Philamgen vs.

PKS Shipping Company

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 P3,375,000.00.
2. DUMC insured the goods for its full value with petitioner Philippine American General Insurance
Company (Philamgen).
3. The goods were loaded aboard the dumb barge Limar I belonging to PKS Shipping.
4. December 22, 1988 9 pm: While Limar I was being towed by PKS’ 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.
5. 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 so Philamgen to file suit against PKS Shipping
6. RTC: dismissed the complaint - fortuitous event
7. CA:Affirmed - not a common carrier but a casual occupation

ISSUE:
 Whether PKS Shipping is a common carrier or a private carrier; and
 WON PKS Shipping exercised the required diligence over the goods they carry. Or, WON PKS
Shipping is liable.

HELD:

PKS Shipping is a common carrier.

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. Neither can the concept of a common carrier change merely
because individual contracts are executed or entered into with patrons of the carrier.

PKS Shipping is not liable.

The vessel was suddenly tossed by waves of extraordinary height of six (6) to eight (8) feet and
buffeted by strong winds of 1.5 knots resulting in the entry of water into the barge’s hatches. The official
Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise Load Line
Certificate would attest to the seaworthiness of Limar I. As such, under Art. 1733, NCC, common carriers
are exempt from liability for loss, destruction, or deterioration of the goods due to any of the following
causes, among others:

Flood, storm, earthquake, lightning, or other natural disaster or calamity x x x

CASE NO. 2

ESTELA L. CRISOSTOMO VS. CA & CARAVAN TRAVEL & TOURS INTERNATIONAL, INC.

FACTS:

Estela Crisostomo contracted the services of Caravan Travel and Tours International, Inc. to arrange and
facilitate her booking, ticketing and accommodation in a tour dubbed "Jewels of Europe". The package tour
included the countries of England, Holland, Germany, Austria, Liechstenstein, Switzerland and France at a
total cost of P74,322.70. ESTELA was given a 5% discount on the amount, which included airfare, and the
booking fee was also waived because petitioner’s niece, Meriam Menor, was respondent company’s ticketing
manager.
Menor went ti Estela to deliver travel documents and plane tickets, in turn, gave Menor the full payment for
the tour. Menor then told her to be at NAIA on Saturday, two hours before her flight on board British Airways.
Without checking her travel documents, ESTELA went to NAIA on Saturday,. To ESTELA dismay, she discovered
that the flight departed the previous day. She learned that her plane is scheduled to leave friday, she thus
called up Menor to complain.
Menor suggest to ESTELA to take another tour – the "British Pageant" For this tour package, ESTELA was
asked to pay $785.00 or P20,881.00. She MENOR US$300 or P7,980.00 as partial payment.
Upon petitioner’s return from Europe, she demanded from CARAVAN TRAVEL the reimbursement of
P61,421.70, representing the difference between the sum she paid for "Jewels of Europe" and the amount
she owed for the "British Pageant" tour. Despite several demands, CARAVAN TRAVEL refused to reimburse the
amount, contending that the same was non-refundable.
ESTELA filed a complaint against for breach of contract of carriage, she alleged that her failure to join "Jewels
of Europe" was due to respondent’s fault since it did not clearly indicate the departure date on the plane
ticket. Caravan Travel was also negligent in informing her of the wrong flight schedule through its employee
Menor.
In CARAVAN TRAVEL answer they denied responsibility, they insisted that ESTELA was informed of the correct
departure date, which was clearly and legibly printed on the plane ticket. The travel documents were given to
ESTELA two days ahead of the scheduled trip & had only herself to blame for missing the flight, as she did not
bother to read or confirm her flight schedule as printed on the ticket.
RTC ruled in favor of ESTELA; CARAVAN TRAVEL was negligent in erroneously advising petitioner of her
departure date BUT ESTELA should have verified the exact date and time of departure by looking at her ticket
and should have simply not relied on Menor’s verbal representation, thus declared that ESTELA was guilty of
CONTRIBUTORY NEGLIGENCE and deducted 10% from the amount being claimed.
On appeal to CA, found both parties to be at fault. However, CA held that ESTELA is more negligent than
respondent because as a lawyer and well-traveled person, she should have known better than to simply rely
on what was told to her. This being so, she is not entitled to any form of damages
ESTELA contends that CARAVAN TRAVEL did not observe the standard of care req. of a common carrier when
it informed her wrongly of the flight schedule. She could not be deemed more negligent than respondent
since the latter is required by law to exercise EXTRAORDINARY DILIGENCE in the fulfillment of its obligation.

ISSUE:

Whether or not CARAVAN TRAVEL breach the contract of carriage?

HELD:
Petitioner’s contention has no merit.

By definition, a contract of carriage or transportation. A common carrier as defined under Article 1732 of the
Civil Code 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 is obvious from the above definition that respondent is not an entity engaged in the business of
transporting either passengers or goods and is therefore, neither a private nor a common carrier. Respondent
did not undertake to transport petitioner from one place to another since its covenant with its customers is
simply to make travel arrangements in their behalf. CARAVAN TRAVEL services as a travel agency include
procuring tickets and facilitating travel permits or visas as well as booking customers for tours.

At most, CARAVAN TRAVEL acted merely as an agent of the airline, with whom ESTELA ultimately contracted
for her carriage to Europe. CARAVAN TRAVEL obligation to ESTELA in this regard was simply to see to it that
ESTELA was properly booked with the airline for the appointed date and time. Her transport to the place of
destination, meanwhile, pertained directly to the airline.

The object of ESTELA’s contractual relation with respondent is the latter’s service of arranging and facilitating
petitioner’s booking, ticketing and accommodation in the package tour. In contrast, the object of a contract of
carriage is the transportation of passengers or goods. It is in this sense that the contract between the parties
in this case was an ordinary one for services and not one of carriage. Petitioner’s submission is premised on a
wrong assumption.

CARAVAN TRAVEL is not a common carrier but a travel agency. It is thus not bound under the law to observe
extraordinary diligence in the performance of its obligation, as ESTELA claims.
Since the contract between the parties is an ordinary one for services, the standard of care required of
respondent is that of a good father of a family under Article 1173 of the Civil Code.

3. First Philippine Industrial Corp. V. CA, G.R. 125948, Dec. 29, 1998

Facts: Petitioner is a grantee of a pipeline concession under RA387, as amended, to contract, install and
operate oil pipelines. Petitioner applied for a mayor´s permit in 1995 but before it could be issued, the
City Treasurer required petitioner to pay a local tax based on its gross receipts for the year 1993
pursuant to the Local Government Code. The business tax was Php956K, payable in 4 installments.
Petitioner paid it under protest and filed a letter-protest addressed to the City Treasurer that stated that
since it is engaged in transporting petroleum products, it is exempt from paying tax on gross receipts
under Section 133 of the Local Government Code. The City Treasurer denied the protest, contending
that petitioner cannot be considered engaged in the transportation business and cannot claim
exemption. Petitioner filed a complaint for tax refund with prayer for writ of preliminary injunction at
RTC Batangas.

RTC - dismissed the complaint

CA - affirmed dismissal
Issue: WON petitioner is a common carrier and therefore exempt from payment of taxes under Section
133 of Local Government Code.

SC: YES.

A. Civil Code Article 1732

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, offring 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 are 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.
The fact that it has a limited clientele does not exclude it from the definition of a common carrier.

B. Under the Petroleum Act of the Philippines (RA387), petitioner is considered a common carrier, thus
Article 86 thereof provides that

Art. 86. Pipe line concessionaire as 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:

that everything relating to the exploration for and exploitation of petroleum . . . and everything relating
to the manufacture, refining, storage, or transportation by special methods of petroleum, is hereby
declared to be a public utility.

C. The Bureau of Internal Revenue likewise considers the petitioner a "common carrier." In BIR Ruling
No. 069-83, it declared:
. . . 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 . . . . Such being the case, it is
not subject to withholding tax prescribed by Revenue Regulations No. 13-78, as amended.

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, to wit:

Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. — Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:

xxx xxx xxx

(j) Taxes on the gross receipts of transportation contractors and persons engaged in the
transportation of passengers or freight by hire and common carriers by air, land or water, except as
provided in this Code.

Petition Granted, CA decision reversed and set aside.

National Steel Corp. vs CA

Facts:

 MV Vlasons I owned by Vlasons Shipping Inc.(VSI) was a private carrier. It renders a tramping service. Its service is only
available for specific person under a special contract that they entered.
 National Steel Corp (NSC) entered a contract with VSI, chater party, where the latter will load steel products, skids of
tinplates and hot rolled sheets, from Illigan to Manila.
 VSI load such steel products for three days, and when it arrived to Manila, NSC’s agent opened the shipment and found
out that the shipments were wet and rusty.
 NSC called for the survey of the shipment from Manila Adjusters and Surveyors Company (MASCO). On the investigation,
MASCO found out that that the shipments contain sea water on it, the tarpaulin that was use as a cover was torn, and the
shipments were rusty and wet.
 NSC filed a case for damages against VSI.
RTC and CA – ruled in favor of VSI.

Issue: W/N VSI is liable for the shipment.

Held: No.

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 a 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."18 The NANYOZAI
Charter Party also provided that "[o]wners shall not be responsible for split, chafing and/or any damage unless caused by the
negligence or default of the master or crew."19

Since, VSI is a private carrier , the burden of proving negligence or a breach of that duty rests on plaintiff (NSC) and proof of loss of,
or damage to, cargo while in the carrier's possession does not cast on it the burden of proving proper care and diligence on its part
or that the loss occurred from an excepted cause in the contract or bill of lading. However, in discharging the burden of proof,
plaintiff is entitled to the benefit of the presumptions and inferences by which the law aids the bailor in an action against a bailee,
and since the carrier is in a better position to know the cause of the loss and that it was not one involving its liability, the law requires
that it come forward with the information available to it, and its failure to do so warrants an inference or presumption of its liability.

In any event, the records reveal that VSI exercised due diligence to make the ship seaworthy and fit for the carriage of NSC's cargo
of steel and tinplates. This is shown by the fact that it was drylocked 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. The Philippine Coast Guard Station in
Cebu cleared it as seaworthy, fitted and equipped; it met all requirements for trading as cargo vessel.
 we encountered very rough seas and strong winds and Manila office was advised by telegram of the adverse weather
conditions encountered; that in the morning of August 10, 1974, the weather condition changed to worse and strong winds
and big waves continued pounding the vessel at her port side causing sea water to overflow on deck andhatch (sic)
covers and which caused the first layer of the canvass covering to give way while the new canvass covering still holding
on;

That due diligence was exercised by the officers and the crew of the MV Vlasons I was further demonstrated by the fact that, despite
encountering rough weather twice, the new tarpaulin did not give way and the ship's hatches and cargo holds remained waterproof.

the records reveal that it was the stevedores of NSC who were negligent in unloading the cargo from the ship.

The stevedores employed only a tent-like material to cover the hatches when strong rains occasioned by a passing typhoon
disrupted the unloading of the cargo. This tent-like covering, however, was clearly inadequate for keeping rain and seawater away
from the hatches of the ship.

LOADSTAR SHIPPING CO. vs. PIONEER ASIA, INC.

Facts:

Loadstar Shipping Co., Inc. is the registered owner and operator of the vessel M/V Weasel.

On June 6, 1984, Loadstar entered into a voyage-charter with Northern Mindanao Transport Company, Inc. for the carriage of
65,000 bags of cement from Iligan City to Manila. The shipper was Iligan Cement Corporation, while the consignee in Manila was
Market Developers, Inc.

On June 24, 1984, 67,500 bags of cement were loaded on board M/V Weasel and stowed in the cargo holds for delivery to the
consignee. The shipment was covered by petitioner’s Bill of Lading dated June 23, 1984. The consignee insured the shipment of
cement with Pioneer Asia Insurance Corporation for P1,400,000.

At 12:50 in the afternoon of June 24, 1984, M/V Weasel left Iligan City for Manila in good weather. However, at 4:31 in the morning
of June 25, 1984, Captain Vicente C. Montera, master of M/V Weasel, ordered the vessel to be forced aground. Consequently, the
entire shipment of cement was good as gone due to exposure to sea water. Petitioner thus failed to deliver the goods to the
consignee in Manila.

The consignee demanded from petitioner full reimbursement of the cost of the lost shipment.

Petitioner, however, refused to reimburse the consignee despite repeated demands.

Respondent insurance company paid the consignee P1,400,000 plus an additional amount of P500,000, the value of the lost
shipment of cement. In return, the consignee executed a Loss and Subrogation Receipt in favor of respondent concerning the
latter’s subrogation rights against petitioner.

RTC rendered a Decision in favor of respondent.

Court of Appeals affirmed the RTC Decision.

Issue:
1. Whether the loss of the cargo was due to force majeure or due to petitioner’s failure to exercise extraordinary diligence.

2. Petitioner entered into a voyage-charter with the Northern Mindanao Transport Company, Inc. Had the voyage-charter converted
petitioner into a private carrier?

Rulling:

1. Petitioner is a corporation engaged in the business of transporting cargo by water and for compensation, offering its services
indiscriminately to the public.
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.

As a common carrier, petitioner is required to observe extraordinary diligence in the vigilance over the goods it transports. When the
goods placed in its care are lost, petitioner is presumed to have been at fault or to have acted negligently. Petitioner therefore has
the burden of proving that it observed extraordinary diligence in order to avoid responsibility for the lost cargo

The records reveal that petitioner took a shortcut route, instead of the usual route, which exposed the voyage to unexpected hazard.
Petitioner has only itself to blame for its misjudgment.

2. No. The voyage-charter agreement between petitioner and Northern Mindanao Transport Company, Inc. did not in any way
convert the common carrier into a private carrier.

Petitioner remains a common carrier notwithstanding the existence of the charter agreement with the Northern Mindanao Transport
Company, Inc. since the said charter is limited to the ship only and does not involve both the vessel and its crew.

ASIA LIGHTERAGE AND SHIPPING, INC., petitioner,

vs.
COURT OF APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE, INC., respondents.

Facts: On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at
US$423,192.354 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,
evidenced by Bill of Lading No. PTD/Man-4.5 The shipment was insured by the private respondent
Prudential Guarantee and Assurance, Inc. against loss or damage for P14,621,771.75.

On July 25, 1990, 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.

On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III, evidenced by
Lighterage Receipt No. 03647 for delivery to consignee. 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. A second Marine protest was then filed. On September 14, 1990, a
bidding was conducted to dispose of the damaged wheat retrieved and loaded on the three other
barges. The total proceeds from the sale of the salvaged cargo was P201,379.75.
Issues: 1) Whether the petitioner is a common carrier; and,

(2) Assuming the petitioner is a common carrier, whether it exercised extraordinary diligence in its care
and custody of the consignee's cargo.

Held: on the first issue, we rule that petitioner is a common carrier. 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.

In the case at bar, the principal business of the petitioner is that of lighterag and drayage and it offers its
barges to the public for carrying or transporting goods by water for compensation. Petitioner is clearly a
common carrier. We therefore hold that 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.

On the second issue, we uphold the findings of the lower courts that petitioner failed to exercise
extraordinary diligence in its care and custody of the consignee's goods.

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.

Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force majeure to escape
liability for the loss sustained by the private respondent. Surely, meeting a typhoon head-on falls short
of due diligence required from a common carrier. More importantly, the officers/employees themselves
of petitioner admitted that when the towing bits of the vessel broke that caused its sinking and the total
loss of the cargo upon reaching the Pasig River, it was no longer affected by the typhoon. The typhoon
then is not the proximate cause of the loss of the cargo; a human factor, i.e., negligence had intervened.

NATIONAL STEEL CORP

vs
CA
FACTS:
Plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc.
(VSI) as Owner, entered into a Contract of Voyage Charter Hire whereby NSC hired VSI’s
vessel, the MV Vlasons I to make one voyage to load steel products at Iligan City and discharge
them at North Harbor, Manila. The handling, loading and unloading of the cargoes were the
responsibility of the Charterer.
The skids of tinplates and hot rolled sheets shipped were allegedly found to be wet and rusty.
Plaintiff, alleging negligence, filed a claim for damages against the defendant who denied
liability claiming that the MV Vlasons I was seaworthy in all respects for the carriage of
plaintiff’s 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; that in the course its
voyage, the vessel encountered very rough seas.

ISSUE:
Whether or not the provisions of the Civil Code on common carriers pursuant to which there
exists a presumption of negligence against the common carrier in case of loss or damage to the
cargo are applicable to a private carrier.

HELD:
No. 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.
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
[Mendoza vs. Philippine Airlines, Inc., 90 Phil. 836, 842-843 (1952)]. 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.
Because the MV Vlasons I was a private carrier, the ship owner’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.

Planters Products, Inc. v. CA (1993)

Facts:
Planters Products, Inc. purchased from Mitsubishi International Corporation
9,329.7069 metric tons of Urea 46% fertilizer, which the latter shipped aboard the cargo
vessel M/V Sun Plum on June 16, 1974. Prior to its voyage, a time-charter party was
entered into between Mitsubishi as shipper, and Kyosei Kisen Kabushiki Kaisha as
shipowner. Before loading the fertilizer aboard the vessel, four of her holds were
presumably inspected by the charterer’s representative and found it fit to take the load.
After loading the cargo, the steel hatches were closed with heavy iron lids, covered with
3 layers of tarpaulin then tied with steel bonds. It remained sealed throughout the entire
voyage.

Upon arrival of the vessel, petitioner unloaded the cargo, which took 11 days. A private
marine and cargo surveyor, Cargo Superintendents Company, Inc. (CSCI) was hired by
petitioner to determine the outturn of the cargo shipped. CSCI reported shortage of
106.726 metric tons, and contamination of 18 metric tons due to dirt. PPI sent a claim
letter against Soriamont Steamship Agencies, the resident agent of KKKK. The request
was denied, hence, PPI filed an action for damages before the CFI Manila. The lower
court sustained the petitioner’s claim, but such decision was reversed by the appellate
court, which absolved the carrier from liability. The appellate court ruled that the vessel
was a private carrier and not a common carrier by reason of the charter party.

ISSUE:

W/N 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. Petition is DISMISSED

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. 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

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.
De Guzman vs CA

Facts of the case:

Pedro De Guzman, a merchant and authorized dealer of General Milk Company, Inc. in Urdaneta
Pangasinan, contracted with Ernesto Cedana (respondent) for the hauling of 750 cartons of
Liberty filled milk from a warehouse of General Milk in Makati.

On 1 December 1970, Cedana 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, Cedana’s driver/employee.

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

On 6 January 1971, De guzman initiated the action against Cedana demanding the payment of
P22,150 (value of the lost good) plus damages and attorney’s fees.

Deguzman argued that being a common carrier and having failed to exercise extraordinary
diligence required of him by law, should be liable for the value of the undelivered goods.

Respondent answered and denied that he was a common carrier and argued that he could not
be held responsible for the lost goods due to force majeure.

RTC: Ruled in favor Petitioner

CA: reversed judgment, stating that the services of Cedana was a “casual occupation”

Issue: WON Cedana can be considered a common carrier?

WON hijacking can be considered force majeure?

Ruling:

Yes. Cedana is a common carrier even though he merely back haled goods for other merchants
from Manila to Pangasinan and even though the same was done in periodic or occasional rather
than regular or scheduled manner, and even though Cedana’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.

The CA referred to the fact that Cedana did not have a certificate of public convenience
therefore concluded that he was not a common carrier. A CPC is not a requisite for the incurring
 of liability under the Civil Code provisions which cover common carriers. That liability arises the
moment a person or firm acts as a common carrier.

Yes. According to Article 1745 (6) – any stipulations that the common carrier’s liability for acts
committed by thieves or of robbers who do not act with grave or irresistible threat, violence or
force, is dispensed with or diminished. It appears that on the robbery case that was decided by
the RTC of Tarlac, 3 out of 5 men were armed that demonstrated grave and imminent
irresistible threat towards the driver Manuel Estrada. Therefore this should be considered as a
fortuitous event.

SCHMITZ TRANSPORT & BROKERAGECORPORATION v. TRANSPORT

VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., et al.

456 SCRA 557 (2005)

A common carrier shall exercise extraordinary diligence to prevent and/or minize the loss
ordestruction of goods.

FACTS:

SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V
―Alexander Saveliev‖ (a vessel of Russian registry and owned by respondent Black Sea) 545
hot rolled steel sheets. The vessel arrived at the port of Manila and the Philippine Ports Authority
(PPA) assigned it a place of berth at the outside breakwater at the Manila South Harbor.
Petitioner Schmitz Transport, engaged to secure the requisite clearances, to receive the cargoes
from the shipside, and to deliver them to Little Giant Steelpipe Corporation‘s warehouse at
Cainta, Rizal. It likewise engaged the services of respondent Transport Venture Inc. (TVI) to
send a barge and tugboat at shipside.

The tugboat, after positioning the barge alongside the vessel, left and returned to the port
terminal. Later on, arrastre operator commenced to unload 37 of the 545 coils from the vessel
unto the barge. By noon the next day, during which the weather condition had become inclement
due to an approaching storm, the unloading unto the barge of the 37 coils was accomplished.
However, there was no tugboat that pulled the barge back to the pier. Eventually, because of the
strong waves, the crew of the barge abandoned it and transferred to the vessel. The
barge capsized, washing the 37 coils into the sea. Earnest efforts on the part of both the
consignee Little Giant and Industrial Insurance to recover the lost cargoes proved futile.

Industrial Insurance later filed a complaint against Schmitz Transport, TVI and Black
Seathrough its representative Inchcape (thedefendants) before the RTC of Manila, for the
recovery of the amount it paid to Little Giant plus adjustment fees, attorney‘s fees, and litigation
expenses. Industrial Insurance won and the Schmitz et al.’s motion for reconsideration is denied.
In effect, Schmitz now filed charges against TVI et al. It asserts that in chartering the barge and
tugboat of TVI, it was acting for its principal, consignee Little Giant, hence, the transportation
contract was by and between Little Giant and TVI. The Court rendered a decision holding
Schmitz and TVI liable.

ISSUES:

Whether or not the liability for the loss may attach to Black Sea, Schmitz and TVI

HELD:

TVI‘s failure to promptly provide a tugboat did not only increase the risk that might have been
reasonably anticipated during the shipside operation, but was the proximate cause of the loss. A
man of ordinary prudence would not leave a heavily loaded barge floating for
a considerable number of hours, at such a precarious time, and in the open sea, knowing that the
barge does not have any power of its own and is totally defenseless from the ravages of the sea.
That it was nighttime and, therefore, the members of the crew of a tugboat would be charging
overtime pay did not excuse TVI from calling for one such tugboat.

As for Schmitz, for it to be relieved of liability, it should, following Article 1739 of the Civil
Code, prove that it exercised due diligence to prevent or minimize the loss, before, during and
after the occurrence of the storm in order that it may be exempted from liability for the loss of
the goods.

While Schmitz sent checkers and a supervisor on board the vessel to counter-check the
operations of TVI, it failed to take all available and reasonable precautions to avoid the loss.
After noting that TVI failed to arrange for the prompt towage of the barge despite the
deteriorating sea conditions, it should have summoned the same or another tugboat to extend
help, but it did not.

The Court holds then that Schmitz and TVI are solidarily liable for the loss of the cargoes. As
for Black Sea, its duty as a common carrier extended only from the time the goods were
surrendered or unconditionally placed in its possession and received for transportation until they
were delivered actually or constructively to consignee Little Giant

Parties to a contract of carriage may, however, agree upon a definition of delivery that extends
the services rendered by the carrier. In the case at bar, Bill of Lading No. 2 covering the
shipment provides that delivery be made ―to the port of discharge or so near thereto as she may
safely get, always afloat.‖ The delivery of the goods to the consignee was not from ―pier to pier‖
but from the shipside of ―M/V Alexander Saveliev‖ and into barges, for which reason the
consignee contracted the services of petitioner. SinceBlack Sea had constructively delivered the
cargoes to Little Giant, through Schmitz, it had discharged its duty.

In fine, no liability may thus attach to Black Sea.