G.R. No.

148496      March 19, 2002 "TED" and "TSN", which the claims processor, Ms. Agrifina De Luna,
claimed to be tearrage at the end and tearrage at the middle of the subject
VIRGINES CALVO doing business under the name and style TRANSORIENT
damaged cargoes respectively, coupled with the Marine Cargo Survey
CONTAINER TERMINAL SERVICES, INC., petitioner,
Report (Exh. "H" - "H-4-A") confirms the fact of the damaged condition of
vs.
the subject cargoes. The surveyor[s'] report (Exh. "H-4-A") in particular,
UCPB GENERAL INSURANCE CO., INC. (formerly Allied Guarantee Ins. Co.,
which provides among others that:
Inc.) respondent.
" . . . we opine that damages sustained by shipment is attributable
MENDOZA, J.:
to improper handling in transit presumably whilst in the custody
This is a petition for review of the decision,1 dated May 31, 2001, of the Court of of the broker . . . ."
Appeals, affirming the decision2 of the Regional Trial Court, Makati City, Branch 148,
is a finding which cannot be traversed and overturned.
which ordered petitioner to pay respondent, as subrogee, the amount of P93,112.00 with
legal interest, representing the value of damaged cargo handled by petitioner, 25% thereof The evidence adduced by the defendants is not enough to sustain [her]
as attorney's fees, and the cost of the suit.1âwphi1.nêt defense that [she is] are not liable. Defendant by reason of the nature of
[her] business should have devised ways and means in order to prevent the
The facts are as follows:
damage to the cargoes which it is under obligation to take custody of and to
Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. forthwith deliver to the consignee. Defendant did not present any evidence
(TCTSI), a sole proprietorship customs broker. At the time material to this case, petitioner on what precaution [she] performed to prevent [the] said incident, hence the
entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels presumption is that the moment the defendant accepts the cargo [she] shall
of semi-chemical fluting paper and 124 reels of kraft liner board from the Port Area in perform such extraordinary diligence because of the nature of the cargo.
Manila to SMC's warehouse at the Tabacalera Compound, Romualdez St., Ermita,
....
Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc.
Generally speaking under Article 1735 of the Civil Code, if the goods are
On July 14, 1990, the shipment in question, contained in 30 metal vans, arrived in Manila
proved to have been lost, destroyed or deteriorated, common carriers are
on board "M/V Hayakawa Maru" and, after 24 hours, were unloaded from the vessel to
presumed to have been at fault or to have acted negligently, unless they
the custody of the arrastre operator, Manila Port Services, Inc. From July 23 to July 25,
prove that they have observed the extraordinary diligence required by law.
1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from the arrastre
The burden of the plaintiff, therefore, is to prove merely that the goods he
operator and delivered it to SMC's warehouse in Ermita, Manila. On July 25, 1990, the
transported have been lost, destroyed or deteriorated. Thereafter, the burden
goods were inspected by Marine Cargo Surveyors, who found that 15 reels of the semi-
is shifted to the carrier to prove that he has exercised the extraordinary
chemical fluting paper were "wet/stained/torn" and 3 reels of kraft liner board were
diligence required by law. Thus, it has been held that the mere proof of
likewise torn. The damage was placed at P93,112.00.
delivery of goods in good order to a carrier, and of their arrival at the place
SMC collected payment from respondent UCPB under its insurance contract for the of destination in bad order, makes out a prima facie case against the carrier,
aforementioned amount. In turn, respondent, as subrogee of SMC, brought suit against so that if no explanation is given as to how the injury occurred, the carrier
petitioner in the Regional Trial Court, Branch 148, Makati City, which, on December 20, must be held responsible. It is incumbent upon the carrier to prove that the
1995, rendered judgment finding petitioner liable to respondent for the damage to the loss was due to accident or some other circumstances inconsistent with its
shipment. liability." (cited in Commercial Laws of the Philippines by Agbayani, p. 31,
Vol. IV, 1989 Ed.)
The trial court held:
Defendant, being a customs brother, warehouseman and at the same time a
It cannot be denied . . . that the subject cargoes sustained damage while in the common carrier is supposed [to] exercise [the] extraordinary diligence
custody of defendants. Evidence such as the Warehouse Entry Slip (Exh. "E"); required by law, hence the extraordinary responsibility lasts from the time
the Damage Report (Exh. "F") with entries appearing therein, classified as the goods are unconditionally placed in the possession of and received by
 the carrier for transportation until the same are delivered actually or by land, water, or air for compensation, offering their services to the
constructively by the carrier to the consignee or to the person who has the right public."
to receive the same.3
The above article makes no distinction between one
Accordingly, the trial court ordered petitioner to pay the following amounts -- whose principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity . . .
1. The sum of P93,112.00 plus interest;
Article 1732 also carefully avoids making any distinction between a person
2. 25% thereof as lawyer's fee; or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
3. Costs of suit.4 unscheduled basis. Neither does Article 1732 distinguish between a carrier
The decision was affirmed by the Court of Appeals on appeal. Hence this petition for offering its services to the "general public," i.e., the general community or
review on certiorari. population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1732
Petitioner contends that: deliberately refrained from making such distinctions.

I. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE So understood, the concept of "common carrier" under Article 1732 may be
ERROR [IN] DECIDING THE CASE NOT ON THE EVIDENCE seen to coincide neatly with the notion of "public service," under the Public
PRESENTED BUT ON PURE SURMISES, SPECULATIONS AND Service Act (Commonwealth Act No. 1416, as amended) which at least
MANIFESTLY MISTAKEN INFERENCE. partially supplements the law on common carriers set forth in the Civil
Code. Under Section 13, paragraph (b) of the Public Service Act, "public
II. THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE
service" includes:
ERROR IN CLASSIFYING THE PETITIONER AS A COMMON CARRIER
AND NOT AS PRIVATE OR SPECIAL CARRIER WHO DID NOT HOLD " x x x every person that now or hereafter may own, operate,
ITS SERVICES TO THE PUBLIC.5 manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
It will be convenient to deal with these contentions in the inverse order, for if petitioner is
permanent, occasional or accidental, and done for general
not a common carrier, although both the trial court and the Court of Appeals held
business purposes, any common carrier, railroad, street railway,
otherwise, then she is indeed not liable beyond what ordinary diligence in the vigilance
traction railway, subway motor vehicle, either for freight or
over the goods transported by her, would require.6 Consequently, any damage to the
passenger, or both, with or without fixed route and whatever may
cargo she agrees to transport cannot be presumed to have been due to her fault or
be its classification, freight or carrier service of any class, express
negligence.
service, steamboat, or steamship line, pontines, ferries and water
Petitioner contends that contrary to the findings of the trial court and the Court of craft, engaged in the transportation of passengers or freight or
Appeals, she is not a common carrier but a private carrier because, as a customs broker both, shipyard, marine repair shop, wharf or dock, ice plant, ice-
and warehouseman, she does not indiscriminately hold her services out to the public but refrigeration plant, canal, irrigation system, gas, electric light, heat
only offers the same to select parties with whom she may contract in the conduct of her and power, water supply and power petroleum, sewerage system,
business. wire or wireless communications systems, wire or wireless
broadcasting stations and other similar public services. x x x" 8
The contention has no merit. In De Guzman v. Court of Appeals,7 the Court dismissed a
similar contention and held the party to be a common carrier, thus - There is greater reason for holding petitioner to be a common carrier because the
transportation of goods is an integral part of her business. To uphold petitioner's
The Civil Code defines "common carriers" in the following terms: contention would be to deprive those with whom she contracts the protection which
"Article 1732. Common carriers are persons, corporations, firms or associations the law affords them notwithstanding the fact that the obligation to carry goods for
engaged in the business of carrying or transporting passengers or goods or both, her customers, as already noted, is part and parcel of petitioner's business.
Now, as to petitioner's liability, Art. 1733 of the Civil Code provides: is a mere thirty-minute drive from the Port Area where the cargo came from. Thus, the
damage to the cargo could not have taken place while these were in her custody.11
Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the Contrary to petitioner's assertion, the Survey Report (Exh. H) of the Marine Cargo
goods and for the safety of the passengers transported by them, according to all Surveyors indicates that when the shipper transferred the cargo in question to the
the circumstances of each case. . . . arrastre operator, these were covered by clean Equipment Interchange Report (EIR)
and, when petitioner's employees withdrew the cargo from the arrastre operator, they
In Compania Maritima v. Court of Appeals,9 the meaning of "extraordinary diligence in
did so without exception or protest either with regard to the condition of container
the vigilance over goods" was explained thus:
vans or their contents. The Survey Report pertinently reads --
The extraordinary diligence in the vigilance over the goods tendered for
Details of Discharge:
shipment requires the common carrier to know and to follow the required
precaution for avoiding damage to, or destruction of the goods entrusted to it Shipment, provided with our protective supervision was noted discharged ex
for sale, carriage and delivery. It requires common carriers to render service vessel to dock of Pier #13 South Harbor, Manila on 14 July 1990,
with the greatest skill and foresight and "to use all reasonable means to containerized onto 30' x 20' secure metal vans, covered by clean
ascertain the nature and characteristic of goods tendered for shipment, and to EIRs. Except for slight dents and paint scratches on side and roof panels,
exercise due care in the handling and stowage, including such methods as their these containers were deemed to have [been] received in good condition.
nature requires."
....
In the case at bar, petitioner denies liability for the damage to the cargo. She claims that
Transfer/Delivery:
the "spoilage or wettage" took place while the goods were in the custody of either the
carrying vessel "M/V Hayakawa Maru," which transported the cargo to Manila, or the On July 23, 1990, shipment housed onto 30' x 20' cargo containers was
arrastre operator, to whom the goods were unloaded and who allegedly kept them in open [withdrawn] by Transorient Container Services, Inc. . . . without exception.
air for nine days from July 14 to July 23, 1998 notwithstanding the fact that some of the
containers were deformed, cracked, or otherwise damaged, as noted in the Marine Survey [The cargo] was finally delivered to the consignee's storage warehouse
Report (Exh. H), to wit: located at Tabacalera Compound, Romualdez Street, Ermita, Manila from
July 23/25, 1990.12
MAXU-2062880      -       rain gutter deformed/cracked
As found by the Court of Appeals:
ICSU-363461-3      -       left side rubber gasket on door distorted/partly loose
From the [Survey Report], it [is] clear that the shipment was discharged
PERU-204209-4    -       with pinholes on roof panel right portion from the vessel to the arrastre, Marina Port Services Inc., in good order and
condition as evidenced by clean Equipment Interchange Reports (EIRs).
TOLU-213674-3     -       wood flooring we[t] and/or with signs of water soaked
Had there been any damage to the shipment, there would have been a report
MAXU-201406-0     -       with dent/crack on roof panel to that effect made by the arrastre operator. The cargoes were withdrawn by
the defendant-appellant from the arrastre still in good order and condition as
ICSU-412105-0      -       rubber gasket on left side/door panel partly detached
the same were received by the former without exception, that is, without
loosened.10
any report of damage or loss. Surely, if the container vans were deformed,
In addition, petitioner claims that Marine Cargo Surveyor Ernesto Tolentino testified that cracked, distorted or dented, the defendant-appellant would report it
he has no personal knowledge on whether the container vans were first stored in immediately to the consignee or make an exception on the delivery receipt
petitioner's warehouse prior to their delivery to the consignee. She likewise claims that or note the same in the Warehouse Entry Slip (WES). None of these took
after withdrawing the container vans from the arrastre operator, her driver, Ricardo place. To put it simply, the defendant-appellant received the shipment in
Nazarro, immediately delivered the cargo to SMC's warehouse in Ermita, Manila, which good order and condition and delivered the same to the consignee damaged.
We can only conclude that the damages to the cargo occurred while it was in
 the possession of the defendant-appellant. Whenever the thing is lost (or
damaged) in the possession of the debtor (or obligor), it shall be presumed that
the loss (or damage) was due to his fault, unless there is proof to the contrary.
No proof was proffered to rebut this legal presumption and the presumption of
negligence attached to a common carrier in case of loss or damage to the
goods.13

Anent petitioner's insistence that the cargo could not have been damaged while in her
custody as she immediately delivered the containers to SMC's compound, suffice it to say
that to prove the exercise of extraordinary diligence, petitioner must do more than merely
show the possibility that some other party could be responsible for the damage. It must
prove that it used "all reasonable means to ascertain the nature and characteristic of goods
tendered for [transport] and that [it] exercise[d] due care in the handling [thereof]."
Petitioner failed to do this.

Nor is there basis to exempt petitioner from liability under Art. 1734(4), which provides
--

Common carriers are responsible for the loss, destruction, or deterioration of

....

(4) The character of the goods or defects in the packing or in the containers.

....

For this provision to apply, the rule is that if the improper packing or, in this case, the
defect/s in the container, is/are known to the carrier or his employees or apparent upon
ordinary observation, but he nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for damage resulting
therefrom.14 In this case, petitioner accepted the cargo without exception despite the
apparent defects in some of the container vans. Hence, for failure of petitioner to prove
that she exercised extraordinary diligence in the carriage of goods in this case or that she
is exempt from liability, the presumption of negligence as provided under Art.
173515 holds.

WHEREFORE, the decision of the Court of Appeals, dated May 31, 2001, is
AFFIRMED.1âwphi1.nêt

SO ORDERED.