A.

Common Carriers

1. Contract of Transportation

1.1 Perfection

Passengers

001 British Airways v. CA
[G.R. No. 92288 February 9, 1993]
TOPIC: PERFECTION OF THE CONTRACT - PASSENGERS
PONENTE: NOCON, J.
AUTHOR: Jimi A.
NOTE/S: The contract to carry was involved
in the case. Its elements are consent,
consideration and object certain.
FACTS:
1. February 15, 1981: First International Trading and General Services Co. (First Int'l), a duly licensed domestic
recruitment and placement agency, received a telex message from its principal ROLACO Engineering and
Contracting Services (ROLACO) in Jeddah, Saudi Arabia to recruit Filipino contract workers in its behalf.
2. Early March 1981: ROLACO paid British Airways, Inc. (BA) Jeddah branch the airfare tickets for 93 contract
workers with specific instruction to transport the workers to Jeddah on or before March 30, 1981.
3. As soon as petitioner received a prepaid ticket advice from its Jeddah branch to transport the 93 workers,
private respondent was immediately informed by petitioner that its principal had forwarded 93 prepaid tickets.
4. Private respondent instructed its travel agent, ADB Travel and Tours. Inc., to book the 93 workers with
petitioner but the latter failed to fly said workers, thereby compelling private respondent to borrow money in
the amount of P304,416.00 in order to purchase airline tickets from the other airlines as evidenced by the cash
vouchers for the 93 workers it had recruited who must leave immediately since the visas of said workers are
valid only for 45 days and the Bureau of Employment Services mandates that contract workers must be sent to
the job site within a period of 30 days.
5. First week of June 1981: First Int'l was again informed by BA that it had received a prepaid ticket advice from
its Jeddah branch for the transportation of 27 contract workers.
6. Private respondent instructed its travel agent to book the 27 contract workers with the petitioner but the latter
was only able to book and confirm 16 seats.
7. On the date of the scheduled flight only 9 workers were able to board said flight while the remaining 7 workers
were rebooked to June 30, 1981 which bookings were again cancelled by the petitioner without any prior notice
to either private respondent or the workers.
8. The 7 workers were rebooked to the July 4,1981 flight of petitioner with 6 more workers booked for said flight.
Unfortunately, the confirmed bookings of the 13 workers were again cancelled and rebooked to July 7, 1981.
9. July 6, 1981: Private respondent paid the travel tax of the said workers as required by the petitioner but when
the receipt of the tax payments was submitted, the latter informed private respondent that it can only confirm
the seats of the 12 workers on its July 7, 1981 flight.
10. The confirmed seats of said workers were again cancelled without any prior notice either to the private
respondent or said workers. The 12 workers were finally able to leave for Jeddah after private respondent had
bought tickets from the other airlines.
11. As a result of these incidents, private respondent sent a letter to petitioner demanding compensation for the
damages it had incurred by the latter's repeated failure to transport its contract workers despite confirmed
bookings and payment of the corresponding travel taxes.
12. July 23, 1981: The counsel of private respondent sent another letter to the petitioner demanding the latter to
pay the amount of P350,000.00 representing damages and unrealized profit or income which was denied by the
petitioner.
13. August 8, 1981: Private respondent received a telex message from its principal cancelling the hiring of the
remaining recruited workers due to the delay in transporting the workers to Jeddah.
14. January 27, 1982: Private respondent filed a complaint for damages against petitioner with the Regional Trial
Court of Manila, Branch 1 in Civil Case No. 82-4653.

TRIAL COURT:
The trial court rendered its decision ordering British Airways to pay the private respondent actual damages,
moral damages, corrective or exemplary damages, attorney's fees, and costs.

COURT OF APPEALS:
Affirmed the finding of the trial court.
ISSUE: Whether or not there was a perfection of the contract.

HELD: YES.
RATIO:

1. In dealing with the contract of common carriage of passengers for purpose of accuracy, there are two (2) aspects of
the same, namely: (a) the contract "to carry (at some future time)," which contract is consensual and is necessarily
perfected by mere consent (See Article 1356, Civil Code of the Philippines), and (b) the contract "of carriage" or "of
common carriage" itself which should be considered as a real contract for not until the carrier is actually used can the
carrier be said to have already assumed the obligation of a carrier.

2. In the instant case, the contract "to carry" is the one involved which is consensual and is perfected by the mere
consent of the parties. There is no dispute as to the appellee's consent to the said contract "to carry" its contract workers
from Manila to Jeddah. The appellant's consent thereto, on the other hand, was manifested by its acceptance of the PTA
or prepaid ticket advice that ROLACO Engineering has prepaid the airfares of the appellee's contract workers advising
the appellant that it must transport the contract workers on or before the end of March, 1981 and the other batch in June,
1981.

3. Even if a PTA is merely an advice from the sponsors that an airline is authorized to issue a ticket and thus no ticket
was yet issued, the fact remains that the passage had already been paid for by the principal of the appellee, and the
appellant had accepted such payment. The existence of this payment was never objected to nor questioned by the
appellant in the lower court. Thus, the cause or consideration which is the fare paid for the passengers exists in this case.

4. The third essential requisite of a contract is an object certain. In this contract "to carry", such an object is the transport
of the passengers from the place of departure to the place of destination as stated in the telex.

5. Accordingly, there could be no more pretensions as to the existence of an oral contract of carriage imposing
reciprocal obligations on both parties.

6. In the case of appellee, it has fully complied with the obligation, namely, the payment of the fare and its willingness
for its contract workers to leave for their place of destination.

7. On the other hand, the facts clearly show that appellant was remiss in its obligation to transport the contract workers
on their flight despite confirmation and bookings made by appellee's travelling agent.

8. Besides, appellant knew very well that time was of the essence as the prepaid ticket advice had specified the period
of compliance therewith, and with emphasis that it could only be used if the passengers fly on BA. Under the
circumstances, the appellant should have refused acceptance of the PTA from appellee's principal or to at least inform
appellee that it could not accommodate the contract workers.

9. While there is no dispute that ROLACO Engineering advanced the payment for the airfares of the appellee's contract
workers who were recruited for ROLACO Engineering and the said contract workers were the intended passengers in
the aircraft of the appellant, the said contract "to carry" also involved the appellee for as recruiter he had to see to it that
the contract workers should be transported to ROLACO Engineering in Jeddah thru the appellant's transportation. For
that matter, the involvement of the appellee in the said contract "to carry" was well demonstrated when the appellant
upon receiving the PTA immediately advised the appellee thereof.

10. Thusly, private respondent is entitled to an award of moral and exemplary damages for the injury suffered as a
result of petitioner's failure to transport the former's workers because of the latter's patent bad faith in the performance of
its obligation.
CASE LAW/ DOCTRINE:

The contract to carry was involved in the case. Its elements are consent, consideration and object certain.

CONSENT: British Airways consent to the contract was manifested by its acceptance of the PTA or prepaid
ticket advice that ROLACO has prepaid the airfares of the First Internationals contract workers advising the
appellant that it must transport the contract workers on or before the end of March, 1981 and the other batch in
June, 1981.

CONSIDERATION: the fare paid for the passengers by the principal of First International.

OBJECT CERTAIN: the transport of the passengers from the place of departure to the place of destination.
DISPOSITIVE: WHEREFORE, the assailed decision is hereby AFFIRMED with the MODIFICATION that the award
of actual damages be deleted from said decision.

KOREAN AIRLINES v. CA

003 DANGWA TRANSPORTATION CO., INC. and THEODORE
LARDIZABAL y MALECDAN, petitioners, vs.
COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA
CUDIAMAT BANDOY, FERNANDO CUDLAMAT, MARRIETA
CUDIAMAT, NORMA CUDIAMAT, DANTE CUDIAMAT,
SAMUEL CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of
the late Pedrito Cudiamat represented by Inocencia Cudiamat,
respondents. [G.R. No. 95582 October 7, 1991]
TOPIC: Passengers
PONENTE: REGALADO, J.
AUTHOR: Ernest
NOTE/S: It is the duty of common carriers of
passengers, including common carriers by
railroad train, streetcar, or motorbus, to stop
their conveyances a reasonable length of time
in order to afford passengers an opportunity to
board and enter, and they are liable for
injuries suffered by boarding passengers
resulting from the sudden starting up or
jerking of their conveyances while they are
doing so.

FACTS:
Private respondents (HEIRS OF CUDIAMAT) filed a complaint for damages against petitioners (CORPORATION and
DRIVER) for the death of Pedrito Cudiamat as a result of a vehicular accident which occurred on March 25, 1985 at
Marivic, Sapid, Mankayan, Benguet.

Respondents Argument:
They alleged that on said date, while petitioner Theodore M. Lardizabal was driving a passenger bus belonging to
petitioner corporation in a reckless and imprudent manner and without due regard to traffic rules and regulations and
safety to persons and property, it ran over its passenger, Pedrito Cudiamat. However, instead of bringing Pedrito
immediately to the nearest hospital, the said driver, in utter bad faith and without regard to the welfare of the
victim, first brought his other passengers and cargo to their respective destinations before banging said victim to the
Lepanto Hospital where he expired.

Petitioners Argument:
They alleged that they had observed and continued to observe the extraordinary diligence required in the operation of
the transportation company and the supervision of the employees, even as they add that they are not absolute insurers of
the safety of the public at large. Further, it was alleged that it was the victim's own carelessness and negligence which
gave rise to the subject incident, hence they prayed for the dismissal of the complaint plus an award of damages in
their favor by way of a counterclaim.

TRIAL COURT:
Ruled in favor of petitioners. Pedrito Cudiamat was negligent, which negligence was the proximate cause of his
death. Nonetheless, defendants in equity, are ordered to pay the heirs of Pedrito Cudiamat the sum of
P10,000.00 which approximates the amount defendants initially offered said heirs for the amicable settlement
of the case.
COURT OF APPEALS:
Set aside the decision of the lower court, and ordered petitioners to pay private respondents indemnity for death
of the victim Pedrito Cudiamat, moral damages; actual and compensatory damages; and The costs of the
suit. Their Motion for reconsideration was also denied.
ISSUE: Whether or not the bus driver is negligent.

HELD: YES. Court reviewed the findings of the lower court and the Court of Appeals and sided with the findings of the
latter.
TRIAL COURTS FINDINGS:
Pedrito Cudiamat was negligent in trying to board a moving vehicle, especially with one of his hands holding
an umbrella. And, without having given the driver or the conductor any indication that he wishes to board
the bus. But defendants can also be found wanting of the necessary diligence. In this connection, it is safe to
assume that when the deceased Cudiamat attempted to board defendants' bus, the vehicle's door was open
instead of being closed. This should be so, for it is hard to believe that one would even attempt to board a
vehicle (i)n motion if the door of said vehicle is closed. Here lies the defendant's lack of diligence. Under such
circumstances, equity demands that there must be something given to the heirs of the victim to assuage their
feelings. This, also considering that initially, defendant common carrier had made overtures to amicably settle
the case. It did offer a certain monetary consideration to the victim's heirs.

COURT OF APPEALS FINDINGS:
From the testimony of the witness in the person of Vitaliano Safarita, it is evident that the subject bus was at
full stop when the victim Pedrito Cudiamat boarded the same as it was precisely on this instance where a
certain Miss Abenoja alighted from the bus. Moreover, contrary to the assertion of the appellees, the victim
did indicate his intention to board the bus as can be seen from the testimony of the said witness when he
declared that Pedrito Cudiamat was no longer walking and made a sign to board the bus when the latter
was still at a distance from him. It was at the instance when Pedrito Cudiamat was closing his umbrella at the
platform of the bus when the latter made a sudden jerk movement (as) the driver commenced to accelerate the
bus. Evidently, the incident took place due to the gross negligence of the appellee-driver in prematurely
stepping on the accelerator and in not waiting for the passenger to first secure his seat especially so when we
take into account that the platform of the bus was at the time slippery and wet because of a drizzle. The
defendants-appellees utterly failed to observe their duty and obligation as common carrier to the end that they
should observe extra-ordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them according to the circumstances of each case (Article 1733, New Civil Code)
RATIO:
When the bus is not in motion there is no necessity for a person who wants to ride the same to signal his intention to
board. A public utility bus, once it stops, is in effect making a continuous offer to bus riders. Hence, it becomes the duty
of the driver and the conductor, every time the bus stops, to do no act that would have the effect of increasing the peril to
a passenger while he was attempting to board the same. The premature acceleration of the bus in this case was a breach
of such duty.

It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or
motorbus, to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to
board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden
starting up or jerking of their conveyances while they are doing so.

Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be considered
negligent under the circumstances. As clearly explained in the testimony of the aforestated witness for petitioners,
Virginia Abalos, the bus had "just started" and "was still in slow motion" at the point where the victim had boarded and
was on its platform.

IT is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is moving
slowly. An ordinarily prudent person would have made the attempt board the moving conveyance under the same or
similar circumstances. The fact that passengers board and alight from slowly moving vehicle is a matter of common
experience both the driver and conductor in this case could not have been unaware of such an ordinary practice.

The victim by stepping and standing on the platform of the bus, is already considered a passenger and is entitled
all the rights and protection pertaining to such a contractual relation. Hence, it has been held that the duty which
the carrier passengers owes to its patrons extends to persons boarding cars as well as to those alighting
therefrom.

CASE LAW/ DOCTRINE:
Common carriers, from the nature of their business and reasons of public policy, are bound to observe extraordinary
diligence for the safety of the passengers transported by the according to all the circumstances of each case. A common
carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence
very cautious persons, with a due regard for all the circumstances.

It has also been repeatedly held that in an action based on a contract of carriage, the court need not make an express
finding of fault or negligence on the part of the carrier in order to hold it responsible to pay the damages sought
by the passenger. By contract of carriage, the carrier assumes the express obligation to transport the passenger to
his destination safely and observe extraordinary diligence with a due regard for all the circumstances, and any
injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier. This is
an exception to the general rule that negligence must be proved, and it is therefore incumbent upon the carrier to prove
that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code.
DISPOSITIVE: WHEREFORE, subject to the above modifications, the challenged judgment and resolution of
respondent Court of Appeals are hereby AFFIRMED in all other respects.SO ORDERED.

Carrier of Goods

Ganzon v. CA

DOCTRINE: NO DISTINCTION WON it is available to public or not as long as it is a persons, corporations, firms
or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or
air for compensation, offering their services to the public.

FACTS:

November 28, 1956: Gelacio Tumambing (Gelacio) contracted the services of of Mauro B. Ganzon to haul
305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the light LCT Batman
December 1, 1956: Gelacio delivered the scrap iron to Filomeno Niza, captain of the lighter, for loading
which was actually begun on the same date by the crew of the lighter under the captains supervisor.
When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan arrived
and demanded P5000 from Gelacio
o Upon resisting, the Mayor fired at Gelacio so he had to be taken to the hospital
o Loading of the scrap iron was resumed
December 4, 1956: Acting Mayor Basilio Rub (Rub), accompanied by 3 policemen, ordered captain
Filomeno Niza and his crew to dump the scrap iron where the lighter was docked
o Later on Rub had taken custody of the scrap iron
RTC: in favor of Gelacio and against Ganzon
ISSUE: W/N Ganzon should be held liable under the contract of carriage

HELD: YES. Petition is DENIED.
Ganzon thru his employees, actually received the scraps is freely admitted.
Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or
constructive, by the carrier to the consignee, or to the person who has a right to receive them.
The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract
of transportation as the goods remained in the custody and control of the carrier, albeit still unloaded.
failed to show that the loss of the scraps was due to any of the following causes enumerated in Article 1734
of the Civil Code, namely:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Hence, the petitioner is presumed to have been at fault or to have acted negligently.
By reason of this presumption, the court is not even required to make an express finding of fault or
negligence before it could hold the petitioner answerable for the breach of the contract of carriage.
o exempted from any liability had he been able to prove that he observed extraordinary diligence in
the vigilance over the goods in his custody, according to all the circumstances of the case, or that
the loss was due to an unforeseen event or to force majeure. As it was, there was hardly any
attempt on the part of the petitioner to prove that he exercised such extraordinary diligence.
We cannot sustain the theory of caso fortuito - "order or act of competent public authority"(Art. 1174 of the
Civil Code)
o no authority or power of the acting mayor to issue such an order was given in evidence. Neither
has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles.
Ganzon was not duty bound to obey the illegal order to dump into the sea the scrap iron.
Moreover, there is absence of sufficient proof that the issuance of the same order was
attended with such force or intimidation as to completely overpower the will of the
petitioner's employees. The mere difficulty in the fullfilment of the obligation is not
considered force majeure.

007 Compania Maritima v. Insurance Co. of
North America, 12 SCRA 213 (1964)
Topic: Carriage of Goods
The liability of the carrier as common carrier begins with the
actual delivery of the goods for transportation, and not merely
with the formal execution of a receipt or bill of lading; the
issuance of a bill of lading is not necessary to complete
delivery and acceptance. Even where it is provided by statute
that liability commences with the issuance of the bill of lading,
actual delivery and acceptance are sufficient to bind the carrier.
(13 C.J.S., p. 288)

1. In October, 1952, Macleod and Co. of the Philippines contracted through phone the services of the Compaia
Maritima, a shipping corporation, for the shipment of 2,645 bales of hemp from Davao City to Manila--- and
for their subsequent transshipment to Boston, Massachusetts, U.S.A.

2. The oral contract was later formally executed and written booking contract was issued, and Compaia
Maritima sent to Macleod's private wharf LCT Nos. 1023 and 1025, the loading of the hemp was completed
on October 29, 1952.

3. The patrons of both barges issued the corresponding carrier's receipts and that issued by the patron of Barge
No. 1025 reads in part:

Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD AND COMPANY OF
PHILIPPINES, Sasa Davao, for transhipment at Manila onto S.S. Steel Navigator. FINAL DESTINATION:
Boston

4. However, on the night of October 29, while the two loaded barges awaits for the arrival of the S.S. Bowline
Knot belonging to Compaia Maritima on which the hemp was to be loaded. LCT No. 1025 sank, resulting
in the damage or loss of 1,162 bales of hemp loaded therein.

5. The damaged hemp was brought to cleaning, washing, reconditioning, and redrying. The reconditioned hemp
total 2,197.75 piculs amounting to P84,887.28 from the original 2,324 piculs (2,645 bales) with a total value
of 116,835.

6. Resulting to a total loss of P60, 421.02 (inclusive of miscellaneous and redrying expenses)

7. The shipments were insured with the Insurance Company of North America against all losses and damages.
The insurance company paid the sum of P64,018.55 with an assignment and subrogation agreement against
Compania Maritima.

8. Having failed to recover from the carrier the sum of P60,421.02, which is the only amount supported by
receipts, the insurance company instituted an action on October 28, 1953.

9. RTC: ordered the carrier to pay with legal interest from date of filing of complaint. CA Affirmed.

MAIN ISSUE:
1. Was there a contract of carriage between the carrier and the shipper even if the loss occurred when the hemp
was loaded on a barge owned by the carrier which was loaded free of charge and was not actually loaded on
the S.S. Bowline Knot which would carry the hemp to Manila and no bill of lading was issued therefore?
SUB-ISSUES:
2. Was the damage caused to the cargo or the sinking of the barge where it was loaded due to a fortuitous event,
storm or natural disaster that would exempt the carrier from liability?
3. Can respondent insurance company sue the carrier under its insurance contract as assignee of Macleod in
spite of the fact that the liability of the carrier as insurer is not recognized in this jurisdiction?

Held:
1. YES, We have a complete contract of carriage, the consummation has already begun
2. NO, the mishap that caused the damage or loss was due, not to force majeure, but to lack of adequate
precautions or measures taken by the carrier to prevent the loss
3. YES
Ratio: ISSUE #1: This issue should be answered in the affirmative.
1. The fact that the carrier sent its lighters free of charge to take the hemp from Macleod's wharf at Sasa
preparatory to its loading onto the ship Bowline Knot does not in any way impair the contract of carriage
already entered into between the carrier and the shipper, for that preparatory step is but part and parcel of
said contract of carriage
2. We have a complete contract of carriage the consummation of which has already begun: the shipper
delivering the cargo to the carrier, and the latter taking possession thereof by placing it on a lighter manned
by its authorized employees, under which Macleod became entitled to the privilege secured to him by law for
its safe transportation and delivery, and the carrier to the full payment of its freight upon completion of the
voyage.
3. The claim that there can be no contract of affreightment because the hemp was not actually loaded on the
ship cant be sustained; the delivery of the hemp to the carrier's lighter is in line with the contract.
4. The receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and deliver,
and if actually no goods are received there can be no such contract.
5. The liability of the carrier as common carrier begins with the actual delivery of the goods for
transportation, and not merely with the formal execution of a receipt or bill of lading; the issuance of a
bill of lading is not necessary to complete delivery and acceptance. Even where it is provided by statute
that liability commences with the issuance of the bill of lading, actual delivery and acceptance are
sufficient to bind the carrier. (13 C.J.S., p. 288)
6. ... The test as to whether the relation of shipper and carrier had been established is, Had the control
and possession of the cotton been completely surrendered by the shipper to the company? Whenever
the control and possession of goods passes to the carrier and nothing remains to be done by the
shipper, then it can be said with certainty that the relation of shipper and carrier has been established.
ISSUE #2:
1. The mishap that caused the damage or loss was due, not to force majeure, but to lack of adequate precautions
or measures taken by the carrier to prevent the loss.
2. it should be noted that on the night of the nautical accident there was no storm, flood, or other natural disaster
or calamity
3. Barge not seaworthy- barge had cracks on its bottom which admitted sea water in the same manner as rain
entered "thru tank man-holes"
ISSUE #3:
1. The instant case, is one between the shipper and the carrier, because the insurance company merely stepped
into the shoes of the shipper.
2. Since the shipper has a direct cause of action against the carrier on account of the damage of the cargo, no
valid reason is seen why such action cannot be asserted or availed of by the insurance company as a subrogee
of the shipper.
3. Nor can the carrier set up as a defense any defect in the insurance policy because it cannot avoid its liability
to the shipper under the contract of carriage which binds it to pay any loss that may be caused to the cargo
involved therein.



1.2 parties

008 Title: Baliwag Transit Corp. v. CA (1989)
Topic: Common Carriers - Parties
Quick Notes / Doctrine:
In the absence of any contract of carriage between Baliwag and
George's parents, the latter are not real parties-in-interest in an
action for breach of that contract.

Facts:

December 17 1984: George, who was a paying passenger on a Baliwag bus (Baliwag) he was thrown off by the
bus driven in a careless and negligent manner by Leonardo Cruz, authorized bus driver, along Barangay
Patubig, Marilao, Bulacan
suffered multiple serious physical injuries
confined in the hospital for treatment, incurring medical expenses, which were borne by his
parents, Spouses Sotero Cailipan, Jr. and Zenaida Lopez, in the sum of about P200,000.00 plus other
incidental expenses of about P10,000.00
April 10 1985:
Baliwag: solely attributable to his own voluntary act in that he suddenly stood up from his seat and
headed for the door of the bus and jumped off while said bus was in motion, in spite of the
protestations by the driver and without the knowledge of the conductor
Baliwag then filed a Third-Party Complaint against Fortune Insurance & Surety Company, Inc., on its
third-party liability insurance in the amount of P50,000.00
Fortune Insurance claimed limited liability, the coverage being subject to a Schedule of
Indemnities forming part of the insurance policy.
November 14 1985 and November 18 1985: Fortune Insurance and Baliwag each filed Motions to Dismiss on
the ground that George, in consideration of the sum of P8,020.50 had executed a notarized "Release of Claims"
dated 16 May 1985. - denied as they were filed beyond the time for pleading and after the Answer were already
filed so Baliwag amended its answer to include such
RTC: dismissed the Complaint and Third-party Complaint, ruling that since the contract of carriage is between
Baliwag and George L. Cailipan (of legal age) had the exclusive right to execute the Release of Claims despite
the fact that he is still a student and dependent on his parents for support
October 22 1987: setting aside the appealed Order and holding that the "Release of Claims" cannot operate as a
valid ground for the dismissal of the case because it does not have the conformity of all the parties, particularly
George's parents, who have a substantial interest in the case as they stand to be prejudiced by the judgment
because they spent a sizeable amount for the medical bills of their son
Baliwag filed Petition for Review on certiorari

Issues: W/N the contract signed by George during case pendency is valid discharging Fortune Insurance and Baliwag
from any and all liability
Held: Yes. George is of legal age and had the capacity to do acts with legal effect
Ratio:
George had the right to be safely brought to his destination and Baliwag had the correlative obligation to do so
Since a contract may be violated only by the parties thereto, as against each other, in an action upon that
contract, the real parties in interest, either as plaintiff or as defendant, must be parties to said contract:
real party-in-interest -plaintiff - who has a legal right
real party-in-interest-defendant - who has a correlative legal obligation whose act or omission violates
the legal right of the former
In the absence of any contract of carriage between Baliwag and George's parents, the latter are not real parties-
in-interest in an action for breach of that contract.
general rule of the common law is that every action must be brought in the name of the party whose legal right
has been invaded or infringed
The phraseology "any and all claims or causes of action" is broad enough to include all damages that may
accrue to the injured party arising from the unfortunate accident.
The Release of Claims had the effect of a compromise agreement since it was entered into for the
purpose of making a full and final compromise adjustment and settlement of the cause of
action involved.
compromise - contract whereby the parties, by making reciprocal concessions, avoid a litigation or put
an end to one already commenced (Article 2028, Civil Code).
Relation to Topic: Definition of Parties
real party-in-interest -plaintiff - who has a legal right
real party-in-interest-defendant - who has a correlative legal obligation whose act or omission violates
the legal right of the former

Title: Everett Steamship vs CA, Hernandez
Trading
Topic: Common Carrier/parties to the contract
Quick Notes/Doctrine : The right of a party to recover for
loss of a shipment consigned to him under a bill of lading
drawn up only by and between the shipper and the
carrier, springs from either a relation of agency that may
exist between him and the shipper or consignor, or his
status as stranger in whose favor some stipulation is made
in said contract, and who becomes a party thereto when
he demands fulfillment of that stipulation.
Facts:
1. Hernandez Trading imported three crates of bus spare parts marked as MARCO C/No. 12, MARCO C/No. 13
and MARCO C/No. 14, from its supplier, Maruman Trading Company, Ltd. (Maruman Trading), a foreign
corporation based in Inazawa, Aichi, Japan
2. The crates were shipped from Nagoya, Japan to Manila on board ADELFAEVERETTE, a vessel owned by
petitioners principal, Everett Orient Lines. Upon arrival at the port of Manila, it was discovered that the crate
marked MARCO C/No. 14 was missing.
3. Hernandez made a formal claim upon petitioner for the value of the lost cargo amounting to One Million Five
Hundred Fifty Two Thousand Five Hundred (Y1,552,500.00) Yen, the amount shown in an Invoice No. MTM-
941, dated November 14, 1991.
4. Everett offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximum amount stipulated under
Clause 18 of the covering bill of lading which limits the liability of petitioner.
5. Hernandez rejected the offer and thereafter instituted a suit for collection against Everett before the Regional
Trial Court of Caloocan City, Branch 126.
6. On July 16, 1993, the trial court rendered judgment in favor of Hernandez , ordering Everett to pay: (a)
Y1,552,500.00; (b) Y20,000.00 or its peso equivalent representing the actual value of the lost cargo and the
material and packaging cost; (c) 10% of the total amount as an award for and as contingent attorneys fees; and
(d) to pay the cost of the suit.
7. On appeal, the Court of Appeals deleted the award of attorneys fees but affirmed the trial courts findings with
the additional observation that Hernandez can not be bound by the terms and conditions of the bill of lading
because it was not privy to the contract of carriage. It said:
As to the amount of liability, no evidence appears on record to show that the appellee (Hernandez Trading
Co.) consented to the terms of the Bill of Lading. The shipper named in the Bill of Lading is Maruman
Trading Co., Ltd. whom the appellant (Everett Steamship Corp.) contracted with for the transportation of the
lost goods.
Even assuming arguendo that the shipper Maruman Trading Co., Ltd. accepted the terms of the bill of lading
when it delivered the cargo to the appellant, still it does not necessarily follow that appellee Hernandez
Trading Company as consignee is bound thereby considering that the latter was never privy to the shipping
contract.
8. Never having entered into a contract with the appellant, appellee should therefore not be bound by any of
the terms and conditions in the bill of lading.
Hence, it follows that the appellee may recover the full value of the shipment lost, the basis of which is not
the breach of contract as appellee was never a privy to the any contract with the appellant, but is based on
Article 1735 of the New Civil Code, there being no evidence to prove satisfactorily that the appellant has
overcome the presumption of negligence provided for in the law.

Issues: WON the consent of the consignee to the terms and conditions of the bill of lading is necessary to make such
stipulations binding upon it.

Held: No, to begin with, there is no question of the right, in principle, of a consignee in a bill of lading to recover from
the carrier or shipper for loss of, or damage to goods being transported under said bill, although that document may
have been- as in practice it oftentimes is-drawn up only by the consignor and the carrier without the intervention
of the consignee.
When Hernandez formally claimed reimbursement for the missing goods from Everett and subsequently filed a case
against the latter based on the very same bill of lading, Hernandez accepted the provisions of the contract and thereby
made itself a party thereto, or at least has come to court to enforce it. Thus, Hernandez cannot now reject or disregard
the carriers limited liability stipulation in the bill of lading. In other words, Hernandez is bound by the whole
stipulations in the bill of lading and must respect the same.
Hernandez, however, insists that the carrier should be liable for the full value of the lost cargo in the amount of
Y1,552,500.00, considering that the shipper, Maruman Trading, had "fully declared the shipment x x x, the contents of
each crate, the dimensions, weight and value of the contents," as shown in the commercial Invoice No. MTM-94
The bill of lading in question confirms Everetts contention. To defeat the carriers limited liability, the aforecited
Clause 18 of the bill of lading requires that the shipper should have declared in writing a higher valuation of its goods
before receipt thereof by the carrier and insert the said declaration in the bill of lading, with the extra freight paid.
These requirements in the bill of lading were never complied with by the shipper, hence, the liability of the carrier under
the limited liability clause stands. The commercial Invoice No. MTM-941 does not in itself sufficiently and
convincingly show that Everett has knowledge of the value of the cargo as contended by private respondent

Ratio: The right of a party in the same situation as respondent here, to recover for loss of a shipment
consigned to him under a bill of lading drawn up only by and between the shipper and the carrier,
springs from either a relation of agency that may exist between him and the shipper or consignor, or his
status as stranger in whose favor some stipulation is made in said contract, and who becomes a party
thereto when he demands fulfillment of that stipulation, in this case the delivery of the goods or cargo
shipped. In neither capacity can he assert personally, in bar to any provision of the bill of lading, the
alleged circumstance that fair and free agreement to such provision was vitiated by its being in such
fine print as to be hardly readable. Parenthetically, it may be observed that in one comparatively recent
case (Phoenix Assurance Company vs. Macondray & Co., Inc., 64 SCRA 15) where this Court found that a
similar package limitation clause was printed in the smallest type on the back of the bill of lading, it
nonetheless ruled that the consignee was bound thereby on the strength of authority holding that such
provisions on liability limitation are as much a part of a bill of lading as though physically in it and as
though placed therein by agreement of the parties.
There can, therefore, be no doubt or equivocation about the validity and enforceability of freely-agreed-upon
stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed valuation
unless the shipper declares a higher value and inserts it into said contract or bill. This proposition,
moreover, rests upon an almost uniform weight of authority.

Relation/Pertinent Law
ART. 1749. A stipulation that the common carriers liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a greater value, is binding.
ART. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has
been freely and fairly agreed upon.



Exceptions

Title: Sulpicio Lines v. CA, 246 SCRA 299,
G.R. No. 106279 July 14, 1995
Topic: Parties; Exceptions
Quick Notes / Doctrine:
ALC had a contract of carriage with Sulpicio.
Pamalaran, a stevedore of CBL, died of gas poisoning.
RTC awarded damages against ACL, CBL and Sulpicio.
Sulpicio appealed.
CA affirmed.
Petition for Review on Certiorari.
Facts:
A contract of carriage was entered into between Sulpicio Lines and AGO Lumber Company (ALC) for the
transport of the latter's timber.
Sulpicio sent its tugboat and barge to pick up ALC's timber. However, no loading could be made because of the
heavy downpour.
The next morning, several stevedores (hired to load and unload cargo from ships) of CBL Timber Corporation
(CBL), who were hired by ALC, boarded the barge and opened its storeroom.
The stevedores were warned of the gas and heat generated by the copra stored in the holds of the ship. Not
heeding the warning, Pamalaran entered the storeroom, lost consciousness and eventually died of gas
poisoning.
Pamalaran's heirs filed for damages.
The TC awarded the claim for damages against CBL Timber Corporation, AGO Lumber Company and
Sulpicio Lines, Inc.
On appeal, the CA affirmed relying on the case of Canas v. Dabatos wherein persons were on board the vessel
of defendant not as passengers but as 'cargadores' of the shipper's goods and that despite the absence of a
passenger-carrier relationship between them, just the same, the patron thereof was held liable as a common
carrier.
Hence, this petition.
Petitioner Sulpicio Lines argued that it is not liable for the death of the victim because:
1. Pamalaran was never a passenger of petitioner. Therefore, it is not liable as a common carrier; and
2. Petitioner and its employees were not negligent in the series of events which led to the death of Pamalaran.
Issue:
WoN Sulpicio Lines is liable as a common carrier for the death of Pamalaran (stevedore) although the latter was never a
passenger of the former.

Held:
Yes. CA affirmed. The presence of the stevedores sent by ALC on board the barge of petitioner was called for by the
contract of carriage.

Ratio:
Claim #1: Pamalaran was never a passenger of petitioner. Therefore, it is not liable as a common carrier.
ALC had a contract of carriage with Sulpicio. The presence of the stevedores sent by ALC on board the barge
of petitioner was called for by the contract of carriage. For how else would its lumber be transported unless it is
placed on board? And by whom? Of course, the stevedores. Definitely, Sulpicio could not expect the shipper
itself to load the lumber without the aid of the stevedores. Furthermore, Sulpicio knew of the presence and role
of the stevedores in its barge and thus consented to their presence. Hence, Sulpicio was responsible for their
safety while on board the barge.

Claim #2: Petitioner and its employees were not negligent in the series of events which led to the death of Pamalaran.
Such argument is demolished by the findings of the CA:
o Sulpicio failed to prove that its employees were actually trained or given specific instructions to see to
it that the barge is fit and safe not only in transporting goods but also for people who would be loading
the cargo into the bodega of the barge.
o It is not enough that appellant's employees have warned the laborers not to enter the barge after the
hatch was opened. Sulpicio's employees should have been sufficiently instructed to see to it that the
hatch of the barge is not opened by any unauthorized person and that the hatch is not easily opened by
anyone.
o At the very least, precautionary measures should have been observed by Sulpicio's employees to see to
it that no one could enter the bodega of the barge until after they have made sure that it is safe for
anyone to enter the same.
o Failing to exercise due diligence in the supervision of its employees, the lower court was correct in
holding appellant liable for damages.
Relation to Topic: (if any)
Pertinent Laws: (if any are mentioned)


PAL v. CA

2. Definition of a Common Carrier

Art. 1732

3. Test of Common Carrier Concept

013 De Guzman v CA
[G.R. No. L-47822 Dec. 22, 1988]
TOPIC: TEST OF COMMON CARRIER CONCEPT
PONENTE: FELICIANO, J.
AUTHOR: Keith
Notes: the common carrier here is not liable
because the robbery couldnt have been
foreseen and they were powerless to act on it
when it happened. They did all they could
through extraordinary diligence.


FACTS:
1. Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he gathered to
Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan, respondent would load his
vehicle with cargo which various merchants wanted delivered, charging fee lower than the commercial rates.
2. Sometime in November 1970, petitioner Pedro de Guzman contracted with respondent for the delivery of 750
cartons of Liberty Milk. On December 1, 1970, respondent loaded the cargo.
3. Only 150 boxes were delivered to petitioner because the truck carrying the boxes was hijacked along the way.
4. Petitioner commenced an action claiming the value of the lost merchandise.
4.1 Petitioner argues that respondent, being a common carrier, is bound to exercise extraordinary diligence,
which it failed to do. Private respondent denied that he was a common carrier, and so he could not be held
liable for force majeure.
5. The trial court ruled against the respondent, but such was reversed by the Court of Appeals.
ISSUE: Whether or not respondent is liable for the goods as a common carrier under Art. 1732 of the NCC?

HELD: Yes, a common carrier, but not liable.
Ratio:
1. Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only as an ancillary activity.
1.1 Article 1732 also carefully avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis.
1.2 Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the
general community or population, and one who offers services or solicits business only from a narrow
segment of the general population.
2. It appears to the Court that private respondent is properly characterized as a common carrier even though he
merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such backhauling was
done on a periodic or occasional rather than regular or scheduled manner, and even though private respondent's
principal occupation was not the carriage of goods for others. There is no dispute that private respondent
charged his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is
not relevant here.
2.1 A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers.
3. The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting causes
listed in Article 1734. Private respondent as common carrier is presumed to have been at fault or to have acted
negligently. The hijacking must therefore fall under Art. 1735. In other words, that the private respondent as
common carrier is presumed to have been at fault or to have acted negligently. This presumption, however,
may be overthrown by proof of extraordinary diligence on the part of private respondent.
4. We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the goods
carried are reached where the goods are lost as a result of a robbery which is attended by "grave or
irresistible threat, violence or force." we hold that the occurrence of the loss must reasonably be regarded
as quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of
transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable,
provided that they shall have complied with the rigorous standard of extraordinary diligence.
5. The SC later found that, through the criminal complaint of the hijacking and the decision of the trial court, the
perpetrators of the hijacking acted with grave, if not irresistible, threat, violence or force. Three (3) of the
five (5) hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but also
kidnapped the driver and his helper, detaining them for several days and later releasing them in another
province (in Zambales). The hijacked truck was subsequently found by the police in Quezon City. The Court of
First Instance convicted all the accused of robber.
CASE LAW/ DOCTRINE:
- 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.
DISPOSITIVE: 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.

013 MAYER STEEL PIPE CORPORATION and HONGKONG
GOVERNMENT SUPPLIES DEPARTMENT, petitioners, vs.
COURT OF APPEALS, SOUTH SEA SURETY AND
INSURANCE CO., INC. and the CHARTER INSURANCE
CORPORATION, respondents.
[G.R. No. L-53515 February 8, 1989]
TOPIC: TEST OF COMMON CARRIER CONCEPT
PONENTE: PUNO, J.
AUTHOR: Ernest
NOTE/S: the liability of the insurer is not
extinguished because the insurer's liability is
based not on the contract of carriage but on
the contract of insurance.
FACTS:
1. Petitioner Hongkong Government Supplies Department (Hongkong) contracted petitioner Mayer Steel Pipe
Corporation (Mayer) to manufacture and supply various steel pipes and fittings.
2. From August to October, 1983, Mayer shipped the pipes and fittings to Hongkong.
3. Prior to the shipping, petitioner Mayer insured the pipes and fittings against all risks with private
respondents South Sea Surety and Insurance Co., Inc. (South Sea) and Charter Insurance Corp. (Amounts:
South Sea= US$212,772.09/ Charter = US$149,470.00)
4. Petitioners Mayer and Hongkong jointly appointed Industrial Inspection (International) Inc. as third-party
inspector to examine whether the pipes and fittings are manufactured in accordance with the
specifications in the contract.
5. Industrial Inspection certified all the pipes and fittings to be in good order condition before they were
loaded in the vessel.
6. Nonetheless, when the goods reached Hongkong, it was discovered that a substantial portion thereof was
damaged.
7. Petitioners filed a claim against private respondents for indemnity under the insurance contract. Respondent
Charter paid petitioner Hongkong the amount of HK$64,904.75. Petitioners demanded payment of the
balance of HK$299,345.30 representing the cost of repair of the damaged pipes. Private respondents
refused to pay because the insurance surveyor's report allegedly showed that the damage is a factory
defect.
8. On April 17, 1986, Petitioners filed an action against private respondents to recover the sum of
HK$299,345.30. For their defense, private respondents averred that they have no obligation to pay the amount
claimed by petitioners because the damage to the goods is due to factory defects which are not covered by the
insurance policies.
TRIAL COURT:
Ruled in favor of petitioners. It found that the damage to the goods is not due to manufacturing defects. It also
noted that the insurance contracts executed by petitioner Mayer and private respondents are "all risks" policies
which insure against all causes of conceivable loss or damage. The only exceptions are those excluded in the
policy, or those sustained due to fraud or intentional misconduct on the part of the insured.
COURT OF APPEALS:
Affirmed the finding of the trial court that the damage is not due to factory defect and that it was covered by the
"all risks" insurance policies issued by private respondents to petitioner Mayer. However, it set aside the
decision of the trial court and dismissed the complaint on the ground of prescription. It held that the action
is barred under Section 3(6) of the Carriage of Goods by Sea Act since it was filed only on April 17, 1986,
more than two years from the time the goods were unloaded from the vessel. Section 3(6) of the Carriage
of Goods by Sea Act provides that "the carrier and the ship shall be discharged from all liability in respect of
loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods
should have been delivered." Respondent court ruled that this provision applies not only to the carrier but
also to the insurer. Citing the case of Filipino Merchants I nsurance Co., I nc. v. Alejandro.
ISSUE: Whether or not the Court of Appeals made an error in applying Section 3(6) of the Carriage of Goods by Sea
Act and the doctrine laid down in Filipino Merchants Insurance Co., Inc. v. Alejandro.

HELD: YES. Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be discharged
from all liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the dat e
when they should have been delivered. Under this provision, only the carrier's liability is extinguished if no suit is
brought within one year. But the liability of the insurer is not extinguished because the insurer's liability is based
not on the contract of carriage but on the contract of insurance. A close reading of the law reveals that the Carriage
of Goods by Sea Act governs the relationship between the carrier on the one hand and the shipper, the consignee and/or
the insurer on the other hand. It defines the obligations of the carrier under the contract of carriage. It does not, however,
affect the relationship between the shipper and the insurer. The latter case is governed by the Insurance Code.
Filipino Merchants I nsurance Co., I nc. v. Alejandro

The shipper filed a complaint against the insurer for recovery of a sum of money as indemnity for the loss and damage
sustained by the insured goods. The insurer, in turn, filed a third-party complaint against the carrier for reimbursement
of the amount it paid to the shipper. The insurer filed the third-party complaint on January 9, 1978, more than one year
after delivery of the goods on December 17, 1977.

The court held that the insurer was already barred from filing a claim against the carrier because under the Carriage of
Goods by Sea Act, the suit against the carrier must be filed within one year after delivery of the goods or the date when
the goods should have been delivered. The court said that "the coverage of the Act includes the insurer of the goods.
SC: Filipino Merchants I nsurance Co., I nc. v. Alejandro does not apply in this case. In Filipino Merchants, it was the
insurer which filed a claim against the carrier for reimbursement of the amount it paid to the shipper. In the case
at bar, it was the shipper which filed a claim against the insurer. The basis of the shipper's claim is the "all risks"
insurance policies issued by private respondents to petitioner Mayer.

When the court said in Filipino Merchants that Section 3(6) of the Carriage of Goods by Sea Act applies to the insurer, it
meant that the insurer, like the shipper, may no longer file a claim against the carrier beyond the one-year period
provided in the law. But it does not mean that the shipper may no longer file a claim against the insurer because the
basis of the insurer's liability is the insurance contract.
CASE LAW/ DOCTRINE:
the basis of the insurer's liability is the insurance contract. An insurance contract is a contract whereby one party, for
a consideration known as the premium, agrees to indemnify another for loss or damage which he may suffer from a
specified peril. An "all risks" insurance policy covers all kinds of loss other than those due to willful and fraudulent act
of the insured. Thus, when private respondents issued the "all risks" policies to petitioner Mayer, they bound themselves
to indemnify the latter in case of loss or damage to the goods insured. Such obligation prescribes in ten years, in
accordance with Article 1144 of the New Civil Code.
DISPOSITIVE: IN VIEW WHEREOF, the petition is GRANTED. The Decision of respondent Court of Appeals dated
December 14, 1995 and its Resolution dated February 22, 1996 are hereby SET ASIDE and the Decision of the
Regional Trial Court is hereby REINSTATED. No costs.


014 First Philippine Industrial Corporation (FPIC) v. CA

Topic: Test of common carrier concept

Doctrine:
The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for others as a public employment, and
must hold himself out as ready to engage in the transportation of goods for person generally
as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and over his
established roads; and
4. The transportation must be for hire.

Facts:
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install
and operate oil pipelines.
Petitioner applied for a mayor's permit with the Office of the Mayor of Batangas City. However, before the
mayor's permit could be issued, the respondent City Treasurer required petitioner to pay a local tax based
on its gross receipts for the fiscal year 1993 pursuant to the Local Government Code.
Petitioner filed a letter-protest addressed to the respondent City Treasurer, the pertinent portion of which
reads:
o "Please note that our Company (FPIC) is a pipeline operator with a government concession
granted under the Petroleum Act. It is engaged in the business of transporting petroleum
products from the Batangas refineries, via pipeline, to Sucat and JTF Pandacan Terminals.
As such, our Company is exempt from paying tax on gross receipts under Section 133 of the
Local Government Code of 1991 x x x x
Respondents argued that petitioner cannot be exempt from taxes under Section 133 (j) of the Local
Government Code as said exemption applies only to "transportation contractors and persons engaged in the
transportation by hire and common carriers by air, land and water."
Respondents assert that pipelines are not included in the term "common carrier" which refers solely to
ordinary carriers such as trucks, trains, ships and the like. Respondents further posit that the term "common
carrier" under the said code pertains to the mode or manner by which a product is delivered to its
destination
Trial court ruled that the exemption granted under Sec. 133 (j) encompasses only common carriers so as not
to overburden the riding public or commuters with taxes. Plaintiff is not a common carrier, but a special
carrier extending its services and facilities to a single specific or "special customer" under a "special
contract."
The Court of Appeals affirmed the Trial Courts decision.

Issue: WON the Petition can be considered as a common carrier

Held: Yes. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a
public employment.

Ratio:
A "common carrier" may be defined, broadly, as one who holds himself out to the public as engaged in the
business of transporting persons or property from place to place, for compensation, offering his services to
the public generally.
Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public."
[see doctrine above test for determining a common carrier of goods]
Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is
engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to
employ its services, and transports the goods by land and for compensation. The fact that petitioner has a
limited clientele does not exclude it from the definition of a common carrier.
Respondent's argument that the term "common carrier" as used in Section 133 (j) of the Local Government
Code refers only to common carriers transporting goods and passengers through moving vehicles or vessels
either by land, sea or water, is erroneous.
As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no
distinction as to the means of transporting, as long as it is by land, water or air. It does not provide that the
transportation of the passengers or goods should be by motor vehicle. In fact, in the United States, oil pipe
line operators are considered common carriers

Extra:
Concept of 'common carrier' under Article 1732 may be seen to coincide neatly with the notion of 'public
service,' under the Public Service Act
Section 13, paragraph (b) of the Public Service Act, 'public service' includes:
o 'every person that now or hereafter may own, operate, manage, or control in the Philippines, for
hire or compensation, with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common carrier, railroad, street railway,
traction railway, subway motor vehicle, either for freight or passenger, or both, with or without
fixed route and whatever may be its classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice
plant, ice-refrigeration plant, canal, irrigation system gas, electric light heat and power, water
supply and power petroleum, sewerage system, wire or wireless communications systems, wire or
wireless broadcasting stations and other similar public services.' "
The Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common carrier."
Thus, Article 86 thereof provides that:
o "Art. 86. Pipe line concessionaire as a common carrier. - A pipe line shall have the
preferential right to utilize installations for the transportation of petroleum owned by him, but
is obligated to utilize the remaining transportation capacity pro rata for the transportation of
such other petroleum as may be offered by others for transport, and to charge without
discrimination such rates as may have been approved by the Secretary of Agriculture and
Natural Resources."
Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of Article 7 thereof
provides:
o "that everything relating to the exploration for and exploitation of petroleum x x and everything
relating to the manufacture, refining, storage, or transportation by special methods of petroleum, is
hereby declared to be a public utility."
Bureau of Internal Revenue likewise considers the petitioner a "common carrier." In BIR Ruling No. 069-
83, it declared:
o "x x x since [petitioner] is a pipeline concessionaire that is engaged only in transporting petroleum
products, it is considered a common carrier under Republic Act No. 387 x x x. Such being the
case, it is not subject to withholding tax prescribed by Revenue Regulations No. 13-78, as
amended."
From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and, therefore,
exempt from the business tax as provided for in Section 133 (j), of the Local Government Code
It is clear that the legislative intent in excluding from the taxing power of the local government unit the
imposition of business tax against common carriers is to prevent a duplication of the so-called "common
carrier's tax."
Petitioner is already paying three (3%) percent common carrier's tax on its gross sales/earnings under the
National Internal Revenue Code. To tax petitioner again on its gross receipts in its transportation of
petroleum business would defeat the purpose of the Local Government Code.

015 National Steel v. CA
Topic: Test of Common Carrier Concept
Doctrine: The true test of a common carrier is the
carriage of passengers or goods, provided it has
space, for all who opt to avail themselves of its
transportation service for a fee. A carrier which does
not qualify under the above test is deemed a private
carrier.
Facts:
1. Vlasons Shipping, Inc. (VSI) had a vessel, MV Vlasons I, which is of Philippine registry engaged in
the tramping service and is available for hire only under special contracts of charter party.
2. Plaintiff National Steel Corporation (NSC) as Charterer and defendant VSI as Owner, entered into a
Contract of Voyage Charter Hire whereby NSC hired the MV Vlasons I to make 1 voyage to load
steel products at Iligan City and discharge them at North Harbor, Manila.
3. August 6, 7 and 8, 1974 - Pursuant to the Contract, the MV Vlasons I loaded the NSCs shipment of
1,677 skids of tinplates and 92 packages of hot rolled sheets or a total of 1,769 packages.
4. August 12, 1974 - The vessel arrived with the cargo in Manila.
5. August 13, 1974 - When the vessels hatches containing the shipment were opened by Plaintiffs
agents, nearly all the skids of tinplates and hot rolled sheets were allegedly found to be wet and
rusty.
6. NSC called for a survey of the shipment by the Manila Adjusters and Surveyors Company
(MASCO). MASCO ventured the opinion that rusting of the tinplates was caused by contact with
SEA WATER sustained while still on board the vessel as a consequence of the heavy weather and
rough seas encountered while en route to destination.
7. September 6, 1974 - On the basis of the report, Plaintiff filed with the Defendant its claim for
damages suffered due to the downgrading of the damaged tinplates in the amount of P941,145.18.
8. October 3, 1974 - Plaintiff formally demanded payment of said claim but defendant VSI refused and
failed to pay.
9. Defendants contentions:
It was not liable because the vessel was seaworthy in all respects for the carriage of
plaintiffs cargo.
In the course of the voyage from Iligan City to Manila, the vessel encountered very rough
seas, strong winds and adverse weather condition, causing strong winds and big waves to
continuously pound against the vessel and seawater to overflow on its deck and hatch covers.
Under the Contract of Voyage Charter Hire, it was agreed upon that defendant shall not be
responsible for losses/damages except on proven willful negligence of the officers of the
vessel. The officers of the vessel exercised due diligence and proper seamanship and were
not willfully negligent.
Neither was it a common carrier inasmuch as she was under voyage charter contract with
the plaintiff as charterer under the charter party.
Issue: Whether VSI contracted with NSC as a common carrier or as a private carrier.
Held: It contracted with NSC as a PRIVATE carrier because VSI did not offer its services to the general
public. The vessel is available for hire only under special contracts of charter party as in this particular case.
Ratio:
1. Article 1732 of the Civil Code defines a common carrier as persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public.
2. [T]he true test of a common carrier is the carriage of passengers or goods, provided it has space, for
all who opt to avail themselves of its transportation service for a fee. A carrier which does not
qualify under the above test is deemed a private carrier. Generally, private carriage is undertaken
by special agreement and the carrier does not hold himself out to carry goods for the general public.
The most typical, although not the only form of private carriage, is the charter party, a maritime
contract by which the charterer, a party other than the shipowner, obtains the use and service of all
or some part of a ship for a period of time or a voyage or voyages.
3. In the instant case, it is undisputed that VSI did not offer its services to the general public. As found
by the Regional Trial Court, it carried passengers or goods only for those it chose under a special
contract of charter party.
4. [T]he MV Vlasons I was not a common but a private carrier. Consequently, the rights and
obligations of VSI and NSC, including their respective liability for damage to the cargo, are
determined primarily by stipulations in their contract of private carriage or charter party.

Other Issues:
The vessel was found to be seaworthy
In any event, the records reveal that VSI exercised due diligence to make the ship seaworthy and fit
for the carriage of NSCs cargo of steel and tinplates. This is shown by the fact that it was
drydocked and inspected by the Philippine Coast Guard before it proceeded to Iligan City for its
voyage to Manila under the contract of voyage charter hire.
Officers and crew of the vessel were not negligent
NSC failed to discharge its burden to show negligence on the part of the officers and the crew
of MV Vlasons I. On the contrary, the records reveal that it was the stevedores of NSC who were
negligent in unloading the cargo from the ship.
Pertinent Laws: Article 1732 of the Civil Code defines a common carrier as persons, corporations, firms
or associations engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public.

016 Caltex Phils vs. Sulpicio Lines
[G.R. No. 131166 September 30, 1999]
TOPIC: TEST OF COMMON CARRIER CONCEPT
PONENTE: PARDO, J..
AUTHOR: Jimi A.
NOTE/S: In this case, the charter party agreement did
not convert the common carrier into a private carrier.
The parties entered into a voyage charter, which retains
the character of the vessel as a common carrier.
FACTS:
1. December 19, 1987: Motor tanker MT Vector left Limay, Bataan, at about 8:00 p.m., en route to Masbate, loaded with
8,800 barrels of petroleum products shipped by petitioner Caltex. MT Vector is a tramping motor tanker owned and
operated by Vector Shipping Corporation, engaged in the business of transporting fuel products such as gasoline,
kerosene, diesel and crude oil. During that particular voyage, the MT Vector carried on board gasoline and other oil
products owned by Caltex by virtue of a charter contract between them
2. December 20, 1987: At about 6:30 a.m., the passenger ship MV Doa Paz left the port of Tacloban headed for Manila
with a complement of 59 crew members including the master and his officers, and passengers totaling 1,493 as indicated
in the Coast Guard Clearance.[4] The MV Doa Paz is a passenger and cargo vessel owned and operated by Sulpicio
Lines, Inc. plying the route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice
a week.
3. At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea within the vicinity of Dumali Point
between Marinduque and Oriental Mindoro. All the crewmembers of MV Doa Paz died, while the two survivors from
MT Vector claimed that they were sleeping at the time of the incident.
4. The MV Doa Paz carried an estimated 4,000 passengers; many indeed, were not in the passenger manifest. Only 24
survived the tragedy after having been rescued from the burning waters by vessels that responded to distress calls.
Among those who perished were public school teacher Sebastian Caezal (47 years old) and his daughter Corazon
Caezal (11 years old), both unmanifested passengers but proved to be on board the vessel.
5. March 22, 1988: The board of marine inquiry in BMI Case No. 653-87 after investigation found that the MT Vector, its
registered operator Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at fault and
responsible for its collision with MV Doa Paz.
6. February 13, 1989: Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife and mother respectively, filed
with the Regional Trial Court, Branch 8, Manila, a complaint for Damages Arising from Breach of Contract of
Carriage against Sulpicio Lines, Inc. Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector
Shipping Corporation and Caltex (Philippines), Inc. Sulpicio alleged that Caltex chartered MT Vector with gross and
evident bad faith knowing fully well that MT Vector was improperly manned, ill-equipped, unseaworthy and a hazard to
safe navigation; as a result, it rammed against MV Doa Paz in the open sea setting MT Vectors highly flammable
cargo ablaze.

TRIAL COURT:
The trial court rendered decision dismissing the third party complaint against petitioner.

COURT OF APPEALS:
The Court of Appeals modified the trial courts ruling and included petitioner Caltex as one of those liable for damages.
Defendant Sulpicio Lines, Inc., was ordered to pay the heirs of Sebastian E. Caezal and Corazon Caezal.
ISSUE: Whether or not MT Vector is a common carrier.

HELD: YES.
RATIO:

1. The charter party agreement did not convert the common carrier into a private carrier. The parties entered into a voyage
charter, which retains the character of the vessel as a common carrier.

2. It is imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one
or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage charter.

3. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes
private, at least insofar as the particular voyage covering the charter-party is concerned.

4. Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship, although her holds may, for
the moment, be the property of the charterer.

5. A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons
who may choose to employ and to remunerate him. MT Vector fits the definition of a common carrier under Article 1732
of the Civil Code.

6. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the
passengers, especially because with the modern development of science and invention, transportation has become more rapid,
more complicated and somehow more hazardous.

7. For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew,
the carrier being obliged by law to impliedly warrant its seaworthiness.

OTHER RELEVANT INFORMATION:

The charterer has no liability for damages under Philippine Maritime laws.

Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter.

A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a
specified time or use; a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or part of her
to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. A
contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time,
or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the
vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ships
store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship. If the charter i s a
contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the
responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.

I s Caltex liable for damages under the Civil Code?

NO.

The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all
legal requirements. The duty rests upon the common carrier simply for being engaged in "public service." The relationship
between the parties in this case is governed by special laws. Because of the implied warranty of seaworthiness, shippers of goods,
when transacting with common carriers, are not expected to inquire into the vessels seaworthiness, genuineness of its licenses
and compliance with all maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing
but the futility of our maritime laws insofar as the protection of the public in general is concerned. Such a practice would be an
absurdity in a business where time is always of the essence. Considering the nature of transportation business, passengers and
shippers alike customarily presume that common carriers possess all the legal requisites in its operation.


CASE LAW/ DOCTRINE:

A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may
choose to employ and to remunerate him. Although a charter party may transform a common carrier into a private one, the same
however is not true in a contract of affreightment.
DISPOSITIVE: WHEREFORE, the Court hereby GRANTS the petition and SETS ASIDE the decision of the Court of Appeals
in CA-G. R. CV No. 39626, promulgated on April 15, 1997, insofar as it held Caltex liable under the third party complaint to
reimburse/indemnify defendant Sulpicio Lines, Inc. the damages the latter is adjudged to pay plaintiffs-appellees. The Court
AFFIRMS the decision of the Court of Appeals insofar as it orders Sulpicio Lines, Inc. to pay the heirs of Sebastian E. Caezal
and Corazon Caezal damages as set forth therein. Third-party defendant-appellee Vector Shipping Corporation and Francisco
Soriano are held liable to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages, attorneys fees and costs the
latter is adjudged to pay plaintiffs-appellees in the case.


COASTWISE LIGHTERAGE CORP. v. CA

018 VIRGINES CALVO doing business under the name and style
TRANSORIENT CONTAINER TERMINAL SERVICES,
INC., petitioner, vs. UCPB GENERAL INSURANCE CO., INC.
(formerly Allied Guarantee Ins. Co., Inc.) respondent.
[G.R. No. 148496 March 19, 2002]
TOPIC: TEST OF COMMON CARRIER CONCEPT
PONENTE: MENDOZA, J.
AUTHOR: Ernest
NOTE/S: Article 1732 does not distinguish between a
carrier offering its services to the "general public,"
i.e., the general community or population, and one
who offers services or solicits business only from a
narrow segment of the general population.

FACTS:
1. Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a sole
proprietorship customs broker.
2. Petitioner entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical
fluting paper and 124 reels of kraft liner board from the Port Area in Manila to SMC's warehouse at the Tabacalera
Compound, Romualdez St., Ermita, Manila.
3. The cargo was insured by respondent UCPB General Insurance Co., Inc.
4. On July 14, 1990, the shipment in question, contained in 30 metal vans, arrived in Manila on board "M/V Hayakawa
Maru" and, after 24 hours, were unloaded from the vessel to the custody of the arrastre operator, Manila Port
Services, Inc.
5. From July 23 to July 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from the arrastre
operator and delivered it to SMC's warehouse in Ermita, Manila.
6. On July 25, 1990, the goods were inspected by Marine Cargo Surveyors, who found that 15 reels of the semi-
chemical fluting paper were "wet/stained/torn" and 3 reels of kraft liner board were likewise torn. The damage was
placed at P93,112.00.
7. SMC collected payment from respondent UCPB under its insurance contract for the aforementioned amount. In turn,
respondent, as subrogee of SMC, brought suit against petitioner in the Regional Trial Court of Makati City.

TRIAL COURT:
Rendered judgment finding petitioner liable to respondent for the damage to the shipment. It ruled that the subject
cargoes sustained damage while in the custody of the Petitioner.

Citing Article 1735 of the Civil Code, if the goods are proved to have been lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted negligently, unless they prove that they have observed the
extraordinary diligence required by law. The burden of the plaintiff, therefore, is to prove merely that the goods he
transported have been lost, destroyed or deteriorated. The burden is shifted to the carrier to prove that he has
exercised the extraordinary diligence required by law. Thus, it has been held that the mere proof of delivery of
goods in good order to a carrier, and of their arrival at the place of destination in bad order, makes out a prima facie
case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier must be held
responsible. It is incumbent upon the carrier to prove that the loss was due to accident or some other circumstances
inconsistent with its liability.

Petitioner, being a customs brother, warehouseman and at the same time a common carrier is supposed [to]
exercise [the] extraordinary diligence required by law, hence the extraordinary responsibility lasts from the time the
goods are unconditionally placed in the possession of and received by the carrier for transportation until the same are
delivered actually or constructively by the carrier to the consignee or to the person who has the right to receive the
same.

Petitioner did not present any evidence on what precaution [she] performed to prevent [the] said incident, hence the
presumption is that the moment the defendant accepts the cargo [she] shall perform such extraordinary diligence
because of the nature of the cargo.

COURT OF APPEALS:
Affirmed the Trial Courts decision, hence, petition for review on certiorari.

ISSUE: Whether or not the Court of Appeals made an error in classifying the petitioner as a common carrier and not as a private
or special carrier who did not hold its services to the public.

Petitioners Argument:
Petitioner contends that contrary to the findings of the trial court and the Court of Appeals, she is not a common carrier but a
private carrier because, as a customs broker and warehouseman, she does not indiscriminately hold her services out to the public
but only offers the same to select parties with whom she may contract in the conduct of her business.
HELD & RATIO:

NO. Petition is without merit. Citing the case of De Guzman v. Court of Appeals,

the Court dismissed a similar contention and
held the party to be a common carrier. The Civil Code defines "common carriers" in the following terms:



"Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their
services to the public."

The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity .

Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis.

Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from a narrow segment of the general
population.

The concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public service,"
under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on
common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, "public service"
includes:

" x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system,
wire or wireless communications systems, wire or wireless broadcasting stations and other similar public services. x x
x"

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 contention would be to deprive those with whom she contracts the protection which
the law affords them notwithstanding the fact that the obligation to carry goods for her customers, as already noted, is part
and parcel of petitioner's business.
PETITIONERS LIABILTY:

Petitioner denies liability for the damage to the cargo. She claims that 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 arrastre
operator, to whom the goods were unloaded and who allegedly kept them in open 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. Also,she claims that
Marine Cargo Surveyor testified that he has no personal knowledge on whether the container vans were first stored in
petitioner's warehouse prior to their delivery to the consignee. She likewise claims that after withdrawing the container vans
from the arrastre operator, her driver, immediately delivered the cargo to SMC's warehouse in Ermita, Manila, which 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.

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 the goods, unless the same is due to any of
the following causes only:
. . . .
(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. petitioner failed 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. 1735 holds.
DISPOSITIVE: WHEREFORE, the decision of the Court of Appeals, dated May 31, 2001, is AFFIRMED. SO ORDERED.

019 PHILIPPINE AMERICAN Gen. Ins. Co., v. PKS
SHIPPING COMPANY

TOPIC: Test of common carrier concept
PONENTE: VITUG, J.:
AUTHOR: RAVZ
NOTES:

Facts:
1. Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping Company (PKS
Shipping) for the shipment to Tacloban City of seventy-five thousand (75,000) bags of cement worth Three Million
Three Hundred Seventy-Five Thousand Pesos (P3,375,000.00).

2. DUMC insured the goods for its full value with petitioner Philippine American General Insurance Company
(Philamgen).

3. On the evening of 22 December 1988, about nine oclock, while Limar I was being towed by respondents tugboat,
MT Iron Eagle, the barge sank a couple of miles off the coast of Dumagasa Point, in Zamboanga del Sur, bringing
down with it the entire cargo of 75,000 bags of cement.

4. DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly made payment;
it then sought reimbursement from PKS Shipping of the sum paid to DUMC but the shipping company refused to pay.
Philamgen filed a suit against PKS shipping company.

5. RTC dismissed the complaint after finding that the total loss of the cargo could have been caused either by a fortuitous
event, in which case the ship owner was not liable, or through the negligence of the captain and crew of the vessel and
that, under Article 587 of the Code of Commerce adopting the Limited Liability Rule, the ship owner could free itself
of liability by abandoning, as it apparently so did, the vessel with all her equipment and earned freightage.

6. The appellate court ruled that evidence to establish that PKS Shipping was a common carrier at the time it undertook to
transport the bags of cement was wanting because the peculiar method of the shipping companys carrying goods for
others was not generally held out as a business but as a casual occupation. not being a common carrier, was not
expected to observe the stringent extraordinary diligence required of common carriers in the care of goods.
ISSUE(S): whether or not the appellate court has committed a patent error in ruling that PKS Shipping is not a common carrier
and that it is not liable for the loss of the subject cargo.

HELD: YES, Contrary to the conclusion made by the appellate court, its factual findings indicate that PKS Shipping has
engaged itself in the business of carrying goods for others, although for a limited clientele, undertaking to carry such goods for a
fee. The regularity of its activities in this area indicates more than just a casual activity on its part.
RATIO:

1. The Civil Code defines common carriers in the following terms:

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their
services to the public.

Complementary to the codal definition is Section 13, paragraph (b), of the Public Service Act; it defines public
service to be

x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for
general business purposes, any common carrier, railroad, street railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or
carrier service of any class, express service, steamboat, or steamship, or steamship line, pontines, ferries and
water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf
or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water
supply and power petroleum, sewerage system, wire or wireless communication systems, wire or wireless
broadcasting stations and other similar public services. x x x. (Underscoring supplied).

2. So understood, the concept of `common carrier under Article 1732 may be seen to coincide neatly with the notion of
`public service, under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in the Civil Code.

3. Much of the distinction between a common or public carrier and a private or special carrier lies in the
character of the business, such that if the undertaking is an isolated transaction, not a part of the business or
occupation, and the carrier does not hold itself out to carry the goods for the general public or to a limited
clientele, although involving the carriage of goods for a fee, the person or corporation providing such service
could very well be just a private carrier.

4. A typical case is that of a charter party which includes both the vessel and its crew, such as in a bareboat or demise,
where the charterer obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages
and gets the control of the vessel and its crew.

5. Contrary to the conclusion made by the appellate court, its factual findings indicate that PKS Shipping has engaged
itself in the business of carrying goods for others, although for a limited clientele, undertaking to carry such goods for a
fee. The regularity of its activities in this area indicates more than just a casual activity on its part.

6. Neither can the concept of a common carrier change merely because individual contracts are executed or
entered into with patrons of the carrier. Such restrictive interpretation would make it easy for a common carrier to
escape liability by the simple expedient of entering into those distinct agreements with clients.
CASE LAW/ DOCTRINE:

1. Much of the distinction between a common or public carrier and a private or special carrier lies in the character of
the business, such that if the undertaking is an isolated transaction, not a part of the business or occupation, and the
carrier does not hold itself out to carry the goods for the general public or to a limited clientele, although involving the
carriage of goods for a fee, the person or corporation providing such service could very well be just a private carrier.


DISSENTING/CONCURRING OPINION(S):

(If any)



Title: [G.R. No. 147246. August 19, 2003]
ASIA LIGHTERAGE AND SHIPPING, INC.,
petitioner, vs. COURT OF APPEALS and
PRUDENTIAL GUARANTEE AND
ASSURANCE, INC., respondents.

Topic: Test of Common Carrier Concept

Quick Notes / Doctrine: The test to determine a common carrier is
whether the given undertaking is a part of the business engaged in by
the carrier which he has held out to the general public as his occupation
rather than the quantity or extent of the business transacted.
Facts:
Background: On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at US$423,192.35
was shipped by Marubeni American Corporation of Portland, Oregon on board the vessel M/V NEO CYMBIDIUM
V-26 for delivery to the consignee, General Milling Corporation in Manila. The shipment was insured by the private
respondent Prudential Guarantee and Assurance, Inc. against loss or damage for P14,621,771.75 under Marine Cargo
Risk Note.
Controversy arose when: the carrying vessel arrived in Manila and the cargo was transferred to the custody of the
petitioner Asia Lighterage and Shipping, Inc. The petitioner was contracted by the consignee as carrier to deliver
the cargo to consignee's warehouse at Bo. Ugong, Pasig City. 900 metric tons of the shipment was loaded on
barge PSTSI III (PETITIONER's BARGE). The cargo did not reach its destination.
It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an incoming
typhoon. On August 22, 1990, the petitioner proceeded to pull the barge to Engineering Island off Baseco to seek
shelter from the approaching typhoon. PSTSI III was tied down to other barges which arrived ahead of it while
weathering out the storm that night. A few days after, the barge developed a list because of a hole it sustained after
hitting an unseen protuberance underneath the water. The petitioner filed a Marine Protest on August 28, 1990. It
likewise secured the services of Gaspar Salvaging Corporation which refloated the barge. The hole was then patched
with clay and cement.
The barge was then towed to ISLOFF terminal before it finally headed towards the consignee's wharf on September 5,
1990. Upon reaching the Sta. Mesa spillways, the barge again ran aground due to strong current. To avoid the
complete sinking of the barge, a portion of the goods was transferred to three other barges.
The next day, September 6, 1990, the towing bits of the barge broke. It sank completely, resulting in the total loss of
the remaining cargo.
The private respondent indemnified the consignee in the amount of P4,104,654.22. Thereafter, as subrogee, it sought
recovery of said amount from the petitioner, but to no avail.
Lower Court and CA favored respondent.
Petitioner claims: that it is not a common carrier but a private carrier. Allegedly, it has no fixed and publicly known
route, maintains no terminals, and issues no tickets. It points out that it is not obliged to carry indiscriminately for any
person. It is not bound to carry goods unless it consents. In short, it does not hold out its services to the general
public.

Issues:
(1) Whether the petitioner is a common carrier - YES.
(2) Assuming the petitioner is a common carrier, whether it exercised extraordinary diligence in its care and custody of the
consignees cargo.- NO. It did not exercise extraordinary diligence.

Held: YES. Petitioner is a common carrier. And for the 2nd issue: NO. it did not exercise extraordinary diligence.

Ratio:
Common carriers in Article 1732 of the Civil Code makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity.
Article 1732 does not distinguish between a carrier offering its services to the general public, and one who offers
services or solicits business only from a narrow segment of the general population. (Doctrine of the De Guzman case).
Petitioner is a common carrier whether its carrying of goods is done on an irregular rather than scheduled manner, and
with an only limited clientele. A common carrier need not have fixed and publicly known routes. Neither does it
have to maintain terminals or issue tickets.
The test to determine a common carrier is whether the given undertaking is a part of the business engaged in
by the carrier which he has held out to the general public as his occupation rather than the quantity or extent
of the business transacted. In the case at bar, the petitioner admitted that it is engaged in the business of shipping
and lighterage, offering its barges to the public, despite its limited clientele for carrying or transporting goods by water
for compensation.
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them.
They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated.
To overcome the presumption of negligence in the case of loss, destruction or deterioration of the goods, the common
carrier must prove that it exercised extraordinary diligence.
In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss of its cargo.
Petitioner claims that this was caused by a typhoon, hence, it should not be held liable for the loss of the cargo.
However, petitioner failed to prove that the typhoon is the proximate and only cause of the loss of the goods, and that
it has exercised due diligence before, during and after the occurrence of the typhoon to prevent or minimize the loss.
The evidence show that, even before the towing bits of the barge broke, it had already previously sustained damage
when it hit a sunken object while docked at the Engineering Island. It even suffered a hole. Clearly, this could not be
solely attributed to the typhoon. The partly-submerged vessel was refloated but its hole was patched with only clay
and cement. The patch work was merely a provisional remedy, not enough for the barge to sail safely. Thus, when
petitioner persisted to proceed with the voyage, it recklessly exposed the cargo to further damage.

Relation to Topic: (if any)
Pertinent Laws:
Article 1732 of the Civil Code defines common carriers as persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering
their services to the public.
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is
due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.





Spouses Cruz v. Sun Holidays
Ruelito Cruz and his wife went to a honeymoon package offered by Sun Holidays at Puerto Galera,
Oriental Mindoro from September 9 to 11, 2000.
However on their way back, they met an accident and Died. Due strong winds their ship sink on the way to
Batangas.
One witness/survivor testified that on that day, they tracked to the other side of the mountain so they could
ride their ship to Batangas, however as the ship sailed the wind started to blow stronger, thus the ship sank.
Spouses Dante and Leonora Cruz lodged a Complaint on January 25, 20011[1] against Sun Holidays, Inc.
with the Regional Trial Court (RTC) of Pasig City for damages arising from the death of their son Ruelito
C. Cruz (Ruelito) who perished with his wife on September 11, 2000 on board the boat M/B Coco Beach III
that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the couple had stayed at
Coco Beach Island Resort (Resort) owned and operated by respondent.
At the time of Ruelitos death, he was 28 years old and employed as a contractual worker for Mitsui
Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic monthly salary of $900.
Petitioners, by letter of October 26, 2000, demanded indemnification from respondent for the death of their
son in the amount of at least P4,000,000.
Contentions
o Spouses Cruz
common carrier since by its tour package, the transporting of its guests is an integral part
of its resort business.
They received storm warning from PAGASA earlier that day (5am)
o Sun Holidays
fortuitous event
boats are not available to the general public as they only ferry Resort guests and crew
members
exercised the utmost diligence in ensuring the safety of its passengers
there was no storm on September 11, 2000 as the Coast Guard in fact cleared the voyage
M/B Coco Beach III was not filled to capacity and had sufficient life jackets for its
passengers
Carlos Bonquin, captain of M/B Coco Beach I I I , averred that the Resort customarily
requires four conditions to be met before a boat is allowed to sail, to wit: (1) the sea is
calm, (2) there is clearance from the Coast Guard, (3) there is clearance from the captain
and (4) there is clearance from the Resorts assistant manager.
private carrier which is only required to observe ordinary diligence
Resorts ferry services for guests cannot be considered as ancillary to its business as no
income is derived therefrom
Issuo: WON Sun Holidays is engaged in CC?
Held: YES
The Civil Code defines common carriers in the following terms:




Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation, offering their services to
the public.

The above article makes no distinction between one whose principal business activity
is the carrying of persons or goods or both, and one who does such carrying only as an
ancillary activity (in local idiom, as a sideline). Article 1732 also carefully avoids making
any distinction between a person or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to the general
public, i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that Article 1733
deliberately refrained from making such distinctions.

Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be
properly considered ancillary thereto. The constancy of respondents ferry services in its resort operations is
underscored by its having its own Coco Beach boats. And the tour packages it offers, which include the ferry
services, may be availed of by anyone who can afford to pay the same. These services are thus available to the
public.
That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be
imprudent to suppose that it provides said services at a loss. The Court is aware of the practice of beach resort
operators offering tour packages to factor the transportation fee in arriving at the tour package price. That guests
who opt not to avail of respondents ferry services pay the same amount is likewise inconsequential. These guests
may only be deemed to have overpaid.
As De Guzman instructs, Article 1732 of the Civil Code defining common carriers has deliberately
refrained from making distinctions on whether the carrying of persons or goods is the carriers principal business,
whether it is offered on a regular basis, or whether it is offered to the general public.
Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence for the safety of the passengers transported by them, according to all
the circumstances of each case. They are bound to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.



When a passenger dies or is injured in the discharge of a contract of carriage, it is presumed that the
common carrier is at fault or negligent. In fact, there is even no need for the court to make an express finding of
fault or negligence on the part of the common carrier.
The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical cyclone warnings
for shipping on September 10 and 11, 2000 advising of tropical depressions in Northern Luzon which would also
affect the province of Mindoro. By the testimony of Dr. Frisco Nilo, supervising weather specialist of PAGASA,
squalls are to be expected under such weather condition.
A very cautious person exercising the utmost diligence would thus not brave such stormy weather and put
other peoples lives at risk. The extraordinary diligence required of common carriers demands that they take care of
the goods or lives entrusted to their hands as if they were their own. This respondent failed to do.


OTHER ISSEU THAT MAY BE ASKED:
The elements of a "fortuitous event" are:
(a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtors to comply with their
obligations, must have been independent of human will;
(b) the event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable,
impossible to avoid;
(c) the occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a
normal manner; and
(d) the obligor must have been free from any participation in the aggravation of the resulting injury to the
creditor.
ACTUAL DAMAGES:
Net Earning Capacity = life expectancy x (gross annual income - reasonable
and necessary living expenses).

Life expectancy is determined in accordance with the formula:

2 / 3 x [80 age of deceased at the time of death]2[30]

THUS:
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35
Documentary evidence shows that Ruelito was earning a basic monthly salary of $9003 which, when
converted to Philippine peso applying the annual average exchange rate of $1 =P44 in 2000,4[36] amounts to
P39,600. Ruelitos net earning capacity is thus computed as follows:

Net Earning Capacity =life expectancy x (gross annual income -







reasonable and necessary living expenses).
=35 x (P475,200 - P237,600)
=35 x (P237,600)
Net Earning Capacity =P8,316,000
TORT, When is there obligation to PAY:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is
judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to
be computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at the discretion of the
court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims
or damages except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall begin to
run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when
such certainty cannot be so reasonably established at the time the demand is made, the interest
shall begin to run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The actual base
for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2,
above, shall be 12% per annum from such finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of credit. (emphasis supplied).
Since the amounts payable by respondent have been determined with certainty only in the present petition,
the interest due shall be computed upon the finality of this decision at the rate of 12% per annum until satisfaction,
in accordance with paragraph number 3 of the immediately cited guideline in Easter Shipping Lines, Inc.

DISPOSITIVE:
WHEREFORE, the Court of Appeals Decision of August 19, 2008 is REVERSED and SET ASIDE. Judgment is
rendered in favor of petitioners ordering respondent to pay petitioners the following: (1) P50,000 as indemnity for
the death of Ruelito Cruz; (2) P8,316,000 as indemnity for Ruelitos loss of earning capacity; (3) P100,000 as moral
damages; (4) P100,000 as exemplary damages; (5) 10% of the total amount adjudged against respondent as
attorneys fees; and (6) the costs of suit.
The total amount adjudged against respondent shall earn interest at the rate of 12% per annum computed
from the finality of this decision until full payment.
022 Fabre Jr. v CA. 259 SCRA 426 (1999)
Topic: Test of Common Carrier Concept

This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees

1. Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus, they used it as a bus
service. The couple had a driver, Porfirio J. Cabil.
2. On November 2, 1984 respondents Word for the World Christian Fellowship Inc. (WWCF) arranged with
petitioners for the transportation of 33 members of its Young Adults Ministry from Manila to La Union and back in
consideration to which they paid P3,000.00.
3. The group was scheduled to leave on November 2, 1984, at 5:00 oclock in the afternoon. However, as several
members of the party were late, the bus left at 8pm.
4. The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under
repair, so that petitioner Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to
take a detour.
5. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway, the road was slippery, leading to an
accident injuring several passengers.
6. Amyline Antonio was thrown on the floor of the bus and pinned down by a wooden seat which came off after being
unscrewed. She is now suffering from paraplegia and is permanently paralyzed from the waist down.
7. The driver, claimed he did not see the curve until it was too late. Furthermore, he said he was not familiar with the
area and he could not have seen the curve despite the care he took in driving the bus, because it was dark and there
was no sign on the road.
8. Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati.
9. RTC: petitioner Cabil failed to exercise due care and precaution in the operation of his vehicle considering the time
and the place of the accident. Ordered that defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil to
pay jointly and severally to the plaintiffs
10. CA: sustained RTCs decision and held that the Fabres were themselves presumptively negligent. Hence this
petition.

ISSUES:
1. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
2. WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY PRIVATE
RESPONDENTS.
3. WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO WHAT
EXTENT.
Held:
1. Yes, Pursuant to Arts. 2176 and 2180 of the Civil Code
2. Yes, As common carriers, the Fabres were bound to exercise extraordinary diligence for the safe transportation of
the passengers to their destination.
3. Yes, award for damges are sustained
ISSUE #1:
1. The fact that it was raining and the road was slippery, that it was dark, that he drove his bus at 50 kilometers an hour
when even on a good day the normal speed was only 20 kilometers an hour, and that he was unfamiliar with the
terrain, Cabil was grossly negligent and should be held liable for the injuries suffered by private respondent
Amyline Antonio.
2. Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his employers,
the Fabres, were themselves negligent in the selection and supervision of their employee.
4. Due diligence in supervision, requires the formulation of rules and regulations for the guidance of employees and
the issuance of proper instructions as well as actual implementation and monitoring of consistent compliance with
the rules.

ISSUE #2: WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY
PRIVATE RESPONDENTS.
5. This case actually involves a contract of carriage. Petitioners, the Fabres, did not have to be engaged in the business
of public transportation for the provisions of the Civil Code on common carriers to apply to them.
6. As common carriers, the Fabres were bound to exercise extraordinary diligence for the safe transportation of the
passengers to their destination.
7. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their employees.
8. This duty of care is not excused by proof that they exercised the diligence of a good father of the family in the
selection and supervision of their employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the
formers employees, although such employees may have acted beyond the scope of their authority or in violation of the
orders of the common carriers.

ISSUE #3: WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO WHAT
EXTENT.
1. Art 2219(2) provides for the payment of moral damages in cases of quasi delict, breach of contract of carriage.
2. On the theory that petitioners are liable for breach of contract of carriage, the award of moral damages is authorized
by Art. 1764, in relation to Art. 2220, since Cabils gross negligence amounted to bad faith.
3. The award of exemplary damages and attorneys fees was also properly made.
4. However, it was error for the appellate court to increase the award of compensatory damages because private
respondents did not question this award as inadequate
RELEVANT LAW:
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the
public.
As this Court has held:

Article 1732:
makes no distinction between one whose principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity (in local idiom, as a sideline).
carefully avoids making any distinction between a person or enterprise offering transportation service on
a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled
basis.
distinguish between a carrier offering its services to the general public, i.e., the general community or
population, and one who offers services or solicits business only from a narrow segment of the general
population.


Title: Planters Products, Inc., vs. Court of Appeals, Quick Notes / Doctrine:
Soriamont Steamship Agencies and Kyosei Kisen
Kabushiki Kaisha
Topic: Test of Common Carrier Concept
A public carrier shall remain as such, notwithstanding the charter of the
whole or portion of a vessel by one or more persons, provided the charter
is limited to the ship only, as in the case of a time-charter or voyage-
charter.
Facts:

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

Issue: Whether or not a time charter

between a shipowner and a charterer transforms a common carrier into a private one as to
negate the civil law presumption of negligence in case of loss or damage to its cargo?
Held: No. KKKK, a common carrier, remained as so in charter party.
Ratio:
Kyosei Kisen Kabushiki Kaisha, in the ordinary course of business, operates as a common carrier, transporting goods
indiscriminately for all persons. When PPI chartered the vessel M/V Sun Plum, the ship captain, its officers and
compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and
control. Considering that the steering of the ship, the manning of the decks, the determination of the course of the
voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were
screened, chosen and hired by the shipowner, the charterer is a stranger to the crew and to the ship.
Thus, a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or
more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-charter.
Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although her holds may,
for the moment, be the property of the charterer.
Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo
when the charterer did not have any control of the means in doing so.
The carrier has sufficiently overcome, by clear and convincing proof, the prima facie presumption of negligence. The
hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it
impossible for a person to open without the use of the ship's boom.
Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so, with a variable
weather condition prevalent during its unloading.
This is a risk the shipper or the owner of the goods has to face. Clearly, KKKK has sufficiently proved the inherent
character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging
which further contributed to the loss.
On the other hand, no proof was adduced by the petitioner showing that the carrier was remise in the exercise of due
diligence in order to minimize the loss or damage to the goods it carried.

Relation to Topic:
Pertinent Laws:
Charter party defined
A charter-party is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another
person for a specified time or use; a contract of affreightment by which the owner of a ship or other vessel lets the whole or a
part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of
freight.
Types of charter parties
Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the
whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its
navigation, including the master and the crew, who are his servants.
Common or public carrier defined; Scope of definition
The term common or public carrier is defined in Article 1732 of the Civil Code. The definition extends to carriers either by
land, air or water which hold themselves out as ready to engage in carrying goods or transporting passengers or both for
compensation as a public employment and not as a casual occupation.
Distinction between common or public carrier, and private or special carrier
The distinction between a common or public carrier and a private or special carrier lies in the character of the business, such
that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of
goods for a fee, the person or corporation offering such service is a private carrier.
Extraordinary diligence required of common carriers (Article 1733); Ordinary diligence required of private carriers
Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their business, should observe
extraordinary diligence in the vigilance over the goods they carry. In the case of private carriers, however, the exercise of
ordinary diligence in the carriage of goods will suffice.
Common carriers presumed negligent in case of loss, etc. of goods; No presumption in private carriers
In case of loss, destruction or deterioration of the goods, common carriers are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on them. On the contrary, no such presumption applies to private carriers,
for whosoever alleges damage to or deterioration of the goods carried has the onus of proving that the cause was the negligence
of the carrier.
When charter party converts common carrier to private carrier
It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes
private, at least insofar as the particular voyage covering the charter-party is concerned.