De Guzman v.

CA

Facts:

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

Issues:

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

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

Held:

(1) Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary activity. Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the
"general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow
segment of the general population. It appears to the Court that private respondent is properly characterized as a common carrier
even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such backhauling was done
on a periodic or occasional rather than regular or scheduled manner, and even though private respondent's principal occupation
was not the carriage of goods for others. There is no dispute that private respondent charged his customers a fee for hauling their
goods; that fee frequently fell below commercial freight rates is not relevant here. A certificate of public convenience is not a
requisite for the incurring of liability under the Civil Code provisions governing common carriers.

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

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

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

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

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

e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting causes listed in Article 1734.
Private respondent as common carrier is presumed to have been at fault or to have acted negligently. This presumption, however,
may be overthrown by proof of extraordinary diligence on the part of private respondent. We believe and so hold that the limits
of the duty of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a result of a
robbery which is attended by "grave or irresistible threat, violence or force." we hold that the occurrence of the loss must
reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of goods,
and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied with
the rigorous standard of extraordinary diligence.

Planters Products, Inc. v. CA

Facts:

Planters Products, Inc. purchased from Mitsubishi International Corporation 9,329.7069 metric tons of Urea 46% fertilizer,
which the latter shipped aboard the cargo vessel M/V Sun Plum on June 16, 1974. Prior to its voyage, a time-charter party was
entered into between Mitsubishi as shipper, and Kyosei Kisen Kabushiki Kaisha as shipowner. Before loading the fertilizer
aboard the vessel, four of her holds were presumably inspected by the charterers representative and found it fit to take the load.
After loading the cargo, the steel hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin then tied with steel
bonds. It remained sealed throughout the entire voyage.

Upon arrival of the vessel, petitioner unloaded the cargo, which took 11 days. A private marine and cargo surveyor, Cargo
Superintendents Company, Inc. (CSCI) was hired by petitioner to determine the outturn of the cargo shipped. CSCI reported
shortage of 106.726 metric tons, and contamination of 18 metric tons due to dirt. PPI sent a claim letter against Soriamont
Steamship Agencies, the resident agent of KKKK. The request was denied, hence, PPI filed an action for damages before the
CFI Manila. The lower court sustained the petitioners claim, but such decision was reversed by the appellate court, which
absolved the carrier from liability. The appellate court ruled that the vessel was a private carrier and not a common carrier by
reason of the charter party.

Issues:

(1) Whether a common carrier becomes a private carrier by reason of a charter party

(2) Whether the ship owner was able to prove the exercise of the diligence required under the circumstances

Held:

(1) A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another
person for a specified time or use; Charter parties are of two types: (a) contract of affreightment which involves the use of
shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or
bareboat charter, by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and
possession and consequent control over its navigation, including the master and the crew, who are his servants. Contract of
affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed period of time, or voyage charter,
wherein the ship is leased for a single voyage.

Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The definition extends to
carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or transporting passengers or
both for compensation as a public employment and not as a casual occupation. The distinction between a "common or public
carrier" and a "private or special carrier" lies in the character of the business, such that if the undertaking is a single transaction, not
a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering
such service is a private carrier. Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of
their business, should observe extraordinary diligence in the vigilance over the goods they carry. In the case of private carriers,
however, the exercise of ordinary diligence in the carriage of goods will suffice. Moreover, in case of loss, destruction or
deterioration of the goods, common carriers are presumed to have been at fault or to have acted negligently, and the burden of
proving otherwise rests on them. On the contrary, no such presumption applies to private carriers, for whosoever alleges damage
to or deterioration of the goods carried has the onus of proving that the cause was the negligence of the carrier.

When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of
the shipowner and therefore continued to be under its direct supervision and control. Hardly then can we charge the charterer, a
stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means
in doing so. This is evident in the present case considering that the steering of the ship, the manning of the decks, the
determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the officers
and crew who were screened, chosen and hired by the shipowner. It is only when the charter includes both the vessel and its
crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the
charter-party is concerned.

(2) In an action for recovery of damages against a common carrier on the goods shipped, the shipper or consignee should first
prove the fact of shipment and its consequent loss or damage while the same was in the possession, actual or constructive, of the
carrier. Thereafter, the burden of proof shifts to respondent to prove that he has exercised extraordinary diligence required by
law or that the loss, damage or deterioration of the cargo was due to fortuitous event, or some other circumstances inconsistent
with its liability. To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima facie
presumption of negligence.

Before the fertilizer was loaded, the four (4) hatches of the vessel were cleaned, dried and fumigated. After completing the
loading of the cargo in bulk in the ship's holds, the steel pontoon hatches were closed and sealed with iron lids, then covered with
three (3) layers of serviceable tarpaulins which were tied with steel bonds. The hatches remained close and tightly sealed while the
ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship's boom. It
was also shown during the trial that the hull of the vessel was in good condition, foreclosing the possibility of spillage of the cargo
into the sea or seepage of water inside the hull of the vessel. When M/V "Sun Plum" docked at its berthing place, representatives
of the consignee boarded, and in the presence of a representative of the shipowner, the foreman, the stevedores, and a cargo
surveyor representing CSCI, opened the hatches and inspected the condition of the hull of the vessel. The stevedores unloaded
the cargo under the watchful eyes of the shipmates who were overseeing the whole operation on rotation basis.

The period during which private respondent was to observe the degree of diligence required of it as a public carrier began from
the time the cargo was unconditionally placed in its charge after the vessel's holds were duly inspected and passed scrutiny by the
shipper, up to and until the vessel reached its destination and its hull was re-examined by the consignee, but prior to unloading. A
shipowner is liable for damage to the cargo resulting from improper stowage only when the stowing is done by stevedores
employed by him, and therefore under his control and supervision, not when the same is done by the consignee or stevedores
under the employ of the latter.

Common carriers are not responsible for the loss, destruction or deterioration of the goods if caused by the character of the
goods or defects in the packaging or in the containers. The primary cause of these spillages is the clamped shell which does not
seal very tightly. Also, the wind tends to blow away some of the materials during the unloading process. The probability of the
cargo being damaged or getting mixed or contaminated with foreign particles was made greater by the fact that the fertilizer was
transported in "bulk," thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of
equipment used in transporting and hauling it. If there was loss or contamination of the cargo, it was more likely to have occurred
while the same was being transported from the ship to the dump trucks and finally to the consignee's warehouse.

Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage, more so, with a variable weather
condition prevalent during its unloading, as was the case at bar. This is a risk the shipper or the owner of the goods has to face.
Clearly, respondent carrier has sufficiently proved the inherent character of the goods which makes it highly vulnerable to
deterioration; as well as the inadequacy of its packaging which further contributed to the loss. On the other hand, no proof was
adduced by the petitioner showing that the carrier was remiss in the exercise of due diligence in order to minimize the loss or
damage to the goods it carried.

Bascos v. CA

Facts:

Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation whereby
the former bound itself to haul the latters 2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE subcontracted
with petitioner Estrellita Bascos to transport and deliver the 400 sacks of soya beans. Petitioner failed to deliver the cargo, and as
a consequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract. Cipriano demanded
reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage.
Petitioner denied that there was no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a
force majeure. The trial court ruled against petitioner.

Issues:

(1) Was petitioner a common carrier?

(2) Was the hijacking referred to a force majeure?

Held:

(1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or association engaged in the
business of carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their services to
the public." The test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the
carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted."
In this case, petitioner herself has made the admission that she was in the trucking business, offering her trucks to those with
cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same.

(2) 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.

First Philippine Industrial Corp. vs. CA

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

Issue:

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

Held:

Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged in the business
of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the
public."

The test for determining whether a party is a common carrier of goods is:

(1) He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready
to engage in the transportation of goods for person generally as a business and not as a casual occupation;

(2) He must undertake to carry goods of the kind to which his business is confined;

(3) He must undertake to carry by the method by which his business is conducted and over his established roads; and

(4) The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is engaged in the
business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for
compensation. The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier.

NATIONAL STEEL CORPORATION v. COURT OF APPEALS

G.R. No. 112287 December 12, 1997
Panganiban, J.

Doctrine:
The stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a
private carrier.

Facts:
Plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a
Contract of Voyage Charter Hire whereby NSC hired VSIs vessel, the MV Vlasons I to make one voyage to load steel products
at Iligan City and discharge them at North Harbor, Manila. The handling, loading and unloading of the cargoes were the
responsibility of the Charterer.

The skids of tinplates and hot rolled sheets shipped were allegedly found to be wet and rusty. Plaintiff, alleging negligence, filed a
claim for damages against the defendant who denied liability claiming that the MV Vlasons I was seaworthy in all respects for the
carriage of plaintiffs cargo; that said vessel was not a common carrier inasmuch as she was under voyage charter contract with
the plaintiff as charterer under the charter party; that in the course its voyage, the vessel encountered very rough seas.
Issue:
Whether or not the provisions of the Civil Code on common carriers pursuant to which there exists a presumption of negligence
against the common carrier in case of loss or damage to the cargo are applicable to a private carrier.

Held:
No. In a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding
on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the
stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship
transporting commercial goods as a private carrier.

It has been held that the true test of a common carrier is the carriage of passengers or goods, provided it has space, for all who
opt to avail themselves of its transportation service for a fee [ Mendoza vs. Philippine Airlines, Inc., 90 Phil. 836, 842-843 (1952)].
A carrier which does not qualify under the above test is deemed a private carrier. Generally, private carriage is undertaken by
special agreement and the carrier does not hold himself out to carry goods for the general public.

Because the MV Vlasons I was a private carrier, the ship owners obligations are governed by the foregoing provisions of the
Code of Commerce and not by the Civil Code which, as a general rule, places the prima facie presumption of negligence on a
common carrier.

G.R. No. 200289

PERALTA, J.:
These two consolidated cases challenge, by way of petition for certiorari under Rule 45 of the 1997 Rules of Civil Procedure, the
[1] [2]
September 13, 2011 Decision and January 19, 2012 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 86752,
[3]
which reversed and set aside the January 27, 2006 Decision of the Manila City Regional Trial Court Branch (RTC) 30.

The facts, as established by the records, are as follows:

On August 23, 1993, Kinsho-Mataichi Corporation shipped from the port of Kobe, Japan, 197 metal containers/skids of tin-free
steel for delivery to the consignee, San Miguel Corporation (SMC). The shipment, covered by Bill of Lading No. KBMA-
[4]
1074, was loaded and received clean on board M/V Golden Harvest Voyage No. 66, a vessel owned and operated by Westwind
Shipping Corporation (Westwind).

SMC insured the cargoes against all risks with UCPB General Insurance Co., Inc. (UCPB) for US Dollars: One Hundred Eighty-
Four Thousand Seven Hundred Ninety-Eight and Ninety-Seven Centavos (US$184,798.97), which, at the time, was equivalent to
Philippine Pesos: Six Million Two Hundred Nine Thousand Two Hundred Forty-Five and Twenty-Eight Centavos
(P6,209,245.28).

The shipment arrived in Manila, Philippines on August 31, 1993 and was discharged in the custody of the arrastre operator,
[5]
Asian Terminals, Inc. (ATI), formerly Marina Port Services, Inc. During the unloading operation, however, six containers/skids
worth Philippine Pesos: One Hundred Seventeen Thousand Ninety-Three and Twelve Centavos (P117,093.12) sustained dents
and punctures from the forklift used by the stevedores of Ocean Terminal Services, Inc. (OTSI) in centering and shuttling the
containers/skids. As a consequence, the local ship agent of the vessel, Baliwag Shipping Agency, Inc., issued two Bad Order
Cargo Receipt dated September 1, 1993.

On September 7, 1993, Orient Freight International, Inc. (OFII), the customs broker of SMC, withdrew from ATI the 197
containers/skids, including the six in damaged condition, and delivered the same at SMC's warehouse in Calamba, Laguna
through J.B. Limcaoco Trucking (JBL). It was discovered upon discharge that additional nine containers/skids valued at
Philippine Pesos: One Hundred Seventy-Five Thousand Six Hundred Thirty-Nine and Sixty-Eight Centavos (P175,639.68) were
also damaged due to the forklift operations; thus, making the total number of 15 containers/skids in bad order.

Almost a year after, on August 15, 1994, SMC filed a claim against UCPB, Westwind, ATI, and OFII to recover the amount
corresponding to the damaged 15 containers/skids. When UCPB paid the total sum of Philippine Pesos: Two Hundred Ninety-
Two Thousand Seven Hundred Thirty-Two and Eighty Centavos (P292,732.80), SMC signed the subrogation receipt.
Thereafter, in the exercise of its right of subrogation, UCPB instituted on August 30, 1994 a complaint for damages against
[6]
Westwind, ATI, and OFII.

After trial, the RTC dismissed UCPB's complaint and the counterclaims of Westwind, ATI, and OFII. It ruled that the right, if
any, against ATI already prescribed based on the stipulation in the 16 Cargo Gate Passes issued, as well as the doctrine laid down
in International Container Terminal Services, Inc. v. Prudential Guarantee & Assurance Co. Inc . that a claim for reimbursement
[7]

for damaged goods must be filed within 15 days from the date of consignee's knowledge. With respect to Westwind, even if the
action against it is not yet barred by prescription, conformably with Section 3 (6) of the Carriage of Goods by Sea Act (COGSA)
and Our rulings in E.E. Elser, Inc., et al. v. Court of Appeals, et al. and Belgian Overseas Chartering and Shipping N.V. v. Phil.
[8]

First Insurance Co., Inc., the court a quo still opined that Westwind is not liable, since the discharging of the cargoes were done
[9]

by ATI personnel using forklifts and that there was no allegation that it (Westwind) had a hand in the conduct of the stevedoring
operations. Finally, the trial court likewise absolved OFII from any liability, reasoning that it never undertook the operation of the
forklifts which caused the dents and punctures, and that it merely facilitated the release and delivery of the shipment as the
customs broker and representative of SMC.

On appeal by UCPB, the CA reversed and set aside the trial court. The fallo of its September 13, 2011 Decision directed:

WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The Decision dated January 27, 2006 rendered
by the court a quo is REVERSED AND SET ASIDE. Appellee Westwind Shipping Corporation is hereby ordered to pay to the
appellant UCPB General Insurance Co., Inc., the amount of One Hundred Seventeen Thousand and Ninety-Three Pesos and
Twelve Centavos (Php117,093.12), while Orient Freight International, Inc. is hereby ordered to pay to UCPB the sum of One
Hundred Seventy-Five Thousand Six Hundred Thirty-Nine Pesos and Sixty-Eight Centavos (Php175,639.68). Both sums shall
bear interest at the rate of six (6%) percent per annum, from the filing of the complaint on August 30, 1994 until the judgment
becomes final and executory. Thereafter, an interest rate of twelve (12%) percent per annum shall be imposed from the time this
decision becomes final and executory until full payment of said amounts.
[10]
SO ORDERED.

While the CA sustained the RTC judgment that the claim against ATI already prescribed, it rendered a contrary view as regards
the liability of Westwind and OFII. For the appellate court, Westwind, not ATI, is responsible for the six damaged
containers/skids at the time of its unloading. In its rationale, which substantially followed Philippines First Insurance Co., Inc. v.
[11]
Wallem Phils. Shipping, Inc., it concluded that the common carrier, not the arrastre operator, is responsible during the
unloading of the cargoes from the vessel and that it is not relieved from liability and is still bound to exercise extraordinary
diligence at the time in order to see to it that the cargoes under its possession remain in good order and condition. The CA also
considered that OFII is liable for the additional nine damaged containers/skids, agreeing with UCPB's contention that OFII is a
common carrier bound to observe extraordinary diligence and is presumed to be at fault or have acted negligently for such
damage. Noting the testimony of OFII's own witness that the delivery of the shipment to the consignee is part of OFII's job as a
cargo forwarder, the appellate court ruled that Article 1732 of the New Civil Code (NCC) does not distinguish between one
whose principal business activity is the carrying of persons or goods or both and one who does so as an ancillary activity. The
appellate court further ruled that OFII cannot excuse itself from liability by insisting that JBL undertook the delivery of the
cargoes to SMC's warehouse. It opined that the delivery receipts signed by the inspector of SMC showed that the containers/skids
were received from OFII, not JBL. At the most, the CA said, JBL was engaged by OFII to supply the trucks necessary to deliver
the shipment, under its supervision, to SMC.

Only Westwind and OFII filed their respective motions for reconsideration, which the CA denied; hence, they elevated the case
before Us via petitions docketed as G.R. Nos. 200289 and 200314, respectively.

Westwind argues that it no longer had actual or constructive custody of the containers/skids at the time they were damaged by
ATI's forklift operator during the unloading operations. In accordance with the stipulation of the bill of lading, which allegedly
conforms to Article 1736 of the NCC, it contends that its responsibility already ceased from the moment the cargoes were
delivered to ATI, which is reckoned from the moment the goods were taken into the latter's custody. Westwind adds that ATI,
which is a completely independent entity that had the right to receive the goods as exclusive operator of stevedoring and arrastre
functions in South Harbor, Manila, had full control over its employees and stevedores as well as the manner and procedure of the
discharging operations.

As for OFII, it maintains that it is not a common carrier, but only a customs broker whose participation is limited to facilitating
withdrawal of the shipment in the custody of ATI by overseeing and documenting the turnover and counterchecking if the
quantity of the shipments were in tally with the shipping documents at hand, but without participating in the physical withdrawal
and loading of the shipments into the delivery trucks of JBL. Assuming that it is a common carrier, OFII insists that there is no
need to rely on the presumption of the law that, as a common carrier, it is presumed to have been at fault or have acted
negligently in case of damaged goods considering the undisputed fact that the damages to the containers/skids were caused by the
forklift blades, and that there is no evidence presented to show that OFII and Westwind were the owners/operators of the
forklifts. It asserts that the loading to the trucks were made by way of forklifts owned and operated by ATI and the unloading
from the trucks at the SMC warehouse was done by way of forklifts owned and operated by SMC employees. Lastly, OFII avers
that neither the undertaking to deliver nor the acknowledgment by the consignee of the fact of delivery makes a person or entity a
common carrier, since delivery alone is not the controlling factor in order to be considered as such.

Both petitions lack merit.

The case of Philippines First Insurance Co., Inc. v. Wallem Phils. Shipping, Inc. applies, as it settled the query on which
[12]

between a common carrier and an arrastre operator should be responsible for damage or loss incurred by the shipment during its
unloading. We elucidated at length:

Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the
Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary
responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received
by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the
person who has a right to receive them.

For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from the time it is
turned over to him at the dock or afloat alongside the vessel at the port of loading, until he delivers it on the shore or on the
discharging wharf at the port of unloading, unless agreed otherwise. In Standard Oil Co. of New York v. Lopez Castelo, the Court
interpreted the ship captain's liability as ultimately that of the shipowner by regarding the captain as the representative of the
shipowner.

Lastly, Section 2 of the COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the
loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and
liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2) thereof then states that among the carriers'
responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.

xxxx

On the other hand, the functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the
establishment of the consignee or shipper and the ship's tackle. Being the custodian of the goods discharged from a vessel, an
arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.

Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or employees should observe the standards
and measures necessary to prevent losses and damage to shipments under its custody.

In Fireman's Fund Insurance Co. v. Metro Port Service, Inc. , the Court explained the relationship and responsibility of an
arrastre operator to a consignee of a cargo, to quote:

The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman. The
relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator. Since it is
the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good condition to the
consignee, such responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore
charged with and obligated to deliver the goods in good condition to the consignee. (Emphasis supplied) (Citations omitted)

The liability of the arrastre operator was reiterated in Eastern Shipping Lines, Inc. v. Court of Appeals with the clarification that
the arrastre operator and the carrier are not always and necessarily solidarily liable as the facts of a case may vary the rule.

Thus, in this case, the appellate court is correct insofar as it ruled that an arrastre operator and a carrier may not be held solidarily
liable at all times. But the precise question is which entity had custody of the shipment during its unloading from the vessel?

The aforementioned Section 3 (2) of the COGSA states that among the carriers' responsibilities are to properly and carefully
load, care for and discharge the goods carried. The bill of lading covering the subject shipment likewise stipulates that the carrier's
liability for loss or damage to the goods ceases after its discharge from the vessel. Article 619 of the Code of Commerce holds a
ship captain liable for the cargo from the time it is turned over to him until its delivery at the port of unloading.

In a case decided by a U.S. Circuit Court, Nichimen Company v. M/V Farland, it was ruled that like the duty of seaworthiness,
the duty of care of the cargo is non-delegable, and the carrier is accordingly responsible for the acts of the master, the crew, the
stevedore, and his other agents. It has also been held that it is ordinarily the duty of the master of a vessel to unload the cargo and
place it in readiness for delivery to the consignee, and there is an implied obligation that this shall be accomplished with sound
machinery, competent hands, and in such manner that no unnecessary injury shall be done thereto. And the fact that a consignee
is required to furnish persons to assist in unloading a shipment may not relieve the carrier of its duty as to such unloading.

xxxx

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier x x
[13]
x.

In Regional Container Lines (RCL) of Singapore v. The Netherlands Insurance Co. (Philippines), Inc . and Asian Terminals,
[14]

Inc. v. Philam Insurance Co., Inc., the Court echoed the doctrine that cargoes, while being unloaded, generally remain under
[15]

the custody of the carrier.

We cannot agree with Westwind's disputation that "the carrier in Wallem clearly exercised supervision during the discharge of the
shipment and that is why it was faulted and held liable for the damage incurred by the shipment during such time." What
Westwind failed to realize is that the extraordinary responsibility of the common carrier lasts until the time the goods are actually
or constructively delivered by the carrier to the consignee or to the person who has a right to receive them. There is actual
delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized
[16]
agent and a reasonable time is given him to remove the goods. In this case, since the discharging of the containers/skids, which
were covered by only one bill of lading, had not yet been completed at the time the damage occurred, there is no reason to imply
that there was already delivery, actual or constructive, of the cargoes to ATI. Indeed, the earlier case of Delsan Transport Lines,
Inc. v. American Home Assurance Corp. serves as a useful guide, thus:
[17]

Delsan's argument that it should not be held liable for the loss of diesel oil due to backflow because the same had already been
actually and legally delivered to Caltex at the time it entered the shore tank holds no water. It had been settled that the subject
cargo was still in the custody of Delsan because the discharging thereof has not yet been finished when the backflow occurred.
Since the discharging of the cargo into the depot has not yet been completed at the time of the spillage when the backflow
occurred, there is no reason to imply that there was actual delivery of the cargo to the consignee. Delsan is straining the issue by
insisting that when the diesel oil entered into the tank of Caltex on shore, there was legally, at that moment, a complete delivery
thereof to Caltex. To be sure, the extraordinary responsibility of common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by, the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to a person who has the right to receive them. The discharging of oil products to
Caltex Bulk Depot has not yet been finished, Delsan still has the duty to guard and to preserve the cargo. The carrier still has in it
the responsibility to guard and preserve the goods, a duty incident to its having the goods transported.

To recapitulate, common carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in vigilance over the goods and for the safety of the passengers transported by them, according to all the
circumstances of each case. The mere proof of delivery of goods in good order to the carrier, and their arrival in the place of
destination in bad order, make out a prima facie case against the carrier, so that if no explanation is given as to how the injury
occurred, the carrier must be held responsible. It is incumbent upon the carrier to prove that the loss was due to accident or
[18]
some other circumstances inconsistent with its liability.

The contention of OFII is likewise untenable. A customs broker has been regarded as a common carrier because transportation
of goods is an integral part of its business. In Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc., the
[19] [20]

Court already reiterated:

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 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.

xxxx

Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such
carrying only as an ancillary activity. The contention, therefore, of petitioner that it is not a common carrier but a customs broker
whose principal function is to prepare the correct customs declaration and proper shipping documents as required by law is
bereft of merit. It suffices that petitioner undertakes to deliver the goods for pecuniary consideration.
And in Calvo v. UCPB General Insurance Co. Inc., this Court held that as the transportation of goods is an integral part of a
customs broker, the customs broker is also a common carrier. For to declare otherwise "would be to deprive those with whom [it]
contracts the protection which the law affords them notwithstanding the fact that the obligation to carry goods for [its] customers,
[21]
is part and parcel of petitioner's business."

That OFII is a common carrier is buttressed by the testimony of its own witness, Mr. Loveric Panganiban Cueto, that part of the
[22]
services it offers to clients is cargo forwarding, which includes the delivery of the shipment to the consignee. Thus, for
undertaking the transport of cargoes from ATI to SMC's warehouse in Calamba, Laguna, OFII is considered a common carrier.
As long as a person or corporation holds itself to the public for the purpose of transporting goods as a business, it is already
considered a common carrier regardless of whether it owns the vehicle to be used or has to actually hire one.
[23]
As a common carrier, OFII is mandated to observe, under Article 1733 of the Civil Code, extraordinary diligence in the
[24]
vigilance over the goods it transports according to the peculiar circumstances of each case. In the event that the goods are lost,
destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently, unless it proves that it observed
[25]
extraordinary diligence. In the case at bar, it was established that, except for the six containers/skids already damaged, OFII
received the cargoes from ATI in good order and condition; and that upon its delivery to SMC, additional nine containers/skids
were found to be in bad order, as noted in the Delivery Receipts issued by OFII and as indicated in the Report of Cares Marine
& Cargo Surveyors. Instead of merely excusing itself from liability by putting the blame to ATI and SMC, it is incumbent upon
OFII to prove that it actively took care of the goods by exercising extraordinary diligence in the carriage thereof. It failed to do so.
Hence, its presumed negligence under Article 1735 of the Civil Code remains unrebutted.

WHEREFORE, premises considered, the petitions of Westwind and OFII in G.R. Nos. 200289 and 200314, respectively,
are DENIED. The September 13, 2011 Decision and January 19, 2012 Resolution of the Court of Appeals in CA-G.R. CV No.
86752, which reversed and set aside the January 27, 2006 Decision of the Manila City Regional Trial Court, Branch 30,
are AFFIRMED.

SO ORDERED.
*
Velasco, Jr., (Chairperson), Bersamin, Abad, and Mendoza, JJ., concur.
 Civil Law Common Carrier Private School Transport are Common Carriers
Torts and Damages Heirs of a high school student may be awarded damages for loss income
In June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Perea to transport their (Zarates) son, Aaron
Zarate, to and from school. The Pereas were owners of a van being used for private school transport.
At about 6:45am of August 22, 1996, the driver of the said private van, Clemente Alfaro, while the children were on board
including Aaron, decided to take a short cut in order to avoid traffic. The usual short cut was a railroad crossing of the Philippine
National Railway (PNR).
Alfaro saw that the barandilla (the pole used to block vehicles crossing the railway) was up which means it was okay to cross. He
then tried to overtake a bus. However, there was in fact an oncoming train but Alfaro no longer saw the train as his view was
already blocked by the bus he was trying to overtake. The bus was able to cross unscathed but the vans rear end was hit. During
the collision, Aaron, was thrown off the van. His body hit the railroad tracks and his head was severed. He was only 15 years old.
It turns out that Alfaro was not able to hear the train honking from 50 meters away before the collision because the vans stereo
was playing loudly.
The Zarates sued PNR and the Pereas (Alfaro became at-large). Their cause of action against PNR was based on quasi-delict.
Their cause of action against the Pereas was based on breach of contract of common carriage.
In their defense, the Pereas invoked that as private carriers they were not negligent in selecting Alfaro as their driver as they
made sure that he had a drivers license and that he was not involved in any accident prior to his being hired. In short, they
observed the diligence of a good father in selecting their employee.
PNR also disclaimed liability as they insist that the railroad crossing they placed there was not meant for railroad crossing (really,
thats their defense!).
The RTC ruled in favor of the Zarates. The Court of Appeals affirmed the RTC. In the decision of the RTC and the CA, they
awarded damages in favor of the Zarates for the loss of earning capacity of their dead son.
The Pereas appealed. They argued that the award was improper as Aaron was merely a high school student, hence, the award of
such damages was merely speculative. They cited the case of People vs Teehankee where the Supreme Court did not award
damages for the loss of earning capacity despite the fact that the victim there was enrolled in a pilot school.
ISSUES: Whether or not the defense of due diligence of a good father by the Pereas is untenable. Whether or not the award of
damages for loss of income is proper.
HELD: Yes, in both issues.
Defense of Due Diligence of a Good Father
This defense is not tenable in this case. The Pereas are common carriers. They are not merely private carriers. (Prior to this
case, the status of private transport for school services or school buses is not well settled as to whether or not they are private or
common carriers but they were generally regarded as private carriers). Private transport for schools are common carriers. The
Pereas, as the operators of a school bus service were: (a) engaged in transporting passengers generally as a business, not just as a
casual occupation; (b) undertaking to carry passengers over established roads by the method by which the business was
conducted; and (c) transporting students for a fee. Despite catering to a limited clientle, the Pereas operated as a common
carrier because they held themselves out as a ready transportation indiscriminately to the students of a particular school living
within or near where they operated the service and for a fee.
Being a common carrier, what is required of the Pereas is not mere diligence of a good father. What is specifically required
from them by law is extraordinary diligence a fact which they failed to prove in court. Verily, their obligation as common
carriers did not cease upon their exercise of diligently choosing Alfaro as their employee.
(It is recommended that you read the full text, the Supreme Court made an elaborate and extensive definition of common and
private carriers as well as their distinctions.)
Award of Damages for Aarons loss of earning capacity despite he being a high school student at the time of his death
The award is proper. Aaron was enrolled in a reputable school (Don Bosco). He was of normal health and was an able-bodied
person. Further, the basis of the computation of his earning capacity was not on what he would have become. It was based on the
current minimum wage. The minimum wage was validly used because with his circumstances at the time of his death, it is most
certain that had he lived, he would at least be a minimum wage earner by the time he starts working. This is not being speculative
at all.
The Teehankee case was different because in that case, the reason why no damages were awarded for loss of earning capacity was
that the defendants there were already assuming that the victim would indeed become a pilot hence, that made the assumption
speculative. But in the case of Aaron, there was no speculation as to what he might be but whatever hell become, it is certain
that he will at the least be earning minimum wage.