Case: 4 Philippine-American General Insurance Company v.

PKS Shipping Company

Facts: Davao Union Marketing Corporation (DUMC) contracted the services of PKS
Shipping Company (PKS Shipping) for the shipment of 75,000 bags of cement worth.
DUMC insured the goods for its full value with Philippine American General Insurance
Company (Philamgen). The goods were loaded aboard the dumb barge Limar I
belonging to PKS Shipping. While Limar I was being towed by PKS’ tugboat, MT Iron
Eagle, the barge sank, bringing down with it the entire cargo of 75,000 bags of cement
this was due to the sudden rise of strong waves.

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, prompting
Philamgen to file suit against PKS.

The CA ruled that that Philamgen was not a common carrier because the peculiar
method of the shipping company’s carrying goods for others was not generally held out
as a business but as a casual occupation. It then concluded that PKS Shipping, not being
a common carrier, was not expected to observe the stringent extraordinary diligence
required of common carriers in the care of goods

Issue: Whether PKS was a common carrier or a private carrier

Held: PKS is a common carrier.

Much of the distinction between a "common or public carrier" and a "private or

special carrier" lies in the character of the business, such that if the undertaking is an
isolated transaction, not a part of the business or occupation, and the carrier does not
hold itself out to carry the goods for the general public or to a limited clientele, although
involving the carriage of goods for a fee, the person or corporation providing such
service could very well be just a private carrier. A typical case is that of a charter party
which includes both the vessel and its crew, such as in a bareboat or demise, where the
charterer obtains the use and service of all or some part of a ship for a period of time or
a voyage or voyage and gets the control of the vessel and its crew. Contrary to the
conclusion made by the appellate court, its factual findings indicate that PKS Shipping
has engaged itself in the business of carrying goods for others, although for a limited
clientele, undertaking to carry such goods for a fee. The regularity of its activities in this
area indicates more than just a casual activity on its part. Neither can the concept of a
common carrier change merely because individual contracts are executed or entered
into with patrons of the carrier. Such restrictive interpretation would make it easy for a
common carrier to escape liability by the simple expedient of entering into those
distinct agreements with clients.
Case: 5 First Philippine Industrial corporation v. CA

Facts: First Philippine Industrial Corporation is a grantee of a pipeline concession

under Republic Act No. 387, as amended, to contract, install and operate oil pipelines.

FPIC applied for a mayor's permit with the Office of the Mayor of Batangas City.
However, before the mayor's permit could be issued, the respondent City Treasurer
required FPIC to pay a local tax based on its gross receipts for the fiscal year 1993
pursuant to the LGC.

FPIC filed a protest contending that it should be exempted from the local tax
under section 133 of the Local Government Code because they are considered common
carriers. This was denied by the LGC arguing that pipelines are not included in the term
common carrier.

Issue: Whether FPIC is a common carrier

Held: Yes.

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.

Case: 6 Vlasons Shipping, Inc. v. CA and National Steel Corporation 

Facts: The National Steel Corporation (NSC) and Vlasons Shipping (VSI) entered a
contract of voyage where NSC hired VSI’s vessel to load steel products to Manila. Upon
arrival of the VS vessel to Manila, the vessels hatches containing the steel products were
open resulting to the rusting of the steel products.

NSC filed a compliant against VS 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. VS denied liability arguing that it was not a common carrier wanting
of extraordinary diligence because it was only under a voyage contract.

Issue: Whether VSI is a common carrier that needs to exercise estraordinary diligence.

Held: No.

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. 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.
 It is clear from the parties' Contract of Voyage Charter Hire that VSI "shall not be
responsible for losses except on proven willful negligence of the officers of the vessel."
Case: 7 Valenzuela Hardwood and Industrial Supply, Inc. v. Court of Appeals and
Seven Brothers Shipping Corporation

Facts: Valenzuela Hardwood and Industrial Suppy Inc. (VHIS) shipped 940 round logs
on a vessel owned by Seven Brothers Shipping Corporation(SBSC). VHIS insured the
logs against loss and/or damage with South Sea Surety and Insurance Co., Inc. for P2M
and the latter issued its Marine Cargo Insurance Policy on said date. In the meantime,
the vessel sank resulting in the loss of the VHIS insured logs.

VHIS demanded from South Sea Surety and Insurance Co., Inc. the payment of
the proceeds of the policy but the latter denied liability under the policy. VHIS likewise
filed a formal claim with SBSC for the value of the lost logs but the latter denied the
claim. VHIS claims that one of the charter stating that “Owners shall not be responsible
for loss, split, short-landing, breakages and any kind of damages to the cargo” is not
valid and thus shall apply the provisions on common carriers.

SBSC was ruled by the CA to have no liability stating that SBSC was acting as a
private carrier and hence should be under the provisions of the Civil Code on common
carriers

Issue: Whether the provision in the charter exempting the SBSC from liability for the
loss of VHIS’ logs arising from the negligence of its SBSC’s captain valid.

Held: Yes.

The charter party between the petitioner and private respondent stipulated that
the “Owners shall not be responsible for loss, split, short-landing, breakages and any
kind of damages to the cargo” is VALID.

SBSC had acted as a private carrier in transporting petitioner’s lauan logs. Thus,
Article 1745 and other Civil Code provisions on common carriers which were cited by
VHIS may not be applied unless expressly stipulated by the parties in their charter
party.

In a contract of private carriage, the parties may validly stipulate that

responsibility for the cargo rests solely on the charterer, exempting the shipowner from
liability for loss of or damage to the cargo caused even by the negligence of the ship
captain. Pursuant to Article 1306 of the Civil Code, such stipulation is valid because it is
freely entered into by the parties and the same is not contrary to law, morals, good
customs, public order, or public policy. Indeed, their contract of private carriage is not
even a contract of adhesion. We stress 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.
Case: 8 Torres-Madrid Brokerage, Inc. v. FEB Mitsui Marine Insurance Co., Inc. and
Benjamin P. Manalastas, doing business under the name of BMT Trucking Services

Facts: Sony Philippines engaged the services of TMBI ,a customs broker, to facilitate,
process, withdraw, and deliver  the shipment from the port to its warehouse in Binan,
Laguna. TMBI - who did not own any delivery trucks - subcontracted the services of
Benjamin Manalastas' company, BMT Trucking Services (BMT),  to transport the
shipment from the port to the Binan warehouse.

4 BMT trucks picked up the shipment from the port at about 11:00 a.m. of
October 7, 2000. However, BMT could not immediately undertake the delivery because
of the truck ban and because the following day was a Sunday. Thus, BMT scheduled the
delivery on October 9, 2000.

Only 3 trucks arrived at the warehouse, the 4th truck was found abandoned and
its’s shipment was missing. The BMT reported the incident to NBI as a hijacking case.
TMBI demanded payment from BMT for the lost shipment, but BMT refused payment
because the loss was because of hijacking which they considered a fortuitous event.

Mitsui after subrogating Sony’s right filed a case against TMBI and BMT for the
payment of the lost goods. TMBI denied being a common carrier because it was only a
brokerage and it has exercised ordinary diligence of a good father and that hijacking
was a fortuitous event, BMT also maintained that hijacking was a fortuitous event.

Issues: a. Whether a brokerage maybe considered as a common carrier

b. Whether hijacking is a fortuitous event.

Held: a. A brokerage may be considered a common carrier if it also undertakes to

deliver the goods for its customers.

A customs broker - whose principal business is the preparation of the correct

customs declaration and the proper shipping documents - is still considered a common
carrier if it also undertakes to deliver the goods for its customers. The law does not
distinguish between one whose principal business activity is the carrying of goods and
one who undertakes this task only as an ancillary activity.

Despite TMBI's present denials, we find that the delivery of the goods is an
integral, albeit ancillary, part of its brokerage services. TMBI admitted that it was
contracted to facilitate, process, and clear the shipments from the customs authorities,
withdraw them from the pier, then transport and deliver them to Sony's warehouse in
Laguna. Lastly, TMBI's customs brokerage services - including the transport/delivery of
the cargo - are available to anyone willing to pay its fees. Given these circumstances, we
find it undeniable that TMBI is a common carrier.

Consequently, TMBI should be held responsible for the loss, destruction, or

deterioration of the goods it transports unless it results from:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act of omission of the shipper or owner of the goods;

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

(5) Order or act of competent public authority.

For all other cases - such as theft or robbery - a common carrier is presumed to

have been at fault or to have acted negligently, unless it can prove that it
observed extraordinary diligence.

b. Simply put, the theft or the robbery of the goods is not considered a fortuitous
event or a force majeure.  Nevertheless, a common carrier may absolve itself of liability
for a resulting loss:

(1) if it proves that it exercised extraordinary  diligence in transporting and safekeeping

the goods; or

(2) if it stipulated with the shipper/owner of the goods to limit its liability for the loss,
destruction, or deterioration of the goods to a degree less than extraordinary diligence.
 However, a stipulation diminishing or dispensing with the common carrier's
liability for acts committed by thieves or robbers who do not act with grave or
irresistible threat, violence, or force is void under Article 1745 of the Civil Code for
being contrary to public policy.

Instead of showing that it had acted with extraordinary diligence,  TMBI simply

argued that it was not a common carrier bound to observe extraordinary diligence. Its
failure to successfully establish this premise carries with it the presumption of fault or
negligence, thus rendering it liable to Sony/Mitsui for breach of contract.