Crisostomo v. CA, 409 SCRA 528 (2003) B.) No.
B.) No. The negligence of the obligor in the performance of the obligation renders him
Facts:
Estela L. Crisostomo contracted the services of Caravan Travel and Tours International,
Inc. to arrange and facilitate her booking, ticketing and accommodation in a tour dubbed
"Jewels of Europe". The package tour cost her P74, 322.70. She was given a 5%
discount on the amount, which included airfare, and the booking fee was also waived
because petitioner’s niece, Meriam Menor, was former’s company’s ticketing manager.
Menor went to her aunt’s residence on a Wednesday to deliver petitioner’s travel
documents and plane tickets. Estela, in turn, gave Menor the full payment for the
package tour. Menor then told her to be at the Ninoy Aquino International Airport (NAIA)
on Saturday, two hours before her flight on board British Airways.
Without checking her travel documents, Estela went to NAIA on Saturday, to take the
flight for the first leg of her journey from Manila to Hongkong. She discovered that the
flight she was supposed to take had already departed the previous day. She learned that
her plane ticket was for the flight scheduled on June 14, 1991. She thus called up Menor
to complain.
Subsequently, Menor prevailed upon Estela to take another tour the "British Pageant”,
which cost P20, 881.00. She gave caravan travel and tours P7, 980.00 as partial payment
and commenced the trip in July 1991.
Upon petitioner’s return from Europe, she demanded from respondent the
reimbursement of P61, 421.70, representing the difference between the sum she paid for
"Jewels of Europe" and the amount she owed respondent for the "British Pageant" tour.
Despite several demands, respondent company refused to reimburse the amount,
contending that the same was non-refundable.
Estela filed a complaint against Caravan travel and Tours for breach of contract of
carriage and damages.
Issue: A) Will the action prosper?
B) Will she be entitled to damages?
Held:
A.) No, for there was no contract of carriage.
By definition, a contract of carriage or transportation is one whereby a certain person or
association of persons obligate themselves to transport persons, things, or news from
one place to another for a fixed price.
From the above definition, Caravan Travel and Tours is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither a private
nor a common carrier. Caravan Travel and Tours did not undertake to transport Estela
from one place to another since its covenant with its customers is simply to make travel
arrangements in their behalf. Caravan travel and tour’s services as a travel agency
include procuring tickets and facilitating travel permits or visas as well as booking
customers for tours.
While Estela concededly bought her plane ticket through the efforts of respondent
company, this does not mean that the latter ipso facto is a common carrier. At most,
Caravan Travel and Tours acted merely as an agent of the airline, with whom the former
ultimately contracted for her carriage to Europe.
liable for damages for the resulting loss suffered by the obligee. Fault or negligence of
the obligor consists in his failure to exercise due care and prudence in the performance
of the obligation as the nature of the obligation so demands.
In the case at bar, Caravan Travel and Tours exercised due diligence in performing its
obligations under the contract and followed standard procedure in rendering its services
to Estela. The plane ticket issued to petitioner clearly reflected the departure date and
time, contrary to Estela’s contention. The travel documents, consisting of the tour
itinerary, vouchers and instructions, were likewise delivered to her two days prior to the
trip. The Caravan Travel and Tours also properly booked Estela for the tour, prepared the
necessary documents and procured the plane tickets. It arranged Estela’s hotel
accommodation as well as food, land transfers and sightseeing excursions, in accordance
with its avowed undertaking.
From the foregoing, it is clear that the Caravan Travel and Tours performed its prestation
under the contract as well as everything else that was essential to book Estela for the
tour.
Hence, Estela cannot recover and must bear her own damage.
First Philippine Industrial Corp. vs. Court of Appeals, 300 SCRA 661, 1998
Facts: Petitioner is a grantee of a pipeline concession under R.A. No. 387, as amended, a
contract, install and operate oil pipelines. The original pipeline concession was granted in
1967 and renewed by the Energy Regulatory Board in 1992.
Sometime in January 1995, petitioner applied for a mayor’s permit with the Office of the
Mayor of Batangas City. However, before the mayor’s permit could be issued, the
respondent City Treasurer required petitioner to pay a local tax based on its gross
receipts for the fiscal year 1993 pursuant to the Local Government Code. The respondent
City Treasure assessed a business tax on the petitioner amounting to P956,076.04
payable in four installments based on the gross receipts for products pumped at GPS-1
for the fiscal year 1993 which amounted to P181,681,151.00. in order not to hamper its
operations, petitioner paid the tax under protest in the amount of P239, 019.01 for the
first quarter of 1993.
On June 15, 1994, petitioner filed with the RTC of Batangas City a complaint for tax
refund with prayer for writ of preliminary injunction against respondents City of Batangas
and Adoracion Arellano in her capacity as City Treasurer. In its complaint, petitioner
alleged, inter alia, that: (1) the imposition and collection of the business tax on its gross
receipts violates Sec. 133 of the Local Government Code; (2) the authority of cities to
impose and collect a tax on the gross receipts of “contractors and independent
contractors” under Sec. 141(e) and 151 does not include the authority to collect such
taxes on transportation contractors for, as defined under Sec. 131(h), the term
“contractors” excludes transportation contactors; and (3) the City Treasurer illegally and
erroneously imposed and collected the said tax, thus meriting the immediate refund of
the tax paid.
Traversing the complaint, the respondents argued that petitioner cannot be exempt from
taxes under Sec. 133 (J) of the Local Government Code as said exemption applied only
to “transportation contractors and persons engaged in the transportation by hire and
common carriers by air land and water.” Respondents assert that pipelines are not
included in the term “common carrier” which refers solely to ordinary carriers as trucks,
trains, ships and the like. Respondents further posit that the term “common carrier”
under the said Code pertains to the mode or manner by which a product is delivered to
its destination.
Issue: Whether or not the petitioner is a common carrier so that in the affirmative, he is
not liable to pay the carriers tax under the Local Government Code of 1991?
Held: Petitioner is a common carrier.
A “common carrier” may be defined, broadly, as one who holds himself out to the public
as engaged in the business of transporting persons or property from place to place, for
compensation, offering his services to the public generally.
Article 1732 of the Civil Code defines a “common carrier” as “any person, corporation,
firm or association engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation, offering their services to the
public.
The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the carrying of goods for others as a public employment, and
must hold himself out as ready to engage in the transportation of goods or persons
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.
National Steel Corporation vs. Ca and Vlasons Shipping, Inc.
G.R. No. 112287. December 12, 1997
FACTS:
National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI)
as Owner, entered into a Contract of Voyage Charter Hire (Affreightment) whereby NSC
hired VSI’s vessel, the MV ‘VLASONS I’ to make one (1) voyage to load steel products at
Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods
only for those it chose under a “special contract of charter party.”
The vessel arrived with the cargo in Manila, but when the vessel’s three (3) hatches
containing the shipment were opened, nearly all the skids of tin plates and hot rolled
sheets were allegedly found to be wet and rusty.
NSC filed its complaint against defendant before the CFI wherein it claimed that it
sustained losses as a result of the “act, neglect and default of the master and crew in the
management of the vessel as well as the want of due diligence on the part of the
defendant to make the vessel seaworthy … -- all in violation of defendant’s undertaking
under their Contract of Voyage Charter Hire.”
In its answer, defendant denied liability for the alleged damage claiming that the MV
‘VLASONS I’ was seaworthy in all respects for the carriage of plaintiff’s cargo; that said
vessel was not a ‘common carrier’ inasmuch as she was under voyage charter contract
with the plaintiff as charterer under the charter party.
The trial court ruled in favor of VSI; it was affirmed by the CA on appeal.
ISSUE:
Whether or not Vlazons is a private carrier.
HELD:
Yes. At the outset, it is essential to establish whether VSI contracted with NSC as a
common carrier or as a private carrier. The resolution of this preliminary question
determines the law, standard of diligence and burden of proof applicable to the present
case.
Article 1732 of the Civil Code defines a common carrier as “persons, corporations, firms
or associations engaged in the business of carrying or transporting passengers or goods
or both, by land, water, or air, for compensation, offering their services to the public.” It
has been held that the true test of a common carrier is the carriage of passengers or
goods, provided it has space, for all who opt to avail themselves of its transportation
service for a fee. A carrier which does not qualify under the above test is deemed a
private carrier. “Generally, private carriage is undertaken by special agreement and the
carrier does not hold himself out to carry goods for the general public. The most typical,
although not the only form of private carriage, is the charter party, a maritime contract
by which the charterer, a party other than the shipowner, obtains the use and service of
all or some part of a ship for a period of time or a voyage or voyages.”
In the instant case, it is undisputed that VSI did not offer its services to the general
public. As found by the Regional Trial Court, it carried passengers or goods only for those
it chose under a “special contract of charter party.” As correctly concluded by the Court
of Appeals, the MV Vlasons I “was not a common but a private carrier.” Consequently,
the rights and obligations of VSI and NSC, including their respective liability for damage
to the cargo, are determined primarily by stipulations in their contract of private carriage
or charter party. Recently, in Valenzuela Hardwood and Industrial Supply, Inc., vs. Court
of Appeals and Seven Brothers Shipping Corporation, the Court ruled:
“ x x x [I]n a contract of private carriage, the parties may freely stipulate their duties and
obligations which perforce would be binding on them. Unlike in a contract involving a
common carrier, private carriage does not involve the general public. Hence, the
stringent provisions of the Civil Code on common carriers protecting the general public
cannot justifiably be applied to a ship transporting commercial goods as a private carrier.
Consequently, the public policy embodied therein is not contravened by stipulations in a
charter party that lessen or remove the protection given by law in contracts involving
common carriers.”
National Steel Corporation vs. Ca and Vlasons Shipping, Inc.
G.R. No. 112287. December 12, 1997
FACTS:
The MV Vlasons I is a vessel which renders tramping service and, as such, does not
transport cargo or shipment for the general public. Its services are available only to
specific persons who enter into a special contract of charter party with its owner. The
ship is a private carrier, and it is in this capacity that its owner, Vlasons Shipping, Inc.
(VSA), entered into a contract of affreightment or contract of voyage charter hire with
National Steel Corporation (NSC) on 17 July 1974, whereby NSC hired VSI’s vessel, the
MV ‘VLASONS I’ to make 1 voyage to load steel products at Iligan City and discharge damage to the cargo arising or resulting from unseaworthiness, unless the same was
them at North Harbor, Manila caused by its lack of due diligence to make the vessel seaworthy or to ensure that the
same was “properly manned, equipped and supplied,” and to “make the holds and all
The shipment was placed in the 3 hatches of the ship which arrived with the cargo at
other parts of the vessel in which cargo was carried, fit and safe for its reception,
Pier 12, North Harbor, Manila, on 12 August 1974. The following day, when the vessel’s 3
carriage and preservation.” The NANYOZAI Charter Party also provided that “owners shall
hatches containing the shipment were opened by NSC’s agents, nearly all the skids of
not be responsible for split, chafing and/or any damage unless caused by the negligence
tinplates and hot rolled sheets were allegedly found to be wet and rusty. The cargo was
or default of the master or crew.”
discharged and unloaded by stevedores hired by the Charterer.
Herein, NSC must prove that the damage to its shipment was caused by VSI’s willful
On 6 September 1974 NSC filed with VSI its claim for damages suffered due to the
negligence or failure to exercise due diligence in making MV Vlasons I seaworthy and fit
downgrading of the damaged tinplates in the amount of P941,145.18. Then on 3 October
for holding, carrying and safekeeping the cargo. Ineluctably, the burden of proof was
1974, NSC formally demanded payment of said claim but VSI refused and failed to pay.
placed on NSC by the parties’ agreement.
On appeal, and on 12 August 1993, the Court of Appeals modified the decision of the
Article 361 of the Code of Commerce provides that “Merchandise shall be transported at
trial court by reducing the demurrage from P88,000.00 to P44,000.00 and deleting the
the risk and venture of the shipper, if the contrary has not been expressly stipulated.
award of attorneys fees and expenses of litigation. NSC and VSI filed separate motions
Therefore, the damage and impairment suffered by the goods during the transportation,
for reconsideration. The CA denied both motions. NSC and VSI filed their respective
due to fortuitous event, force majeure, or the nature and inherent defect of the things,
petitions for review before the Supreme Court.
shall be for the account and risk of the shipper. The burden of proof of these accidents is
ISSUE: Whether or not VSI contracted with NSC as a common carrier or a private carrier. on the carrier.”

RULING: Article 362 of the Code of Commerce provides that “The carrier, however, shall be liable
for damages arising from the cause mentioned in the preceding article if proofs against
Article 1732 of the Civil Code defines a common carrier as “persons, corporations, firms him show that they occurred on account of his negligence or his omission to take the
or associations engaged in the business of carrying or transporting passengers or goods precautions usually adopted by careful persons, unless the shipper committed fraud in
or both, by land, water, or air, for compensation, offering their services to the public.” It the bill of lading, making him to believe that the goods were of a class or quality different
has been held that the true test of a common carrier is the carriage of passengers or from what they really were.”
goods, provided it has space, for all who opt to avail themselves of its transportation
service for a fee. As the MV Vlasons I was a private carrier, the shipowner’s obligations are governed by
the foregoing provisions of the Code of Commerce and not by the Civil Code which, as a
A carrier which does not qualify under the test of a common carrier is deemed a private general rule, places the prima facie presumption of negligence on a common carrier.
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, The Supreme Court denied the consolidated petitions; and affirmed the questioned
although not the only form of private carriage, is the charter party, a maritime contract Decision of the Court of Appeals with the modification that the demurrage awarded to
by which the charterer, a party other than the shipowner, obtains the use and service of VSI is deleted. No pronouncement as to costs.
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.
In Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven
Brothers Shipping Corporation, the Court ruled that “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.”
From the parties’ Contract of Voyage Charter Hire, dated 17 July 1974, VSI “shall not be
responsible for losses except on proven willful negligence of the officers of the vessel.”
The NANYOZAI Charter Party, which was incorporated in the parties’ contract of
transportation further provided that the shipowner shall not be liable for loss of or