Loadmasters Customs Services Inc. vs.

Glodel Brokerage Corporation Digested

LOADMASTERS CUSTOMS SERVICES, INC., vs. GLODEL BROKERAGE
CORPORATION and R&B INSURANCE CORPORATION, / G.R. No. 179446 /
January 10, 2011

FACTS:
The case is a petition for review on certiorari under Rule 45 of the Revised Rules
of Court assailing the August 24, 2007 Decision of the Court of Appeals (CA) in CA-
G.R. CV No. 82822.
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. Of the six (6)
trucks route to Balagtas, Bulacan, 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, 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 ofP1,903,335.39. After the investigation, R&B
Insurance paid Columbia the amount ofP1,896,789.62 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),
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."
On November 19, 2003, the RTC rendered a decision 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.
Both R&B Insurance and Glodel appealed the RTC decision to the CA. On August
24, 2007, the CA rendered that the 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. Hence, Loadmasters filed the present petition for review on
certiorari.

ISSUE:
Whether or not Loadmasters and Glodel are common carriers to determine their
liability for the loss of the subject cargo.

RULING:
The petition is PARTIALLY GRANTED. Judgment is rendered declaring petitioner
Loadmasters Customs Services, Inc. and respondent Glodel Brokerage
Corporation jointly and severally liable to respondent
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. 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. Glodel is also considered a
common carrier within the context of Article 1732. For as stated and well
provided in the case of Schmitz Transport & Brokerage Corporation v. Transport
Venture, Inc., 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.
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.
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. 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.
For under 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.
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. Glodel should,
therefore, be held liable with Loadmasters. Its defense of force majeure is
unavailing.
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." The Court cannot be a lawyer and
take the cudgels for a party who has been at fault or negligent.
SCHMITZ TRANSPORT & BROKERAGE CORPORATION v. TRANSPORT VENTURE,
INC., INDUSTRIAL INSURANCE COMPANY, LTD., et al.

456 SCRA 557 (2005)

A common carrier shall exercise extraordinary diligence to prevent and/or minize

the loss or destruction of goods.

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 respondent Black
Sea) 545 hot rolled steel sheets. The vessel arrived at the port of Manila and the
Philippine Ports Authority (PPA) assigned it a place of berth at the outside
breakwater at the Manila South Harbor. Petitioner Schmitz Transport, engaged to
secure the requisite clearances, to receive the cargoes from the shipside, and to
deliver them to Little Giant Steelpipe Corporation‘s warehouse at Cainta, Rizal. It
likewise engaged the services of respondent Transport Venture Inc. (TVI) to send a
barge and tugboat at shipside.

The tugboat, after positioning the barge alongside the vessel, left and returned to
the port terminal. Later on, arrastre operator commenced to unload 37 of the
545 coilsfrom the vessel unto the barge. By noon the next day, during which the
weather condition had become inclement due to an approaching storm, the
unloading unto the barge of the 37 coils was accomplished. However, there was no
tugboat that pulled the barge back to the pier. Eventually, because of the strong
waves, the crew of the barge abandoned it and transferred to the vessel. The
barge capsized, washing the 37 coils into the sea. Earnest efforts on the part of
both the consignee Little Giant and Industrial Insurance to recover the lost cargoes
proved futile.

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. Industrial Insurance won and the
Schmitz et al.’s motion for reconsideration is denied.

In effect, Schmitz now filed charges against TVI et al. It 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. The
Court rendered a decision holding Schmitz and TVI liable.
ISSUES:

Whether or not the liability for the loss may attach to Black Sea, Schmitz and TVI

HELD:

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 Schmitz, for it to be relieved of liability, it should, following Article 1739 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 Schmitz sent checkers and a supervisor 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.

The Court holds then that Schmitz and TVI are solidarily liable for the loss of the
cargoes. 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

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
LadingNo. 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.‖ 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 Schmitz, it had discharged its duty.

In fine, no liability may thus attach to Black Sea.

Calvo V. UCPB Gen Insurance Co. (2002)

G.R. No.148496 March 19, 2002

Lessons Applicable: Legal Effect (Transportation)

FACTS:
▪ At the time material to this case, Transorient Container Terminal Services, Inc.
(TCTSI) owned by Virgines Calvo entered into a contract with San Miguel
Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper
and 124 reels of kraft liner board from the Port Area in Manila to SMC's
warehouse at the Tabacalera Compound, Romualdez St., Ermita, Manila.
▪ The cargo was insured by respondent UCPB General Insurance Co., Inc.
▪ July 14, 1990: arrived in Manila on board "M/V Hayakawa Maru" and later
on unloaded from the vessel to the custody of the arrastre operator, Manila
Port Services, Inc
▪ July 23 to July 25, 1990: Calvo withdrew the cargo from the arrastre operator
and delivered it to SMC's warehouse in Ermita, Manila
▪ July 25, 1990: goods were inspected by Marine Cargo Surveyors, who found
that 15 reels of the semi-chemical fluting paper were "wet/stained/torn" and
3 reels of kraft liner board were likewise torn
▪ SMC collected payment from UCPB the total damage of P93,112 under its
insurance contract
▪ UCPB brought suit against Calvo as subrogee of SMC
▪ Calvo: Art. 1734(4) The character of the goods or defects in the packing or in
the containers
▪ spoilage or wettage" took place while the goods were in the custody of either
the carrying vessel "M/V Hayakawa Maru," which transported the cargo to
Manila, or the arrastre operator, to whom the goods were unloaded and who
allegedly kept them in open air for 9 days notwithstanding the fact that some
of the containers were deformed, cracked, or otherwise damaged
▪ Trial Court: Calvo liable
▪ CA: affirmed
ISSUE: W/N Calvo can be exempted from liability under Art. 1734(4)

HELD: NO. CA AFFIRMED.

▪ mere proof of delivery of goods in good order to a carrier, and of their arrival
at the place of destination in bad order, makes out a prima facie case against
the carrier, so that if no explanation is given as to how the injury occurred, the
carrier must be held responsible
▪ extraordinary responsibility lasts from the time the goods are unconditionally
placed in the possession of and received by the carrier for transportation until
the same are delivered actually or constructively by the carrier to the
consignee or to the person who has the right to receive the same
▪ 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 . . . 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.
▪ 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:
" x x x every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, traction
railway, subway motor vehicle, either for freight or passenger, or both, with or
without fixed route and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or steamship line, pontines,
ferries and water craft, engaged in the transportation of passengers or freight
or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system, gas, electric light, heat and power,
 water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other
similar public services. x x x"
▪ when Calvo's employees withdrew the cargo from the arrastre operator, they
did so without exception or protest either with regard to the condition of
container vans or their contents
▪ Calvo must do more than merely show the possibility that some other party
could be responsible for the damage. It must prove that it used "all reasonable
means to ascertain the nature and characteristic of goods tendered for
transport and that it exercised due care in the handling
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 mayor’s 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.
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.
Republic Act 387

ARTICLE 86. Pipe line concessionaire as common carrier. — A pipe line

concessionaire shall have the preferential right to utilize his installations for the
transportation of petroleum owned by him, but is obligated to utilize any
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.

When the pipe line concessionaire is also an exploitation concessionaire, the

Secretary of Agriculture and Natural Resources may require that the royalty in
kind of the Government received from the same concessionaire, be transported,
pro rata, with that owned by the concessionaire from the same concession; and in
all cases the petroleum of the Government shall have priority over all other
petroleum in the utilization of the excess capacity of the pipe line over that
required to transport petroleum owned by the pipe line concessionaire.
Procedure for the determination of pipe line transportation rates and the
conditions governing the transportation of petroleum other than that owned by
the concessionaire shall conform to the Regulations.

ARTICLE 87. Term of Pipe Line Concession. — The term of a Pipe Line
Concession shall not exceed twenty-five years counted from the date of its
issuance, renewable for another twenty-five years, upon application of the
concessionaire filed prior to the expiration of the original term.
Planters Products Inc V. CA (1993)

G.R. No. 101503 September 15, 1993

Lessons Applicable: Charter Party (Transportation)

FACTS:
▪ June 16 1974: Mitsubishi International Corporation (Mitsubishi) of New York,
U.S.A., 9,329.7069 M/T of Urea 46% fertilizer bought by Planters Products, Inc.
(PPI) on aboard the cargo vessel M/V "Sun Plum" owned by private Kyosei
Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San
Fernando, La Union, Philippines, as evidenced by Bill of Lading
▪ May 17 1974: a time charter-party on the vessel M/V "Sun Plum" pursuant to
the Uniform General Charter was entered into between Mitsubishi as
shipper/charterer and KKKK as shipowner, in Tokyo, Japan
▪ Before loading the fertilizer aboard the vessel, 4 of her holds were all
presumably inspected by the charterer's representative and found fit
▪ The hatches remained closed and tightly sealed throughout the entire voyage
▪ July 3, 1974: PPI unloaded the cargo from the holds into its steelbodied dump
trucks which were parked alongside the berth, using metal scoops attached to
the ship, pursuant to the terms and conditions of the charter-partly
▪ hatches remained open throughout the duration of the discharge
▪ Each time a dump truck was filled up, its load of Urea was covered with
tarpaulin before it was transported to the consignee's warehouse located
some 50 meters from the wharf
▪ Midway to the warehouse, the trucks were made to pass through a weighing
scale where they were individually weighed for the purpose of ascertaining the
net weight of the cargo.
▪ The port area was windy, certain portions of the route to the warehouse were
sandy and the weather was variable, raining occasionally while the discharge
was in progress.
▪ Tarpaulins and GI sheets were placed in-between and alongside the trucks to
contain spillages of the ferilizer
▪ It took 11 days for PPI to unload the cargo
▪ Cargo Superintendents Company Inc. (CSCI), private marine and cargo
surveyor, was hired by PPI to determine the "outturn" of the cargo shipped, by
taking draft readings of the vessel prior to and after discharge
▪ shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer
approximating 18 M/T was contaminated with dirt
▪ Certificate of Shortage/Damaged Cargo prepared by PPI
▪ short of 94.839 M/T and about 23 M/T were rendered unfit for commerce,
having been polluted with sand, rust and dirt
▪ PPI sent a claim letter 1974 to Soriamont Steamship Agencies (SSA), the
resident agent of the carrier, KKKK, for P245,969.31 representing the cost of
the alleged shortage in the goods shipped and the diminution in value of that
portion said to have been contaminated with dirt
▪ SSA: what they received was just a request for shortlanded certificate and not
a formal claim, and that they "had nothing to do with the discharge of the
shipment
▪ RTC: failure to destroy the presumption of negligence against them, SSA are
liable
▪ CA: REVERSED - failed to prove the basis of its cause of action

ISSUE: W/N a time charter between a shipowner and a charterer transforms a

common carrier into a private one as to negate the civil law presumption of
negligence in case of loss or damage to its cargo

HELD: NO. petition is DISMISSED

▪ When PPI 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
▪ carrier has sufficiently overcome, by clear and convincing proof, the prima
facie presumption of negligence. 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.
▪ 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
▪ This is a risk the shipper or the owner of the goods has to face. Clearly, KKKK
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 remise in the exercise of due diligence in order to minimize the
loss or damage to the goods it carried.
Coastwise Lighterage Corporation v. CA

Facts:
Pag-asa Sales Inc. entered into a contract to transport molasses from the province
of Negros to Manila with Coastwise Lighterage Corporation (Coastwise for
brevity), using the latter's dumb barges. The barges were towed in tandem by the
tugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila
Bay, one of the barges, "Coastwise 9", struck an unknown sunken object. The
forward buoyancy compartment was damaged, and water gushed in through a
hole "two inches wide and twenty-two inches long". As a consequence, the
molasses at the cargo tanks were contaminated. Pag-asa filed a claim against
Philippine General Insurance Company, the insurer of its cargo. Philgen paid
P700,000 for the value of the molasses lost.
Philgen then filed an action against Coastwise to recover the money it paid,
claiming to be subrogated to the claims which the consignee may have against the
carrier. Both the trial court and the Court of Appeals ruled against Coastwise.

Issues:
(1) Whether Coastwise was transformed into a private carrier by virtue of the
contract it entered into with Pag-asa, and whether it exercised the required
degree of diligence
(2) Whether Philgen was subrogated into the rights of the consignee against the
carrier

Held:
(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry
cargo from one point to another, but the possession, command mid navigation of
the vessels remained with petitioner Coastwise Lighterage. Coastwise Lighterage,
by the contract of affreightment, was not converted into a private carrier, but
remained a common carrier and was still liable as such. The law and jurisprudence
on common carriers both hold that the mere proof of delivery of goods in good
order to a carrier and the subsequent arrival of the same goods at the place of
destination in bad order makes for a prima facie case against the carrier. It follows
then that the presumption of negligence that attaches to common carriers, once
the goods it is sports are lost, destroyed or deteriorated, applies to the petitioner.
This presumption, which is overcome only by proof of the exercise of
extraordinary diligence, remained unrebutted in this case. Jesus R. Constantino,
the patron of the vessel "Coastwise 9" admitted that he was not licensed.
Coastwise Lighterage cannot safely claim to have exercised extraordinary
diligence, by placing a person whose navigational skills are questionable, at the
helm of the vessel which eventually met the fateful accident. It may also logically,
follow that a person without license to navigate, lacks not just the skill to do so,
but also the utmost familiarity with the usual and safe routes taken by seasoned
and legally authorized ones. Had the patron been licensed he could be presumed
to have both the skill and the knowledge that would have prevented the vessel's
hitting the sunken derelict ship that lay on their way to Pier 18. As a common
carrier, petitioner is liable for breach of the contract of carriage, having failed to
overcome the presumption of negligence with the loss and destruction of goods it
transported, by proof of its exercise of extraordinary diligence.
(2) Article 2207 of the Civil Code is founded on the well-settled principle of
subrogation. If the insured property is destroyed or damaged through the fault or
negligence of a party other than the assured, then the insurer, upon payment to
the assured will be subrogated to the rights of the assured to recover from the
wrongdoer to the extent that the insurer has been obligated to pay. Payment by
the insurer to the assured operated as an equitable assignment to the former of
all remedies which the latter may have against the third party whose negligence
or wrongful act caused the loss. The right of subrogation is not dependent upon,
nor does it grow out of, any private of contract or upon written assignment of,
claim. It accrues simply upon payment of the insurance claim by the insurer.
Phil Am Gen Insurance Co, Et Al. V. PKS Shipping Co (2003)

G.R. No. 149038 April 9, 2003

Lessons Applicable: Charter Party (Transportation)

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

HELD: NO. Petition is DENIED

Article 1732. Common carriers are persons, corporations, firms or associations

engaged in the business of carrying or transporting passengers or goods or both,
by land, water, or air for compensation, offering their services to the public
▪ Complementary is Section 13, paragraph (b), of the Public Service Act

public service" to be –
"x x x every person that now or hereafter may own, operate, manage, or control
in the Philippines, for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, subway motor vehicle,
either for freight or passenger, or both, with or without fixed route and whatever
may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship, or steamship line, pontines, ferries and water craft,
engaged in the transportation of passengers or freight or both, shipyard, marine
repair shop, wharf or dock, ice plant, ice refrigeration plant, canal, irrigation
system, gas, electric light, heat and power, water supply and power petroleum,
sewerage system, wire or wireless communication systems, wire or wireless
broadcasting stations and other similar public services
▪ 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
▪ distinction between:
▪ common or public carrier
▪ private or special carrier - character of the business, such that if the
undertaking is an isolated transaction , not a part of the business or
occupation, and the carrier does not hold itself out to carry the goods for the
general public or to a limited clientele, although involving the carriage of
goods for a fee
▪ EX: charter party which includes both the vessel and its crew, such as in a
bareboat or demise, where the charterer obtains the use and service of all or
some part of a ship for a period of time or a voyage or voyages and gets the
control of the vessel and its crew.
▪ The regularity of its activities in this area indicates more than just a casual
activity on its part
▪ The appellate court ruled, gathered from the testimonies and sworn marine
protests of the respective vessel masters ofLimar I and MT Iron Eagle, that
there was no way by which the 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 6 to 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.
Fabre vs CA Case Digest
Fabre vs. Court of Appeals
259 SCRA 426
G.R. No. 111127
July 26, 1996

Facts: Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazda minibus.
They used the bus principally in connection with a bus service for school children
which they operated in Manila. It was driven by Porfirio Cabil.

On November 2, 1984 private respondent Word for the World Christian Fellowship
Inc. (WWCF) arranged with the 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 usual route to Caba, La Union was through Carmen, Pangasinan. However, the
bridge at Carmen was under repair, so that petitioner Cabil, who was unfamiliar
with the area (it being his first trip to La Union), was forced to take a detour through
the town of Ba-ay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil
came upon a sharp curve on the highway. 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. Because of the mishap, several passengers were injured particularly
Amyline Antonio.

Criminal complaint was filed against the driver and the spouses were also made
jointly liable. Spouses Fabre on the other hand contended that they are not liable
since they are not a common carrier. The RTC of Makati ruled in favor of the plaintiff
and the defendants were ordered to pay jointly and severally to the plaintiffs. The
Court of Appeals affirmed the decision of the trial court.

Issue: Whether the spouses Fabre are common carriers?

Held: Petition was denied. Spouses Fabre are common carriers.

The Supreme Court held that 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.