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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. Art. 1732 of
the Civil Code defines a "common carrier" as "any person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods
or both, by land, water, or air, for compensation, offering their services to the
public." The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of
goods for person generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted
and over his established roads; and
4. The transportation must be for hire.
Based on the above definitions and requirements, there is no doubt that petitioner
is a common carrier. It is engaged in the business of transporting or carrying goods,
i.e. petroleum products, for hire as a public employment. It undertakes to carry for
all persons indifferently, that is, to all persons who choose to employ its services,
and transports the goods by land and for compensation. The fact that petitioner has
a limited clientele does not exclude it from the definition of a common carrier.
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.
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is
considered a "common carrier.", and at the same time, said act also regards
petroleum operation as a public utility. BIR likewise considers the petitioner a
"common carrier." In so ruling, it held that, 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.
Section 133 (j), of the Local Government Code, provides:
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:
(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.
SC held that the legislative intent in excluding 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."
5:30 a.m. of October 27, 1991, due to strong waves, the crew of the barge
abandoned it and transferred to the vessel. The barge pitched and rolled with the
waves and eventually capsized, washing the 37 coils into the sea.
Little Giant thus filed a formal claim against Industrial Insurance which paid it the
amount of P5,246,113.11. Little Giant thereupon executed a subrogation receipt in
favor of Industrial Insurance. Industrial Insurance later filed a complaint against
Schmitz Transport, TVI, and Black Sea through its representative Inchcape (the
defendants) before the RTC of Manila, they faulted the defendants for undertaking
the unloading of the cargoes while typhoon signal No. 1 was raised. The RTC held
all the defendants negligent. Defendants Schmitz Transport and TVI filed a joint
motion for reconsideration assailing the finding that they are common carriers. RTC
denied the motion for reconsideration. CA affirmed the RTC decision in toto, finding
that all the defendants were common carriers Black Sea and TVI for engaging in
the transport of goods and cargoes over the seas as a regular business and not as
an isolated transaction, and Schmitz Transport for entering into a contract with Little
Giant to transport the cargoes from ship to port for a fee.
Issue:
Whether or not Black Sea and TVI are common carriers
Held :
Contrary to petitioners insistence, this Court, as did the appellate court, finds that
petitioner is a common carrier. For it undertook to transport the cargoes from the
shipside of M/V Alexander Saveliev to the consignees warehouse at Cainta, Rizal.
As the appellate court put it, as long as a person or corporation holds [itself] to the
public for the purpose of transporting goods as [a] business, [it] is already
considered a common carrier regardless if [it] owns the vehicle to be used or has to
hire one. That petitioner is a common carrier, the testimony of its own VicePresident and General Manager Noel Aro that part of the services it offers to its
clients as a brokerage firm includes the transportation of cargoes reflects so.
It is settled that under a given set of facts, a customs broker may be regarded as a
common carrier. Thus, this Court, in A.F. Sanchez Brokerage, Inc. v. The Honorable
Court of Appeals,[44] held:
The appellate court did not err in finding petitioner, a customs broker, to be also a
common carrier, as defined under Article 1732 of the Civil Code, to wit,
Art. 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.
xxx
Article 1732 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 petitioner 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.
And in Calvo v. UCPB General Insurance Co. Inc.,[46] this Court held that as the
transportation of goods is an integral part of a customs broker, the customs broker
is also a common carrier. For to declare otherwise would be to deprive those with
whom [it] contracts the protection which the law affords them notwithstanding the
fact that the obligation to carry goods for [its] customers, is part and parcel of
petitioners business.
The M/V "National Honor" arrived at the Manila International Container Terminal
(MICT). The International Container Terminal Services, Incorporated (ICTSI) was the
exclusive arrastre operator of MICT and was charged with discharging the cargoes
from the vessel. Claudio Cansino, the stevedore of the ICTSI, placed two sling cables
on each end of Crate No. 1. No sling cable was fastened on the mid-portion of the
crate. As the crate was being hoisted from the vessel's hatch, the mid-portion of the
wooden flooring suddenly snapped in the air, about five feet high from the vessel's
twin deck, sending all its contents crashing down hard, resulting in extensive
damage to the shipment.
Blue Mono International Company, Incorporated (BMICI) subsequently filed separate
claims against the NSCP, the ICTSI, and its insurer, the PCIC, for US$61,500.00.
When the other companies denied liability, PCIC paid the claim and was issued a
Subrogation Receipt for P1,740,634.50. On March 22, 1995, PCIC, as subrogee, filed
with the RTC of Manila a Complaint for Damages against the "Unknown owner of the
vessel M/V National Honor," NSCP and ICTSI, as defendants. ICTSI, for its part, filed
its Answer with Counterclaim and Cross-claim against its co-defendant NSCP,
claiming that the loss/damage of the shipment was caused exclusively by the
defective material of the wooden battens of the shipment, insufficient packing or
acts of the shipper.
The trial court rendered judgment for PCIC and ordered the complaint dismissed.
According to the trial court, the loss of the shipment contained in Crate No. 1 was
due to the internal defect and weakness of the materials used in the fabrication of
the crates. The CA affirmed in TOTO the decision of the RTC.
ISSUE:
WHETHER OR NOT THE COMMON CARRIER IS LIABLE FOR THE DAMAGE SUSTAINED
BY THE SHIPMENT IN THE HANDS OF THE ARRASTRE OPERATOR.
HELD: THE RULING OF THE RTC AND CA WAS UPHELD.
The petitioner posits that the loss/damage was caused by the mishandling of the
shipment by therein respondent ICTSI, the arrastre operator, and not by its
negligence. The petition has no merit.
We agree with the contention of the petitioner that common carriers, from the
nature of their business and for reasons of public policy, are mandated to observe
extraordinary diligence in the vigilance over the goods according to all the
circumstances of each case. The extraordinary diligence in the vigilance over the
goods requires common carriers to render service with the greatest skill and
foresight and "to use all reasonable means to ascertain the nature and
characteristic of goods tendered for shipment, and to exercise due care in the
handling and stowage, including such methods as their nature requires." When the
goods shipped are either lost or arrive in damaged condition, a presumption arises
against the carrier of its failure to observe that diligence, and there need not be an
express finding of negligence to hold it liable. However, under Article 1734 of the
New Civil Code, the presumption of negligence does not apply to any of the
following causes:
1.
2.
3.
4.
5.
It bears stressing that the enumeration in Article 1734 of the New Civil Code which
exempts the common carrier for the loss or damage to the cargo is a closed list.
Crate No. 1 was provided by the shipper of the machineries in Seoul, Korea. There is
nothing in the record which would indicate that defendant ICTSI had any role in the
choice of the materials used in fabricating this crate. Said defendant, therefore,
cannot be held as blame worthy for the loss of the machineries contained in Crate
No. 1.
The CA affirmed the ruling of the RTC, thus:
The case at bar falls under one of the exceptions mentioned in Article 1734 of the
Civil Code, particularly number (4) thereof, i.e., the character of the goods or
defects in the packing or in the containers. The trial court found that the breakage
of the crate was not due to the fault or negligence of ICTSI, but to the inherent
defect and weakness of the materials used in the fabrication of the said crate.
Upon examination of the records, We find no compelling reason to depart from the
factual findings of the trial court. It appears that the wooden batten used as support
for the flooring was not made of good materials, which caused the middle portion
thereof to give way when it was lifted. The shipper also failed to indicate signs to
notify the stevedores that extra care should be employed in handling the shipment.
Appellant's allegation that since the cargo arrived safely from the port of [P]usan,
Korea without defect, the fault should be attributed to the arrastre operator who
mishandled the cargo; is without merit. The cargo fell while it was being carried only
at about five (5) feet high above the ground. It would not have so easily collapsed
had the cargo been properly packed. The shipper should have used materials of
stronger quality to support the heavy machines. Not only did the shipper fail to
properly pack the cargo, it also failed to indicate an arrow in the middle portion of
the cargo where additional slings should be attached.
While it is true that the crate contained machineries and spare parts, it cannot
thereby be concluded that the respondents knew or should have known that the
middle wooden batten had a hole, or that it was not strong enough to bear the
weight of the shipment. The statement in the Bill of Lading, that the shipment was
in apparent good condition, is sufficient to sustain a finding of absence of defects in
the merchandise. Case law has it that such statement will create a prima facie
presumption only as to the external condition and not to that not open to
inspection.
FACTS:
Ilian Silica Mining entered into a contract of carriage with the petitioner, Lea Mer
Industries Inc. for the shipment of 900 metric tons of silica sand worth P565,000.
The cargo was consigned to Vulcan Industrial and Mining Corporation and was to be
shipped from Palawan to Manila. The silica sand was boarded to Judy VII, the vessel
leased by Lea Mer. However, during the course of its voyage, the vessel sank which
led to the loss of the cargo.
Consequently, the respondent, as the insurer, paid Vulcan the value of the lost
cargo. Malayan Insurance Co., Inc. then collected from the petitioner the amount it
paid to Vulcan as reimbursement and as its exercise on the right of subrogation. Lea
Mer refused to pay which led Malayan to institute a complaint with the RTC. The RTC
dismissed the complaint stating that the loss was due to a fortuitous event, Typhoon
Trining. Petitioner did not know that a typhoon was coming and that it has been
cleared by the Philippine Coast Guard to travel from Palawan to Manila. The CA
reversed the ruling of the trial court for the reason that said vessel was not
seaworthy when it sailed to Manila.
ISSUE:
Whether or not the petitioner is liable for the loss of the cargo.
HELD:
CA reversed. 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 when this service is offered to the public for compensation.
Petitioner is clearly a common carrier, because it offers to the public its business of
transporting goods through its vessels. Thus, the Court corrects the trial court's
finding that petitioner became a private carrier when Vulcan chartered it. Charter
parties are classified as contracts of demise (or bareboat) and affreightment, which
are distinguished as follows:
"Under the demise or bareboat charter of the vessel, the charterer will generally be
considered as owner for the voyage or service stipulated. The charterer mans the
vessel with his own people and becomes, in effect, the owner pro hac vice, subject
to liability to others for damages caused by negligence. To create a demise, the
owner of a vessel must completely and exclusively relinquish possession, command
and navigation thereof to the charterer; anything short of such a complete transfer
is a contract of affreightment (time or voyage charter party) or not a charter party
at all."
The distinction is significant, because a demise or bareboat charter indicates a
business undertaking that is private in character. Consequently, the rights and
obligations of the parties to a contract of private carriage are governed principally
by their stipulations, not by the law on common carriers. The Contract in the
present case was one of affreightment, as shown by the fact that it was petitioner's
crew that manned the tugboat M/V Ayalit and controlled the barge Judy VII.
2. CSC was the one which contracted with MCCII for the transport of the cargo. It
had control over what vessel it would use. All throughout its dealings with MCCII, it
represented itself as a common carrier. The fact that it did not own the vessel it
decided to use to consummate the contract of carriage did not negate its character
& duties as a common carrier. The MCCII could not be reasonably expected to
inquire about the ownership of the vessels which petitioner carrier offered to utilize.
It is very difficult & often impossible for the general public to enforce its rights of
action under a contract of carriage if it should be required to know who the actual
owner of the vehicle is. In this case, the voyage charter itself denominated the
petitioner as the owner/operator of the vessel.
3. No. The bill of lading was merely a receipt issued by ALS to evidence the fact that
the goods had been received for transportation. It was not signed by MCCII, as in
fact it was simply signed by the supercargo of ALS. This is consistent with the fact
that MCCII did not contract directly with ALS. While it is true that a bill of lading may
serve as the contract of carriage between the parties, it cannot prevail over the
express provision of the voyage charter that MCCII and petitioner executed.
4. No. It deserves scant consideration that the voyage charter stipulated that cargo
insurance was for the charterers account. This meant that the charterer would take
care of having the goods insured. It could not exculpate the carrier from liability for
the breach of its contract of carriage. The law prohibits it and condemns it as unjust
& contrary to public policy.
5. The idea proposed by CSC is preposterous & dangerous. MCCII never dealt with
ALS and yet petitioner insists that MCCII should sue ALS for reimbursement for its
loss. Certainly, to permit a common carrier to escape its responsibility for the goods
it agreed to transport (by expedient of alleging non-ownership of the vessel it
employed) would radically derogate from the carriers duty of extraordinary
diligence. It would also open the door to collusion between the carrier & the
supposed owner and to the possible shifting of liability from the carrier to one
without any financial capability to answer for the resulting damages.