CASE DOCTRINES IN TRANSPORTATION LAW

I. COMMON CARRIERS

Definition of Common Carrier

De Guzman v. CA

In referring to Article 1732 of the Civil Code, it held in De Guzman vs. Court of Appeals
that 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.

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.

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.

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.

It is important to point out that the above list of causes of loss, destruction or
deterioration which exempt 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.

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.

Under Article 1745 (6) above, 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. 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.

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)

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.

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.

Characteristics
Fisher v. Yangco Steamship

Whatever may have been the rule at the common law, common carriers in this
jurisdiction cannot lawfully decline to accept a particular class of goods for carriage, to
the prejudice of the traffic in those goods, unless it appears that for some sufficient
reason the discrimination against the traffic in such goods is reasonable and necessary.
Mere prejudice or whim will not suffice. The grounds of the discrimination must be
substantial ones, such as will justify the courts in holding the discrimination to have
been reasonable and necessary under all the circumstances of the case. The traffic in
dynamite, gunpowder and other explosives is vitally essential to the material and
general welfare of the people of these Islands. If dynamite, gunpowder and other
explosives are to continue in general use throughout the Philippines, they must be
transported by water from port to port in the various islands which make up the
Archipelago. The refusal by a particular vessel, engaged as a common carrier of
merchandise in the coastwise trade of the Philippine Islands, to accept any or all of
these explosives for carriage would constitute a violation of the prohibitions against
discriminations penalized under the statute unless it can be shown by affirmative
evidence that there is so real and substantial a danger of disaster necessarily involved in
the carriage of any or all of these articles of merchandise as to render such refusal a due
or a necessary or a reasonable exercise of prudence and discretion on the part of the
ship owner.

Loadstar Shipping Co. Inc. v. CA

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.

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.

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.

First Phil. Industrial v. CA

Tests For Determining Whether a Party is a Common Carrier of Goods

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.

The fact that FPIC 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 pipeline operators are considered common carriers.

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.

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.

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.

Distinguished From a Common Carrier

Home Insurance Co. v. American Steamship

A perusal of the charter party referred to shows that while the possession and control of
the ship were not entirely transferred to the charterer, the vessel was chartered to its
full and complete capacity. Furthermore, the charterer had the option to go north or
south or vice-versa, loading, stowing and discharging at its risk and expense.
Accordingly, the charter party contract is one of affreightment over the whole vessel
rather than a demise. As such, the liability of the shipowner for acts or negligence of its
captain and crew, would remain in the absence of stipulation.

In a charter of the entire vessel, the bill of lading issued by the master to the charterer,
as shipper, is in fact and legal contemplation merely a receipt and a document of title,
not a contract, for the contract is the charter party. The consignee may not claim
 ignorance of said charter party because the bills of lading expressly referred to the
same. Accordingly, the consignees under the bills of lading must likewise abide by the
terms of the charter party. And as stated recovery cannot be had thereunder, for loss or
damage to the cargo, against the shipowners, unless the same is due to personal acts or
negligence of said owner or its manager, as distinguished from its other agents or
employees. In this case, no such personal act or negligence has been proved.

In Home Insurance Co. vs. American Steamship Agencies, Inc., the trial court similarly
nullified a stipulation identical to that involved in the present case for being contrary to
public policy based on Article 1744 of the Civil Code and Article 587 of the Code of
Commerce. Consequently, the trial court held the shipowner liable for damages
resulting from the partial loss of the cargo. This Court reversed the trial court and laid
down the well-settled observation and doctrine that the provisions of our Civil Code on
common carriers were taken from Anglo-American law. Under American jurisprudence,
a common carrier undertaking to carry a special cargo or chartered to a special person
only, becomes a private carrier. As a private carrier, a stipulation exempting the owner
from liability for the negligence of its agent is not against public policy, and is deemed
valid. The Court finds such doctrine reasonable. The Civil Code provisions on common
carriers should not be applied where the carrier is not acting as such but as a private
carrier. The stipulation in the charter party absolving the owner from liability for loss
due to the negligence of its agent would be void only if the strict public policy governing
common carriers is applied. Such policy has no force where the public at large is not
involved, as in this case of a ship totally chartered for the use of a single party.

The case of Home Insurance specifically dealt with the liability of the shipowner for acts
or negligence of its captain and crew and a charter party stipulation which exempts
the owner of the vessel from any loss or damage or delay arising from any other source,
even from the neglect or fault of the captain or crew or some other person employed by
the owner on board, for whose acts the owner would ordinarily be liable except for said
paragraph.

National Steel Corp v. CA

A carrier which does not qualify under the test of a common carrier 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.

Herein, VSI did not offer its services to the general public. It carried passengers or goods
only for those it chose under a special contract of charter party. 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.

As the MV Vlasons I was a private carrier, the shipowners 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.

In an action against a private carrier for loss of, or injury to, cargo, the burden is on the
plaintiff to prove that the carrier was negligent or unseaworthy, and the fact that the
goods were lost or damaged while in the carriers custody does not put the burden of
proof on the carrier. Since a private carrier is not an insurer but undertakes only to
exercise due care in the protection of the goods committed to its care, the burden of
proving negligence or a breach of that duty rests on plaintiff and proof of loss of, or
damage to, cargo while in the carriers possession does not cast on it the burden of
proving proper care and diligence on its part or that the loss occurred from an excepted
cause in the contract or bill of lading. However, in discharging the burden of proof,
plaintiff is entitled to the benefit of the presumptions and inferences by which the law
aids the bailor in an action against a bailee, and since the carrier is in a better position to
know the cause of the loss and that it was not one involving its liability, the law requires
that it come forward with the information available to it, and its failure to do so
warrants an inference or presumption of its liability. However, such inferences and
presumptions, while they may affect the burden of coming forward with evidence, do
not alter the burden of proof which remains on plaintiff, and, where the carrier comes
forward with evidence explaining the loss or damage, the burden of going forward with
the evidence is again on plaintiff.

Planters Products v. 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.

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.
 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. 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.

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.

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.

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.

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 shipowner 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.

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.

Governing Law
Samar Mining Co., Inc. v. Nordeutscher

The nature of the bill of lading is that it operates both as a receipt for the goods; and
more importantly, as a contract to transport and deliver the same as stipulated therein.
Being a contract, it is the law between the parties thereto, who are bound by its terms
and conditions provided that these are not contrary to law, morals, good customs,
public order and public policy.

The liability of the common carrier for the loss, destruction or deterioration of goods
transported from a foreign country to the Philippines is governed primarily by the New
Civil Code. In all matters not regulated by said Code, the rights and obligations of
common carriers shall be governed by the Code of Commerce and by special laws.

Eastern Shipping Lines v. IAC

As held in Eastern Shipping Lines Inc. v. IAC (150 SCRA 469-470 [1987]) where it was held
under similar circumstances that the law of the country to which the goods are to be
transported governs the liability of the common carrier in case of their loss, destruction
or deterioration (Article 1753, Civil Code).

The collision, however, falls among matters not specifically regulated by the Civil Code,
so that no reversible error can be found in the lower courts application to the present
case of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively
with collision of vessels.

The Code of Commerce applies not only to domestic trade but also foreign trade. Aside
from the fact that the Carriage of Goods by Sea Act (Commonwealth Act 65) does not
specifically provide for the subject of collision, said Act in no uncertain terms, restricts
its application to all contracts for the carriage of goods by sea to and from Philippine
ports in foreign trade. Under Section 1 thereof, it is explicitly provided that nothing in
this Act shall be construed as repealing any existing provision of the Code of Commerce
 which is now in force, or as limiting its application. By such incorporation, it is obvious
that said law not only recognizes the existence of the Code of Commerce, but more
importantly does not repeal nor limit its application.

National Development Co. v. CA

Herein, it has been established that the goods in question are transported from San
Francisco, California and Tokyo, Japan to the Philippines and that they were lost or
damaged due to a collision which was found to have been caused by the negligence or
fault of both captains of the colliding vessels. Under the above ruling, it is evident that
the laws of the Philippines will apply, and it is immaterial that the collision actually
occurred in foreign waters, such as Ise Bay, Japan.

Thus, the rule was specifically laid down that for cargoes transported from Japan to the
Philippines, the liability of the carrier is governed primarily by the Civil Code and in all
matters not regulated by said Code, the rights and obligations of common carrier shall
be governed by the Code of Commerce and by special laws (Article 1766, Civil Code).
Hence, the Carriage of Goods by Sea Act, a special law, is merely suppletory to the
provisions of the Civil Code.

As resolved in National Development Co. v. C.A. (164 SCRA 593 [1988]; citing Eastern
Shipping Lines, Inc. v. I.A.C., 150 SCRA 469, 470 [1987], the law of the country to which
the goods are to be transported governs the liability of the common carrier in case of
their loss, destruction or deterioration. (Article 1753, Civil Code). Herein, thus, for
cargoes transported to the Philippines, the liability of the carrier is governed primarily
by the Civil Code and in all matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the Code of Commerce and by
special laws (Article 1766, Civil Code).

Registered Owner Rule

Benedicto v. IAC

Herein, Benedicto has been holding herself out to the public as engaged in the business
of hauling or transporting goods for hire or compensation. Benedicto is, in brief, a
common carrier. The prevailing doctrine on common carriers makes the registered
owner liable for consequences flowing from the operations of the carrier, even though
the specific vehicle involved may already have been transferred to another person. This
doctrine rests upon the principle that in dealing with vehicles registered under the
Public Service Law, the public has the right to assume that the registered owner is the
actual or lawful owner thereof. It would be very difficult and often impossible as a
practical matter, for members of the general public to enforce the rights of action that
they may have for injuries inflicted by the vehicles being negligently operated if they
 should be required to prove who the actual owner is. The registered owner is not
allowed to deny liability by proving the identity of the alleged transferee.
Herein, Greenhills Wood is not required to go beyond the vehicles certificate of
registration to ascertain the owner of the carrier. In this regard, the letter allegedly
written by Benjamin Tee admitting that Licuden was his driver, had no evidentiary value
not only because Benjamin Tee was not presented in court to testify on this matter but
also because of the above doctrine. To permit the ostensible or registered owner to
prove who the actual owner is, would be to set at naught the purpose or public policy
which infuses that doctrine.

Herein, assuming the truth of her story, Benedicto retained registered ownership of the
freight truck for her own benefit and convenience, i.e. to secure the payment of the
balance of the selling price of the truck. She may have been unaware of the legal
security device of chattel mortgage; or she, or her buyer, may have been unwilling to
absorb the expenses of registering a chattel mortgage over the truck. In either case,
considerations both of public policy and of equity require that she bear the
consequences flowing from registered ownership of the subject vehicle.

Clearly, to permit a common carrier to escape its responsibility for the passengers or
goods transported by it by proving a prior sale of the vehicle or means of transportation
to an alleged vendee would be to attenuate drastically the carriers duty of
extraordinary diligence. It would also open wide the door to collusion between the
carrier and the supposed vendee and to shifting liability from the carrier to one without
financial capability to respond for the resulting damages. In other words, the thrust of
the public policy here involved is as sharp and real in the case of carriage of goods as it is
in the transporting of human beings. Herein, to sustain Benedictos contention, that is,
to require the shipper to go behind a certificate of registration of a public utility vehicle,
would be utterly subversive of the purpose of the law and doctrine.

Kabit System