G.R. No.

138334 August 25, 2003

ESTELA L. CRISOSTOMO, Petitioner,
vs.
The Court of Appeals and CARAVAN TRAVEL & TOURS INTERNATIONAL, INC., Respondents.
DECISION
YNARES-SANTIAGO, J.:
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 petitioner’s niece, Meriam
Menor, was respondent company’s ticketing manager.
Pursuant to said contract, Menor went to her aunt’s residence on June 12, 1991 – a Wednesday – to deliver petitioner’s 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 petitioner’s 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 petitioner’s 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 respondent’s 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 petitioner’s 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.
After due proceedings, the trial court rendered a decision,4 the dispositive part of which reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty Three Thousand Nine Hundred Eighty Nine
Pesos and Forty Three Centavos (P53,989.43) with legal interest thereon at the rate of twelve percent (12%) per annum starting
January 16, 1992, the date when the complaint was filed;
2. Ordering the defendant to pay the plaintiff the amount of Five Thousand (P5,000.00) Pesos as and for reasonable attorney’s
fees;
3. Dismissing the defendant’s counterclaim, for lack of merit; and
4. With costs against the defendant.
SO ORDERED.5
The trial court held that respondent was negligent in erroneously advising petitioner of her departure date through its employee, Menor,
who was not presented as witness to rebut petitioner’s testimony. However, petitioner should have verified the exact date and time of
departure by looking at her ticket and should have simply not relied on Menor’s verbal representation. The trial court thus declared that
petitioner was guilty of contributory negligence and accordingly, deducted 10% from the amount being claimed as refund.
Respondent appealed to the Court of Appeals, which likewise found both parties to be at fault. However, the appellate court held that
petitioner is more negligent than respondent because as a lawyer and well-traveled person, she should have known better than to simply
rely on what was told to her. This being so, she is not entitled to any form of damages. Petitioner also forfeited her right to the "Jewels of
Europe" tour and must therefore pay respondent the balance of the price for the "British Pageant" tour. The dispositive portion of the
judgment appealed from reads as follows:
WHEREFORE, premises considered, the decision of the Regional Trial Court dated October 26, 1995 is hereby REVERSED and SET
ASIDE. A new judgment is hereby ENTERED requiring the plaintiff-appellee to pay to the defendant-appellant the amount of P12,901.00,
representing the balance of the price of the British Pageant Package Tour, the same to earn legal interest at the rate of SIX PERCENT
(6%) per annum, to be computed from the time the counterclaim was filed until the finality of this decision. After this decision becomes
final and executory, the rate of TWELVE PERCENT (12%) interest per annum shall be additionally imposed on the total obligation until
payment thereof is satisfied. The award of attorney’s fees is DELETED. Costs against the plaintiff-appellee.
SO ORDERED.6
Upon denial of her motion for reconsideration,7 petitioner filed the instant petition under Rule 45 on the following grounds:
I
It is respectfully submitted that the Honorable Court of Appeals committed a reversible error in reversing and setting aside the
decision of the trial court by ruling that the petitioner is not entitled to a refund of the cost of unavailed "Jewels of Europe" tour she
being equally, if not more, negligent than the private respondent, for in the contract of carriage the common carrier is obliged to
observe utmost care and extra-ordinary diligence which is higher in degree than the ordinary diligence required of the passenger.
Thus, even if the petitioner and private respondent were both negligent, the petitioner cannot be considered to be equally, or worse,
more guilty than the private respondent. At best, petitioner’s negligence is only contributory while the private respondent [is guilty]
of gross negligence making the principle of pari delicto inapplicable in the case;
II
The Honorable Court of Appeals also erred in not ruling that the "Jewels of Europe" tour was not indivisible and the amount paid
therefor refundable;
III
The Honorable Court erred in not granting to the petitioner the consequential damages due her as a result of breach of contract of
carriage.8
Petitioner contends that respondent did not observe the standard of care required of a common carrier when it informed her wrongly of
the flight schedule. She could not be deemed more negligent than respondent since the latter is required by law to exercise extraordinary
diligence in the fulfillment of its obligation. If she were negligent at all, the same is merely contributory and not the proximate cause of the
damage she suffered. Her loss could only be attributed to respondent as it was the direct consequence of its employee’s gross negligence.
Petitioner’s contention has no merit.
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. Respondent’s services as a travel agency
include procuring tickets and facilitating travel permits or visas as well as booking customers for tours.
While petitioner concededly bought her plane ticket through the efforts of respondent company, this does not mean that the latter ipso
facto is a common carrier. At most, respondent acted merely as an agent of the airline, with whom petitioner ultimately contracted for her
carriage to Europe. Respondent’s obligation to petitioner in this regard was simply to see to it that petitioner was properly booked with
the airline for the appointed date and time. Her transport to the place of destination, meanwhile, pertained directly to the airline.
The object of petitioner’s contractual relation with respondent is the latter’s service of arranging and facilitating petitioner’s 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.
Petitioner’s 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 latter’s 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. Petitioner’s
testimony was accepted as indubitable evidence of Menor’s 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 petitioner’s uncontradicted testimony to be sufficient proof of her
claim.
On the other hand, respondent has consistently denied that Menor was negligent and maintains that petitioner’s 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.
Respondent’s failure to present Menor as witness to rebut petitioner’s 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 Menor’s testimony, the presumption
under Rule 131, Section 3(e) would still not apply. The opportunity and possibility for obtaining Menor’s testimony belonged to both
parties, considering that Menor was not just respondent’s employee, but also petitioner’s 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 Menor’s negligence concurred with the negligence of petitioner and
resultantly caused damage to the latter. Menor’s negligence was not sufficiently proved, considering that the only evidence presented on
this score was petitioner’s 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.18
Contrary to petitioner’s claim, the evidence on record shows that respondent exercised due diligence in performing its obligations under
the contract and followed standard procedure in rendering its services to petitioner. As correctly observed by the lower court, the plane
ticket19 issued to petitioner clearly reflected the departure date and time, contrary to petitioner’s contention. The travel documents,
consisting of the tour itinerary, vouchers and instructions, were likewise delivered to petitioner two days prior to the trip. Respondent also
properly booked petitioner for the tour, prepared the necessary documents and procured the plane tickets. It arranged petitioner’s hotel
accommodation as well as food, land transfers and sightseeing excursions, in accordance with its avowed undertaking.
Therefore, it is clear that respondent performed its prestation under the contract as well as everything else that was essential to book
petitioner for the tour. Had petitioner exercised due diligence in the conduct of her affairs, there would have been no reason for her to
miss the flight. Needless to say, after the travel papers were delivered to petitioner, it became incumbent upon her to take ordinary care
of her concerns. This undoubtedly would require that she at least read the documents in order to assure herself of the important details
regarding the trip.
The negligence of the obligor in the performance of the obligation renders him liable for damages for the resulting loss suffered by the
obligee. Fault or negligence of the obligor consists in his failure to exercise due care and prudence in the performance of the obligation
as the nature of the obligation so demands.20 There is no fixed standard of diligence applicable to each and every contractual obligation
and each case must be determined upon its particular facts. The degree of diligence required depends on the circumstances of the
specific obligation and whether one has been negligent is a question of fact that is to be determined after taking into account the particulars
of each case.21 1âwphi1
The lower court declared that respondent’s employee was negligent. This factual finding, however, is not supported by the evidence on
record. While factual findings below are generally conclusive upon this court, the rule is subject to certain exceptions, as when the trial
court overlooked, misunderstood, or misapplied some facts or circumstances of weight and substance which will affect the result of the
case.22
In the case at bar, the evidence on record shows that respondent company performed its duty diligently and did not commit any contractual
breach. Hence, petitioner cannot recover and must bear her own damage.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of Appeals in CA-G.R. CV No. 51932 is
AFFIRMED. Accordingly, petitioner is ordered to pay respondent the amount of P12,901.00 representing the balance of the price of the
British Pageant Package Tour, with legal interest thereon at the rate of 6% per annum, to be computed from the time the counterclaim
was filed until the finality of this Decision. After this Decision becomes final and executory, the rate of 12% per annum shall be imposed
until the obligation is fully settled, this interim period being deemed to be by then an equivalent to a forbearance of credit.23
SO ORDERED.
G.R. No. 125948 December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in her official capacity
as City Treasurer of Batangas, respondents.

MARTINEZ, J.:
This petition for review on certiorari assails the Decision of the Court of Appeals dated November 29, 1995, in CA-G.R. SP No. 36801,
affirming the decision of the Regional Trial Court of Batangas City, Branch 84, in Civil Case No. 4293, which dismissed petitioners'
complaint for a business tax refund imposed by the City of Batangas.
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install and operate oil pipelines.
The original pipeline concession was granted in 19671 and renewed by the Energy Regulatory Board in 1992. 2
Sometime in January 1995, petitioner applied for a mayor's permit with the Office of the Mayor of Batangas City. However, before the
mayor's permit could be issued, the respondent City Treasurer required petitioner to pay a local tax based on its gross receipts for the
fiscal year 1993 pursuant to the Local Government Code 3. The respondent City Treasurer assessed a business tax on the petitioner
amounting to P956,076.04 payable in four installments based on the gross receipts for products pumped at GPS-1 for the fiscal year
1993 which amounted to P181,681,151.00. In order not to hamper its operations, petitioner paid the tax under protest in the amount of
P239,019.01 for the first quarter of 1993.
On January 20, 1994, petitioner filed a letter-protest addressed to the respondent City Treasurer, the pertinent portion of which reads:
Please note that our Company (FPIC) is a pipeline operator with a government concession granted under the Petroleum
Act. It is engaged in the business of transporting petroleum products from the Batangas refineries, via pipeline, to Sucat
and JTF Pandacan Terminals. As such, our Company is exempt from paying tax on gross receipts under Section 133 of the
Local Government Code of 1991 . . . .
Moreover, Transportation contractors are not included in the enumeration of contractors under Section 131, Paragraph (h)
of the Local Government Code. Therefore, the authority to impose tax "on contractors and other independent contractors"
under Section 143, Paragraph (e) of the Local Government Code does not include the power to levy on transportation
contractors.
The imposition and assessment cannot be categorized as a mere fee authorized under Section 147 of the Local Government
Code. The said section limits the imposition of fees and charges on business to such amounts as may be commensurate
to the cost of regulation, inspection, and licensing. Hence, assuming arguendo that FPIC is liable for the license fee, the
imposition thereof based on gross receipts is violative of the aforecited provision. The amount of P956,076.04 (P239,019.01
per quarter) is not commensurate to the cost of regulation, inspection and licensing. The fee is already a revenue raising
measure, and not a mere regulatory imposition.4
On March 8, 1994, the respondent City Treasurer denied the protest contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under Section 133 (j) of the Local Government Code. 5
On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas City a complaint 6 for tax refund with prayer for writ of
preliminary injunction against respondents City of Batangas and Adoracion Arellano in her capacity as City Treasurer. In its complaint,
petitioner alleged, inter alia, that: (1) the imposition and collection of the business tax on its gross receipts violates Section 133 of the
Local Government Code; (2) the authority of cities to impose and collect a tax on the gross receipts of "contractors and independent
contractors" under Sec. 141 (e) and 151 does not include the authority to collect such taxes on transportation contractors for, as defined
under Sec. 131 (h), the term "contractors" excludes transportation contractors; and, (3) the City Treasurer illegally and erroneously
imposed and collected the said tax, thus meriting the immediate refund of the tax paid.7
Traversing the complaint, the respondents argued that petitioner cannot be exempt from taxes under Section 133 (j) of the Local
Government Code as said exemption applies only to "transportation contractors and persons engaged in the transportation by hire and
common carriers by air, land and water." 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. 8
On October 3, 1994, the trial court rendered a decision dismissing the complaint, ruling in this wise:
. . . Plaintiff is either a contractor or other independent contractor.
. . . the exemption to tax claimed by the plaintiff has become unclear. It is a rule that tax exemptions are to be strictly
construed against the taxpayer, taxes being the lifeblood of the government. Exemption may therefore be granted only by
clear and unequivocal provisions of law.
Plaintiff claims that it is a grantee of a pipeline concession under Republic Act 387. (Exhibit A) whose concession was lately
renewed by the Energy Regulatory Board (Exhibit B). Yet neither said law nor the deed of concession grant any tax
exemption upon the plaintiff.
Even the Local Government Code imposes a tax on franchise holders under Sec. 137 of the Local Tax Code. Such being
the situation obtained in this case (exemption being unclear and equivocal) resort to distinctions or other considerations
may be of help:
1. That the exemption granted under Sec. 133 (j) encompasses only common carriers so as not
to overburden the riding public or commuters with taxes. Plaintiff is not a common carrier, but a
special carrier extending its services and facilities to a single specific or "special customer" under
a "special contract."
2. The Local Tax Code of 1992 was basically enacted to give more and effective local autonomy
to local governments than the previous enactments, to make them economically and financially
viable to serve the people and discharge their functions with a concomitant obligation to accept
 certain devolution of powers, . . . So, consistent with this policy even franchise grantees are
taxed (Sec. 137) and contractors are also taxed under Sec. 143 (e) and 151 of the Code. 9
Petitioner assailed the aforesaid decision before this Court via a petition for review. On February 27, 1995, we referred the case to the
respondent Court of Appeals for consideration and adjudication. 10 On November 29, 1995, the respondent court rendered a
decision 11 affirming the trial court's dismissal of petitioner's complaint. Petitioner's motion for reconsideration was denied on July 18,
1996. 12
Hence, this petition. At first, the petition was denied due course in a Resolution dated November 11, 1996. 13Petitioner moved for a
reconsideration which was granted by this Court in a Resolution 14 of January 22, 1997. Thus, the petition was reinstated.
Petitioner claims that the respondent Court of Appeals erred in holding that (1) the petitioner is not a common carrier or a transportation
contractor, and (2) the exemption sought for by petitioner is not clear under the law.
There is merit in the petition.
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. 15
Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is engaged in the business of
transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently,
that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The fact that petitioner
has a limited clientele does not exclude it from the definition of a common carrier. In De Guzman vs. Court of Appeals 16we ruled that:
The above article (Art. 1732, Civil Code) makes no distinction between one whose principal business activity
is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in
local idiom, as a "sideline"). Article 1732 . . . avoids making any distinction between a person or enterprise
offering transportation service on a regular or scheduled basis and one offering such service on an occasional,
 episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and one who offers services or solicits business
only from a narrow segment of the general population. We think that Article 1877 deliberately refrained from
making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the
notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended) which at
least partially supplements the law on common carriers set forth in the Civil Code. Under Section 13,
paragraph (b) of the Public Service Act, "public service" includes:
every person that now or hereafter may own, operate. manage, or control in the Philippines, for
hire or compensation, with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or
without fixed route and whatever may be its classification, freight or carrier service of any class,
express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice
plant, ice-refrigeration plant, canal, irrigation system gas, electric light heat and power, water
supply andpower petroleum, sewerage system, wire or wireless communications systems, wire
or wireless broadcasting stations and other similar public services. (Emphasis Supplied)
Also, respondent's argument that the term "common carrier" as used in Section 133 (j) of the Local Government Code refers only to
common carriers transporting goods and passengers through moving vehicles or vessels either by land, sea or water, is erroneous.
As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no distinction as to the means of
transporting, as long as it is by land, water or air. It does not provide that the transportation of the passengers or goods should be by
motor vehicle. In fact, in the United States, oil pipe line operators are considered common carriers. 17
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common carrier." Thus, Article 86 thereof
provides that:
Art. 86. Pipe line concessionaire as common carrier. — A pipe line shall have the preferential right to utilize
installations for the transportation of petroleum owned by him, but is obligated to utilize the remaining
transportation capacity pro rata for the transportation of such other petroleum as may be offered by others for
transport, and to charge without discrimination such rates as may have been approved by the Secretary of
Agriculture and Natural Resources.
Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of Article 7 thereof provides:
that everything relating to the exploration for and exploitation of petroleum . . . and everything relating to the
manufacture, refining, storage, or transportation by special methods of petroleum, is hereby declared to be
a public utility. (Emphasis Supplied)
The Bureau of Internal Revenue likewise considers the petitioner a "common carrier." In BIR Ruling No. 069-83, it declared:
. . . since [petitioner] is a pipeline concessionaire that is engaged only in transporting petroleum products, it is
considered a common carrier under Republic Act No. 387 . . . . Such being the case, it is not subject to
withholding tax prescribed by Revenue Regulations No. 13-78, as amended.
From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and, therefore, exempt from the business tax as
provided for in Section 133 (j), of the Local Government Code, to wit:
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:
xxx xxx xxx
(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.
The deliberations conducted in the House of Representatives on the Local Government Code of 1991 are illuminating:
MR. AQUINO (A). Thank you, Mr. Speaker.
Mr. Speaker, we would like to proceed to page 95, line
1. It states: "SEC. 121 [now Sec. 131]. Common Limitations on the Taxing Powers of Local Government Units."
...
MR. AQUINO (A.). Thank you Mr. Speaker.
Still on page 95, subparagraph 5, on taxes on the business of transportation. This appears to be one of those
being deemed to be exempted from the taxing powers of the local government units. May we know the reason
why the transportation business is being excluded from the taxing powers of the local government units?
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in Section 121 (now Sec. 131), line 16,
paragraph 5. It states that local government units may not impose taxes on the business of transportation,
except as otherwise provided in this code.
Now, Mr. Speaker, if the Gentleman would care to go to page 98 of Book II, one can see there that provinces
have the power to impose a tax on business enjoying a franchise at the rate of not more than one-half of 1
percent of the gross annual receipts. So, transportation contractors who are enjoying a franchise would be
subject to tax by the province. That is the exception, Mr. Speaker.
What we want to guard against here, Mr. Speaker, is the imposition of taxes by local government units on the
carrier business. Local government units may impose taxes on top of what is already being imposed by the
 National Internal Revenue Code which is the so-called "common carriers tax." We do not want a duplication
of this tax, so we just provided for an exception under Section 125 [now Sec. 137] that a province may impose
this tax at a specific rate.
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . . 18

It is clear 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."
Petitioner is already paying three (3%) percent common carrier's tax on its gross sales/earnings under the National Internal Revenue
Code. 19 To tax petitioner again on its gross receipts in its transportation of petroleum business would defeat the purpose of the Local
Government Code.
WHEREFORE, the petition is hereby GRANTED. The decision of the respondent Court of Appeals dated November 29, 1995 in CA-G.R.
SP No. 36801 is REVERSED and SET ASIDE.
SO ORDERED.
G.R. No. L-47822 December 22, 1988
PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.
Vicente D. Millora for petitioner.
Jacinto Callanta for private respondent.

FELICIANO, J.:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan. Upon gathering
sufficient quantities of such scrap material, respondent would bring such material to Manila for resale. He utilized two (2) six-wheeler
trucks which he owned for hauling the material to Manila. On the return trip to Pangasinan, respondent would load his vehicles with cargo
which various merchants wanted delivered to differing establishments in Pangasinan. For that service, respondent charged freight rates
which were commonly lower than regular commercial rates.
Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealer of General Milk Company (Philippines),
Inc. in Urdaneta, Pangasinan, contracted with respondent for the hauling of 750 cartons of Liberty filled milk from a warehouse of General
Milk in Makati, Rizal, to petitioner's establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December 1970,
respondent loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by respondent himself, while
600 cartons were placed on board the other truck which was driven by Manuel Estrada, respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached petitioner, since the truck which
carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took with them the
truck, its driver, his helper and the cargo.
On 6 January 1971, petitioner commenced action against private respondent in the Court of First Instance of Pangasinan, demanding
payment of P 22,150.00, the claimed value of the lost merchandise, plus damages and attorney's fees. Petitioner argued that private
respondent, being a common carrier, and having failed to exercise the extraordinary diligence required of him by the law, should be held
liable for the value of the undelivered goods.
In his Answer, private respondent 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.
On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to be a common carrier and holding him liable for
the value of the undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages and P 2,000.00 as attorney's fees.
On appeal before the Court of Appeals, respondent urged that the trial court had erred in considering him a common carrier; in finding
that he had habitually offered trucking services to the public; in not exempting him from liability on the ground of force majeure; and in
ordering him to pay damages and 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. Petitioner came to this Court by way of a Petition for
Review assigning as errors the following conclusions of the Court of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondent's truck was force majeure; and
3. that respondent was not liable for the value of the undelivered cargo. (Rollo, p. 111)
We consider first the issue of whether or not private respondent Ernesto Cendana may, under the facts earlier set forth, be properly
characterized as a common carrier.
The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and
one who does such carrying only as an ancillary activity (in local Idiom as "a sideline"). Article 1732 also carefully avoids making any
distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service
on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the
"general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment
of the general population. We think that Article 1733 deliberaom making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public service,"
under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on common carriers
set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:
... every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with
general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with
or without fixed route and whatever may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or
both, shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum,
sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public
services. ... (Emphasis supplied)
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 back-hauling was done on a periodic or occasional rather than regular or
scheduled manner, and even though private respondent's principal occupation was not the carriage of goods for others. There is no
dispute that private respondent charged his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates
is not relevant here.
The Court of Appeals referred to the fact that private respondent held no certificate of public convenience, and concluded he was not a
common carrier. This is palpable error. A certificate of public convenience is not a requisite for the incurring of liability under the Civil
Code provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard
to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations
and has been granted a certificate of public convenience or other franchise. To exempt private respondent from the liabilities of a common
carrier because he has not secured the necessary certificate of public convenience, would be offensive to sound public policy; that would
be to reward private respondent precisely for failing to comply with applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and property of those members of the general community who happen to
deal with such carrier. The law imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their
services and the law cannot allow a common carrier to render such duties and liabilities merely facultative by simply failing to obtain the
necessary permits and authorizations.
We turn then to the liability of private respondent as a common carrier.
Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a very high degree of care and diligence
("extraordinary diligence") in the carriage of goods as well as of passengers. The specific import of extraordinary diligence in the care of
goods transported by a common carrier is, according to Article 1733, "further expressed in Articles 1734,1735 and 1745, numbers 5, 6
and 7" of the Civil Code.
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.
It is important to point out that 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)
Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in the instant case — the hijacking of
the carrier's truck — does not fall within any of the five (5) categories of exempting causes listed in Article 1734. It would follow, therefore,
that the hijacking of the carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the private respondent
as common carrier is presumed to have been at fault or to have acted negligently. This presumption, however, may be overthrown by
proof of extraordinary diligence on the part of private respondent.
Petitioner insists that private respondent had not observed extraordinary diligence in the care of petitioner's goods. Petitioner argues that
in the circumstances of this case, private respondent should have hired a security guard presumably to ride with the truck carrying the
600 cartons of Liberty filled milk. We do not believe, however, that in the instant case, the standard of extraordinary diligence required
private respondent to retain a security guard to ride with the truck and to engage brigands in a firelight at the risk of his own life and the
lives of the driver and his helper.
The precise issue that we address here relates to the specific requirements of the duty of extraordinary diligence in the vigilance over the
goods carried in the specific context of hijacking or armed robbery.
As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given additional specification not
only by Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:
Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:
xxx xxx xxx
(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 donot act with grave or
irresistible threat, violence or force, is dispensed with or diminished; and
(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."
In the instant case, armed men held up the second truck owned by private respondent which carried petitioner's cargo. The record shows
that an information for robbery in band was filed in the Court of First Instance of Tarlac, Branch 2, in Criminal Case No. 198 entitled
"People of the Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one John Doe." There, the accused
were charged with willfully and unlawfully taking and carrying away with them the second truck, driven by Manuel Estrada and loaded
with the 600 cartons of Liberty filled milk destined for delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the trial court
shows that the accused acted with grave, if not irresistible, threat, violence or force.3 Three (3) of the five (5) hold-uppers were armed
with firearms. The robbers not only took away the truck and its cargo but also kidnapped the driver and his helper, detaining them for
several days and later releasing them in another province (in Zambales). The hijacked truck was subsequently found by the police in
Quezon City. The Court of First Instance convicted all the accused of robbery, though not of robbery in band. 4
In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the common
carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers
against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable,
provided that they shall have complied with the rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendana is not liable for the value of the
undelivered merchandise which was lost because of an event entirely beyond private respondent's control.
ACCORDINGLY, the 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.
SO ORDERED.
G.R. No. 101089. April 7, 1993.
ESTRELLITA M. BASCOS, petitioners,
vs.
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.
Modesto S. Bascos for petitioner.
Pelaez, Adriano & Gregorio for private respondent.
SYLLABUS
1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE COMMON CARRIER. — Article 1732 of the Civil Code defines
a common carrier as "(a) person, corporation or firm, or association engaged in the business of carrying or transporting passengers or
goods or both, by land, water or air, for compensation, offering their services to the public." The test to determine a common carrier is
"whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." . . . The holding of the Court in De Guzman vs. Court of Appeals
is instructive. In referring to Article 1732 of the Civil Code, it held thus: "The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in
local idiom, as a "sideline"). Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguished between a carrier offering its services to the "general public," i.e., the general community or population, and
one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1732 deliberately
refrained from making such distinctions."
2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE
ARISES; HOW PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. — Common carriers are obliged to observe
extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have been at fault or to
have acted negligently if the goods are lost, destroyed or deteriorated. There are very few instances when the presumption of negligence
does not attach and these instances are enumerated in Article 1734. In those cases where the presumption is applied, the common
carrier must prove that it exercised extraordinary diligence in order to overcome the presumption . . . The presumption of negligence was
raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent need not introduce
any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the presumption
conclusive against her.
3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT; HOW CARRIER ABSOLVED FROM LIABILITY. — In De
Guzman vs. Court of Appeals, the Court held that hijacking, not being included in the provisions of Article 1734, must be dealt with under
the provisions of Article 1735 and thus, the common carrier is presumed to have been at fault or negligent. To exculpate the carrier from
liability arising from hijacking, he must prove that the robbers or the hijackers acted with grave or irresistible threat, violence, or force.
This is in accordance with Article 1745 of the Civil Code which provides: "Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy . . . (6) That the common carrier's liability for acts committed by thieves, or
of robbers who do not act with grave or irresistible threat, violences or force, is dispensed with or diminished"; In the same case, the
Supreme Court also held that: "Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to divest or
to diminish such responsibility — even for acts of strangers like thieves or robbers, except where such thieves or robbers in fact acted
"with grave of irresistible threat, violence of force," We believe and so hold that the limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible
threat, violence or force."
4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE. — 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.
5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A FACT. — Petitioner presented no other proof of the existence
of the contract of lease. He who alleges a fact has the burden of proving it.
6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF AFFIANTS AVAILABLE AS WITNESSES. — While the affidavit of
Juanito Morden, the truck helper in the hijacked truck, was presented as evidence in court, he himself was a witness as could be gleaned
from the contents of the petition. Affidavits are not considered the best evidence if the affiants are available as witnesses.
7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS WHAT LAW DEFINES IT TO BE. — Granting that the said evidence
were not self-serving, the same were not sufficient to prove that the contract was one of lease. It must be understood that a contract is
what the law defines it to be and not what it is called by the contracting parties.
DECISION
CAMPOS, JR., J p:
This is a petition for review on certiorari of the decision ** of the Court of Appeals in "RODOLFO A. CIPRIANO, doing business under the
name CIPRIANO TRADING ENTERPRISES plaintiff-appellee, vs. ESTRELLITA M. BASCOS, doing business under the name of
BASCOS TRUCKING, defendant-appellant," C.A.-G.R. CV No. 25216, the dispositive portion of which is quoted hereunder:
"PREMISES considered, We find no reversible error in the decision appealed from, which is hereby affirmed in toto. Costs against
appellant." 1
The facts, as gathered by this Court, are as follows:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short) entered into a hauling contract 2 with Jibfair Shipping
Agency Corporation whereby the former bound itself to haul the latter's 2,000 m/tons of soya bean meal from Magallanes Drive, Del Pan,
Manila to the warehouse of Purefoods Corporation in Calamba, Laguna. To carry out its obligation, CIPTRADE, through Rodolfo Cipriano,
subcontracted with Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya bean meal worth P156,404.00 from the
Manila Port Area to Calamba, Laguna at the rate of P50.00 per metric ton. Petitioner failed to deliver the said cargo. As a consequence
of that failure, Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance with the contract which stated that:
"1. CIPTRADE shall be held liable and answerable for any loss in bags due to theft, hijacking and non-delivery or damages to the cargo
during transport at market value, . . ." 3
Cipriano demanded reimbursement from petitioner but the latter refused to pay. Eventually, Cipriano filed a complaint for a sum of money
and damages with writ of preliminary attachment 4 for breach of a contract of carriage. The prayer for a Writ of Preliminary Attachment
was supported by an affidavit 5 which contained the following allegations:
"4. That this action is one of those specifically mentioned in Sec. 1, Rule 57 the Rules of Court, whereby a writ of preliminary attachment
may lawfully issue, namely:
"(e) in an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud his creditors;"
5. That there is no sufficient security for the claim sought to be enforced by the present action;
6. That the amount due to the plaintiff in the above-entitled case is above all legal counterclaims;"
The trial court granted the writ of preliminary attachment on February 17, 1987.
In her answer, petitioner 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 in the amount of P11,000.00 for loading
the cargo; that the truck carrying the cargo was hijacked along Canonigo St., Paco, Manila on the night of October 21, 1988; that the
hijacking was immediately reported to CIPTRADE and that petitioner and the police exerted all efforts to locate the hijacked properties;
that after preliminary investigation, an information for robbery and carnapping were filed against Jose Opriano, et al.; and that hijacking,
being a force majeure, exculpated petitioner from any liability to CIPTRADE.
After trial, the trial court rendered a decision *** the dispositive portion of which reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant ordering the latter to pay the former:
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR HUNDRED FOUR PESOS (P156,404.00) as an (sic) for actual
damages with legal interest of 12% per cent per annum to be counted from December 4, 1986 until fully paid;
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for attorney's fees; and
3. The costs of the suit.
The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated March 10, 1987 filed by defendant is DENIED for being moot and
academic.
SO ORDERED." 6
Petitioner appealed to the Court of Appeals but respondent Court affirmed the trial court's judgment.
Consequently, petitioner filed this petition where she makes the following assignment of errors; to wit:
"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND
PRIVATE RESPONDENT WAS CARRIAGE OF GOODS AND NOT LEASE OF CARGO TRUCK.
II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE RESPONDENT COURT THAT THE CONTRACTUAL
RELATIONSHIP BETWEEN PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE OF GOODS IS CORRECT,
NEVERTHELESS, IT ERRED IN FINDING PETITIONER LIABLE THEREUNDER BECAUSE THE LOSS OF THE CARGO WAS DUE
TO FORCE MAJEURE, NAMELY, HIJACKING.
III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF THE TRIAL COURT THAT PETITIONER'S MOTION TO
DISSOLVE/LIFT THE WRIT OF PRELIMINARY ATTACHMENT HAS BEEN RENDERED MOOT AND ACADEMIC BY THE DECISION
OF THE MERITS OF THE CASE." 7
The petition presents the following issues for resolution: (1) was petitioner a common carrier?; and (2) was the hijacking referred to a
force majeure?
The Court of Appeals, in holding that petitioner was a common carrier, found that she admitted in her answer that she did business under
the name A.M. Bascos Trucking and that said admission dispensed with the presentation by private respondent, Rodolfo Cipriano, of
proofs that petitioner was a common carrier. The respondent Court also adopted in toto the trial court's decision that petitioner was a
common carrier, Moreover, both courts appreciated the following pieces of evidence as indicators that petitioner was a common carrier:
the fact that the truck driver of petitioner, Maximo Sanglay, received the cargo consisting of 400 bags of soya bean meal as evidenced
by a cargo receipt signed by Maximo Sanglay; the fact that the truck helper, Juanito Morden, was also an employee of petitioner; and the
fact that control of the cargo was placed in petitioner's care.
In disputing the conclusion of the trial and appellate courts that petitioner was a common carrier, she alleged in this petition that the
contract between her and Rodolfo A. Cipriano, representing CIPTRADE, was lease of the truck. She cited as evidence certain affidavits
which referred to the contract as "lease". These affidavits were made by Jesus Bascos 8 and by petitioner herself. 9 She further averred
that Jesus Bascos confirmed in his testimony his statement that the contract was a lease contract. 10 She also stated that: she was not
catering to the general public. Thus, in her answer to the amended complaint, she said that she does business under the same style of
A.M. Bascos Trucking, offering her trucks for lease to those who have cargo to move, not to the general public but to a few customers
only in view of the fact that it is only a small business. 11
We agree with the respondent Court in its finding that 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." 12 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. 13
But petitioner argues that there was only a contract of lease because they offer their services only to a select group of people and because
the private respondents, plaintiffs in the lower court, did not object to the presentation of affidavits by petitioner where the transaction was
referred to as a lease contract.
Regarding the first contention, the holding of the Court in De Guzman vs. Court of Appeals 14 is instructive. In referring to Article 1732 of
the Civil Code, it held thus:
"The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and
one who does such carrying only as an ancillary activity (in local idiom, as a "sideline"). Article 1732 also carefully avoids making any
distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service
on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the
"general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment
of the general population. We think that Article 1732 deliberately refrained from making such distinctions."
Regarding the affidavits presented by petitioner to the court, both the trial and appellate courts have dismissed them as self-serving and
petitioner contests the conclusion. We are bound by the appellate court's factual conclusions. Yet, granting that the said evidence were
not self-serving, the same were not sufficient to prove that the contract was one of lease. It must be understood that a contract is what
the law defines it to be and not what it is called by the contracting parties. 15 Furthermore, petitioner presented no other proof of the
existence of the contract of lease. He who alleges a fact has the burden of proving it. 16
Likewise, We affirm the holding of the respondent court that the loss of the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. 17 Accordingly, they
are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. 18 There are very few
instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. 19 In those cases
where the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the
presumption.
In this case, petitioner alleged that hijacking constituted force majeure which exculpated her from liability for the loss of the cargo. In De
Guzman vs. Court of Appeals, 20 the Court held that hijacking, not being included in the provisions of Article 1734, must be dealt with
under the provisions of Article 1735 and thus, the common carrier is presumed to have been at fault or negligent. To exculpate the carrier
from liability arising from hijacking, he must prove that the robbers or the hijackers acted with grave or irresistible threat, violence, or
force. This is in accordance with Article 1745 of the Civil Code which provides:
"Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violences
or force, is dispensed with or diminished;"
In the same case, 21 the Supreme Court also held that:
"Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to divest or to diminish such responsibility
— even for acts of strangers like thieves or robbers except where such thieves or robbers in fact acted with grave or irresistible threat,
violence or force. We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or force."
To establish grave and irresistible force, petitioner presented her accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and Juanito Morden's
24 "Salaysay". However, both the trial court and the Court of Appeals have concluded that these affidavits were not enough to overcome
the presumption. Petitioner's affidavit about the hijacking was based on what had been told her by Juanito Morden. It was not a first-hand
account. While it had been admitted in court for lack of objection on the part of private respondent, the respondent Court had discretion
in assigning weight to such evidence. We are bound by the conclusion of the appellate court. In a petition for review on certiorari, We are
not to determine the probative value of evidence but to resolve questions of law. Secondly, the affidavit of Jesus Bascos did not dwell on
how the hijacking took place. Thirdly, while the affidavit of Juanito Morden, the truck helper in the hijacked truck, was presented as
evidence in court, he himself was a witness as could be gleaned from the contents of the petition. Affidavits are not considered the best
evidence if the affiants are available as witnesses. 25 The subsequent filing of the information for carnapping and robbery against the
accused named in said affidavits did not necessarily mean that the contents of the affidavits were true because they were yet to be
determined in the trial of the criminal cases.
The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion,
private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary
diligence made the presumption conclusive against her.
Having affirmed the findings of the respondent Court on the substantial issues involved, We find no reason to disturb the conclusion that
the motion to lift/dissolve the writ of preliminary attachment has been rendered moot and academic by the decision on the merits.
In the light of the foregoing analysis, it is Our opinion that the petitioner's claim cannot be sustained. The petition is DISMISSED and the
decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
G.R. No. 111127 July 26, 1996
MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners,
vs.
COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS,
GONZALO GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO, RICHARD
BAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO NARCISO, ENRIQUETA
LOCSIN, FRANCIS NORMAN O. LOPES, JULIUS CAESAR, GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE
SENIEL, ROSARIO MARA-MARA, TERESITA REGALA, MELINDA TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA
NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO, CARLOS RANARIO, ROSAMARIA
T. RADOC and BERNADETTE FERRER, respondents.

MENDOZA, J.:p
This is a petition for review on certiorari of the decision of the Court of Appeals1 in CA-GR No. 28245, dated September 30, 1992, which
affirmed with modification the decision of the Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and severally to pay
damages to private respondent Amyline Antonio, and its resolution which denied petitioners' motion for reconsideration for lack of merit.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used the bus principally in connection
with a bus service for school children which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whom they hired in 1981,
after trying him out for two weeks, His job was to take school children to and from the St. Scholastica's College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with petitioners for the
transportation of 33 members of its Young Adults Ministry from Manila to La Union and back in consideration of which private respondent
paid petitioners the amount of P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the afternoon. However, as several members of the party
were late, the bus did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 o'clock in the evening. Petitioner
Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under repair, sot hat 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 Baay 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,
which he described as "siete." 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 down by a wooden seat which came off after being unscrewed. It took three persons to safely remove her from this
portion. She was in great pain and could not move.
The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said he was not familiar with the area and he could
not have seen the curve despite the care he took in driving the bus, because it was dark and there was no sign on the road. He said that
he saw the curve when he was already within 15 to 30 meters of it. He allegedly slowed down to 30 kilometers per hour, but it was too
late.
The Lingayen police investigated the incident the next day, November 3, 1984. On the basis of their finding they filed a criminal complaint
against the driver, Porfirio Cabil. The case was later filed with the Lingayen Regional Trial Court. Petitioners Fabre paid Jesus Escano
P1,500.00 for the damage to the latter's fence. On the basis of Escano's affidavit of desistance the case against petitioners Fabre was
dismissed.
Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila. As a result of the accident, she is now
suffering from paraplegia and is permanently paralyzed from the waist down. During the trial she described the operations she underwent
and adduced evidence regarding the cost of her treatment and therapy. Immediately after the accident, she was taken to the Nazareth
Hospital in Baay, Lingayen. As this hospital was not adequately equipped, she was transferred to the Sto. Niño Hospital, also in the town
of Ba-ay, where she was given sedatives. An x-ray was taken and the damage to her spine was determined to be too severe to be treated
there. She was therefore brought to Manila, first to the Philippine General Hospital and later to the Makati Medical Center where she
underwent an operation to correct the dislocation of her spine.
In its decision dated April 17, 1989, the trial court found that:
No convincing evidence was shown that the minibus was properly checked for travel to a long distance trip and that the driver was properly
screened and tested before being admitted for employment. Indeed, all the evidence presented have shown the negligent act of the
defendants which ultimately resulted to the accident subject of this case.
Accordingly, it gave judgment for private respondents holding:
Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline Antonio were the only ones who adduced
evidence in support of their claim for damages, the Court is therefore not in a position to award damages to the other plaintiffs.
WHEREFORE, premises considered, the Court hereby renders judgment against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio
Cabil y Jamil pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and said defendants are ordered to pay jointly and
severally to the plaintiffs the following amount:
1) P93,657.11 as compensatory and actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
 5) 25% of the recoverable amount as attorney's fees;
6) Costs of suit.
SO ORDERED.
The Court of Appeals affirmed the decision of the trial court with respect to Amyline Antonio but dismissed it with respect to the other
plaintiffs on the ground that they failed to prove their respective claims. The Court of Appeals modified the award of damages as follows:
1) P93,657.11 as actual damages;
2) P600,000.00 as compensatory damages;
3) P50,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorney's fees; and
6) Costs of suit.
The Court of Appeals sustained the trial court's finding that petitioner Cabil failed to exercise due care and precaution in the operation of
his vehicle considering the time and the place of the accident. The Court of Appeals held that the Fabres were themselves presumptively
negligent. Hence, this petition. Petitioners raise the following issues:
I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
II. WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY PRIVATE
RESPONDENTS.
III WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO WHAT EXTENT.
Petitioners challenge the propriety of the award of compensatory damages in the amount of P600,000.00. It is insisted that, on the
assumption that petitioners are liable an award of P600,000.00 is unconscionable and highly speculative. Amyline Antonio testified that
she was a casual employee of a company called "Suaco," earning P1,650.00 a month, and a dealer of Avon products, earning an average
of P1,000.00 monthly. Petitioners contend that as casual employees do not have security of tenure, the award of P600,000.00, considering
Amyline Antonio's earnings, is without factual basis as there is no assurance that she would be regularly earning these amounts.
With the exception of the award of damages, the petition is devoid of merit.
First, it is unnecessary for our purpose to determine whether to decide this case on the theory that petitioners are liable for breach of
contract of carriage or culpa contractual or on the theory of quasi delict or culpa aquiliana as both the Regional Trial Court and the Court
of Appeals held, for although the relation of passenger and carrier is "contractual both in origin and nature," nevertheless "the act that
breaks the contract may be also a tort." 2 In either case, the question is whether the bus driver, petitioner Porfirio Cabil, was negligent.
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. These factual
findings of the two courts we regard as final and conclusive, supported as they are by the evidence. 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. He averred these facts to justify
his failure to see that there lay a sharp curve ahead. 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. 3 By then it was too late for him to avoid falling off
the road. 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 4 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.
Considering the foregoing — the fact that it was raining and the road was slippery, that it was dark, that he drove his bus at 50 kilometers
an hour when even on a good day the normal speed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, 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 supervisions 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. 5 Due diligence in supervision, on the
other hand, requires the formulation of rules and regulations for the guidance of employees and issuance of proper instructions as well
as actual implementation and monitoring of consistent compliance with the rules. 6
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. 7They had hired him only after a two-
week apprenticeship. They had hired him only after a two-week apprenticeship. They had tested him for certain matters, such as whether
he could remember the names of the children he would be taking to school, which were irrelevant to his qualification to drive on a long
distance travel, especially considering that the trip to La Union was his first. The existence of hiring procedures and supervisory policies
cannot be casually invoked to overturn the presumption of negligence on the part of an employer. 8
Petitioners argue that they are not liable because (1) an earlier departure (made impossible by the congregation's delayed meeting) could
have a averted the mishap and (2) under the contract, the WWCF was directly responsible for the conduct of the trip. Neither of these
contentions hold water. The hour of departure had not been fixed. Even if it had been, the delay did not bear directly on the cause of the
accident. With respect to the second contention, it was held in an early case that:
[A] person who hires a public automobile and gives the driver directions as to the place to which he wishes to be conveyed, but exercises
no other control over the conduct of the driver, is not responsible for acts of negligence of the latter or prevented from recovering for
injuries suffered from a collision between the automobile and a train, caused by the negligence or the automobile driver. 9
As already stated, this case actually 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. As this Court has held: 10
 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 (in local idiom, as "a sideline"). Article 1732 also
carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one
who offers services or solicits business only from a narrow segment of the general population. We think that Article 1732
deliberately refrained from making such distinctions.
As common carriers, the Fabres were found 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 exercise 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 willful 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.
This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a
family in the selection and supervision of their employees.
The same circumstances detailed above, supporting the finding of the trial court and of the appellate court that petitioners are liable under
Arts. 2176 and 2180 for quasi delict, fully justify findings them guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of
the Civil Code.
Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we think the Court of Appeals erred in increasing the
amount of compensatory damages because private respondents did not question this award as inadequate. 11 To the contrary, the award
of P500,000.00 for compensatory damages which the Regional Trial Court made is reasonable considering the contingent nature of her
income as a casual employee of a company and as distributor of beauty products and the fact that the possibility that she might be able
to work again has not been foreclosed. In fact she testified that one of her previous employers had expressed willingness to employ her
again.
With respect to the other awards, while the decisions of the trial court and the Court of Appeals do not sufficiently indicate the factual and
legal basis for them, we find that they are nevertheless supported by evidence in the records of this case. Viewed as an action for quasi
delict, this case falls squarely within the purview of Art. 2219(2) providing for the payment of moral damages in cases of quasi delict. On
the theory that petitioners are liable for breach of contract of carriage, the award of moral damages is authorized by Art. 1764, in relation
to Art. 2220, since Cabil's gross negligence amounted to bad faith.12 Amyline Antonio's testimony, as well as the testimonies of her father
and copassengers, fully establish the physical suffering and mental anguish she endured as a result of the injuries caused by petitioners'
negligence.
The award of exemplary damages and attorney's fees was also properly made. However, for the same reason that it was error for the
appellate court to increase the award of compensatory damages, we hold that it was also error for it to increase the award of moral
damages and reduce the award of attorney's fees, inasmuch as private respondents, in whose favor the awards were made, have not
appealed. 13
As above stated, the decision of the Court of Appeals can be sustained either on the theory of quasi delict or on that of breach of contract.
The question is whether, as the two courts below held, petitioners, who are the owners and driver of the bus, may be made to respond
jointly and severally to private respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v. Court of Appeals, 14 on facts similar
to those in this case, this Court held the bus company and the driver jointly and severally liable for damages for injuries suffered by a
passenger. Again, in Bachelor Express, Inc. v. Court of
Appeals 15 a driver found negligent in failing to stop the bus in order to let off passengers when a fellow passenger ran amuck, as a result
of which the passengers jumped out of the speeding bus and suffered injuries, was held also jointly and severally liable with the bus
company to the injured passengers.
The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff was riding concurred
with the negligence of a third party who was the driver of another vehicle, thus causing an accident. In Anuran v. Buño, 16 Batangas
Laguna Tayabas Bus Co. v. Intermediate Appellate Court, 17 and Metro Manila Transit Corporation v. Court of Appeals, 18 the bus
company, its driver, the operator of the other vehicle and the driver of the vehicle were jointly and severally held liable to the injured
passenger or the latters' heirs. The basis of this allocation of liability was explained in Viluan v. Court of Appeals, 19 thus:
Nor should it make any difference that the liability of petitioner [bus owner] springs from contract while that of respondents
[owner and driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez,
56 Phil. 177, that in case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and
of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for
damages. Some members of the Court, though, are of the view that under the circumstances they are liable on quasi-
delict. 20
It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals 21 this Court exonerated the jeepney driver from liability to the injured
passengers and their families while holding the owners of the jeepney jointly and severally liable, but that is because that case was
expressly tried and decided exclusively on the theory of culpa contractual. As this Court there explained:
The trial court was therefore right in finding that Manalo (the driver) and spouses Mangune and Carreon (the jeepney owners) were
negligent. However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous. The driver
cannot be held jointly and severally liable with carrier in case of breach of the contract of carriage. The rationale behind this is readily
discernible. Firstly, the contract of carriage is between the carrier is exclusively responsible therefore to the passenger, even if such
breach be due to the negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA
742). 22
As in the case of BLTB, private respondents in this case and her coplaintiffs did not stake out their claim against the carrier and the driver
exclusively on one theory, much less on that of breach of contract alone. After all, it was permitted for them to allege alternative causes
of action and join as many parties as may be liable on such causes of action 23 so long as private respondent and her coplaintiffs do not
recover twice for the same injury. What is clear from the cases is the intent of the plaintiff there to recover from both the carrier and the
driver, thus, justifying the holding that the carrier and the driver were jointly and severally liable because their separate and distinct acts
concurred to produce the same injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as to award of damages. Petitioners are
ORDERED to PAY jointly and severally the private respondent Amyline Antonio the following amounts:
1) P93,657.11 as actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorney's fees; and
6) costs of suit.
SO ORDERED.
G.R. No. 186312 June 29, 2010
SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners,
vs.
SUN HOLIDAYS, INC., Respondent.
DECISION
CARPIO MORALES, J.:
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 Ruelito’s 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
₱4,000,000.
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 ₱10,000 to petitioners upon their signing of a waiver.
As petitioners declined respondent’s offer, they filed the Complaint, as earlier reflected, alleging that respondent, as a common carrier,
was guilty of negligence in allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by the Philippine
Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) as early as 5:00 a.m. of September 11, 2000. 6
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, 2000 as 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 attorney’s fees and litigation expenses amounting to not less than ₱300,000.
Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily requires four conditions to be met before a boat is
allowed to sail, to wit: (1) the sea is calm, (2) there is clearance from the Coast Guard, (3) there is clearance from the captain and (4)
there is clearance from the Resort’s assistant manager.8 He added that M/B Coco Beach III met all four conditions on September 11,
2000,9 but a subasco or squall, characterized by strong winds and big waves, suddenly occurred, causing the boat to capsize.10
By Decision of February 16, 2005,11 Branch 267 of the Pasig RTC dismissed petitioners’ Complaint and respondent’s Counterclaim.
Petitioners’ Motion for Reconsideration having been denied by Order dated September 2, 2005, 12 they appealed to the Court of Appeals.
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.
Petitioners’ Motion for Reconsideration having been denied by Resolution dated January 16, 2009, 14 they filed the present Petition for
Review.15
Petitioners maintain the position they took before the trial court, adding that respondent is a common carrier since by its tour package,
the transporting of its guests is an integral part of its resort business. They inform that another division of the appellate court in fact held
respondent liable for damages to the other survivors of the incident.
Upon the other hand, respondent contends that petitioners failed to present evidence to prove that it is a common carrier; that the Resort’s
ferry services for guests cannot be considered as ancillary to its business as no income is derived therefrom; that it exercised extraordinary
diligence as shown by the conditions it had imposed before allowing M/B Coco Beach III to sail; that the incident was caused by a
fortuitous event without any contributory negligence on its part; and that the other case wherein the appellate court held it liable for
damages involved different plaintiffs, issues and evidence.16
The petition is impressed with merit.
Petitioners correctly rely on De Guzman v. Court of Appeals17 in characterizing respondent as a common carrier.
The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and
one who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any
distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service
on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow
segment of the general population. We think that Article 1733 deliberately refrained from making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public service,"
under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on common carriers
set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:
. . . every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad,
street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever
may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other similar public services . . .18 (emphasis and underscoring
supplied.)
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 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.
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 respondent’s 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 carrier’s 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. Respondent’s 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 people’s 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.
Respondent’s insistence that the incident was caused by a fortuitous event does not impress either.
The elements of a "fortuitous event" are: (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.24
To fully free a common carrier from any liability, the fortuitous event must have been the proximate and only causeof the loss. And it
should have exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the fortuitous event. 25
Respondent cites the squall that occurred during the voyage as the fortuitous event that overturned M/B Coco Beach III. As reflected
above, however, the occurrence of squalls was expected under the weather condition of September 11, 2000. Moreover, evidence shows
that M/B Coco Beach III suffered engine trouble before it capsized and sank.26 The incident was, therefore, not completely free from
human intervention.
The Court need not belabor how respondent’s evidence likewise fails to demonstrate that it exercised due diligence to prevent or minimize
the loss before, during and after the occurrence of the squall.
Article 176427 vis-à-vis Article 220628 of the Civil Code holds the common carrier in breach of its contract of carriage that results in the
death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity and (3) moral damages.
Petitioners are entitled to indemnity for the death of Ruelito which is fixed at ₱50,000. 29
As for damages representing unearned income, the formula for its computation is:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).
Life expectancy is determined in accordance with the formula:
2 / 3 x [80 — age of deceased at the time of death]30
The first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 — age at death]) adopted in the American Expectancy
Table of Mortality or the Actuarial of Combined Experience Table of Mortality. 31
The second factor is computed by multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less expenses
necessary in the creation of such earnings or income and less living and other incidental expenses. 32 The loss is not equivalent to the
entire earnings of the deceased, but only such portion as he would have used to support his dependents or heirs. Hence, to be deducted
from his gross earnings are the necessary expenses supposed to be used by the deceased for his own needs. 33
In computing the third factor – necessary living expense, Smith Bell Dodwell Shipping Agency Corp. v. Borja34teaches that when, as in
this case, there is no showing that the living expenses constituted the smaller percentage of the gross income, the living expenses are
fixed at half of the gross income.
Applying the above guidelines, the Court determines Ruelito's life expectancy as follows:

Life expectancy = 2/3 x [80 - age of deceased at the time of death]

2/3 x [80 - 28]
2/3 x [52]

Life expectancy = 35

Documentary evidence shows that Ruelito was earning a basic monthly salary of $900 35 which, when converted to Philippine peso
applying the annual average exchange rate of $1 = ₱44 in 2000,36 amounts to ₱39,600. Ruelito’s net earning capacity is thus computed
as follows:
 Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).
= 35 x (₱475,200 - ₱237,600)
= 35 x (₱237,600)

Net Earning Capacity = ₱8,316,000

Respecting the award of moral damages, since respondent common carrier’s breach of contract of carriage resulted in the death of
petitioners’ son, following Article 1764 vis-à-vis Article 2206 of the Civil Code, petitioners are entitled to moral damages.
Since respondent failed to prove that it exercised the extraordinary diligence required of common carriers, it is presumed to have acted
recklessly, thus warranting the award too of exemplary damages, which are granted in contractual obligations if the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.37
Under the circumstances, it is reasonable to award petitioners the amount of ₱100,000 as moral damages and ₱100,000 as exemplary
damages.381avvphi1
Pursuant to Article 220839 of the Civil Code, attorney's fees may also be awarded where exemplary damages are awarded. The Court
finds that 10% of the total amount adjudged against respondent is reasonable for the purpose.
Finally, Eastern Shipping Lines, Inc. v. Court of Appeals40 teaches that when an obligation, regardless of its source, i.e., law, contracts,
quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for payment of interest in the concept of actual
and compensatory damages, subject to the following rules, to wit —
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the
interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest
from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed
from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand
is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially
(Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest
shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed
to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount
finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a forbearance of credit. (emphasis supplied).
Since the amounts payable by respondent have been determined with certainty only in the present petition, the interest due shall be
computed upon the finality of this decision at the rate of 12% per annum until satisfaction, in accordance with paragraph number 3 of the
immediately cited guideline in Easter Shipping Lines, Inc.
WHEREFORE, the Court of Appeals Decision of August 19, 2008 is REVERSED and SET ASIDE. Judgment is rendered in favor of
petitioners ordering respondent to pay petitioners the following: (1) ₱50,000 as indemnity for the death of Ruelito Cruz; (2) ₱8,316,000
as indemnity for Ruelito’s loss of earning capacity; (3) ₱100,000 as moral damages; (4) ₱100,000 as exemplary damages; (5) 10% of the
total amount adjudged against respondent as attorneys fees; and (6) the costs of suit.
The total amount adjudged against respondent shall earn interest at the rate of 12% per annum computed from the finality of this decision
until full payment.
SO ORDERED.
G.R. No. 179446 January 10, 2011
LOADMASTERS CUSTOMS SERVICES, INC., Petitioner,
vs.
GLODEL BROKERAGE CORPORATION and R&B INSURANCE CORPORATION, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the August 24, 2007 Decision 1 of the Court
of Appeals (CA) in CA-G.R. CV No. 82822, entitled "R&B Insurance Corporation v. Glodel Brokerage Corporation and Loadmasters
Customs Services, Inc.," which held petitioner Loadmasters Customs Services, Inc. (Loadmasters) liable to respondent Glodel Brokerage
Corporation (Glodel) in the amount of ₱1,896,789.62 representing the insurance indemnity which R&B Insurance Corporation (R&B
Insurance) paid to the insured-consignee, Columbia Wire and Cable Corporation (Columbia).
THE FACTS:
On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in favor of Columbia to insure the shipment of 132 bundles
of electric copper cathodes against All Risks. On August 28, 2001, the cargoes were shipped on board the vessel "Richard Rey" from
Isabela, Leyte, to Pier 10, North Harbor, Manila. They arrived on the same date.
Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and the subsequent delivery to its
warehouses/plants. Glodel, in turn, engaged the services of Loadmasters for the use of its delivery trucks to transport the cargoes to
Columbia’s warehouses/plants in Bulacan and Valenzuela City.
The goods were loaded on board twelve (12) trucks owned by Loadmasters, driven by its employed drivers and accompanied by its
employed truck helpers. Six (6) truckloads of copper cathodes were to be delivered to Balagtas, Bulacan, while the other six (6) truckloads
were destined for Lawang Bato, Valenzuela City. The cargoes in six truckloads for Lawang Bato were duly delivered in Columbia’s
warehouses there. Of the six (6) trucks en route to Balagtas, Bulacan, however, only five (5) reached the destination. One (1) truck,
loaded with 11 bundles or 232 pieces of copper cathodes, failed to deliver its cargo.
Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered but without the copper cathodes. Because of this incident,
Columbia filed with R&B Insurance a claim for insurance indemnity in the amount of ₱1,903,335.39. After the requisite investigation and
adjustment, R&B Insurance paid Columbia the amount of ₱1,896,789.62 as insurance indemnity.
R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel before the Regional Trial Court, Branch
14, Manila (RTC), docketed as Civil Case No. 02-103040. It sought reimbursement of the amount it had paid to Columbia for the loss of
the subject cargo. It claimed that it had been subrogated "to the right of the consignee to recover from the party/parties who may be held
legally liable for the loss."2
On November 19, 2003, the RTC rendered a decision3 holding Glodel liable for damages for the loss of the subject cargo and dismissing
Loadmasters’ counterclaim for damages and attorney’s fees against R&B Insurance. The dispositive portion of the decision reads:
WHEREFORE, all premises considered, the plaintiff having established by preponderance of evidence its claims against defendant Glodel
Brokerage Corporation, judgment is hereby rendered ordering the latter:
1. To pay plaintiff R&B Insurance Corporation the sum of ₱1,896,789.62 as actual and compensatory damages, with interest from
the date of complaint until fully paid;
2. To pay plaintiff R&B Insurance Corporation the amount equivalent to 10% of the principal amount recovered as and for attorney’s
fees plus ₱1,500.00 per appearance in Court;
3. To pay plaintiff R&B Insurance Corporation the sum of ₱22,427.18 as litigation expenses.
WHEREAS, the defendant Loadmasters Customs Services, Inc.’s counterclaim for damages and attorney’s fees against plaintiff are
hereby dismissed.
With costs against defendant Glodel Brokerage Corporation.
SO ORDERED.4
Both R&B Insurance and Glodel appealed the RTC decision to the CA.
On August 24, 2007, the CA rendered the assailed decision which reads in part:
Considering that appellee is an agent of appellant Glodel, whatever liability the latter owes to appellant R&B Insurance Corporation as
insurance indemnity must likewise be the amount it shall be paid by appellee Loadmasters.
WHEREFORE, the foregoing considered, the appeal is PARTLY GRANTED in that the appellee Loadmasters is likewise held liable to
appellant Glodel in the amount of ₱1,896,789.62 representing the insurance indemnity appellant Glodel has been held liable to appellant
R&B Insurance Corporation.
Appellant Glodel’s appeal to absolve it from any liability is herein DISMISSED.
SO ORDERED.5
Hence, Loadmasters filed the present petition for review on certiorari before this Court presenting the following
ISSUES
1. Can Petitioner Loadmasters be held liable to Respondent Glodel in spite of the fact that the latter respondent Glodel
did not file a cross-claim against it (Loadmasters)?
2. Under the set of facts established and undisputed in the case, can petitioner Loadmasters be legally considered as an
Agent of respondent Glodel?6
To totally exculpate itself from responsibility for the lost goods, Loadmasters argues that it cannot be considered an agent of Glodel
because it never represented the latter in its dealings with the consignee. At any rate, it further contends that Glodel has no recourse
against it for its (Glodel’s) failure to file a cross-claim pursuant to Section 2, Rule 9 of the 1997 Rules of Civil Procedure.
Glodel, in its Comment,7 counters that Loadmasters is liable to it under its cross-claim because the latter was grossly negligent in the
transportation of the subject cargo. With respect to Loadmasters’ claim that it is already estopped from filing a cross-claim, Glodel insists
that it can still do so even for the first time on appeal because there is no rule that provides otherwise. Finally, Glodel argues that its
relationship with Loadmasters is that of Charter wherein the transporter (Loadmasters) is only hired for the specific job of delivering the
merchandise. Thus, the diligence required in this case is merely ordinary diligence or that of a good father of the family, not the
extraordinary diligence required of common carriers.
R&B Insurance, for its part, claims that Glodel is deemed to have interposed a cross-claim against Loadmasters because it was not
prevented from presenting evidence to prove its position even without amending its Answer. As to the relationship between Loadmasters
and Glodel, it contends that a contract of agency existed between the two corporations. 8
Subrogation is the substitution of one person in the place of another with reference to a lawful claim or right, so that he who is substituted
succeeds to the rights of the other in relation to a debt or claim, including its remedies or securities. 9 Doubtless, R&B Insurance is
subrogated to the rights of the insured to the extent of the amount it paid the consignee under the marine insurance, as provided under
Article 2207 of the Civil Code, which reads:
ART. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured
against the wrong-doer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover
the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.
As subrogee of the rights and interest of the consignee, R&B Insurance has the right to seek reimbursement from either Loadmasters or
Glodel or both for breach of contract and/or tort.
The issue now is who, between Glodel and Loadmasters, is liable to pay R&B Insurance for the amount of the indemnity it paid Columbia.
At the outset, it is well to resolve the issue of whether Loadmasters and Glodel are common carriers to determine their liability for the loss
of the subject cargo. Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in
the business of carrying or transporting passenger or goods, or both by land, water or air for compensation, offering their services to the
public.
Based on the aforecited definition, Loadmasters is a common carrier because it is engaged in the business of transporting goods by land,
through its trucking service. It is a common carrier as distinguished from a private carrier wherein the carriage is generally undertaken by
special agreement and it does not hold itself out to carry goods for the general public.10 The distinction is significant in the sense that "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."11
In the present case, there is no indication that the undertaking in the contract between Loadmasters and Glodel was private in character.
There is no showing that Loadmasters solely and exclusively rendered services to Glodel.
In fact, Loadmasters admitted that it is a common carrier.12
In the same vein, Glodel is also considered a common carrier within the context of Article 1732. In its Memorandum, 13 it states that it "is
a corporation duly organized and existing under the laws of the Republic of the Philippines and is engaged in the business of customs
brokering." It cannot be considered otherwise because as held by this Court in Schmitz Transport & Brokerage Corporation v. Transport
Venture, Inc.,14 a customs broker is also regarded as a common carrier, the transportation of goods being an integral part of its business.
Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and for reasons of public policy,
to observe the extraordinary diligence in the vigilance over the goods transported by them according to all the circumstances of such
case, as required by Article 1733 of the Civil Code. When the Court speaks of extraordinary diligence, it is that extreme measure of care
and caution which persons of unusual prudence and circumspection observe for securing and preserving their own property or
rights.15 This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the
shipper who is at the mercy of the common carrier once the goods have been lodged for shipment. 16 Thus, in case of loss of the goods,
the common carrier is presumed to have been at fault or to have acted negligently. 17 This presumption of fault or negligence, however,
may be rebutted by proof that the common carrier has observed extraordinary diligence over the goods.
With respect to the time frame of this extraordinary responsibility, the Civil Code provides that the exercise of extraordinary diligence 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. 18
Premises considered, the Court is of the view that both Loadmasters and Glodel are jointly and severally liable to R & B Insurance for the
loss of the subject cargo. Under Article 2194 of the New Civil Code, "the responsibility of two or more persons who are liable for a quasi-
delict is solidary."
Loadmasters’ claim that it was never privy to the contract entered into by Glodel with the consignee Columbia or R&B Insurance as
subrogee, is not a valid defense. It may not have a direct contractual relation with Columbia, but it is liable for tort under the provisions of
Article 2176 of the Civil Code on quasi-delicts which expressly provide:
ART. 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.
Pertinent is the ruling enunciated in the case of Mindanao Terminal and Brokerage Service, Inc. v. Phoenix Assurance Company of New
York,/McGee & Co., Inc.19 where this Court held that a tort may arise despite the absence of a contractual relationship, to wit:
We agree with the Court of Appeals that the complaint filed by Phoenix and McGee against Mindanao Terminal, from which the present
case has arisen, states a cause of action. The present action is based on quasi-delict, arising from the negligent and careless loading
and stowing of the cargoes belonging to Del Monte Produce. Even assuming that both Phoenix and McGee have only been subrogated
in the rights of Del Monte Produce, who is not a party to the contract of service between Mindanao Terminal and Del Monte, still the
insurance carriers may have a cause of action in light of the Court’s consistent ruling that the act that breaks the contract may be also a
tort. In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract. In the present case, Phoenix
and McGee are not suing for damages for injuries arising from the breach of the contract of service but from the alleged negligent
manner by which Mindanao Terminal handled the cargoes belonging to Del Monte Produce. Despite the absence of contractual
relationship between Del Monte Produce and Mindanao Terminal, the allegation of negligence on the part of the defendant should be
sufficient to establish a cause of action arising from quasi-delict. [Emphases supplied]
In connection therewith, Article 2180 provides:
ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons
for whom one is responsible.
xxxx
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.
It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose employees (truck driver and helper) were
instrumental in the hijacking or robbery of the shipment. As employer, Loadmasters should be made answerable for the damages caused
by its employees who acted within the scope of their assigned task of delivering the goods safely to the warehouse.
Whenever an employee’s negligence causes damage or injury to another, there instantly arises a presumption juris tantum that the
employer failed to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its
employees.20 To avoid liability for a quasi-delict committed by its employee, an employer must overcome the presumption by presenting
convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee. 21 In
this regard, Loadmasters failed.
Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure that Loadmasters would fully comply with
the undertaking to safely transport the subject cargo to the designated destination. It should have been more prudent in entrusting the
goods to Loadmasters by taking precautionary measures, such as providing escorts to accompany the trucks in delivering the cargoes.
Glodel should, therefore, be held liable with Loadmasters. Its defense of force majeure is unavailing.
At this juncture, the Court clarifies that there exists no principal-agent relationship between Glodel and Loadmasters, as erroneously
found by the CA. Article 1868 of the Civil Code provides: "By the contract of agency a person binds himself to render some service or to
do something in representation or on behalf of another, with the consent or authority of the latter." The elements of a contract of agency
are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation
to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority.22
Accordingly, there can be no contract of agency between the parties. Loadmasters never represented Glodel. Neither was it ever
authorized to make such representation. It is a settled rule that the basis for agency is representation, that is, the agent acts for and on
behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally
executed by the principal. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from
his words or actions, while on the part of the agent, there must be an intention to accept the appointment and act on it. 23 Such mutual
intent is not obtaining in this case.
What then is the extent of the respective liabilities of Loadmasters and Glodel? Each wrongdoer is liable for the total damage suffered by
R&B Insurance. Where there are several causes for the resulting damages, a party is not relieved from liability, even partially. It is sufficient
that the negligence of a party is an efficient cause without which the damage would not have resulted. It is no defense to one of the
concurrent tortfeasors that the damage would not have resulted from his negligence alone, without the negligence or wrongful acts of the
other concurrent tortfeasor. As stated in the case of Far Eastern Shipping v. Court of Appeals,24
X x x. Where several causes producing an injury are concurrent and each is an efficient cause without which the injury would not have
happened, the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons
although under the circumstances of the case, it may appear that one of them was more culpable, and that the duty owed by them to the
injured person was not the same. No actor's negligence ceases to be a proximate cause merely because it does not exceed the negligence
of other actors. Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause of the injury.
There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for the total damage. Where the
concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination the direct
and proximate cause of a single injury to a third person, it is impossible to determine in what proportion each contributed to the injury
and either of them is responsible for the whole injury. Where their concurring negligence resulted in injury or damage to a third party,
they become joint tortfeasors and are solidarily liable for the resulting damage under Article 2194 of the Civil Code. [Emphasis supplied]
The Court now resolves the issue of whether Glodel can collect from Loadmasters, it having failed to file a cross-claim against the
latter.1avvphi1
Undoubtedly, Glodel has a definite cause of action against Loadmasters for breach of contract of service as the latter is primarily liable
for the loss of the subject cargo. In this case, however, it cannot succeed in seeking judicial sanction against Loadmasters because the
records disclose that it did not properly interpose a cross-claim against the latter. Glodel did not even pray that Loadmasters be liable for
any and all claims that it may be adjudged liable in favor of R&B Insurance. Under the Rules, a compulsory counterclaim, or a cross-
claim, not set up shall be barred.25Thus, a cross-claim cannot be set up for the first time on appeal.
For the consequence, Glodel has no one to blame but itself. The Court cannot come to its aid on equitable grounds. "Equity, which has
been aptly described as ‘a justice outside legality,’ is applied only in the absence of, and never against, statutory law or judicial rules of
procedure."26 The Court cannot be a lawyer and take the cudgels for a party who has been at fault or negligent.
WHEREFORE, the petition is PARTIALLY GRANTED. The August 24, 2007 Decision of the Court of Appeals is MODIFIED to read as
follows:
WHEREFORE, judgment is rendered declaring petitioner Loadmasters Customs Services, Inc. and respondent Glodel Brokerage
Corporation jointly and severally liable to respondent R&B Insurance Corporation for the insurance indemnity it paid to consignee
Columbia Wire & Cable Corporation and ordering both parties to pay, jointly and severally, R&B Insurance Corporation a] the amount of
₱1,896,789.62 representing the insurance indemnity; b] the amount equivalent to ten (10%) percent thereof for attorney’s fees; and c]
the amount of ₱22,427.18 for litigation expenses.
The cross-claim belatedly prayed for by respondent Glodel Brokerage Corporation against petitioner Loadmasters Customs Services,
Inc. is DENIED.
SO ORDERED.
G.R. No. 150255. April 22, 2005
SCHMITZ TRANSPORT & BROKERAGE CORPORATION, Petitioners,
vs.
TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL now
INCHCAPE SHIPPING SERVICES, Respondents.
DECISION
CARPIO-MORALES, J.:
On petition for review is the June 27, 2001 Decision1 of the Court of Appeals, as well as its Resolution2 dated September 28, 2001 denying
the motion for reconsideration, which affirmed that of Branch 21 of the Regional Trial Court (RTC) of Manila in Civil Case No. 92-
631323 holding petitioner Schmitz Transport Brokerage Corporation (Schmitz Transport), together with Black Sea Shipping Corporation
(Black Sea), represented by its ship agent Inchcape Shipping Inc. (Inchcape), and Transport Venture (TVI), solidarily liable for the loss of
37 hot rolled steel sheets in coil that were washed overboard a barge.
On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V "Alexander Saveliev" (a
vessel of Russian registry and owned by Black Sea) 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),4 were insured against all risks with Industrial Insurance Company Ltd. (Industrial Insurance) under Marine Policy No. M-91-3747-
TIS.5
The vessel arrived at the port of Manila on October 24, 1991 and the Philippine Ports Authority (PPA) assigned it a place of berth at the
outside breakwater at the Manila South Harbor.6
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,7 in turn engaged the services of TVI to send a barge and tugboat
at shipside.
On October 26, 1991, around 4:30 p.m., TVI’s tugboat "Lailani" towed the barge "Erika V" to shipside.8
By 7:00 p.m. also of October 26, 1991, the tugboat, after positioning the barge alongside the vessel, left and returned to the port
terminal.9 At 9:00 p.m., 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.10 No tugboat pulled the barge back to the pier, however.
At around 5:30 a.m. of October 27, 1991, due to strong waves, 11 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. 12 At 7:00 a.m., a tugboat finally arrived
to pull the already empty and damaged barge back to the pier.13
Earnest efforts on the part of both the consignee Little Giant and Industrial Insurance to recover the lost cargoes proved futile.14
Little Giant thus filed a formal claim against Industrial Insurance which paid it the amount of ₱5,246,113.11. Little Giant thereupon
executed a subrogation receipt15 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, for the recovery of the amount it paid to Little Giant plus adjustment fees, attorney’s fees, and
litigation expenses.16
Industrial Insurance faulted the defendants for undertaking the unloading of the cargoes while typhoon signal No. 1 was raised in Metro
Manila.17
By Decision of November 24, 1997, Branch 21 of the RTC held all the defendants negligent for unloading the cargoes outside of the
breakwater notwithstanding the storm signal.18 The dispositive portion of the decision reads:
WHEREFORE, premises considered, the Court renders judgment in favor of the plaintiff, ordering the defendants to pay plaintiff jointly
and severally the sum of ₱5,246,113.11 with interest from the date the complaint was filed until fully satisfied, as well as the sum of
₱5,000.00 representing the adjustment fee plus the sum of 20% of the amount recoverable from the defendants as attorney’s fees plus
the costs of suit. The counterclaims and cross claims of defendants are hereby DISMISSED for lack of [m]erit. 19
To the trial court’s decision, the defendants Schmitz Transport and TVI filed a joint motion for reconsideration assailing the finding that
they are common carriers and the award of excessive attorney’s fees of more than ₱1,000,000. And they argued that they were not
motivated by gross or evident bad faith and that the incident was caused by a fortuitous event. 20
By resolution of February 4, 1998, the trial court denied the motion for reconsideration. 21
All the defendants appealed to the Court of Appeals which, by decision of June 27, 2001, affirmed in toto the decision of the trial court, 22 it
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, 23 and Schmitz Transport for entering into a contract with Little Giant to
transport the cargoes from ship to port for a fee.24
In holding all the defendants solidarily liable, the appellate court ruled that "each one was essential such that without each other’s
contributory negligence the incident would not have happened and so much so that the person principally liable cannot be distinguished
with sufficient accuracy."25
In discrediting the defense of fortuitous event, the appellate court held that "although defendants obviously had nothing to do with the
force of nature, they however had control of where to anchor the vessel, where discharge will take place and even when the discharging
will commence."26
The defendants’ respective motions for reconsideration having been denied by Resolution 27 of September 28, 2001, Schmitz Transport
(hereinafter referred to as petitioner) filed the present petition against TVI, Industrial Insurance and Black Sea.
Petitioner asserts that in chartering the barge and tugboat of TVI, it was acting for its principal, consignee Little Giant, hence, the
transportation contract was by and between Little Giant and TVI. 28
By Resolution of January 23, 2002, herein respondents Industrial Insurance, Black Sea, and TVI were required to file their respective
Comments.29
By its Comment, Black Sea argued that the cargoes were received by the consignee through petitioner in good order, hence, it cannot
be faulted, it having had no control and supervision thereover.30
For its part, TVI maintained that it acted as a passive party as it merely received the cargoes and transferred them unto the barge upon
the instruction of petitioner.31
In issue then are:
(1) Whether the loss of the cargoes was due to a fortuitous event, independent of any act of negligence on the part of petitioner Black
Sea and TVI, and
(2) If there was negligence, whether liability for the loss may attach to Black Sea, petitioner and TVI.
When a fortuitous event occurs, Article 1174 of the Civil Code absolves any party from any and all liability arising therefrom:
ART. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the
obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though
foreseen, were inevitable.
In order, to be considered a fortuitous event, however, (1) the cause of the unforeseen and unexpected occurrence, or the failure of the
debtor to comply with his obligation, must be independent of human will; (2) it must be impossible to foresee the event which constitute
the caso fortuito, or if it can be foreseen it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the
debtor to fulfill his obligation in any manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting
to the creditor.32
[T]he principle embodied in the act of God doctrine strictly requires that the act must be occasioned solely by the violence of nature.
Human intervention is to be excluded from creating or entering into the cause of the mischief. When the effect is found to be in part the
result of the participation of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized
and removed from the rules applicable to the acts of God.33
The appellate court, in affirming the finding of the trial court that human intervention in the form of contributory negligence by all the
defendants resulted to the loss of the cargoes,34 held that unloading outside the breakwater, instead of inside the breakwater, while a
storm signal was up constitutes negligence.35 It thus concluded that the proximate cause of the loss was Black Sea’s negligence in
deciding to unload the cargoes at an unsafe place and while a typhoon was approaching. 36
From a review of the records of the case, there is no indication that there was greater risk in loading the cargoes outside the breakwater.
As the defendants proffered, the weather on October 26, 1991 remained normal with moderate sea condition such that port operations
continued and proceeded normally.37
The weather data report,38 furnished and verified by the Chief of the Climate Data Section of PAG-ASA and marked as a common exhibit
of the parties, states that while typhoon signal No. 1 was hoisted over Metro Manila on October 23-31, 1991, the sea condition at the port
of Manila at 5:00 p.m. - 11:00 p.m. of October 26, 1991 was moderate. It cannot, therefore, be said that the defendants were negligent in
not unloading the cargoes upon the barge on October 26, 1991 inside the breakwater.
That no tugboat towed back the barge to the pier after the cargoes were completely loaded by 12:30 in the morning 39 is, however, a
material fact which the appellate court failed to properly consider and appreciate40 — the proximate cause of the loss of the cargoes. Had
the barge been towed back promptly to the pier, the deteriorating sea conditions notwithstanding, the loss could have been avoided. But
the barge was left floating in open sea until big waves set in at 5:30 a.m., causing it to sink along with the cargoes.41 The loss thus falls
outside the "act of God doctrine."
The proximate cause of the loss having been determined, who among the parties is/are responsible therefor?
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." 42 That petitioner is a common carrier, the
testimony of its own Vice-President and General Manager Noel Aro that part of the services it offers to its clients as a brokerage firm
includes the transportation of cargoes reflects so.
Atty. Jubay: Will you please tell us what [are you] functions x x x as Executive Vice-President and General Manager of said Company?
Mr. Aro: Well, I oversee the entire operation of the brokerage and transport business of the company. I also handle the various division
heads of the company for operation matters, and all other related functions that the President may assign to me from time to time, Sir.
Q: Now, in connection [with] your duties and functions as you mentioned, will you please tell the Honorable Court if you came to know
the company by the name Little Giant Steel Pipe Corporation?
A: Yes, Sir. Actually, we are the brokerage firm of that Company.
Q: And since when have you been the brokerage firm of that company, if you can recall?
A: Since 1990, Sir.
Q: Now, you said that you are the brokerage firm of this Company. What work or duty did you perform in behalf of this company?
A: We handled the releases (sic) of their cargo[es] from the Bureau of Customs. We [are] also in-charged of the delivery of the goods to
their warehouses. We also handled the clearances of their shipment at the Bureau of Customs, Sir.
xxx
Q: Now, what precisely [was] your agreement with this Little Giant Steel Pipe Corporation with regards to this shipment? What work did
you do with this shipment?
A: We handled the unloading of the cargo[es] from vessel to lighter and then the delivery of [the] cargo[es] from lighter to BASECO then
to the truck and to the warehouse, Sir.
Q: Now, in connection with this work which you are doing, Mr. Witness, you are supposed to perform, what equipment do (sic) you require
or did you use in order to effect this unloading, transfer and delivery to the warehouse?
A: Actually, we used the barges for the ship side operations, this unloading [from] vessel to lighter, and on this we hired or we sub-
contracted with [T]ransport Ventures, Inc. which [was] in-charged (sic) of the barges. Also, in BASECO compound we are leasing cranes
to have the cargo unloaded from the barge to trucks, [and] then we used trucks to deliver [the cargoes] to the consignee’s warehouse,
Sir.
Q: And whose trucks do you use from BASECO compound to the consignee’s warehouse?
A: We utilized of (sic) our own trucks and we have some other contracted trucks, Sir.
xxx
ATTY. JUBAY: Will you please explain to us, to the Honorable Court why is it you have to contract for the barges of Transport Ventures
Incorporated in this particular operation?
A: Firstly, we don’t own any barges. That is why we hired the services of another firm whom we know [al]ready for quite sometime, which
is Transport Ventures, Inc. (Emphasis supplied)43
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.
xxx
Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying
only as an ancillary activity. The contention, therefore, of petitioner that it is not a common carrier but a customs broker whose principal
function is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that
petitioner undertakes to deliver the goods for pecuniary consideration. 45
And in Calvo v. UCPB General Insurance Co. Inc.,46 this Court held that as the transportation of goods is an integral part of a customs
broker, the customs broker is also a common carrier. For to declare otherwise "would be to deprive those with whom [it] contracts the
protection which the law affords them notwithstanding the fact that the obligation to carry goods for [its] customers, is part and parcel of
petitioner’s business."47
As for petitioner’s argument that being the agent of Little Giant, any negligence it committed was deemed the negligence of its principal,
it does not persuade.
True, petitioner was the broker-agent of Little Giant in securing the release of the cargoes. In effecting the transportation of the cargoes
from the shipside and into Little Giant’s warehouse, however, petitioner was discharging its own personal obligation under a contact of
carriage.
Petitioner, which did not have any barge or tugboat, engaged the services of TVI as handler48 to provide the barge and the tugboat. In
their Service Contract,49 while Little Giant was named as the consignee, petitioner did not disclose that it was acting on commission and
was chartering the vessel for Little Giant.50 Little Giant did not thus automatically become a party to the Service Contract and was not,
therefore, bound by the terms and conditions therein.
Not being a party to the service contract, Little Giant cannot directly sue TVI based thereon but it can maintain a cause of action for
negligence.51
In the case of TVI, while it acted as a private carrier for which it was under no duty to observe extraordinary diligence, it was still required
to observe ordinary diligence to ensure the proper and careful handling, care and discharge of the carried goods.
Thus, Articles 1170 and 1173 of the Civil Code provide:
ART. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner
contravene the tenor thereof, are liable for damages.
ART. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation
and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions
of articles 1171 and 2202, paragraph 2, shall apply.
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.
Was the reasonable care and caution which an ordinarily prudent person would have used in the same situation exercised by TVI?52
This Court holds not.
TVI’s failure to promptly provide a tugboat did not only increase the risk that might have been reasonably anticipated during the shipside
operation, but was the proximate cause of the loss. A man 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 power of its
own and is totally defenseless from the ravages of the sea. 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.
As for petitioner, for it to be relieved of liability, it should, following Article 173953 of the Civil Code, prove that it exercised due diligence to
prevent or minimize the loss, before, during and after the occurrence of the storm in order that it may be exempted from liability for the
loss of the goods.
While petitioner sent checkers54 and a supervisor55 on board the vessel to counter-check the operations of TVI, it failed to take all available
and reasonable precautions to avoid the loss. After noting that TVI failed to arrange for the prompt towage of the barge despite the
deteriorating sea conditions, it should have summoned the same or another tugboat to extend help, but it did not.
This Court holds then that petitioner and TVI are solidarily liable56 for the loss of the cargoes. The following pronouncement of the Supreme
Court is instructive:
The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim arises from the breach of that contract
by reason of its failure to exercise the high diligence required of the common carrier. In the discharge of its commitment to ensure the
safety of passengers, a carrier may choose to hire its own employees or avail itself of the services of an outsider or an independent firm
to undertake the task. In either case, the common carrier is not relieved of its responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could only be for tort under the provisions of Article 2176 and related
provisions, in conjunction with Article 2180 of the Civil Code. x x x [O]ne might ask further, how then must the liability of the common
carrier, on one hand, and an independent contractor, on the other hand, be described? It would be solidary. A contractual obligation can
be breached by tort and when the same act or omission causes the injury, one resulting in culpa contractual and the other in culpa
aquiliana, Article 2194 of the Civil Code can well apply. In fine, a liability for tort may arise even under a contract, where tort is that which
breaches the contract. Stated differently, when an act which constitutes a breach of contract would have itself constituted the source of
a quasi-delictual liability had no contract existed between the parties, the contract can be said to have been breached by tort, thereby
allowing the rules on tort to apply.57
As for Black Sea, its duty as a common carrier extended only from the time the goods were surrendered or unconditionally placed in its
possession and received for transportation until they were delivered actually or constructively to consignee Little Giant. 58
Parties to a contract of carriage may, however, agree upon a definition of delivery that extends the services rendered by the carrier. In
the case at bar, Bill of Lading No. 2 covering the shipment provides that delivery be made "to the port of discharge or so near thereto as
she may safely get, always afloat."59 The delivery of the goods to the consignee was not from "pier to pier" but from the shipside of "M/V
Alexander Saveliev" and into barges, for which reason the consignee contracted the services of petitioner. Since Black Sea had
constructively delivered the cargoes to Little Giant, through petitioner, it had discharged its duty. 60
In fine, no liability may thus attach to Black Sea.
Respecting the award of attorney’s fees in an amount over ₱1,000,000.00 to Industrial Insurance, for lack of factual and legal basis, this
Court sets it aside. While Industrial Insurance was compelled to litigate its rights, such fact by itself does not justify the award of attorney’s
fees under Article 2208 of the Civil Code. For no sufficient showing of bad faith would be reflected in a party’s persistence in a case other
than an erroneous conviction of the righteousness of his cause.61 To award attorney’s fees to a party just because the judgment is
rendered in its favor would be tantamount to imposing a premium on one’s right to litigate or seek judicial redress of legitimate
grievances.62
On the award of adjustment fees: The adjustment fees and expense of divers were incurred by Industrial Insurance in its voluntary but
unsuccessful efforts to locate and retrieve the lost cargo. They do not constitute actual damages. 63
As for the court a quo’s award of interest on the amount claimed, the same calls for modification following the ruling in Eastern Shipping
Lines, Inc. v. Court of Appeals64 that when the demand cannot be reasonably established at the time the demand is made, the interest
shall begin to run not from the time the claim is made judicially or extrajudicially but from the date the judgment of the court is made (at
which the time the quantification of damages may be deemed to have been reasonably ascertained). 65
WHEREFORE, judgment is hereby rendered ordering petitioner Schmitz Transport & Brokerage Corporation, and Transport Venture
Incorporation jointly and severally liable for the amount of ₱5,246,113.11 with the MODIFICATION that interest at SIX PERCENT per
annum of the amount due should be computed from the promulgation on November 24, 1997 of the decision of the trial court.
Costs against petitioner.
SO ORDERED.
G.R. No. 149038 April 9, 2003
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, petitioner,
vs.
PKS SHIPPING COMPANY, respondent.
VITUG, J.:
The petition before the Court seeks a review of the decision of the Court of Appeals in C.A. G.R. CV No. 56470, promulgated on 25 June
2001, which has affirmed in toto the judgment of the Regional Trial Court (RTC), Branch 65, of Makati, dismissing the complaint for
damages filed by petitioner insurance corporation against respondent shipping company.
Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping Company (PKS Shipping) for the
shipment to Tacloban City of seventy-five thousand (75,000) bags of cement worth Three Million Three Hundred Seventy-Five Thousand
Pesos (P3,375,000.00). DUMC insured the goods for its full value with petitioner Philippine American General Insurance Company
(Philamgen). The goods were loaded aboard the dumb barge Limar I belonging to PKS Shipping. On the evening of 22 December 1988,
about nine o’clock, while Limar Iwas being towed by respondent’s tugboat, MT Iron Eagle, the barge sank a couple of miles off the coast
of Dumagasa Point, in Zamboanga del Sur, bringing down with it the entire cargo of 75,000 bags of cement.
DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly made payment; it then sought
reimbursement from PKS Shipping of the sum paid to DUMC but the shipping company refused to pay, prompting Philamgen to file suit
against PKS Shipping with the Makati RTC.
The RTC dismissed the complaint after finding that the total loss of the cargo could have been caused either by a fortuitous event, in
which case the ship owner was not liable, or through the negligence of the captain and crew of the vessel and that, under Article 587 of
the Code of Commerce adopting the "Limited Liability Rule," the ship owner could free itself of liability by abandoning, as it apparently so
did, the vessel with all her equipment and earned freightage.
Philamgen interposed an appeal to the Court of Appeals which affirmed in toto the decision of the trial court. The appellate court ruled
that evidence to establish that PKS Shipping was a common carrier at the time it undertook to transport the bags of cement was wanting
because the peculiar method of the shipping company’s carrying goods for others was not generally held out as a business but as a
casual occupation. It then concluded that PKS Shipping, not being a common carrier, was not expected to observe the stringent
extraordinary diligence required of common carriers in the care of goods. The appellate court, moreover, found that the loss of the goods
was sufficiently established as having been due to fortuitous event, negating any liability on the part of PKS Shipping to the shipper.
In the instant appeal, Philamgen contends that the appellate court has committed a patent error in ruling that PKS Shipping is not a
common carrier and that it is not liable for the loss of the subject cargo. The fact that respondent has a limited clientele, petitioner argues,
does not militate against respondent’s being a common carrier and that the only way by which such carrier can be held exempt for the
loss of the cargo would be if the loss were caused by natural disaster or calamity. Petitioner avers that typhoon "APIANG" has not entered
the Philippine area of responsibility and that, even if it did, respondent would not be exempt from liability because its employees,
particularly the tugmaster, have failed to exercise due diligence to prevent or minimize the loss.
PKS Shipping, in its comment, urges that the petition should be denied because what Philamgen seeks is not a review on points or errors
of law but a review of the undisputed factual findings of the RTC and the appellate court. In any event, PKS Shipping points out, the
findings and conclusions of both courts find support from the evidence and applicable jurisprudence.
The determination of possible liability on the part of PKS Shipping boils down to the question of whether it is a private carrier or a common
carrier and, in either case, to the other question of whether or not it has observed the proper diligence (ordinary, if a private carrier, or
extraordinary, if a common carrier) required of it given the circumstances.
The findings of fact made by the Court of Appeals, particularly when such findings are consistent with those of the trial court, may not at
liberty be reviewed by this Court in a petition for review under Rule 45 of the Rules of Court. 1The conclusions derived from those factual
findings, however, are not necessarily just matters of fact as when they are so linked to, or inextricably intertwined with, a requisite
appreciation of the applicable law. In such instances, the conclusions made could well be raised as being appropriate issues in a petition
for review before this Court. Thus, an issue whether a carrier is private or common on the basis of the facts found by a trial court or the
appellate court can be a valid and reviewable question of law.
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."
Complementary to the codal definition is Section 13, paragraph (b), of the Public Service Act; it defines "public service" to be –
"x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with
general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common
carrier, railroad, street railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship, or steamship
line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop,
wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communication systems, wire or wireless broadcasting stations and other similar
public services. x x x. (Underscoring supplied)."
The prevailing doctrine on the question is that enunciated in the leading case of De Guzman vs. Court of Appeals.2Applying Article 1732
of the Code, in conjunction with Section 13(b) of the Public Service Act, this Court has held:
"The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary activity (in local idiom, as `a sideline’). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the `general public,’ i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that Article 1732 deliberately refrained from making such
distinctions.
 "So understood, the concept of `common carrier’ under Article 1732 may be seen to coincide neatly with the notion of `public
service,’ under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on
common carriers set forth in the Civil Code."
Much of 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 an isolated transaction, not a part of the business or occupation, and the carrier does not hold itself out to carry
the goods for the general public or to a limited clientele, although involving the carriage of goods for a fee, 3 the person or corporation
providing such service could very well be just a private carrier. A typical case is that of a charter party which includes both the vessel and
its crew, such as in a bareboat or demise, where the charterer obtains the use and service of all or some part of a ship for a period of
time or a voyage or voyages4 and gets the control of the vessel and its crew.5 Contrary to the conclusion made by the appellate court, its
factual findings indicate that PKS Shipping has engaged itself in the business of carrying goods for others, although for a limited clientele,
undertaking to carry such goods for a fee. The regularity of its activities in this area indicates more than just a casual activity on its
part.6 Neither can the concept of a common carrier change merely because individual contracts are executed or entered into with patrons
of the carrier. Such restrictive interpretation would make it easy for a common carrier to escape liability by the simple expedient of entering
into those distinct agreements with clients.
Addressing now the issue of whether or not PKS Shipping has exercised the proper diligence demanded of common carriers, Article 1733
of the Civil Code requires common carriers to observe extraordinary diligence in the vigilance over the goods they carry. In case of loss,
destruction or deterioration of goods, common carriers are presumed to have been at fault or to have acted negligently, and the burden
of proving otherwise rests on them.7 The provisions of Article 1733, notwithstanding, common carriers are exempt from liability for loss,
destruction, or deterioration of the goods due 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; and
(5) Order or act of competent public authority.8
The appellate court ruled, gathered from the testimonies and sworn marine protests of the respective vessel masters of Limar I and MT
Iron Eagle, that there was no way by which the barge’s or the tugboat’s crew could have prevented the sinking of Limar I. The vessel was
suddenly tossed by waves of extraordinary height of six (6) to eight (8) feet and buffeted by strong winds of 1.5 knots resulting in the entry
of water into the barge’s hatches. The official Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise
Load Line Certificate would attest to the seaworthiness of Limar I and should strengthen the factual findings of the appellate court.
Findings of fact of the Court of Appeals generally conclude this Court; none of the recognized exceptions from the rule - (1) when the
factual findings of the Court of Appeals and the trial court are contradictory; (2) when the conclusion is a finding grounded entirely on
speculation, surmises, or conjectures; (3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken,
absurd, or impossible; (4) when there is a grave abuse of discretion in the appreciation of facts; (5) when the appellate court, in making
its findings, went beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee; (6) when
the judgment of the Court of Appeals is premised on a misapprehension of facts; (7) when the Court of Appeals failed to notice certain
relevant facts which, if properly considered, would justify a different conclusion; (8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific evidence on which they are based; and (10) when the findings
of fact of the Court of Appeals are premised on the absence of evidence but such findings are contradicted by the evidence on record –
would appear to be clearly extant in this instance.
All given then, the appellate court did not err in its judgment absolving PKS Shipping from liability for the loss of the DUMC cargo.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
G.R. No. 141910 August 6, 2002
FGU INSURANCE CORPORATION, petitioner,
vs.
G.P. SARMIENTO TRUCKING CORPORATION and LAMBERT M. EROLES, respondents.
VITUG, J.:
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.1âwphi1.nêt
The issues having thus been joined, FGU presented its evidence, establishing the extent of damage to the cargoes and the amount it
had paid to the assured. GPS, instead of submitting its evidence, filed with leave of court a motion to dismiss the complaint by way of
demurrer to evidence on the ground that petitioner had failed to prove that it was a common carrier.
The trial court, in its order of 30 April 1996,1 granted the motion to dismiss, explaining thusly:
"Under Section 1 of Rule 131 of the Rules of Court, it is provided that ‘Each party must prove his own affirmative allegation, xxx.’
"In the instant case, plaintiff did not present any single evidence that would prove that defendant is a common carrier.
"x x x xxx xxx
"Accordingly, the application of the law on common carriers is not warranted and the presumption of fault or negligence on the part
of a common carrier in case of loss, damage or deterioration of goods during transport under 1735 of the Civil Code is not availing.
"Thus, the laws governing the contract between the owner of the cargo to whom the plaintiff was subrogated and the owner of the
vehicle which transports the cargo are the laws on obligation and contract of the Civil Code as well as the law on quasi delicts.
"Under the law on obligation and contract, negligence or fault is not presumed. The law on quasi delict provides for some
presumption of negligence but only upon the attendance of some circumstances. Thus, Article 2185 provides:
‘Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if
at the time of the mishap, he was violating any traffic regulation.’
 "Evidence for the plaintiff shows no proof that defendant was violating any traffic regulation. Hence, the presumption of negligence
is not obtaining.
"Considering that plaintiff failed to adduce evidence that defendant is a common carrier and defendant’s driver was the one
negligent, defendant cannot be made liable for the damages of the subject cargoes." 2
The subsequent motion for reconsideration having been denied, 3 plaintiff interposed an appeal to the Court of Appeals, contending that
the trial court had erred (a) in holding that the appellee corporation was not a common carrier defined under the law and existing
jurisprudence; and (b) in dismissing the complaint on a demurrer to evidence.
The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. The appellate court, in its decision of 10 June
1999,4 discoursed, among other things, that -
"x x x in order for the presumption of negligence provided for under the law governing common carrier (Article 1735, Civil Code)
to arise, the appellant must first prove that the appellee is a common carrier. Should the appellant fail to prove that the appellee is
a common carrier, the presumption would not arise; consequently, the appellant would have to prove that the carrier was negligent.
"x x x xxx xxx
"Because it is the appellant who insists that the appellees can still be considered as a common carrier, despite its `limited clientele,’
(assuming it was really a common carrier), it follows that it (appellant) has the burden of proving the same. It (plaintiff-appellant)
`must establish his case by a preponderance of evidence, which means that the evidence as a whole adduced by one side is
superior to that of the other.’ (Summa Insurance Corporation vs. Court of Appeals, 243 SCRA 175). This, unfortunately, the
appellant failed to do -- hence, the dismissal of the plaintiff’s complaint by the trial court is justified.
"x x x xxx xxx
"Based on the foregoing disquisitions and considering the circumstances that the appellee trucking corporation has been `its
exclusive contractor, hauler since 1970, defendant has no choice but to comply with the directive of its principal,’ the inevitable
conclusion is that the appellee is a private carrier.
"x x x xxx xxx
"x x x the lower court correctly ruled that 'the application of the law on common carriers is not warranted and the presumption of
fault or negligence on the part of a common carrier in case of loss, damage or deterioration of good[s] during transport under
[article] 1735 of the Civil Code is not availing.' x x x.
"Finally, We advert to the long established rule that conclusions and findings of fact of a trial court are entitled to great weight on
appeal and should not be disturbed unless for strong and valid reasons."5
Petitioner's motion for reconsideration was likewise denied;6 hence, the instant petition,7 raising the following issues:
I
 WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIER AS DEFINED UNDER THE LAW AND
EXISTING JURISPRUDENCE.
II
WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE CARRIER, MAY BE PRESUMED TO
HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY
DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION.
III
WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN THE INSTANT CASE.
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. 10Given 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 obligation 16 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. 18
A word in passing. Res ipsa loquitur, a doctrine being invoked by petitioner, holds a defendant liable where the thing which caused the
injury complained of is shown to be under the latter’s management and the accident is such that, in the ordinary course of things, cannot
be expected to happen if those who have its management or control use proper care. It affords reasonable evidence, in the absence of
explanation by the defendant, that the accident arose from want of care. 19 It is not a rule of substantive law and, as such, it does not
create an independent ground of liability. Instead, it is regarded as a mode of proof, or a mere procedural convenience since it furnishes
a substitute for, and relieves the plaintiff of, the burden of producing specific proof of negligence. The maxim simply places on the
defendant the burden of going forward with the proof. 20 Resort to the doctrine, however, may be allowed only when (a) the event is of a
kind which does not ordinarily occur in the absence of negligence; (b) other responsible causes, including the conduct of the plaintiff and
third persons, are sufficiently eliminated by the evidence; and (c) the indicated negligence is within the scope of the defendant's duty to
the plaintiff.21 Thus, it is not applicable when an unexplained accident may be attributable to one of several causes, for some of which the
defendant could not be responsible.22
Res ipsa loquitur generally finds relevance whether or not a contractual relationship exists between the plaintiff and the defendant, for
the inference of negligence arises from the circumstances and nature of the occurrence and not from the nature of the relation of the
parties.23 Nevertheless, the requirement that responsible causes other than those due to defendant’s conduct must first be eliminated,
for the doctrine to apply, should be understood as being confined only to cases of pure (non-contractual) tort since obviously the
presumption of negligence in culpa contractual, as previously so pointed out, immediately attaches by a failure of the covenant or its
tenor. In the case of the truck driver, whose liability in a civil action is predicated on culpa acquiliana, while he admittedly can be said to
have been in control and management of the vehicle which figured in the accident, it is not equally shown, however, that the accident
could have been exclusively due to his negligence, a matter that can allow, forthwith, res ipsa loquitur to work against him.
If a demurrer to evidence is granted but on appeal the order of dismissal is reversed, the movant shall be deemed to have waived the
right to present evidence.24 Thus, respondent corporation may no longer offer proof to establish that it has exercised due care in
transporting the cargoes of the assured so as to still warrant a remand of the case to the trial court.1âwphi1.nêt
WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court, Branch 66, of Makati City, and the decision, dated 10 June
1999, of the Court of Appeals, are AFFIRMED only insofar as respondent Lambert M. Eroles is concerned, but said assailed order of the
trial court and decision of the appellate court are REVERSED as regards G.P. Sarmiento Trucking Corporation which, instead, is hereby
ordered to pay FGU Insurance Corporation the value of the damaged and lost cargoes in the amount of P204,450.00. No costs. SO
ORDERED.