De Guzman v.

CA
Principal vs ancillary

Facts: Respondent Ernesto Cendana, a junk dealer, primarily engaged in the business of buying
used bottles and scrap metals in Pangasinan would bring such materials to Manila for resale. He
utilized 2 six-wheeler trucks, which he owned, for hauling materials to Manila. On return trips, to
Pangasinan, responded would offer trucking services by loading his vehicles cargoes with various
merchants to Pangasinan.

Petitioner Pedro de Guzman, a merchant and authorized dealer of General Milk Company, Inc.
based in Urdaneta, Pangasinan contracted with respondent the hauling of 750 cartons of Liberty
filled milk.

Due to unfortunate events, 600 boxes never reached petitioner, since the truck which carried
these boxes was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed
men who took with them the truck, its driver, his helper and the cargo.

Petitioner commenced an action against private respondent arguing that being a common carrier,
and having failed to exercise the extraordinary diligence required of him by law, should be liable
for the value of the undelivered goods.

The trial court rendered a Decision finding private respondent to be a common carrier and holding
him liable for the value of the undelivered goods as well as for damages and attorney's fees.

On appeal before the Court of Appeals, respondent urged that the trial court had erred in
considering him a common carrier; in finding that he had habitually offered trucking services to
the public; in not exempting him from liability on the ground of force majeure; and in ordering him
to pay damages and attorney's fees. The Court of Appeals reversed the judgment of the trial court
and held that respondent had been engaged in transporting return loads of freight "as a casual
occupation — a sideline to his scrap iron busin ess" and not as a common carrier.

Held: 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.

The Court of Appeals referred to the fact that private respondent held no certificate of public
convenience. A certificate of public convenience is not a requisite for the incurring of liability. 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 private respondent 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.

We turn then to the liability of private respondent as a common carrier.

Common carriers, "by the nature of their business and for reasons of public policy" 2 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.

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.”

National Steel Corp. v. CA and Vlasons Shipping, Inc.

Common carrier vs private carrier presumption of liability

Facts: Plaintiff National Steel Corporation and defendant Vlasons Shipping, Inc. entered in a
Contract of Voyage Charter Hire whereby NSC hired VSIs vessel, the MV Vlasons I to make one
(1) voyage to load steel products at Iligan City and discharge them at North Harbor, Manila with
stipulation agreed. (Note: MV Vlasons I, a vessel which renders Tramping* services, does not
transport cargo or shipment for the general public.)

That upon reaching of the cargo to Manila, nearly all the skids of tinplates and hot rolled sheets
were allegedly found to be wet and rusty . In its complaint, plaintiff claimed that it sustained losses
as a result of the act, neglect and default of the master and crew in the management of the vessel
as well as the want of due diligence on the part of the defendant to make the vessel seaworthy
and to make the holds and all other parts of
the vessel in which the cargo was carried, fit and safe for its reception, carriage and preservation
-- all in violation of defendants undertaking under their Contract of Voyage Charter Hire.

In its answer, defendant denied liability for the alleged damage claiming that the MV VLASONS I
was seaworthy in all respects for the carriage of plaintiffs cargo; that said vessel was not a
common carrier inasmuch as she was under voyage charter contract with the plaintiff as charterer
under the charter party; that in the course of the voyage from Iligan City to Manila, the MV
VLASONS I encountered very rough seas, strong winds and adverse weather condition, causing
strong winds and big waves to continuously pound against the vessel and seawater to overflow
on its deck and hatch covers; that under the Contract of Voyage Charter Hire, defendant shall not
be responsible for losses/damages except on proven willful negligence of the officers of the
vessel, that the officers of said MV VLASONS I exercised due diligence and proper seamanship
and were not willfully negligent;of the management of the vessel as well as the want of due
diligence on the part of the defendant to make the vessel seaworthy and to make the holds
and boat or ship engaged in the tramp trade is one which does not have a fixed schedule or
published ports of call

Held: Article 1732 of the Civil Code defines a common carrier….

It has been held that the true test of a common carrier is the carriage of passengers or goods,
provided it has space, for all who opt to avail themselves of its transportation service for a fee. A
carrier which does not qualify under the above test is deemed a private carrier. Generally, private
carriage is undertaken by special agreement and the carrier does not hold himself out to carry
goods for the general public. The most typical, although not the only form of private carriage, is
the charter party, a maritime contract by which the charterer, a party other than the shipowner,
obtains the use and service of all or some part of a ship for a period of time or a voyage or
voyages.

In the instant case, it is undisputed that VSI did not offer its services to the general public. As
concluded by the CA, 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.
In another case:
x x x in a contract of private carriage, the parties may freely stipulate their duties and obligations
which perforce would be binding on them. Unlike in a contract involving a common carrier, private
carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on
common carriers protecting the general public cannot justifiably be applied to a ship transporting
commercial goods as a private carrier. Consequently, the public policy embodied therein is not
contravened by stipulations in a charter party that lessen or remove the protection given by law
in contracts involving common carriers.

Because the MV Vlasons I was a private carrier, the shipowners obligations are overned by the
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.

Thus, the agreement between the parties -- the Contract of Voyage Charter Hire -- placed the
burden of proof for such loss or damage upon the shipper, not upon the shipowner. Such
stipulation, while disadvantageous to NSC, is valid because the parties entered into a contract of
private charter, not one of common carriage.

First Philippine Industrial Corporation v. CA

Pipeline Business; limited clientele

Facts:
Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January
1995, petitioner applied for mayor’s permit in Batangas. However, the Treasurer required
petitioner to pay a local tax based on gross receipts amounting to P956,076.04. In order not to
hamper its operations, petitioner paid the taxes for the first quarter of 1993 amounting to
P239,019.01 under protest. On January 20, 1994, petitioner filed a letter-protest to the City
Treasurer, claiming that it is exempt from local tax since it is engaged in transportation business.
The respondent City Treasurer denied the protest, thus, petitioner filed a complaint before the
Regional Trial Court of Batangas for tax refund. Respondents assert that pipelines are not
included in the term “common carrier” which refers solely to ordinary carriers or motor vehicles.
The trial court dismissed the complaint, and such was affirmed by the Court of Appeals.
Issue:
Whether a pipeline business is included in the term “common carrier” so as to entitle the petitioner
to the exemption
Held: Yes it is a common carrier.
Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public."
The test for determining whether a party is a common carrier of goods is:
(1) He must be engaged in the business of carrying goods for others as a public employment, and
must hold himself out as ready to engage in the transportation of goods for person generally as a
business and not as a casual occupation;
(2) He must undertake to carry goods of the kind to which his business is confined;
(3) He must undertake to carry by the method by which his business is conducted and over his
established roads; and
(4) The transportation must be for hire.
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; As held in the case of De Guzman vs CA: Article 1732 x x x 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 opulation, 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.