CALTEX v.

SULPICIO LINES
1. The respective rights and duties of a carrier depends on the nature of the contract of carriage
The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but on
whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand, or a charter party or
similar contract on the other. In the case at bar, Caltex and Vector entered into a contract of affreightment, also known as
a voyage charter.
2. Charter party and contract of affreightment defined
A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person
for a specified time or use; a contract of affreightment is one by which the owner of a ship or other vessel lets the whole
or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the
payment of freight.
3. Kinds of contract of affreightment
A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed
period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides
for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner
to supply the ships store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the
ship.
4. Charterers liability: Bareboat charter vs. Contract of affreightment
Under a demise or bareboat charter, the charterer mans the vessel with his own people and becomes, in effect, the owner
for the voyage or service stipulated, subject to liability for damages caused by negligence. If the charter is a contract of
affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the
responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.
5. Categories of charter parties
Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage charter.
6. Bareboat, but not voyage charter, transforms common carrier into private carrier
Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of
affreightment (Coastwise Lighterage Corp. vs. CA) A public carrier shall remain as such, notwithstanding the charter of
the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a
time-charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise
that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned.
Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship, although her holds may,
for the moment, be the property of the charterer. (Planters Products vs. CA). In the case at bar, the charter party
agreement did not convert the common carrier into a private carrier. The parties entered into a voyage charter, which
retains the character of the vessel as a common carrier.
7. Common carrier defined
A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who
may choose to employ and to remunerate him. In the case at bar, MT Vector fits the definition of a common carrier under
Article 1732 of the Civil Code (Common carriers are persons, corporations, firms or associations engaged in the business
of carrying or transporting passengers for passengers or goods or both, by land, water, or air for compensation, offering
their services to the public).
8. Article 1732, Common carrier, construed
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 (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 services on a 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. Article 1733
deliberately refrained from making such distinctions.
9. Responsibility of carrier before voyage; Seaworthiness
Under Section 3 of the Carriage of Goods by Sea Act, (1) The carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to (a) Make the ship seaworthy; (b) Properly man, equip, and supply the ship; among
others. Carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be seaworthy, it must be
adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a
common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code.

10. Article 1173 of the New Civil Code

Article 1173 of the Civil Code provides that the fault or negligence of the obligor consists in the
omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows bad faith, the provisions of Article 1171 and 2201
paragraph 2, shall apply. If the law does not state the diligence which is to be observed in the performance, that which is
expected of a good father of a family shall be required.
11. Negligence defined
Negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk orharm to others. It
may be the failure to observe that degree of care, precaution, and vigilance, which the circumstances justly demand, or
the omission to do something which ordinarily regulate the conduct of human affairs, would do (Southeastern College vs.
CA).
12. Reason for the applicability of Section 3 COGSA, and Article 1755 NCC to carriers, not shipper and
passengers; Ordinary diligence required of shippers
The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a
special public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the
goods and safety of the passengers, especially because with the modern development of science and invention,
transportation has become more rapid, more complicated and somehow more hazardous. For these reasons, a passenger or
a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by
law to impliedly warrant its seaworthiness. The charterer of a vessel has no obligation before transporting its cargo to
ensure that the vessel it chartered complied with all legal requirements. The duty rests upon the common carrier simply
for
being engaged in public service. The Civil Code demands diligence which is required by the nature of the obligation
and that which corresponds with the circumstances of the persons, the time and the place. Because of the implied
warranty of seaworthiness, shippers of goods, when transacting with common carriers, are not expected to inquire into the
vessels seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers
and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of
the public in general is concerned. By the same token, passengers cannot be expected to inquire every time they board a
common carrier, whether the carrier possesses the necessary papers or that all the carriers employees are qualified. Such
a practice would be an absurdity in a business where time is always of the essence. Considering the nature of
transportation business, passengers and shippers alike customarily presume that common carriers possess all the legal
requisites in its operation. In the case at bar, the nature of the obligation of Caltex demands ordinary diligence like any
other shipper in shipping his cargoes.
13. Caltex not liable for damages
Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years before the tragic
incident occurred in 1987. Past services rendered showed no reason for Caltex to observe a higher degree of diligence.
Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as even the Philippine
Coast Guard itself was convinced of its seaworthiness. All things considered, we find no legal basis to hold petitioner
liable for damages.
PHILIPPINE PLANTERS INC v. CA
1. Charter party defined
A charter-party is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to
another person for a specified time or use; a contract of affreightment by which the owner of a ship or other vessel lets the
whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration
of the payment of freight.
2. Types of charter parties
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.
3. Kinds of contract of affreightment
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. In both cases, the charter-party provides for the
hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the shipowner to
supply the ships stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the
ship.
4. Common or public carrier defined; Scope of definition

The term common or public carrier is defined in Article 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.
5. Distinction between common or public carrier, and private or special carrier
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.
6. Extraordinary diligence required of common carriers (Article 1733); Ordinary diligence required of private
carriers
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.
7. Common carriers presumed negligent in case of loss, etc. of goods; No presumption in private carriers
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.
8. Kyosei Kisen Kabushiki Kaisha a common carrier, remained as so in charter party
Kyosei Kisen Kabushiki Kaisha, in the ordinary course of business, operates as a common carrier, transporting goods
indiscriminately for all persons. When PPI chartered the vessel M/V Sun Plum, the ship captain, its officers and
compliment were under the employ of the ship owner and therefore continued to be under its direct supervision and
control. 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, the charterer is a stranger to the crew and to the ship. Thus, a public carrier shall
remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the
charter is limited to the ship only, as in the case of a time-charter or voyage-charter. Indubitably, a shipowner in a time or
voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the
charterer.
9. When charter party converts common carrier to private carrier
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.
10. Reliance on case of Home Insurance vs. American Steamship misplaced
The carriers heavy reliance on the case of Home Insurance Co. v. American Steamship Agencies is misplaced for the
reason that the meat of the controversy therein was the validity of a stipulation in the charter-party exempting the ship
owner from liability for loss due to the negligence of its agent, and not the effects of a special charter on common
carriers.
11. American rule as to shipper carrying special cargo not applicable in the Philippines; Stricter interpretation of
admiralty laws
The rule in the United States that a ship chartered by a single shipper to carry special cargo is not a common carrier, does
not find application in Philippine jurisdiction, for the Court has observed that the growing concern for safety in the
transportation of passengers and/or carriage of goods by sea requires a more exacting interpretation of admiralty laws,
more particularly, the rules governing common carriers.
12. Observations of Raoul Colinvaux, the learned barrister-at-law
As a matter of principle, it is difficult to find a valid distinction between cases in which a ship is used to convey the
goods of one and of several persons. Where the ship herself is let to a charterer, so that he takes over the charge and
control of her, the case is different; the ship owner is not then a carrier. But where her services only are let, the same
grounds for imposing a strict responsibility exist, whether he is employed by one or many. The master and the crew are in
each case his servants, the freighter in each case is usually without any representative on board the ship; the same
opportunities for fraud or collusion occur; and the same difficulty in discovering the truth as to what has taken place
arises . . .
13. Burden of proof in an action for recovery of damages against a common carrier
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.

14. Carrier has sufficiently overcome, by clear and convincing proof, the prima facie presumption of negligence
(1) The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19 April 1977 before the Philippine
Consul and Legal Attache in the Philippine Embassy in Tokyo, Japan, testified that before the fertilizer was loaded, the 4
hatches of the vessel were cleaned, dried and fumigated. After completing the loading of the cargo in bulk in the ships
holds, the steel pontoon hatches were closed and sealed with iron lids, then covered with 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 ships boom. (2) 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 ship owner, 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. Verily, the presumption of negligence on the part of respondent carrier has been efficaciously
overcome by the showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo.
15. Period which carrier was to observe degree of diligence; Limitation clause of FIOS meaning
The period during which the carrier 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 vessels 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. This is clear from the limitation clause agreed upon by the parties in the Addendum to the standard
GENCON time charter-party which provided for an F.I.O.S., meaning, that the loading, stowing, trimming and
discharge of the cargo was to be done by the charterer, free from all risk and expense to the carrier. Moreover, a ship
owner 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.
15. When common carriers not liable for loss, destruction or deterioration of goods
Article 1734 of the New Civil Code provides that 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
Code of Commerce also provides that all losses and deteriorations which the goods may suffer during the transportation
by reason of fortuitous event, force majeure, or the inherent defect of the goods, shall be for the account and risk of the
shipper, and that proof of these accidents is incumbent upon the carrier. The carrier, nonetheless, shall be liable for the
loss and damage resulting from the preceding causes if it is proved, as against him, that they arose through his negligence
or by reason of his having failed to take theprecautions which usage has established among careful persons.
16. Characteristics of urea
Urea is a chemical compound consisting mostly of ammonia and carbon monoxide compounds which are used as
fertilizer. Urea also contains 46% nitrogen and is highly soluble in water. However, during storage, nitrogen and ammonia
do not normally evaporate even on a long voyage, provided that the temperature inside the hull does not exceed 80
degrees centigrade.
17. Expected risks of bulk shipping
(1) In unloading fertilizer in bulk with the use of a clamped shell, losses due to spillage during such operation amounting
to one percent (1%) against the bill of lading is deemed normal or tolerable. 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. (2) The dissipation of quantities of fertilizer, or its deterioration in value, is caused either by an
extremely high temperature in its place of storage, or when it comes in contact with water. When Urea is drenched in
water, either fresh or saline, some of its particles dissolve. But the salvaged portion which is in liquid form still remains
potent and usable although no longer saleable in its original market value. (3) 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.
18. Hull of vessel in good condition; Improbable that sea water seep in vessels hold
It was highly improbable for sea water to seep into the vessels holds during the voyage since the hull of the vessel was in
good condition and her hatches were tightly closed and firmly sealed, making the M/V Sun Plum in all respects
seaworthy to carry the cargo she was chartered for. 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 consignees
warehouse. This may be gleaned from the testimony of the marine and cargo surveyor of CSCI who supervised the
unloading. He explained that the 18 M/T of alleged bad order cargo as contained in their report to PPI was just an
approximation or estimate made by them after the fertilizer was discharged from the vessel and segregated from the rest
of the cargo.
19. Variable weather condition a risk of loss or damage which owner or shipper of goods has to face
Herein, it was in the month of July when the vessel arrived port and unloaded her cargo. It rainedfrom time to time at the
harbor area while the cargo was being discharged according to the supply officer of PPI, who also testified that it was
windy at the waterfront and along the shoreline where the dump trucks passed enroute to the consignees 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. This is a risk the shipper or the owner of the goods has to face.
FIRST PHIL. INDUSTRIAL CORP. v. CA
1. Common Carrier defined (broad definition)
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.
2. Common Carrier defined (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, offering their
services to the public.
3. Test for determining whether a party is a common carrier of goods
a. 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;
b. He must undertake to carry goods of the kind to which his business is confined;
c. He must undertake to carry by the method by which his business is conducted and over his established roads; and
d. The transportation must be for hire.
4. FPIC is a common carrier
Based on the definitions and requirements, 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.
5. The fact that FPIC has a limited clientele does not exclude it from the definition of a common carrier
Article 1732 of the Civil Code 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 . . . 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 1877 deliberately refrained from making such distinctions. (De Guzman vs. CA)
6. Common Carrier under Article 1732 coincides neatly with notion of Public Service
The concept of common carrier under Article 1732 may be seen to coincide neatly with the notion of public service,
under the Public Service Act (Commonwealth Act 1416, as amended) which at least partially supplements the law on
common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, public service
includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight
or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any
class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,
irrigation system gas, electric light heat and power, water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other similar public services.
7. Oil pipeline operators are common carriers; Motor vehicle not required
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.
8. Pipeline concessionaire as common carrier (RA 387)
Under the Petroleum Act of the Philippines (Republic Act 387), FPIC is considered a common carrier. Thus, Article 86
thereof provides that 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 obliged 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 change without discrimination such rates as may have been approved by the Secretary of Agriculture and Natural
Resources.
9. Petroleum operation regarded as public utility (RA 387)
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.

10. Pipeline concessionaire a common carrier (BIR Ruling 069-83)

The Bureau of Internal Revenue likewise considers FPIC a common carrier. In BIR Ruling 069-83, it declared 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.
11. FPIC is a common carrier and is thus exempt from the business tax provided in Section 133 (j) LGC
FPIC is a common carrier and, therefore, exempt from the business tax as provided for in Section 133 (j), of the Local
Government Code. Section 133 (j) provides that (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.
12. Non-imposition of business tax against common carriers to prevent duplication of common carriers tax
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 carriers tax. The legislature thus provided
an exception under Section 125 (now Section 137) that a province may impose this tax at a specific rate. In the case at
bar, FPIC is already paying 3% common carriers tax on its gross sales/earnings under the National Internal Revenue
Code. To tax FPIC again on its gross receipts in its transportation of petroleum business would defeat the purpose of the
Local Government Code.
DE GUZMAN v. CA
1. Common carriers defined; Article 1732 NCC
The Civil Code defines common carriers in the following terms (Article 1732): Common carriers are persons,
corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air for compensation, offering their services to the public.
2. Article 1732 NCC makes no distinctions
Article 1732 of the Civil Code 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. Article
1733 deliberately refrained from making such distinctions.
3. Concept of common carrier coincides neatly with the notion of public service
The concept of common carrier under Article 1732 may be seen to coincide neatly with the notion of public service,
under the Public Service Act (Commonwealth Act 1416, as amended) which at least partially supplements the law on
common carriers set forth in the Civil Code.
4. Public Service; Section 13, paragraph (b) of the Public Service Act
Under Section 13, paragraph (b) of the Public Service Act, public service includes every person that now or hereafter
may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line,
pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair
shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water
supply and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting
stations and other similar public services.
5. Cendaa a common carrier
Cendaa 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 Cendaas principal occupation was not the carriage of goods for others. There is no
dispute that Cendaa charged his customers a fee for hauling their goods; that fee frequently fell below commercial
freight rates is not relevant.
6. Certificate of public convenience not requisite for incurring of liability as common carrier
A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions
governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to
whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing
regulations and has been granted a certificate of public convenience or other franchise. Herein, to exempt Cendaa from
the liabilities of a common carrier because he has not secured the necessary certificate of public convenience would be

offensive to sound public policy; that would be to reward private respondent precisely for failing to comply with
applicable statutory requirements.
7. Business of common carrier imbued with public interest
The business of a common carrier impinges directly and intimately upon the safety and well-being and property of those
members of the general community who happen to deal with such carrier. The law imposes duties and liabilities upon
common carriers for the safety and protection of those who utilize their services and the law cannot allow a common
carrier to render such duties and liabilities merely facultative by simply failing to obtain the necessary permits and
authorizations.
8. Extraordinary diligence required of common carriers
Common carriers, by the nature of their business and for reasons of public policy, are held to a very high degree of care
and diligence (extraordinary diligence) in the carriage of goods as well as of passengers.
The specific import of extraordinary diligence in the care of goods transported by a common carrier is, according to
Article 1733, further expressed in Articles 1734, 1735 and 1745, numbers 5, 6 and 7 of the Civil Code.
9. Article 1734 NCC
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: (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
or omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the
containers; and (5) Order or act of competent public authority.
10. Enumeration in Article 1734 NCC exclusive; Article 1735 NCC
It is important to point out that the above list of causes of loss, destruction or deterioration which exempts the common
carrier for responsibility therefor is a closed list. Causes falling outside the foregoing list, even if they appear to constitute
a species of force majeure, fall within the scope of Article 1735, which provides that In all cases other than those
mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as required in Article 1733.
11. Cendaa presumed at fault; Cendaa, however, not required to retain security guard to ride with truck
Applying Articles 1734 and 1735, the hijacking of the carriers truck does not fall within any of the 5 categories of
exempting causes listed in Article 1734. It would follow that the hijacking of the carriers vehicle must be dealt with
under the provisions of Article 1735, in other words, that Cendaa 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 Cendaa. The standard of extraordinary diligence required Cendaa to retain a security guard to ride with the truck and
to engage brigands in a fire fight at the risk of his own life and the lives of the driver and his helper.
12. Hold uppers of second truck armed
Herein, armed men held up the second truck owned by Cendaa which carried de Guzmans cargo. The record shows that
an information for robbery in band was filed in the CFI of Tarlac, Branch 2, in Criminal Case 198 entitled People of the
Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one John Doe. There, the accused
were charged with willfully and unlawfully taking and carrying away with them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of Liberty filled milk destined for delivery at de Guzmans store in Urdaneta,
Pangasinan. The decision of the trial court shows that the accused acted with grave, if not irresistible, threat, violence or
force. 3 of the 5 holduppers were armed with firearms. The robbers not only took away the truck and its cargo but also
kidnapped the driver and his helper, detaining them for several days and later releasing them in another province (in
Zambales). The hijacked truck was subsequently found by the police in Quezon City. The CFI convicted all the accused
of robbery, though not of robbery in band.
12. Specific requirements of the duty of extraordinary diligence in the vigilance over the goods carried in the
specific context of hijacking or armed robbery; Armed robbery herein is fortuitous event
The duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given additional specification not
only by Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part: Any
of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: xxx (5) that
the common carrier shall not be responsible for the acts or omissions of his or its employees; (6) that the common
carriers 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; and (7) that the common carrier shall not responsible for the loss, destruction or
deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in
the contract of carriage. Under Article 1745 (6), a common carrier is held responsible and will not be allowed to
divest or to diminish such responsibility even for acts of strangers like thieves or robbers, except where such thieves or
robbers in fact acted with grave or irresistible threat, violence or force. The limits of the duty of extraordinary diligence
in the vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by
grave or irresistible threat, violence or force. In these circumstances, 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.
14. Common carriers not absolute insurers against all risks of travel and of transport of goods

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.
DELSAN TRANSPORT LINES INC. v. CA
1. PAGASA Weather report for 15 August 1986
The weather report issued by the Philippine Atmospheric, Geophysical and Astronomical Services Administration
(PAGASA for brevity) showed that from 2:00 oclock to 8:00 oclock in the morning on August 16, 1986, the wind speed
remained at 10 to 20 knots per hour while the waves measured from .7 to two (2) meters in height only in the vicinity of
the Panay Gulf where the subject vessel sank, in contrast to Delsan Transports allegation that the waves were 20 feet
high.
2. Payment of insured value of lost cargo operates as waiver to enforce term of implied warranty against Caltex,
not an automatic admission of vessels seaworthiness
The payment made by American Home Assurance for the insured value of the lost cargo operates as waiver of its right to
enforce the term of the implied warranty against Caltex under the marine insurance
policy. However, the same cannot be validly interpreted as an automatic admission of the vessels seaworthiness by
American Home Assurance as to foreclose recourse against the petitioner for any liability under its contractual obligation
as a common carrier. The fact of payment grants American Home Assurance subrogatory right which enables it to
exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against the petitioner
common carrier.
3. Right of Subrogation; Article 2207 NCC
Article 2207 of the New Civil Code provides that if the plaintiffs property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has
violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved
party shall be entitled to recover the deficiency from the person causing the loss or injury.
4. Rationale for right of subrogation
The right of subrogation has its roots in equity. It is designed to promote and to accomplish justice and is the mode which
equity adopts to compel the ultimate payment of a debt by one who in justice and good conscience ought to pay. It is not
dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply
upon payment by the insurance company of the insurance claim. Herein, the payment made by the insurer to the assured
operates as an equitable assignment to the former of all the remedies which the latter may have against the common
carrier.
5. Diligence required of common carriers; Liability, exception; Presumption of negligence
From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of passengers transported by them, according to all the
circumstances of each case. In the event of loss, destruction or deterioration of the insured goods, common carriers shall
be responsible unless the same is brought about, among others, by flood, storm, earthquake, lightning or other natural
disaster or calamity. In all other cases, if the goods are lost, destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.
6. Claim of force majeure rebutted by PAGASA report
Herein, from the testimonies of Jaime Jarabe and Francisco Berina, captain and chief mate,
respectively of the ill-fated vessel, it appears that a sudden and unexpected change of weather condition occurred in the
early morning of 16 August 1986; that at around 3:15 a.m. a squall (unos) carrying strong winds with an approximate
velocity of 30 knots per hour and big waves averaging 18 to 20 feet high, repeatedly buffeted MT Maysun causing it to
tilt, take in water and eventually sink with its cargo. This tale of strong winds and big waves by the said officers of Delsan
Transport however, was effectively rebutted and belied by the weather report from PAGASA, the independent
government agency charged with monitoring weather and sea conditions, showing that from 2:00 to 8:00 a.m. on 16
August 1986, the wind speed remained at 10 to 20 knots per hour while the height of the waves ranged from 0.7 to 2
meters in the vicinity of Cuyo East Pass and Panay Gulf where the subject vessel sank. There was no squall or bad
weather or extremely poor sea condition in the vicinity when the said vessel sank.
7. Ship captain not expected to testify against interest of employer
Herein, Delsan Transports witnesses, Jaime Jarabe and Francisco Berina, ship captain and chief mate, respectively, of the
said vessel, could not be expected to testify against the interest of their employer, the common carrier.
8. Evidence certificates at time of drydocking and Coast Guard inspection not conclusive as to condition of vessel
at the time of commencement of voyage; Seaworthiness not established by certificates
Evidence certificates, showing that at the time of dry-docking and inspection by the Philippine Coast
Guard the vessel MT Maysun was fit for voyage, do not necessarily take into account the actual condition of the vessel at
the time of the commencement of the voyage. At the time of dry-docking and inspection, the ship may have appeared fit.

The certificates issued, however, do not negate the presumption of unseaworthiness triggered by an unexplained sinking.
Of certificates issued in this regard, authorities are likewise clear as to their probative value. Seaworthiness relates to a
vessels actual condition. Neither the granting of classification or the issuance of certificates establishes seaworthiness.
9. Certificates of seaworthiness does not satisfy the vessel owners obligation
Diligence in securing certificates of seaworthiness does not satisfy the vessel owners obligation. Also securing the
approval of the shipper of the cargo, or his surveyor, of the condition of the vessel or her stowage does not establish due
diligence if the vessel was in fact unseaworthy, for the cargo owner has no obligation in relation to seaworthiness.
10. Exoneration of officers by Board of Marine Inquiry concerns only their administrative liability, not civil
liabililty
The exoneration of MT Maysuns officers and crew by the Board of Marine Inquiry merely concerns their respective
administrative liabilities. It does not in any way operate to absolve the petitioner common carrier from its civil liability
arising from its failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the
negligent acts or omissions of its employees, the determination of which properly belongs to the courts. Herein, Delsan
Transport is liable for the insured value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut
the presumption of fault or negligence as common carrier occasioned by the unexplained sinking of its vessel, MT
Maysun, while in transit.
11. Subrogation receipt merely establish relationship of parties thereto; When right of subrogation accrues
The presentation in evidence of the marine insurance policy is not indispensable in this case before the insurer may
recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. The
subrogation receipt, by itself, is sufficient to establish not only the relationship of the insurer and the assured shipper of
the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance claim. The right of subrogation accrues
simply upon payment by the insurance company of the insurance claim.
12. Home Insurance Corp. vs. CA; Liability of a hauler
In the absence of proof of stipulations to the contrary, the hauler can be liable only for any damage that occurred from the
time it received the cargo until it finally delivered it to the consignee. Ordinarily, it cannot be held responsible for the
handling of the cargo before it actually received it. The insurance contract, which was not presented in evidence in that
case would have indicated the scope of the insurers liability, if any, since no evidence was adduced indicating at what
stage in the handling process the damage to the cargo was sustained.
13. Home Insurance Corp. vs. CA not applicable
The presentation of the insurance policy was necessary in the case of Home Insurance Corporation v. CA because the
shipment therein (hydraulic engines) passed through several stages with different parties involved in each stage. First,
from the shipper to the port of departure; second, from the port of departure to the M/S Oriental Statesman; third, from
the M/S Oriental Statesman to the M/S Pacific Conveyor; fourth, from the M/S Pacific Conveyor to the port of arrival;
fifth, from the port of arrival to the arrastre operator; sixth, from the arrastre operator to the hauler, Mabuhay Brokerage
Co., Inc.; and lastly, from the hauler to the consignee. Herein, the presentation of the insurance policy is not applicable,
for there is no doubt that the cargo of industrial fuel oil belonging to Caltex was lost while on board Delsan Transports
vessel, MT Maysun, which sank while in transit in the vicinity of Panay Gulf and Cuyo East Pass in the early morning of
16 August 1986.
LOADSTAR SHIPPING v. CA
1. Home Insurance vs. American Steamship, Valenzuela Hardwood vs. CA, and National Steel vs. CA not
applicable; No charter party in present case
In the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., the Court held that a common carrier
transporting special cargo or chartering the vessel to a special person becomes a private carrier that is not subject to the
provisions of the Civil Code. Any stipulation in the charter party absolving the owner from liability for loss due to the
negligence of its agent is void only if the strict policy governing common carriers is upheld. Such policy has no force
where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party. The cases
of Valenzuela Hardwood and Industrial Supply, Inc. v. Court of Appeals and National Steel Corp. v. Court of Appeals,
upheld the Home Insurance doctrine. These cases are not applicable in the present case as the factual settings are
different. The records do not disclose that the M/V Cherokee undertook to carry a special cargo or was chartered to a
special person only. 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 it was shown that the vessel was also
carrying passengers.
2. Common Carriers defined; Article 1732 NCC
Article 1732 of the Civil Code defines common carriers as 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.

3. Article 1732 NCC construed; De Guzman vs. CA

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 (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. Article 1733
deliberately refrained from making such distinctions.
4. Issuance of CPC not a prerequisite for a common carrier; De Guzman vs. CA
A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions
governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to
whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing
regulations and has been granted a certificate of public convenience or other franchise. To exempt the carrier from the
liabilities of a common carrier because he has not secured the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward private respondent precisely for failing to comply with
applicable statutory requirements. The business of a common carrier impinges directly and intimately upon the safety and
well-being and property of those members of the general community who happen to deal with such carrier. The law
imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their services and
the law cannot allow a common carrier to render such duties and liabilities merely facultative by simply failing to obtain
the necessary permits and authorizations.
5. Vessel not seaworthy as it was not sufficiently manned when it embarked on its voyage
The M/V Cherokee was not seaworthy when it embarked on its voyage on 19 November 1984. The vessel was not even
sufficiently manned at the time. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned
with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy
condition its vessel involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil
Code.
6. Doctrine of limited liability does not apply when there was negligence on part of vessel owner or agent
The doctrine of limited liability does not apply where there was negligence on the part of the vessel owner or agent.
Herein, 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.
7. Stipulations in St. Paul Fire and National Union Fire Insurance cases different from present one; Present
stipulations void as contrary to public policy
In the cases of St. Paul Fire & Marine Ins. Co. v. Macondray & Co., Inc., and National Union Fire
Insurance v. Stolt-Nielsen Phils., Inc., it was ruled that after paying the claim of the insured for damages under the
insurance policy, the insurer is subrogated merely to the rights of the assured, i.e. it can recover only the amount that may,
in turn, be recovered by the latter. Since the right of the assured in case of loss or damage to the goods is limited or
restricted by the provisions in the bills of lading, a suit by the insurer as subrogee is necessarily subject to the same
limitations and restrictions. These cases involved a limitation on the carriers liability to an amount fixed in the bill of
lading which the parties may enter into, provided that the same was freely and fairly agreed upon (Articles 1749-1750).
On the other hand, the stipulation in the present case effectively reduces the common carriers liability for the loss or
destruction of the goods to a degree less than extraordinary (Articles 1744 and 1745), i.e. the carrier is not liable for any
loss or damage to shipments made at owners risk. Such stipulation is obviously null and void for being contrary to
public policy.
8. Three kinds of stipulations to limit liability, which are void and which are valid
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.
9. MIC subrogated to right of shipper
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.
10. Action has not yet prescribed; Stipulation reducing 1 year period void
Herein, MICs 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 present case. This one-year prescriptive period also applies to the insurer of the goods.
Herein, 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..