.#
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.#
# ISSUE:%Whether#or#not#Arada#is#liable#as#common#carrier?#YES.#
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.##
# RATIO:%%
# •
# function# as# a# common# carrier# when# it# entered# into# a# contract# with# private#
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#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #27#
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.# 88H82#
exonerating# the# owner/operator# officers# and# crew# of# the# illHfated# M/L# Maya# from#
• 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.#
#
#
HELD:%Petition#dismissed.#
#
In# the# case# at# bar,# there# is# no# doubt# that# petitioner# Arada# was# exercising# its#
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#officerHinHcharge#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.#
• 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# illHfated#
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# illHfated"# vessel.# It# could# not# have#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #28#
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# 7Hwire# 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# H# # the# heavy# seas# and# rains# referred# to# in# the# master's# report# were# not#caso'
fortuito,# but# normal# occurrences# that# an# oceanHgoing# 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# oceanHgoing# 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#"extraHordinary#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%caso6fortuito,%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# 7Hwire# 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.#
• 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?#H#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.#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #29#
• 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# oceanHgoing# 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# oceanHgoing#
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#"extraHordinary#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.##
# made#liable#for#the#loss.##
EMERGENCY#RECIT#
• Caltex# contracted# Delsan# to# transport# oil# from# BatangasHBataan# 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.##
# legal#remedies#that#would#otherwise#be#available#to#Caltex#as#owner#of#the#lost#
FACTS:##
• Caltex# Philippines# contracted# with# Delsan# Transport# Lines# to# transport# the#
2,277.317#kiloliters#of#industrial#oil#fuel#from#the#BatangasHBataan#Refinery#to#the#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #30#
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#dryHdocking,#Delsan#cannot#be#
• On# appeal,# the# CA# reversed# the# RTC# and# ruled# in# favor# of# AHA.# The# CA# did# not#
believe#the#selfHserving#statements#of#Jarabe#and#Berina.#Rather,#it#gave#credence#to#
the# weather# report# issued# by# PAGASA# that# between# 2amH6am# 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# CAHG.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#
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.#
• 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.##
# exercise# extraordinary# diligence# in# the# transport# and# care# of# the# shipment.# The#
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#extraHordinary#diligence#in#
the#carrying#of#the#copper#tubings.#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #31#
ISSUE:#W/on#the#burden#of#proof#is#on#Zuellig#to#show#that#it#exercised#extraHordinary#
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:#
H108#cases#of#copper#tubings#were#imported#by#Ali#Trading#Company#
H#The#tubings#were#insured#by#petitioner%BANKERS%&%MANUFACTURERS%ASSURANCE%
CORP% (“Bankers”)# and# arrived# in# Manila# on# board# and# vessel# S/S# "Oriental#
Ambassador”#
H# The# 108# cases# were# turned# over# to# the# private# respondent# E.# Razon,# the# Manila#
arrastre#operator#upon#discharge#at#the#waterfront.##
HThe# 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.#
HBankers# in# subrogation# of# the# importerHconsignee# 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#nonH
liability# shifted# to# private# respondents,# one# of# whom,# the# carrier,# being# obligated# to#
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# wellHtaken# but# the#
conclusions#are#not#borne#out#or#supported#by#the#record.#
HIt# must# be# underscored# that# the# shipment# involved# in# the# case# at# bar# was#
"containerized"..#
HA# 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#
H#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.##

#
HThree#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#
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#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #32#
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.#20H21,#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#
(Fortades6 et6 al.)# filed# a# damage# suit# against# petitioner# Sarkies# Tours# Philippines#
(Sarkies)#for#breach#of#contract#of#carriage#allegedly#attended#by#bad#faith.#

#
H# 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.###
H# 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.#
H# 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#
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.#
H# 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.#
H#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.###
H# 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.#
01#Transpo#Compiled#Digests.#3C.#Atty.#Ampil# #33#
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#
the# baggage# compartment# of# its# bus# were# securely# fastened.## As# a# result# of# this# lack# 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.###
!#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# CarulloHMagno# also# lost# her# chemical# engineering# review#
materials,#while#her#brother#lost#abaca#products#he#was#transporting#to#Bicol.#

H#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#