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De Guzman v.

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

Issues:(1) Whether or not private respondent is a common carrier
(2) Whether private respondent is liable for the loss of the goods

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

(2) Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, "unless the same is due to any of the following causes only:
a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;
b. Act of the public enemy in war, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. The character of the goods or defects in the packing or in the containers; and
e. Order or act of competent public authority."

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

Planters Products, Inc. v. CA (G.R. No. 101503)
Facts:Planters Products (Planters) purchased from Mitsubishi International Corporation of USA of 9,000 metric tons of
urea fertilizer which the latter shipped aboard the cargo vessel owned by private respondent Kyosei Kisin Kabushiki
Kaisha (KKKK) from America to La Union. Prior to its voyage, a time charter party was entered into between Mitusbishi
as shipper/charterer and KKKK as ship-owner. After the Urea fertilizer was loaded in bulk by stevedores hired by the
shipper, the steel hatches were closed with heavy iron lids which remained closed during the entire journey.

Upon arrival of the vessel, the hatches were opened with the use of the vessel boom. Planters unloaded the cargo from
the holders into the steel bodied dump trucks. Each time the dump trucks were filled up, its load of urea was covered
with tarpaulin before it was transported to the consignees warehouse located some (50) fifty meters from the wharf. It
took (11) eleven days from planters to unload the cargo. The report submitted by private marine and cargo surveyors
revealed a shortage in the cargo, and some portion in the cargo was contaminated with dirt, rendering the same unfit
for commerce.

PPI filed an action for damages with the CFI Manila. The defendant carrier argued that the strict public policy governing
common carriers does not apply to them because they have become private carriers by reason of the provisions of the
charter-party. The court a quo however sustained the claim of the plaintiff against the defendant carrier for the value of
the goods lost or damaged.

On appeal, respondent Court of Appeals reversed the lower court and absolved the carrier from liability for the value of
the cargo that was lost or damaged. Relying on the 1968 case of Home Insurance Co.v. American Steamship Agencies,
Inc., the appellate court ruled that the cargo vessel M/V Sun Plum owned by private respondent KKKK was a private
carrier and not a common carrier by reason of the time charterer-party and that the Civil Code provisions on common
carriers which set forth a presumption of negligence do not find application in the case at bar.

Issues:1. Whether a common carrier becomes a private carrier by reason of a charter-party.
2. Whether or not the respondent is a common carrier.
3. Whether or not the respondent is liable for damages.

Held:1. 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.

It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting
goods indiscriminately for all persons. When petitioner chartered the vessel M/V Sun Plum, the ship captain, its
officers and compliment were under the employ of the shipowner and therefore continued to be under its direct
supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty
of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident in the
present case considering that the steering of the ship, the manning of the decks, the determination of the course of the
voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were
screened, chosen and hired by the shipowner.

It is therefore 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. 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.
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.

2. Respondent is a common carrier. The term common carrier is defined in Article 1732 of the Civil Code. The definition
refers to carriers either by land, water, or air which holds themselves out as ready to engage in carrying goods on
transporting passengers or both for compensation as a public employment and not as a casual occupation; if the
undertaking is a single transaction, not a part of the general business or corporation, although involving the carriage of
goods for a fee, then the person or corporation offering such services is a private carrier. In the case at bar respondent
carrier transports goods indiscriminately for all persons. Being such, he is a common carrier.

3. The court ruled in the negative. While respondent is a common carrier, he has sufficiently overcome by clear and
convincing proof the prima facie presumption of negligence, due to the manner of storage of the goods during the
voyage. The presumption of negligence on the part of the respondent carrier has been efficaciously overcome by the
showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo.

Article 1734 of the New Civil Code provides that common carriers are not responsible for the loss, destruction or
deterioration of the goods if caused by the charterer of the goods or defects in the packaging or in the containers. The
Code of Commerce also provides that all losses and deterioration which the goods may suffer during the transportation
by reason of fortuitous event, force majeure, or the inherent defect of the goods, shall be for the account and risk of the
shipper, and that proof of these accidents is incumbent upon the carrier.

F.C. Fisher v. Yangco Steamship Co. G.R. No. L-8095 March 31, 1915
Carson, J.
FACTS: Fisher is a stockholder in the Yangco Steamship Company. The directors of the companyadopted a resolution
which was thereafter ratified and affirmed by the shareholders of thecompany, expressly declaring and providing that
the classes of merchandise to be carriedby the company in its business as a common carrier do not include dynamite,
powder orother explosives, and expressly prohibiting the officers, agents and servants of thecompany from offering to
carry, accepting for carriage said dynamite, powder or otherexplosives.

Then Acting Collector of Customs demanded and required of the company the acceptanceand carriage of such
explosives. He has refused and suspended the issuance of thenecessary clearance documents of the vessels of the
company unless and until thecompany consents to accept such explosives for carriage. Fisher was advised thatshould
the company decline to accept such explosives for carriage, the respondentAttorney-General of the Philippine Islands
and the respondent prosecuting attorney of thecity of Manila intend to institute proceedings under the penal provisions
of sections 4, 5,and 6 of Act No. 98 of the Philippine Commission against the company, its managers,agents and

Notwithstanding the demands of Fisher, the manager, agents and servants of the companydecline and refuse the
carriage of such explosives.

ISSUE:WON the acts complained of had the effect of making or giving an unreasonable orunnecessary preference or
advantage to any person, locality or particular kind of traffic, orof subjecting any person, locality, or particular kind of
traffic to any undue or unreasonableprejudice or discrimination

HELD:No. There may be some vessels engaged in business as common carriers of merchandise,which for lack of suitable
deck space or storage rooms might be justified in declining tocarry kerosene oil, gasoline, and similar products, even
when offered for carriage securelypacked in cases; and few vessels are equipped to transport those products in bulk. But
inany case of a refusal to carry such products which would subject any person, locality or thetraffic in such products
would be necessary to hear evidence before making an affirmativefinding that such prejudice or discrimination was or
was not unnecessary, undue orunreasonable. The making of such a finding would involve a consideration of the
suitabilityof the vessel for the transportation of such products; the reasonable possibility of dangeror disaster resulting
from their transportation in the form and under the conditions inwhich they are offered for carriage; the general nature
of the business done by the carrierand, in a word, all the attendant circumstances which might affect the question of
thereasonable necessity for the refusal by the carrier to undertake the transportation of thisclass of merchandise.

U.S. v. Quinajon and Quitoriano G.R. No. L-8686, July 30, 1915 Johnson, J.:

FACTS: Defendants Pascual Quinajon and Eugenio Quitoriano have been engaged for more than four years in the
transportation of passengers and merchandise in the port of Currimao by means of virayes. They, by means of their
virayes and employees, unloaded 5,986 sacks of rice belonging to the provincial government of Ilocos Norte from Manila
and demanded from the provincial treasurer for the unloading of each one 10 centavos which amounted to P598.60.
The prosecuting attorney of the Province of Ilocos Norte filed a complaint against the defendants stating that the
provincial government of Ilocos Norte suffered damaged in the sum of 359.16, inasmuch as it should have paid only
239.44, in accordance with the said normal rate of 6 centavos for each package. The provincial fiscal presented
witnesses to prove that defendants entered into a special contract with certain merchants, under and by virtue of the
terms of which they charged and collected, for loading merchandise in said port, the sum of 6 centavos for each
package, without reference to its size or weight. Defendants were charged of violating Act No. 98 of the Civil
Commission. Said Act No. 98 is "An Act to regulate commerce in the Philippine Islands." Its purpose, so far as it is
possible, is to compel common carriers to render to all persons exactly the same or analogous service for exactly the
same price, to the end that there may be no unjust advantage or unreasonable discrimination. It applies to persons or
corporation engaged as common carriers of passengers or property. 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 renumerate him. A
common carrier is a person or corporation who undertakes to carry goods or persons for hire.

The appellants admit that they are common carriers. They were found guilty and sentenced to pay a fine of P200 and
costs, and to return to the provincial government of the Province of Ilocos Norte the sum of P359.16. From that
sentence each of the defendants appealed to this court.

ISSUE: Whether or not the defendants and appellants have violated Act No. 98.

HELD: YES. It will be noted that the law requires common carriers to carry for all persons, either passengers or property,
for exactly the same charge for a like or contemporaneous service in the transportation of like kind of traffic under
substantially similar circumstances or conditions. The law prohibits common carriers from subjecting any person, etc., or
locality, or any particular kind of traffic, to any undue or unreasonable prejudice or discrimination whatsoever. The law
does not require that the same charge shall be made for the carrying of passengers or property, unless all the conditions
are alike and contemporaneous. It is not believed that the law prohibits the charging of a different rate for the carrying
of passengers or property when the actual cost of handling and transporting the same is different. It is not believed that
the law intended to require common carriers to carry the same kind of merchandise, even at the same price, under
different and unlike conditions and where the actual cost is different. It is when the price charged is for the purpose of
favoring persons or localities or particular kinds of merchandise, that the law intervenes and prohibits. It is favoritism
and discrimination which the law prohibits. The difference in charge must not be made to favor one merchant, or
shipper, or locality, to the disadvantage of another merchant, or shipper, or locality. If the services are alike and
contemporaneous, discrimination in the price charged is prohibited. In the case at bar, there is no proof that the
conditions were different. There is no proof that the services rendered by the defendants for the different parties were
unlike or even not contemporaneous. There is no pretense that it actually cost more to handle the rice for the province
than it did for the merchants with whom the special contracts were made. From the evidence it would seem that there
was a clear discrimination made against the province. Discrimination is the thing which is specifically prohibited and
punished under the law.

Loadstar Shipping vs. Court of Appeals (GR 131621, 28 September 1999)

FACTS : Loadstar Shipping Co. Inc. received on board its M/V Cherokee goods, amounting to P6,067,178, which were
insured for the same amount with the respondent Manila Insurance Co. (MIC) against various risks including total loss
by total loss of the vessel. The vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (PGAI) for P4
million. On its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off
Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with Loadstar which, however,
ignored the same. As the insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and the latter
executed a subrogation receipt therefor.

MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of the vessel was due to the fault and
negligence of Loadstar and its employees. PGAI was later dropped as a party defendant after it paid the insurance
proceeds to Loadstar. Loadstar submits that the vessel was a private carrier because it was not issued a certificate of
public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one
consignee for a special cargo. The trial court rendered judgment in favor of MIC. Loadstar elevated the matter to the
Court of Appeals, which affirmed the RTCs decision in toto.

ISSUE: Whether or not Loadstar is a common carrier.

HELD: Yes.

x x x [W]e hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public
convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic,
occasional, episodic or unscheduled.

In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies,
Inc., where this Court held that a common carrier transporting special cargo or chartering the vessel to a special person
becomes a private carrier that is not subject to the provisions of the Civil Code. Any stipulation in the charter party
absolving the owner from liability for loss due to the negligence of its agent is void only if the strict policy governing
common carriers is upheld. Such policy has no force where the public at large is not involved, as in the case of a ship
totally chartered for the use of a single party. LOADSTAR also cited Valenzuela Hardwood and Industrial Supply, Inc. v.
Court of Appeals and National Steel Corp. v. Court of Appeals, both of which upheld the Home Insurance doctrine.

These cases invoked by LOADSTAR are not applicable in the case at bar for simple reason that the factual settings are
different. The records do not disclose that the M/V "Cherokee," on the date in question, undertook to carry a special
cargo or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special
arrangement, but only a general provision to the effect that the M/V "Cherokee" was a "general cargo carrier."14 ["A
general ship carrying goods for hire, whether employed in internal, in coasting, or in foreign commerce is a common
carrier." (Baer, Senior & Co.s Successors v. La Compania Maritima, 6 Phil. 215, 217-218, quoting Liverpool Steamship Co.
v. Phoenix Ins. Co., 129 U.S. 397, 437), cited in 3 TEODORICO C. MARTIN, PHILIPPINE COMMERCIAL LAWS 118 (Rev. Ed.
1989).] Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be
purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as
in this case, it was shown that the vessel was also carrying passengers.

First Philippine Industrial Corp. vs. CA

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

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

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

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

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

G.R. No. L-25599 April 4, 1968

FACTS: Consorcio Pesquero del Peru of South America shipped freight pre-paid at Peru, jute bags of Peruvian fish meal
through SS Crowborough, covered by clean bills of lading. The cargo, consigned to San Miguel Brewery, Inc., now San
Miguel Corporation, and insured by Home Insurance Company arrived in Manila and was discharged into the lighters of
Luzon Stevedoring Company. When the cargo was delivered to consignee San Miguel Brewery Inc., there were shortages
causing the latter to lay claims against Luzon Stevedoring Corporation, Home Insurance Company and the American
Steamship Agencies (shipowner), owner and operator of SS Crowborough.

Because the others denied liability, Home Insurance Company paid SMBI the insurance value of the loss, as full
settlement of the claim. Having been refused reimbursement by both the Luzon Stevedoring Corporation and American
Steamship Agencies, Home Insurance Company, as subrogee to the consignee, filed against them before the CFI of
Manila a complaint for recovery of the payment paid with legal interest, plus attorneys fees.

In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods in the same quantity
and quality that it had received the same from the carrier.

The CFI, after trial, absolved Luzon Stevedoring Corporation, having found the latter to have merely delivered what it
received from the carrier in the same condition and quality, and ordered American Steamship Agencies to pay Home
Insurance Company the amount demanded with legal interest plus attorneys fees.

Disagreeing with such judgment, American Steamship Agencies appealed directly to Us.

ISSUE: Is the stipulation in the charter party of the owners non-liability valid so as to absolve the American Steamship
Agencies from liability for loss?

HELD: The judgment appealed from is hereby reversed and appellant is absolved from liability to plaintiff.
YES. The bills of lading, covering the shipment of Peruvian fish meal provide at the back thereof that the bills of lading
shall be governed by and subject to the terms and conditions of the charter party, if any, otherwise, the bills of lading
prevail over all the agreements. On the bills are stamped Freight prepaid as per charter party. Subject to all terms,
conditions and exceptions of charter party dated London, Dec. 13, 1962.

Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods caused by
personal want of due diligence on its part or its manager to make the vessel in all respects seaworthy and to secure that
she be properly manned, equipped and supplied or by the personal act or default of the owner or its manager. Said
paragraph, however, exempts the owner of the vessel from any loss or damage or delay arising from any other source,
even from the neglect or fault of the captain or crew or some other person employed by the owner on board, for whose
acts the owner would ordinarily be liable except for said paragraph..

The provisions of our Civil Code on common carriers were taken from Anglo-American law. Under American
jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a special person only, becomes a
private carrier. As a private carrier, a stipulation exempting the owner from liability for the negligence of its agent is not
against public policy, and is deemed valid.

Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied where the carrier
is not acting as such but as a private carrier. The stipulation in the charter party absolving the owner from liability for
loss due to the negligence of its agent would be void only if the strict public policy governing common carriers is applied.
Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for the use of
a single party.

And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the charterer, as shipper, is in
fact and legal contemplation merely a receipt and a document of title not a contract, for the contract is the charter
party. The consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the
same. Accordingly, the consignees under the bills of lading must likewise abide by the terms of the charter party. And as
stated, recovery cannot be had thereunder, for loss or damage to the cargo, against the shipowners, unless the same is
due to personal acts or negligence of said owner or its manager, as distinguished from its other agents or employees. In
this case, no such personal act or negligence has been proved.

Epitacio San Pablo v. Pantranco South Express, Inc. G.R. No. L-61461 August 21, 1987
Gancayco, J.
FACTS: Pantranco engaged in the land transportation business with PUB service for passengers and freight and various
certificates for public conveniences to operate passenger buses from Metro Manila to Bicol Region and Eastern Samar;
through its counsel, it wrote to Maritime Industry Authority (MARINA) requesting authority to lease/purchase a vessel
named M/V Black Double to be used for its project to operate a ferryboat service from Matnog, Sorsogon and Allen,
Samar that will provide service to company buses and freight trucks that have to cross San Bernardo Strait; request was
denied by MARINA

It nevertheless acquired the vessel MV Black Double; it wrote the Chairman of the Boardof Transportation that it
proposes to operate a ferry service to carry its passenger buses and freight trucks between Allen and Matnog in
connection with its trips to Tacloban City for the purpose of continuing the highway, which is interrupted by a small
body of water, the said proposed ferry operation being merely a necessary and incidental service to its main service and
obligation of transporting its passengers; that being so, it believed that there was no need for it to obtain a separate
certificate for public convenience to operate a ferry service Matnog to cater exclusively to its passenger buses and
freight trucks. BOT granted the request. Cardinal Shipping Corporation and the heirs of San Pablo filed separate motions
for reconsideration.

ISSUES: 1. WON a ferry service is an extension of the highway and thus is a part of the authority originally granted
PANTRANCO; 2. WON a land transportation company can be authorized to operate a ferry service or coastwise or
interisland shipping service along its authorized route as an incident to its franchise without the need of filing a separate
application for the same

HELD: 1. No.
ferry- continuation by means of boats, barges, or rafts, of a highway or the connection of highways located on the
opposite banks of a stream or other body of water. The term necessarily implies transportation for a short distance,
almost invariably between two points, which is unrelated to other transportation

ferry service- service either by barges or rafts, even by motor or steam vessels, between the banks of a river or stream to
continue the highway which is interrupted by the body of water, or in some cases to connect two points on opposite
shores of an arm of the sea such as bay or lake which does not involve too great a distance or too long a time to navigate

coastwise or interisland service - service which involves crossing the open sea

motorship, steamboat or motorboat service (engaged in the coastwise trade) service between the different islands,
involving more or less great distance and over more or less turbulent and dangerous waters of the open sea, to be
coastwise or inter-island service; considered coastwise or inter-island service

conveyance of passengers, trucks and cargo from Matnog to Allen is certainly not a ferryboat service but a coastwise or
interisland shipping service. Under no circumstance can the sea between Matnog and Allen be considered a
continuation of the highway. While a ferry boat service has been considered as a continuation of the highway when
crossing rivers or even lakes, which are small body of waters - separating the land, however, when as in this case the two
terminals, Matnog and Allen are separated by an open sea it cannot be considered as a continuation of the highway.
PANTRANCO should secure a separate CPC for the operation of an interisland or coastwise shipping. Its CPC as a bus
transportation cannot be merely amended to include this water service under the guise that it is a mere private ferry

[G.R. No. 112350. December 12, 1997]
[G.R. No. 112287. December 12, 1997]

FACTS: National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into
a Contract of Voyage Charter Hire (Affreightment) whereby NSC hired VSIs vessel, the MV VLASONS I to make one (1)
voyage to load steel products at Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods
only for those it chose under a special contract of charter party.

The vessel arrived with the cargo in Manila, but when the vessels three (3) hatches containing the shipment were
opened, nearly all the skids of tin plates and hot rolled sheets were allegedly found to be wet and rusty.

NSC filed its complaint against defendant before the CFI wherein it claimed that it sustained losses as a result of the act,
neglect and default of the master and crew in the management of the vessel as well as the want of due diligence on the
part of the defendant to make the vessel seaworthy -- all in violation of defendants undertaking under their Contract
of Voyage Charter Hire.

In its answer, defendant denied liability for the alleged damage claiming that the MV VLASONS I was seaworthy in all
respects for the carriage of plaintiffs cargo; that said vessel was not a common carrier inasmuch as she was under
voyage charter contract with the plaintiff as charterer under the charter party.

The trial court ruled in favor of VSI; it was affirmed by the CA on appeal.

ISSUE: Whether or not Vlazons is a private carrier.

HELD: Yes. At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as a private
carrier. The resolution of this preliminary question determines the law, standard of diligence and burden of proof
applicable to the present case.

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. It has been held that the true test of a common carrier is the carriage of passengers or goods,
provided it has space, for all who opt to avail themselves of its transportation service for a fee. 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.

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. As correctly
concluded by the Court of Appeals, the 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. Recently, in Valenzuela Hardwood and Industrial
Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation, the Court ruled:

x x x *I+n a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce
would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general
public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot
justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy
embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law
in contracts involving common carriers.

KMU Labor Center vs. Garcia, Jr.

FACTS: Department of Transportation and Communication (DOTC) Secretary Oscar M. Orbos issued Memorandum
Circular No. 90-395 to Land Transportation Franchising and Regulatory Board (LTFRB) Chairman, Remedios A.S. Fernando
that will allow provincial bus operators to charge passengers rates within a range of 15% above and 15% below the
LTFRB official rate for a period of one (1) year to be implemented on August 6, 1990. The Memo read as is the
liberalization of regulations in the transport sector and to move away gradually from regulatory policies and make
progress towards greater reliance to market forces: Chairman Fernando informed Sec. Orbos that the Memo is not
legally feasible and recommended for further studies because (1) under Public Service Act rates should be approved by
public service operators; there should be publication and notice especially to affected sectors; and a public hearing be
held; (2) it was untimely due to an earthquake happened on July 16; (3) it will trigger upward adjustment in bus fares
especially in trips bound for Northern Luzon; and (4) DOTC should consider reforms that will be uplifting after the
earthquake. On December 5, 1990 the Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed an
application for fare rate increase. On December 14, 1990 LTFRB released a fare schedule based on a straight
computation. On March 30, 1992 DOTC Sec. Pete Nicomedes Prado issued Department Order No 92-587 defining the
framework on the regulation of transport services. Then on October 8, 1992 DOTC Sec. Jose B. Garcia issued a
memorandum to LTFRB for the swift action on the adoption of the rules and procedures to implement Department
Order No. 92-587 that laid down the deregulation and other liberalization policies for the transport sector. LTFRB issued
on February 17, 1993

On March 16, 1994. Kilusang Mayo Uno anchors its claim on two (2) grounds. First, the authority given by respondent
LTFRB to provincial bus operators to set a fare range of plus or minus fifteen (15%) percent, later increased to plus
twenty (20%) and minus twenty-five (-25%) percent, over and above the existing authorized fare without having to file a
petition for the purpose, is unconstitutional, invalid and illegal. Second, the establishment of a presumption of public
need in favor of an applicant for a proposed transport service without having to prove public necessity is illegal for being
violative of the Public Service Act and the Rules of Court and petitions before the LTFRB.

LTFRB dismissed because of lack of merit.

The Court, on June 20, 1994, issued a temporary restraining order enjoining, prohibiting and preventing respondents
from implementing the bus fare rate increase as well as the questioned orders and memorandum circulars. This meant
that provincial bus fares were rolled back to the levels duly authorized by the LTFRB prior to March 16, 1994. A
moratorium was likewise enforced on the issuance of franchises for the operation of buses, jeepneys, and taxicabs.

DOTC Secretary Jesus B. Garcia, Jr. and the LTFRB asseverate that the petitioner does not have the standing to maintain
the instant suit. They further claim that it is within DOTC and LTFRBs authority to set a fare range scheme and establish
a presumption of public need in applications for certificates of public convenience.

ISSUE: Are the petitioners have the right to petition of this case?
Whether or not the fare adjustment is constitutional?

HELD: (1) YES. KMU has a locus standi (or ability of a party to demonstrate to the court sufficient connection to and
harm from the law or action challenged to support that partys participation in the case) which is inherent in the Section
1 of Article VIII of the Constitution provides: Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the Government.

NO. WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED and the challenged administrative
issuances and orders, namely: DOTC Department Order No. 92-587, LTFRB Memorandum Circular No. 92-009, and the
order dated March 24, 1994 issued by respondent LTFRB are hereby DECLARED contrary to law and invalid insofar as
they affect provisions therein (a) delegating to provincial bus and jeepney operators the authority to increase or
decrease the duly prescribed transportation fares; and (b) creating a presumption of public need for a service in favor of
the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the
proposed service to the oppositor. The Temporary Restraining Order issued on June 20, 1994 is hereby MADE
PERMANENT insofar as it enjoined the bus fare rate increase granted under the provisions of the aforementioned
administrative circulars, memoranda and/or orders declared invalid.

Tatad vs. Garcia, Jr.

FACTS: In 1989, the government planned to build a railway transit line along EDSA. No bidding was made but certain
corporations were invited to prequalify. The only corporation to qualify was the EDSA LRT Consortium which was obviously
formed for this particular undertaking. An agreement was then made between the government, through the Department of
Transportation and Communication (DOTC), and EDSA LRT Consortium. The agreement was based on the Build-Operate-
Transfer scheme provided for by law (RA 6957, amended by RA 7718). Under the agreement, EDSA LRT Consortium shall build
the facilities, i.e., railways, and shall supply the train cabs. Every phase that is completed shall be turned over to the DOTC and
the latter shall pay rent for the same for 25 years. By the end of 25 years, it was projected that the government shall have fully
paid EDSA LRT Consortium. Thereafter, EDSA LRT Consortium shall sell the facilities to the government for $1.00.
However, Senators Francisco Tatad, John Osmea, and Rodolfo Biazon opposed the implementation of said agreement as they
averred that EDSA LRT Consortium is a foreign corporation as it was organized under Hongkong laws; that as such, it cannot
own a public utility such as the EDSA railway transit because this falls under the nationalized areas of activities. The petition was
filed against Jesus Garcia, Jr. in his capacity as DOTC Secretary.

ISSUE: Whether or not the petition shall prosper.

HELD: No. The Supreme Court made a clarification. The SC ruled that EDSA LRT Consortium, under the agreement, does not
and will not become the owner of a public utility hence, the question of its nationality is misplaced. It is true that a foreign
corporation cannot own a public utility but in this case what EDSA LRT Consortium will be owning are the facilities that it will be
building for the EDSA railway project. There is no prohibition against a foreign corporation to own facilities used for a public
utility. Further, it cannot be said that EDSA LRT Consortium will be the one operating the public utility for it will be DOTC that
will operate the railway transit. DOTC will be the one exacting fees from the people for the use of the railway and from the
proceeds, it shall be paying the rent due to EDSA LRT Consortium. All that EDSA LRT Consortium has to do is to build the
facilities and receive rent from the use thereof by the government for 25 years it will not operate the railway transit. Although
EDSA LRT Consortium is a corporation formed for the purpose of building a public utility it does not automatically mean that it is
operating a public utility. The moment for determining the requisite Filipino nationality is when the entity applies for a franchise,
certificate or any other form of authorization for that purpose.

Samar Mining Co., Inc. vs Nordeutscher Lloyd (G.R. No. L-28673, 1984)

FACTS: The case arose from an importation made by Samar Mining Co. Inc. of 1 crate Optima welded wedge wire sieves
through the M/S Schwabenstein, a vessel owned by Nordeutscher Lloyd, (represented in the Philippines by its agent, C.F.
Sharp & Co., Inc.), which shipment is covered by Bill of Lading No. 18 duly issued to consignee Samar Mining. Upon
arrival of the vessel at the port of Manila, the importation was unloaded and delivered in good order and condition to
the bonded warehouse of AMCYL. The goods were however never delivered to, nor received by, the consignee at the
port of destination Davao. When the letters of complaint sent to Nordeutscher Lloyd failed to elicit the desired
response, Samar Mining filed a formal claim for P1,691.93, the equivalent of $424.00 at the prevailing rate of exchange
at that time, against the former, but neither paid.

Samar Mining filed a suit to enforce payment. Nordeutscher Lloyd and CF Sharp & Co. brought in AMCYL as third party
defendant. The trial court rendered judgment in favor of Samar Mining, ordering Nordeutscher Lloyd, et. al. to pay the
amount of P1,691.93 plus attorneys fees and costs. However, the Court stated that Nordeutscher Lloyd, et. al. may
recoup whatever they may pay Samar Mining by enforcing the judgment against third party defendant AMCYL, which
had earlier been declared in default. Nordeutscher Lloyd and C.F. Sharp & Co. appealed from said decision.

The following are the pertinent ports, as provided in the bill of lading:
Port of Loading: Bremen, Germany
Port of discharge from ship: Manila
Port of destination/Port of discharge of the goods: Davao

As plainly indicated on the face of the bill, the vessel M/S Schwabenstein is to transport the goods only up to Manila.
Thereafter, the goods are to be transshipped by the carrier to the port of destination.

ISSUE: Whether or not a stipulation in the bill of lading exempting the carrier from liability for loss of goods not in its
actual custody (i.e., after their discharge from the ship) is valid.

HELD: It is clear that in discharging the goods from the ship at the port of Manila, and delivering the same into the
custody of AMCYL, the bonded warehouse, appellants were acting in full accord with the contractual stipulations
contained in Bill of Lading No. 18. The delivery of the goods to AMCYL was part of appellants' duty to transship (meaning
to transfer for further transportation from one ship or conveyance to another) the goods from Manila to their port of

The extent of appellant carrier's responsibility and/or liability in the transshipment of the goods in question are spelled
out and delineated under Section 1, paragraph 3 of Bill of Lading No. 18, to wit: the carrier shall not be liable in any
capacity whatsoever for any delay, loss or damage occurring before the goods enter ship's tackle to be loaded or after
the goods leave ship's tackle to be discharged, transshipped or forwarded. Further, in Section 11 of the same bill, it was
provided that this carrier, in making arrangements for any transshipping or forwarding vessels or means of
transportation not operated by this carrier shall be considered solely the forwarding agent of the shipper and without
any other responsibility whatsoever even though the freight for the whole transport has been collected by him
Pending or during forwarding or transshipping the carrier may store the goods ashore or afloat solely as agent of the

We find merits in Nordeutschers contention that they are not liable for the loss of the subject goods by claiming that
they have discharged the same in full and good condition unto the custody of AMCYL at the port of discharge from ship
Manila, and therefore, pursuant to the aforequoted stipulation (Sec. 11) in the bill of lading, their responsibility for
the cargo had ceased.The validity of stipulations in bills of lading exempting the carrier from liability for loss or damage
to the goods when the same are not in its actual custody has been upheld by Us in PHOENIX ASSURANCE CO., LTD. vs.
UNITED STATES LINES, 22 SCRA 674 (1968), ruling that pursuant to the terms of the Bill of Lading, appellee's
responsibility as a common carrier ceased the moment the goods were unloaded in Manila and in the matter of
transshipment, appellee acted merely as an agent of the shipper and consignee

In the present case, by the authority of the above pronouncements, and in conformity with the pertinent provisions of
the Civil Code, Section 11 of Bill of Lading No. 18 and the third paragraph of Section 1 thereof are valid stipulations
between the parties insofar as they exempt the carrier from liability for loss or damage to the goods while the same are
not in the latter's actual custody.

Acareful perusal of the provisions of the New Civil Code on common carriers directs our attention to Article 1736, which
reads: The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed
in the possession of, and received by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to
the provisions of article 1738. In relation to this, Article 1738 provides: the extraordinary liability of the common
carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of
destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them.

Art. 1738 finds no applicability to the instant case. The said article contemplates a situation where the goods had already
reached their place of destination and are stored in the warehouse of the carrier. The subject goods were still awaiting
transshipment to their port of destination, and were stored in the warehouse of a third party when last seen and/or
heard of. However, Article 1736 is applicable to the instant suit. Under said article, the carrier may be relieved of the
responsibility for loss or damage to the goods upon actual or constructive delivery of the same by the carrier to the
consignee, or to the person who has a right to receive them. There is actual delivery in contracts for the transport of
goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is
given him to remove the goods. In the present case, there was actual delivery to the consignee through its duly
authorized agent, the carrier.

Lastly, two undertakings are embodied in the bill of lading: the transport of goods from Germany to Manila, and the
transshipment of the same goods from Manila to Davao, with Samar Mining acting as the agent of the consignee. The
moment the subject goods are discharged in Manila, Samar Minings personality changes from that of carrier to that of
agent of the consignee. Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier
to the same appellant as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be
responsible for any loss or damage that may befall the goods from that point onwards. This is the full import of Article

But even as agent of the consignee, the appellant cannot be made answerable for the value of the missing goods. It is
true that the transshipment of the goods, which was the object of the agency, was not fully performed. However,
appellant had commenced said performance, the completion of which was aborted by circumstances beyond its control.
An agent who carries out the orders and instructions of the principal without being guilty of negligence, deceit or fraud,
cannot be held responsible for the failure of the principal to accomplish the object of the agency.

When a carrier fails to establish any caso fortuito, the presumption by law of fault or negligence on the part of the
carrier applies.

Eastern Shipping Lines Inc. v. IAC, 150 SCRA 463
- 13 coils of uncoated 7-wire stress relived wire strand for prestressed concrete were shipped on board the vessel
Japri Venture (owned by Easter Shipping Lines) for delivery to Stresstek Post-Tensioning Phils. in Manila. The cargo
was insured by First Nationwide Assurance Corporation (FNAC).
- The vessel arrived in Manila and discharged the cargo to the custody of E.Razon Inc., from whom the consignees
customs broker received it for delivery to the consignees warehouse.
- It appears that while en route to Manila, the vessel encountered very rough seas and stormy weather and the cargo
stored in the lower hatch of the vessel was flooded with water about one foot deep. That upon survey, it was found that
several coils were rusty on one side and that the wetting of the cargo was caused by fresh water that entered the hatch
when the vessel encountered heavy weather.
- FNAC paid Stresstek about Php 172K for damage and loss to the insured cargo.
- Being subrogated to the rights of Stresstek, FNAC now seeks o recover from Eastern what it has indemnified Stresstek
less the salvage value of the goods, or the total of about Php 124K.
- The RTC ordered for the dismissal of the case.
Upon appeal, the CA held that Eastern is liable to FNAC.

Issue: Whether Easter should be held liable even if it claims that the shipment was discharged and delivered complete
into the custody of the arrastre operator under clean tally sheets.

Held: YES. In arriving at the decision, the SC agreed with the CA on its findings and conclusions.
- The heavy seas and rains referred to in the masters report were not caso fortuito, but normal occurrences that an
ocean going vessel, particularly in the month of September which, in our area, is a month of rains and heavy seas would
encounter as a matter of routine. They are not unforeseen nor unforeseeable. These are conditions that ocean-going
vessels would encounter and provide for, in the ordinary course of voyage.
- The rain water (not sea water) found its way into Japri Venture is a clear indication that care and foresight did not
attend the closing of the ships hatches so that rain water would not find its way into the cargo,
- Since Easter has failed to establish any caso fortuito, the presumption of fault or negligence on the part of the carrier
applies; and the carrier must present evidence that it has observed the extraordinary diligence required in Art. 1733 to
escape liability.
The SC held that the presumption that the cargo was in apparent good condition when it was delivered by the vessel to
the arrastre operation by the clean tally sheets has been overturned. The evidence is clear to the effect that the damage
to the cargo was suffered while aboard petitioners vessel.