1. First Philippine Industrial Co. v.

Court of Appeals
G.R. No. 125948, 29 December 1998, 101 SCAD 1098

FACTS:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January
1995, petitioner applied for mayor’s permit in Batangas. However, the Treasurer required petitioner
to pay a local tax based on gross receipts amounting to P956,076.04 pursuant to the Local
Government Code. 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 on June 15,
1994 for tax refund. Respondents assert that pipelines are not included in the term “common carrier”
which refers solely to ordinary carriers or motor vehicles. The trial court dismissed the complaint,
and such was affirmed by the Court of Appeals.

ISSUE:

Whether a pipeline business is included in the term “common carrier” so as to entitle the petitioner to
the exemption

HELD:

Article 1732 of the Civil Code defines a “common carrier” as “any person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public.”
The test for determining whether a party is a common carrier of goods is:
(1) He must be engaged in the business of carrying goods for others as a public employment,
and must hold himself out as ready to engage in the transportation of goods for person
generally as a business and not as a casual occupation;
(2) He must undertake to carry goods of the kind to which his business is confined;
(3) He must undertake to carry by the method by which his business is conducted and over
his established roads; and
(4) The transportation must be for hire.
Based on the above definitions and requirements, there is no doubt that petitioner is a common
carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for
hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons
who choose to employ its services, and transports the goods by land and for compensation. The fact
that petitioner has a limited clientele does not exclude it from the definition of a common carrier.
2. Home Assurance Co. v. American Steamship
Agencies, Inc.
G.R. No. L-25599, 4 April 1968, 23 SCRA 24

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 attorney’s 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 attorney’s fees.
Disagreeing with such judgment, American Steamship Agencies appealed directly to Us.

ISSUE:

Is the stipulation in the charter party of the owner’s non-liability valid so as to absolve the American
Steamship Agencies from liability for loss?

HELD:

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.
3. De Guzman v. Court of Appeals
G.R. No. L-47822, 22 December 1988, 186 SCRA 612

FACTS:

Respondent Ernesto Cendaña, a junk dealer, was engaged in buying up used bottles and scrap
metal in Pangasinan. Upon gathering sufficient quantities of such scrap material, respondent would
bring such material to Manila for resale. He utilized two (2) six-wheeler trucks which he owned for
hauling the material to Manila. On the return trip to Pangasinan, respondent would load his vehicles
with cargo which various merchants wanted delivered to differing establishments in Pangasinan. For
that service, respondent charged freight rates which were commonly lower than regular commercial
rates.

Sometime in November 1970, petitioner Pedro de Guzman, a merchant and authorized dealer of
General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted with respondent for
the hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to
petitioner’s establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December
1970, respondent loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a
truck driven by respondent himself; while 600 cartons were placed on board the other truck which
was driven by Manuel Estrada, respondent’s driver and employee.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached
petitioner, since the truck which carried these boxes was hijacked somewhere along the MacArthur
Highway in Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and
the cargo.

On 6 January 1971, petitioner commenced action against private respondent in the Court of First
Instance of Pangasinan, demanding payment of P22,150.00, the claimed value of the lost
merchandise, plus damages and attorney’s fees. On December 10, 1975, the trial court rendered a
Decision finding private respondent to be a common carrier and holding him liable for the value of
the undelivered goods (P22,150.00) as well as for P4,000.00 as damages and P2,000.00 as
attorney’s fees.

The Court of Appeals reversed the judgment of the trial court and held that respondent had been
engaged in transporting return loads of freight, as a casual occupation a sideline to his scrap iron
business and not as a common carrier.

ISSUES:

1. Whether or not the private respondent is considered a common carrier.

2. Whether or not the hijacking of respondent’s truck was force majeure.

RULING:

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.

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.

The concept of “common carrier” under Art. 1732 may be seen to coincide neatly with the notion of
“public service” under the Public Service Act which states in section 13, par b, public service
includes: xxx 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. Xxx

Further, a certificate of public convenience is not a requisite for the incurring of liability
under the Civil Code provisions governing common carriers. That liability arises the moment a
person or firm acts as a common carrier, without regard to whether or not such carrier has also
complied with the requirements of the applicable regulatory statute and implementing regulations
and has been granted a certificate of public convenience or other franchise.

2. The hijacking of the carrier’s truck does not fall within any of the five (5) categories of exempting
causes in Art. 1734. Hence, 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.

However, under Article 1745 (6) above, a common carrier is held responsible and will not be allowed
to divest or to diminish such responsibility• even for acts of strangers like thieves or robbers, except
where such thieves or robbers in fact acted with grave or irresistible threat, violence or force. The
court believes and so holds 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.
In the instant case, armed men held up the second truck owned by private respondent which carried
petitioner’s cargo. 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). In these circumstances, we hold that the occurrence of the loss must
reasonably be regarded as quite beyond the control of the common carrier and properly
regarded as a fortuitous event. It is necessary to recall that even common carriers are not
made absolute insurers against all risks of travel and of transport of goods, and are not held
liable for acts or events which cannot be foreseen or are inevitable, provided that they shall
have complied with the rigorous standard of extraordinary diligence.
4. Planters Products, Inc. v. Court of Appeals
G.R. No. 101503, 15 September 1993, 226 SCRA 476

FACTS:

Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of
New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter shipped in
bulk on 16 June 1974 aboard the cargo vessel M/V “Sun Plum” owned by private respondent 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 No. KP-1 signed by the master of the vessel and issued
on the date of departure.
On 17 May 1974, or prior to its voyage, a time charter-party on the vessel M/V “Sun Plum” pursuant
to the Uniform General Charter2 was entered into between Mitsubishi as shipper/charterer and
KKKK as shipowner, in Tokyo, Japan.3 Riders to the aforesaid charter-party starting from par. 16 to
40 were attached to the pre-printed agreement. Addenda Nos. 1, 2, 3 and 4 to the charter-party were
also subsequently entered into on the 18th, 20th, 21st and 27th of May 1974, respectively.

ISSUE:

Whether a common carrier becomes a private carrier by reason of a charter-party.

RULING:

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; 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. Contract of affreightment may either be time charter,
wherein the vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein
the ship is leased for a single voyage. 22 In both cases, the charter-party provides for the hire of
vessel only, either for a determinate period of time or for a single or consecutive voyage, the
shipowner to supply the ship’s stores, pay for the wages of the master and the crew, and defray the
expenses for the maintenance of the ship.
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.
28
5. Fisher v. Yangco Steamship Co.
G.R. No. L-8095, 31 March 1915, 31 Phil 1

FACTS:

Plaintiff is a stockholder in the Yangco Steamship Company, the owner of a large number of steam
vessels, duly licensed to engage in the coastwise trade of the Philippine Islands; that on or about
June 10, 1912, the directors of the company adopted a resolution which was thereafter ratified and
affirmed by the shareholders of the company, “expressly declaring and providing that the
classes of merchandise to be carried by the company in its business as a common carrier do
not include dynamite, powder or other explosives, and expressly prohibiting the officers,
agents and servants of the company from offering to carry, accepting for carriage said
dynamite, powder or other explosives;”
Thereafter the respondent Acting Collector of Customs demanded and required of the company the
acceptance and carriage of such explosives; that he has refused and suspended the issuance of the
necessary clearance documents of the vessels of the company unless and until the company
consents to accept such explosives for carriage

ISSUE:

Whether the refusal of the owners and officers of a steam vessel, duly licensed to engage in the
coastwise trade of the Philippine Islands and engaged in that trade as a common carrier, to accept
for carriage “dynamite, powder or other explosives” is a valid act.

RULING:

The traffic in dynamite gun powder and other explosive is vitally essential to the material and general
welfare of the inhabitants of this islands and it these products are to continue in general use
throughout the Philippines they must be transported from water to port to port in various island which
make up the Archipelago.

It follows that a refusal by a particular vessel engage as a common carrier of merchandise in

coastwise trade in the Philippine Island to accept such explosives for carriage constitutes a violation.
The prohibition against discrimination penalized under the statute, unless it can be shown that there
is so Real and substantial danger of disaster necessarily involved in the courage of any or all of this
article of merchandise as to render such refusal a due or unnecessary or a reasonable exercise or
prudence and discretion on the part of the ship owner
6. U.S. v. Quinajon and Quitoriano
G.R. No. L-8686, 30 July 1915, 31 Phil 189

FACTS:

Quinajon and Quitorano have been engaged in the transportation of passengers and merchandise in
the port of Currimao by means of virayes. They charged and collected from some shippers and
merchants, a certain price for each package of merchandise, loaded or unloaded, according to a
certain schedule.

They collected 6 centavos for each package, of whatever kind of merchandise, large or small, heavy
or light, from those merchants only with whom they had a special contract. From other merchants,
with whom they had not made said special contract, as well as the Province of Ilocos Norte, they
collected a different rate (10 centavos).

They were charged with violation of Act. No. 98 of the Civil Commission which compels 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 unreasonablediscrimination.

The law provides that no common carrier shall directly or indirectly, by any special rate, rebate,
drawback, or other device, charge, demand collect, or receive from any person or persons, a greater
or less compensation for any service rendered in the transportation of passengers or property,
between points in the Philippine Islands, than he charges, demands, collects, or receives from any
other person or
persons, for doing a like or contemporaneous service, under substantially similar conditions or
circumstances.

The law prohibits any common carrier from making or giving any unnecessary orunreasonable
preference or advantage to any particular person, company, firm, corporation or locality, or any
particular kind of traffic, or to subject any particular person, company, firm, corporation, or locality, or
any particular kind of traffic, to any undue or unreasonable prejudice or discrimination whatsoever.

ISSUE:

ON Quinajon and Quitorano violated Act No. 98

HELD:

No.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
notbelieved 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.

A common carrier may enter into special agreements for handling and transportingmerchandise,
whereby advantage may accrue to individuals, when it is made clearly to appear that by such
agreements the common carrier has only its interests and the legitimate increase of its profits in
view, and when the consideration given to the individual is for the interest of the common carrier
alone, and when the common carrier gives all shippers exactly the same rate, under the same
conditions.
7. Loadstar Shipping Co., Inc. v. Court of Appeals
G.R. No. 131621, 28 September 1999, 315 SCRA 339

FACTS:

On November 19, 1984, loadstar received on board its M/V “Cherokee” bales of lawanit hardwood,
tilewood and Apitong Bolidenized for shipment, of which the goods were insured for the with the
Manila Insurance Company against various risks including “Total Loss by Total Loss of the Vessel”.
The vessel sank off at Limasawa Island along with its cargo. 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 to the insured in full settlement of its claim, and the latter executed a subrogation
receipt therefor. MIC thereafter filed a complaint against loadstar alleging that the sinking of the
vessel was due to fault and negligence of loadstar and its employees.

In its answer, Loadstar denied any liability for the loss of the shipper’s goods and claimed that the
sinking of its vessel was due to force majeure. The court a quo rendered judgment in favor of MIC,
prompting loadstar to elevate the matter to the Court of Appeals, which however, agreed with the
trial court and affirmed its decision in toto. On appeal, loadstar maintained 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”.

ISSUE:

Whether or not M/V Cherokee was a private carrier so as to exempt it from the provisions covering
Common Carrier?

HELD:

Loadstar is a common carrier.

The Court held 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. Further, the bare fact
that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely
co-incidental; it is no 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.

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.

*Case digest by Rosemarie G. Banatanto-Baliquig, LLB-IV, Andres Bonifacio Law School, SY 2018-2019
8. San Pablo v. Pantranco South Express, Inc.
G.R. No. L-61461, 21 August 1987, 153 SCRA 199

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 toMaritime 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 fromMatnog, Sorsogon and Allen, Samar that
will provide service to company buses and freighttrucks 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 busesand freight
trucks between Allen and Matnog in connection with its trips to Tacloban Cityfor 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 itsmain 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 operatea 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.

ISSUE:

WON a ferry service is an extension of the highway and thus is a part of theauthority originally
granted PANTRANCO; 2. WON a land transportation company can beauthorized to operate a ferry
service or coastwise or interisland shipping service along itsauthorized route as an incident to its
franchise without the need of filing a separateapplication for the same

HELD:

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 termnecessarily implies
transportation for a short distance, almost invariably between twopoints, which is unrelated to other
transportation

Ferry service- service either by barges or rafts, even by motor or steam vessels, betweenthe 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 seasuch as bay or lake which does
not involve too great a distance or too long a time tonavigate(engaged in the coastwise trade)
,service between the different islands, involving more or less great distance and over moreor less
turbulent and dangerous waters of the open sea, to be coastwise or inter-islandservice; 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 canthe sea between Matnog and Allen be considered a continuation of the highway.
While aferry boat service has been considered as a continuation of the highway when crossingrivers
or even lakes, which are small body of waters – separating the land, however, whenas 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 guisethat it is a mere private ferry service.
9. National Steel Corp. v. Court of Appeals
G.R. No. 112287, 12 December 1997, 283 SCRA 45

FACTS:

The MV Vlasons I is a vessel which renders tramping service and, as such, does not transport cargo
or shipment for the general public. Its services are available only to specific persons who enter into a
special contract of charter party with its owner. The ship is a private carrier, and it is in this capacity
that its owner, Vlasons Shipping, Inc. (VSA), entered into a contract of affreightment or contract of
voyage charter hire with National Steel Corporation (NSC) on 17 July 1974, whereby NSC hired
VSI’s vessel, the MV ‘VLASONS I’ to make 1 voyage to load steel products at Iligan City and
discharge them at North Harbor, Manila

The shipment was placed in the 3 hatches of the ship which arrived with the cargo at Pier 12, North
Harbor, Manila, on 12 August 1974. The following day, when the vessel’s 3 hatches containing the
shipment were opened by NSC’s agents, nearly all the skids of tinplates and hot rolled sheets were
allegedly found to be wet and rusty. The cargo was discharged and unloaded by stevedores hired by
the Charterer.

On 6 September 1974 NSC filed with VSI its claim for damages suffered due to the downgrading of
the damaged tinplates in the amount of P941,145.18. Then on 3 October 1974, NSC formally
demanded payment of said claim but VSI refused and failed to pay.
On appeal, and on 12 August 1993, the Court of Appeals modified the decision of the trial court by
reducing the demurrage from P88,000.00 to P44,000.00 and deleting the award of attorneys fees
and expenses of litigation. NSC and VSI filed separate motions for reconsideration. The CA denied
both motions. NSC and VSI filed their respective petitions for review before the Supreme Court.

ISSUE:

Whether or not VSI contracted with NSC as a common carrier or a private carrier.

RULING:

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 test of a common carrier 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.”Herein, VSI did not offer its services to the general public. It carried passengers
or goods only for those it chose under a “special contract of charter party.” 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.

In Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers
Shipping Corporation, the Court ruled that “in 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.”

From the parties’ Contract of Voyage Charter Hire, dated 17 July 1974, VSI “shall not be responsible
for losses except on proven willful negligence of the officers of the vessel.” The NANYOZAI Charter
Party, which was incorporated in the parties’ contract of transportation further provided that the
shipowner shall not be liable for loss of or damage to the cargo arising or resulting from
unseaworthiness, unless the same was caused by its lack of due diligence to make the vessel
seaworthy or to ensure that the same was “properly manned, equipped and supplied,” and to “make
the holds and all other parts of the vessel in which cargo was carried, fit and safe for its reception,
carriage and preservation.” The NANYOZAI Charter Party also provided that “owners shall not be
responsible for split, chafing and/or any damage unless caused by the negligence or default of the
master or crew.”
Herein, NSC must prove that the damage to its shipment was caused by VSI’s willful negligence or
failure to exercise due diligence in making MV Vlasons I seaworthy and fit for holding, carrying and
safekeeping the cargo. Ineluctably, the burden of proof was placed on NSC by the parties’
agreement.
Article 361 of the Code of Commerce provides that “Merchandise shall be transported at the risk and
venture of the shipper, if the contrary has not been expressly stipulated. Therefore, the damage and
impairment suffered by the goods during the transportation, due to fortuitous event, force majeure, or
the nature and inherent defect of the things, shall be for the account and risk of the shipper. The
burden of proof of these accidents is on the carrier.”

Article 362 of the Code of Commerce provides that “The carrier, however, shall be liable for
damages arising from the cause mentioned in the preceding article if proofs against him show that
they occurred on account of his negligence or his omission to take the precautions usually adopted
by careful persons, unless the shipper committed fraud in the bill of lading, making him to believe
that the goods were of a class or quality different from what they really were.”

As the MV Vlasons I was a private carrier, the shipowner’s obligations are governed by the foregoing
provisions of the Code of Commerce and not by the Civil Code which, as a general rule, places the
prima facie presumption of negligence on a common carrier.

The Supreme Court denied the consolidated petitions; and affirmed the questioned Decision of the
Court of Appeals with the modification that the demurrage awarded to VSI is deleted. No
pronouncement as to costs.