GR No.

210621, April 4, 2016 Common carriers are required to exercise extraordinary diligence in the performance of its
obligations under the contract of carriage. This extraordinary diligence must be observed not only in
Alfredo Manay et al. (Petitioners) v Cebu Air Inc. (Respondent) the transportation of goods and services but also in the issuance of the contract of carriage, including
its ticketing operations. A contract of carriage is defined as "one whereby a certain person or
Second Division association of persons obligate themselves to transport persons, things, or news from one place to
Ponente: Leonen, J. another for a fixed price." Once a plane ticket is issued, the common carrier binds itself to deliver the
passenger safely on the date and time stated in the ticket. The contractual obligation of the common
Nature of Action: Action for damages based on contract of carriage. carrier to the passenger is governed principally by what is written on the contract of carriage. In this
case, both parties stipulated that the flight schedule stated on the nine (9) disputed tickets was the
FACTS: 10:05 a.m. flight of July 22, 2008. According to the contract of carriage, respondent's obligation as a
Carlos S. Jose purchased 20 Cebu Pacific round-trip tickets from Manila to Palawan for common carrier was to transport nine (9) of the petitioners safely on the 10:05 a.m. flight of July 22,
himself and on behalf of his relatives and friends. 2008. Petitioners, however, argue that respondent was negligent in the issuance of the contract of
carriage since the contract did not embody their intention. They insist that the nine (9) disputed
Jose alleged that he specified to "Alou," the Cebu Pacific ticketing agent, that his preferred tickets should have been scheduled for the 4:15 p.m. flight of July 22, 2008. Respondent, on the
date and time of departure from Manila to Palawan should be on July 20, 2008 at 8:20 a.m. and that other hand, denies this and states that petitioner Jose was fully informed of the schedules of the
his preferred date and time for their flight back to Manila should be on July 22, 2008 at 4:15 p.m. He purchased tickets and petitioners were negligent when they failed to correct their ticket schedule.
alleged that after paying for the tickets, Alou printed the tickets, which consisted of three (3) pages,
and recapped only the first page to him. Since the first page contained the details he specified to The common carrier's obligation to exercise extraordinary diligence in the issuance of the
Alou, he no longer read the other pages of the flight information. On July 20, 2008, Jose and his 19 contract of carriage is fulfilled by requiring a full review of the flight schedules to be given to a
companions boarded the 8:20am Cebu Pacific flight to Palawan and had an enjoyable stay. prospective passenger before payment. Based on the information stated on the contract of carriage,
all three (3) pages were recapped to petitioner Jose. The only evidence petitioners have in order to
On the afternoon of July 22, 2008, the group proceeded to the airport for their flight back to prove their true intent of having the entire group on the 4:15 p.m. flight is petitioner Jose's self-
Manila. During the processing of their boarding passes, they were informed by Cebu Pacific serving testimony that the airline failed to recap the last page of the tickets to him. They have neither
personnel that nine (9) of them could not be admitted because their tickets were for the 10:05 a.m. shown nor introduced any other evidence before the Metropolitan Trial Court, Regional Trial Court,
flight earlier that day. Jose informed the ground personnel that he personally purchased the tickets Court of Appeals, or this Court. Even assuming that the ticketing agent encoded the incorrect flight
and specifically instructed the ticketing agent that all 20 of them should be on the 4:15 p.m. flight to information, it is incumbent upon the purchaser of the tickets to at least check if all the information is
Manila. Upon checking the tickets, they learned that only the first two (2) pages had the schedule correct before making the purchase. Once the ticket is paid for and printed, the purchaser is
Jose specified. They were left with no other option but to rebook their tickets. presumed to have agreed to all its terms and conditions.
Most of the petitioners were balikbayans. It is reasonable to presume that they were
Jose and his companions filed a Complaint for Damages against Cebu Pacific before the adequately versed with the procedures of air travel, including familiarizing themselves with the
Metropolitan Trial Court of Mandaluyong. The Metropolitan Trial Court rendered its Decision ordering itinerary before departure. Moreover, the tickets were issued days before their departure from Manila
Cebu Pacific to pay Jose and his companions actual damages. Cebu Pacific appealed to the and days from their departure from Palawan. There was more than enough time to correct any
Regional Trial Court, reiterating that its ticketing agent gave Jose a full recap of the tickets he alleged mistake in the flight schedule. Petitioners, in failing to exercise the necessary care in the
purchased. The Regional Trial Court affirmed the findings of the Metropolitan Trial Court. Cebu conduct of their affairs, were without a doubt negligent. Thus, they are not entitled to damages.
Pacific appealed to the Court of Appeals, arguing that it was not at fault for the damages caused to Before damages may be awarded, "the claimant should satisfactorily show the existence of the
the passengers. On appeal, the Court of Appeals rendered the Decision granting the appeal and factual basis of damages and its causal connection to defendant's acts."
reversing the Decisions of the Metropolitan Trial Court and the Regional Trial Court.

ISSUE:
Whether or not Cebu Air is liable for damages to petitioners under the contract of carriage.

RULING:
No. Petitioners, in failing to exercise the necessary care in the conduct of their affairs, were
without a doubt negligent. Thus, they are not entitled to damages.

1
Designer Baskets, Inc v. Air Sea Transport The general rule is that upon receipt of the goods, the consignee surrenders the bill of lading to the
carrier and their respective obligations are considered canceled. The law, however, provides two
Facts: exceptions where the goods may be released without the surrender of the bill of lading because the
 DBI is a domestic corporation engaged in the production of housewares and handicraft consignee can no longer return it. These exceptions are when the bill of lading gets lost or for other
items for export. cause. In either case, the consignee must issue a receipt to the carrier upon the release of the
 In October 1995, Ambiente, a foreign-based company, ordered from DBI 223 cartons of goods. Such receipt shall produce the same effect as the surrender of the bill of lading.
assorted wooden items. We have already ruled that the non-surrender of the original bill of lading does not violate the
carrier’s duty of extraordinary diligence over the goods (Republic v. Lorenzo Shipping Corporation).
 Ambiente designated ACCLI as the forwarding agent that will ship out its order from the
Thus, we held that the surrender of the original bill of lading is not a condition precedent for a
Philippines to the United States. ACCLI is a domestic corporation acting as agent of ASTI, common carrier to be discharged of its contractual obligation.
a US based corporation engaged in carrier transport business, in the Philippines. Clearly, law and jurisprudence is settled that the surrender of the original bill of lading is not absolute;
 On January 7, 1996, DBI delivered the shipment to ACCLI for sea transport from Manila that in case of loss or any other cause, a common carrier may release the goods to the consignee
and delivery to Ambiente. To acknowledge receipt and to serve as the contract of sea even without it.
carriage, ACCLI issued to DBI triplicate copies of ASTI Bill of Lading. DBI retained
possession of the originals of the bills of lading pending the payment of the goods by
Ambiente. 2) Articles 1733, 1734, and 1735 of the Civil Code are not applicable.
 On January 23, 1996, Ambiente and ASTI entered into an Indemnity Agreement. Under the
Articles 1733, 1734, and 1735 speak of the common carrier's responsibility over the goods. They
Agreement, Ambiente obligated ASTI to deliver the shipment to it or to its order “without the
refer to the general liability of common carriers in case of loss, destruction or deterioration of goods
surrender of the relevant bill(s) of lading due to the non-arrival or loss thereof.” In and the presumption of negligence against them.
exchange, Ambiente undertook to indemnify and hold ASTI and its agent free from any The applicable provision instead is Article 353 of the Code of Commerce, the Article allows the
liability as a result of the release of the shipment. Thereafter, ASTI released the shipment release of the goods to the consignee even without his surrender of the original bill of lading. In such
to Ambiente without the knowledge of DBI, and without it receiving payment for the total case, the duty of the carrier to exercise extraordinary diligence is not violated. Nothing, therefore,
cost of the shipment. prevented the consignee and the carrier to enter into an indemnity agreement of the same nature as
 DBI then made several demands to Ambiente for the payment of the shipment, but to no the one they entered here. No law or public policy is contravened upon its execution.
avail. Thus, on October 7, 1996, DBI filed the Original Complaint against ASTI, ACCLI and
ACCLI’s incorporators-stockholders 3) Article 1503 of the Civil Code does not apply to contracts for carriage of goods.
 DBI claimed that under Bill of Lading is “to release and deliver the cargo/shipment to the Articles 1523 and 1503, , refer to a contract of sale between a seller and a buyer. In particular, they
consignee, x x x, only after the original copy or copies of [the] Bill of Lading is or are refer to who between the seller and the buyer has the right of possession or ownership over the
surrendered to them; otherwise, they become liable to the shipper for the value of the goods subject of the sale. Articles 1523 and 1503 do not apply to a contract of carriage between the
shipment.” DBI also averred that ACCLI should be jointly and severally liable with its shipper and the common carrier.
codefendants because ACCLI failed to register ASTI as a foreign corporation doing
business in the Philippines. In addition, ACCLI failed to secure a license to act as agent of
ASTI.

Issue: WON ASTI, ACCLI, and Ambiente are solidarily liable to DBI for the value of the shipment.

Held:
Petition Denied.
1) A common carrier may release the goods to the consignee even without the
surrender of the bill of lading.

2
 Torres Madrid Brokerage Inc. vs Feb Mitsui and BMT public policy in the vigilance over the goods and in rhe safety of their passengers. The law does not
disringuish between one whose principal business activity is the carrying of goods and one who
Facts: undertakes this task only as an ancillary activity.TMBI’s delivery of the goods is an integral, albeit
Sony engaged the services of Torres Madrid Brokerage (TMBI) to facilitate, process, withdraw, and ancillary, part of its brokerage services. As long as an entity holds itself to the public for the transport
deliver the shipment of various electronic goods from Thailand at the port to its warehouse in Biñan, of goods as a business, it os considered a common carrier regardless of whether it owns a vehicle or
Laguna. has actually to hire one.
TMBI subcontracted the services of Benjamin Manalastas’ company, BMT Trucking services (BMT) Consequently, as in the case of theft or robbery of goods,, a common carrier is presumed to have
to transport the shipment as they do not own any delivery trucks. TMBI notified Sony and had no been at fault or to have acted negligently, unless it can prove that it observed extraordinary diligence.
objections of the arrangement. And that a robbery attended by grave or irresistble threat, violence or force is a fortuitous event that
absolves the common carrier from liability.
4 BMT trucks picked up the shipment from the port on Oct. 7, 2000 but due to the truck ban they In the present case, despite the subcontract, TMBI remained responsible for the cargo. Under Article
could not undertake delivery immediately and bec the ff. Day was Sunday. BMT scheduled delivery 1763, a common carrier’s extraordinary responsibility lasts from the time these goods are
on Oct. 9 2000. October 9 early morning however, only 3 trucks arrived at Sony’s Biñan warehouse. unconditionally placed in the possession of, and received by the carrier for transportation, until they
The 4th truck was seen abandoned along Diversion Road in Filinvest, Alabang, Muntinlupa City at are delivered, actually or constructively, by the carrier to the consignee.TMBI simply argued that it
12noon wherein both the driver Rufo Lapesura and the shipments were missing. was not a common carrier bound to observe extraordinary diligence. Its failure to successfully
Victor Torres, TMBI’s general manager, filed with NBI against Lapesura for’hijacking’ establish this premise carries with it the presumption of fault thus rendering it liably to Sony or Mitsui
TMBI notified Sony of the loss and sent BMT a letter demanding payment for the lost shipment. BMT for breach of contract
refused so insisting the goods were ‘hijacked,’.
SONY filed an insurance claim with the Mitsui, the insurer of goods. Mitsui paid Sony P7,293,386.23. 2.NO. TMBI’s liability to Mitsui does not stem from a quasi delict but from its breach of contract. Th e
After being subrogated to Sony’s rights, Mitsui sent TMBI a demand letter for payment of the lost tie that binds TMBI with Mitsui is contractual, albeit one that oassed on to Mitsui as a result of TMBI’s
goods. TMBI refused to pay. Mitsui then filed a complaint against TMBI. TMBI impleaded BMT as a contract of carriage with Sony to which Mitsui had been subrogated as an insurer. The legal reality
3rd party defendant, alleging BMT’s driver responsible and claimed BMT’s negligence as the that results from this contractual tie precludes the application of quasi- delict
proximate cause. TMBI prayed that in te event it is held liable to Mitsui, it should be reimbursed by
BMT. 3.No. There is no direct contractual relationship existed between Sony/Mitsui. Mitsui did not even sue
RTC found BMT and TMBI jointly and solidarily liable. That they have been doing business since BMT, much less prove any negligence on its part. There is no basis to directly hold BMT Liable to
early 80’s and the same incident happened on Sony’s cargo in 1997 but neither sony nor its insurer Mitsui for quasi-delict
filed a complaint.
BMT AND TMBI appealed. 4.YES. By subcontracting the delivery, TMBI entered into its ownc contract of carriage with a fellow
TMBI denied that it was a common carrier required to exercise extraordinary diligence and that common carrier. The cargo was lost after is transfer to BMT’s custody based on its contract with
‘hijack’ is a fortuitous event. TMBI. Following Article 1735, BMT Is presumed to be at fault.Since BMT failed to provethat it
BMT claimed that it exercised extraordinary diligence and ye loss result from a forfuitous event. observed extraordinary diligence, it is liable to TMBI for breach of their contract of carriage

Issue: TMBI is liable to Sony/Mitsui for breaching the contract of carriage. In turn, TMBI is entitled to
1. WON TMBI is a common carrier engaged in the business of transporting goods for the reimbursement from BMT due to the latter’s won breach of its contract of carriage with TMBI
general public for a fee
2. WON TMBI and BMT are solidarily liable to MITSUI
3. WON BMT is directly liable to Sony or Mitsui
4. WON BMT is liable to TMBI for breach of their contract of carriage

Ruling:

1.A brokerage may be considered a common carrier if it also undertakes to deliver the goods for its
customers. Common carriers are persons, corporations, firms or associations engaged in the
business of transporting passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public. They are bound to observe extraordinary diligence for reasons of
3
De Guzman v. Court of Appeals and even though private respondent's principal occupation was not the carriage of goods for others.
There is no dispute that private respondent charged his customers a fee for hauling their goods; that
Facts: fee frequently fell below commercial freight rates is not relevant here. A certificate of public
Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he convenience is not a requisite for the incurring of liability under the Civil Code provisions governing
gathered to Manila for resale using 2 six-wheeler trucks. common carriers.

On the return trip to Pangasinan, respondent would load his vehicle with cargo which various (2) Article 1734 establishes the general rule that common carriers are responsible for the loss,
merchants wanted delivered, charging fee lower than the commercial rates. Sometime in November destruction or deterioration of the goods which they carry, "unless the same is due to any of
1970, petitioner Pedro de Guzman contracted with respondent for the delivery of 750 cartons of the following causes only:
Liberty Milk.
a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;
On December 1, 1970, respondent loaded the cargo. Only 150 boxes were delivered to petitioner b. Act of the public enemy in war, whether international or civil;
because the truck carrying the boxes was hijacked along the way. c. Act or omission of the shipper or owner of the goods;
d. The character of the goods or defects in the packing or in the containers; and
Petitioner commenced an action claiming the value of the lost merchandise. Petitioner argues that e. Order or act of competent public authority."
respondent, being a common carrier, is bound to exercise extraordinary diligence, which it failed to
do. The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting
causes listed in Article 1734.

Private respondent denied that he was a common carrier, and so he could not be held liable for force Private respondent as common carrier is presumed to have been at fault or to have acted
majeure. The trial court ruled against the respondent, but such was reversed by the Court of negligently. This presumption, however, may be overthrown by proof of extraordinary diligence on
Appeals. the part of private respondent.

Issues: We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the
goods carried are reached where the goods are lost as a result of a robbery which is attended by
(1) Whether or not private respondent is a common carrier "grave or irresistible threat, violence or force."

(2) Whether private respondent is liable for the loss of the goods We hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of
the common carrier and properly regarded as a fortuitous event. It is necessary to recall that even
Held: 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
(1) Article 1732 makes no distinction between one whose principal business activity is the carrying of they shall have complied with the rigorous standard of extraordinary diligence.
persons or goods or both, and one who does such carrying only as an ancillary activity.

Article 1732 also carefully avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis.

Neither does Article 1732 distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or solicits business only from
a narrow segment of the general population.

It appears to the Court that private respondent is properly characterized as a common carrier even
though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although
such backhauling was done on a periodic or occasional rather than regular or scheduled manner,
4
 Pedro de Guzman v. Court of Appeals ISSUES
G.R. No. L-47822, December 22, 1988
1. Is respondent a common carrier?

PARTIES: 2. Is the respondent liable for the loss of the cartons of milk due to force majeure?
Pedro de Guzman, petitioner
Court of Appeals and Ernesto Cendana, respondents ARGUMENTS:

BRIEF STATEMENT OF THE CASE: 1. Herein respondent is considered as a common carrier.

Upon gathering sufficient quantities of such scrap material, respondent would bring such material to 2. Respondent is not liable for the value of the undelivered merchandise .
Manila for resale.
Article 1734 of the Civil Code- The general rule is established by the article that common carriers are
He utilized (2) two six-wheeler trucks which he owned for the purpose. Upon returning to responsible for the loss, destruction or deterioration of the goods which they carry, unless the same
Pangasinan, he would load his vehicle with cargo belonging to different merchants to different is due to any of the following causes only:
establishments in Pangasisnan which respondents charged a freight fee for.
a. Flood, storm, earthquake, lightning or other natural disasters;
Sometime in November 1970, herein petitioner Pedro de Guzman, a merchant and dealer of General b. Act of the public enemy, whether international or civil;
Milk Company Inc. in Pangasinan contracted with respondent for hauling 750 cartons of milk. c. Act or omission of the shipper or owner of the goods;
Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by hijackers along d. Character of the goods or defects in the packing;
Marcos Highway. e. Order or act of competent public authority.

Hence, petitioners commenced an action against private respondent. In his defense, respondent Applying the above article, we note firstly that the specific cause alleged in the instant case — the
argued that he cannot be held liable due to force majuere, and that he is not a common carrier and hijacking of the carrier's truck — does not fall within any of the five (5) categories of exempting
hence is not required to exercise extraordinary diligence. causes listed in Article 1734. It would follow; therefore, that the hijacking of the carrier's vehicle must
be dealt with under the provisions of Article 1735, in other words, the private respondent as common
On appeal before the Court of Appeals, Cendana urged that the trial court had erred in considering carrier is presumed to have been at fault or to have acted negligently. This presumption, however,
him a common carrier; in finding that he had habitually offered trucking services to the public; in not may be overthrown by proof of extraordinary diligence on the part of private respondent.
exempting him from liability on the ground of force majeure; and in ordering him to pay damages and
attorney’s fees. Article 1745: Any of the following or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy:
The Court of Appeals reversed the judgment of the trial court and held that Cendana had been
engaged in transporting return loads of freight “as a casual occupation — a sideline to his scrap iron
xxx xxx xxx
business” and not as a common carrier.

De Guzman came to the Supreme Court by way of a Petition for Review. (5) that the common carrier shall not be responsible for the acts or omissions of his or its employees;

(6) that the common carrier's liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is dispensed with or diminished; and
5
(7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods on
account of the defective condition of the car vehicle, ship, airplane or other equipment used in the
contract of carriage. (Emphasis supplied)

Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to
divest or to diminish such responsibility — even for acts of strangers like thieves or
robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat, violence
or force." We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance
over the goods carried are reached where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force."

The decision of the trial court shows that the armed men who held up the second truck owned by
private respondent acted with grave, if not irresistible, threat, violence or force, which is an exception
of the general rule of Article 1745 (6).

RULING:

The Petition for Review on certiorari is hereby DENIED and the Decision of the Court of Appeals
dated 3 August 1977 is AFFIRMED.

The occurrence of the loss must reasonably be regarded as quite beyond the control of the common
carrier and properly regarded as a fortuitous event. It is necessary to recall that even common
carriers are not made absolute insurers against all risks of travel and of transport of goods, and are
not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall
have complied with the rigorous standard of extraordinary diligence.

We, therefore, agree with the result reached by the Court of Appeals that private respondent
Cendana is not liable for the value of the undelivered merchandise which was lost because of an
event entirely beyond private respondent's control.

6
 HELD:
First Philippine Industrial v. Court of Appeals
A common carrier is one who holds himself out to the public as engaged in the business of
FACTS: transporting persons or property from place to place, for compensation, offering his services to the
public generally. Article 1732 of the Civil Code defines common carrier as any person, corporation,
Petitioner is a grantee of a pipeline concession under RA 387 to contract, install and operate oil firm or association engaged in the business of carrying or transporting passengers or goods or both,
pipelines. by land, water, or air, for compensation, offering their services to the public.

The original pipeline concession was granted in 1967 and was renewed by the Energy Regulatory The fact that petitioner has a limited clientele does not exclude it from the definition of a common
Board (ERB) in 1992. carrier. 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
In January 1995, petitioner applied for a mayor’s permit in Batangas City. Respondent City Treasurer undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its
required petitioner to pay a local tax based on its gross receipts for the fiscal year in 1993 pursuant to services, and transports the goods by land and for compensation. As correctly pointed out by
the Local Government Code before the permit could be issue. In order not to hamper its operations, petitioner, Civil Code makes no distinction as to the means of transporting, as long as it is by land,
petitioner paid the tax under protest amounting to ₱ 239,019.01 for the first quarter of 1993. water or air. It does not provide that the transportation of the passengers or goods should be by
Petitioner filed a letter-protest and states that FPIC is a pipeline operator with a government motor vehicle. In fact, in the U.S., oil pipe line operators are considered common carriers.
concession granted engaged in transporting petroleum products from the Batangas refineries, via
pipeline, to Sucat and JTF Pandacan Terminals. As such, it is exempt from paying tax on gross With regard to the other issue in the case at bar regarding the tax exemption, it is clear that the
receipts. Moreover, Transportation contractors are not included in the enumeration of contractors legislative intent in excluding from the taxing power of the local government unit the imposition of
under Section 131, Paragraph (h) of LGC. business tax against common carriers is to prevent a duplication of the so-called "common carrier's
tax." Petitioner is already paying 3% common carrier's tax on its gross sales/earnings under the
City Treasurer denied the protest contending that petitioner cannot be considered engaged in the National Internal Revenue Code. To tax petitioner again on its gross receipts in its transportation of
transportation business, thus it cannot claim exemption. petroleum business would defeat the purpose of the Local Government Code.

Petitioner filed with RTC a complaint for tax refund with prayer for writ of preliminary injunction
against respondents. Traversing the complaint, respondents argued that petitioner could not be NOTES:
exempt from taxes as said exemption applies only to transportation contractors and persons
engaged in the transportation by hire and common carriers by air, land and water. They also assert TEST for determining whether a party is a common carrier of goods:
that pipelines are not included in the term common carrier which refers solely to ordinary carriers
such as trucks, trains, ships and the like. They further posit that common carrier pertains to the 1. He must be engaged in the business of carrying goods for others as a public
mode or manner by which a product is delivered to its destination. 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
TC: Dismissed the complaint. Exemption to tax has become unclear. Tax exemption granted under occupation;
Sec 133 (j.) encompasses only common carriers so as not to overburden the riding public or 2. He must undertake to carry goods of the kind to which his business is confined;
commuters with taxes. FPIC is not a common carrier but a special carrier extending its services and 3. He must undertake to carry by the method by which his business is conducted
facilities to a single specific or special customer under special contract. Moreover, even franchise and over his established roads; and
grantees are taxed as well as contractors. 4. The transportation must be for hire.

CA: affirming TC’s dismissal of petitioner’s complaint. MFR was also denied.

SC: At first, petition was denied. Petitioner moved for a reconsideration which was granted. Petition
was reinstated.

ISSUE: Whether or not petitioner is a common carrier

7
Calvo v. UCPB General Insurance Co.

FACTS:

Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. (TCTSI),
a sole proprietorship customs broker.

Petitioner entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels
of semi-chemical fluting paper and 124 reels of kraft liner board from the Port Area in Manila to
SMC's warehouse at the Tabacalera Compound, Romualdez St., Ermita, Manila. The cargo was
insured by respondent UCPB General Insurance Co., Inc.

The shipment in question, contained in 30 metal vans, arrived in Manila on board "M/V Hayakawa
Maru" and, after 24 hours, were unloaded from the vessel to the custody of the arrastre operator,
Manila Port Services, Inc.

Petitioner then withdrew the cargo from the arrastre operator and delivered it to SMC's warehouse in
Ermita, Manila Thereafter, the goods were inspected by Marine Cargo Surveyors, who found that 15
reels of the semi-chemical fluting paper were "wet/stained/torn" and 3 reels of kraft liner board were
likewise torn.

The damage was placed at P93,112.00. SMC collected payment from respondent UCPB under its
insurance contract for the aforementioned amount. In turn, respondent, as subrogee of SMC, brought
suit against petitioner in the Regional Trial Court, Branch 148, Makati City, which, on December 20,
1995, rendered judgment finding petitioner liable to respondent for the damage to the shipment.

ISSUE:

Whether or not petitioner is a common carrier

HELD:

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

8
Calvo V. UCPB Gen Insurance Co. (2002) 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
FACTS: compensation, offering their services to the public."

At the time material to this case, Transorient Container Terminal Services, Inc. (TCTSI) owned The above article makes no distinction between one whose principal business activity is the carrying
by Virgines Calvo entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 of persons or goods or both, and one who does such carrying only as an ancillary activity . . .
reels of semi-chemical fluting paper and 124 reels of kraft liner board from the Port Area in Manila to
SMC's warehouse at the Tabacalera Compound, Romualdez St., Ermita, Manila. 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
The cargo was insured by respondent UCPB General Insurance Co., Inc. 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
July 14, 1990: arrived in Manila on board "M/V Hayakawa Maru" and later on unloaded from the who offers services or solicits business only from a narrow segment of the general population.
vessel to the custody of the arrastre operator, Manila Port Services, Inc concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of
"public service," under the Public Service Act (Commonwealth Act No. 1416, as amended) which at
July 23 to July 25, 1990: Calvo withdrew the cargo from the arrastre operator and delivered it to least partially supplements the law on common carriers set forth in the Civil Code
SMC's warehouse in Ermita, Manila
Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:
July 25, 1990: goods were inspected by Marine Cargo Surveyors, who found that 15 reels of the
semi-chemical fluting paper were "wet/stained/torn" and 3 reels of kraft liner board were likewise torn " x x x every person that now or hereafter may own, operate, manage, or control in the Philippines,
SMC collected payment from UCPB the total damage of P93,112 under its insurance contract for hire or compensation, with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common carrier, railroad, street railway,
UCPB brought suit against Calvo as subrogee of SMC 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,
Calvo: Art. 1734(4) The character of the goods or defects in the packing or in the containers spoilage steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of
or wettage" took place while the goods were in the custody of either the carrying vessel "M/V passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
Hayakawa Maru," which transported the cargo to Manila, or the arrastre operator, to whom the goods plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum,
were unloaded and who allegedly kept them in open air for 9 days notwithstanding the fact that some sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations
of the containers were deformed, cracked, or otherwise damaged and other similar public services. x x x"

Trial Court: Calvo liable  when Calvo's employees withdrew the cargo from the arrastre operator, they did so without
exception or protest either with regard to the condition of container vans or their contents
CA: affirmed
 Calvo must do more than merely show the possibility that some other party could be
ISSUE: W/N Calvo can be exempted from liability under Art. 1734(4) responsible for the damage. It must prove that it used "all reasonable means to ascertain
the nature and characteristic of goods tendered for transport and that it exercised due care
HELD: NO. CA AFFIRMED. in the handling

Mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of
destination in bad order, makes 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

Extraordinary responsibility 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 the right to receive the same

9
 A.F. SANCHEZ BROKERAGE INC., v. THE HON. COURT OF APPEALS and FGU INSURANCE the circumstances of each case. In the event that the goods are lost, destroyed or deteriorated, it is
CORPORATION presumed to have been at fault or to have acted negligently, unless it proves that it observed
extraordinary diligence.
447 SCRA 427 (2004)
The concept of ―extra-ordinary diligence‖ was explained in Compania Maritima v. Court of Appeals.
A common carrier is liable to the resulting damage to the goods if the improper packaging is The extraordinary diligence in the vigilance over the goods tendered for shipment requires the
known to the carrier or his employees or is apparent upon ordinary observation, but he common carrier to know and to follow the required precaution for avoiding damage to or destruction
nevertheless accepts the same without protest or exception. of the goods entrusted to it for sale, carriage and delivery. It requires common carriers to render
service with the greatest skill and foresight and ―to use all reasonable means to ascertain the nature
and characteristics of goods tendered for shipment and to exercise due care in the handling and
Respondent FGU Insurance Corporation (FGU) brought an action for reimbursement against
storage including such methods as their nature requires.
petitioner A.F. Sanchez Brokerage Inc. (Sanchez Brokerage) to collect the amount paid by the former
to Wyeth-Suaco Laboratories Inc. (Wyeth-Suaco) as insurance payment for the goods delivered in
bad condition. It was established that Sanchez Brokerage received the cargoes from the PSI warehouse in good
order and condition and that upon delivery by petitioner some of the cargoes were found to be in bad
order as noted in the Delivery Receipt and as indicated in the Survey and Destruction Report.
A.F. Brokerage refused to admit liability for the damaged goods which it delivered from Philippines
Skylanders, Inc. (PSI) to Wyeth-Suaco as it maintained that the damage was due to improper and
insufficient export packaging, discovered when the sealed containers were opened outside the PSI While paragraph no. 4 of Article 1734 of the Civil Code exempts a common carrierfrom liability if the
warehouse. loss or damage is due to the character of the goods or defects in the packaging or in the containers,
the rule is that if the improper packaging is known to the carrier or his employees or is apparent upon
ordinary observation, but he nevertheless accepts the same without protest or exception
The Regional Trial Court of Makati dismissed the said complaint; however, the decision was
notwithstanding such condition, he is not relieved of liability for the resulting damage. If the claim of
subsequently reversed and set aside by the Court of Appeals, finding that Sanchez Brokerage is
Sanchez Brokerage that some of the cartons were already damaged upon delivery to it were true,
liable for the carriage of cargo as a ―common carrier‖ by definition of the New Civil Code.
then it should naturally have received the cargo under protest or with reservation duly noted on the
receipt issued by PSI but it made no such protest or reservation.
ISSUE:

Whether or not the FGU Insurance is liable for the delivery of the damaged goods

HELD:

As defined under Article 1732 of the Civil Code, 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. It 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 Sanchez Brokerage that it is not a common carrier but a customs
broker whose principal function is to prepare the correct customs declaration and proper shipping
documents as required by law is bereft of merit. It suffices that petitioner undertakes to deliver the
goods for pecuniary consideration.

In this light, Sanchez Brokerage as a common carrier is mandated to observe, under Article 1733 of
the Civil Code, extraordinary diligence in the vigilance over the goods it transports according to all

10
 Schmitz Transport & Brokerage Corporation vs. Transport Venture, Inc. (458 SCRA 557) If the law or contract does not state the diligence which is to be observed in the performance, that
which is expected of a good father of a family shall be required.
FACTS:
Was the reasonable care and caution which an ordinarily prudent person would have used in the
Petitioner, who was in charge of securing requisite clearances, receive the cargoes from the shipside same situation exercised by TVI?[52]
and deliver it to the consignee Little Giant Steel Pipe Corporation warehouse at Cainta, Rizal, hired
the services of respondent Transport Venture Incorporation (TVI)’s tugboat for the hot rolled steel This Court holds not.
sheets in coil.
TVIs failure to promptly provide a tugboat did not only increase the risk that might have been
Coils were unloaded to the barge but there was no tugboat to pull the barge to the pier. Due to strong reasonably anticipated during the shipside operation, but was the proximate cause of the loss. A man
waves caused by approaching storm, the barge was abandoned. of ordinary prudence would not leave a heavily loaded barge floating for a considerable number of
hours, at such a precarious time, and in the open sea, knowing that the barge does not have any
Later, the barge capsized washing 37 coils into the sea. Consignee was executed a subrogation power of its own and is totally defenseless from the ravages of the sea.
receipt by Industrial Insurance after the former’s filing of formal claim. Industrial Insurance filed a
complaint against both petitioner and respondent herein. That it was nighttime and, therefore, the members of the crew of a tugboat would be charging
overtime pay did not excuse TVI from calling for one such tugboat.
The trial court held that petitioner and respondent TVI were jointly and severally liable for the
subrogation. As for petitioner, for it to be relieved of liability, it should, following Article 1739[53] of the Civil Code,
prove that it exercised due diligence to prevent or minimize the loss, before, during and after the
ISSUES: occurrence of the storm in order that it may be exempted from liability for the loss of the goods.

1) Whether the loss of the cargoes was due to a fortuitous event, independent of any act of While petitioner sent checkers[54] and a supervisor[55] on board the vessel to counter-check the
negligence on the part of petitioner Black Sea and TVI, and operations of TVI, it failed to take all available and reasonable precautions to avoid the loss. After
noting that TVI failed to arrange for the prompt towage of the barge despite the deteriorating sea
(2) If there was negligence, whether liability for the loss may attach to Black Sea, petitioner and TVI. conditions, it should have summoned the same or another tugboat to extend help, but it did not.

NO. In order, to be considered a fortuitous event:

(1) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to
comply with his obligation, must be independent of human will;
(2) it must be impossible to foresee the event which constitute the caso fortuito, or if it can
be foreseen it must be impossible to avoid;
(3) the occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in any manner; and
(4) the obligor must be free from any participation in the aggravation of the injury resulting
to the creditor.

RT. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay,
and those who in any manner contravene the tenor thereof, are liable for damages.

ART. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of
the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and
2202, paragraph 2, shall apply.

11
 Philippine Charter Insurance Corp. vs. Unknown Owner and characteristic of goods tendered for shipment, and to exercise due care in the handling and
stowage, including such methods as their nature requires.”
[G.R. No. 161833. July 8, 2005]
The common carrier’s duty to observe the requisite diligence in the shipment of goods lasts from the
FACTS: time the articles are surrendered to or unconditionally placed in the possession of, and received by,
the carrier for transportation until delivered to, or until the lapse of a reasonable time for their
Petitioner Philippine Charter Insurance Corporation (PCIC) is the insurer of a shipment on board the acceptance, by the person entitled to receive them.] >When the goods shipped are either lost or
vessel M/V “National Honor,” represented in the Philippines by its agent, National Shipping arrive in damaged condition, a presumption arises against the carrier of its failure to observe that
Corporation of the Philippines (NSCP). diligence, and there need not be an express finding of negligence to hold it liable. To overcome the
presumption of negligence in the case of loss, destruction or deterioration of the goods, the common
The M/V “National Honor” arrived at the Manila International Container Terminal (MICT). The carrier must prove that it exercised extraordinary diligence.
International Container Terminal Services, Incorporated (ICTSI) was furnished with a copy of the
crate cargo list and bill of lading, and it knew the contents of the crate. The following day, the vessel However, under Article 1734 of the New Civil Code, the presumption of negligence does not
started discharging its cargoes using its winch crane. The crane was operated by Olegario Balsa, a apply to any of the following causes:
winchman from the ICTSI, exclusive arrastre operator of MICT.
1. Flood, storm, earthquake, lightning or other natural disaster or calamity;
Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor of the 2. Act of the public enemy in war, whether international or civil;
ICTSI, conducted an inspection of the cargo. They inspected the hatches, checked the cargo and 3. Act or omission of the shipper or owner of the goods;
found it in apparent good condition. Claudio Cansino, the stevedore of the ICTSI, placed two sling 4. The character of the goods or defects in the packing or in the containers;
cables on each end of Crate No. 1. No sling cable was fastened on the mid-portion of the crate. In 5. Order or act of competent public authority.
Dauz’s experience, this was a normal procedure. 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 It bears stressing that the enumeration in Article 1734 of the New Civil Code which exempts the
the vessel’s twin deck, sending all its contents crashing down hard, resulting in extensive damage to common carrier for the loss or damage to the cargo is a closed list. To exculpate itself from liability
the shipment. for the loss/damage to the cargo under any of the causes, the common carrier is burdened to prove
any of the aforecited causes claimed by it by a preponderance of evidence. If the carrier succeeds,
PCIC paid the damage, and as subrogee, filed a case against M/V National Honor, NSCP and ICTSI. the burden of evidence is shifted to the shipper to prove that the carrier is negligent.
Both RTC and CA dismissed the complaint.
“Defect” is the want or absence of something necessary for completeness or perfection; a lack or
ISSUE: absence of something essential to completeness; a deficiency in something essential to the proper
Whether or not the presumption of negligence is applicable in the instant case. use for the purpose for which a thing is to be used. On the other hand, inferior means of poor quality,
mediocre, or second rate. A thing may be of inferior quality but not necessarily defective. In other
HELD: words, “defectiveness” is not synonymous with “inferiority.”

No. xxx

We agree with the contention of the petitioner that common carriers, from the nature of their business In the present case, the trial court declared that based on the record, the loss of the shipment was
and for reasons of public policy, are mandated to observe extraordinary diligence in the vigilance caused by the negligence of the petitioner as the shipper:
over the goods and for the safety of the passengers transported by them, according to all the
circumstances of each case. he Court has defined extraordinary diligence in the vigilance over the The same may be said with respect to defendant ICTSI. The breakage and collapse of Crate No. 1
goods as follows: and the total destruction of its contents were not imputable to any fault or negligence on the part of
said defendant in handling the unloading of the cargoes from the carrying vessel, but was due solely
The extraordinary diligence in the vigilance over the goods tendered for shipment requires the to the inherent defect and weakness of the materials used in the fabrication of said crate.
common carrier to know and to follow the required precaution for avoiding damage to, or destruction
of the goods entrusted to it for sale, carriage and delivery. It requires common carriers to render The crate should have three solid and strong wooden batten placed side by side underneath or on
service with the greatest skill and foresight and “to use all reasonable means to ascertain the nature the flooring of the crate to support the weight of its contents. x x
12
 Lea mer industries v Malayan insurance barge.36 This fact was confirmed during his cross-examination, as shown by the following brief
exchange:
FACTS: Ilian Silica Mining entered into a contract of carriage with Lea Mer Industries, Inc., for the
shipment of 900 metric tons of silica sand valued at P565,000.5 Consigned to Vulcan Industrial and Second, the alleged fortuitous event was not the sole and proximate cause of the loss. There is a
Mining Corporation, the cargo was to be transported from Palawan to Manila. preponderance of evidence that the barge was not seaworthy when it sailed for
Manila.38 Respondent was able to prove that, in the hull of the barge, there were holes that might
On October 25, 1991, the silica sand was placed on board Judy VII, a barge leased by Lea have caused or aggravated the sinking.39 Because the presumption of negligence or fault applied to
Mer.6 During the voyage, the vessel sank, resulting in the loss of the cargo.7 petitioner, it was incumbent upon it to show that there were no holes; or, if there were, that they did
not aggravate the sinking.
Malayan Insurance Co., Inc., as insurer, paid Vulcan the value of the lost cargo.8 To recover the
amount paid and in the exercise of its right of subrogation, Malayan demanded reimbursement from Petitioner offered no evidence to rebut the existence of the holes. Its witness, Domingo A. Luna,
Lea Mer, which refused to comply. testified that the barge was in "tip-top" or excellent condition,40 but that he had not personally
inspected it when it left Palawan.41
Consequently, Malayan instituted a Complaint with the Regional Trial Court (RTC) of Manila on
September 4, 1992, for the collection of P565,000 representing the amount that respondent had paid The submission of the Philippine Coast Guard’s Certificate of Inspection of Judy VII, dated July 31,
Vulcan.9 1991, did not conclusively prove that the barge was seaworthy.42 The regularity of the issuance of
the Certificate is disputably presumed.43 It could be contradicted by competent evidence, which
On October 7, 1999, the trial court dismissed the Complaint, upon finding that the cause of the loss respondent offered. Moreover, this evidence did not necessarily take into account the actual
was a fortuitous event.10 The RTC noted that the vessel had sunk because of the bad weather condition of the vessel at the time of the commencement of the voyage.44
condition brought about by Typhoon Trining.

The court ruled that petitioner had no advance knowledge of the incoming typhoon, and that the
vessel had been cleared by the Philippine Coast Guard to travel from Palawan to Manila

ISSUE: whether petitioner is liable for the loss of the cargo,

There is no controversy regarding the loss of the cargo in the present case. As the common carrier,
petitioner bore the burden of proving that it had exercised extraordinary diligence to avoid the loss, or
that the loss had been occasioned by a fortuitous event -- an exempting circumstance.

It was precisely this circumstance that petitioner cited to escape liability. Lea Mer claimed that the
loss of the cargo was due to the bad weather condition brought about by Typhoon
Trining.32 Evidence was presented to show that petitioner had not been informed of the incoming
typhoon, and that the Philippine Coast Guard had given it clearance to begin the voyage.33 On
October 25, 1991, the date on which the voyage commenced and the barge sank, Typhoon Trining
was allegedly far from Palawan, where the storm warning was only "Signal No. 1."34

The evidence presented by petitioner in support of its defense of fortuitous event was sorely
insufficient. 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.

First, petitioner presented no evidence that it had attempted to minimize or prevent the loss before,
during or after the alleged fortuitous event.35 Its witness, Joey A. Draper, testified that he could no
longer remember whether anything had been done to minimize loss when water started entering the
13
 Cebu Salvage Corporation (CSC) vs Philippine Home Assurance Corp., (PHAC) HELD:

G.R. No. 150403 1. Yes. The cargo was loaded on board the vessel; loss/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
January 25, 2007 due to some casualty or force majeure. The voyage charter here being a contract of affreightment,
the carrier was answerable for the loss of the goods received for transportation.
FACTS:
2. CSC was the one which contracted with MCCII for the transport of the cargo. It had control over
On November 12, 1984, CSC & Maria Christina Chemicals Industries, Inc., (MCCII) entered into a what vessel it would use. All throughout its dealings with MCCII, it represented itself as a common
voyage charter wherein CSC was to load 800-1,100 metric tons of silica quartz on board the M/T carrier. The fact that it did not own the vessel it decided to use to consummate the contract of
Espiritu Santo at Ayungon, Negros Occidental for transport to and discharge at Tagoloan, Misamis carriage did not negate its character & duties as a common carrier. The MCCII could not be
Oriental to consigned Ferrochrome Phil’s., Inc. reasonably expected to inquire about the ownership of the vessels which petitioner carrier offered to
utilize. It is very difficult & often impossible for the general public to enforce its rights of action under a
Pursuant to the contract, on December 23, 1984, CSC received & loaded 1,100 metric tons of silica contract of carriage if it should be required to know who the actual owner of the vehicle is. In this
quartz on board the M/T Espiritu Santo which left Ayungon for Tagoloan the next day. case, the voyage charter itself denominated the petitioner as the “owner/operator” of the vessel.

However, the shipment never reached its destination because the M/T Espiritu Santo sank in the 3. No. The bill of lading was merely a receipt issued by ALS to evidence the fact that the goods had
afternoon of December 24, 1984 off the beach of Opol, Misamis Oriental, resulting in the total loss of been received for transportation. It was not signed by MCCII, as in fact it was simply signed by the
the cargo. supercargo of ALS. 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, it cannot
MCCII filed a claim for the loss of the shipment with its insurer, PHAC. PHAC paid the claim in the prevail over the express provision of the voyage charter that MCCII and petitioner executed.
amount of P211,500 and was surrogated to MCCII’s rights. It thereafter filed a case in the RTC
against CSC for reimbursement of the amount it paid MCCII. 4. No. It deserves scant consideration that the voyage charter stipulated that cargo insurance was for
the charterer’s account. This meant that the charterer would take care of having the goods insured. It
However, CSC claims no liability insisting that the agreement was merely a contract of hire wherein could not exculpate the carrier from liability for the breach of its contract of carriage. The law prohibits
MCCII hired the vessel from its owner, ALS Timber Enterprises. it and condemns it as unjust & contrary to public policy.

Not being the owner of the M/T Espiritu Santo, petitioner did not have control over the vessel, it’s 5. The idea proposed by CSC is preposterous & dangerous. MCCII never dealt with ALS and yet
master & crew. Thus, it could not allegedly be held liable for the loss of the shipment caused by the petitioner insists that MCCII should sue ALS for reimbursement for its loss. Certainly, to permit a
sinking of a ship it didn’t own. common carrier to escape its responsibility for the goods it agreed to transport (by expedient of
alleging non-ownership of the vessel it employed) would radically derogate from the carrier’s duty of
ISSUES: extraordinary diligence. It would also open the door to collusion between the carrier & the supposed
owner and to the possible shifting of liability from the carrier to one without any financial capability to
1. Whether there is a contract of carriage between CSC and MCCII. answer for the resulting damages.

2. Whether CSC is a common carrier despite not being the owner of the vessel it used.

3. Whether the bill of lading should prevail over the voyage charter as the contract of carriage
between the parties.

4. Whether MCCII should be held liable for its own loss

5. Whether a carrier that enters into a contract of carriage is not liable to the charterer/shipper if it
does not own the vessel it chooses to use.

14
 Spouses Cruz vs. Sun Holidays, Inc.
GR No. 186312 Under the Civil Code, common carriers, from the nature of their business and for reasons of public
29 June 2010 policy, are bound to observe extraordinary diligence for the safety of the passengers transported by
them, according to all the circumstances of each case.
FACTS
Spouses Cruz files a complaint for damages against Sun Holidays arising from the death of their son They are bound to carry the passengers safely as far as human care and foresight can provide, using
who perished with his wife on board the boat M/B Coco Beach III that capsized en route Batangas the utmost diligence of very cautious persons, with due regard for all the circumstances.
from Puerto Galera where the couple had stayed at Coco Beach Island Resort owned and operated
by respondent. Their stay was by virtue of a tour package-contract with respondent that included When a passenger dies or is injured in the discharge of a contract of carriage, it is presumed that the
transportation to and from the Resort and the point of departure in Batangas. 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.
Eight of the passengers, including petitioners’ son and his wife, died during the accident. Sun denied
any responsibility for the incident which it considered to be a fortuitous event. This statutory presumption may only be overcome by evidence that the carrier exercised
extraordinary diligence.
Petitioners allege that as a common carrier, Sun was negligent in allowing the boat to sail despite the
storm warning bulletins issued by PAGASA.

Respondent denied being a common carrier, alleging that its boats are not available to the public but
are only used as ferry resort carrier.

It also claimed to have exercised the utmost diligence in ensuring the safety of its passengers, and
that contrary to petitioners’ allegation, there was no storm as the Coast Guard in fact cleared the
voyage. M/B Coco Beach III was not filled to capacity and had sufficient life jackets for its
passengers.

RTC dismissed the complaint. CA denied the appeal holding that Sun is a private carrier which is
only required to observe ordinary diligence and that the proximate cause of the incident was a
fortuitous event.

ISSUE
Whether M/B Coco Beach III breached a contract of carriage

HELD
Respondent is a common carrier. Its ferry services are so intertwined with its business as to be
properly considered ancillary thereto.

The constancy of respondent’s 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.

In the De Guzman case, 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 carrier’s
principal business, whether it is offered on a regular basis, or whether it is offered to the general
public.
15