A. COMMON CARRIERS (Arts. 1731 to 1766 NCC)
1. Definitions of "domestic shipping" under R.A. No. 9295 and of "public
service" under Commonwealth Act No. 146
2. Common Carriage
PEDRO DE GUZMAN vs.COURT OF APPEALS and ERNESTO CENDANA
FACTS:
Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and
scrap metal in Pangasinan, and bring such material to Manila for resale. He
utilized two (2) six-wheeler trucks which he owned for hauling the material
to Manila. He charged freight rates which were commonly lower than regular
commercial rates for the cargo loaded in his vehicle.
Pedro de Guzman a merchant and authorized dealer of General Milk Company
contracted with Cendana for the hauling of 750 cartons of Liberty filled
milk from a warehouse of General Milk in Makati, Rizal. 150 cartons were
loaded on a truck driven by Cendana himself, while 600 cartons were placed
on board the other truck which was driven by Manuel Estrada, Cendana's
driver and employee. The other 600 boxes never reached de Guzman, since the
truck which carried these boxes was hijacked somewhere along the MacArthur
Highway in Paniqui, Tarlac, by armed men who took with them the truck, its
driver, his helper and the cargo. Having failed to exercise the
extraordinary diligence required of him by the law, he is held liable for
the value of the undelivered goods. Cendana denied that he was a common
carrier and argued that he could not be held responsible for the value of
the lost goods, such loss having been due to force majeure.
ISSUE: Whether or not Ernesto Cendana may, under the facts earlier set
forth, be properly characterized as a common carrier?
Whether or not high jacking with robbery can be properly regarded as a
fortuitous event that can exempt the carrier?
HELD:
The trial court rendered a Decision finding private respondent to be a
common carrier and holding him liable for the value of the undelivered
goods as damages and as attorney's fees. The Court of Appeals reversed
the judgment of the trial court and held that respondent had been engaged
in transporting return loads of freight "as a casual occupation — a
sideline to his scrap iron business" and not as a common carrier.
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.
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. 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:
(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; and
(5) Order or act of competent public authority.
The above list of causes of loss, destruction or deterioration which exempt
the common carrier for responsibility therefor, is a closed list. Causes
falling outside the foregoing list, even if they appear to constitute a
species of force majeure fall within the scope of Article 1735, which
provides as follows:
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the
preceding article, if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as required in
Article 1733. (Emphasis supplied)
The limits of the duty of extraordinary diligence in the vigilance over the
goods carried are reached where the goods are lost as a result of a robbery
which is attended by "grave or irresistible threat, violence or force." In
the instant case, armed men held up the second truck owned by private
respondent which carried petitioner's cargo.
The 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.
Cendana is not liable for the value of the undelivered merchandise which
was lost because of an event entirely beyond private respondent's control.
Petition for Review on certiorari is hereby DENIED and the Decision of the
Court of Appeals dated 3 August 1977 is AFFIRMED. No pronouncement as to
costs.
PLANTERS PRODUCTS, INC. VS. COURT OF APPEALS,
SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA
G.R. No. 101503 September 15, 1993
FACTS:
Planters Products, Inc. (PPI), purchased from Mitsubishi International
Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T)
of Urea 46% fertilizer which the latter shipped in bulk on 16 June 1974
aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei
Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point,
San Fernando, La Union, Philippines, as evidenced by Bill of Lading No. KP-
1 signed by the master of the vessel and issued on the date of departure.
Prior to its voyage, a time charter-party on the vessel M/V "Sun Plum"
pursuant to the Uniform General Charter was entered into between
Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan.
Before loading the fertilizer aboard the vessel, four (4) of her holds were
all presumably inspected by the charterer's representative and found fit to
take a load of urea in bulk pursuant to par. 16 of the charter-party .
After the Urea fertilizer was loaded in bulk by stevedores hired by and
under the supervision of the shipper, the steel hatches were closed with
heavy iron lids, covered with three (3) layers of tarpaulin, then tied with
steel bonds. The hatches remained closed and tightly sealed throughout the
entire voyage.
Petitioner unloaded the cargo from the holds into its steelbodied dump
trucks which were parked alongside the berth, using metal scoops attached
to the ship, pursuant to the terms and conditions of the charter-partly
(which provided for an F.I.O.S. clause). However, the hatches remained
open throughout the duration of the discharge. Each time a dump truck was
filled up, its load of Urea was covered with tarpaulin. The port area was
windy, certain portions of the route to the warehouse were sandy and the
weather was variable, raining occasionally while the discharge was in
progress.
It took eleven (11) days for PPI to unload the cargo. A private marine and
cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI
to determine the "outturn" of the cargo shipped, by taking draft readings
of the vessel prior to and after discharge. The survey report submitted by
CSCI to the consignee (PPI) revealed a shortage in the cargo of 106.726 M/T
and that a portion of the Urea fertilizer approximating 18 M/T was
contaminated with dirt, sand and rust and rendered unfit for commerce.
Consequently, PPI sent a claim letter to Soriamont Steamship Agencies
(SSA), the resident agent of the carrier, KKKK, representing the cost of
the alleged shortage in the goods shipped and the diminution in value of
that portion said to have been contaminated with dirt. Respondent SSA was
not able to respond to this consignee's claim for payment because according
to them, they only received a request for shortlanded certificate and not a
formal claim.
Hence, PPI filed an action for damages with the Court of First Instance of
Manila. The defendant carrier argued that the strict public policy
governing common carriers does not apply to them because they have become
private carriers by reason of the provisions of the charter-party. The
court a quo however sustained the claim of the plaintiff against the
defendant carrier for the value of the goods lost or damaged.
On appeal, respondent Court of Appeals reversed the lower court and
absolved the carrier from liability for the value of the cargo that was
lost or damaged. Relying on the 1968 case of Home Insurance Co.v. American
Steamship Agencies, Inc., the appellate court ruled that the cargo vessel
M/V "Sun Plum" owned by private respondent KKKK was a private carrier and
not a common carrier by reason of the time charterer-party. Accordingly,
the Civil Code provisions on common carriers which set forth a presumption
of negligence do not find application in the case at bar.
ISSUE: Whether a common carrier becomes a private carrier by reason of a
charter-party.
HELD: The assailed decision of the Court of Appeals, which reversed the
trial court, is affirmed.
A "charter-party" is defined as a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a
specified time or use; a contract of affreightment by which the owner of a
ship or other vessel lets the whole or a part of her to a merchant or other
person for the conveyance of goods, on a particular voyage, in
consideration of the payment of freight; Charter parties are of two types:
(a) contract of affreightment which involves the use of shipping space on
vessels leased by the owner in part or as a whole, to carry goods for
others; and, (b) charter by demise or bareboat charter, by the terms of
which the whole vessel is let to the charterer with a transfer to him of
its entire command and possession and consequent control over its
navigation, including the master and the crew, who are his servants.
Contract of affreightment may either be time charter, wherein the vessel is
leased to the charterer for a fixed period of time, or voyage charter,
wherein the ship is leased for a single voyage. In both cases, the charter-
party provides for the hire of vessel only, either for a determinate period
of time or for a single or consecutive voyage, the shipowner to supply the
ship's stores, pay for the wages of the master and the crew, and defray the
expenses for the maintenance of the ship.
Upon the other hand, the term "common or public carrier" is defined
in Art. 1732 of the Civil Code. The definition extends to carriers either
by land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation as a
public employment and not as a casual occupation. The distinction between a
"common or public carrier" and a "private or special carrier" lies in the
character of the business, such that if the undertaking is a single
transaction, not a part of the general business or occupation, although
involving the carriage of goods for a fee, the person or corporation
offering such service is a private carrier.
It is not disputed that respondent carrier, in the ordinary course of
business, operates as a common carrier, transporting goods indiscriminately
for all persons. When petitioner chartered the vessel M/V "Sun Plum", the
ship captain, its officers and compliment were under the employ of the
shipowner and therefore continued to be under its direct supervision and
control. Hardly then can we charge the charterer, a stranger to the crew
and to the ship, with the duty of caring for his cargo when the charterer
did not have any control of the means in doing so. This is evident in the
present case considering that the steering of the ship, the manning of the
decks, the determination of the course of the voyage and other technical
incidents of maritime navigation were all consigned to the officers and
crew who were screened, chosen and hired by the shipowner.
It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or
more persons, provided the charter is limited to the ship only, as in the
case of a time-charter or voyage-charter. It is only when the charter
includes both the vessel and its crew, as in a bareboat or demise that a
common carrier becomes private, at least insofar as the particular voyage
covering the charter-party is concerned. Indubitably, a shipowner in a time
or voyage charter retains possession and control of the ship, although her
holds may, for the moment, be the property of the charterer.
Respondent carrier's heavy reliance on the case of Home Insurance
Co. v. American Steamship Agencies, supra, is misplaced for the reason that
the meat of the controversy therein was the validity of a stipulation in
the charter-party exempting the shipowners from liability for loss due to
the negligence of its agent, and not the effects of a special charter on
common carriers. At any rate, the rule in the United States that a ship
chartered by a single shipper to carry special cargo is not a common
carrier, does not find application in our jurisdiction, for we have
observed that the growing concern for safety in the transportation of
passengers and /or carriage of goods by sea requires a more exacting
interpretation of admiralty laws, more particularly, the rules governing
common carriers.
In an action for recovery of damages against a common carrier on the goods
shipped, the shipper or consignee should first prove the fact of shipment
and its consequent loss or damage while the same was in the possession,
actual or constructive, of the carrier. Thereafter, the burden of proof
shifts to respondent to prove that he has exercised extraordinary diligence
required by law or that the loss, damage or deterioration of the cargo was
due to fortuitous event, or some other circumstances inconsistent with its
liability. To our mind, respondent carrier has sufficiently overcome, by
clear and convincing proof, the prima facie presumption of negligence.
Verily, the presumption of negligence on the part of the respondent carrier
has been efficaciously overcome by the showing of extraordinary zeal and
assiduity exercised by the carrier in the care of the cargo. The period
during which private respondent was to observe the degree of diligence
required of it as a public carrier began from the time the cargo was
unconditionally placed in its charge after the vessel's holds were duly
inspected and passed scrutiny by the shipper, up to and until the vessel
reached its destination and its hull was reexamined by the consignee, but
prior to unloading.
Article 1734 of the New Civil Code provides that common carriers are not
responsible for the loss, destruction or deterioration of the goods if
caused by the charterer of the goods or defects in the packaging or in the
containers. The Code of Commerce also provides that all losses and
deterioration which the goods may suffer during the transportation by
reason of fortuitous event, force majeure, or the inherent defect of the
goods, shall be for the account and risk of the shipper, and that proof of
these accidents is incumbent upon the carrier. The carrier, nonetheless,
shall be liable for the loss and damage resulting from the preceding causes
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.
Thus, the petition is dismissed.
ESTRELLITA M. BASCOS vs. COURT OF APPEALS and RODOLFO A. CIPRIANO
G.R. No. 101089. April 7, 1993.
FACTS:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE)
entered into a hauling contract with Jibfair Shipping Agency Corp. whereby
the former bound itself to haul the latter's 2,000 m/tons of soya bean meal
from Magallanes Drive, Del Pan, Manila to the warehouse of Purefoods
Corporation in Calamba, Laguna. To carry out its obligation, CIPTRADE,
through Rodolfo Cipriano, subcontracted with Estrellita Bascos to transport
and to deliver 400 sacks of soya bean meal from the Manila Port Area to
Calamba, Laguna at the rate. But, Bascos failed to deliver the said cargo.
As a consequence, Cipriano paid Jibfair Shipping Agency the amount of the
lost goods in accordance with the contract. Cipriano demanded reimbursement
from Bascos but the latter refused to pay.
Eventually, Cipriano filed a complaint for a sum of money and damages with
writ of preliminary attachment for breach of a contract of carriage. The
trial court granted the writ of preliminary attachment and rendered a
decision, ordering Bascos to pay for actual damages with legal interest,
attorney's fees and the costs of the suit. The court further denied the
"Urgent Motion To Dissolve/Lift preliminary Attachment" filed by Bascos for
being moot and academic.
Bascos appealed to the CA but the appellate court affirmed the trial
court's judgment. Hence, the petition for review on certiorari. Petitioner,
Bascos interposed the following defenses: that there was no contract of
carriage since CIPTRADE leased her cargo truck to load the cargo from
Manila Port Area to Laguna; that CIPTRADE was liable to petitioner for
loading the cargo; that the truck carrying the cargo was hijacked along
Paco, Manila; that the hijacking was immediately reported to CIPTRADE and
that petitioner and the police exerted all efforts to locate the hijacked
properties; and that hijacking, being a force majeure, exculpated
petitioner from any liability to CIPTRADE
ISSUE:
WON petitioner was a common carrier.
WON the hijacking referred to a force majeure.
HELD:
The Supreme Court dismissed the petition and affirmed the decision of the
Court of Appeals.
Petitioner is a 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." In this case, petitioner
herself has made the admission that she was in the trucking business,
offering her trucks to those with cargo to move. Judicial admissions are
conclusive and no evidence is required to prove the same.
Moreover, in referring to Article 1732 of the Civil Code, it held in De
Guzman vs. Court of Appeals that "The above article makes no distinction
between one whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only as an ancillary activity
(in local idiom, as a "sideline"). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering
such service on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its services to the
"general public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the
general population.
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.
As to the second issue, 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. UArticle 1745 of the Civil Code provides that 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. Affidavits were not enough to
overcome the presumption. (1) Bascos's affidavit about the hijacking was
based on what had been told her by Juanito Morden. It was not a first-hand
account. While it had been admitted in court for lack of objection on the
part of Cipriano, the lower court had discretion in assigning weight to
such evidence. (2) The affidavit of Jesus Bascos did not dwell on how the
hijacking took place. (3) While the affidavit of Juanito Morden, the truck
helper in the hijacked truck, was presented as evidence in court, he
himself was a witness as could be gleaned from the contents of the
petition.
Mr. & Mrs. Engracio Fabre, Jr. vs. CA, et al.
259 SCRA 426
Facts:
Petitioners Fabre and his wife were owners of a minibus which they used
principally in connection with a bus service for school children which they
operated. The couple had a driver, Porfirio Cabil, whom they hired after
trying him out for two weeks. His job was to take school children to and
from the St. Scholastica's College.
On November 2, 1984, private respondent Word for the World Christian
Fellowship Inc. arranged with petitioners for the transportation of 33
members from Manila to La Union and back in consideration of which they
paid P3,000 to petitioners.
The group left at 8:00 in the evening, petitioner Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan. However,
the bridge at Carmen was under repair, so that petitioner Cabil, who was
unfamiliar with the area (it being his first trip to La Union), was forced
to take a detour through the town of Ba-ay in Lingayen, Pangasinan. At
11:30 that night, petitioner Cabil came upon a sharp curve on the highway,
running on a south to east direction. The road was slippery because it was
raining, causing the bus, which was running at the speed of 50 kilometers
per hour, to skid to the left road shoulder. The bus hit the left traffic
steel brace and sign along the road and rammed the fence of one Jesus
Escano, then turned over and landed on its left side, coming to a full stop
only after a series of impacts. The bus came to rest off the road. A
coconut tree which it had hit fell on it and smashed its front portion.
Several passengers were injured. Private respondent Amyline Antonio was
thrown on the floor of the bus and pinned down by a wooden seat which came
off after being unscrewed. It took three persons to safely remove her from
this position. She was in great pain and could not move.
A case was filed by the respondents against Fabre and Cabil. Amyline
Antonio was found to be suffering from paraplegia and is permanently
paralyzed from the waist down. The RTC ruled in favor of respondents. Mr. &
Mrs. Fabre and Cabil were ordered to pay jointly and severally actual,
moral and exemplary damages, and as well as amount of loss of earning
capacity of Antonio and attorney's fees. The Court of Appeals affirmed the
decision of the trial court with modification on the award of damages.
Issues:
1. Whether or not petitioners were negligent.
2. Whether or not petitioners were liable for the injuries suffered by
private respondents.
3. Whether or not damages can be awarded and in the positive, up to what
extent.
Held:
SC affirmed the decision of the CA but reverted the amount of the
award of damages to that ordered by the RTC.
1. The finding that Cabil drove his bus negligently, while his employer,
the Fabres, who owned the bus, failed to exercise the diligence of a good
father of the family in the selection and supervision of their employee
is fully supported by the evidence on record. Indeed, it was admitted by
Cabil that on the night in question, it was raining, and, as a
consequence, the road was slippery, and it was dark. However, it is
undisputed that Cabil drove his bus at the speed of 50 kilometers per
hour and only slowed down when he noticed the curve some 15 to 30 meters
ahead. Given the conditions of the road and considering that the trip was
Cabil's first one outside of Manila, Cabil should have driven his vehicle
at a moderate speed. There is testimony that the vehicles passing on that
portion of the road should only be running 20 kilometers per hour, so
that at 50 kilometers per hour, Cabil was running at a very high speed.
Cabil was grossly negligent and should be held liable for the injuries
suffered by private respondent Amyline Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave
rise to the presumption that his employers, the Fabres, were themselves
negligent in the selection and supervision of their employee. Due
diligence in selection of employees is not satisfied by finding that the
applicant possessed a professional driver's license. The employer should
also examine the applicant for his qualifications, experience and record
of service. In the case at bar, the Fabres, in allowing Cabil to drive
the bus to La Union, apparently did not consider the fact that Cabil had
been driving for school children only, from their homes to the St.
Scholastica's College in Metro Manila. They had hired him only after a
two-week apprenticeship.
2. This case involves a contract of carriage. Petitioners, the Fabres, did
not have to be engaged in the business of public transportation for the
provisions of the Civil Code on common carriers to apply to them.
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.
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. 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.
As common carriers, the Fabres were bound to exercise "extraordinary
diligence" for the safe transportation of the passengers to their
destination. This duty of care is not excused by proof that they
exercised the diligence of a good father of the family in the selection
and supervision of their employee.
As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the former's employees, although
such employees may have acted beyond the scope of their authority or in
violation of the orders of the common carriers.
First Philippine Industrial Corporation vs. Court of Appeals
G.R. No. 125948 December 29, 1998
Facts:
Petitioner, First Phil. Industrial Corporation (FirstPhil for brevity) is a
grantee of a pipeline concession under Republic Act No. 387, as amended, to
contract, install and operate oil pipelines. FirstPhil applied for a
mayor's permit, but before the mayor's permit could be issued, the
respondent City Treasurer required petitioner to pay a local tax pursuant
to the Local Government Code. Petitioner filed a letter-protest addressed
to the respondent City Treasurer, but the latter denied the same contending
that petitioner cannot be considered engaged in transportation business,
thus it cannot claim exemption under Section 133 (j) of the Local
Government Code.
FirstPhil filed with the RTC Batangas a complaint for tax refund with
prayer for writ of preliminary injunction against respondents, contending
that the imposition of tax upon them violates Sec 133 of the Local
Government Code. On the other hand, respondents assert that pipelines are
not included in the term "common carrier" which refers solely to ordinary
carriers such as trucks, trains, ships and the like. Respondents further
posit that the term "common carrier" under the said code pertains to the
mode or manner by which a product is delivered to its destination.
RTC dismissed the complaint, ruling that exemption granted under Sec. 133
(j) encompasses only "common carriers" so as not to overburden the riding
public or commuters with taxes. And that petitioner is not a common
carrier, but a special carrier extending its services and facilities to a
single specific or "special customer" under a "special contract."
The case was elevated by the petitioner to the CA, but CA affirmed the
decision of the RTC. Hence this petition.
Issue:
WON the petitioner is a "common carrier" and, therefore, exempt from the
business taxc
Held: Petition was granted. CA decision was REVERSED and SET ASIDE.
SC ruled in this case that petitioner is a common carrier and thus, exempt
from business tax.
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. Art. 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.
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.
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner
is considered a "common carrier.", and at the same time, said act also
regards petroleum operation as a public utility. BIR likewise considers
the petitioner a "common carrier." In so ruling, it held that, 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.
Section 133 (j), of the Local Government Code, provides:
Sec. 133. Common Limitations on the Taxing Powers of Local Government
Units. — Unless otherwise provided herein, the exercise of the taxing
powers of provinces, cities, municipalities, and barangays shall not extend
to the levy of the following:
(j) Taxes on the gross receipts of transportation contractors and persons
engaged in the transportation of passengers or freight by hire and common
carriers by air, land or water, except as provided in this Code.
SC held that the legislative intent in excluding from the taxing power of
the local government unit the imposition of business tax against common
carriers is to prevent a duplication of the so-called "common carrier's
tax."
LOADSTAR SHIPPING CO., INC., vs.
COURT OF APPEALS
Facts:
On 19 November 1984, LOADSTAR received on board a) 705 bales of lawanit
hardwood; b) 27 boxes and crates of tilewood assemblies and the others ;and
c) 49 bundles of mouldings R & W (3) Apitong Bolidenized. On its way to
Manila from the port of Nasipit, Agusan del Norte, the vessel, along with
its cargo, sank off Limasawa Island. As a result of the total loss of its
shipment, the consignee made a claim with LOADSTAR which, however, ignored
the same. MIC filed a complaint against LOADSTAR and PGAI, alleging that
the sinking of the vessel was due to the fault and negligence of LOADSTAR
and its employees. LOADSTAR denied any liability for the loss of the
shipper's goods and claimed that sinking of its vessel was due to force
majeure. LOADSTAR submits that the vessel was a private carrier because it
was not issued certificate of public convenience, it did not have a regular
trip or schedule nor a fixed route, and there was only "one shipper, one
consignee for a special cargo.
Issues:
(1) Is the M/V "Cherokee" a private or a common carrier?
(2) Did LOADSTAR observe due and/or ordinary diligence in these premises.
Held: Petition is dismissed:
SC hold that LOADSTAR is a common carrier. It is not necessary that the
carrier be issued a certificate of public convenience, and this public
character is not altered by the fact that the carriage of the goods in
question was periodic, occasional, episodic or unscheduled. The bills of
lading failed to show any special arrangement, but only a general provision
to the effect that the M/V"Cherokee" was a "general cargo carrier." 14
Further, the bare fact that the vessel was carrying a particular type of
cargo for one shipper, which appears to be purely coincidental, is not
reason enough to convert the vessel from a common to a private carrier,
especially where, as in this case, it was shown that the vessel was also
carrying passengers. Under Article 1732 of the Civil Code the Civil Code
defines "common carriers" in the following terms:
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.
On to the second assigned error, we find that the M/V "Cherokee" was not
seaworthy when it embarked on its voyage on 19 November 1984. The vessel
was not even sufficiently manned at the time. "For a vessel to be
seaworthy, it must be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition its vessel involved in a
contract of carriage is a clear breach of its duty.
CALVO VS. UCPB GENERAL INSURANCE TERMINAL SERVICE, INC.
Facts:
A contract was entered into between Calvo and San Miguel Corporation (SMC)
for the transfer of certain cargoes from the port area in Manila to the
warehouse of SMC. The cargo was insured by UCPB General Insurance Co., Inc.
When the shipment arrived and unloaded from the vessel, Calvo withdrew the
cargo from the arrastre operator and delivered the same to SMC's warehouse.
When it was inspected, it was found out that some of the goods were torn.
UCPB, being the insurer, paid for the amount of the damages and as subrogee
thereafter, filed a suit against Calvo.
Petitioner, on the other hand, contends that it is a private carrier not
required to observe such extraordinary diligence in the vigilance over the
goods.
As customs broker, she does not indiscriminately hold her services out to
the public but only to selected parties.
Issue:
Whether or not Calvo is a common carrier liable for the damages for failure
to observe extraordinary diligence in the vigilance over the goods.
Held:
The contention has no merit. In De Guzman v. Court of Appeals, the Court
dismissed a similar contention and held the party to be a common carrier,
thus -
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 law makes no distinction between a carrier offering its services to the
general community or solicits business only from a narrow segment of the
general population. Note that the transportation of goods holds an integral
part of Calvo's business, it cannot indeed be doubted that it is a common
carrier.
Asia Lighterage and Shipping Inc. v. CA
Gr, No. 147246, August 19, 2003
FACTS:
Petitioner was contracted as carrier by a corporation from Portland, Oregon
to deliver a cargo to the consignee's warehouse at Pasig City. The cargo,
however, never reached the consignee as the barge that carried the cargo
sank completely, resulting in damage to the cargo. Private respondent, as
insurer, indemnified the consignee for the lost cargo and thus, as
subrogee, sought recovery from petitioner. Both the trial court and the
appellate court ruled in favor of private respondent.
The Court ruled in favor of private respondent. Whether or not petitioner
is a common carrier, the Court ruled in the affirmative. The principal
business of petitioner is that of lighterage and drayage, offering its
barges to the public, although for limited clientele, for carrying or
transporting goods by water for compensation. Whether or not petitioner
failed to exercise extraordinary diligence in its care and custody of the
consignee's goods, the Court also ruled in the affirmative. The barge
completely sank after its towing bits broke, resulting in the loss of the
cargo. Petitioner failed to prove that the typhoon was the proximate and
only cause of the loss and that it has exercised due diligence before,
during and after the occurrence. HCISED
ISSUE:
Whether or Not the petitioner is a common carrier.
RULING: YES.
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. 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 and
lighterage, offering its barges to the public, despite its limited
clientele for carrying or transporting goods by water for compensation.
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. Petitioner contends
that it is not a common carrier but a private carrier. Allegedly, it has no
fixed and publicly known route, maintains no terminals, and issues no
tickets. It points out that it is not obliged to carry indiscriminately for
any person. It is not bound to carry goods unless it consents. In short, it
does not hold out its services to the general public. In De Guzman vs.
Court of Appeals, 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.
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, 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
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. 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.
AF Sanchez Brokerage vs CA
(Dec 21, 2004)
Facts:
AF Sanchez is engaged in a broker business wherein its main job is to
calculate customs duty, fees and charges as well as storage fees for the
cargoes. Part also of the services being given by AF Sanchez is the
delivery of the shipment to the consignee upon the instruction of the
shipper.
Wyett engaged the services of AF Sanchez where the latter delivered the
shipment to Hizon Laboratories upon instruction of Wyett. Upon inspection,
it was found out that at least 44 cartons containing contraceptives were in
bad condition. Wyett claimed insurance from FGU. FGU exercising its right
of subrogation claims damages against AF Sanchez who delivered the damaged
goods. AF Sanchez contended that it is not a common carrier but a brokerage
firm.
Issue: Is AF Sanchez a common carrier?
Held:
SC held that Art 1732 of the Civil Code in defining common carrier does not
distinguish whether the activity is undertaken as a principal activity or
merely as an ancillary activity. In this case, while it is true that AF
Sanchez is principally engaged as a broker, it cannot be denied from the
evidence presented that part of the services it offers to its customers is
the delivery of the goods to their respective consignees.
Note:
AF Sanchez claimed that the proximate cause of the damage is improper
packing. Under the CC, improper packing of the goods is an exonerating
circumstance. But in this case, the SC held that though the goods were
improperly packed, since AF Sanchez knew of the condition and yet it
accepted the shipment without protest or reservation, the defense is deemed
waived.
Schmitz Transport and Brokerage Corp v Transort Venture Inc., GR 150255
April 22,2005
Facts:
On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port of
Ilyichevsk, Russia on board M/V "Alexander Saveliev" 545 hot rolled steel
sheets in coil weighing 6,992,450 metric tons. The cargoes, which were to
be discharged at the port of Manila in favor of the consignee, Little Giant
Steel Pipe Corporation (Little Giant), were insured against all risks with
Industrial Insurance Company Ltd. (Industrial Insurance) under Marine
Policy No. M-91-3747-TIS. The vessel arrived at the port of Manila and
the Philippine Ports Authority (PPA) assigned it a place of berth at the
outside breakwater at the Manila South Harbor.
Schmitz Transport, whose services the consignee engaged to secure the
requisite clearances, to receive the cargoes from the shipside, and to
deliver them to its (the consignee's) warehouse at Cainta, Rizal, in turn
engaged the services of TVI to send a barge and tugboat at shipside. TVI's
tugboat "Lailani" towed the barge "Erika V" to shipside. The tugboat,
after positioning the barge alongside the vessel, left and returned to the
port terminal. Arrastre operator Ocean Terminal Services Inc. commenced
to unload 37 of the 545 coils from the vessel unto the barge. By 12:30
a.m. of October 27, 1991 during which the weather condition had become
inclement due to an approaching storm, the unloading unto the barge of the
37 coils was accomplished. No tugboat pulled the barge back to the pier,
however. At around 5:30 a.m. of October 27, 1991, due to strong waves, the
crew of the barge abandoned it and transferred to the vessel. The barge
pitched and rolled with the waves and eventually capsized, washing the 37
coils into the sea.
Little Giant thus filed a formal claim against Industrial Insurance which
paid it the amount of P5,246,113.11. Little Giant thereupon executed a
subrogation receipt in favor of Industrial Insurance. Industrial Insurance
later filed a complaint against Schmitz Transport, TVI, and Black Sea
through its representative Inchcape (the defendants) before the RTC of
Manila, they faulted the defendants for undertaking the unloading of the
cargoes while typhoon signal No. 1 was raised. The RTC held all the
defendants negligent. Defendants Schmitz Transport and TVI filed a joint
motion for reconsideration assailing the finding that they are common
carriers. RTC denied the motion for reconsideration. CA affirmed the RTC
decision in toto, finding that all the defendants were common carriers —
Black Sea and TVI for engaging in the transport of goods and cargoes over
the seas as a regular business and not as an isolated transaction, and
Schmitz Transport for entering into a contract with Little Giant to
transport the cargoes from ship to port for a fee.
Issue:
Whether or not Black Sea and TVI are common carriers
Held :
Contrary to petitioner's insistence, this Court, as did the appellate
court, finds that 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." 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,
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.
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."
PHIL CHARTER vs. M/V "NATIONAL HONOR,"
[G.R. No. 161833. July 8, 2005.]
FACTS:
On November 5, 1995, J. Trading Co. Ltd. of Seoul, Korea, loaded a shipment
of four units of parts and accessories on board the vessel M/V "National
Honor," represented in the Philippines by its agent, National Shipping
Corporation of the Philippines (NSCP). The shipment was contained in two
wooden crates, namely, Crate No. 1 and Crate No. 2, complete and in good
order condition. Crate No. 1 contained the following articles: one (1) unit
Lathe Machine complete with parts and accessories; one (1) unit Surface
Grinder complete with parts and accessories; and one (1) unit Milling
Machine complete with parts and accessories. On the flooring of the wooden
crates were three wooden battens placed side by side to support the weight
of the cargo. It was insured for P2,547,270.00 with the Philippine Charter
Insurance Corporation (PCIC).
The M/V "National Honor" arrived at the Manila International Container
Terminal (MICT). The International Container Terminal Services,
Incorporated (ICTSI) was the exclusive arrastre operator of MICT and was
charged with discharging the cargoes from the vessel. Claudio Cansino, the
stevedore of the ICTSI, placed two sling cables on each end of Crate No. 1.
No sling cable was fastened on the mid-portion of the crate. As the crate
was being hoisted from the vessel's hatch, the mid-portion of the wooden
flooring suddenly snapped in the air, about five feet high from the
vessel's twin deck, sending all its contents crashing down hard, resulting
in extensive damage to the shipment.
Blue Mono International Company, Incorporated (BMICI) subsequently filed
separate claims against the NSCP, the ICTSI, and its insurer, the PCIC, for
US$61,500.00. When the other companies denied liability, PCIC paid the
claim and was issued a Subrogation Receipt for P1,740,634.50. On March 22,
1995, PCIC, as subrogee, filed with the RTC of Manila a Complaint for
Damages against the "Unknown owner of the vessel M/V National Honor," NSCP
and ICTSI, as defendants. ICTSI, for its part, filed its Answer with
Counterclaim and Cross-claim against its co-defendant NSCP, claiming that
the loss/damage of the shipment was caused exclusively by the defective
material of the wooden battens of the shipment, insufficient packing or
acts of the shipper.
The trial court rendered judgment for PCIC and ordered the complaint
dismissed. According to the trial court, the loss of the shipment contained
in Crate No. 1 was due to the internal defect and weakness of the materials
used in the fabrication of the crates. The CA affirmed in TOTO the decision
of the RTC.
ISSUE:
WHETHER OR NOT THE COMMON CARRIER IS LIABLE FOR THE DAMAGE SUSTAINED BY THE
SHIPMENT IN THE HANDS OF THE ARRASTRE OPERATOR.
HELD: THE RULING OF THE RTC AND CA WAS UPHELD.
The petitioner posits that the loss/damage was caused by the mishandling of
the shipment by therein respondent ICTSI, the arrastre operator, and not by
its negligence. The petition has no merit.
We agree with the contention of the petitioner that common carriers, from
the nature of their business and for reasons of public policy, are mandated
to observe extraordinary diligence in the vigilance over the goods
according to all the circumstances of each case. The extraordinary
diligence in the vigilance over the goods 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." When the goods
shipped are either lost or arrive in damaged condition, a presumption
arises against the carrier of its failure to observe that diligence, and
there need not be an express finding of negligence to hold it liable.
However, under Article 1734 of the New Civil Code, the presumption of
negligence does not apply to any of the following causes:
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.
It bears stressing that the enumeration in Article 1734 of the New Civil
Code which exempts the common carrier for the loss or damage to the cargo
is a closed list. Crate No. 1 was provided by the shipper of the
machineries in Seoul, Korea. There is nothing in the record which would
indicate that defendant ICTSI had any role in the choice of the materials
used in fabricating this crate. Said defendant, therefore, cannot be held
as blame worthy for the loss of the machineries contained in Crate No. 1.
The CA affirmed the ruling of the RTC, thus:
"The case at bar falls under one of the exceptions mentioned in Article
1734 of the Civil Code, particularly number (4) thereof, i.e., the
character of the goods or defects in the packing or in the containers. The
trial court found that the breakage of the crate was not due to the fault
or negligence of ICTSI, but to the inherent defect and weakness of the
materials used in the fabrication of the said crate."
Upon examination of the records, We find no compelling reason to depart
from the factual findings of the trial court. It appears that the wooden
batten used as support for the flooring was not made of good materials,
which caused the middle portion thereof to give way when it was lifted. The
shipper also failed to indicate signs to notify the stevedores that extra
care should be employed in handling the shipment. Appellant's allegation
that since the cargo arrived safely from the port of [P]usan, Korea without
defect, the fault should be attributed to the arrastre operator who
mishandled the cargo; is without merit. The cargo fell while it was being
carried only at about five (5) feet high above the ground. It would not
have so easily collapsed had the cargo been properly packed. The shipper
should have used materials of stronger quality to support the heavy
machines. Not only did the shipper fail to properly pack the cargo, it also
failed to indicate an arrow in the middle portion of the cargo where
additional slings should be attached.
While it is true that the crate contained machineries and spare parts, it
cannot thereby be concluded that the respondents knew or should have known
that the middle wooden batten had a hole, or that it was not strong enough
to bear the weight of the shipment. The statement in the Bill of Lading,
that the shipment was in apparent good condition, is sufficient to sustain
a finding of absence of defects in the merchandise. Case law has it that
such statement will create a prima facie presumption only as to the
external condition and not to that not open to inspection.
LEA MER INDUSTRIES INC VS MALAYAN INSURANCE CO, INC.
GR No. 161745, SEPTEMBER 30, 2005
FACTS:
Ilian Silica Mining entered into a contract of carriage with the
petitioner, Lea Mer Industries Inc. for the shipment of 900 metric tons of
silica sand worth P565,000. The cargo was consigned to Vulcan Industrial
and Mining Corporation and was to be shipped from Palawan to Manila. The
silica sand was boarded to Judy VII, the vessel leased by Lea Mer. However,
during the course of its voyage, the vessel sank which led to the loss of
the cargo.
Consequently, the respondent, as the insurer, paid Vulcan the value of the
lost cargo. Malayan Insurance Co., Inc. then collected from the petitioner
the amount it paid to Vulcan as reimbursement and as its exercise on the
right of subrogation. Lea Mer refused to pay which led Malayan to institute
a complaint with the RTC. The RTC dismissed the complaint stating that the
loss was due to a fortuitous event, Typhoon Trining. Petitioner did not
know that a typhoon was coming and that it has been cleared by the
Philippine Coast Guard to travel from Palawan to Manila. The CA reversed
the ruling of the trial court for the reason that said vessel was not
seaworthy when it sailed to Manila.
ISSUE:
Whether or not the petitioner is liable for the loss of the cargo.
HELD:
CA reversed. 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 — when this service is offered
to the public for compensation. Petitioner is clearly a common carrier,
because it offers to the public its business of transporting goods through
its vessels. Thus, the Court corrects the trial court's finding that
petitioner became a private carrier when Vulcan chartered it. Charter
parties are classified as contracts of demise (or bareboat) and
affreightment, which are distinguished as follows:
"Under the demise or bareboat charter of the vessel, the charterer will
generally be considered as owner for the voyage or service stipulated. The
charterer mans the vessel with his own people and becomes, in effect, the
owner pro hac vice, subject to liability to others for damages caused by
negligence. To create a demise, the owner of a vessel must completely and
exclusively relinquish possession, command and navigation thereof to the
charterer; anything short of such a complete transfer is a contract of
affreightment (time or voyage charter party) or not a charter party at
all."
The distinction is significant, because a demise or bareboat charter
indicates a business undertaking that is private in character.
Consequently, the rights and obligations of the parties to a contract of
private carriage are governed principally by their stipulations, not by the
law on common carriers. The Contract in the present case was one of
affreightment, as shown by the fact that it was petitioner's crew that
manned the tugboat M/V Ayalit and controlled the barge Judy VII.
Common carriers are bound to observe extraordinary diligence in their
vigilance over the goods and the safety of the passengers they transport,
as required by the nature of their business and for reasons of public
policy. Extraordinary diligence requires rendering service with the
greatest skill and foresight to avoid damage and destruction to the goods
entrusted for carriage and delivery.
Common carriers are presumed to have been at fault or to have acted
negligently for loss or damage to the goods that they have transported.
This presumption can be rebutted only by proof that they observed
extraordinary diligence, or that the loss or damage was occasioned by any
of the following causes:
"(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."
Jurisprudence defines the elements of a "fortuitous event" as follows: (a)
the cause of the unforeseen and unexpected occurrence, or the failure of
the debtors to comply with their obligations, must have been independent of
human will; (b) the event that constituted the caso fortuito must have been
impossible to foresee or, if foreseeable, impossible to avoid; (c) the
occurrence must have been such as to render it impossible for the debtors
to fulfill their obligation in a normal manner; and (d) the obligor must
have been free from any participation in the aggravation of the resulting
injury to the creditor. To excuse the common carrier fully of any
liability, the fortuitous event must have been the proximate and only cause
of the loss. Moreover, it should have exercised due diligence to prevent or
minimize the loss before, during and after the occurrence of the fortuitous
event. As required by the pertinent law, it was not enough for the common
carrier to show that there was an unforeseen or unexpected occurrence. It
had to show that it was free from any fault — a fact it miserably failed to
prove.
LOADSTAR SHIPPING CO., INC., v. CA
Facts:
On 19 November 1984, LOADSTAR received on board a) 705 bales of lawanit
hardwood; b) 27 boxes and crates of tilewood assemblies and the others ;and
c) 49 bundles of mouldings R & W (3) Apitong Bolidenized. On its way to
Manila from the port of Nasipit, Agusan del Norte, the vessel, along with
its cargo, sank off Limasawa Island. As a result of the total loss of its
shipment, the consignee made a claim with LOADSTAR which, however, ignored
the same. MIC filed a complaint against LOADSTAR and PGAI, alleging that
the sinking of the vessel was due to the fault and negligence of LOADSTAR
and its employees. LOADSTAR denied any liability for the loss of the
shipper's goods and claimed that sinking of its vessel was due to force
majeure. LOADSTAR submits that the vessel was a private carrier because it
was not issued certificate of public convenience, it did not have a regular
trip or schedule nor a fixed route, and there was only "one shipper, one
consignee for a special cargo.
Issues:
(1) Is the M/V "Cherokee" a private or a common carrier?
(2) Did LOADSTAR observe due and/or ordinary diligence in these premises.
Held: Petition is dismissed:
SC hold that LOADSTAR is a common carrier. It is not necessary that the
carrier be issued a certificate of public convenience, and this public
character is not altered by the fact that the carriage of the goods in
question was periodic, occasional, episodic or unscheduled. The bills of
lading failed to show any special arrangement, but only a general provision
to the effect that the M/V"Cherokee" was a "general cargo carrier." 14
Further, the bare fact that the vessel was carrying a particular type of
cargo for one shipper, which appears to be purely coincidental, is not
reason enough to convert the vessel from a common to a private carrier,
especially where, as in this case, it was shown that the vessel was also
carrying passengers. Under Article 1732 of the Civil Code the Civil Code
defines "common carriers" in the following terms:
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.
On to the second assigned error, we find that the M/V "Cherokee" was not
seaworthy when it embarked on its voyage on 19 November 1984. The vessel
was not even sufficiently manned at the time. "For a vessel to be
seaworthy, it must be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition its vessel involved in a
contract of carriage is a clear breach of its duty.
Cebu Salvage Corp. v. Phil. Home Assurance Corp.
Facts: On November 12, 1984, petitioner Cebu Salvage Corporation (as
carrier) and Maria Cristina Chemicals Industries, Inc. [MCCII]
(as charterer) entered into a voyage charter[6] wherein petitioner was to
load 800 to 1,100 metric tons of silica quartz on board the
M/T Espiritu Santo[7] at Ayungon, Negros Occidental for transport to and
discharge at Tagoloan, Misamis Oriental to consignee Ferrochrome Phils.,
Inc.[8]
Pursuant to the contract, on December 23, 1984, petitioner received and
loaded 1,100 metric tons of silica quartz on board the M/T Espiritu Santo
which left Ayungon forTagoloan the next day.[9] The shipment never reached
its destination, however, because the M/T Espiritu Santo sank in the
afternoon of December 24, 1984 off the beach ofOpol, Misamis Oriental,
resulting in the total loss of the cargo.[10]
MCCII filed a claim for the loss of the shipment with its insurer,
respondent Philippine Home Assurance Corporation.[11] Respondent paid the
claim in the amount of P211,500and was subrogated to the rights of
MCCII.[12] Thereafter, it filed a case in the RTC[13] against petitioner
for reimbursement of the amount it paid MCCII.
After trial, the RTC rendered judgment in favor of respondent. It ordered
petitioner to pay respondent P211,500 plus legal interest, attorneys fees
equivalent to 25% of the award and costs of suit.
On appeal, the CA affirmed the decision of the RTC.
Ruling: Based on the agreement signed by the parties and the testimony of
petitioners operations manager, it is clear that it was a contract of
carriage petitioner signed with MCCII.It actively negotiated and
solicited MCCIIs account, offered its services to ship the silica quartz
and proposed to utilize the M/T Espiritu Santo in lieu of the
M/T Seebees or the M/T Shirley (as previously agreed upon in the voyage
charter) since these vessels had broken down.[20]
There is no dispute that petitioner was a common carrier. At the time of
the loss of the cargo, it was engaged in the business of carrying and
transporting goods by water, for compensation, and offered its services to
the public.[21]
From the nature of their business and for reasons of public policy, common
carriers are bound to observe extraordinary diligence over the goods they
transport according to the circumstances of each case.[22] In the event of
loss of the goods, common carriers are responsible, unless they can prove
that this was brought about by the causes specified in Article 1734 of the
Civil Code.[23] In all other cases, common carriers are presumed to be at
fault or to have acted negligently, unless they prove that they observed
extraordinary diligence.[24]
Petitioner was the one which contracted with MCCII for the transport of
the cargo. It had control over what vessel it would use. All throughout its
dealings with MCCII, it represented itself as a common carrier. The fact
that it did not own the vessel it decided to use to consummate the contract
of carriage did not negate its character and duties as a common
carrier. The MCCII (respondents subrogor) could not be reasonably expected
to inquire about the ownership of the vessels which petitioner carrier
offered to utilize. As a practical matter, it is very difficult and often
impossible for the general public to enforce its rights of action under a
contract of carriage if it should be required to know who the actual owner
of the vessel is.[25] In fact, in this case, the voyage charter itself
denominated petitioner as the owner/operator of the vessel.
Petitioner next contends that if there was a contract of carriage, then it
was between MCCII and ALS as evidenced by the bill of lading ALS
issued.[27]
Again, we disagree.
The bill of lading was merely a receipt issued by ALS to evidence the fact
that the goods had been received for transportation. It was not signed by
MCCII, as in fact it was simply signed by the supercargo of ALS.[28] This
is consistent with the fact that MCCII did not contract directly with ALS.
While it is true that a bill of lading may serve as the contract of
carriage between the parties,[29] it cannot prevail over the express
provision of the voyage charter that MCCII and petitioner executed
Finally, petitioner asserts that MCCII should be held liable for its own
loss since the voyage charter stipulated that cargo insurance was for
the charterers account.[31] This deserves scant consideration. This simply
meant that the charterer would take care of having the goods insured. It
could not exculpate the carrier from liability for the breach of its
contract of carriage. The law, in fact, prohibits it and condemns it as
unjust and contrary to public policy.[32]
To summarize, a contract of carriage of goods was shown to exist; the
cargo was loaded on board the vessel; loss or non-delivery of the cargo was
proven; and petitioner failed to prove that it exercised extraordinary
diligence to prevent such loss or that it was due to some casualty
or force majeure. The voyage charter here being a contract ofaffreightment,
the carrier was answerable for the loss of the goods received for
transportation.[
Sps. Cruz v. Sun Holidays
Facts: Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on
January 25, 2001[1] against Sun Holidays, Inc. (respondent) with the
Regional Trial Court (RTC) of Pasig City for damages arising from the death
of their son Ruelito C. Cruz (Ruelito) who perished with his wife on
September 11, 2000 on board the boat M/B Coco Beach III that capsized en
route to Batangas from Puerto Galera, Oriental Mindoro where the couple had
stayed at Coco Beach Island Resort (Resort) owned and operated by
respondent.
The stay of the newly wed Ruelito and his wife at the Resort
from September 9 to 11, 2000 was by virtue of a tour package-contract with
respondent that included transportation to and from the Resort and the
point of departure in Batangas.
Miguel C. Matute (Matute),[2] a scuba diving instructor and one of the
survivors, gave his account of the incident that led to the filing of the
complaint as follows:
Matute stayed at the Resort from September 8 to 11, 2000. He was
originally scheduled to leave the Resort in the afternoon of September 10,
2000, but was advised to stay for another night because of strong winds and
heavy rains.
On September 11, 2000, as it was still windy, Matute and 25 other Resort
guests including petitioners son and his wife trekked to the other side of
the Coco Beach mountain that was sheltered from the wind where they
boarded M/B Coco Beach III, which was to ferry them to Batangas.
Shortly after the boat sailed, it started to rain. As it moved farther
away from Puerto Galera and into the open seas, the rain and wind got
stronger, causing the boat to tilt from side to side and the captain to
step forward to the front, leaving the wheel to one of the crew members.
The waves got more unwieldy. After getting hit by two big waves which came
one after the other, M/B Coco Beach III capsized putting all passengers
underwater.
The passengers, who had put on their life jackets, struggled to get out of
the boat. Upon seeing the captain, Matute and the other passengers who
reached the surface asked him what they could do to save the people who
were still trapped under the boat. The captain replied Iligtas niyo na lang
ang sarili niyo (Just save yourselves).
Help came after about 45 minutes when two boats owned by Asia Divers in
Sabang, Puerto Galera passed by the capsized M/B Coco Beach III. Boarded on
those two boats were 22 persons, consisting of 18 passengers and four crew
members, who were brought to Pisa Island. Eight passengers, including
petitioners son and his wife, died during the incident.
At the time of Ruelitos death, he was 28 years old and employed as a
contractual worker for Mitsui Engineering & Shipbuilding Arabia, Ltd.
in Saudi Arabia, with a basic monthly salary of $900.[3]
Petitioners, by letter of October 26, 2000,[4] demanded indemnification
from respondent for the death of their son in the amount of at
least P4,000,000.
Replying, respondent, by letter dated November 7, 2000,[5] denied any
responsibility for the incident which it considered to be a fortuitous
event. It nevertheless offered, as an act of commiseration, the amount
of P10,000 to petitioners upon their signing of a waiver.
In its Answer,[7] respondent denied being a common carrier, alleging that
its boats are not available to the general public as they only ferry Resort
guests and crew members.Nonetheless, it claimed that it exercised the
utmost diligence in ensuring the safety of its passengers; contrary to
petitioners allegation, there was no storm on September 11, 2000as the
Coast Guard in fact cleared the voyage; and M/B Coco Beach III was not
filled to capacity and had sufficient life jackets for its passengers. By
way of Counterclaim, respondent alleged that it is entitled to an award for
attorneys fees and litigation expenses amounting to not less than P300,000.
By Decision of February 16, 2005,[11] Branch 267 of the Pasig RTC dismissed
petitioners Complaint and respondents Counterclaim.
By Decision of August 19, 2008,[13] the appellate court denied petitioners
appeal, holding, among other things, that the trial court correctly ruled
that respondent is a private carrier which is only required to observe
ordinary diligence; that respondent in fact observed extraordinary
diligence in transporting its guests on board M/B Coco Beach III; and that
the proximate cause of the incident was a squall, a fortuitous event.
Issues: WON respondent is a common carrier.
Ruling: Indeed, respondent is a common carrier. Its ferry services are so
intertwined with its main business as to be properly considered ancillary
thereto. The constancy of respondents ferry services in its resort
operations is underscored by its having its own Coco Beach boats. And the
tour packages it offers, which include the ferry services, may be availed
of by anyone who can afford to pay the same. These services are thus
available to the public.
That respondent does not charge a separate fee or fare for its ferry
services is of no moment. It would be imprudent to suppose that it provides
said services at a loss. The Court is aware of the practice of beach resort
operators offering tour packages to factor the transportation fee in
arriving at the tour package price. That guests who opt not to avail of
respondents ferry services pay the same amount is likewise
inconsequential. These guests may only be deemed to have overpaid.
As De Guzman instructs, Article 1732 of the Civil Code defining common
carriers has deliberately refrained from making distinctions on whether the
carrying of persons or goods is the carriers principal business, whether it
is offered on a regular basis, or whether it is offered to the general
public. The intent of the law is thus to not consider such
distinctions. Otherwise, there is no telling how many other distinctions
may be concocted by unscrupulous businessmen engaged in the carrying of
persons or goods in order to avoid the legal obligations and liabilities of
common carriers.
Under the Civil Code, common carriers, from the nature of their business
and for reasons of public policy, are bound to observe extraordinary
diligence for the safety of the passengers transported by them, according
to all the circumstances of each case.[19] They are bound to carry the
passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for all the
circumstances.[20]
When a passenger dies or is injured in the discharge of a contract of
carriage, it is presumed that the common carrier is at fault or
negligent. In fact, there is even no need for the court to make an express
finding of fault or negligence on the part of the common carrier. This
statutory presumption may only be overcome by evidence that the carrier
exercised extraordinary diligence.[21]
Respondent nevertheless harps on its strict compliance with the earlier
mentioned conditions of voyage before it allowed M/B Coco Beach III to sail
on September 11, 2000.Respondents position does not impress.
The evidence shows that PAGASA issued 24-hour public weather forecasts and
tropical cyclone warnings for shipping on September 10 and 11, 2000
advising of tropical depressions in Northern Luzon which would also affect
the province of Mindoro.[22] By the testimony of Dr. Frisco Nilo,
supervising weather specialist of PAGASA, squalls are to be expected under
such weather condition.[23]
A very cautious person exercising the utmost diligence would thus not
brave such stormy weather and put other peoples lives at risk. The
extraordinary diligence required of common carriers demands that they take
care of the goods or lives entrusted to their hands as if they were their
own. This respondent failed to do.
Unsworth Transport International v. CA
Facts: On August 31, 1992, the shipper Sylvex Purchasing Corporation
delivered to UTI a shipment of 27 drums of various raw materials for
pharmaceutical manufacturing, consisting of: 1) 3 drums (of) extracts,
flavoring liquid, flammable liquid x x x banana flavoring; 2) 2 drums (of)
flammable liquids x x x turpentine oil; 2 pallets. STC: 40 bags dried
yeast; and 3) 20 drums (of) Vitabs: Vitamin B Complex Extract.[4] UTI
issued Bill of Lading No. C320/C15991-2,[5] covering the aforesaid
shipment. The subject shipment was insured with private respondent Pioneer
Insurance and Surety Corporation in favor of Unilab against all risks in
the amount of P1,779,664.77 under and by virtue of Marine Risk Note Number
MC RM UL 0627 92[6] and Open Cargo Policy No. HO-022-RIU.[7]
On the same day that the bill of lading was issued, the shipment was
loaded in a sealed 1x40 container van, with no. APLU-982012, boarded on
APLs vessel M/V Pres. Jackson, Voyage 42, and transshipped to APLs M/V
Pres. Taft[8] for delivery to petitioner in favor of the consignee United
Laboratories, Inc. (Unilab).
On September 30, 1992, the shipment arrived at the port of Manila. On
October 6, 1992, petitioner received the said shipment in its warehouse
after it stamped the Permit to Deliver Imported Goods[9] procured by the
Champs Customs Brokerage.[10] Three days thereafter, or on October 9, 1992,
Oceanica Cargo Marine Surveyors Corporation (OCMSC) conducted a stripping
survey of the shipment located in petitioners warehouse.
On October 15, 1992, the arrastre Jardine Davies Transport Services, Inc.
(Jardine) issued Gate Pass No. 7614[12] which stated that 22 drums[13] Raw
Materials for Pharmaceutical Mfg. were loaded on a truck with Plate No. PCK-
434 facilitated by Champs for delivery to Unilabs warehouse. The materials
were noted to be complete and in good order in the gate pass.[14] On the
same day, the shipment arrived in Unilabs warehouse and was immediately
surveyed by an independent surveyor.
On October 23 and 28, 1992, the same independent surveyor conducted final
inspection surveys which yielded the same results. Consequently, Unilabs
quality control representative rejected one paper bag containing dried
yeast and one steel drum containing Vitamin B Complex as unfit for the
intended purpose.[16]
On November 7, 1992, Unilab filed a formal claim[17] for the damage against
private respondent and UTI. On November 20, 1992, UTI denied liability on
the basis of the gate pass issued by Jardine that the goods were in
complete and good condition; while private respondent paid the claimed
amount on March 23, 1993. By virtue of the Loss and Subrogation
Receipt[18] issued by Unilab in favor of private respondent, the latter
filed a complaint for Damages against APL, UTI and petitioner with the RTC
of Makati.[19]The case was docketed as Civil Case No. 93-3473 and was
raffled to Branch 134.
The RTC decided in favor of private respondent and against APL, UTI and
petitioner. On appeal, the CA affirmed the RTC decision on April 29, 2004.
The CA rejected UTIs defense that it was merely a forwarder, declaring
instead that it was a common carrier.
Issues: WON petitioner is a common carrier.
Ruling: Admittedly, petitioner is a freight forwarder. The term freight
forwarder" refers to a firm holding itself out to the general public (other
than as a pipeline, rail, motor, or water carrier) to provide
transportation of property for compensation and, in the ordinary
course of its business, (1) to
assemble and consolidate, or to provide for assembling and consolidating,
shipments, and to perform or provide for break-bulk and distribution
operations of the shipments; (2) to assume responsibility for the
transportation of goods from the place of receipt to the place of
destination; and (3) to use for any part of the transportation a carrier
subject to the federal law pertaining to common carriers.[23]
A freight forwarders 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.[24]
It is undisputed that UTI issued a bill of lading in favor of Unilab.
Pursuant thereto, petitioner undertook to transport, ship, and deliver the
27 drums of raw materials for pharmaceutical manufacturing to the
consignee.
A bill of lading is a written acknowledgement of the receipt of goods and
an agreement to transport and to deliver them at a specified place to a
person named or on his or her order.[25] It operates both as a receipt and
as a contract. It is a receipt for the goods shipped and a contract to
transport and
deliver the same as therein stipulated. As a receipt, it recites the date
and place of shipment, describes the goods as to quantity, weight,
dimensions, identification marks, condition, quality, and value. As a
contract, it names the contracting parties, which include the consignee;
fixes the route, destination, and freight rate or charges; and stipulates
the rights and obligations assumed by the parties.[26]
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.
Sps. Perena v. Sps. Zarate
Facts: The Pereñas were engaged in the business of transporting students
from their respective residences in Parañaque City to Don Bosco in Pasong
Tamo, Makati City, and back. In their business, the Pereñas used a KIA
Ceres Van (van) with Plate No. PYA 896, which had the capacity to transport
14 students at a time, two of whom would be seated in the front beside the
driver, and the others in the rear, with six students on either side. They
employed Clemente Alfaro (Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereñas to transport Aaron to and
from Don Bosco. On August 22, 1996, as on previous school days, the van
picked Aaron up around 6:00 a.m. from the Zarates' residence. Aaron took
his place on the left side of the van near the rear door. The van, with its
air-conditioning unit turned on and the stereo playing loudly, ultimately
carried all the 14 student riders on their way to 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 that
was then commonly used by Makati-bound vehicles as a short cut into Makati.
At the time, the narrow path was marked by piles of construction materials
and parked passenger jeepneys, and 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), operated by Jhonny Alano (Alano), 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. When
the train was about 50 meters away from the passenger bus and the van,
Alano applied the ordinary brakes of the train. He applied the emergency
brakes only when he saw that a collision was imminent. The passenger bus
successfully crossed the railroad tracks, but the van driven by Alfaro did
not. The train hit the rear end of the van, and 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. Alano fled the scene on board the train, and
did not wait for the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereñas, PNR and
Alano. The Pereñas and PNR filed their respective answers, with cross-
claims against each other, but Alfaro could not be served with summons.
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiff and against the defendants.
Issues: WON the petitioners are common carrier.
Ruling: 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.11The
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.12Contracts 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.
Westwind Shipping Corp. v. UCPB General Insurance Co.
Facts: On August 23, 1993, Kinsho-Mataichi Corporation shipped from the
port of Kobe, Japan, 197 metal containers/skids of tin-free steel for
delivery to the consignee, San Miguel Corporation (SMC). The shipment,
covered by Bill of Lading No. KBMA-1074,4 was loaded and received clean on
board M/V Golden Harvest Voyage No. 66, a vessel owned and operated by
Westwind Shipping Corporation (Westwind).
SMC insured the cargoes against all risks with UCPB General Insurance Co.,
Inc. (UCPB) for US Dollars: One Hundred Eighty-Four Thousand Seven Hundred
Ninety-Eight and Ninety-Seven Centavos (US$184,798.97), which, at the time,
was equivalent to Philippine Pesos: Six Million Two Hundred Nine Thousand
Two Hundred Forty-Five and Twenty-Eight Centavos (P6,209,245.28).
The shipment arrived in Manila, Philippines on August 31, 1993 and was
discharged in the custody of the arrastre operator, Asian Terminals, Inc.
(ATI), formerly Marina Port Services, Inc.5 During the unloading operation,
however, six containers/skids worth Philippine Pesos: One Hundred Seventeen
Thousand Ninety-Three and Twelve Centavos (P117,093.12) sustained dents and
punctures from the forklift used by the stevedores of Ocean Terminal
Services, Inc. (OTSI) in centering and shuttling the containers/skids. As a
consequence, the local ship agent of the vessel, Baliwag Shipping Agency,
Inc., issued two Bad Order Cargo Receipt dated September 1, 1993.
On September 7, 1993, Orient Freight International, Inc. (OFII), the
customs broker of SMC, withdrew from ATI the 197 containers/skids,
including the six in damaged condition, and delivered the same at SMC's
warehouse in Calamba, Laguna through J.B. Limcaoco Trucking (JBL). It was
discovered upon discharge that additional nine containers/skids valued at
Philippine Pesos: One Hundred Seventy-Five Thousand Six Hundred Thirty-Nine
and Sixty-Eight Centavos (P175,639.68) were also damaged due to the
forklift operations; thus, making the total number of 15 containers/skids
in bad order.
Almost a year after, on August 15, 1994, SMC filed a claim against UCPB,
Westwind, ATI, and OFII to recover the amount corresponding to the damaged
15 containers/skids. When UCPB paid the total sum of Philippine Pesos: Two
Hundred Ninety-Two Thousand Seven Hundred Thirty-Two and Eighty Centavos
(P292,732.80), SMC signed the subrogation receipt. Thereafter, in the
exercise of its right of subrogation, UCPB instituted on August 30, 1994 a
complaint for damages against Westwind, ATI, and OFII.
Ruling: The case of Philippines First Insurance Co., Inc. v. Wallem Phils.
Shipping, Inc.12 applies, as it settled the query on which between a common
carrier and an arrastre operator should be responsible for damage or loss
incurred by the shipment during its unloading. We elucidated at length:
Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the
vigilance over the goods transported by them. Subject to certain exceptions
enumerated under Article 1734 of the Civil Code, common carriers are
responsible for the loss, destruction, or deterioration of the goods. 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.
For marine vessels, Article 619 of the Code of Commerce provides that the
ship captain is liable for the cargo from the time it is turned over to him
at the dock or afloat alongside the vessel at the port of loading, until he
delivers it on the shore or on the discharging wharf at the port of
unloading, unless agreed otherwise. In Standard Oil Co. of New York v.
Lopez Castelo, the Court interpreted the ship captain's liability as
ultimately that of the shipowner by regarding the captain as the
representative of the shipowner.
Lastly, Section 2 of the COGSA provides that under every contract of
carriage of goods by sea, the carrier in relation to the loading, handling,
stowage, carriage, custody, care, and discharge of such goods, shall be
subject to the responsibilities and liabilities and entitled to the rights
and immunities set forth in the Act. Section 3 (2) thereof then states that
among the carriers' responsibilities are to properly and carefully load,
handle, stow, carry, keep, care for, and discharge the goods carried.
x x x x
On the other hand, the functions of an arrastre operator involve the
handling of cargo deposited on the wharf or between the establishment of
the consignee or shipper and the ship's tackle. Being the custodian of the
goods discharged from a vessel, an arrastre operator's duty is to take good
care of the goods and to turn them over to the party entitled to their
possession.
Handling cargo is mainly the arrastre operator's principal work so its
drivers/operators or employees should observe the standards and measures
necessary to prevent losses and damage to shipments under its custody.
The legal relationship between the consignee and the arrastre operator is
akin to that of a depositor and warehouseman. The relationship between the
consignee and the common carrier is similar to that of the consignee and
the arrastre operator. Since it is the duty of the ARRASTRE to take good
care of the goods that are in its custody and to deliver them in good
condition to the consignee, such responsibility also devolves upon the
CARRIER. Both the ARRASTRE and the CARRIER are therefore charged with and
obligated to deliver the goods in good condition to the consignee.
(Emphasis supplied) (Citations omitted)
To recapitulate, common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in
vigilance over the goods and for the safety of the passengers transported
by them, according to all the circumstances of each case. The mere proof of
delivery of goods in good order to the carrier, and their arrival in the
place of destination in bad order, make out a prima facie case against the
carrier, so that if no explanation is given as to how the injury occurred,
the carrier must be held responsible. It is incumbent upon the carrier to
prove that the loss was due to accident or some other circumstances
inconsistent with its liability.18
The contention of OFII is likewise untenable. A customs broker has been
regarded as a common carrier because transportation of goods is an integral
part of its business.19 In Schmitz Transport & Brokerage Corporation v.
Transport Venture, Inc.,20 the Court already reiterated: It is settled that
under a given set of facts, a customs broker may be regarded as a common
carrier.
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.
And in Calvo v. UCPB General Insurance Co. Inc., 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."21
That OFII is a common carrier is buttressed by the testimony of its own
witness, Mr. Loveric Panganiban Cueto, that part of the services it offers
to clients is cargo forwarding, which includes the delivery of the shipment
to the consignee.22 Thus, for undertaking the transport of cargoes from ATI
to SMC's warehouse in Calamba, Laguna, OFII is considered a common carrier.
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 of whether it owns the vehicle to be used or has
to actually hire one.
As a common carrier, OFII is mandated to observe, under Article 1733 of the
Civil Code,23 extraordinary diligence in the vigilance over the goods24 it
transports according to the peculiar 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.25 In the case at bar it was established
that except for the six containers/skids already damaged OFII received the
cargoes from ATI in good order and condition; and that upon its delivery to
SMC additional nine containers/skids were found to be in bad order as noted
in the Delivery Receipts issued by OFII and as indicated in the Report of
Cares Marine Cargo Surveyors. Instead of merely excusing itself from
liability by putting the blame to ATI and SMC it is incumbent upon OFII to
prove that it actively took care of the goods by exercising extraordinary
diligence in the carriage thereof. It failed to do so. Hence its presumed
negligence under Article 1735 of the Civil Code remains unrebutted.
Federal Phoenix Assurance Co. Ltd. v. Fortune Sea Carrier Inc.
FACTS:
Fortune agreed to lease its vessel to Northern Mindanao Transport (Northern
Transport). The parties agreed (Time Charter Party Agreement) that the
vessel (M/V Ricky Rey) shall be leased to Northern Transport for 90 days to
carry cement bags to different ports. Later on, the parties extended the
period of lease for another 90 days.
Thereafter, Northern Transport ordered 2,069 bales of abaca fibers to be
shipped on board M/V Ricky Rey by shipper Manila Hemp Trading Corp, for
delivery to Newtech, the consignee in Iligan. This was covered by Bill of
Lading No. 1, and was insured by Federal Phoenix.
When M/V Ricky Rey arrived at Iligan, the stevedores started to discharge
the abaca shipment. However later that day, the stevedores noticed smoke
coming out of the cargo haul where the bales of abaca were located. It was
then discovered that the 60 bales of abaca were damaged.
As a result, Newtech filed an insurance claim with Federal Phoenix. Thus,
Federal Phoenix paid Newtech for the losses it incurred due to the damaged
and undelivered bales of abaca. Upon payment, Federal Phoenix was
subrogated to the rights of Newtech and pursued its claim against Fortune
Sea. Despite several demands to the latter, Federal Phoenix's claims were
not settled. Thus, it filed complaint for sum of money.
Fortune Sea argued that it was acting as a private sea carrier at the time
incident occurred. It alleged that the agreement executed by the parties
expressly provided that M/V Ricky Rey shall be under the orders and
complete control of Northern Transport.
RTC Ruling:
In favor of Federal Phoenix.
Ordered Fortune Sea to pay actual damages, attorney's fees and suit costs
as well. Fortune Sea appealed to CA.
CA Ruling:
Reversed the RTC Decision, and dismissed the complaint for sum of money
filed by Federal Phoenix.
Ruled that although the agreement between Fortune Sea and Northern
Transport was denominated as Time Charter Party, it found compelling
reasons to hold that the contract was one of bareboat or demise.
ISSUE: WON Fortune Sea was converted into a private carrier by virtue of
the charter party agreement it entered into Northern Transport.
HELD: YES
RATIO:
Fortune Sea is a corporation engaged in the business of transporting cargo
by water, and for compensation, offering its services to the public. Thus,
no doubt it is a common carrier.
However, it entered into a time-chatter with Northern Transport. Did this
agreement convert Fortune Sea into a private carrier? Yes.
In determining the nature of the contract, courts are not bound by the
title or name given by the parties. The decisive factors are not
necessarily the terminology used in the contract, but by their conduct,
actions, and deeds prior to, during and immediately after executing the
agreement.
In this case the Time Charter Agreement executed by Fortune Sea and
Northern Transport clearly shows that the charter includes both vessel and
its crew, thus making the Northern Transport the owner pro hac vice (for
this occasion only) of M/V Ricky Rey during the period of the voyage.
The contract stated:
o Upon delivery of the vessel(s) and during the period of the
charter, SECOND PARTY (Northern Transport) assumes operational
control for the dispatch and direction of voyage of the
vessel(s).
o H. The Master to prosecute all voyages with the utmost despatch
and to render customary assistance with the vessel(s) crew. The
Master to be under the orders of the SECOND PARTY (Northern
Transport) as regards employment of the other arrangements.
o N. The SECOND PARTY (Northern Transport) to furnish MASTER with
all instructions and sailing directions and the Master and
Engineer to keep full and correct logs accessible to the SECOND
PARTY (Northern Transport) or their Supercargo.
It is clear then that the Time Charter Party agreement established that
Fortune Sea had completely and exclusively relinquished, possession,
command, and navigation of M/V Ricky Rey to Northern Transport.
M/V Ricky Rey was converted into a private carrier notwithstanding the
existence of the Time Charter Party agreement, since the said agreement was
not limited to the ship but even extends to the control of its crew.
Also, the testimony of Capt. Alfredo Canon of M/V Ricky Rey confirmed that
the whole vessel was leased to Northern Transport, the entire command and
control over its navigation was likewise transferred to it.
The master, and all the crew of the ship were all made subject to direct
control and supervision of the charterer. The CA correctly ruled that the
nature of the vessel's charter is one of bareboat or demise charter.
Thus SC affirmed the decision of the CA, in dismissing the complaint for
sum of money filed by Federal Phoenix.
3. Private Carriage
Home Insurance Co. v. American Steamship Agencies
23 SCRA 24
FACTS:
"Consorcio Pesquero del Peru of South America" shipped freight pre-paid at
Chimbate, Peru, 21,740 jute bags of Peruvian fish meal through SS
Crowborough. The cargo, consigned to San Miguel Brewery, Inc., now San
Miguel Corporation, and insured by Home Insurance Company for $202,505,
arrived in Manila and was discharged into the lighters of Luzon Stevedoring
Company. When the cargo was delivered to consignee San Miguel Brewery Inc.,
there were shortages amounting to P12,033.85, causing the latter to lay
claims against Luzon Stevedoring Corporation, Home Insurance Company and
the American Steamship Agencies, owner and operator of SS Crowborough.
Because the others denied liability, Home Insurance Company paid the
consignee P14,870.71. Having been refused reimbursement by both the Luzon
Stevedoring Corporation and American Steamship Agencies, Home Insurance
Company, as subrogee to the consignee, filed against them before the Court
of First Instance a complaint for recovery of P14,870.71 with legal
interest, plus attorney's fees.
In answer, Luzon Stevedoring Corporation alleged that it delivered with due
diligence the goods in the same quantity and quality that it had received
the same from the carrier. It also claimed that plaintiff's claim had
prescribed under Article 366 of the Code of Commerce stating that the claim
must be made within 24 hours from receipt of the cargo.
American Steamship Agencies denied liability by alleging that under the
provisions of the Charter party referred to in the bills of lading, the
charterer, not the shipowner, was responsible for any loss or damage of the
cargo. Furthermore, it claimed to have exercised due diligence in stowing
the goods and that as a mere forwarding agent, it was not responsible for
losses or damages to the cargo.
The Court of First Instance absolved the Luzon Stevedoring Corporation from
any liability and ordered the American Steamship Agencies to pay the sum.
Hence, this petition.
ISSUE:
Is the stipulation in the charter party of the owner's non-liability valid
so as to absolve the American Steamship Agencies from liability for loss?
RULING:
Judgment was reversed and American Steamship Agencies was absolved
liability.
The bills of lading provided at the back thereof that the bills of lading
shall be governed by and subject to the terms and conditions of the
charter party, if any, otherwise, the bills of lading prevail over all
the agreements.
o Section 2, paragraph 2 of the charter party, provides that the owner
is liable for loss or damage to the goods caused by personal want of
due diligence on its part or its manager to make the vessel in all
respects seaworthy and to secure that she be properly manned, equipped
and supplied or by the personal act or default of the owner or its
manager. Said paragraph, however, exempts the owner of the vessel from
any loss or damage or delay arising from any other source, even from
the neglect or fault of the captain or crew or some other person
employed by the owner on board, for whose acts the owner would
ordinarily be liable except for said paragraph..
The Court of First Instance declared the contract as contrary to Article
587 of the Code of Commerce making the ship agent civilly liable for
indemnities suffered by third persons arising from acts or omissions of
the captain in the care of the goods and Article 1744 of the Civil Code
under which a stipulation between the common carrier and the shipper or
owner limiting the liability of the former for loss or destruction of the
goods to a degree less than extraordinary diligence is valid provided it
be reasonable, just and not contrary to public policy. The release from
liability in this case was held unreasonable and contrary to the public
policy on common carriers.
o Under American jurisprudence, a common carrier undertaking to carry a
special cargo or chartered to a special person only, becomes a private
carrier.8 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
o he Civil Code provisions on common carriers should not be applied
where the carrier is not acting as such but as a private carrier. The
stipulation in the charter party absolving the owner from liability
for loss due to the negligence of its agent would be void only if the
strict public policy governing common carriers is applied. Such policy
has no force where the public at large is not involved, as in the case
of a ship totally chartered for the use of a single party.
And furthermore, in a charter of the entire vessel, the bill of lading
issued by the master to the charterer, as shipper, is in fact and legal
contemplation merely a receipt and a document of title not a contract,
for the contract is the charter party. The consignee may not claim
ignorance of said charter party because the bills of lading expressly
referred to the same. Accordingly, the consignees under the bills of
lading must likewise abide by the terms of the charter party. And as
stated, recovery cannot be had thereunder, for loss or damage to the
cargo, against the shipowners, unless the same is due to personal acts or
negligence of said owner or its manager, as distinguished from its other
agents or employees. In this case, no such personal act or negligence has
been proved.
NATIONAL STEEL CORPORATION vs. COURT OF APPEALS (1997)
Facts:
NSC hired MV Vlasons I, a private vessel owned by VSI. They entered into a
contract of voyage charter hire wherein the contract states that NSC hired
VSI's vessel to make one voyage to load steel products at Iligan City and
discharge them at North Harbor, Manila. On arrival and upon opening the
three hatches containing the shipment, nearly all the skids of tinplates
and hot rolled sheets were allegedly found to be wet and rusty. NSC filed a
complaint for damages but RTC dismissed the complaint
Issues:
1. whether VSI contracted with NSC as a common carrier or as a private
carrier
2. Whether or not the provisions of the Civil Code of the Philippines on
common carriers pursuant to which there exist[s] a presumption of
negligence against the common carrier in case of loss or damage to the
cargo are applicable to a private carrier.
Held:
1. VSI was not a common carrier but a private carrier. It is undisputed
that VSI did not offer its services to the general public. The extent
of VSI's responsibility and liability over NSC's cargo are determined
primarily by the stipulations in the contract of carriage or charter
party and the Code of Commerce. The burden of proof lies on the part
of NSC and not the VSI.
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. 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. . . ."
2. Because the MV Vlason I was a private carrier, the shipowner's
obligations are governed by the provisions of the Code of Commerce and
not by the Civil Code which, as a general rule places the prima facie
presumption of negligence on a common carrier.
IN A CONTRACT OF PRIVATE CARRIAGE, THE BURDEN OF PROOF IN CASE OF
ACCIDENT IS ON THE CARRIER but the court exempts VSI due to force
majeure.
NSC must prove that the damage to its shipment was caused by VSI's
willful negligence or failure to exercise due diligence in making MV
Vlason I seaworthy and fit for holding, carrying and safekeeping the
cargo. The burden of proof was placed on NSC by the parties'
agreement.
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY v. CA
FACTS:
Plaintiff shipped at Maconcon Port, Isabela 940 round logs on board M/V
Seven Ambassador, a vessel owned by defendant Seven Brothers Shipping
Corporation. Plaintiff insured the logs against loss and/or damage with
defendant South Sea Surety and Insurance Co., Inc. for P2M and the latter
issued its Marine Cargo Insurance Policy on said date. In the meantime, the
M/V Seven Ambassador sank resulting in the loss of the plaintiff's insured
logs.
Plaintiff demanded from defendant South Sea Surety and Insurance Co., Inc.
the payment of the proceeds of the policy but the latter denied liability
under the policy. Plaintiff likewise filed a formal claim with defendant
Seven Brothers Shipping Corporation for the value of the lost logs but the
latter denied the claim.
Court of Appeals affirmed in part the RTC judgment by sustaining the
liability of South Sea Surety and Insurance Company ("South Sea"), but
modified it by holding that Seven Brothers Shipping Corporation ("Seven
Brothers") was not liable for the lost cargo.
ISSUE:
Whether defendants shipping corporation and the surety company are liable
to the plaintiff for the latter's lost logs.
HELD:
The charter party between the petitioner and private respondent stipulated
that the "(o)wners shall not be responsible for loss, split, short-landing,
breakages and any kind of damages to the cargo" –VALID
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." 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.
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.
In a contract of private carriage, the parties may validly stipulate that
responsibility for the cargo rests solely on the charterer, exempting the
shipowner from liability for loss of or damage to the cargo caused even by
the negligence of the ship captain. Pursuant to Article 1306 of the Civil
Code, such stipulation is valid because it is freely entered into by the
parties and the same is not contrary to law, morals, good customs, public
order, or public policy. Indeed, their contract of private carriage is not
even a contract of adhesion. 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 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 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 be void only if the strict public policy governing common
carriers is applied. Such policy has no force where the public at large is
not involved as in this case of a ship totally chartered for the use of a
single party. (Home Insurance Co. vs. American Steamship Agencies Inc., 23
SCRA 24, April 4, 1968)
FGU INSURANCE v. G.P. SARMIENTO
Facts: G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18
June 1994 thirty (30) units of Condura S.D. white refrigerators aboard one
of its Isuzu truck, driven by Lambert Eroles, from the plant site of
Concepcion Industries, Inc., along South Superhighway in Alabang, Metro
Manila, to the Central Luzon Appliances in Dagupan City. While the truck
was traversing the north diversion road along McArthur highway in Barangay
Anupol, Bamban, Tarlac, it collided with an unidentified truck, causing it
to fall into a deep canal, resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to
Concepcion Industries, Inc., the value of the covered cargoes in the sum of
P204,450.00. FGU, in turn, being the subrogee of the rights and interests
of Concepcion Industries, Inc., sought reimbursement of the amount it had
paid to the latter from GPS. Since the trucking company failed to heed the
claim, FGU filed a complaint for damages and breach of contract of carriage
against GPS and its driver Lambert Eroles with the Regional Trial Court,
Branch 66, of Makati City. In its answer, respondents asserted that GPS was
the exclusive hauler only of Concepcion Industries, Inc., since 1988, and
it was not so engaged in business as a common carrier. Respondents further
claimed that the cause of damage was purely accidental.
Issues: WON GPS was a common carrier.
Ruling: On the first issue, the Court finds the conclusion of the trial
court and the Court of Appeals to be amply justified. 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.10 Given accepted standards, GPS
scarcely falls within the term "common carrier."
The above conclusion nothwithstanding, GPS cannot escape from liability.
In culpa contractual, upon which the action of petitioner rests as being
the subrogee of Concepcion Industries, Inc., the mere proof of the
existence of the contract and the failure of its compliance justify, prima
facie, a corresponding right of relief.11 The law, recognizing the
obligatory force of contracts,12 will not permit a party to be set free
from liability for any kind of misperformance of the contractual
undertaking or a contravention of the tenor thereof.13 A breach upon the
contract confers upon the injured party a valid cause for recovering that
which may have been lost or suffered. The remedy serves to preserve the
interests of the promisee that may include his "expectation interest,"
which is his interest in having the benefit of his bargain by being put in
as good a position as he would have been in had the contract been
performed, or his "reliance interest," which is his interest in being
reimbursed for loss caused by reliance on the contract by being put in as
good a position as he would have been in had the contract not been made; or
his "restitution interest," which is his interest in having restored to him
any benefit that he has conferred on the other party.14 Indeed, agreements
can accomplish little, either for their makers or for society, unless they
are made the basis for action.15 The effect of every infraction is to
create a new duty, that is, to make recompense to the one who has been
injured by the failure of another to observe his contractual obligation16
unless he can show extenuating circumstances, like proof of his exercise of
due diligence (normally that of the diligence of a good father of a family
or, exceptionally by stipulation or by law such as in the case of common
carriers, that of extraordinary diligence) or of the attendance of
fortuitous event, to excuse him from his ensuing liability.
Respondent trucking corporation recognizes the existence of a contract of
carriage between it and petitioner's assured, and admits that the cargoes
it has assumed to deliver have been lost or damaged while in its custody.
In such a situation, a default on, or failure of compliance with, the
obligation – in this case, the delivery of the goods in its custody to the
place of destination - gives rise to a presumption of lack of care and
corresponding liability on the part of the contractual obligor the burden
being on him to establish otherwise. GPS has failed to do so.
Respondent driver, on the other hand, without concrete proof of his
negligence or fault, may not himself be ordered to pay petitioner. The
driver, not being a party to the contract of carriage between petitioner's
principal and defendant, may not be held liable under the agreement. A
contract can only bind the parties who have entered into it or their
successors who have assumed their personality or their juridical
position.17 Consonantly with the axiom res inter alios acta aliis neque
nocet prodest, such contract can neither favor nor prejudice a third
person. Petitioner's civil action against the driver can only be based on
culpa aquiliana, which, unlike culpa contractual, would require the
claimant for damages to prove negligence or fault on the part of the
defendant.
4. Services
Crisostomo v. CA
Facts: In May 1991, petitioner Estela L. Crisostomo contracted the services
of respondent Caravan Travel and Tours International, Inc. to arrange and
facilitate her booking, ticketing and accommodation in a tour dubbed Jewels
of Europe. The package tour included the countries of England, Holland,
Germany, Austria, Liechstenstein, Switzerland and France at a total cost of
P74,322.70. Petitioner was given a 5% discount on the amount, which
included airfare, and the booking fee was also waived because petitioners
niece, Meriam Menor, was respondent companys ticketing manager.
Pursuant to said contract, Menor went to her aunts residence on June 12,
1991 a Wednesday to deliver petitioners travel documents and plane tickets.
Petitioner, in turn, gave Menor the full payment for the package tour.
Menor then told her to be at the Ninoy Aquino International Airport (NAIA)
on Saturday, two hours before her flight on board British Airways.
Without checking her travel documents, petitioner went to NAIA on Saturday,
June 15, 1991, to take the flight for the first leg of her journey from
Manila to Hongkong. To petitioners dismay, she discovered that the flight
she was supposed to take had already departed the previous day. She learned
that her plane ticket was for the flight scheduled on June 14, 1991. She
thus called up Menor to complain.
Subsequently, Menor prevailed upon petitioner to take another tour the
British Pageant which included England, Scotland and Wales in its
itinerary. For this tour package, petitioner was asked anew to pay
US$785.00 or P20,881.00 (at the then prevailing exchange rate of P26.60).
She gave respondent US$300 or P7,980.00 as partial payment and commenced
the trip in July 1991.
Upon petitioners return from Europe, she demanded from respondent the
reimbursement of P61,421.70, representing the difference between the sum
she paid for Jewels of Europe and the amount she owed respondent for the
British Pageant tour. Despite several demands, respondent company refused
to reimburse the amount, contending that the same was non-refundable.[1]
Petitioner was thus constrained to file a complaint against respondent for
breach of contract of carriage and damages, which was docketed as Civil
Case No. 92-133 and raffled to Branch 59 of the Regional Trial Court of
Makati City.
In her complaint,[2] petitioner alleged that her failure to join Jewels of
Europe was due to respondents fault since it did not clearly indicate the
departure date on the plane ticket. Respondent was also negligent in
informing her of the wrong flight schedule through its employee Menor. She
insisted that the British Pageant was merely a substitute for the Jewels of
Europe tour, such that the cost of the former should be properly set-off
against the sum paid for the latter.
For its part, respondent company, through its Operations Manager,
Concepcion Chipeco, denied responsibility for petitioners failure to join
the first tour. Chipeco insisted that petitioner was informed of the
correct departure date, which was clearly and legibly printed on the plane
ticket. The travel documents were given to petitioner two days ahead of the
scheduled trip. Petitioner had only herself to blame for missing the
flight, as she did not bother to read or confirm her flight schedule as
printed on the ticket.
Respondent explained that it can no longer reimburse the amount paid for
Jewels of Europe, considering that the same had already been remitted to
its principal in Singapore, Lotus Travel Ltd., which had already billed the
same even if petitioner did not join the tour. Lotus European tour
organizer, Insight International Tours Ltd., determines the cost of a
package tour based on a minimum number of projected participants. For this
reason, it is accepted industry practice to disallow refund for individuals
who failed to take a booked tour.[3]
Lastly, respondent maintained that the British Pageant was not a substitute
for the package tour that petitioner missed. This tour was independently
procured by petitioner after realizing that she made a mistake in missing
her flight for Jewels of Europe. Petitioner was allowed to make a partial
payment of only US$300.00 for the second tour because her niece was then an
employee of the travel agency. Consequently, respondent prayed that
petitioner be ordered to pay the balance of P12,901.00 for the British
Pageant package tour.
Ruling: 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.
It is obvious from the above definition that respondent is not an entity
engaged in the business of transporting either passengers or goods and is
therefore, neither a private nor a common carrier. 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. Respondents 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. Respondents 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.
The object of petitioners contractual relation with respondent is the
latters service of arranging and facilitating petitioners booking,
ticketing and accommodation in the package tour. 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. Petitioners submission
is premised on a wrong assumption.
The nature of the contractual relation between petitioner and respondent is
determinative of the degree of care required in the performance of the
latters obligation under the contract. 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.
Since the contract between the parties is an ordinary one for services, the
standard of care required of respondent is that of a good father of a
family under Article 1173 of the Civil Code.[12] This connotes reasonable
care consistent with that which an ordinarily prudent person would have
observed when confronted with a similar situation. The test to determine
whether negligence attended the performance of an obligation is: 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, then he is guilty of negligence.[13]
In the case at bar, the lower court found Menor negligent when she
allegedly informed petitioner of the wrong day of departure. Petitioners
testimony was accepted as indubitable evidence of Menors alleged negligent
act since respondent did not call Menor to the witness stand to refute the
allegation. The lower court applied the presumption under Rule 131, Section
3 (e)[14] of the Rules of Court that evidence willfully suppressed would be
adverse if produced and thus considered petitioners uncontradicted
testimony to be sufficient proof of her claim.
On the other hand, respondent has consistently denied that Menor was
negligent and maintains that petitioners assertion is belied by the
evidence on record. The date and time of departure was legibly written on
the plane ticket and the travel papers were delivered two days in advance
precisely so that petitioner could prepare for the trip. It performed all
its obligations to enable petitioner to join the tour and exercised due
diligence in its dealings with the latter.
We agree with respondent.
Respondents failure to present Menor as witness to rebut petitioners
testimony could not give rise to an inference unfavorable to the former.
Menor was already working in France at the time of the filing of the
complaint,[15] thereby making it physically impossible for respondent to
present her as a witness. Then too, even if it were possible for respondent
to secure Menors testimony, the presumption under Rule 131, Section 3(e)
would still not apply. The opportunity and possibility for obtaining Menors
testimony belonged to both parties, considering that Menor was not just
respondents employee, but also petitioners niece. It was thus error for the
lower court to invoke the presumption that respondent willfully suppressed
evidence under Rule 131, Section 3(e). Said presumption would logically be
inoperative if the evidence is not intentionally omitted but is simply
unavailable, or when the same could have been obtained by both parties.[16]
In sum, we do not agree with the finding of the lower court that Menors
negligence concurred with the negligence of petitioner and resultantly
caused damage to the latter. Menors negligence was not sufficiently proved,
considering that the only evidence presented on this score was petitioners
uncorroborated narration of the events. It is well-settled that the party
alleging a fact has the burden of proving it and a mere allegation cannot
take the place of evidence.[17] If the plaintiff, upon whom rests the
burden of proving his cause of action, fails to show in a satisfactory
manner facts upon which he bases his claim, the defendant is under no
obligation to prove his exception or defense.
5. Distinction from towage, arrastre, stevedoring
MARINA PORT SERVICES INC. V. AMERICAN HOME ASSURANCE CORP.
FACTS:
On September 21, 1989, Countercorp Trading PTE., Ltd. shipped from
Singapore to the Philippines 10 container vans of soft wheat flour with
seals intact on board the vessel M/V Uni Fortune. The shipment was insured
against all risks by AHAC and consigned to MSC Distributor (MSC).
Upon arrival at the Manila South Harbor on September 25, 1989, the shipment
was discharged in good and complete order condition and with safety seals
in place to the custody of the arrastre operator, MPSI. After unloading and
prior to hauling, agents of the Bureau of Customs officially broke the
seals, opened the container vans, and examined the shipment for tax
evaluation in the presence of MSC's broker and checker. Thereafter, the
customs inspector closed the container vans and refastened them with safety
wire seals while MSC's broker padlocked the same. MPSI then placed the said
container vans in a back-to-back arrangement at the delivery area of the
harbor's container yard where they were watched over by the security guards
of MPSI and of the Philippine Ports Authority.
On October 10, 1989, MSC's representative, AD's Customs Services (ACS),
took out five container vans for delivery to MSC. At the compound's exit,
MPSI issued to ACS the corresponding gate passes for the vans indicating
its turnover of the subject shipment to MSC. However, upon receipt of the
container vans at its warehouse, MSC discovered substantial shortages in
the number of bags of flour delivered. Hence, it filed a formal claim for
loss with MPSI.
From October 12 to 14, 1989 and pursuant to the gate passes issued by MPSI,
ACS took out the remaining five container vans from the container yard and
delivered them to MSC. Upon receipt, MSC once more discovered substantial
shortages. Thus, MSC filed another claim with MPSI.
Per MSC, the total number of the missing bags of flour was 1,650 with a
value of £257,083.00.
MPSI denied both claims of MSC. As a result, MSC sought insurance indemnity
for the lost cargoes from AHAC. AHAC paid MSC the value of the missing bags
of flour after finding the tetter's claim in order. In turn, MSC issued a
subrogation receipt in favor of AHAC.
Thereafter, AHAC filed a Complaint for damages against MPSI before the RTC.
RTC ruled in favor of MPSI saying that AHAC's evidence failed to clearly
show that the loss happened while the subject shipment was still under
MPSI's responsibility.
Aggrieved, AHAC appealed to the CA. CA reversed the ruling in RTC saying
that in a claim for loss filed by a consignee, the burden of proof to show
due compliance with the obligation to deliver the goods to the appropriate
party devolves upon the arrastre operator. In this case, the CA found that
MPSI failed to discharge such burden and to rebut the aforementioned
presumption.
MPSI moved for reconsideration but the CA denied the same. Hence, the
present recourse.
ISSUE:
The core issue to be resolved in this case is whether MPSI is liable for
the loss of the bags of flour.
HELD:
NO! MPSI is not liable for the loss.
The relationship between an arrastre operator and a consignee is similar to
that between a warehouseman and a depositor, or to that between a common
carrier and the consignee and/or the owner of the shipped goods. Thus, an
arrastre operator should adhere to the same degree of diligence as that
legally expected of a warehouseman or a common carrieras set forth in
Section 3[b] of the Warehouse Receipts [Act] and Article 1733 of the Civil
Code. As custodian of the shipment discharged from the vessel, the arrastre
operator must take good care of the same and turn it over to the party
entitled to its possession.
In case of claim for loss filed by a consignee or the insurer as subrogee,
it is the arrastre operator that carries the burden of proving compliance
with the obligation to deliver the goods to the appropriate party. It must
show that the losses were not due to its negligence or that of its
employees. It must establish that it observed the required diligence in
handling the shipment. Otherwise, it shall be presumed that the loss was
due to its fault. In the same manner, an arrastre operator shall be liable
for damages if the seal and lock of the goods deposited and delivered to it
as closed and sealed, be broken through its fault. Such fault on the part
of the arrastre operator is likewise presumed unless there is proof to the
contrary.
MPSI was able to prove delivery of the shipment to MSC in good and complete
condition and with locks and seals intact. It is significant to note that
MPSI, in order to prove that it properly delivered the subject shipment
consigned to MSC, presented 10 gate passes. Each of these gate passes bore
the duly identified signature of MSC's representative which serves, among
others, as an acknowledgement that:
Issuance of [the] Gate Pass constitutes delivery to and receipt by
consignee of the goods as described above in good order and condition,
unless an accompanying B.O. certificate duly issued and noted on the face
of [the] Gate Pass appears.
The signature of the consignee's representative on the gate pass is
evidence of receipt of the shipment in good order and condition. Also, that
MPSI delivered the subject shipment to MSC's representative in good and
complete condition and with lock and seals intact is established by the
testimonies of MPSFs employees who were directly involved in the processing
of the subject shipment. The testimonies of the aforementioned employees of
MPSI confirm that the container vans, together with their padlocks and
wirings, were in order at the time the gate passes were issued up to the
time the said container vans were turned over to ACS.
Even in the light of Article 1981, no presumption of fault on the part of
MPSI arises since it was not sufficiently shown that the container vans
were re-opened or that their locks and seals were broken for the second
time. Indeed, Article 1981 of the Civil Code also mandates a presumption of
fault on the part of the arrastre operator as follows:
Article 1981. When the thing deposited is delivered closed and sealed, the
depositary must return it in the same condition, and he shall be liable for
damages should the seal or lock be broken through his fault.
Fault on the part of the depositary is presumed, unless there is proof to
the contrary.
As regards the value of the thing deposited, the statement of the depositor
shall be accepted, when the forcible opening is imputable to the
depositary, should there be no proof to the contrary. However, the courts
may pass upon the credibility of the depositor with respect to the value
claimed by him.
When the seal or lock is broken, with or without the depositary's fault, he
shall keep the secret of the deposit. However, no such presumption arises
in this case considering that it was not sufficiently shown that the
container vans were re-opened or that their locks and seals were broken for
the second time. As may be recalled, the container vans were opened by a
customs official for examination of the subject shipment and were
thereafter resealed with safety wires. While this fact is not disputed by
both parties, AHAC alleges that the container vans were re-opened and this
gave way to the alleged pilferage. There being no other competent evidence
that the container vans were reopened or that their locks and seals were
broken for the second time, MPSI cannot be held liable for damages due to
the alleged loss of the bags of flour pursuant to Article 1981 of the Civil
Code.
At any rate, the goods were shipped under "Shipper's Load and Count"
arrangement. Thus, protection against pilferage of the subject shipment
was the consignees lookout.
At any rate, MPSI cannot just the same be held liable for the missing bags
of flour since the consigned goods were shipped under "Shipper's Load and
Count" arrangement. "This means that the shipper was solely responsible for
the loading of the container, while the carrier was oblivious to the
contents of the shipment. Protection against pilferage of the shipment was
the consignee's lookout. The arrastre operator was, like any ordinary
depositary, duty-bound to take good care of the goods received from the
vessel and to turn the same over to the party entitled to their possession,
subject to such qualifications as may have validly been imposed in the
contract between the parties. The arrastre operator was not required to
verify the contents of the container received and to compare them with
those declared by the shipper because, as earlier stated, the cargo was at
the shipper's load and count. The arrastre operator was expected to deliver
to the consignee only the container received from the carrier.
ASIAN TERMINALS, INC. V. ALLIED GUARANTEE INSURANCE CO., INC.
G.R. No. 182208, October 14, 2015
ASIAN TERMINALS, INC., Petitioner, v. ALLIED GUARANTEE INSURANCE, CO.,
INC., Respondent.
FACTS:
Marina Port Services, Inc. (Marina), the predecessor of herein petitioner
Asian Terminals, Inc. (petitioner ATP), is an arrastre operator based in
the South Harbor, Port Area, Manila.3 On February 5, 1989, a shipment was
made of 72,322 lbs. of kraft linear board (a type of paperboard) loaded and
received from the ports of Lake Charles, LA, and Mobile, AL, U.S.A., for
transport and delivery to San Miguel Corporation (San Miguel) in Manila,
Philippines. The vessel used was the M/V Nicole, operated by Transocean
Marine, Inc. (Transocean), a foreign corporation, whose Philippine
representative is Philippine Transmarine Carrier, Inc. (Philippine
Transmarine).
The M/V Nicole arrived in Manila on April 8, 1989 and, shortly thereafter,
the subject shipment was offloaded from the vessel to the arrastre Marina
until April 13, 1989.6 Thereafter, it was assessed that a total of 158
rolls of the goods were "damaged" during shipping. Further, upon the goods'
withdrawal from the arrastre and their delivery, first, to San Miguel's
customs broker, Dynamic Brokerage Co. Inc. (Dynamic), and, eventually, to
the consignee San Miguel, another 54 rolls were found to have been damaged,
for a total of 212 rolls of damaged shipment worth P755,666.84.
Herein respondent Allied Guarantee Insurance, Co., Inc., (respondent
Allied), was the insurer of the shipment. Thus, it paid San Miguel
P755,666.84 and was subrogated in the latter's rights.
On March 8, 1990, Allied filed a Complaint (and later, an Amended
Complaint) for maritime damages against Transocean, Philippine Transmarine,
Dynamic and Marina seeking to be indemnified for the P755,666.84 it lost in
paying the consignee San Miguel.
The RTC found the defendant shipping company Transocean liable for the 158
rolls of damaged goods due to the latter's failure to observe the necessary
precautions and extraordinary diligence as common carrier to prevent such
damage.20
Then, the additional 54 rolls of the goods that were lost were found to
have been damaged while in the possession of Marina, the arrastre operator
and Dynamic, the broker.21 It found Marina and Dynamic solidarity liable
for the said damaged goods.22
Thus, the trial court found all the defendants liable for portions of the
cargo that were damaged in their respective custody. It dismissed the
parties' counterclaims and crossclaims.
ISSUE: W/N ATI is liable for the additional damages sustained by the
subject shipment
Petitioner's contention:
Petitioner ATI argues that the appellate court erroneously failed to note
the so-called Turn Over Survey of Bad Order Cargoes and the Requests for
Bad Order Survey which supposedly could absolve it from liability for the
damaged shipment. The reports were allegedly made prior to the shipment's
turnover from ATI to Dynamic and they purportedly show that no additional
loss or damage happened while the shipment was in ATI's custody as the
reports only mention the 158 rolls that were damaged during shipping or
prior to ATI's possession. ATI also assails the award of attorney's fees,
stating that no findings of fact or law mas made to justify the grant of
such an award.
Held:
The court denies the petition with respect to the additional 54 rolls of
damaged goods, as petitioner's liability thereon was duly proven and well
established during trial. The rulings of both the trial and appellate
courts in this respect are upheld.
"In general, the nature of the work of an arrastre operator covers the
handling of cargoes at piers and wharves," which was what exactly defendant
Marina's function entails in this case. "To carry out its duties, the
arrastre is required to provide cargo handling equipment which includes,
among others, trailer, chassis for containers."
On the other hand, defendant Dynamic (which) in its capacity as broker,
withdrew the 357 rolls of kraft linear board from the custody of defendant
Marina and delivered the same to the consignee, San Miguel Corporation's
warehouse in Tabacalera at United Nations, Manila, is considered a common
carrier.
Hence, the "legal relationship between the consignee and the arrastre
operator is akin to that of a depositor and the warehouseman.
The relationship between the consignee and the common carrier is similar
to that of the consignee and the arrastre operator. Since it is the duty of
the arrastre to take good care of the goods that are in its custody and to
deliver them in good condition to the consignee, such responsibility also
develops upon the carrier. Both the arrastre and the carrier are,
therefore, charged with and obligated to deliver the goods in good
condition to the consignee."41chanrobleslaw
The trial court correctly held that the broker, Dynamic, cannot alone be
held liable for the additional 54 rolls of damaged goods since such damage
occurred during the following instances: (1) while the goods were in the
custody of the arrastre ATI; (2) when they were in transition from ATI's
custody to that of Dynamic (i.e., during loading to Dynamic's trucks); and
(3) during Dynamic's custody.
While the trial court could not determine with pinpoint accuracy who among
the two caused which particular damage and in what proportion or quantity,
it was clear that both ATI and Dynamic failed to discharge the burden of
proving that damage on the 54 rolls did not occur during their custody. As
for petitioner ATI, in particular, what worked against it was the
testimony, as cited above, that its employees' use of the wrong lifting
equipment while loading the goods onto Dynamic's trucks had a role in
causing the damage. Such is a finding of fact made by the trial court which
this Court, without a justifiable ground, will not disturb,
As previously held by this Court, the arrastre operator's principal work is
that of handling cargo, so that its drivers/operators or employees should
observe the standards and measures necessary to prevent losses and damage
to shipments under its custody.42
In the performance of its obligations, an arrastre operator should observe
the same degree of diligence as that required of a common carrier and a
warehouseman.43
Being the custodian of the goods discharged from a vessel, an arrastre
operator's duty is to take good care of the goods and to turn them over to
the party entitled to their possession. With such a responsibility, the
arrastre operator must prove that the losses were not due to its negligence
or to that of its employees.45 And to prove the exercise of diligence in
handling the subject cargoes, petitioner must do more than merely show the
possibility that some other party could be responsible for the loss or the
damage.46 It must prove that it exercised due care in the handling
thereof.47
But ATI submits that the Turn Over Survey of Bad Order Cargoes and the
Requests for Bad Order Survey help establish that damage to the additional
54 rolls of goods did not happen in its custody.
In particular, the Requests for Bad Order Survey was allegedly signed by
Dynamic's representative stating that only 158 rolls were damaged as of the
goods' transfer from ATI to Dynamic. However, this Court has already held
that a mere sign-off from the customs broker's representative that he had
received the subject shipment "in good order and condition without
exception" would not absolve the arrastre from liability, simply because
the representative's signature merely signifies that said person thereby
frees the arrastre from any liability for loss or damage to the cargo so
withdrawn while the same was in the custody of such representative to whom
the cargo was released, but it does not foreclose the remedy or right of
the consignee (or its subrogee) to prove that any loss or damage to the
subject shipment occurred while the same was under the custody, control and
possession of the arrastre operator.48 Additionally, the finding of the
trial court, as stated above, that at least some of the damage occurred
during ATI's custody cannot be ignored.
Certainly, ATI's reliance on the Turn Over Survey of Bad Order Cargoes as
well as the Requests for Bad Order Survey is misplaced. An examination of
the documents would even reveal that the first set of documents, the Turn
Over Survey of Bad Order Cargoes, pertain to the 158 rolls of damaged goods
which occurred during shipment and prior to ATI's custody.49 But
responsibility for the 158 rolls was already established to be that of the
common carrier and is no longer disputed by the parties. Thus, this fact
has little or no more relevance to the issue of liability over the
additional 54 rolls of damaged goods. Anent the second set of documents,
the Requests for Bad Order Survey, which mention only 158 rolls of damaged
goods and do not mention any additional damage, the same do not result in
an automatic exculpation of ATI from liability. As previously stated,
jurisprudence states that the signature by a-customs broker's
representative of "receipt in good order" does not foreclose the
consignee's or its subrogee's right or remedy to prove that additional loss
or damage to the subject shipment occurred while the same was under the
custody, control and possession of the arrastre operator.50 Further, it is
unclear whether these Requests for Bad Order Survey were executed prior to
or after loading was done onto Dynamic's trucks. As earlier indicated,
there is testimony that it was during the loading to the trucks that some
or all of the damage was incurred.
Since the relationship of an arrastre operator and a consignee is akin to
that between a warehouseman and a depositor, then, in instances when the
consignee claims any loss, the burden of proof is on the arrastre operator
to show that it complied with the obligation to deliver the goods and that
the losses were not due to its negligence or that of its employees. ATI
failed to dislodge this burden.
6. Governing Laws
LIM ET.AL. V. CA
Facts: Sometime in 1982 private respondent Donato Gonzales purchased an
Isuzu passenger jeepney from Gomercino Vallarta, holder of a certificate of
public convenience for the operation of public utility vehicles plying the
Monumento-Bulacan route. While private respondent Gonzales continued
offering the jeepney for public transport services he did not have the
registration of the vehicle transferred in his name nor did he secure for
himself a certificate of public convenience for its operation. Thus
Vallarta remained on record as its registered owner and operator.
On 22 July 1990, while the jeepney was running northbound along the North
Diversion Road somewhere in Meycauayan, Bulacan, it collided with a ten-
wheeler-truck owned by petitioner Abelardo Lim and driven by his co-
petitioner Esmadito Gunnaban. Gunnaban owned responsibility for the
accident, explaining that while he was traveling towards Manila the truck
suddenly lost its brakes. To avoid colliding with another vehicle, he
swerved to the left until he reached the center island. However, as the
center island eventually came to an end, he veered farther to the left
until he smashed into a Ferroza automobile, and later, into private
respondent's passenger jeepney driven by one Virgilio Gonzales. The impact
caused severe damage to both the Ferroza and the passenger jeepney and left
one (1) passenger dead and many others wounded.
Petitioner Lim shouldered the costs for hospitalization of the wounded,
compensated the heirs of the deceased passenger, and had the Ferroza
restored to good condition. He also negotiated with private respondent and
offered to have the passenger jeepney repaired at his shop. Private
respondent however did not accept the offer so Lim offered him P20,000.00,
the assessment of the damage as estimated by his chief mechanic. Again,
petitioner Lim's proposition was rejected; instead, private respondent
demanded a brand-new jeep or the amount of P236,000.00. Lim increased his
bid to P40,000.00 but private respondent was unyielding. Under the
circumstances, negotiations had to be abandoned; hence, the filing of the
complaint for damages by private respondent against petitioners.
In his answer Lim denied liability by contending that he exercised due
diligence in the selection and supervision of his employees. He further
asserted that as the jeepney was registered in Vallarta's name, it was
Vallarta and not private respondent who was the real party in interest.1
For his part, petitioner Gunnaban averred that the accident was a
fortuitous event which was beyond his control.2
Meanwhile, the damaged passenger jeepney was left by the roadside to
corrode and decay. Private respondent explained that although he wanted to
take his jeepney home he had no capability, financial or otherwise, to tow
the damaged vehicle
Ruling: The kabit system is an arrangement whereby a person who has been
granted a certificate of public convenience allows other persons who own
motor vehicles to operate them under his license, sometimes for a fee or
percentage of the earnings.9 Although the parties to such an agreement are
not outrightly penalized by law, the kabit system is invariably recognized
as being contrary to public policy and therefore void and inexistent under
Art. 1409 of the Civil Code.
It would seem then that the thrust of the law in enjoining the kabit system
is not so much as to penalize the parties but to identify the person upon
whom responsibility may be fixed in case of an accident with the end view
of protecting the riding public. The policy therefore loses its force if
the public at large is not deceived, much less involved.
In the present case it is at once apparent that the evil sought to be
prevented in enjoining the kabit system does not exist. First, neither of
the parties to the pernicious kabit system is being held liable for
damages. Second, the case arose from the negligence of another vehicle in
using the public road to whom no representation, or misrepresentation, as
regards the ownership and operation of the passenger jeepney was made and
to whom no such representation, or misrepresentation, was necessary. Thus
it cannot be said that private respondent Gonzales and the registered owner
of the jeepney were in estoppel for leading the public to believe that the
jeepney belonged to the registered owner. Third, the riding public was not
bothered nor inconvenienced at the very least by the illegal arrangement.
On the contrary, it was private respondent himself who had been wronged and
was seeking compensation for the damage done to him. Certainly, it would be
the height of inequity to deny him his right.
In light of the foregoing, it is evident that private respondent has the
right to proceed against petitioners for the damage caused on his passenger
jeepney as well as on his business. Any effort then to frustrate his claim
of damages by the ingenuity with which petitioners framed the issue should
be discouraged, if not repelled.
FEB Leasing v. Sps. Baylon
Facts: On 2 September 2000, an Isuzu oil tanker running along Del Monte
Avenue in Quezon City and bearing plate number TDY 712 hit Loretta V.
Baylon (Loretta), daughter of respondent spouses Sergio P. Baylon and
Maritess Villena-Baylon (spouses Baylon). At the time of the accident, the
oil tanker was registered5 in the name of petitioner FEB Leasing and
Finance Corporation6 (petitioner). The oil tanker was leased7 to BG Hauler,
Inc. (BG Hauler) and was being driven by the latters driver, Manuel Y.
Estilloso. The oil tanker was insured8 by FGU Insurance Corp. (FGU
Insurance).
Petitioner claimed that the spouses Baylon had no cause of action against
it because under its lease contract with BG Hauler, petitioner was not
liable for any loss, damage, or injury that the leased oil tanker might
cause. Petitioner claimed that no employer-employee relationship existed
between petitioner and the driver.
BG Hauler alleged that neither do the spouses Baylon have a cause of action
against it since the oil tanker was not registered in its name. BG Hauler
contended that the victim was guilty of contributory negligence in crossing
the street. BG Hauler claimed that even if its driver was at fault, BG
Hauler exercised the diligence of a good father of a family in the
selection and supervision of its driver. BG Hauler also contended that FGU
Insurance is obliged to assume all liabilities arising from the use of the
insured oil tanker.
Issues: whether the registered owner of a financially leased vehicle
remains liable for loss, damage, or injury caused by the vehicle
notwithstanding an exemption provision in the financial lease contract.
Ruling: Petitioner contends that the lease contract between BG Hauler and
petitioner specifically provides that BG Hauler shall be liable for any
loss, damage, or injury the leased oil tanker may cause even if petitioner
is the registered owner of the said oil tanker. Petitioner claims that the
Court of Appeals erred in holding petitioner solidarily liable with BG
Hauler despite having found the latter liable under the lease contract.
For their part, the spouses Baylon counter that the lease contract between
petitioner and BG Hauler cannot bind third parties like them. The spouses
Baylon maintain that the existence of the lease contract does not relieve
petitioner of direct responsibility as the registered owner of the oil
tanker that caused the death of their daughter.
On the other hand, BG Hauler and the driver argue that at the time
petitioner and BG Hauler entered into the lease contract, Republic Act No.
598014 was still in effect. They point out that the amendatory law,
Republic Act No. 8556,15 which exempts from liability in case of any loss,
damage, or injury to third persons the registered owners of vehicles
financially leased to another, was not yet enacted at that time.
In the instant case, Section 5.1 of the lease contract between petitioner
and BG Hauler provides:
Sec. 5.1. It is the principle of this Lease that while the title or
ownership of the EQUIPMENT, with all the rights consequent thereof, are
retained by the LESSOR, the risk of loss or damage of the EQUIPMENT from
whatever source arising, as well as any liability resulting from the
ownership, operation and/or possession thereof, over and above those
actually compensated by insurance, are hereby transferred to and assumed by
the LESSEE hereunder which shall continue in full force and effect.17
(Emphasis supplied)
If it so wishes, petitioner may proceed against BG Hauler to seek
enforcement of the latters contractual obligation under Section 5.1 of the
lease contract. In the present case, petitioner did not file a cross-claim
against BG Hauler. Hence, this Court cannot require BG Hauler to reimburse
petitioner for the latters liability to the spouses Baylon. However, as the
registered owner of the oil tanker, petitioner may not escape its liability
to third persons.
Under Section 5 of Republic Act No. 4136,18 as amended, all motor vehicles
used or operated on or upon any highway of the Philippines must be
registered with the Bureau of Land Transportation (now Land Transportation
Office) for the current year.19 Furthermore, any encumbrances of motor
vehicles must be recorded with the Land Transportation Office in order to
be valid against third parties.
In accordance with the law on compulsory motor vehicle registration, this
Court has consistently ruled that, with respect to the public and third
persons, the registered owner of a motor vehicle is directly and primarily
responsible for the consequences of its operation regardless of who the
actual vehicle owner might be.21 Well-settled is the rule that the
registered owner of the vehicle is liable for quasi-delicts resulting from
its use. Thus, even if the vehicle has already been sold, leased, or
transferred to another person at the time the vehicle figured in an
accident, the registered vehicle owner would still be liable for damages
caused by the accident. The sale, transfer or lease of the vehicle, which
is not registered with the Land Transportation Office, will not bind third
persons aggrieved in an accident involving the vehicle. The compulsory
motor vehicle registration underscores the importance of registering the
vehicle in the name of the actual owner.
The policy behind the rule is to enable the victim to find redress by the
expedient recourse of identifying the registered vehicle owner in the
records of the Land Transportation Office. The registered owner can be
reimbursed by the actual owner, lessee or transferee who is known to him.
Unlike the registered owner, the innocent victim is not privy to the lease,
sale, transfer or encumbrance of the vehicle. Hence, the victim should not
be prejudiced by the failure to register such transaction or encumbrance.
The policy behind the rule is to enable the victim to find redress by the
expedient recourse of identifying the registered vehicle owner in the
records of the Land Transportation Office. The registered owner can be
reimbursed by the actual owner, lessee or transferee who is known to him.
Unlike the registered owner, the innocent victim is not privy to the lease,
sale, transfer or encumbrance of the vehicle. Hence, the victim should not
be prejudiced by the failure to register such transaction or encumbrance.
Filcar Transport v. Espinas
Facts: On November 22, 1998, at around 6:30 p.m., respondent Jose A.
Espinas was driving his car along Leon Guinto Street in Manila. Upon
reaching the intersection of Leon Guinto and President Quirino Streets,
Espinas stopped his car. When the signal light turned green, he proceeded
to cross the intersection. He was already in the middle of the intersection
when another car, traversing President Quirino Street and going to Roxas
Boulevard, suddenly hit and bumped his car. As a result of the impact,
Espinas car turned clockwise. The other car escaped from the scene of the
incident, but Espinas was able to get its plate number.
After verifying with the Land Transportation Office, Espinas learned that
the owner of the other car, with plate number UCF-545, is Filcar.
Espinas sent several letters to Filcar and to its President and General
Manager Carmen Flor, demanding payment for the damages sustained by his
car. On May 31, 2001, Espinas filed a complaint for damages against Filcar
and Carmen Flor before the Metropolitan Trial Court (MeTC) of Manila, and
the case was raffled to Branch 13. In the complaint, Espinas demanded that
Filcar and Carmen Flor pay the amount of P97,910.00, representing actual
damages sustained by his car.
Filcar argued that while it is the registered owner of the car that hit
and bumped Espinas car, the car was assigned to its Corporate Secretary
Atty. Candido Flor, the husband of Carmen Flor. Filcar further stated that
when the incident happened, the car was being driven by Atty. Flors
personal driver, Timoteo Floresca.
Atty. Flor, for his part, alleged that when the incident occurred, he was
attending a birthday celebration at a nearby hotel, and it was only later
that night when he noticed a small dent on and the cracked signal light of
the car. On seeing the dent and the crack, Atty. Flor allegedly asked
Floresca what happened, and the driver replied that it was a result of a
hit and run while the car was parked in front of Bogota on Pedro Gil
Avenue, Manila.
Filcar denied any liability to Espinas and claimed that the incident was
not due to its fault or negligence since Floresca was not its employee but
that of Atty. Flor. Filcar and Carmen Flor both said that they always
exercised the due diligence required of a good father of a family in
leasing or assigning their vehicles to third parties
Issues: whether Filcar, as registered owner of the motor vehicle which
figured in an accident, may be held liable for the damages caused to
Espinas.
Ruling: It is undisputed that Filcar is the registered owner of the motor
vehicle which hit and caused damage to Espinas car; and it is on the basis
of this fact that we hold Filcar primarily and directly liable to Espinas
for damages.
As a general rule, one is only responsible for his own act or omission.[9]
Thus, a person will generally be held liable only for the torts committed
by himself and not by another. This general rule is laid down in Article
2176 of the Civil Code, which provides to wit:
Article 2176. Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such
fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
Based on the above-cited article, the obligation to indemnify another for
damage caused by ones act or omission is imposed upon the tortfeasor
himself, i.e., the person who committed the negligent act or omission. The
law, however, provides for exceptions when it makes certain persons liable
for the act or omission of another.
One exception is an employer who is made vicariously liable for the tort
committed by his employee. Article 2180 of the Civil Code states:
Article 2180. The obligation imposed by Article 2176 is demandable not
only for ones own acts or omissions, but also for those of persons for whom
one is responsible.
x x x x
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.
x x x x
The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good
father of a family to prevent damage.
Under Article 2176, in relation with Article 2180, of the Civil Code, an
action predicated on an employees act or omission may be instituted against
the employer who is held liable for the negligent act or omission committed
by his employee.
Although the employer is not the actual tortfeasor, the law makes him
vicariously liable on the basis of the civil law principle of pater
familias for failure to exercise due care and vigilance over the acts of
ones subordinates to prevent damage to another.[10] In the last paragraph
of Article 2180 of the Civil Code, the employer may invoke the defense that
he observed all the diligence of a good father of a family to prevent
damage.
As its core defense, Filcar contends that Article 2176, in relation with
Article 2180, of the Civil Code is inapplicable because it presupposes the
existence of an employer-employee relationship. According to Filcar, it
cannot be held liable under the subject provisions because the driver of
its vehicle at the time of the accident, Floresca, is not its employee but
that of its Corporate Secretary, Atty. Flor.
We cannot agree. It is well settled that in case of motor vehicle mishaps,
the registered owner of the motor vehicle is considered as the employer of
the tortfeasor-driver, and is made primarily liable for the tort committed
by the latter under Article 2176, in relation with Article 2180, of the
Civil Code.
The rationale for the rule that a registered owner is vicariously liable
for damages caused by the operation of his motor vehicle is explained by
the principle behind motor vehicle registration, which has been discussed
by this Court in Erezo, and cited by the CA in its decision:
The main aim of motor vehicle registration is to identify the owner so
that if any accident happens, or that any damage or injury is caused by the
vehicle on the public highways, responsibility therefor can be fixed on a
definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner
or drivers, or with very scant means of identification. It is to forestall
these circumstances, so inconvenient or prejudicial to the public, that the
motor vehicle registration is primarily ordained, in the interest of the
determination of persons responsible for damages or injuries caused on
public highways. [emphasis ours]
Thus, whether there is an employer-employee relationship between the
registered owner and the driver is irrelevant in determining the liability
of the registered owner who the law holds primarily and directly
responsible for any accident, injury or death caused by the operation of
the vehicle in the streets and highways.
As explained by this Court in Erezo, the general public policy involved in
motor vehicle registration is the protection of innocent third persons who
may have no means of identifying public road malefactors and, therefore,
would find it difficult if not impossible to seek redress for damages they
may sustain in accidents resulting in deaths, injuries and other damages;
by fixing the person held primarily and directly liable for the damages
sustained by victims of road mishaps, the law ensures that relief will
always be available to them.
To identify the person primarily and directly responsible for the damages
would also prevent a situation where a registered owner of a motor vehicle
can easily escape liability by passing on the blame to another who may have
no means to answer for the damages caused, thereby defeating the claims of
victims of road accidents. We take note that some motor vehicles running on
our roads are driven not by their registered owners, but by employed
drivers who, in most instances, do not have the financial means to pay for
the damages caused in case of accidents.
These same principles apply by analogy to the case at bar. Filcar should
not be permitted to evade its liability for damages by conveniently passing
on the blame to another party; in this case, its Corporate Secretary, Atty.
Flor and his alleged driver, Floresca. Following our reasoning in
Equitable, the agreement between Filcar and Atty. Flor to assign the motor
vehicle to the latter does not bind Espinas who was not a party to and has
no knowledge of the agreement, and whose only recourse is to the motor
vehicle registration.
Neither can Filcar use the defenses available under Article 2180 of the
Civil Code - that the employee acts beyond the scope of his assigned task
or that it exercised the due diligence of a good father of a family to
prevent damage - because the motor vehicle registration law, to a certain
extent, modified Article 2180 of the Civil Code by making these defenses
unavailable to the registered owner of the motor vehicle. Thus, for as long
as Filcar is the registered owner of the car involved in the vehicular
accident, it could not escape primary liability for the damages caused to
Espinas.
The public interest involved in this case must not be underestimated. Road
safety is one of the most common problems that must be addressed in this
country. We are not unaware of news of road accidents involving reckless
drivers victimizing our citizens. Just recently, such pervasive
recklessness among most drivers took the life of a professor of our state
university.[14] What is most disturbing is that our existing laws do not
seem to deter these road malefactors from committing acts of recklessness.
Metro Manila Transit Corp v. Cuevas
G.R. No. 167797 June 15, 2015
METRO MANILA TRANSIT CORPORATION vs. REYNALDO CUEVAS and JUNNEL CUEVAS,
represented by REYNALDO CUEVAS
One liner: The registered owner of a motor vehicle whose operation causes
injury to another is legally liable to the latter but the registered owner
may recover reimbursement from the actual and present owner by way of its
cross-claim.
FACTS
Metro Manila Transit Corporation (MMTC) and Mina's Transit Corporation
(Mina's Transit) entered into an agreement to sell dated August 31, 1990.
They agreed that MMTC would retain the ownership of the buses but in the
meantime Mina's Transit could operate the buses within Metro Manila.
On October 14, 1994, one of the buses subject of the agreement to sell, hit
and damaged a Honda Motorcycle owned by Reynaldo and driven by Junnel.
Reynaldo and Junnel sued MMTC and Mina's Transit for damages in the
Regional Trial Court (RTC) in Cavite and prayed for actual damages for
actual medical damages, cost of repair of motorcycle, moral, exemplary, and
nominal damages, litigations expenses, attorney's fees and cost of the suit
and alleged that:
On October 14, 1994, … the defendants' driver Jessie Rillera Y Gaceta,
driving the MMTC/Mina's Transit Passenger bus with Plate No. NXM-449-TB-pil
94, heading in the same direction and following Plaintiff's motorcycle,
recklessly and carelessly attempted to overtake Plaintiff's Motorcycle on
the right side of the lane, in the course of which the said Jessie Rillera
side swiped the Plaintiff as the said Jessie Rillera accelerated speed.
Plaintiff Junnel Cuevas and his companion were thrown to the road and
Plaintiff's right leg was severely fractured, and the Honda Motorcycle
owned by plaintiff Reynaldo Cuevas was extensively damaged; plaintiff had
to undergo several operations on his right leg; but in spite of the several
operations which he had undergone, Plaintiff Junnel Cuevas, even up to now,
is unable to walk on his own without the aid of crutches and is still
scheduled for more operations;
MMTC denied liability
In its answer with compulsory counterclaim and cross-claim, MMTC denied
liability, and averred that although it retained the ownership of the bus,
the actual operator and employer of the bus driver was Mina's Transit; and
that, in support of its cross-claim against Mina's Transit, a provision in
the agreement to sell mandated Mina 's Transport to hold it free from
liability arising from the use and operation of the bus units.
Mina's Transit denied liability and filed a third-party complaint against
insurer
On its part, Mina's Transit contended that it was not liable because: (a)
it exercised due diligence in the selection and supervision of its
employees; (b) its bus driver exercised due diligence; and (c) Junnel's
negligence was the cause of the accident.
Meanwhile, Mina's Transit filed a third-party complaint against its
insurer, Perla Compania de Seguros, Inc. (Perla), seeking reimbursement
should it be adjudged liable, pursuant to its insurance policy issued by
Perla with the following coverage: (a) third-party liability of P50,000.00
as the maximum amount; and (b) third-party damage to property of P20,000.00
as the maximum amount.
Perla's denial of liability
In its answer to the third-party complaint, Perla denied liability as
insurer because Mina's Transit had waived its recourse by failing to notify
Perla of the incident within one year from its occurrence, as required by
Section 384 of the Insurance Code. It submitted that even assuming that the
claim had not yet prescribed, its liability should be limited to the
maximum of P50,000.00 for third-party liability and P20,000.00 for third-
party damage.
RTC Ruling, affirmed by CA
After trial, the RTC rendered judgment in favor of the respondents on
September 17, 19999 ordering petitioner Metro Manila Transit Corporation
(MMTC) and its co-defendant Mina's Transit Corporation (Mina's Transit) to
pay damages in favor of respondents Reynaldo Cuevas and Junnel Cuevas to
wit:
The RTC concluded that the proximate cause of the mishap was the negligence
of the bus driver; that following Article 2180 of the Civil Code, his
employers should be solidarily liable; that MMTC and Mina's Transit, being
the joint owners of the bus, were liable; and that the third-party
complaint was dismissed because no evidence was presented to prove it. The
RTC, however, did not rule on the propriety of the cross-claim.
ISSUE: Whether or not MMTC was liable for the injuries sustained by the
respondents despite the provision in the agreement to sell that shielded it
from liability.
RULING
The appeal is partly meritorious.
MMTC urges the revisit of the registered-owner rule in order to gain
absolution from liability. It contends that although it retained ownership
of the bus at the time of the vehicular accident, the actual operation was
transferred to Mina's Transit; that for it to be held liable for the acts
of the bus driver, the existence of an employer-employee relationship
between them must be established; and that because the bus driver was not
its employee, it was not liable for his negligent act.
The contentions of MMTC cannot persuade.
In view of MMTC's admission in its pleadings that it had remained the
registered owner of the bus at the time of the incident, it could not
escape liability for the personal injuries and property damage suffered by
the Cuevases. This is because of the registered-owner rule, whereby the
registered owner of the motor vehicle involved in a vehicular accident
could be held liable for the consequences. The registered-owner rule has
remained good law in this jurisdiction considering its impeccable and
timeless rationale, as enunciated in the 1957 ruling in Erezo, et al. v.
Jepte,12 where the Court pronounced:
Registration is required not to make said registration the operative act by
which ownership in vehicles is transferred, as in land registration cases,
because the administrative proceeding of registration does not bear any
essential relation to the contract of sale between the parties (Chinchilla
vs. Rafael and Verdaguer, 39 Phil. 888), but to permit the use and
operation of the vehicle upon any public highway (section 5 [a], Act No.
3992, as amended.)
The main aim of motor vehicle registration is to identify the owner so that
if any accident happens, or that any damage or injury is caused by the
vehicle on the public highways, responsibility therefore can be fixed on a
definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner
or drivers, or with very scant means of identification. It is to forestall
these circumstances, so inconvenient or prejudicial to the public, that the
motor vehicle registration is primarily ordained, in the interest of the
determination of persons responsible for damages or injuries caused on
public highways.
"'One of the principal purposes of motor vehicles legislation is
identification of the vehicle and of the operator, in case of accident; and
another is that the knowledge that means of detection are always available
may act as a deterrent from lax observance of the law and of the rules of
conservative and safe operation. Whatever purpose there may be in these
statutes, it is subordinate at the last to the primary purpose of rendering
it certain that the violator of the law or of the rules of safety shall not
escape because of lack of means to discover him.' The purpose of the
statute is thwarted, and the displayed number becomes a 'snare and
delusion,' if courts would entertain such defenses as that put forward by
appellee in this case. No responsible person or corporation could be held
liable for the most outrageous acts of negligence, if they should be
allowed to place a 'middleman' between them and the public, and escape
liability by the manner in which they recompense their servants." (King vs.
Brenham Automobile Co., 145 S.W. 278, 279.)
The Court has reiterated the registered-owner rule in other rulings, like
in Filcar Transport Services v. Espinas ,13 to wit:
It is well settled that in case of motor vehicle mishaps, the registered
owner of the motor vehicle is considered as the employer of the tortfeasor-
driver , and is made primarily liable for the tort committed by the latter
under Article 2176, in relation with Article 2180, of the Civil Code.
In Equitable Leasing Corporation v. Suyom, we ruled that in so far as third
persons are concerned, the registered owner of the motor vehicle is the
employer of the negligent driver, and the actual employer is considered
merely as an agent of such owner .
Thus, it is clear that for the purpose of holding the registered owner of
the motor vehicle primarily and directly liable for damages under Article
2176, in relation with Article 2180, of the Civil Code, the existence of an
employer-employee relationship, as it is understood in labor relations law,
is not required
Indeed, MMTC could not evade liability by passing the buck to Mina's
Transit. The stipulation in the agreement to sell did not bind third
parties like the Cuevases, who were expected to simply rely on the data
contained in the registration certificate of the erring bus.
MMTC's recourse
Although the registered-owner rule might seem to be unjust towards MMTC,
the law did not leave it without any remedy or recourse. According to
Filcar Transport Services v. Espinas, MMTC could recover from Mina's
Transit, the actual employer of the negligent driver, under the principle
of unjust enrichment, by means of a cross-claim seeking reimbursement of
all the amounts that it could be required to pay as damages arising from
the driver's negligence. A cross-claim is a claim by one party against a co-
party arising out of the transaction or occurrence that is the subject
matter either of the original action or of a counterclaim therein, and may
include a claim that the party against whom it is asserted is or may be
liable to the cross-claimant for all or part of a claim asserted in the
action against the cross-claimant.
MMTC set up its cross-claim against Mina's Transit precisely to ensure that
Mina's Transit would reimburse whatever liability would be adjudged against
MMTC. Yet, it is a cause of concern for the Court that the RTC ignored to
rule on the propriety of MMTC's cross-claim. Such omission was unwarranted,
inasmuch as Mina's Transit did not dispute the cross-claim, or did not
specifically deny the agreement to sell with MMTC, the actionable document
on which the cross-claim was based. Even more telling was the fact that
Mina's Transit did not present controverting evidence to disprove the cross-
claim as a matter of course if it was warranted for it to do so.
Under the circumstances, the RTC should have granted the cross-claim to
prevent the possibility of a multiplicity of suits, and to spare not only
the MMTC but also the other parties in the case from further expense and
bother. Compounding the RTC's uncharacteristic omission was the CA's
oversight in similarly ignoring the cross-claim. The trial and the
appellate courts should not forget that a cross-claim is like the complaint
and the counterclaim that the court must rule upon.
WHEREFORE, the Court AFFIRMS the decision promulgated on June 28, 2004
subject to the MODIFICATION that the cross-claim of Metro Manila Transit
Corporation against Mina's Transit Corporation is GRANTED, and,
ACCORDINGLY, Mina's Transit Corporation is
ORDERED to reimburse to Metro Manila Transit Corporation whatever amounts
the latter shall pay to the respondents pursuant to the judgment of the
Regional Trial Court in Civil Case No. N-6127. No pronouncement on costs of
suit. SO ORDERED.
