G.R. No. L-47822 December 22, 1988 Only 150 boxes of Liberty filled milk were delivered to petitioner.

filled milk were delivered to petitioner. The

other 600 boxes never reached petitioner, since the truck which carried
PEDRO DE GUZMAN, petitioner,
these boxes was hijacked somewhere along the MacArthur Highway in
vs.
Paniqui, Tarlac, by armed men who took with them the truck, its driver,
COURT OF APPEALS and ERNESTO CENDANA, respondents.
his helper and the cargo.
Vicente D. Millora for petitioner.
On 6 January 1971, petitioner commenced action against private
Jacinto Callanta for private respondent. 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,
FELICIANO, J.: 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
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up the undelivered goods.
used bottles and scrap metal in Pangasinan. Upon gathering sufficient
quantities of such scrap material, respondent would bring such material In his Answer, private respondent denied that he was a common carrier
to Manila for resale. He utilized two (2) six-wheeler trucks which he and argued that he could not be held responsible for the value of the lost
owned for hauling the material to Manila. On the return trip to goods, such loss having been due to force majeure.
Pangasinan, respondent would load his vehicles with cargo which various
On 10 December 1975, the trial court rendered a Decision 1 finding
merchants wanted delivered to differing establishments in Pangasinan.
private respondent to be a common carrier and holding him liable for the
For that service, respondent charged freight rates which were commonly
value of the undelivered goods (P 22,150.00) as well as for P 4,000.00 as
lower than regular commercial rates.
damages and P 2,000.00 as attorney's fees.
Sometime in November 1970, petitioner Pedro de Guzman a merchant
On appeal before the Court of Appeals, respondent urged that the trial
and authorized dealer of General Milk Company (Philippines), Inc. in
court had erred in considering him a common carrier; in finding that he
Urdaneta, Pangasinan, contracted with respondent for the hauling of 750
had habitually offered trucking services to the public; in not exempting
cartons of Liberty filled milk from a warehouse of General Milk in Makati,
him from liability on the ground of force majeure; and in ordering him to
Rizal, to petitioner's establishment in Urdaneta on or before 4 December
pay damages and attorney's fees.
1970. Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck driven The Court of Appeals reversed the judgment of the trial court and held
by respondent himself, while 600 cartons were placed on board the other that respondent had been engaged in transporting return loads of freight
truck which was driven by Manuel Estrada, respondent's driver and "as a casual
employee. 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 So understood, the concept of "common carrier" under Article 1732 may
assigning as errors the following conclusions of the Court of Appeals: be seen to coincide neatly with the notion of "public service," under the
Public Service Act (Commonwealth Act No. 1416, as amended) which at
1. that private respondent was not a common carrier;
least partially supplements the law on common carriers set forth in the
2. that the hijacking of respondent's truck was force majeure; and Civil Code. Under Section 13, paragraph (b) of the Public Service Act,
"public service" includes:
3. that respondent was not liable for the value of the undelivered cargo.
(Rollo, p. 111) ... every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or
We consider first the issue of whether or not private respondent Ernesto
limited clientele, whether permanent, occasional or accidental, and done
Cendana may, under the facts earlier set forth, be properly characterized
for general business purposes, any common carrier, railroad, street railway,
as a common carrier.
traction railway, subway motor vehicle, either for freight or passenger, or
The Civil Code defines "common carriers" in the following terms: both, with or without fixed route and whatever may be its classification,
freight or carrier service of any class, express service, steamboat, or
Article 1732. Common carriers are persons, corporations, firms or steamship line, pontines, ferries and water craft, engaged in the
associations engaged in the business of carrying or transporting transportation of passengers or freight or both, shipyard, marine repair
passengers or goods or both, by land, water, or air for compensation, shop, wharf or dock, ice plant,
offering their services to the public. ice-refrigeration plant, canal, irrigation system, gas, electric light, heat
The above article makes no distinction between one and power, water supply and power petroleum, sewerage system, wire or
whose principal business activity is the carrying of persons or goods or wireless communications systems, wire or wireless broadcasting stations
both, and one who does such carrying only as an ancillary activity (in and other similar public services. ... (Emphasis supplied)
local Idiom as "a sideline"). Article 1732 also carefully avoids making any It appears to the Court that private respondent is properly characterized
distinction between a person or enterprise offering transportation as a common carrier even though he merely "back-hauled" goods for
service on a regular or scheduled basis and one offering such service on other merchants from Manila to Pangasinan, although such back-hauling
an occasional, episodic or unscheduled basis. Neither does Article 1732 was done on a periodic or occasional rather than regular or scheduled
distinguish between a carrier offering its services to the "general public," manner, and even though private respondent's principal occupation was
i.e., the general community or population, and one who offers services or not the carriage of goods for others. There is no dispute that private
solicits business only from a narrow segment of the general population. respondent charged his customers a fee for hauling their goods; that fee
We think that Article 1733 deliberaom making such distinctions. frequently fell below commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held no Article 1734 establishes the general rule that common carriers are
certificate of public convenience, and concluded he was not a common responsible for the loss, destruction or deterioration of the goods which
carrier. This is palpable error. A certificate of public convenience is not a they carry, "unless the same is due to any of the following causes only:
requisite for the incurring of liability under the Civil Code provisions
(1) Flood, storm, earthquake, lightning or other natural disaster or
governing common carriers. That liability arises the moment a person or
calamity;
firm acts as a common carrier, without regard to whether or not such
(2) Act of the public enemy in war, whether international or civil;
carrier has also complied with the requirements of the applicable
(3) Act or omission of the shipper or owner of the goods;
regulatory statute and implementing regulations and has been granted a
(4) The character-of the goods or defects in the packing or-in the
certificate of public convenience or other franchise. To exempt private
containers; and
respondent from the liabilities of a common carrier because he has not
(5) Order or act of competent public authority.
secured the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward private It is important to point out that the above list of causes of loss,
respondent precisely for failing to comply with applicable statutory destruction or deterioration which exempt the common carrier for
requirements. The business of a common carrier impinges directly and responsibility therefor, is a closed list. Causes falling outside the foregoing
intimately upon the safety and well being and property of those members list, even if they appear to constitute a species of force majeure fall within
of the general community who happen to deal with such carrier. The law the scope of Article 1735, which provides as follows:
imposes duties and liabilities upon common carriers for the safety and
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the
protection of those who utilize their services and the law cannot allow a
preceding article, if the goods are lost, destroyed or deteriorated, common
common carrier to render such duties and liabilities merely facultative by
carriers are presumed to have been at fault or to have acted negligently,
simply failing to obtain the necessary permits and authorizations.
unless they prove that they observed extraordinary diligence as required in
We turn then to the liability of private respondent as a common carrier. Article 1733. (Emphasis supplied)
Common carriers, "by the nature of their business and for reasons of Applying the above-quoted Articles 1734 and 1735, we note firstly that
public policy" 2 are held to a very high degree of care and diligence the specific cause alleged in the instant case — the hijacking of the
("extraordinary diligence") in the carriage of goods as well as of carrier's truck — does not fall within any of the five (5) categories of
passengers. The specific import of extraordinary diligence in the care of exempting causes listed in Article 1734. It would follow, therefore, that
goods transported by a common carrier is, according to Article 1733, the hijacking of the carrier's vehicle must be dealt with under the
"further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7" provisions of Article 1735, in other words, that the private respondent as
of the Civil Code. common carrier is presumed to have been at fault or to have acted
negligently. This presumption, however, may be overthrown by proof of (7) that the common carrier shall not responsible for the loss, destruction
extraordinary diligence on the part of private respondent. 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.
Petitioner insists that private respondent had not observed extraordinary
(Emphasis supplied)
diligence in the care of petitioner's goods. Petitioner argues that in the
circumstances of this case, private respondent should have hired a Under Article 1745 (6) above, a common carrier is held responsible —
security guard presumably to ride with the truck carrying the 600 cartons and will not be allowed to divest or to diminish such responsibility —
of Liberty filled milk. We do not believe, however, that in the instant case, even for acts of strangers like thieves or robbers, except where such
the standard of extraordinary diligence required private respondent to thieves or robbers in fact acted "with grave or irresistible threat, violence
retain a security guard to ride with the truck and to engage brigands in a or force." We believe and so hold that the limits of the duty of
firelight at the risk of his own life and the lives of the driver and his extraordinary diligence in the vigilance over the goods carried are
helper. reached where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force."
The precise issue that we address here relates to the specific
requirements of the duty of extraordinary diligence in the vigilance over In the instant case, armed men held up the second truck owned by private
the goods carried in the specific context of hijacking or armed robbery. 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
As noted earlier, the duty of extraordinary diligence in the vigilance over
Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the
goods is, under Article 1733, given additional specification not only by
Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar
Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6,
Oria and one John Doe." There, the accused were charged with willfully
Article 1745 provides in relevant part:
and unlawfully taking and carrying away with them the second truck,
Any of the following or similar stipulations shall be considered driven by Manuel Estrada and loaded with the 600 cartons of Liberty
unreasonable, unjust and contrary to public policy: filled milk destined for delivery at petitioner's store in Urdaneta,
Pangasinan. The decision of the trial court shows that the accused acted
xxx xxx xxx
with grave, if not irresistible, threat, violence or force. 3 Three (3) of the
(5) that the common carrier shall not be responsible for the acts or five (5) hold-uppers were armed with firearms. The robbers not only took
omissions of his or its employees; 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
(6) that the common carrier's liability for acts committed by thieves, or of province (in Zambales). The hijacked truck was subsequently found by
robbers who do not act with grave or irresistible threat, violence or force, the police in Quezon City. The Court of First Instance convicted all the
is dispensed with or diminished; and 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.
 the tax under protest in the amount of P239,019.01 for the first quarter of
1993.
G.R. No. 125948 December 29, 1998
On January 20, 1994, petitioner filed a letter-protest addressed to the
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
respondent City Treasurer, the pertinent portion of which reads:
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS Please note that our Company (FPIC) is a pipeline operator with a
CITY and ADORACION C. ARELLANO, in her official capacity as City government concession granted under the Petroleum Act. It is engaged in
Treasurer of Batangas, respondents. 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
MARTINEZ, J.: of the Local Government Code of 1991 . . . .

This petition for review on certiorari assails the Decision of the Court of Moreover, Transportation contractors are not included in the
Appeals dated November 29, 1995, in CA-G.R. SP No. 36801, affirming the enumeration of contractors under Section 131, Paragraph (h) of the Local
decision of the Regional Trial Court of Batangas City, Branch 84, in Civil Government Code. Therefore, the authority to impose tax "on contractors
Case No. 4293, which dismissed petitioners' complaint for a business tax and other independent contractors" under Section 143, Paragraph (e) of
refund imposed by the City of Batangas. the Local Government Code does not include the power to levy on
transportation contractors.
Petitioner is a grantee of a pipeline concession under Republic Act No.
387, as amended, to contract, install and operate oil pipelines. The The imposition and assessment cannot be categorized as a mere fee
original pipeline concession was granted in 1967 1 and renewed by the authorized under Section 147 of the Local Government Code. The said
Energy Regulatory Board in 1992. 2 section limits the imposition of fees and charges on business to such
amounts as may be commensurate to the cost of regulation, inspection,
Sometime in January 1995, petitioner applied for a mayor's permit with
and licensing. Hence, assuming arguendo that FPIC is liable for the license
the Office of the Mayor of Batangas City. However, before the mayor's
fee, the imposition thereof based on gross receipts is violative of the
permit could be issued, the respondent City Treasurer required petitioner
aforecited provision. The amount of P956,076.04 (P239,019.01 per
to pay a local tax based on its gross receipts for the fiscal year 1993
quarter) is not commensurate to the cost of regulation, inspection and
pursuant to the Local Government Code 3. The respondent City Treasurer
licensing. The fee is already a revenue raising measure, and not a mere
assessed a business tax on the petitioner amounting to P956,076.04
regulatory imposition.4
payable in four installments based on the gross receipts for products
pumped at GPS-1 for the fiscal year 1993 which amounted to On March 8, 1994, the respondent City Treasurer denied the protest
P181,681,151.00. In order not to hamper its operations, petitioner paid contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under Section . . . the exemption to tax claimed by the plaintiff has become unclear. It is a
133 (j) of the Local Government Code.5 rule that tax exemptions are to be strictly construed against the taxpayer,
taxes being the lifeblood of the government. Exemption may therefore be
On June 15, 1994, petitioner filed with the Regional Trial Court of
granted only by clear and unequivocal provisions of law.
Batangas City a complaint6 for tax refund with prayer for writ of
preliminary injunction against respondents City of Batangas and Plaintiff claims that it is a grantee of a pipeline concession under Republic
Adoracion Arellano in her capacity as City Treasurer. In its complaint, Act 387. (Exhibit A) whose concession was lately renewed by the Energy
petitioner alleged, inter alia, that: (1) the imposition and collection of the Regulatory Board (Exhibit B). Yet neither said law nor the deed of
business tax on its gross receipts violates Section 133 of the Local concession grant any tax exemption upon the plaintiff.
Government Code; (2) the authority of cities to impose and collect a tax
Even the Local Government Code imposes a tax on franchise holders
on the gross receipts of "contractors and independent contractors" under
under Sec. 137 of the Local Tax Code. Such being the situation obtained in
Sec. 141 (e) and 151 does not include the authority to collect such taxes
this case (exemption being unclear and equivocal) resort to distinctions
on transportation contractors for, as defined under Sec. 131 (h), the term
or other considerations may be of help:
"contractors" excludes transportation contractors; and, (3) the City
Treasurer illegally and erroneously imposed and collected the said tax, 1. That the exemption granted under Sec. 133 (j) encompasses
thus meriting the immediate refund of the tax paid.7 only common carriers so as not to overburden the riding public or
commuters with taxes. Plaintiff is not a common carrier, but a special
Traversing the complaint, the respondents argued that petitioner cannot
carrier extending its services and facilities to a single specific or "special
be exempt from taxes under Section 133 (j) of the Local Government Code
customer" under a "special contract."
as said exemption applies only to "transportation contractors and
persons engaged in the transportation by hire and common carriers by 2. The Local Tax Code of 1992 was basically enacted to give more and
air, land and water." Respondents assert that pipelines are not included in effective local autonomy to local governments than the previous
the term "common carrier" which refers solely to ordinary carriers such enactments, to make them economically and financially viable to serve
as trucks, trains, ships and the like. Respondents further posit that the the people and discharge their functions with a concomitant obligation to
term "common carrier" under the said code pertains to the mode or accept certain devolution of powers, . . . So, consistent with this policy
manner by which a product is delivered to its destination. 8 even franchise grantees are taxed (Sec. 137) and contractors are also
taxed under Sec. 143 (e) and 151 of the Code.9
On October 3, 1994, the trial court rendered a decision dismissing the
complaint, ruling in this wise: Petitioner assailed the aforesaid decision before this Court via a petition
for review. On February 27, 1995, we referred the case to the respondent
. . . Plaintiff is either a contractor or other independent contractor.
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 3. He must undertake to carry by the method by which his business is
reconsideration was denied on July 18, 1996. 12 conducted and over his established roads; and
Hence, this petition. At first, the petition was denied due course in a 4. The transportation must be for hire. 15
Resolution dated November 11, 1996. 13 Petitioner moved for a
Based on the above definitions and requirements, there is no doubt that
reconsideration which was granted by this Court in a Resolution 14 of
petitioner is a common carrier. It is engaged in the business of
January 22, 1997. Thus, the petition was reinstated.
transporting or carrying goods, i.e. petroleum products, for hire as a
Petitioner claims that the respondent Court of Appeals erred in holding public employment. It undertakes to carry for all persons indifferently,
that (1) the petitioner is not a common carrier or a transportation that is, to all persons who choose to employ its services, and transports
contractor, and (2) the exemption sought for by petitioner is not clear the goods by land and for compensation. The fact that petitioner has a
under the law. limited clientele does not exclude it from the definition of a common
carrier. In De Guzman vs. Court of Appeals  16 we ruled that:
There is merit in the petition.
The above article (Art. 1732, Civil Code) makes no distinction between
A "common carrier" may be defined, broadly, as one who holds himself
one whose principal business activity is the carrying of persons or goods
out to the public as engaged in the business of transporting persons or
or both, and one who does such carrying only as an ancillary activity (in
property from place to place, for compensation, offering his services to
local idiom, as a "sideline"). Article 1732 . . . avoids making any distinction
the public generally.
between a person or enterprise offering transportation service on
Art. 1732 of the Civil Code defines a "common carrier" as "any person, a regular or scheduled basis and one offering such service on
corporation, firm or association engaged in the business of carrying or an occasional, episodic or unscheduled basis. Neither does Article 1732
transporting passengers or goods or both, by land, water, or air, for distinguish between a carrier offering its services to the "general
compensation, offering their services to the public." public," i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of the general
The test for determining whether a party is a common carrier of goods is:
population. We think that Article 1877 deliberately refrained from
1. He must be engaged in the business of carrying goods for others as a making such distinctions.
public employment, and must hold himself out as ready to engage in the
So understood, the concept of "common carrier" under Article 1732 may
transportation of goods for person generally as a business and not as a
be seen to coincide neatly with the notion of "public service," under the
casual occupation;
Public Service Act (Commonwealth Act No. 1416, as amended) which at
2. He must undertake to carry goods of the kind to which his business is least partially supplements the law on common carriers set forth in the
confined;
Civil Code. Under Section 13, paragraph (b) of the Public Service Act, Art. 86. Pipe line concessionaire as common carrier. — A pipe line shall
"public service" includes: have the preferential right to utilize installations for the transportation of
petroleum owned by him, but is obligated to utilize the remaining
every person that now or hereafter may own, operate. manage, or control
transportation capacity pro rata for the transportation of such other
in the Philippines, for hire or compensation, with general or limited
petroleum as may be offered by others for transport, and to charge
clientele, whether permanent, occasional or accidental, and done for
without discrimination such rates as may have been approved by the
general business purposes, any common carrier, railroad, street railway,
Secretary of Agriculture and Natural Resources.
traction railway, subway motor vehicle, either for freight or passenger, or
both, with or without fixed route and whatever may be its classification, Republic Act 387 also regards petroleum operation as a public utility.
freight or carrier service of any class, express service, steamboat, or Pertinent portion of Article 7 thereof provides:
steamship line, pontines, ferries and water craft, engaged in the
that everything relating to the exploration for and exploitation of
transportation of passengers or freight or both, shipyard, marine repair
petroleum . . . and everything relating to the manufacture, refining,
shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation
storage, or transportation by special methods of petroleum, is hereby
system gas, electric light heat and power, water supply and power
declared to be a public utility. (Emphasis Supplied)
petroleum, sewerage system, wire or wireless communications systems,
wire or wireless broadcasting stations and other similar public services. The Bureau of Internal Revenue likewise considers the petitioner a
(Emphasis Supplied) "common carrier." In BIR Ruling No. 069-83, it declared:
Also, respondent's argument that the term "common carrier" as used in . . . since [petitioner] is a pipeline concessionaire that is engaged only in
Section 133 (j) of the Local Government Code refers only to common transporting petroleum products, it is considered a common carrier
carriers transporting goods and passengers through moving vehicles or under Republic Act No. 387 . . . . Such being the case, it is not subject to
vessels either by land, sea or water, is erroneous. withholding tax prescribed by Revenue Regulations No. 13-78, as
amended.
As correctly pointed out by petitioner, the definition of "common
carriers" in the Civil Code makes no distinction as to the means of From the foregoing disquisition, there is no doubt that petitioner is a
transporting, as long as it is by land, water or air. It does not provide that "common carrier" and, therefore, exempt from the business tax as
the transportation of the passengers or goods should be by motor vehicle. provided for in Section 133 (j), of the Local Government Code, to wit:
In fact, in the United States, oil pipe line operators are considered
Sec. 133. Common Limitations on the Taxing Powers of Local Government
common carriers. 17
Units. — Unless otherwise provided herein, the exercise of the taxing
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner powers of provinces, cities, municipalities, and barangays shall not extend
is considered a "common carrier." Thus, Article 86 thereof provides that: to the levy of the following:
x x x           x x x          x x x What we want to guard against here, Mr. Speaker, is the imposition of
taxes by local government units on the carrier business. Local
(j) Taxes on the gross receipts of transportation contractors and persons
government units may impose taxes on top of what is already being
engaged in the transportation of passengers or freight by hire and
imposed by the National Internal Revenue Code which is the so-called
common carriers by air, land or water, except as provided in this Code.
"common carriers tax." We do not want a duplication of this tax, so we
The deliberations conducted in the House of Representatives on the Local just provided for an exception under Section 125 [now Sec. 137] that a
Government Code of 1991 are illuminating: province may impose this tax at a specific rate.

MR. AQUINO (A). Thank you, Mr. Speaker. MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . . 18

Mr. Speaker, we would like to proceed to page 95, line 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
1. It states: "SEC. 121 [now Sec. 131]. Common Limitations on the Taxing
carriers is to prevent a duplication of the so-called "common carrier's
Powers of Local Government Units." . . .
tax."
MR. AQUINO (A.). Thank you Mr. Speaker.
Petitioner is already paying three (3%) percent common carrier's tax on
Still on page 95, subparagraph 5, on taxes on the business of its gross sales/earnings under the National Internal Revenue Code. 19 To
transportation. This appears to be one of those being deemed to be tax petitioner again on its gross receipts in its transportation of
exempted from the taxing powers of the local government units. May we petroleum business would defeat the purpose of the Local Government
know the reason why the transportation business is being excluded from Code.
the taxing powers of the local government units?
WHEREFORE, the petition is hereby GRANTED. The decision of the
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in Section respondent Court of Appeals dated November 29, 1995 in CA-G.R. SP No.
121 (now Sec. 131), line 16, paragraph 5. It states that local government 36801 is REVERSED and SET ASIDE.
units may not impose taxes on the business of transportation, except as
SO ORDERED.
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.
 March 6, 1964 before the Court of First Instance of Manila a complaint for
recovery of P14,870.71 with legal interest, plus attorney's fees.
In answer, Luzon Stevedoring Corporation alleged that it delivered with
G.R. No. L-25599             April 4, 1968
due diligence the goods in the same quantity and quality that it had
HOME INSURANCE COMPANY, plaintiff-appellee, received the same from the carrier. It also claimed that plaintiff's claim
vs. had prescribed under Article 366 of the Code of Commerce stating that
AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING the claim must be made within 24 hours from receipt of the cargo.
CORPORATION, defendants,
American Steamship Agencies denied liability by alleging that under the
AMERICAN STEAMSHIP AGENCIES, INC., defendant-appellant.
provisions of the Charter party referred to in the bills of lading, the
William H. Quasha and Associates for plaintiff-appellee. charterer, not the shipowner, was responsible for any loss or damage of
Ross, Selph, Salcedo and Associates for defendant-appellant. the cargo. Furthermore, it claimed to have exercised due diligence in
stowing the goods and that as a mere forwarding agent, it was not
BENGZON, J.P., J.:
responsible for losses or damages to the cargo.
"Consorcio Pesquero del Peru of South America" shipped freight pre-paid
On November 17, 1965, the Court of First Instance, after trial, absolved
at Chimbate, Peru, 21,740 jute bags of Peruvian fish meal through SS
Luzon Stevedoring Corporation, having found the latter to have merely
Crowborough, covered by clean bills of lading Numbers 1 and 2, both
delivered what it received from the carrier in the same condition and
dated January 17, 1963. The cargo, consigned to San Miguel Brewery, Inc.,
quality, and ordered American Steamship Agencies to pay plaintiff
now San Miguel Corporation, and insured by Home Insurance Company
P14,870.71 with legal interest plus P1,000 attorney's fees. Said court
for $202,505, arrived in Manila on March 7, 1963 and was discharged into
cited the following grounds:
the lighters of Luzon Stevedoring Company. When the cargo was
delivered to consignee San Miguel Brewery Inc., there were shortages (a) The non-liability claim of American Steamship Agencies under the
amounting to P12,033.85, causing the latter to lay claims against Luzon charter party contract is not tenable because Article 587 of the Code of
Stevedoring Corporation, Home Insurance Company and the American Commerce makes the ship agent also civilly liable for damages in favor of
Steamship Agencies, owner and operator of SS Crowborough. third persons due to the conduct of the captain of the carrier;

Because the others denied liability, Home Insurance Company paid the (b) The stipulation in the charter party contract exempting the owner
consignee P14,870.71 — the insurance value of the loss, as full settlement from liability is against public policy under Article 1744 of the Civil Code;
of the claim. Having been refused reimbursement by both the Luzon
(c) In case of loss, destruction or deterioration of goods, common carriers
Stevedoring Corporation and American Steamship Agencies, Home
are presumed at fault or negligent under Article 1735 of the Civil Code
Insurance Company, as subrogee to the consignee, filed against them on
unless they prove extraordinary diligence, and they cannot by contract seaworthy and to secure that she be properly manned, equipped and
exempt themselves from liability resulting from their negligence or that supplied or by the personal act or default of the owner or its manager.
of their servants; and Said paragraph, however, exempts the owner of the vessel from any loss
or damage or delay arising from any other source, even from the neglect
(d) When goods are delivered to the carrier in good order and the same
or fault of the captain or crew or some other person employed by the
are in bad order at the place of destination, the carrier is prima
owner on board, for whose acts the owner would ordinarily be liable
facie liable.
except for said paragraph..
Disagreeing with such judgment, American Steamship Agencies appealed
Regarding the stipulation, the Court of First Instance declared the
directly to Us. The appeal brings forth for determination this legal issue:
contract as contrary to Article 587 of the Code of Commerce making the
Is the stipulation in the charter party of the owner's non-liability valid so
ship agent civilly liable for indemnities suffered by third persons arising
as to absolve the American Steamship Agencies from liability for loss?
from acts or omissions of the captain in the care of the goods and Article
The bills of lading,1 covering the shipment of Peruvian fish meal provide 1744 of the Civil Code under which a stipulation between the common
at the back thereof that the bills of lading shall be governed by and carrier and the shipper or owner limiting the liability of the former for
subject to the terms and conditions of the charter party, if any, otherwise, loss or destruction of the goods to a degree less than extraordinary
the bills of lading prevail over all the agreements. 2 On the of the bills are diligence is valid provided it be reasonable, just and not contrary to
stamped "Freight prepaid as per charter party. Subject to all terms, public policy. The release from liability in this case was held
conditions and exceptions of charter party dated London, Dec. 13, 1962." unreasonable and contrary to the public policy on common carriers.

A perusal of the charter party3 referred to shows that while the The provisions of our Civil Code on common carriers were taken from
possession and control of the ship were not entirely transferred to the Anglo-American law.7 Under American jurisprudence, a common carrier
charterer,4 the vessel was chartered to its full and complete capacity (Exh. undertaking to carry a special cargo or chartered to a special person only,
3). Furthermore, the, charter had the option to go north or south or vice- becomes a private carrier.8 As a private carrier, a stipulation exempting
versa,5 loading, stowing and discharging at its risk and the owner from liability for the negligence of its agent is not against
expense.6 Accordingly, the charter party contract is one of affreightment public policy,9 and is deemed valid.
over the whole vessel rather than a demise. As such, the liability of the
Such doctrine We find reasonable. The Civil Code provisions on common
shipowner for acts or negligence of its captain and crew, would remain in
carriers should not be applied where the carrier is not acting as such but
the absence of stipulation.
as a private carrier. The stipulation in the charter party absolving the
Section 2, paragraph 2 of the charter party, provides that the owner is owner from liability for loss due to the negligence of its agent would be
liable for loss or damage to the goods caused by personal want of due void only if the strict public policy governing common carriers is applied.
diligence on its part or its manager to make the vessel in all respects
Such policy has no force where the public at large is not involved, as in
the case of a ship totally chartered for the use of a single party.
And furthermore, in a charter of the entire vessel, the bill of lading issued
by the master to the charterer, as shipper, is in fact and legal
contemplation merely a receipt and a document of title not a contract, for
the contract is the charter party. 10 The consignee may not claim ignorance
of said charter party because the bills of lading expressly referred to the
same. Accordingly, the consignees under the bills of lading must likewise
abide by the terms of the charter party. And as stated, recovery cannot be
had thereunder, for loss or damage to the cargo, against the shipowners,
unless the same is due to personal acts or negligence of said owner or its
manager, as distinguished from its other agents or employees. In this
case, no such personal act or negligence has been proved.
WHEREFORE, the judgment appealed from is hereby reversed and
appellant is absolved from liability to plaintiff. No costs. So ordered.
 reasonable attorney's fees in the amount equivalent to five (5) percent of
the amount of the claim and the costs of the suit.
Plaintiff is hereby ordered to pay defendant Seven Brothers Shipping
Corporation the sum of TWO HUNDRED THIRTY THOUSAND PESOS
G.R. No. 102316 June 30, 1997 (P230,000.00) representing the balance of the stipulated freight charges.

VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC., petitioner, Defendant South Sea Surety and Insurance Company's counterclaim is
vs. hereby dismissed.
COURT OF APPEALS AND SEVEN BROTHERS SHIPPING
In its assailed Decision, Respondent Court of Appeals held:
CORPORATION, respondents.
WHEREFORE, the appealed judgment is hereby AFFIRMED except in so
far (sic) as the liability of the Seven Brothers Shipping Corporation to the
PANGANIBAN, J.: plaintiff is concerned which is hereby REVERSED and SET ASIDE. 3

Is a stipulation in a charter party that the "(o)wners shall not be The Facts
responsible for loss, split, short-landing, breakages and any kind of
The factual antecedents of this case as narrated in the Court of Appeals
damages to the cargo" 1 valid? This is the main question raised in this
Decision are as follows:
petition for review assailing the Decision of Respondent Court of
Appeals 2 in CA-G.R. No. CV-20156 promulgated on October 15, 1991. The It appears that on 16 January 1984, plaintiff (Valenzuela Hardwood and
Court of Appeals modified the judgment of the Regional Trial Court of Industrial Supply, Inc.) entered into an agreement with the defendant
Valenzuela, Metro Manila, Branch 171, the dispositive portion of which Seven Brothers (Shipping Corporation) whereby the latter undertook to
reads: load on board its vessel M/V Seven Ambassador the former's lauan round
logs numbering 940 at the port of Maconacon, Isabela for shipment to
WHEREFORE, Judgment is hereby rendered ordering South Sea Surety
Manila.
and Insurance Co., Inc. to pay plaintiff the sum of TWO MILLION PESOS
(P2,000,000.00) representing the value of the policy of the lost logs with On 20 January 1984, plaintiff insured the logs against loss and/or damage
legal interest thereon from the date of demand on February 2, 1984 until with defendant South Sea Surety and Insurance Co., Inc. for P2,000,000.00
the amount is fully paid or in the alternative, defendant Seven Brothers and the latter issued its Marine Cargo Insurance Policy No. 84/24229 for
Shipping Corporation to pay plaintiff the amount of TWO MILLION PESOS P2,000,000.00 on said date.
(2,000,000.00) representing the value of lost logs plus legal interest from
On 24 January 1984, the plaintiff gave the check in payment of the
the date of demand on April 24, 1984 until full payment thereof; the
premium on the insurance policy to Mr. Victorio Chua.
In the meantime, the said vessel M/V Seven Ambassador sank on 25 C. The lower court erred in holding defendant-appellant Seven Brothers
January 1984 resulting in the loss of the plaintiff's insured logs. Shipping Corporation liable in the alternative and ordering/directing it to
pay plaintiff-appellee the amount of two million (2,000,000.00) pesos
On 30 January 1984, a check for P5,625.00 (Exh. "E") to cover payment of
representing the value of the logs plus legal interest from date of demand
the premium and documentary stamps due on the policy was tendered
until fully paid.
due to the insurer but was not accepted. Instead, the South Sea Surety and
Insurance Co., Inc. cancelled the insurance policy it issued as of the date of D. The lower court erred in ordering defendant-appellant Seven Brothers
the inception for non-payment of the premium due in accordance with Shipping Corporation to pay appellee reasonable attorney's fees in the
Section 77 of the Insurance Code. amount equivalent to 5% of the amount of the claim and the costs of the
suit.
On 2 February 1984, plaintiff demanded from defendant South Sea Surety
and Insurance Co., Inc. the payment of the proceeds of the policy but the E. The lower court erred in not awarding defendant-appellant Seven
latter denied liability under the policy. Plaintiff likewise filed a formal Brothers Corporation its counter-claim for attorney's fees.
claim with defendant Seven Brothers Shipping Corporation for the value
F. The lower court erred in not dismissing the complaint against Seven
of the lost logs but the latter denied the claim.
Brothers Shipping Corporation.
After due hearing and trial, the court a quo rendered judgment in favor of
Defendant-appellant South Sea Surety and Insurance Co., Inc. assigns the
plaintiff and against defendants. Both defendants shipping corporation
following errors:
and the surety company appealed.
A. The trial court erred in holding that Victorio Chua was an agent of
Defendant-appellant Seven Brothers Shipping Corporation impute (sic) to
defendant-appellant South Sea Surety and Insurance Company, Inc. and
the court a quo the following assignment of errors, to wit:
likewise erred in not holding that he was the representative of the
A. The lower court erred in holding that the proximate cause of the insurance broker Columbia Insurance Brokers, Ltd.
sinking of the vessel Seven Ambassadors, was not due to fortuitous event
B. The trial court erred in holding that Victorio Chua received
but to the negligence of the captain in stowing and securing the logs on
compensation/commission on the premiums paid on the policies issued
board, causing the iron chains to snap and the logs to roll to the portside.
by the defendant-appellant South Sea Surety and Insurance Company, Inc.
B. The lower court erred in declaring that the non-liability clause of the
C. The trial court erred in not applying Section 77 of the Insurance Code.
Seven Brothers Shipping Corporation from logs (sic) of the cargo
stipulated in the charter party is void for being contrary to public policy D. The trial court erred in disregarding the "receipt of payment clause"
invoking article 1745 of the New Civil Code. attached to and forming part of the Marine Cargo Insurance Policy No.
84/24229.
E. The trial court in disregarding the statement of account or bill stating Under American jurisprudence, a common carrier undertaking to carry a
the amount of premium and documentary stamps to be paid on the policy special cargo or chartered to a special person only, becomes a private
by the plaintiff-appellee. carrier.
F. The trial court erred in disregarding the endorsement of cancellation of As a private carrier, a stipulation exempting the owner from liability even
the policy due to non-payment of premium and documentary stamps. for the negligence of its agent is valid (Home Insurance Company, Inc. vs.
American Steamship Agencies, Inc., 23 SCRA 24).
G. The trial court erred in ordering defendant-appellant South Sea Surety
and Insurance Company, Inc. to pay plaintiff-appellee P2,000,000.00 The shipping corporation should not therefore be held liable for the loss
representing value of the policy with legal interest from 2 February 1984 of the logs. 6
until the amount is fully paid,
South Sea and herein Petitioner Valenzuela Hardwood and Industrial
H. The trial court erred in not awarding to the defendant-appellant the Supply, Inc. ("Valenzuela") filed separate petitions for review before this
attorney's fees alleged and proven in its counterclaim. Court. In a Resolution dated June 2, 1995, this Court denied the petition of
South
The primary issue to be resolved before us is whether defendants
Sea. 7 There the Court found no reason to reverse the factual findings of
shipping corporation and the surety company are liable to the plaintiff for
the trial court and the Court of Appeals that Chua was indeed an
the latter's lost logs. 4
authorized agent of South Sea when he received Valenzuela's premium
The Court of Appeals affirmed in part the RTC judgment by sustaining the payment for the marine cargo insurance policy which was thus binding
liability of South Sea Surety and Insurance Company ("South Sea"), but on the insurer. 8
modified it by holding that Seven Brothers Shipping Corporation ("Seven
The Court is now called upon to resolve the petition for review filed by
Brothers") was not liable for the lost cargo. 5 In modifying the RTC
Valenzuela assailing the CA Decision which exempted Seven Brothers
judgment, the respondent appellate court ratiocinated thus:
from any liability for the lost cargo.
It appears that there is a stipulation in the charter party that the ship
The Issue
owner would be exempted from liability in case of loss.
Petitioner Valenzuela's arguments resolve around a single issue:
The court a quo erred in applying the provisions of the Civil Code on
"whether or not respondent Court (of Appeals) committed a reversible
common carriers to establish the liability of the shipping corporation. The
error in upholding the validity of the stipulation in the charter party
provisions on common carriers should not be applied where the carrier is
executed between the petitioner and the private respondent exempting
not acting as such but as a private carrier.
the latter from liability for the loss of petitioner's logs arising from the
negligence of its (Seven Brothers') captain." 9
The Court's Ruling (4) That the common carrier shall exercise a degree of diligence less than
that of a good father of a family, or of a man of ordinary prudence in the
The petition is not meritorious.
vigilance over the movables transported;
Validity of Stipulation is Lis Mota
(5) That the common carrier shall not be responsible for the acts or
The charter party between the petitioner and private respondent omissions of his or its employees;
stipulated that the "(o)wners shall not be responsible for loss, split, short-
(6) That the common carrier's liability for acts committed by thieves, or
landing, breakages and any kind of damages to the cargo." 10 The validity
of robbers who do not act with grave or irresistible threat, violence or
of this stipulation is the lis mota of this case.
force, is dispensed with or diminished;
It should be noted at the outset that there is no dispute between the
(7) That the common carrier is not responsible for the loss, destruction,
parties that the proximate cause of the sinking of M/V Seven
or deterioration of goods on account of the defective condition of the car,
Ambassadors resulting in the loss of its cargo was the "snapping of the
vehicle, ship, airplane or other equipment used in the contract of carriage.
iron chains and the subsequent rolling of the logs to the portside due to
the negligence of the captain in stowing and securing the logs on board Petitioner Valenzuela adds that the stipulation is void for being contrary
the vessel and not due to fortuitous event." 11 Likewise undisputed is the to Articles 586 and 587 of the Code of Commerce 14 and Articles 1170 and
status of Private Respondent Seven Brothers as a private carrier when it 1173 of the Civil Code. Citing Article 1306 and paragraph 1, Article 1409
contracted to transport the cargo of Petitioner Valenzuela. Even the latter of the Civil Code, 15 petitioner further contends that said stipulation "gives
admits this in its petition. 12 no duty or obligation to the private respondent to observe the diligence of
a good father of a family in the custody and transportation of the cargo."
The trial court deemed the charter party stipulation void for being
contrary to public policy, 13 citing Article 1745 of the Civil Code which The Court is not persuaded. As adverted to earlier, it is undisputed that
provides: private respondent had acted as a private carrier in transporting
petitioner's lauan logs. Thus, Article 1745 and other Civil Code provisions
Art. 1745. Any of the following or similar stipulations shall be considered
on common carriers which were cited by petitioner may not be applied
unreasonable, unjust and contrary to public policy:
unless expressly stipulated by the parties in their charter party. 16
(1) That the goods are transported at the risk of the owner or shipper;
In a contract of private carriage, the parties may validly stipulate that
(2) That the common carrier will not be liable for any loss, destruction, or responsibility for the cargo rests solely on the charterer, exempting the
deterioration of the goods; shipowner from liability for loss of or damage to the cargo caused even by
the negligence of the ship captain. Pursuant to Article 1306 17 of the Civil
(3) That the common carrier need not observe any diligence in the
Code, such stipulation is valid because it is freely entered into by the
custody of the goods;
parties and the same is not contrary to law, morals, good customs, public Such doctrine We find reasonable. The Civil Code provisions on common
order, or public policy. Indeed, their contract of private carriage is not carriers should not be applied where the carrier is not acting as such but as
even a contract of adhesion. We stress that in a contract of private a private carrier. The stipulation in the charter party absolving the owner
carriage, the parties may freely stipulate their duties and obligations from liability for loss due to the negligence of its agent would be void if the
which perforce would be binding on them. Unlike in a contract involving a strict public policy governing common carriers is applied. Such policy has
common carrier, private carriage does not involve the general public. no force where the public at large is not involved, as in this case of a ship
Hence, the stringent provisions of the Civil Code on common carriers totally chartered for the used of a single party. 19 (Emphasis supplied.)
protecting the general public cannot justifiably be applied to a ship
Indeed, where the reason for the rule ceases, the rule itself does not
transporting commercial goods as a private carrier. Consequently, the
apply. The general public enters into a contract of transportation with
public policy embodied therein is not contravened by stipulations in a
common carriers without a hand or a voice in the preparation thereof.
charter party that lessen or remove the protection given by law in
The riding public merely adheres to the contract; even if the public wants
contracts involving common carriers.
to, it cannot submit its own stipulations for the approval of the common
The issue posed in this case and the arguments raised by petitioner are carrier. Thus, the law on common carriers extends its protective mantle
not novel; they were resolved long ago by this Court in Home Insurance against one-sided stipulations inserted in tickets, invoices or other
Co. vs. American Steamship Agencies, Inc. 18 In that case, the trial court documents over which the riding public has no understanding or, worse,
similarly nullified a stipulation identical to that involved in the present no choice. Compared to the general public, a charterer in a contract of
case for being contrary to public policy based on Article 1744 of the Civil private carriage is not similarly situated. It can — and in fact it usually
Code and Article 587 of the Code of Commerce. Consequently, the trial does — enter into a free and voluntary agreement. In practice, the parties
court held the shipowner liable for damages resulting for the partial loss in a contract of private carriage can stipulate the carrier's obligations and
of the cargo. This Court reversed the trial court and laid down, through liabilities over the shipment which, in turn, determine the price or
Mr. Justice Jose P. Bengzon, the following well-settled observation and consideration of the charter. Thus, a charterer, in exchange for
doctrine: convenience and economy, may opt to set aside the protection of the law
on common carriers. When the charterer decides to exercise this option,
The provisions of our Civil Code on common carriers were taken from
he takes a normal business risk.
Anglo-American law. Under American jurisprudence, a common carrier
undertaking to carry a special cargo or chartered to a special person only, Petitioner contends that the rule in Home Insurance is not applicable to
becomes a private carrier. As a private carrier, a stipulation exempting the the present case because it "covers only a stipulation exempting a private
owner from liability for the negligence of its agent is not against public carrier from liability for the negligence of his agent, but it does not apply
policy, and is deemed valid. to a stipulation exempting a private carrier like private respondent from
the negligence of his employee or servant which is the situation in this
case." 20 This contention of petitioner is bereft of merit, for it raises a Petitioner Valenzuela insists that the charter party stipulation is contrary
distinction without any substantive difference. The case Home to Articles 586 and 587 of the Code of Commerce which confer on
Insurance specifically dealt with "the liability of the shipowner for acts or petitioner the right to recover damages from the shipowner and ship
negligence of its captain and crew" 21 and a charter party stipulation agent for the acts or conduct of the captain. 25 We are not persuaded.
which "exempts the owner of the vessel from any loss or damage or delay Whatever rights petitioner may have under the aforementioned statutory
arising from any other source, even from the neglect or fault of the provisions were waived when it entered into the charter party.
captain or crew or some other person employed by the owner on
Article 6 of the Civil Code provides that "(r)ights may be waived, unless
board, for whose acts the owner would ordinarily be liable except for said
the waiver is contrary to law, public order, public policy, morals, or good
paragraph." 22 Undoubtedly, Home Insurance is applicable to the case at
customs, or prejudicial to a person with a right recognized by law." As a
bar.
general rule, patrimonial rights may be waived as opposed to rights to
The naked assertion of petitioner that the American rule enunciated personality and family rights which may not be made the subject of
in Home Insurance is not the rule in the Philippines 23 deserves scant waiver. 26 Being patently and undoubtedly patrimonial, petitioner's right
consideration. The Court there categorically held that said rule was conferred under said articles may be waived. This, the petitioner did by
"reasonable" and proceeded to apply it in the resolution of that case. acceding to the contractual stipulation that it is solely responsible or any
Petitioner miserably failed to show such circumstances or arguments damage to the cargo, thereby exempting the private carrier from any
which would necessitate a departure from a well-settled rule. responsibility for loss or damage thereto. Furthermore, as discussed
Consequently, our ruling in said case remains a binding judicial precedent above, the contract of private carriage binds petitioner and private
based on the doctrine of stare decisis and Article 8 of the Civil Code which respondent alone; it is not imbued with public policy considerations for
provides that "(j)udicial decisions applying or interpreting the laws or the the general public or third persons are not affected thereby.
Constitution shall form part of the legal system of the Philippines."
Articles 1170 and 1173, Civil Code
In fine, the respondent appellate court aptly stated that "[in the case of] a
Petitioner likewise argues that the stipulation subject of this controversy
private carrier, a stipulation exempting the owner from liability even for
is void for being contrary to Articles 1170 and 1173 of the Civil
the negligence of its agents is valid." 24
Code 27 which read:
Other Arguments
Art. 1170. Those who in the performance of their obligations are guilty of
On the basis of the foregoing alone, the present petition may already be fraud, negligence, or delay, and those who in any manner contravene the
denied; the Court, however, will discuss the other arguments of petitioner tenor thereof, are liable for damages
for the benefit and satisfaction of all concerned.
Art. 1173. The fault or negligence of the obligor consists in the omission
Articles 586 and 587, Code of Commerce 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 due to negligence "should not be countenanced" and should be "strictly
place. When negligence shows bad faith, the provisions of articles 1171 construed" against the party claiming its benefit. 33 We disagree.
and 2201, shall apply.
The cases of Shewaram and Ysmael both involve a common carrier; thus,
If the law does not state the diligence which is to be observed in the they necessarily justify the application of such policy considerations and
performance, that which is expected of a good father of a family shall be concomitantly stricter rules. As already discussed above, the public policy
required. considerations behind the rigorous treatment of common carriers are
absent in the case of private carriers. Hence, the stringent laws applicable
The Court notes that the foregoing articles are applicable only to the
to common carriers are not applied to private carries. The case of Manila
obligor or the one with an obligation to perform. In the instant case,
Railroad is also inapplicable because the action for damages there does
Private Respondent Seven Brothers is not an obligor in respect of the
not involve a contract for transportation. Furthermore, the defendant
cargo, for this obligation to bear the loss was shifted to petitioner by
therein made a "promise to use due care in the lifting operations" and,
virtue of the charter party. This shifting of responsibility, as earlier
consequently, it was "bound by its undertaking"'; besides, the exemption
observed, is not void. The provisions cited by petitioner are, therefore,
was intended to cover accidents due to hidden defects in the apparatus or
inapplicable to the present case.
other unforseeable occurrences" not caused by its "personal negligence."
Moreover, the factual milieu of this case does not justify the application of This promise was thus constructed to make sense together with the
the second paragraph of Article 1173 of the Civil Code which prescribes stipulation against liability for damages. 34 In the present case, we stress
the standard of diligence to be observed in the event the law or the that the private respondent made no such promise. The agreement of the
contract is silent. In the instant case, Article 362 of the Code of parties to exempt the shipowner from responsibility for any damage to
Commerce 28 provides the standard of ordinary diligence for the carriage the cargo and place responsibility over the same to petitioner is the lone
of goods by a carrier. The standard of diligence under this statutory stipulation considered now by this Court.
provision may, however, be modified in a contract of private carriage as
Finally, petitioner points to Standard Oil Co. of New York vs. Lopez
the petitioner and private respondent had done in their charter party.
Costelo, 35 Walter A. Smith & Co. vs. Cadwallader Gibson Lumber
Cases Cited by Petitioner Inapplicable Co., 36 N. T . Hashim and Co. vs. Rocha and Co., 37 Ohta Development
Co. vs. Steamship "Pompey"  38 and Limpangco Sons vs. Yangco Steamship
Petitioner cites Shewaram vs. Philippine Airlines, Inc. 29 which, in turn,
Co. 39 in support of its contention that the shipowner be held liable for
quoted Juan Ysmael & Co. vs. Gabino Barreto & Co. 30 and argues that the
damages. 40 These however are not on all fours with the present case
public policy considerations stated there vis-a-vis contractual stipulations
because they do not involve a similar factual milieu or an identical
limiting the carrier's liability be applied "with equal force" to this
stipulation in the charter party expressly exempting the shipowner form
case. 31 It also cites Manila Railroad Co. vs. Compañia Transatlantica  32 and
responsibility for any damage to the cargo.
contends that stipulations exempting a party from liability for damages
Effect of the South Sea Resolution
In its memorandum, Seven Brothers argues that petitioner has no cause
of action against it because this Court has earlier affirmed the liability of
South Sea for the loss suffered by petitioner. Private respondent submits
that petitioner is not legally entitled to collect twice for a single loss. 41 In
view of the above disquisition upholding the validity of the questioned
charter party stipulation and holding that petitioner may not recover
from private respondent, the present issue is moot and academic. It
suffices to state that the Resolution of this Court dated June 2,
1995 42 affirming the liability of South Sea does not, by itself, necessarily
preclude the petitioner from proceeding against private respondent. An
aggrieved party may still recover the deficiency for the person causing
the loss in the event the amount paid by the insurance company does not
fully cover the loss. Article 2207 of the Civil Code provides:
Art. 2207. If the plaintiff's property has been insured, and he has received
indemnity for 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 wrongdoer 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 form the person causing
the loss or injury.
WHEREFORE, premises considered, the petition is hereby DENIED for its
utter failure to show any reversible error on the part of Respondent
Court. The assailed Decision is AFFIRMED.
SO ORDERED.
 Filbrite cartons of mixed British manufactured cigarettes called "Dunhill
International Filter" and "Dunhill International Menthol," as evidenced by
G.R. No. 88092               April 25, 1990
Bill of Lading No. 70621374 2 and Bill of Lading No. 70608680 3 of the Ben
CITADEL LINES, INC., petitioner, Line Containers Ltd. The shipment arrived at the Port of Manila Pier 13,
vs. on April 18, 1979 in container van No. BENU 204850-9. The said
COURT OF APPEALS* and MANILA WINE MERCHANTS, container was received by E. Razon, Inc. (later known as Metro Port
INC., respondents. Service, Inc. and referred to herein as the ARRASTRE) under Cargo
Receipt No. 71923 dated April 18, 1979. 4
Del Rosario & Del Rosario Law Offices for petitioner.
Limqueco and Macaraeg Law Office for private respondent. On April 30, 1979, the container van, which contained two shipments was
stripped. One shipment was delivered and the other shipment consisting
of the imported British manufactured cigarettes was palletized. Due to
lack of space at the Special Cargo Coral, the aforesaid cigarettes were
REGALADO, J.: placed in two containers with two pallets in container No. BENU 204850-
9, the original container, and four pallets in container No. BENU 201009-
Through this petition, we are asked to review the decision of the Court of
9, with both containers duly padlocked and sealed by the representative
Appeals dated December 20, 1988, in CA-G.R. No. CV-10070, 1 which
of the CARRIER.
affirmed the August 30, 1985 decision of the Regional Trial Court of
Manila, Branch 27, in Civil Case No. 126415, entitled Manila Wine In the morning of May 1, 1979, the CARRIER'S headchecker discovered
Merchants, Inc. vs. Citadel Lines, Inc. and E. Razon, Inc., with a that container van No. BENU 201009-9 had a different padlock and the
modification by deleting the award of attorney's fees and costs of suit. seal was tampered with. The matter was reported to Jose G. Sibucao, Pier
Superintendent, Pier 13, and upon verification, it was found that 90 cases
The following recital of the factual background of this case is culled from
of imported British manufactured cigarettes were missing. This was
the findings in the decision of the court a quo and adopted by respondent
confirmed in the report of said Superintendent Sibucao to Ricardo Cosme,
court based on the evidence of record.
Assistant Operations Manager, dated May 1, 1979 5 and the Official
Petitioner Citadel Lines, Inc. (hereafter referred to as the CARRIER) is the Report/Notice of Claim of Citadel Lines, Inc. to E. Razon, Inc. dated May 8,
general agent of the vessel "Cardigan Bay/Strait Enterprise," while 1979. 6 Per investigation conducted by the ARRASTRE, it was revealed
respondent Manila Wine Merchants, Inc. (hereafter, the CONSIGNEE) is that the cargo in question was not formally turned over to it by the
the importer of the subject shipment of Dunhill cigarettes from England. CARRIER but was kept inside container van No. BENU 201009-9 which
was padlocked and sealed by the representatives of the CARRIER without
On or about March 17, 1979, the vessel "Cardigan Bay/Strait Enterprise" any participation of the ARRASTRE.
loaded on board at Southampton, England, for carriage to Manila, 180
When the CONSIGNEE learned that 90 cases were missing, it filed a by two witnesses, namely, Atty. Lope M. Velasco and Ruben Ignacio,
formal claim dated May 21, 1979, 7 with the CARRIER, demanding the Claims Manager and Head Checker, respectively, of the CARRIER, 10 that
payment of P315,000.00 representing the market value of the missing for lack of space the containers were not turned over to and as the
cargoes. The CARRIER, in its reply letter dated May 23, 1979, 8 admitted responsibility of E. Razon Inc. The CARRIER is now estopped from
the loss but alleged that the same occurred at Pier 13, an area absolutely claiming otherwise.
under the control of the ARRASTRE. In view thereof, the CONSIGNEE filed
Common carriers, from the nature of their business and for reasons of
a formal claim, dated June 4, 1979, 9 with the ARRASTRE, demanding
public policy, are bound to observe extraordinary diligence in the
payment of the value of the goods but said claim was denied.
vigilance over the goods and for the safety of the passengers transported
After trial, the lower court rendered a decision on August 30, 1985, by them, according to all the circumstances of each case. 11 If the goods
exonerating the ARRASTRE of any liability on the ground that the subject are lost, destroyed or deteriorated, common carriers are presumed to
container van was not formally turned over to its custody, and adjudging have been at fault or to have acted negligently, unless they prove that
the CARRIER liable for the principal amount of P312,480.00 representing they observed extra ordinary diligence as required in Article 1733 of the
the market value of the lost shipment, and the sum of P30,000.00 as and Civil Code. 12 The duty of the consignee is to prove merely that the goods
for attorney's fees and the costs of suit. were lost. Thereafter, the burden is shifted to the carrier to prove that it
has exercised the extraordinary diligence required by law. And, its
As earlier stated, the court of Appeals affirmed the decision of the court a
extraordinary responsibility lasts from the time the goods are
quo but deleted the award of attorney's fees and costs of suit.
unconditionally placed in the possession of, and received by the carrier
The two main issues for resolution are: 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
1. Whether the loss occurred while the cargo in question was in the
receive them. 13
custody of E. Razon, Inc. or of Citadel Lines, Inc; and
Considering, therefore, that the subject shipment was lost while it was
2. Whether the stipulation limiting the liability of the carrier contained in
still in the custody of herein petitioner CARRIER, and considering further
the bill of lading is binding on the consignee.
that it failed to prove that the loss was occasioned by an excepted cause,
The first issue is factual in nature. The Court of Appeals declared in no the inescapable conclusion is that the CARRIER was negligent and should
uncertain terms that, on the basis of the evidence presented, the subject be held liable therefor.
cargo which was placed in a container van, padlocked and sealed by the
The cases cited by petitioner in support of its allegations to the contrary
representative of the CARRIER was still in its possession and control
do not find proper application in the case at bar simply because those
when the loss occurred, there having been no formal turnover of the
cases involve a situation wherein the shipment was turned over to the
cargo to the ARRASTRE. Besides, there is the categorical admission made
custody and possession of the arrastre operator.
We, however, find the award of damages in the amount of P312,800.00 complain of having been "rushed," imposed upon or deceived in any
for the value of the goods lost, based on the alleged market value thereof, significant way into agreeing to ship the cargo under a bill of lading
to be erroneous. It is clearly and expressly provided under Clause 6 of the carrying such a stipulation — in fact, it does not appear, that said party
aforementioned bills of lading issued by the CARRIER that its liability is has been heard from at all insofar as this dispute is concerned — there is
limited to $2.00 per kilo. Basic is the rule, long since enshrined as a simply no ground for assuming that its agreement thereto was not as the
statutory provision, that a stipulation limiting the liability of the carrier to law would require, freely and fairly sought and well.
the value of the goods appearing in the bill of lading, unless the shipper or
The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos
owner declares a greater value, is binding. 14 Further, a contract fixing the
per carton. Since 90 cartons were lost and the weight of said cartons is
sum that may be recovered by the owner or shipper for the loss,
2,233.80 kilos, at $2.00 per kilo the CARRIER's liability amounts to only
destruction or deterioration of the goods is valid, if it is reasonable and
US$4,467.60.
just under the circumstances, and has been fairly and freely agreed
upon. 15 WHEREFORE, the judgment of respondent court is hereby MODIFIED and
petitioner Citadel Lines, Inc. is ordered to pay private respondent Manila
The CONSIGNEE itself admits in its memorandum that the value of the
Wine Merchants, Inc. the sum of US$4,465.60. or its equivalent in
goods shipped does not appear in the bills of lading. 16 Hence, the
Philippine currency at the exchange rate obtaining at the time of payment
stipulation on the carrier's limited liability applies. There is no question
thereof. In all other respects, said judgment of respondent Court is
that the stipulation is just and reasonable under the circumstances and
AFFIRMED.
have been fairly and freely agreed upon. In Sea-land Service,
Inc. vs. Intermediate Appellate Court, et al. 17 we there explained what is a SO ORDERED.
just and reasonable, and a fair and free, stipulation, in this wise:
. . . That said stipulation is just and reasonable arguable from the fact that
it echoes Art. 1750 itself in providing a limit to liability only if a greater
value is not declared for the shipment in the bill of lading. To hold
otherwise would amount to questioning the justice and fairness of that
law itself, and this the private respondent does not pretend to do. But
over and above that consideration the just and reasonable character of
such stipulation is implicit in it giving the shipper or owner the option of
avoiding accrual of liability limitation by the simple and surely far from
onerous expedient of declaring the nature and value of the shipment in
the bill of lading. And since the shipper here has not been heard to
G.R. No. 101089. April 7, 1993. population. We think that Article 1732 deliberately refrained from
making such distinctions."
ESTRELLITA M. BASCOS, petitioners,
vs. 2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents. TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE ARISES; HOW
PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. —
Modesto S. Bascos for petitioner.
Common carriers are obliged to observe extraordinary diligence in the
Pelaez, Adriano & Gregorio for private respondent. vigilance over the goods transported by them. Accordingly, they are
presumed to have been at fault or to have acted negligently if the goods
SYLLABUS
are lost, destroyed or deteriorated. There are very few instances when
1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE the presumption of negligence does not attach and these instances are
COMMON CARRIER. — Article 1732 of the Civil Code defines a common enumerated in Article 1734. In those cases where the presumption is
carrier as "(a) person, corporation or firm, or association engaged in the applied, the common carrier must prove that it exercised extraordinary
business of carrying or transporting passengers or goods or both, by land, diligence in order to overcome the presumption . . . The presumption of
water or air, for compensation, offering their services to the public." The negligence was raised against petitioner. It was petitioner's burden to
test to determine a common carrier is "whether the given undertaking is overcome it. Thus, contrary to her assertion, private respondent need not
a part of the business engaged in by the carrier which he has held out to introduce any evidence to prove her negligence. Her own failure to
the general public as his occupation rather than the quantity or extent of adduce sufficient proof of extraordinary diligence made the presumption
the business transacted." . . . The holding of the Court in De Guzman vs. conclusive against her.
Court of Appeals is instructive. In referring to Article 1732 of the Civil
3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT;
Code, it held thus: "The above article makes no distinction between one
HOW CARRIER ABSOLVED FROM LIABILITY. — In De Guzman vs. Court
whose principal business activity is the carrying of persons or goods or
of Appeals, the Court held that hijacking, not being included in the
both, and one who does such carrying only as an ancillary activity (in
provisions of Article 1734, must be dealt with under the provisions of
local idiom, as a "sideline"). Article 1732 also carefully avoids making any
Article 1735 and thus, the common carrier is presumed to have been at
distinction between a person or enterprise offering transportation
fault or negligent. To exculpate the carrier from liability arising from
service on a regular or scheduled basis and one offering such service on
hijacking, he must prove that the robbers or the hijackers acted with
an occasional, episodic or unscheduled basis. Neither does Article 1732
grave or irresistible threat, violence, or force. This is in accordance with
distinguished between a carrier offering its services to the "general
Article 1745 of the Civil Code which provides: "Art. 1745. Any of the
public," i.e., the general community or population, and one who offers
following or similar stipulations shall be considered unreasonable, unjust
services or solicits business only from a narrow segment of the general
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 lease. It must be understood that a contract is what the law defines it to
irresistible threat, violences or force, is dispensed with or diminished"; In be and not what it is called by the contracting parties.
the same case, the Supreme Court also held that: "Under Article 1745 (6)
DECISION
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 CAMPOS, JR., J p:
thieves or robbers, except where such thieves or robbers in fact acted
This is a petition for review on certiorari of the decision ** of the Court of
"with grave of irresistible threat, violence of force," We believe and so
Appeals in "RODOLFO A. CIPRIANO, doing business under the name
hold that the limits of the duty of extraordinary diligence in the vigilance
CIPRIANO TRADING ENTERPRISES plaintiff-appellee, vs. ESTRELLITA M.
over the goods carried are reached where the goods are lost as a result of
BASCOS, doing business under the name of BASCOS TRUCKING,
a robbery which is attended by "grave or irresistible threat, violence or
defendant-appellant," C.A.-G.R. CV No. 25216, the dispositive portion of
force."
which is quoted hereunder:
4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE. —
"PREMISES considered, We find no reversible error in the decision
In this case, petitioner herself has made the admission that she was in the
appealed from, which is hereby affirmed in toto. Costs against appellant."
trucking business, offering her trucks to those with cargo to move.
1
Judicial admissions are conclusive and no evidence is required to prove
the same. The facts, as gathered by this Court, are as follows:
5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE
FACT. — Petitioner presented no other proof of the existence of the for short) entered into a hauling contract 2 with Jibfair Shipping Agency
contract of lease. He who alleges a fact has the burden of proving it. 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
6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF AFFIANTS
warehouse of Purefoods Corporation in Calamba, Laguna. To carry out its
AVAILABLE AS WITNESSES. — While the affidavit of Juanito Morden, the
obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted with
truck helper in the hijacked truck, was presented as evidence in court, he
Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya
himself was a witness as could be gleaned from the contents of the
bean meal worth P156,404.00 from the Manila Port Area to Calamba,
petition. Affidavits are not considered the best evidence if the affiants are
Laguna at the rate of P50.00 per metric ton. Petitioner failed to deliver the
available as witnesses.
said cargo. As a consequence of that failure, Cipriano paid Jibfair Shipping
7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS WHAT Agency the amount of the lost goods in accordance with the contract
LAW DEFINES IT TO BE. — Granting that the said evidence were not self- which stated that:
serving, the same were not sufficient to prove that the contract was one of
"1. CIPTRADE shall be held liable and answerable for any loss in bags due investigation, an information for robbery and carnapping were filed
to theft, hijacking and non-delivery or damages to the cargo during against Jose Opriano, et al.; and that hijacking, being a force majeure,
transport at market value, . . ." 3 exculpated petitioner from any liability to CIPTRADE.
Cipriano demanded reimbursement from petitioner but the latter refused After trial, the trial court rendered a decision *** the dispositive portion
to pay. Eventually, Cipriano filed a complaint for a sum of money and of which reads as follows:
damages with writ of preliminary attachment 4 for breach of a contract of
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and
carriage. The prayer for a Writ of Preliminary Attachment was supported
against defendant ordering the latter to pay the former:
by an affidavit 5 which contained the following allegations:
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR HUNDRED
"4. That this action is one of those specifically mentioned in Sec. 1, Rule
FOUR PESOS (P156,404.00) as an (sic) for actual damages with legal
57 the Rules of Court, whereby a writ of preliminary attachment may
interest of 12% per cent per annum to be counted from December 4,
lawfully issue, namely:
1986 until fully paid;
"(e) in an action against a party who has removed or disposed of his
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for
property, or is about to do so, with intent to defraud his creditors;"
attorney's fees; and
5. That there is no sufficient security for the claim sought to be enforced
3. The costs of the suit.
by the present action;
The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated
6. That the amount due to the plaintiff in the above-entitled case is above
March 10, 1987 filed by defendant is DENIED for being moot and
all legal counterclaims;"
academic.
The trial court granted the writ of preliminary attachment on February
SO ORDERED." 6
17, 1987.
Petitioner appealed to the Court of Appeals but respondent Court
In her answer, petitioner interposed the following defenses: that there
affirmed the trial court's judgment.
was no contract of carriage since CIPTRADE leased her cargo truck to
load the cargo from Manila Port Area to Laguna; that CIPTRADE was Consequently, petitioner filed this petition where she makes the following
liable to petitioner in the amount of P11,000.00 for loading the cargo; that assignment of errors; to wit:
the truck carrying the cargo was hijacked along Canonigo St., Paco, Manila
"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE
on the night of October 21, 1988; that the hijacking was immediately
CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND PRIVATE
reported to CIPTRADE and that petitioner and the police exerted all
efforts to locate the hijacked properties; that after preliminary
RESPONDENT WAS CARRIAGE OF GOODS AND NOT LEASE OF CARGO employee of petitioner; and the fact that control of the cargo was placed
TRUCK. in petitioner's care.
II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE In disputing the conclusion of the trial and appellate courts that
RESPONDENT COURT THAT THE CONTRACTUAL RELATIONSHIP petitioner was a common carrier, she alleged in this petition that the
BETWEEN PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE OF contract between her and Rodolfo A. Cipriano, representing CIPTRADE,
GOODS IS CORRECT, NEVERTHELESS, IT ERRED IN FINDING was lease of the truck. She cited as evidence certain affidavits which
PETITIONER LIABLE THEREUNDER BECAUSE THE LOSS OF THE CARGO referred to the contract as "lease". These affidavits were made by Jesus
WAS DUE TO FORCE MAJEURE, NAMELY, HIJACKING. Bascos 8 and by petitioner herself. 9 She further averred that Jesus
Bascos confirmed in his testimony his statement that the contract was a
III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF
lease contract. 10 She also stated that: she was not catering to the general
THE TRIAL COURT THAT PETITIONER'S MOTION TO DISSOLVE/LIFT
public. Thus, in her answer to the amended complaint, she said that she
THE WRIT OF PRELIMINARY ATTACHMENT HAS BEEN RENDERED
does business under the same style of A.M. Bascos Trucking, offering her
MOOT AND ACADEMIC BY THE DECISION OF THE MERITS OF THE
trucks for lease to those who have cargo to move, not to the general
CASE." 7
public but to a few customers only in view of the fact that it is only a small
The petition presents the following issues for resolution: (1) was business. 11
petitioner a common carrier?; and (2) was the hijacking referred to a
We agree with the respondent Court in its finding that petitioner is a
force majeure?
common carrier.
The Court of Appeals, in holding that petitioner was a common carrier,
Article 1732 of the Civil Code defines a common carrier as "(a) person,
found that she admitted in her answer that she did business under the
corporation or firm, or association engaged in the business of carrying or
name A.M. Bascos Trucking and that said admission dispensed with the
transporting passengers or goods or both, by land, water or air, for
presentation by private respondent, Rodolfo Cipriano, of proofs that
compensation, offering their services to the public." The test to determine
petitioner was a common carrier. The respondent Court also adopted in
a common carrier is "whether the given undertaking is a part of the
toto the trial court's decision that petitioner was a common carrier,
business engaged in by the carrier which he has held out to the general
Moreover, both courts appreciated the following pieces of evidence as
public as his occupation rather than the quantity or extent of the business
indicators that petitioner was a common carrier: the fact that the truck
transacted." 12 In this case, petitioner herself has made the admission
driver of petitioner, Maximo Sanglay, received the cargo consisting of 400
that she was in the trucking business, offering her trucks to those with
bags of soya bean meal as evidenced by a cargo receipt signed by Maximo
cargo to move. Judicial admissions are conclusive and no evidence is
Sanglay; the fact that the truck helper, Juanito Morden, was also an
required to prove the same. 13
But petitioner argues that there was only a contract of lease because they Likewise, We affirm the holding of the respondent court that the loss of
offer their services only to a select group of people and because the the goods was not due to force majeure.
private respondents, plaintiffs in the lower court, did not object to the
Common carriers are obliged to observe extraordinary diligence in the
presentation of affidavits by petitioner where the transaction was
vigilance over the goods transported by them. 17 Accordingly, they are
referred to as a lease contract.
presumed to have been at fault or to have acted negligently if the goods
Regarding the first contention, the holding of the Court in De Guzman vs. are lost, destroyed or deteriorated. 18 There are very few instances when
Court of Appeals 14 is instructive. In referring to Article 1732 of the Civil the presumption of negligence does not attach and these instances are
Code, it held thus: enumerated in Article 1734. 19 In those cases where the presumption is
applied, the common carrier must prove that it exercised extraordinary
"The above article makes no distinction between one whose principal
diligence in order to overcome the presumption.
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 In this case, petitioner alleged that hijacking constituted force majeure
"sideline"). Article 1732 also carefully avoids making any distinction which exculpated her from liability for the loss of the cargo. In De Guzman
between a person or enterprise offering transportation service on a vs. Court of Appeals, 20 the Court held that hijacking, not being included
regular or scheduled basis and one offering such service on an occasional, in the provisions of Article 1734, must be dealt with under the provisions
episodic or unscheduled basis. Neither does Article 1732 distinguish of Article 1735 and thus, the common carrier is presumed to have been at
between a carrier offering its services to the "general public," i.e., the fault or negligent. To exculpate the carrier from liability arising from
general community or population, and one who offers services or solicits hijacking, he must prove that the robbers or the hijackers acted with
business only from a narrow segment of the general population. We think grave or irresistible threat, violence, or force. This is in accordance with
that Article 1732 deliberately refrained from making such distinctions." Article 1745 of the Civil Code which provides:
Regarding the affidavits presented by petitioner to the court, both the "Art. 1745. Any of the following or similar stipulations shall be considered
trial and appellate courts have dismissed them as self-serving and unreasonable, unjust and contrary to public policy;
petitioner contests the conclusion. We are bound by the appellate court's
xxx xxx xxx
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 (6) That the common carrier's liability for acts committed by thieves, or
lease. It must be understood that a contract is what the law defines it to of robbers who do not act with grave or irresistible threat, violences or
be and not what it is called by the contracting parties. 15 Furthermore, force, is dispensed with or diminished;"
petitioner presented no other proof of the existence of the contract of
In the same case, 21 the Supreme Court also held that:
lease. He who alleges a fact has the burden of proving it. 16
"Under Article 1745 (6) above, a common carrier is held responsible — The presumption of negligence was raised against petitioner. It was
and will not be allowed to divest or to diminish such responsibility — petitioner's burden to overcome it. Thus, contrary to her assertion,
even for acts of strangers like thieves or robbers except where such private respondent need not introduce any evidence to prove her
thieves or robbers in fact acted with grave or irresistible threat, violence negligence. Her own failure to adduce sufficient proof of extraordinary
or force. We believe and so hold that the limits of the duty of diligence made the presumption conclusive against her.
extraordinary diligence in the vigilance over the goods carried are
Having affirmed the findings of the respondent Court on the substantial
reached where the goods are lost as a result of a robbery which is
issues involved, We find no reason to disturb the conclusion that the
attended by "grave or irresistible threat, violence or force."
motion to lift/dissolve the writ of preliminary attachment has been
To establish grave and irresistible force, petitioner presented her rendered moot and academic by the decision on the merits.
accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and Juanito Morden's
In the light of the foregoing analysis, it is Our opinion that the petitioner's
24 "Salaysay". However, both the trial court and the Court of Appeals
claim cannot be sustained. The petition is DISMISSED and the decision of
have concluded that these affidavits were not enough to overcome the
the Court of Appeals is hereby AFFIRMED.
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. SO ORDERED.
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.