CRISOSTOMO vs.
CA From the above definition, Caravan Travel and Tours is not an entity
Facts: Estela L. 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 cost her P74, 322.70. She 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 former’s company’s
ticketing manager.
Menor went to her aunt’s residence on a Wednesday to deliver
petitioner’s travel documents and plane tickets. Estela, in turn, gave
Menor the full payment for the package tour. Menor then told her to be
at the Ninoy Aquino International Airport (NAIA) on Saturday, two hours
before her flight on board British Airways.
Without checking her travel documents, Estela went to NAIA on
Saturday, to take the flight for the first leg of her journey from Manila to
Hongkong. She discovered that the flight she was supposed to take had
already departed the previous day. She learned that her plane ticket was
for the flight scheduled on June 14, 1991. She thus called up Menor to
complain.
Subsequently, Menor prevailed upon Estela to take another tour the
"British Pageant”, which cost P20, 881.00. She gave caravan travel and
tours P7, 980.00 as partial payment and commenced the trip in July
1991.
Upon petitioner’s return from Europe, she demanded from respondent
the reimbursement of P61, 421.70, representing the difference between
the sum she paid for "Jewels of Europe" and the amount she owed
respondent for the "British Pageant" tour. Despite several demands,
respondent company refused to reimburse the amount, contending that
the same was non-refundable.
Estela filed a complaint against Caravan travel and Tours for breach of
contract of carriage and damages.
A) Will the action prosper?
B) Will she be entitled to damages?
Answer:
No, for there was no contract of carriage.
By definition, a contract of carriage or transportation is one whereby a
certain person or association of persons obligate themselves to
transport persons, things, or news from one place to another for a fixed
price.
delivery of 750 cartons of Liberty Milk. On December 1, 1970,
engaged in the business of transporting either passengers or goods and
is therefore, neither a private nor a common carrier. Caravan Travel and
Tours did not undertake to transport Estela from one place to another
since its covenant with its customers is simply to make travel
arrangements in their behalf. Caravan travel and tour’s services as a
travel agency include procuring tickets and facilitating travel permits or
visas as well as booking customers for tours.
While Estela concededly bought her plane ticket through the efforts of
respondent company, this does not mean that the latter ipso facto is a
common carrier. At most, Caravan Travel and Tours acted merely as an
agent of the airline, with whom the former ultimately contracted for her
carriage to Europe.
B) No.
The negligence of the obligor in the performance of the obligation
renders him liable for damages for the resulting loss suffered by the
obligee. Fault or negligence of the obligor consists in his failure to
exercise due care and prudence in the performance of the obligation as
the nature of the obligation so demands.
In the case at bar, Caravan Travel and Tours exercised due diligence in
performing its obligations under the contract and followed standard
procedure in rendering its services to Estela. The plane ticket issued to
petitioner clearly reflected the departure date and time, contrary to
Estela’s contention. The travel documents, consisting of the tour
itinerary, vouchers and instructions, were likewise delivered to her two
days prior to the trip. The Caravan Travel and Tours also properly
booked Estela for the tour, prepared the necessary documents and
procured the plane tickets. It arranged Estela’s hotel accommodation as
well as food, land transfers and sightseeing excursions, in accordance
with its avowed undertaking.
From the foregoing, it is clear that the Caravan Travel and Tours
performed its prestation under the contract as well as everything else
that was essential to book Estela for the tour.
Hence, Estela cannot recover and must bear her own damage.
DE GUZMAN vs. CA
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
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
diligence.
FIRST PHIL. INDUSTRIAL CORP. vs. CA
FACTS: FPIC is a grantee of a pipeline concession under Republic Act
No. 387, as amended, to contract, install and operate oil pipelines. The
original pipeline concession was granted in 1967[1] and renewed by the
Energy Regulatory Board in 1992.[2]
In January 1995, 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.[3] The respondent City Treasurer assessed a business tax on the
FPIC amounting to P956,076.04 payable in four installments based on
the gross receipts for products pumped at GPS-1 for the fiscal year 1993
which amounted to P181,681,151.00. In order not to hamper its
operations, FPIC paid the tax under protest in the amount of
P239,019.01 for the first quarter of 1993.
On January 20, 1994, FPIC filed a letter-protest[4] addressed to the
respondent City Treasurer, alleging exemption under Section 133 (j) of
the LGC. City Treasurer denied the protest contending that FPIC cannot
be considered engaged in transportation business, thus it cannot
claim.[5]
"Section 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
(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."
On June 15, 1994, FPIC filed with the Regional Trial Court of Batangas
City a complaint[6] for tax refund with prayer for a writ of preliminary
injunction against respondents City of Batangas and City Treasurer.
Respondents argued that FPIC cannot be exempt from taxes under
Section 133 (j) of the LGC as said exemption applies only to
"transportation contractors and persons engaged in the transportation
by hire and common carriers by air, land and water." Respondents
assert that pipelines are not included in the term "common carrier" which
refers solely to ordinary carriers such as trucks, trains, ships and the like.
Respondents further posit that the term "common carrier" under the said
code pertains to the mode or manner by which a product is delivered to
its destination.[8]
On October 3, 1994, RTC ruled against FPIC. CA ruled against FPIC.
Affirmed RTC. MR denied.
ISSUES:
What is a common carrier?
Is FPIC, an oil pipeline operator, a common carrier?
Does Section 133 (j) of the LGC only refer to common carriers via land,
water and air AND via motor vehicle?
Does the law recognize pipeline operators as common carriers?
Why are common carriers exempt from local business tax?
HELD: There is merit in the petition. WHEREFORE, the petition is
hereby GRANTED. The decision of the respondent Court of Appeals
dated November 29, 1995 in CA-G.R. SP No. 36801 is REVERSED and
SET ASIDE.
ISSUE [1]: A "common carrier" may be defined, broadly, as one who
holds himself out to the public as engaged in the business of transporting
persons or property from place to place, for compensation, offering his
services to the public generally.
Article 1732 of the Civil Code defines a "common carrier" as "any
person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public."
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.[15]
ISSUE [2]: Based on the above definitions and requirements, there is no
doubt that FPIC 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 FPIC has a limited
clientele does not exclude it from the definition of a common carrier.
ISSUE [3]: Also, respondent's argument that the term "common carrier"
as used in Section 133 (j) of the LGC refers only to common carriers
transporting goods and passengers through moving vehicles or vessels
either by land, sea or water, is erroneous.
As correctly pointed out by FPIC, the definition of "common carriers" in
the Civil Code makes no distinction as to the means of transporting, as
long as it is by land, water or air. It does not provide that the
transportation of the passengers or goods should be by motor vehicle.
In fact, in the United States, oil pipe line operators are considered
common carriers.[17]
ISSUE [4]: Under the Petroleum Act of the Philippines (Republic Act
387), FPIC is considered a "common carrier." (Article 86)
Republic Act 387 also regards petroleum operation as a public utility.
(Article 7)
The Bureau of Internal Revenue likewise considers the FPIC a "common
carrier." (BIR Ruling No. 069-83)
ISSUE [5]: The legislative intent is to exclude from the taxing power of
the local government unit the imposition of business tax against common
carriers is to prevent a duplication of the so-called "common carrier's
tax."
FPIC is already paying three (3%) percent common carrier's tax on its
gross sales/earnings under the National Internal Revenue Code.[19] To
tax FPIC again on its gross receipts in its transportation of petroleum
business would defeat the purpose of the LGC.
 SPOUSES FERNANDO vs. NORTHWEST AIRLINES
Facts: Sometime on December 20, 2001, Jesus Fernando arrived at the
LA Airport via Northwest Airlines Flight No. NW02 to join his family who
flew earlier to the said place for a reunion for the Christmas holidays. He
was asked by the Immigration Officer to have his return ticket verified
and validated since the date reflected thereon. Instead the personnel of
the respondent merely glanced at his ticket without checking its status
with the computer and peremptorily said that the ticket has been used
and could not be considered as valid. He presented his Elite Platinum
World Perks Card but the personnel refused to check the validity of the
ticket in the computer, instead, looked at Jesus Fernando with contempt,
then informed the Immigration Officer that the ticket is not valid.
The Immigration Officer brought Jesus Fernando to the interrogation
room of the Immigration and Naturalization Services (INS) where he was
asked humiliating questions for more than two (2) hours. When he was
finally cleared by the Immigration Officer, he was granted only a twelve
(12)-day stay in the United States (US), instead of the usual six (6)
months. He further incurred other expenses due to the said incident.
The second incident happened on January 29, 2002, the Fernandos
were on their way back to the Philippines. When the Fernandos reached
the gate area where boarding passes need to be presented, Northwest
supervisor Linda Tang stopped them and demanded for the presentation
of their paper tickets. They failed to present the same since Northwest
issued electronic tickets (attached to the boarding passes) which they
showed to the supervisor. The personnel rudely pulled them out of the
queue. Elizabeth Fernando explained to Linda Tang that the matter
could be sorted out by simply verifying their electronic tickets in her
computer and all she had to do was click and punch in their Elite
Platinum World Perks Card number. But Linda Tang arrogantly told them
that if they wanted to board the plane, they should produce their credit
cards and pay for their new tickets, otherwise Northwest would order
their luggage off-loaded from the plane. The Fernandos printed coupon
tickets and rushe back to the boarding gates since the plane was about
to depart. But when the Fernandos reached the boarding gate, the plane
had already departed. Hence this petition.
Issue: Whether there is a breach of contract of carriage in the case at
bar
Held: Yes. The Fernandos' cause of action against Northwest stemmed
from a breach of contract of carriage. A contract is a meeting of minds
between two persons whereby one agrees to give something or render
some service to another for a consideration. There is no contract unless
the following requisites concur: (1) consent of the contracting parties; (2)
an object certain which is the subject of the contract; and (3) the cause
of the obligation which is established.[30]
A contract of carriage is defined as one whereby a certain person or
association of persons obligate themselves to transport persons, things,
or goods from one place to another for a fixed price. Under Article 1732
of the Civil Code, this "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" is called a common carrier.Undoubtedly, a contract of
carriage existed between Northwest and the Fernandos. They
voluntarily and freely gave their consent to an agreement whose object
was the transportation of the Fernandos from LA to Manila, and whose
cause or consideration was the fare paid by the Fernandos to Northwest.
In Alitalia Airways v. CA, et al.,We held that when an airline issues a
ticket to a passenger confirmed for a particular flight on a certain date, a
contract of carriage arises. The passenger then has every right to expect
that he would fly on that flight and on that date. If he does not, then the
carrier opens itself to a suit for breach of contract of carnage
When Northwest confirmed the reservations of the Fernandos, it bound
itself to transport the Fernandos on their flight on 29 January 2002. We
note that the witness of Northwest admitted on cross-examination that
based on the documents submitted by the Fernandos, they were
confirmed passengers on the January 29, 2002 flight.
In an action based on a breach of contract of carriage, the aggrieved
party does not have to prove that the common carrier was at fault or was
negligent. All that he has to prove is the existence of the contract and
the fact of its non-performance by the carrier. As the aggrieved party,
the Fernandos only had to prove the existence of the contract and the
fact of its non-performance by Northwest, as carrier, in order to be
awarded compensatory and actual damages.
Therefore, having proven the existence of a contract of carriage between
Northwest and the Fernandos, and the fact of non-performance by
Northwest of its obligation as a common carrier, it is clear that Northwest
breached its contract of carriage with the Fernandos. Thus, Northwest
opened itself to claims for compensatory, actual, moral and exemplary
damages, attorney's fees and costs of suit.
VLASONS SHIPPING vs. CA
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 VSI’s 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 vessel’s 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 defendant’s 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 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.
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.”
LOADSTAR SHIPPING CO. vs. CA
Facts: On November 19, 1984, Loadstar received on board its vessel
M/V Cherokee the following goods for shipment:
1. 705 bales of lawanit hardwood
2. 27 boxes and crates of tilewood assemblies and others
3. 49 bundles of mouldings R & W (3) Apitong Bolidenized
The goods, amounting to P6,067,178, were insured by Manila Insurance
Co. The vessel is insured by Prudential Guarantee and Assurance, Inc.
On November 20, 1984, on its way to Manila from Agusan, the vessel
sank off Limasawa Island. MIC paid the consignee P6,075,000 for the
value of the goods lost, and filed a complaint against Loadstar and PGAI,
claiming subrogation into the rights of the consignee. When PGAI paid
Loadstar, it was dropped from the complaint. The trial court ruled against
Loadstar, and this was affirmed by the Court of Appeals.
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." In refutation, MIC argues that the issue
as to the classification of the M/V "Cherokee" was not timely raised
below; hence, it is barred by estoppel. While it is true that the vessel had
on board only the cargo of wood products for delivery to one consignee,
it was also carrying passengers as part of its regular business.
Moreover, the bills of lading in this case made no mention of any charter
party but only a statement that the vessel was a "general cargo carrier."
Neither was there any "special arrangement" between LOADSTAR and
the shipper regarding the shipment of the cargo. The singular fact that
the vessel was carrying a particular type of cargo for one shipper is not
sufficient to convert the vessel into a private carrier.
LOADSTAR argues that as a private carrier, it cannot be presumed to
have been negligent, and the burden of proving otherwise devolved
upon MIC. It also maintains that the vessel was seaworthy, and that the
loss was due to force majeure. LOADSTAR goes on to argue that, being
a private carrier, any agreement limiting its liability, such as what
transpired in this case, is valid. Since the cargo was being shipped at
"owner’s risk," LOADSTAR was not liable for any loss or damage to the
same. Finally, LOADSTAR avers that MIC’s claim had already
prescribed, the case having been instituted beyond the period stated in
the bills of lading for instituting the same — suits based upon claims
arising from shortage, damage, or non-delivery of shipment shall be
instituted within sixty days from the accrual of the right of action. MIC,
on the other hand, claims that LOADSTAR was liable, notwithstanding
that the loss of the cargo was due to force majeure, because the same
concurred with LOADSTAR’s fault or negligence. Secondly, LOADSTAR
did not raise the issue of prescription in the court below; hence, the same
must be deemed waived. Thirdly, the "limited liability" theory is not
applicable in the case at bar because LOADSTAR was at fault or
negligent, and because it failed to maintain a seaworthy vessel.
Authorizing the voyage notwithstanding its knowledge of a typhoon is
tantamount to negligence.
Issues:
(1) Whether Loadstar was a common carrier or a private carrier
(2) Whether Loadstar exercised the degree of diligence required under
the circumstances
(3) Whether the stipulation that the goods are at “the owner’s risk” is
valid
(4) Whether the action has prescribed
Held:
(1) We 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. 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." 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.
(2) The doctrine of limited liability does not apply where there was
negligence on the part of the vessel owner or agent. LOADSTAR was at
fault or negligent in not maintaining a seaworthy vessel and in having
allowed its vessel to sail despite knowledge of an approaching typhoon.
In any event, it did not sink because of any storm that may be deemed
as force majeure, inasmuch as the wind condition in the area where it
sank was determined to be moderate. Since it was remiss in the
performance of its duties, LOADSTAR cannot hide behind the "limited
liability" doctrine to escape responsibility for the loss of the vessel and
its cargo.
(3) Three kinds of stipulations have often been made in a bill of lading.
The first is one exempting the carrier from any and all liability for loss or
damage occasioned by its own negligence. The second is one providing
for an unqualified limitation of such liability to an agreed valuation. And
the third is one limiting the liability of the carrier to an agreed valuation
unless the shipper declares a higher value and pays a higher rate of
freight. According to an almost uniform weight of authority, the first and
second kinds of stipulations are invalid as being contrary to public policy,
but the third is valid and enforceable. Since the stipulation in question is
null and void, it follows that when MIC paid the shipper, it was
subrogated to all the rights which the latter has against the common
carrier, LOADSTAR.
(4) MIC’s cause of action had not yet prescribed at the time it was
concerned. Inasmuch as neither the Civil Code nor the Code of
Commerce states a specific prescriptive period on the matter, the
Carriage of Goods by Sea Act (COGSA) — which provides for a one-
year period of limitation on claims for loss of, or damage to, cargoes
sustained during transit — may be applied suppletorily to the case at
bar. This one-year prescriptive period also applies to the insurer of the
goods. In this case, the period for filing the action for recovery has not
yet elapsed. Moreover, a stipulation reducing the one-year period is null
and void; it must, accordingly, be struck down.
NATIONAL STEEL CORPORATION vs. CA
Doctrine: The stringent provisions of the Civil Code on common carriers
protecting the general public cannot justifiably be applied to a private
carrier.
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.
BASCOS vs. CA
FACTS: Rodolfo A. Cipriano representing Cipriano Trading Enterprise
(CIPTRADE for short) entered into a hauling contract with Jibfair
Shipping Agency Corp whereby the former bound itself to haul the
latter’s 2,000 m/tons of soya bean meal to the warehouse in Calamba,
Laguna. To carry out its obligation, CIPTRADE, through Cipriano,
subcontracted with Bascos to transport and to deliver 400 sacks of soya
bean meal from the Manila Port Area to Calamba, Laguna. Petitioner
failed to deliver the said cargo. As a consequence of that failure,
Cipriano paid Jibfair Shipping Agency the amount of the lost goods in
accordance with their contract.
Cipriano demanded reimbursement from petitioner but the latter refused
to pay. Eventually, Cipriano filed a complaint for a sum of money and
damages with writ of preliminary attachment for breach of a contract of
carriage. The trial court granted the writ of preliminary attachment.
In her answer, petitioner interposed the defense that there was no
contract of carriage since CIPTRADE leased her cargo truck to load the
cargo from Manila Port Area to Laguna and that the truck carrying the
cargo was hijacked and being a force majeure, exculpated petitioner
from any liability
After trial, the trial court rendered a decision in favor of Cipriano and
against Bascos ordering the latter to pay the former for actual damages
for attorney’s fees and cost of suit.
The “Urgent Motion To Dissolve/Lift preliminary Attachment” Bascos is
DENIED for being moot and academic.
Petitioner appealed to the Court of Appeals but respondent Court
affirmed the trial court’s judgment.
Hence this petition for review on certiorari
ISSUE:
(1) WON petitioner a common carrier
(2) WON the hijacking referred to a force majeure
HELD: The petition is DISMISSED and the decision of the Court of
Appeals is hereby AFFIRMED.
1. YES
In disputing the conclusion of the trial and appellate courts that petitioner
was a common carrier, she alleged in this petition that the contract
between her and Cipriano was lease of the truck. She also stated that:
she was not catering to the general public. Thus, in her answer to the
amended complaint, she said that she does business under the same
style of A.M. Bascos Trucking, offering her trucks for lease to those who
have cargo to move, not to the general public but to a few customers
only in view of the fact that it is only a small business.
We agree with the respondent Court in its finding that petitioner is a
common carrier.
Article 1732 of the Civil Code defines a common carrier as “(a) person,
corporation or 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 to
determine a common carrier is “whether the given undertaking is a part
of the business engaged in by the carrier which he has held out to the
general public as his occupation rather than the quantity or extent of the
business transacted.” 12 In this case, petitioner herself has made the
admission that she was in the trucking business, offering her trucks to
those with cargo to move. Judicial admissions are conclusive and no
evidence is required to prove the same. 13
But petitioner argues that there was only a contract of lease because
they offer their services only to a select group of people. Regarding the
first contention, the holding of the Court in De Guzman vs. Court of
Appeals 14 is instructive. In referring to Article 1732 of the Civil Code, it
held thus:
“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 1732 deliberately refrained from making
such distinctions.”
2. NO
Likewise, We affirm the holding of the respondent court that the loss of
the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in the
vigilance over the goods transported by them. Accordingly, they are
presumed to have been at fault or to have acted negligently if the goods
are lost, destroyed or deteriorated. There are very few instances when
the presumption of negligence does not attach and these instances are
enumerated in Article 1734. 19 In those cases where the presumption is
applied, the common carrier must prove that it exercised extraordinary
diligence in order to overcome the presumption.
In this case, petitioner alleged that hijacking constituted force majeure
which exculpated her from liability for the loss of the cargo. In De
Guzman vs. Court of Appeals, the Court held that hijacking, not being
included in the provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is presumed to
have been at fault or negligent. To exculpate the carrier from liability
arising from hijacking, he must prove that the robbers or the hijackers
acted with grave or irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which provides:
“Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy; xx
(6) That the common carrier’s liability for acts committed by thieves, or
of robbers who do not act with grave or irresistible threat, violences or
force, is dispensed with or diminished;” xx
NOTES:
1. She cited as evidence certain affidavits which referred to the contract
as “lease”. These affidavits were made by Jesus Bascos and by
petitioner herself and Cipriano and CIPTRADE did not object to the
presentation of affidavits by petitioner where the transaction was
referred to as a lease contract. Both the trial and appellate courts have
dismissed them as self-serving and petitioner contests the conclusion.
We are bound by the appellate court’s factual conclusions. Yet, granting
that the said evidence were not self-serving, the same were not sufficient
to prove that the contract was one of lease. It must be understood that
a contract is what the law defines it to be and not what it is called by the
contracting parties. Furthermore, petitioner presented no other proof of
the existence of the contract of lease. He who alleges a fact has the
burden of proving it.
2. Having affirmed the findings of the respondent Court on the
substantial issues involved, We find no reason to disturb the conclusion
that the motion to lift/dissolve the writ of preliminary attachment has
been rendered moot and academic by the decision on the merits.
A.F. SANCHEZ BROKERAGE vs. CA
A common carrier is liable to the resulting damage to the goods if the
improper packaging is known to the carrier or his employees or is
apparent upon ordinary observation, but he nevertheless accepts the
same without protest or exception.
Respondent FGU Insurance Corporation (FGU) brought an action for
reimbursement against petitioner A.F. Sanchez Brokerage Inc.
(Sanchez Brokerage) to collect the amount paid by the former to Wyeth-
Suaco Laboratories Inc. (Wyeth-Suaco) as insurance payment for the
goods delivered in bad condition.
A.F. Brokerage refused to admit liability for the damaged goods which it
delivered from Philippines Skylanders, Inc. (PSI) to Wyeth-Suaco as it
maintained that the damage was due to improper and insufficient export
packaging, discovered when the sealed containers were opened outside
the PSI warehouse.
The Regional Trial Court of Makati dismissed the said complaint;
however, the decision was subsequently reversed and set aside by the
Court of Appeals, finding that Sanchez Brokerage is liable for the
carriage of cargo as a ―common carrier‖ by definition of the New Civil
Code.
ISSUE:
Whether or not the FGU Insurance is liable for the delivery of the
damaged goods
HELD:
As defined under Article 1732 of the Civil Code, 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. It does not
distinguish between one whose principal business activity is the carrying
of goods and one who does such carrying only as an ancillary activity.
The contention therefore of Sanchez Brokerage that it is not a common
carrier but a customs broker whose principal function is to prepare the
correct customs declaration and proper shipping documents as required
by law is bereft of merit. It suffices that petitioner undertakes to deliver
the goods for pecuniary consideration.
In this light, Sanchez Brokerage as a common carrier is mandated to
observe, under Article 1733 of the Civil Code, extraordinary diligence in
the vigilance over the goods it transports according to all the
circumstances of each case. In the event that the goods are lost,
destroyed or deteriorated, it is presumed to have been at fault or to have
acted negligently, unless it proves that it observed extraordinary
diligence.
The concept of ―extra-ordinary diligence‖ was explained in Compania
Maritima v. Court of Appeals. The extraordinary diligence in the vigilance
over the goods tendered for shipment requires the common carrier to
know and to follow the required precaution for avoiding damage to or
destruction of the goods entrusted to it for sale, carriage and delivery. It
requires common carriers to render service with the greatest skill and
foresight and ―to use all reasonable means to ascertain the nature and
characteristics of goods tendered for shipment and to exercise due care
in the handling and storage including such methods as their nature
requires.
It was established that Sanchez Brokerage received the cargoes from
the PSI warehouse in good order and condition and that upon delivery
by petitioner some of the cargoes were found to be in bad order as noted
in the Delivery Receipt and as indicated in the Survey and Destruction
Report.
While paragraph no. 4 of Article 1734 of the Civil Code exempts a
common carrier from liability if the loss or damage is due to the character
of the goods or defects in the packaging or in the containers, the rule is
that if the improper packaging is known to the carrier or his employees
or is apparent upon ordinary observation, but he nevertheless accepts
the same without protest or exception notwithstanding such condition,
he is not relieved of liability for the resulting damage. If the claim of
Sanchez Brokerage that some of the cartons were already damaged
upon delivery to it were true, then it should naturally have received the
cargo under protest or with reservation duly noted on the receipt issued
by PSI but it made no such protest or reservation.
PLANTERS PRODUCTS INC. vs. CA
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.
Issues:
(1) Whether a common carrier becomes a private carrier by reason of a
charter party
(2) Whether the ship owner was able to prove the exercise of the
diligence required under the circumstances
Held:
(1) 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; 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.
Upon the other hand, the term "common or public carrier" is defined in
Art. 1732 of the Civil Code. The definition extends to carriers either by
land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation as
a public employment and not as a casual occupation. 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. Article 1733 of the
New Civil Code mandates that common carriers, by reason of the nature
of their business, should observe extraordinary diligence in the vigilance
over the goods they carry. In the case of private carriers, however, the
exercise of ordinary diligence in the carriage of goods will suffice.
Moreover, in case of loss, destruction or deterioration of the goods,
common carriers are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on them. On the
contrary, no such presumption applies to private carriers, for whosoever
alleges damage to or deterioration of the goods carried has the onus of
proving that the cause was the negligence of the carrier.
When 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 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.
(2) In an action for recovery of damages against a common carrier on
the goods shipped, the shipper or consignee should first prove the fact
of shipment and its consequent loss or damage while the same was in
the possession, actual or constructive, of the carrier. Thereafter, the
burden of proof shifts to respondent to prove that he has exercised
extraordinary diligence required by law or that the loss, damage or
deterioration of the cargo was due to fortuitous event, or some other
circumstances inconsistent with its liability. To our mind, respondent
carrier has sufficiently overcome, by clear and convincing proof, the
prima facie presumption of negligence.
Before the fertilizer was loaded, the four (4) hatches of the vessel were
cleaned, dried and fumigated. After completing the loading of the cargo
in bulk in the ship's holds, the steel pontoon hatches were closed and
sealed with iron lids, then covered with three (3) layers of serviceable
tarpaulins which were tied with steel bonds. 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. It was also shown during the trial that the hull of the vessel
was in good condition, foreclosing the possibility of spillage of the cargo
into the sea or seepage of water inside the hull of the vessel. When M/V
"Sun Plum" docked at its berthing place, representatives of the
consignee boarded, and in the presence of a representative of the
shipowner, the foreman, the stevedores, and a cargo surveyor
representing CSCI, opened the hatches and inspected the condition of
the hull of the vessel. The stevedores unloaded the cargo under the
watchful eyes of the shipmates who were overseeing the whole
operation on rotation basis.
The period during which private respondent was to observe the degree
of diligence required of it as a public carrier began from the time the
cargo was unconditionally placed in its charge after the vessel's holds
were duly inspected and passed scrutiny by the shipper, up to and until
the vessel reached its destination and its hull was re-examined by the
consignee, but prior to unloading. A shipowner is liable for damage to
the cargo resulting from improper stowage only when the stowing is
done by stevedores employed by him, and therefore under his control
and supervision, not when the same is done by the consignee or
stevedores under the employ of the latter.
Common carriers are not responsible for the loss, destruction or
deterioration of the goods if caused by the character of the goods or
defects in the packaging or in the containers. The primary cause of these
spillages is the clamped shell which does not seal very tightly. Also, the
wind tends to blow away some of the materials during the unloading
process. The probability of the cargo being damaged or getting mixed or
contaminated with foreign particles was made greater by the fact that
the fertilizer was transported in "bulk," thereby exposing it to the inimical
effects of the elements and the grimy condition of the various pieces of
equipment used in transporting and hauling it. If there was loss or
contamination of the cargo, it was more likely to have occurred while the
same was being transported from the ship to the dump trucks and finally
to the consignee's warehouse.
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, as was the case at bar. This is a risk the shipper or
the owner of the goods has to face. Clearly, respondent carrier 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 remiss
in the exercise of due diligence in order to minimize the loss or damage
to the goods it carried.