Case Citation
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE
COURT and FELIPA E. PABLO, Respondents. G.R. No.
71929 : December 4, 1990
AMERICAN HOME ASSURANCE, COMPANY, petitioner,
vs.
THE COURT OF APPEALS and NATIONAL MARINE
CORPORATION and/or NATIONAL MARINE
CORPORATION (Manila), respondents. G.R. No. 94149
May 5, 1992
Principles
The Convention does not thus operate as an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent
of that liability. Such a proposition is not borne out by the language of the Convention, as this Court has now, and at an earlier time, pointed
out. 25 Moreover, slight reflection readily leads to the conclusion that it should be deemed a limit of liability only in those cases where the
cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by
any wilful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official or employee for which the carrier is
responsible, and there is otherwise no special or extraordinary form of resulting injury. The Convention's provisions, in short, do not "regulate
or exclude liability for other breaches of contract by the carrier" 26 or misconduct of its officers and employees, or for some particular or
exceptional type of damage. Otherwise, "an air carrier would be exempt from any liability for damages in the event of its absolute refusal, in
bad faith, to comply with a contract of carriage, which is absurd." 27 Nor may it for a moment be supposed that if a member of the aircraft
complement should inflict some physical injury on a passenger, or maliciously destroy or damage the latter's property, the Convention might
successfully be pleaded as the sole gauge to determine the carrier's liability to the passenger. Neither may the Convention be invoked to
justify the disregard of some extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond the limits set by
said Convention. It is in this sense that the Convention has been applied, or ignored, depending on the peculiar facts presented by each case.
In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw Convention was applied as regards the limitation on the carrier's
liability, there being a simple loss of baggage without any otherwise improper conduct on the part of the officials or employees of the airline or
other special injury sustained by the passenger.
On the other hand, the Warsaw Convention has invariably been held inapplicable, or as not restrictive of the carrier's liability, where there was
satisfactory evidence of malice or bad faith attributable to its officers and employees. 29 Thus, an air carrier was sentenced to pay not only
compensatory but also moral and exemplary damages, and attorney's fees, for instance, where its employees rudely put a passenger holding a
first-class ticket in the tourist or economy section, 30 or ousted a brown Asiatic from the plane to give his seat to a white man, 31 or gave the
seat of a passenger with a confirmed reservation to another, 32 or subjected a passenger to extremely rude, even barbaric treatment, as by
calling him a "monkey." 33
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of petitioner airline; and Dr. Pablo's luggage
was eventually returned to her, belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some special species of injury
was caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time appointed — a breach of
its contract of carriage, to be sure — with the result that she was unable to read the paper and make the scientific presentation (consisting of
slides, autoradiograms or films, tables and tabulations) that she had painstakingly labored over, at the prestigious international conference, to
attend which she had traveled hundreds of miles, to her chagrin and embarrassment and the disappointment and annoyance of the organizers.
She felt, not unreasonably, that the invitation for her to participate at the conference, extended by the Joint FAO/IAEA Division of Atomic Energy
in Food and Agriculture of the United Nations, was a singular honor not only to herself, but to the University of the Philippines and the country
as well, an opportunity to make some sort of impression among her colleagues in that field of scientific activity. The opportunity to claim this
honor or distinction was irretrievably lost to her because of Alitalia's breach of its contract.
Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and anxiety, which gradually turned to panic and finally
despair, from the time she learned that her suitcases were missing up to the time when, having gone to Rome, she finally realized that she would
no longer be able to take part in the conference. As she herself put it, she "was really shocked and distraught and confused."
Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the circumstances be restricted to that prescribed by the
Warsaw Convention for delay in the transport of baggage.
National Development Co. v. C.A. (164 SCRA 593 [1988]; citing Eastern Shipping Lines, Inc. v. I.A.C., 150 SCRA 469, 470 [1987] --- "the law of
the country to which the goods are to be transported persons the liability of the common carrier in case of their loss, destruction or
deterioration." (Article 1753, Civil Code). Thus, for cargoes transported to the Philippines as in the case at bar, the liability of the carrier is
governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations of common carrier shall be
governed by the Code of Commerce and by special laws (Article 1766, Civil Code).
Under Article 1733 of 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 and for the safety of passengers transported by them according to all circumstances of
each case. Thus, under Article 1735 of the same Code, in all cases other than those mentioned in Article 1734 thereof, the common carrier
Page 1 of 17

UNSWORTH TRANSPORT INTERNATIONAL (PHILS.),
INC., PETITIONER, vs. COURT OF APPEALS AND
PIONEER INSURANCE AND SURETY CORPORATION,
RESPONDENTS. G.R. No. 166250 : July 26, 2010
NATIONAL STEEL CORPORATION, petitioner, vs.
COURT OF APPEALS AND VLASONS SHIPPING,
INC., respondents. G.R. No. 112287 December 12, 1997
shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required
by law (Ibid., p. 595).
Common carriers cannot limit their liability for injury or loss of goods where such injury or loss was caused by its own negligence. Otherwise
stated, the law on averages under the Code of Commerce cannot be applied in determining liability where there is negligence (Ibid., p. 606).
Hence, it is but reasonable to conclude that the issue of negligence must first be addressed before the proper provisions of the Code of
Commerce on the extent of liability may be applied.
Instead of presenting proof of the exercise of extraordinary diligence as required by law, National Marine Corporation (NMC) filed its Motion
to Dismiss dated August 7, 1989, hypothetically admitting the truth of the facts alleged in the complaint to the effect that the loss or damage
to the 122 bales was due to the negligence or fault of NMC. Such being the case, it is evident that the Code of Commerce provisions on
averages cannot apply.
On the other hand, Article 1734 of the Civil Code provides that common carriers are responsible for loss, destruction or deterioration of the
goods, unless due to any of the causes enumerated therein. It is obvious that the case at bar does not fall under any of the exceptions. Thus,
American Home Assurance Company is entitled to reimbursement of what it paid to Mayleen Paper, Inc. as insurer.
A freight forwarder's liability is limited to damages arising from its own negligence, including negligence in choosing the carrier; however,
where the forwarder contracts to deliver goods to their destination instead of merely arranging for their transportation, it becomes liable as a
common carrier for loss or damage to goods. A freight forwarder assumes the responsibility of a carrier, which actually executes the transport,
even though the forwarder does not carry the merchandise itself.
Undoubtedly, UTI is liable as a common carrier. Common carriers, as a general rule, are presumed to have been at fault or negligent if the
goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in
transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed
such diligence.27 Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination
constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the deterioration, loss, or
destruction of the goods happened, the transporter shall be held responsible.
Petitioner failed to rebut the prima facie presumption of negligence in the carriage of the subject shipment. Further, petitioner failed to prove
that it observed the extraordinary diligence and precaution which the law requires a common carrier to exercise and to follow in order to
avoid damage to or destruction of the goods entrusted to it for safe carriage and delivery.
It is to be noted that the Civil Code does not limit the liability of the common carrier to a fixed amount per package. In all matters not
regulated by the Civil Code, the rights and obligations of common carriers are governed by the Code of Commerce and special laws. Thus, the
COGSA supplements the Civil Code by establishing a provision limiting the carrier's liability in the absence of a shipper's declaration of a
higher value in the bill of lading.30 Section 4(5) of the COGSA provides:
(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of
goods in an amount exceeding $500 per package of lawful money of the United States, or in case of goods not shipped in packages, per
customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but
shall not be conclusive on the carrier.
In the present case, the shipper did not declare a higher valuation of the goods to be shipped. Contrary to the CA's conclusion, the insertion
of the words "L/C No. LC No. 1-187-008394/ NY 69867 covering shipment of raw materials for pharmaceutical Mfg. x x x" cannot be the basis
of petitioner's liability.31 Furthermore, the insertion of an invoice number does not in itself sufficiently and convincingly show that petitioner
had knowledge of the value of the cargo.
At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as a private carrier. The resolution of this
preliminary question determines the law, standard of diligence and burden of proof applicable to the present case.
Page 2 of 17

MALAYAN INSURANCE CO., INC., Petitioner, vs.
PHILIPPINES FIRST INSURANCE CO., INC. and
REPUTABLE FORWARDER SERVICES, INC., Respondents.
G.R. No. 184300 July 11, 2012
Article 1732 of the Civil Code defines a common carrier as "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." 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.11 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."12
In the instant case, it is undisputed that VSI did not offer its services to the general public. As found by the Regional Trial Court, it carried
passengers or goods only for those it chose under a "special contract of charter party." 13 As correctly concluded by the Court of Appeals,
the MV Vlasons I "was not a common but a private carrier."14Consequently, the rights and obligations of VSI and NSC, including their
respective liability for damage to the cargo, are determined primarily by stipulations in their contract of private carriage or charter
party.15 Recently, in Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation,16 the
Court ruled:
. . . 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.
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:
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.
Since . . . a private carrier is not an insurer but undertakes only to exercise due care in the protection of the goods committed to its
care, the burden of proving negligence or a breach of that duty rests on plaintiff and proof of loss of, or damage to, cargo while in
the carrier's possession does not cast on it the burden of proving proper care and diligence on its part or that the loss occurred
from an excepted cause in the contract or bill of lading. 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. . . . 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.
Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of carrying or
transporting passenger or goods, or both by land, water or air for compensation, offering their services to the public. On the other hand, a
private carrier is one wherein the carriage is generally undertaken by special agreement and it does not hold itself out to carry goods for the
general public.28 A common carrier becomes a private carrier when it undertakes to carry a special cargo or chartered to a special person
Page 3 of 17

BRITISH AIRWAYS, petitioner, vs. COURT OF APPEALS,
GOP MAHTANI, and PHILIPPINE
AIRLINES, respondents. G.R. No. 121824 January 29,
1998
PEDRO DE GUZMAN, petitioner, vs. COURT OF
APPEALS and ERNESTO CENDANA, respondents. G.R.
No. L-47822 December 22, 1988
only.29 For all intents and purposes, therefore, Reputable operated as a private/special carrier with regard to its contract of carriage with
Wyeth.
The extent of a private carrier’s obligation is dictated by the stipulations of a contract it entered into, provided its stipulations, clauses, terms
and conditions are not contrary to law, morals, good customs, public order, or public policy. "The Civil Code provisions on common carriers
should not be applied where the carrier is not acting as such but as a private carrier. Public policy governing common carriers has no force
where the public at large is not involved."30
Thus, being a private carrier, the extent of Reputable’s liability is fully governed by the stipulations of the contract of carriage, one of which is
that it shall be liable to Wyeth for the loss of the goods/products due to any and all causes whatsoever, including theft, robbery and other
force majeure while the goods/products are in transit and until actual delivery to Wyeth’s customers, salesmen and dealers.
The nature of an airline's contract of carriage partakes of two types, namely: a contract to deliver a cargo or merchandise to its destination and
a contract to transport passengers to their destination. A business intended to serve the traveling public primarily, it is imbued with public
interest, hence, the law governing common carriers imposes an exacting standard.14 Neglect or malfeasance by the carrier's employees could
predictably furnish bases for an action for damages.
Admittedly, in a contract of air carriage a declaration by the passenger of a higher value is needed to recover a greater amount. Article 22(1)
of the Warsaw Convention,19 provides as follows: (2) In the transportation of checked baggage and goods, the liability of the carrier shall be
limited to a sum of 250 francs per kilogram, unless the consignor has made, at time the package was handed over to the carrier, a special
declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum
not exceeding the declared sum, unless he proves that the sum is greater than the actual value to the consignor at delivery.
American jurisprudence provides that an air carrier is not liable for the loss of baggage in an amount in excess of the limits specified in the
tariff which was filed with the proper authorities, such tariff being binding, on the passenger regardless of the passenger's lack of knowledge
thereof or assent thereto.20 This doctrine is recognized in this jurisdiction.21
Notwithstanding the foregoing, we have, nevertheless, ruled against blind reliance on adhesion contracts where the facts and circumstances
justify that they should be disregarded.22
In addition, we have held that benefits of limited liability are subject to waiver such as when the air carrier failed to raise timely objections
during the trial when questions and answers regarding the actual claims and damages sustained by the passenger were asked.23
Given the foregoing postulates, the inescapable conclusion is that BA had waived the defense of limited liability when it allowed Mahtani to
testify as to the actual damages he incurred due to the misplacement of his luggage, without any objection.
Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their contract of carriage. Yet, BA adamantly
disclaimed its liability and instead imputed it to PAL which the latter naturally denies. In other words, BA and PAL are blaming each other for
the incident.
Since the instant petition was based on breach of contract of carriage, Mahtani can only sue BA alone, and not PAL, since the latter was not a
party to the contract. However, this is not to say that PAL is relieved from any liability due to any of its negligent acts.
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.
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,
Page 4 of 17

FIRST PHILIPPINE INDUSTRIAL CORPORATION,
petitioner, vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-
AN, BATANGAS CITY and ADORACION C. ARELLANO,
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 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, subway motor vehicle,
either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any class,
express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire
or wireless communications systems, wire or wireless broadcasting stations and other similar public services. ... (Emphasis supplied)
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.
Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a very high degree of care and diligence
("extraordinary diligence") in the carriage of goods as well as of passengers. The specific import of extraordinary diligence in the care of goods
transported by a common carrier is, according to Article 1733, "further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7" of the
Civil Code.
Specific requirements of the duty of extraordinary diligence in the vigilance over the goods carried in the specific context of hijacking or
armed robbery: 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 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.
We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendana is not liable for the value of the
undelivered merchandise which was lost because of an event entirely beyond private respondent's control.
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.
***Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install and operate oil pipelines.
Page 5 of 17
in her official capacity as City Treasurer of Batangas, Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged in the business of carrying or
respondents. G.R. No. 125948 December 29, 1998 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: 1. 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; 2. He must undertake to carry goods of the kind to which his business is confined; 3. He must undertake to carry
by the method by which his business is conducted and over his established roads; and 4. The transportation must be for hire. 15

Based on the above definitions and requirements, there is no doubt that petitioner 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 petitioner has a
limited clientele does not exclude it from the definition of a common carrier. In De Guzman vs. Court of Appeals 16we ruled that: 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 . . . avoids making any distinction
between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the
general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We
think that Article 1877 deliberately refrained from making such distinctions. 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, subway motor vehicle, either for freight or passenger, or both, with or without
fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines,
ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system gas, electric light heat and power, water supply andpower petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting stations and other similar public services. (Emphasis Supplied)

As correctly pointed out by petitioner, 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. 17

Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common carrier." Thus, Article 86 thereof provides
that: Art. 86. Pipe line concessionaire as common carrier. — A pipe line shall have the preferential right to utilize installations for the
transportation of petroleum owned by him, but is obligated to utilize the remaining transportation capacity pro rata for the transportation of
such other petroleum as may be offered by others for transport, and to charge without discrimination such rates as may have been approved
by the Secretary of Agriculture and Natural Resources.

Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of Article 7 thereof provides: that everything relating
to the exploration for and exploitation of petroleum . . . and everything relating to the manufacture, refining, storage, or transportation by
special methods of petroleum, is hereby declared to be a public utility. (Emphasis Supplied)

The Bureau of Internal Revenue likewise considers the petitioner a "common carrier." In BIR Ruling No. 069-83, it declared: . . . 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 . . . . Such being the case, it is not subject to withholding tax prescribed by Revenue Regulations No. 13-78, as amended.

From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and, therefore, exempt from the business tax.

Page 6 of 17
ASIA LIGHTERAGE AND SHIPPING, INC., petitioner,
vs. COURT OF APPEALS and PRUDENTIAL GUARANTEE
AND ASSURANCE, INC., respondents. G.R. No. 147246
August 19, 2003
Article 1732 of the Civil Code defines common carriers as 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.
In De Guzman vs. Court of Appeals,21 we held that the definition of common carriers in Article 1732 of the 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. We also did not distinguish 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. Further, we ruled that Article 1732 does not distinguish
between a carrier offering its services to the general public, and one who offers services or solicits business only from a narrow segment of the
general population.
In the case at bar, the principal business of the petitioner is that of lighterage and drayage22 and it offers its barges to the public for carrying
or transporting goods by water for compensation. Petitioner is clearly a common carrier. In De Guzman, supra,23 we considered private
respondent Ernesto Cendaña to be a common carrier even if his principal occupation was not the carriage of goods for others, but that of
buying used bottles and scrap metal in Pangasinan and selling these items in Manila.
We therefore hold that petitioner is a common carrier whether its carrying of goods is done on an irregular rather than scheduled manner,
and with an only limited clientele. A common carrier need not have fixed and publicly known routes. Neither does it have to maintain
terminals or issue tickets.
To be sure, petitioner fits the test of a common carrier as laid down in Bascos vs. Court of Appeals.24 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."25 In the case at bar, the petitioner admitted that it is engaged in the
business of shipping and lighterage,26 offering its barges to the public, despite its limited clientele for carrying or transporting goods by water
for compensation.27
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them.28 They are presumed to
have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated.29 To overcome the presumption of negligence
in the case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There
are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instances when the presumption of negligence does not
attach:
Art. 1734. 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:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss of its cargo. Petitioner claims that this was
caused by a typhoon, hence, it should not be held liable for the loss of the cargo. However, petitioner failed to prove that the typhoon is the
Page 7 of 17

ESTRELLITA M. BASCOS, petitioners, vs. COURT OF
APPEALS and RODOLFO A. CIPRIANO, respondents.
G.R. No. 101089. April 7, 1993
proximate and only cause of the loss of the goods, and that it has exercised due diligence before, during and after the occurrence of the
typhoon to prevent or minimize the loss.30 The evidence show that, even before the towing bits of the barge broke, it had already previously
sustained damage when it hit a sunken object while docked at the Engineering Island. It even suffered a hole. Clearly, this could not be solely
attributed to the typhoon. The partly-submerged vessel was refloated but its hole was patched with only clay and cement. The patch work was
merely a provisional remedy, not enough for the barge to sail safely. Thus, when petitioner persisted to proceed with the voyage, it recklessly
exposed the cargo to further damage.
Petitioner still headed to the consignee's wharf despite knowledge of an incoming typhoon. During the time that the barge was heading
towards the consignee's wharf on September 5, 1990, typhoon "Loleng" has already entered the Philippine area of responsibility.
Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force majeure to escape liability for the loss sustained by the
private respondent. Surely, meeting a typhoon head-on falls short of due diligence required from a common carrier. More importantly, the
officers/employees themselves of petitioner admitted that when the towing bits of the vessel broke that caused its sinking and the total loss
of the cargo upon reaching the Pasig River, it was no longer affected by the typhoon. The typhoon then is not the proximate cause of the loss
of the cargo; a human factor, i.e., negligence had intervened.
1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE COMMON CARRIER. — 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." . . . 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 distinguished 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."
2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE ARISES; HOW
PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. — 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. In those cases where the presumption is applied, the common carrier must prove that it exercised
extraordinary diligence in order to overcome the presumption . . . The presumption of negligence was raised against petitioner. It was
petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent 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.
3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT; HOW CARRIER ABSOLVED FROM LIABILITY. — In De Guzman vs. Court of
Appeals, the Court held that hijacking, not being included in the provisions of Article 1734, must be dealt with under the provisions of Article
1735 and thus, the common carrier is presumed to have been at fault or negligent. To exculpate the carrier from liability arising from hijacking,
he must prove that the robbers or the hijackers acted with grave or irresistible threat, violence, or force. This is in accordance with Article 1745
of the Civil Code which provides: "Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary
to public policy . . . (6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible
threat, violences or force, is dispensed with or diminished"; In the same case, the Supreme Court also held that: "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 of irresistible threat, violence of 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."
Page 8 of 17
VIRGINES CALVO doing business under the name and
style TRANSORIENT CONTAINER TERMINAL SERVICES,
INC., petitioner, vs. UCPB GENERAL INSURANCE CO.,
INC. (formerly Allied Guarantee Ins. Co.,
Inc.) respondent. G.R. No. 148496 March 19, 2002
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."

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 . . . 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.

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:

" x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight
or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any
class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting stations and other similar public services. x x x" 8

There is greater reason for holding petitioner to be a common carrier because the transportation of goods is an integral part of her business.
To uphold petitioner's contention would be to deprive those with whom she contracts the protection which the law affords them
notwithstanding the fact that the obligation to carry goods for her customers, as already noted, is part and parcel of petitioner's business.

Art. 1733 of the Civil Code provides:

Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in
the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each
case. . . .

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

The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the
required precaution for avoiding damage to, or destruction of the goods entrusted to it for sale, carriage and delivery. It requires common
carriers to render service with the greatest skill and foresight and "to use all reasonable means to ascertain the nature and characteristic of
goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires."

Anent petitioner's insistence that the cargo could not have been damaged while in her custody as she immediately delivered the containers to
SMC's compound, suffice it to say that 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.

Page 9 of 17

SCHMITZ TRANSPORT & BROKERAGE
CORPORATION, Petitioners,
vs. TRANSPORT VENTURE, INC., INDUSTRIAL
INSURANCE COMPANY, LTD., and BLACK SEA
SHIPPING AND DODWELL now INCHCAPE SHIPPING
SERVICES, Respondents. G.R. No. 150255. April 22,
2005
Nor is there basis to exempt petitioner from liability under Art. 1734(4), which provides --
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: xxxx
(4) The character of the goods or defects in the packing or in the containers. xxxx
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.14 In this case, petitioner accepted the cargo without exception
despite the apparent defects in some of the container vans. Hence, for failure of petitioner to prove that she exercised extraordinary diligence
in the carriage of goods in this case or that she is exempt from liability, the presumption of negligence as provided under Art. 173515 holds.
ART. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were
inevitable.
In order, to be considered a fortuitous event, however, (1) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor
to comply with his obligation, must be independent of human will; (2) it must be impossible to foresee the event which constitute the caso
fortuito, or if it can be foreseen it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to
fulfill his obligation in any manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the
creditor.32
[T]he principle embodied in the act of God doctrine strictly requires that the act must be occasioned solely by the violence of nature. Human
intervention is to be excluded from creating or entering into the cause of the mischief. When the effect is found to be in part the result of the
participation of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized and removed
from the rules applicable to the acts of God.
That no tugboat towed back the barge to the pier after the cargoes were completely loaded by 12:30 in the morning39 is, however, a material
fact which the appellate court failed to properly consider and appreciate40 — the proximate cause of the loss of the cargoes. Had the barge
been towed back promptly to the pier, the deteriorating sea conditions notwithstanding, the loss could have been avoided. But the barge was
left floating in open sea until big waves set in at 5:30 a.m., causing it to sink along with the cargoes.41 The loss thus falls outside the "act of
God doctrine."
petitioner is a common carrier. For it undertook to transport the cargoes from the shipside of "M/V Alexander Saveliev" to the consignee’s
warehouse at Cainta, Rizal. As the appellate court put it, "as long as a person or corporation holds [itself] to the public for the purpose of
transporting goods as [a] business, [it] is already considered a common carrier regardless if [it] owns the vehicle to be used or has to hire
one."42 That petitioner is a common carrier, the testimony of its own Vice-President and General Manager Noel Aro that part of the services it
offers to its clients as a brokerage firm includes the transportation of cargoes reflects so.
It is settled that under a given set of facts, a customs broker may be regarded as a common carrier. Thus, this Court, in A.F. Sanchez Brokerage,
Inc. v. The Honorable Court of Appeals,44 held:
The appellate court did not err in finding petitioner, a customs broker, to be also a common carrier, as defined under Article 1732 of the Civil
Code, to wit,
Page 10 of 17

A.F. SANCHEZ BROKERAGE INC., petitioners, vs. THE
HON. COURT OF APPEALS and FGU INSURANCE
CORPORATION, respondents. G.R. No. 147079
December 21, 2004
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation, offering their services to the public.x x x
Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying only
as an ancillary activity. The contention, therefore, of petitioner that it is not a common carrier but a customs broker whose principal function is
to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that petitioner
undertakes to deliver the goods for pecuniary consideration.45
And in Calvo v. UCPB General Insurance Co. Inc.,46 this Court held that as the transportation of goods is an integral part of a customs broker,
the customs broker is also a common carrier. For to declare otherwise "would be to deprive those with whom [it] contracts the protection
which the law affords them notwithstanding the fact that the obligation to carry goods for [its] customers, is part and parcel of petitioner’s
business."47
As for petitioner, for it to be relieved of liability, it should, following Article 173953 of the Civil Code, prove that it exercised due diligence to
prevent or minimize the loss, before, during and after the occurrence of the storm in order that it may be exempted from liability for the loss
of the goods.
While petitioner sent checkers54 and a supervisor55 on board the vessel to counter-check the operations of TVI, it failed to take all available and
reasonable precautions to avoid the loss. After noting that TVI failed to arrange for the prompt towage of the barge despite the deteriorating
sea conditions, it should have summoned the same or another tugboat to extend help, but it did not.
The appellate court did not err in finding petitioner, a customs broker, to be also a common carrier, as defined under Article 1732 of the Civil
Code, to wit: Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.
Anacleto F. Sanchez, Jr., the Manager and Principal Broker of Sanchez Brokerage, himself testified that the services the firm offers include the
delivery of goods to the warehouse of the consignee or importer.
Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying only
as an ancillary activity.44 The contention, therefore, of petitioner that it is not a common carrier but a customs broker whose principal function
is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that petitioner
undertakes to deliver the goods for pecuniary consideration.
In this light, petitioner as a common carrier is mandated to observe, under Article 173345 of the Civil Code, extraordinary diligence in the
vigilance over the goods it transports according to all the circumstances of each case. In the event that the goods are lost, destroyed or
deteriorated, it is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence.46
The concept of "extra-ordinary diligence" was explained in Compania Maritima v. Court of Appeals:47
The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the
required precaution for avoiding damage to, or destruction of the goods entrusted to it for sale, carriage and delivery. It requires common
carriers to render service with the greatest skill and foresight and "to use all reasonable means to ascertain the nature and characteristics of
goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires."48
In the case at bar, it was established that petitioner received the cargoes from the PSI warehouse in NAIA in good order and condition;49 and
that upon delivery by petitioner to Hizon Laboratories Inc., some of the cargoes were found to be in bad order, as noted in the Delivery
Receipt50 issued by petitioner, and as indicated in the Survey Report of Elite Surveyors51 and the Destruction Report of Hizon Laboratories, Inc.
Page 11 of 17

FGU INSURANCE CORPORATION, petitioner, vs. G.P.
SARMIENTO TRUCKING CORPORATION and LAMBERT
M. EROLES, respondents. G.R. No. 141910 August 6,
2002
ESTELA L. CRISOSTOMO, Petitioner, vs. The Court of
Appeals and CARAVAN TRAVEL & TOURS
INTERNATIONAL, INC., Respondents. G.R. No. 138334
August 25, 2003
SPOUSES TEODORO1 and NANETTE
PERENA, Petitioners, vs. SPOUSES TERESITA PHILIPPINE
NICOLAS and L. ZARATE, NATIONAL RAILWAYS, and
the COURT OF APPEALS Respondents. G.R. No. 157917
August 29, 2012
While paragraph No. 4 of Article 173455 of the Civil Code exempts a common carrier from liability if the loss or damage is due to the character
of the goods or defects in the packing or in the containers, the rule is that if the improper packing is known to the carrier or his employees or
is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such condition, he
is not relieved of liability for the resulting damage.56
If the claim of petitioner that some of the cartons were already damaged upon delivery to it were true, then it should naturally have received
the cargo under protest or with reservations duly noted on the receipt issued by PSI. But it made no such protest or reservation.57
Since petitioner received all the cargoes in good order and condition at the time they were turned over by the PSI warehouseman, and upon
their delivery to Hizon Laboratories, Inc. a portion thereof was found to be in bad order, it was incumbent on petitioner to prove that it
exercised extraordinary diligence in the carriage of the goods. It did not, however. Hence, its presumed negligence under Article 1735 of the
Civil Code remains unrebutted.
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,8 whether to
the public in general or to a limited clientele in particular, but never on an exclusive basis.9 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.10Given accepted standards,
GPS scarcely falls within the term "common carrier."
By definition, a contract of carriage or transportation is one whereby a certain person or association of persons obligate themselves to
transport persons, things, or news from one place to another for a fixed price.9 Such person or association of persons are regarded as carriers
and are classified as private or special carriers and common or public carriers.10 A common carrier is defined under Article 1732 of the Civil
Code as 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.
Respondent did not undertake to transport petitioner from one place to another since its covenant with its customers is simply to make travel
arrangements in their behalf. Respondent’s services as a travel agency include procuring tickets and facilitating travel permits or visas as well
as booking customers for tours.
While petitioner concededly bought her plane ticket through the efforts of respondent company, this does not mean that the latter ipso facto
is a common carrier. At most, respondent acted merely as an agent of the airline, with whom petitioner ultimately contracted for her carriage
to Europe. Respondent’s obligation to petitioner in this regard was simply to see to it that petitioner was properly booked with the airline for
the appointed date and time. Her transport to the place of destination, meanwhile, pertained directly to the airline.
In contrast, the object of a contract of carriage is the transportation of passengers or goods. It is in this sense that the contract between the
parties in this case was an ordinary one for services and not one of carriage. For reasons of public policy, a common carrier in a contract of
carriage is bound by law to carry passengers as far as human care and foresight can provide using the utmost diligence of very cautious
persons and with due regard for all the circumstances.11 As earlier stated, however, respondent is not a common carrier but a travel agency. It
is thus not bound under the law to observe extraordinary diligence in the performance of its obligation, as petitioner claims.
We find no adequate cause to differ from the conclusions of the lower courts that the Pereñas operated as a common carrier; and that their
standard of care was extraordinary diligence, not the ordinary diligence of a good father of a family. Although in this jurisdiction the operator
of a school bus service has been usually regarded as a private carrier,9primarily because he only caters to some specific or privileged
individuals, and his operation is neither open to the indefinite public nor for public use, the exact nature of the operation of a school bus
service has not been finally settled. This is the occasion to lay the matter to rest.
A carrier is a person or corporation who undertakes to transport or convey goods or persons from one place to another, gratuitously or for
hire. The carrier is classified either as a private/special carrier or as a common/public carrier.10 A private carrier is one who, without making the
activity a vocation, or without holding himself or itself out to the public as ready to act for all who may desire his or its services, undertakes, by
special agreement in a particular instance only, to transport goods or persons from one place to another either gratuitously or for hire.11 The
Page 12 of 17
provisions on ordinary contracts of the Civil Code govern the contract of private carriage.The diligence required of a private carrier is only
ordinary, that is, the diligence of a good father of the family. In contrast, a common carrier is a person, corporation, firm or association
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering such
services to the public.12 Contracts of common carriage are governed by the provisions on common carriers of the Civil Code, the Public Service
Act,13 and other special laws relating to transportation. A common carrier is required to observe extraordinary diligence, and is presumed to be
at fault or to have acted negligently in case of the loss of the effects of passengers, or the death or injuries to passengers.14

In relation to common carriers, the Court defined public use in the following terms in United States v. Tan Piaco,15viz: "Public use" is the same
as "use by the public". The essential feature of the public use is not confined to privileged individuals, but is open to the indefinite public. It is
this indefinite or unrestricted quality that gives it its public character. In determining whether a use is public, we must look not only to the
character of the business to be done, but also to the proposed mode of doing it. If the use is merely optional with the owners, or the public
benefit is merely incidental, it is not a public use, authorizing the exercise of the jurisdiction of the public utility commission. There must be, in
general, a right which the law compels the owner to give to the general public. It is not enough that the general prosperity of the public is
promoted. Public use is not synonymous with public interest. The true criterion by which to judge the character of the use is whether the
public may enjoy it by right or only by permission.

In De Guzman v. Court of Appeals,16 the Court noted that Article 1732 of the Civil Code avoided any distinction between a person or an
enterprise offering transportation on a regular or an isolated basis; and has not distinguished a carrier offering his services to the general
public, that is, the general community or population, from one offering his services only to a narrow segment of the general population.

Nonetheless, the concept of a common carrier embodied in Article 1732 of the Civil Code coincides neatly with the notion of public service
under the Public Service Act, which supplements the law on common carriers found in the Civil Code. Public service, according to Section 13,
paragraph (b) of the Public Service Act, includes: x x x every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientèle, whether permanent or occasional, and done for the 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, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other similar public services. x x x.17

Given the breadth of the aforequoted characterization of a common carrier, the Court has considered as common carriers pipeline
operators,18 custom brokers and warehousemen,19 and barge operators20 even if they had limited clientèle.

As all the foregoing indicate, the true test for a common carrier is not the quantity or extent of the business actually transacted, or the number
and character of the conveyances used in the activity, but whether the undertaking is a part of the activity engaged in by the carrier that he
has held out to the general public as his business or occupation. If the undertaking is a single transaction, not a part of the general business or
occupation engaged in, as advertised and held out to the general public, the individual or the entity rendering such service is a private, not a
common, carrier. The question must be determined by the character of the business actually carried on by the carrier, not by any secret
intention or mental reservation it may entertain or assert when charged with the duties and obligations that the law imposes.21

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

The common carrier’s standard of care and vigilance as to the safety of the passengers is defined by law. Given the nature of the business and
for reasons of public policy, the common carrier is bound "to observe extraordinary diligence in the vigilance over the goods and for the

Page 13 of 17
safety of the passengers transported by them, according to all the circumstances of each case."22 Article 1755 of the Civil Code specifies that
the common carrier should "carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very
cautious persons, with a due regard for all the circumstances." To successfully fend off liability in an action upon the death or injury to a
passenger, the common carrier must prove his or its observance of that extraordinary diligence; otherwise, the legal presumption that he or it
was at fault or acted negligently would stand.23 No device, whether by stipulation, posting of notices, statements on tickets, or otherwise, may
dispense with or lessen the responsibility of the common carrier as defined under Article 1755 of the Civil Code. 24

And, secondly, the Pereñas have not presented any compelling defense or reason by which the Court might now reverse the CA’s findings on
their liability. On the contrary, an examination of the records shows that the evidence fully supported the findings of the CA.

As earlier stated, the Pereñas, acting as a common carrier, were already presumed to be negligent at the time of the accident because death
had occurred to their passenger.25 The presumption of negligence, being a presumption of law, laid the burden of evidence on their shoulders
to establish that they had not been negligent.26 It was the law no less that required them to prove their observance of extraordinary diligence
in seeing to the safe and secure carriage of the passengers to their destination. Until they did so in a credible manner, they stood to be held
legally responsible for the death of Aaron and thus to be held liable for all the natural consequences of such death.

There is no question that the Pereñas did not overturn the presumption of their negligence by credible evidence. Their defense of having
observed the diligence of a good father of a family in the selection and supervision of their driver was not legally sufficient. According to
Article 1759 of the Civil Code, their liability as a common carrier did not cease upon proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their employee. This was the reason why the RTC treated this defense of the Pereñas as
inappropriate in this action for breach of contract of carriage.

The Pereñas were liable for the death of Aaron despite the fact that their driver might have acted beyond the scope of his authority or even in
violation of the orders of the common carrier.27 In this connection, the records showed their driver’s actual negligence. There was a showing,
to begin with, that their driver traversed the railroad tracks at a point at which the PNR did not permit motorists going into the Makati area to
cross the railroad tracks. Although that point had been used by motorists as a shortcut into the Makati area, that fact alone did not excuse
their driver into taking that route. On the other hand, with his familiarity with that shortcut, their driver was fully aware of the risks to his
passengers but he still disregarded the risks. Compounding his lack of care was that loud music was playing inside the air-conditioned van at
the time of the accident. The loudness most probably reduced his ability to hear the warning horns of the oncoming train to allow him to
correctly appreciate the lurking dangers on the railroad tracks. Also, he sought to overtake a passenger bus on the left side as both vehicles
traversed the railroad tracks. In so doing, he lost his view of the train that was then coming from the opposite side of the passenger bus,
leading him to miscalculate his chances of beating the bus in their race, and of getting clear of the train. As a result, the bus avoided a
collision with the train but the van got slammed at its rear, causing the fatality. Lastly, he did not slow down or go to a full stop before
traversing the railroad tracks despite knowing that his slackening of speed and going to a full stop were in observance of the right of way at
railroad tracks as defined by the traffic laws and regulations.28He thereby violated a specific traffic regulation on right of way, by virtue of
which he was immediately presumed to be negligent.29

The omissions of care on the part of the van driver constituted negligence,30 which, according to Layugan v. Intermediate Appellate Court,31 is
"the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable man would not do,32 or as Judge Cooley defines it, ‘(t)he failure
to observe for the protection of the interests of another person, that degree of care, precaution, and vigilance which the circumstances justly
demand, whereby such other person suffers injury.’"33

The test by which to determine the existence of negligence in a particular case has been aptly stated in the leading case of Picart v.
Smith,34 thuswise:

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the
alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not,

Page 14 of 17

VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY
INC., petitioner, vs. COURT OF APPEALS AND SEVEN
BROTHERS SHIPPING CORPORATION, respondents.
G.R. No. 102316 June 30, 1997
then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet
paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the
actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and
prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the light
of human experience and in view of the facts involved in the particular case. Abstract speculation cannot here be of much value but this much
can be profitably said: Reasonable men govern their conduct by the circumstances which are before them or known to them. They are not,
and are not supposed to be, omniscient of the future. Hence they can be expected to take care only when there is something before them to
suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of the course actually pursued? If
so, it was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of harm, followed by the ignoring of the
suggestion born of this prevision, is always necessary before negligence can be held to exist. Stated in these terms, the proper criterion for
determining the existence of negligence in a given case is this: Conduct is said to be negligent when a prudent man in the position of the
tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing the conduct or guarding
against its consequences. (Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereñas’ driver was entirely negligent when he traversed the railroad tracks at a point
not allowed for a motorist’s crossing despite being fully aware of the grave harm to be thereby caused to his passengers; and when he
disregarded the foresight of harm to his passengers by overtaking the bus on the left side as to leave himself blind to the approach of the
oncoming train that he knew was on the opposite side of the bus.
Unrelenting, the Pereñas cite Phil. National Railways v. Intermediate Appellate Court,35 where the Court held the PNR solely liable for the
damages caused to a passenger bus and its passengers when its train hit the rear end of the bus that was then traversing the railroad crossing.
But the circumstances of that case and this one share no similarities. In Philippine National Railways v. Intermediate Appellate Court, no
evidence of contributory negligence was adduced against the owner of the bus. Instead, it was the owner of the bus who proved the exercise
of extraordinary diligence by preponderant evidence. Also, the records are replete with the showing of negligence on the part of both the
Pereñas and the PNR. Another distinction is that the passenger bus in Philippine National Railways v. Intermediate Appellate Court was
traversing the dedicated railroad crossing when it was hit by the train, but the Pereñas’ school van traversed the railroad tracks at a point not
intended for that purpose.
At any rate, the lower courts correctly held both the Pereñas and the PNR "jointly and severally" liable for damages arising from the death of
Aaron. They had been impleaded in the same complaint as defendants against whom the Zarates had the right to relief, whether jointly,
severally, or in the alternative, in respect to or arising out of the accident, and questions of fact and of law were common as to the
Zarates.36 Although the basis of the right to relief of the Zarates (i.e., breach of contract of carriage) against the Pereñas was distinct from the
basis of the Zarates’ right to relief against the PNR (i.e., quasi-delict under Article 2176, Civil Code), they nonetheless could be held jointly and
severally liable by virtue of their respective negligence combining to cause the death of Aaron. As to the PNR, the RTC rightly found the PNR
also guilty of negligence despite the school van of the Pereñas traversing the railroad tracks at a point not dedicated by the PNR as a railroad
crossing for pedestrians and motorists, because the PNR did not ensure the safety of others through the placing of crossbars, signal lights,
warning signs, and other permanent safety barriers to prevent vehicles or pedestrians from crossing there. The RTC observed that the fact that
a crossing guard had been assigned to man that point from 7 a.m. to 5 p.m. was a good indicium that the PNR was aware of the risks to
others as well as the need to control the vehicular and other traffic there. Verily, the Pereñas and the PNR were joint tortfeasors.
It should be noted at the outset that there is no dispute between the parties that the proximate cause of the sinking of M/V Seven
Ambassadors resulting in the loss of its 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." 11 Likewise undisputed
is the status of Private Respondent Seven Brothers as a private carrier when it contracted to transport the cargo of Petitioner Valenzuela. Even
the latter admits this in its petition. 12
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The trial court deemed the charter party stipulation void for being contrary to public policy, 13 citing 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:

(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.

it is undisputed that private respondent had acted as a private carrier in transporting petitioner's lauan logs. Thus, Article 1745 and other Civil
Code provisions on common carriers which were cited by petitioner may not be applied unless expressly stipulated by the parties in their
charter party. 16

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 17 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. We stress that 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.

The issue posed in this case and the arguments raised by petitioner are not novel; they were resolved long ago by this Court in Home
Insurance Co. vs. American Steamship Agencies, Inc. 18 In that case, the trial court similarly nullified a stipulation identical to that involved in
the present case for being contrary to public policy based on Article 1744 of the Civil Code and Article 587 of the Code of Commerce.
Consequently, the trial court held the shipowner liable for damages resulting for the partial loss of the cargo. This Court reversed the trial
court and laid down, through Mr. Justice Jose P. Bengzon, the following well-settled observation and doctrine:

The provisions of our Civil Code on common carriers were taken from Anglo-American 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.

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

Page 16 of 17

PHILIPPINE AIR LINES, petitioner, vs. HON. COURT OF
APPEALS and ISIDRO CO, respondents. G.R. No. 92501
March 6, 1992
be void 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 used of a single party. 19(Emphasis supplied.)
Indeed, where the reason for the rule ceases, the rule itself does not apply. The general public enters into a contract of transportation with
common carriers without a hand or a voice in the preparation thereof. The riding public merely adheres to the contract; even if the public
wants to, it cannot submit its own stipulations for the approval of the common carrier. Thus, the law on common carriers extends its protective
mantle against one-sided stipulations inserted in tickets, invoices or other documents over which the riding public has no understanding or,
worse, no choice. Compared to the general public, a charterer in a contract of private carriage is not similarly situated. It can — and in fact it
usually does — enter into a free and voluntary agreement. In practice, the parties in a contract of private carriage can stipulate the carrier's
obligations and liabilities over the shipment which, in turn, determine the price or consideration of the charter. Thus, a charterer, in exchange
for convenience and economy, may opt to set aside the protection of the law on common carriers. When the charterer decides to exercise this
option, he takes a normal business risk.
In Alitalia vs. IAC (192 SCRA 9, 18, citing Pan American World Airways, Inc. vs. IAC 164 SCRA 268), the Warsaw Convention limiting the carrier's
liability was applied because of a simple loss of baggage without any improper conduct on the part of the officials or employees of the airline,
or other special injury sustained by the passengers. The petitioner therein did not declare a higher value for his luggage, much less did he pay
an additional transportation charge.
In Samar Mining Company, Inc. vs. Nordeutscher Lloyd (132 SCRA 529), this Court ruled: The liability of the common carrier for the loss,
destruction or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New Civil Code. In all
matters not regulated by said Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by
Special Laws.
The provisions of the New Civil Code on common carriers are Articles 1733, 1735 and 1753 which provide: Art. 1733. 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.
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.
Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss,
destruction or deterioration.
Since the passenger's destination in this case was the Philippines, Philippine law governs the liability of the carrier for the loss of the
passenger's luggage.
In this case, the petitioner failed to overcome, not only the presumption, but more importantly, the private respondent's evidence, proving
that the carrier's negligence was the proximate cause of the loss of his baggage. Furthermore, petitioner acted in bad faith in faking a retrieval
receipt to bail itself out of having to pay Co's claim. The Court of Appeals therefore did not err in disregarding the limits of liability under the
Warsaw Convention.
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