Civil Code Common CarriersSECTION 4Common Carriers

SUBSECTION 1. General Provisions

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.

Article 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.

Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.

SUBSECTION 2. Vigilance Over Goods

Article 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.

Article 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.

Article 1736. The extraordinary responsibility of the common carrier 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 to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of article 1738.

Article 1737. The common carriers duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu.

Article 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.

Article 1739. 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 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 loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in article 1734, No. 2.

Article 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.

Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced.

Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.

Article 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order.

Article 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be:

(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.

Article 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 omission of his or its employees;

(6) That the common carriers 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.

Article 1746. An agreement limiting the common carriers liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation.

Article 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carriers liability cannot be availed of in case of the loss, destruction, or deterioration of the goods.

Article 1748. An agreement limiting the common carriers liability for delay on account of strikes or riots is valid.

Article 1749. A stipulation that the common carriers liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Article 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon.

Article 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carriers liability is reasonable, just and in consonance with public policy.

Article 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.

Article 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.

Article 1754. The provisions of articles 1733 to 1753 shall apply to the passengers baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.

SUBSECTION 3. Safety of Passengers

Article 1755. A common carrier is bound to 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.

Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755.

Article 1757. The responsibility of a common carrier for the safety of passengers as required in articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise.

Article 1758. When a passenger is carried gratuitously, a stipulation limiting the common carriers liability for negligence is valid, but not for willful acts or gross negligence.

The reduction of fare does not justify any limitation of the common carriers liability.

Article 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the formers employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.

Article 1760. The common carriers responsibility prescribed in the preceding article cannot be eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.

Article 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.

Article 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced.

Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carriers employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

SUBSECTION 4. Common Provisions

Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

Article 1765. The Public Service Commission may, on its own motion or on petition of any interested party, after due hearing, cancel the certificate of public convenience granted to any common carrier that repeatedly fails to comply with his or its duty to observe extraordinary diligence as prescribed in this Section.

Article 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws.Code of Commerce-Commercial Contracts for TransportationTITLE VII COMMERCIAL CONTRACTS FOR TRANSPORTATION

ARTICLE 349. A contract of transportation by land or water ways of any kind shall be considered commercial:

1. When it has for its object merchandise or any article of commerce.

2. When, whatever its object may be, the carrier is a merchant or is habitually engaged in transportation for the public.

ARTICLE 350. The shipper as well as the carrier of merchandise or goods may mutually demand that a bill of lading be made, stating:

1. The name, surname and residence of the shipper.

2. The name, surname and residence of the carrier.

3. The name, surname and residence of the person to whom or to whose order the goods are to be sent or whether they are to be delivered to the bearer of said bill.

4. The description of the goods, with a statement of their kind, of their weight, and of the external marks or signs of the packages in which they are contained.

5. The cost of transportation.

6. The date on which shipment is made.

7. The place of delivery to the carrier.

8. The place and the time at which delivery to the consignee shall be made.

9. The indemnity to be paid by the carrier in case of delay, if there should be any agreement on this matter.

ARTICLE 351. In transportation made by railroads or other enterprises subject to regulation rate and time schedules, it shall be sufficient for the bills of lading or the declaration of shipment furnished by the shipper to refer, with respect to the cost, time and special conditions of the carriage, to the schedules and regulations the application of which he requests; and if the shipper does not determine the schedule, the carrier must apply the rate of those which appear to be the lowest, with the conditions inherent thereto, always including a statement or reference to in the bill of lading which he delivers to the shipper.

ARTICLE 352. The bills of lading, or tickets in cases of transportation of passengers, may be diverse, some for persons and others for baggage; but all of them shall bear the name of the carrier, the date of shipment, the points of departure and arrival, the cost, and, with respect to the baggage, the number and weight of the packages, with such other manifestations which may be considered necessary for their easy identification.

ARTICLE 353. The legal evidence of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which the disputes which may arise regarding their execution and performance shall be decided, no exceptions being admissible other than those of falsity and material error in the drafting.

After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and by virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be considered cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to writing, with the exception of that provided for in Article 366.

In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading.

ARTICLE 354. In the absence of a bill of lading, disputes shall be determined by the legal proofs which the parties may present in support of their respective claims, according to the general provisions established in this Code for commercial contracts.

ARTICLE 355. The responsibility of the carrier shall commence from the moment he receives the merchandise, personally or through a person charged for the purpose, at the place indicated for receiving them.

ARTICLE 356. Carriers may refuse packages which appear unfit for transportation; and if the carriage is to be made by railway, and the shipment is insisted upon, the company shall transport them, being exempt from all responsibility if its objections, is made to appear in the bill of lading.

ARTICLE 357. If by reason of well-founded suspicion of falsity in the declaration as to the contents of a package the carrier should decide to examine it, he shall proceed with his investigation in the presence of witnesses, with the shipper or consignee in attendance.

If the shipper or consignee who has to be cited does not attend, the examination shall be made before a notary, who shall prepare a memorandum of the result of the investigation, for such purpose as may be proper.

If the declaration of the shipper should be true, the expense occasioned by the examination and that of carefully repacking the packages shall be for the account of the carrier and in a contrary case for the account of the shipper.

ARTICLE 358. If there is no period fixed for the delivery of the goods the carrier shall be bound to forward them in the first shipment of the same or similar goods which he may make point where he must deliver them; and should he not do so, the damages caused by the delay should be for his account.

ARTICLE 359. If there is an agreement between the shipper and the carrier as to the road over which the conveyance is to be made, the carrier may not change the route, unless it be by reason of force majeure; and should he do so without this cause, he shall be liable for all the losses which the goods he transports may suffer from any other cause, beside paying the sum which may have been stipulated for such case.

When on account of said cause of force majeure, the carrier had to take another route which produced an increase in transportation charges, he shall be reimbursed for such increase upon formal proof thereof.

ARTICLE 360. The shipper, without changing the place where the delivery is to be made, may change the consignment of the goods which he delivered to the carrier, provided that at the time of ordering the change of consignee the bill of lading signed by the carrier, if one has been issued, be returned to him, in exchange for another wherein the novation of the contract appears.

The expenses which this change of consignment occasions shall be for the account of the shipper.

ARTICLE 361. The merchandise shall be transported at the risk and venture of the shipper, if the contrary has not been expressly stipulated. As a consequence, all the losses and deterioration which the goods may suffer during the transportation by reason of fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the account and risk of the shipper. Proof of these accidents is incumbent upon the carrier.

ARTICLE 362. Nevertheless, the carrier shall be liable for the losses and damages resulting from the causes mentioned in the preceding article if it is proved, as against him, that they arose through his negligence or by reason of his having failed to take the precautions which usage has established among careful persons, unless the shipper has committed fraud in the bill of lading, representing the goods to be of a kind or quality different from what they really were.

If, notwithstanding the precautions referred to in this article, the goods transported run the risk of being lost, on account of their nature or by reason of unavoidable accident, there being no time for their owners to dispose of them, the carrier may proceed to sell them, placing them for this purpose at the disposal of the judicial authority or of the officials designated by special provisions.

ARTICLE 363. Outside of the cases mentioned in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods shipped in the same condition in which, according to the bill of lading, they were found at the time they were received, without any damage or impairment, and failing to do so, to pay the value which those not delivered may have at the point and at the time at which their delivery should have been made.

If those not delivered form part of the goods transported, the consignee may refuse to receive the latter, when he proves that he cannot make use of them independently of the others.

ARTICLE 364. If the effect of the damage referred to in Article 361 is merely a diminution in the value of the goods, the obligation of the carrier shall be reduced to the payment of the amount which, in the judgment of experts, constitutes such difference in value.

ARTICLE 365. If, in consequence of the damage, the goods are rendered useless for sale and consumption for the purposes for which they are properly destined, the consignee shall not be bound to receive them, and he may have them in the hands of the carrier, demanding of the latter their value at the current price on that day.

If among the damaged goods there should be some pieces in good condition and without any defect, the foregoing provision shall be applicable with respect to those damaged and the consignee shall receive those which are sound, this segregation to be made by distinct and separate pieces and without dividing a single object, unless the consignee proves the impossibility of conveniently making use of them in this form.

The same rule shall be applied to merchandise in bales or packages, separating those parcels which appear sound.

ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average be found therein upon opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt.

After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.

ARTICLE 367. If doubts and disputes should arise between the consignee and the carrier with respect to the condition of the goods transported at the time their delivery to the former is made, the goods shall be examined by experts appointed by the parties, and, in case of disagreement, by a third one appointed by the judicial authority, the results to be reduced to writing; and if the interested parties should not agree with the expert opinion and they do not settle their differences, the merchandise shall be deposited in a safe warehouse by order of the judicial authority, and they shall exercise their rights in the manner that may be proper.

ARTICLE 368. The carrier must deliver to the consignee, without any delay or obstruction, the goods which he may have received, by the mere fact of being named in the bill of lading to receive them; and if he does not do so, he shall be liable for the damages which may be caused thereby.

ARTICLE 369. If the consignee cannot be found at the residence indicated in the bill of lading, or if he refuses to pay the transportation charges and expenses, or if he refuses to receive the goods, the municipal judge, where there is none of the first instance, shall provide for their deposit at the disposal of the shipper, this deposit producing all the effects of delivery without prejudice to third parties with a better right.

ARTICLE 370. If a period has been fixed for the delivery of the goods, it must be made within such time, and, for failure to do so, the carrier shall pay the indemnity stipulated in the bill of lading, neither the shipper nor the consignee being entitled to anything else.If no indemnity has been stipulated and the delay exceeds the time fixed in the bill of lading, the carrier shall be liable for the damages which the delay may have caused.

ARTICLE 371. In case of delay through the fault of the carrier, referred to in the preceding articles, the consignee may leave the goods transported in the hands of the former, advising him thereof in writing before their arrival at the point of destination.

When this abandonment takes place, the carrier shall pay the full value of the goods as if they had been lost or mislaid.

If the abandonment is not made, the indemnification for losses and damages by reason of the delay cannot exceed the current price which the goods transported would have had on the day and at the place in which they should have been delivered; this same rule is to be observed in all other cases in which this indemnity may be due.

ARTICLE 372. The value of the goods which the carrier must pay in cases if loss or misplacement shall be determined in accordance with that declared in the bill of lading, the shipper not being allowed to present proof that among the goods declared therein there were articles of greater value and money.

Horses, vehicles, vessels, equipment and all other principal and accessory means of transportation shall be especially bound in favor of the shipper, although with respect to railroads said liability shall be subordinated to the provisions of the laws of concession with respect to the property, and to what this Code established as to the manner and form of effecting seizures and attachments against said companies.

ARTICLE 373. The carrier who makes the delivery of the merchandise to the consignee by virtue of combined agreements or services with other carriers shall assume the obligations of those who preceded him in the conveyance, reserving his right to proceed against the latter if he was not the party directly responsible for the fault which gave rise to the claim of the shipper or consignee.

The carrier who makes the delivery shall likewise acquire all the actions and rights of those who preceded him in the conveyance. The shipper and the consignee shall have an immediate right of action against the carrier who executed the transportation contract, or against the other carriers who may have received the goods transported without reservation.However, the reservation made by the latter shall not relieve them from the responsibilities which they may have incurred by their own acts.

ARTICLE 374. The consignees to whom the shipment was made may not defer the payment of the expenses and transportation charges of the goods they receive after the lapse of twenty-four hours following their delivery; and in case of delay in this payment, the carrier may demand the judicial sale of the goods transported in an amount necessary to cover the cost of transportation and the expenses incurred.

ARTICLE 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury to the personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as by strangers; but not that which may proceed from any force majeure. The fact that travellers are constrained to rely on the vigilance of the keeper of the hotel or inn shall be considered in determining the degree of care required of him. (1784a)

ARTICLE 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. (n)

ARTICLE 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family, servants or visitors, or if the loss arises from the character of the things brought into the hotel. (n)

ARTICLE 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be void. (n)

ARTICLE 2004. The hotel-keeper has a right to retain the things brought into the hotel by the guest, as a security for credits on account of lodging, and supplies usually furnished to hotel guests. (n)

CHAPTER 4

Sequestration or Judicial Deposit

ARTICLE 2005. A judicial deposit or sequestration takes place when an attachment or seizure of property in litigation is ordered. (1785)

ARTICLE 2006. Movable as well as immovable property may be the object of sequestration. (1786)

ARTICLE 2007. The depositary of property or objects sequestrated cannot be relieved of his responsibility until the controversy which gave rise thereto has come to an end, unless the court so orders. (1787a)

ARTICLE 2008. The depositary of property sequestrated is bound to comply, with respect to the same, with all the obligations of a good father of a family. (1788)

De Guzman v. CAFacts:

Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he gathered to Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan, respondent would load his vehicle with cargo which various merchants wanted delivered, charging fee lower than the commercial rates. Sometime in November 1970, petitioner Pedro de Guzman contracted with respondent for the delivery of 750 cartons of Liberty Milk. On December 1, 1970, respondent loaded the cargo. Only 150 boxes were delivered to petitioner because the truck carrying the boxes was hijacked along the way. Petitioner commenced an action claiming the value of the lost merchandise. Petitioner argues that respondent, being a common carrier, is bound to exercise extraordinary diligence, which it failed to do. Private respondent denied that he was a common carrier, and so he could not be held liable for force majeure. The trial court ruled against the respondent, but such was reversed by the Court of Appeals.

Issues:

(1) Whether or not private respondent is a common carrier

(2) Whether private respondent is liable for the loss of the goods

Held:

(1) Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity. Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. It appears to the Court that private respondent is properly characterized as a common carrier even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such backhauling 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. A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers.

(2) Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or deterioration of the goods which they carry, "unless the same is due to any of the following causes only:

a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;

b. Act of the public enemy in war, whether international or civil;

c. Act or omission of the shipper or owner of the goods;

d. The character of the goods or defects in the packing or in the containers; and

e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting causes listed in Article 1734. 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. 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." 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.

Calvo vs UCPB

Facts: Petitioner Virgines Calvo, owner of Transorient Container Terminal Services, Inc. (TCTSI), and a custom broker, entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the port area to the Tabacalera Compound, Ermita, Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc. On July 14, 1990, contained in 30 metal vans, arrived in Manila on board M/V Hayakawa Maru. After 24 hours, they were unloaded from vessel to the custody of the arrastre operator, Manila Port Services, Inc. From July 23 to 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from the arrastre operator and delivered it to SMCs warehouse in Manila. On July 25, the goods were inspected by Marine Cargo Surveyors, reported that 15 reels of the semi-chemical fluting paper were wet/stained/torn and 3 reels of kraft liner board were also torn. The damages cost P93,112.00. SMC collected the said amount from respondent UCPB under its insurance contract. Respondent on the other hand, as a subrogee of SMC, brought a suit against petitioner in RTC, Makati City. On December 20, 1995, the RTC rendered judgment finding petitioner liable for the damage to the shipment. The decision was affirmed by the CA.

Issue: Whether or not Calvo is a common carrier?

Held: In this case the contention of the petitioner, that he is not a common carrier but a private carrier, has no merit.

Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as ancillary activity. Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinction. (De Guzman v. CA, 68 SCRA 612)

Te concept of common carrier under Article 1732 coincide with the notion of public service, under the Public Service Act which partially supplements the law on common carrier. Under Section 13, paragraph (b) of the Public Service Act, it includes:

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

Asia Lighterage & Shipping, Inc. vs CA & Prudential Guarantee and Assurance, Inc.Posted on November 24, 2012G.R. No. 147246

August 19, 2003

On appeal is the CAs May 11, 2000 Decision in CA-G.R. CV No. 49195 and February 21, 2001 Resolution affirming with modification the April 6,1994 Decision of the RTC of Manila which found petitioner liable to pay private respondent the amount of indemnity and attorneys fees.

FACTS:

Asia Lighterage and Shipping, Inc was contracted as carrier to deliver 3,150 metric tons of Better Western White Wheat in bulk, (US$423,192.35) to the consignees (General Milling Corporation) warehouse at Bo. Ugong, Pasig City. The cargo was transferred to its custody on July 25, 1990. The shipment was insured by Prudential Guarantee and Assurance, Inc. against loss/damage for P14,621,771.75.

On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III for delivery to consignee. However, the cargo did not reach its destination.

It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an incoming typhoon. 5 days later, the petitioner proceeded to pull the barge to Engineering Island off Baseco to seek shelter from the approaching typhoon. PSTSI III was tied down to other barges which arrived ahead of it while weathering out the storm that night. A few days after, the barge developed a list because of a hole it sustained after hitting an unseen protuberance underneath the water. It filed a Marine Protest on August 28, 1990 and also secured the services of Gaspar Salvaging Corporation to refloat the barge. The hole was then patched with clay and cement.

The barge was then towed to ISLOFF terminal before it finally headed towards the consignees wharf on September 5, 1990. Upon reaching the Sta. Mesa spillways, the barge again ran aground due to strong current. To avoid the complete sinking of the barge, a portion of the goods was transferred to 3 other barges.

The next day, the towing bits of the barge broke. It sank completely, resulting in the total loss of the remaining cargo. A 2nd Marine Protest was filed on September 7, 1990.

7 days later, a bidding was conducted to dispose of the damaged wheat retrieved & loaded on the 3 other barges. The total proceeds from the sale of the salvaged cargo was P201,379.75.

On the same date, consignee sent a claim letter to the petitioner, and another letter dated September 18, 1990 to the private respondent for the value of the lost cargo. On January 30, 1991, the private respondent indemnified the consignee in the amount of P4,104,654.22. Thereafter, as subrogee, it sought recovery of said amount from the petitioner, but to no avail.

ISSUES:

1. Whether petitioner is a common carrier.

2. Assuming petitioner is a common carrier, whether it exercised extraordinary care and diligence in its care and custody of the consignees cargo.

HELD:

1. Petitioner is a common carrier.

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. CA (G.R. No. L-47822, 22 December 1988) it was 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. There is also no distinction between a person or enterprise offering transportation service on a regular/scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Further, 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.Private respondent Ernesto Cendaa was considered 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.

To be sure, petitioner fits the test of a common carrier as laid down in Bascos vs. CA (G.R. No. 101089, 07 April 1993, 221 SCRA 318). 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 the case at bar, the petitioner admitted that it is engaged in the business of shipping, lighterage and drayage, offering its barges to the public, despite its limited clientele for carrying/transporting goods by water for compensation. Petitioner is clearly a common carrier.

Therefore, 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.

2. The findings of the lower courts should be upheld. Petitioner failed to exercise extraordinary diligence in its care and custody of the consignees goods.

Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. 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/omission of the shipper/owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order/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 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/minimize the loss. 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.

Moreover, petitioner still headed to the consignees wharf despite knowledge of an incoming typhoon. During the time that the barge was heading towards the consignees 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.

First Philippine Industrial Corp. vs. CAFacts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995, petitioner applied for mayors permit in Batangas. However, the Treasurer required petitioner to pay a local tax based on gross receipts amounting to P956,076.04. In order not to hamper its operations, petitioner paid the taxes for the first quarter of 1993 amounting to P239,019.01 under protest. On January 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt from local tax since it is engaged in transportation business. The respondent City Treasurer denied the protest, thus, petitioner filed a complaint before the Regional Trial Court of Batangas for tax refund. Respondents assert that pipelines are not included in the term common carrier which refers solely to ordinary carriers or motor vehicles. The trial court dismissed the complaint, and such was affirmed by the Court of Appeals.

Issue:

Whether a pipeline business is included in the term common carrier so as to entitle the petitioner to the exemption

Held:

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:

(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.

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.

Transportation Case Digest: Phil Am Gen Insurance Co, Et Al. V. PKS Shipping Co (2003)

G.R. No. 149038 April 9, 2003Lessons Applicable: Charter Party (Transportation)

FACTS:Davao Union Marketing Corporation (DUMC) contracted the services of PKS Shipping Company (PKS Shipping) for the shipment to Tacloban City of 75,000 bags of cement worth P3,375,000. DUMC insured the goods for its full value with Philippine American General Insurance Company (Philamgen). The goods were loaded aboard the dumb barge Limar I belonging to PKS Shipping.December 22, 1988 9 pm: While Limar I was being towed by PKS tugboat MT Iron Eagle, the barge sank a couple of miles off the coast of Dumagasa Point, in Zamboanga del Sur, bringing down with it the entire cargo of 75,000 bags of cement.DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly made payment; it then sought reimbursement from PKS Shipping of the sum paid to DUMC but the shipping company refused to pay so Philamgen to file suit against PKS Shipping RTC: dismissed the complaint - fortuitous eventCA:Affirmed - not a common carrier but a casual occupationISSUE: W/N PKS Shipping is NOT liable since it was NOT a common carrier

HELD: NO. Petition is DENIED

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 publicComplementary is Section 13, paragraph (b), of the Public Service Act

public service" to be "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, 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, 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 communication systems, wire or wireless broadcasting stations and other similar public servicesSo 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 Actdistinction between:common or public carrierprivate or special carrier - character of the business, such that if the undertaking is an isolated transaction , not a part of the business or occupation, and the carrier does not hold itself out to carry the goods for the general public or to a limited clientele, although involving the carriage of goods for a feeEX: charter party which includes both the vessel and its crew, such as in a bareboat or demise, where the charterer obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages and gets the control of the vessel and its crew.The regularity of its activities in this area indicates more than just a casual activity on its partThe appellate court ruled, gathered from the testimonies and sworn marine protests of the respective vessel masters ofLimar I and MT Iron Eagle, that there was no way by which the barges or the tugboats crew could have prevented the sinking of Limar I. The vessel was suddenly tossed by waves of extraordinary height of 6 to 8 feet and buffeted by strong winds of 1.5 knots resulting in the entry of water into the barges hatches. The official Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness of Limar I and should strengthen the factual findings of the appellate court.Findings of fact of the Court of Appeals generally conclude this Court; none of the recognized exceptions from the rule - (1) when the factual findings of the Court of Appeals and the trial court are contradictory; (2) when the conclusion is a finding grounded entirely on speculation, surmises, or conjectures; (3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd, or impossible; (4) when there is a grave abuse of discretion in the appreciation of facts; (5) when the appellate court, in making its findings, went beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee; (6) when the judgment of the Court of Appeals is premised on a misapprehension of facts; (7) when the Court of Appeals failed to notice certain relevant facts which, if properly considered, would justify a different conclusion; (8) when the findings of fact are themselves conflicting; (9) when the findings of fact are conclusions without citation of the specific evidence on which they are based; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such findings are contradicted by the evidence on record would appear to be clearly extant in this instance.Spouses Perena vs. Zarate DigestG.R. No. 157917 : August 29, 2012

SPOUSES TEODORO and NANETTE PERENA, Petitioners, v. SPOUSES NICOLAS and TERESITA L. ZARATE, PHILIPPINE NATIONAL RAILWAYS, and the COURT OF APPEALS, Respondents.

BERSAMIN, J.:

FACTS:

Spouses Teodoro and Nanette Peres (Peres) were engaged in the business of transporting students from their respective residences in Paraque City to Don Bosco in Pasong Tamo, Makati City, and back. They employed Clemente Alfaro (Alfaro) as driver of the van. Spouses Nicolas and Teresita Zarate (Zarates) contracted the Peres to transport their son Aaron to and from Don Bosco.

Considering that the students were due at Don Bosco by 7:15 a.m., and that they were already running late because of the heavy vehicular traffic on the South Superhighway, Alfaro took the van to an alternate route at about 6:45 a.m. by traversing the narrow path underneath the Magallanes Interchange. The railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other responsible persons manning the crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing open to traversing motorists.

At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302 (train), was in the vicinity of the Magallanes Interchange travelling northbound. As the train neared the railroad crossing, Alfaro drove the van eastward across the railroad tracks, closely tailing a large passenger bus. His view of the oncoming train was blocked because he overtook the passenger bus on its left side. The train blew its horn to warn motorists of its approach. The passenger bus successfully crossed the railroad tracks, but the van driven by Alfaro did not. The impact threw nine of the 12 students in the rear, including Aaron, out of the van. Aaron landed in the path of the train, which dragged his body and severed his head, instantaneously killing him.

Thus, the Zarates sued the Peres for breach of contract of carriage and the PNR for quasi-delict. The RTC ruled in favor of the Zarates. On appeal, the CA affirmed the findings of the RTC.

ISSUE: Whether or not the Peres are liable for breach of contract of carriage?

HELD: The petition has no merit.

CIVIL LAW: common carrier; extraordinary diligence

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. Contracts of common carriage are governed by the provisions on common carriers of the Civil Code, the Public Service Act, 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. 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.

Applying these considerations to the case before us, there is no question that the Peres 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 clientele, the Peres 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.

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.

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. The Peres 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.

DENIED.