Tawang Multi-Purpose Cooperative v.

La Trinidad Water District

TAWANG MULTI-PURPOSE COOPERATIVE v. LA TRINIDAD WATER DISTRICT
G.R. No. 166471, March 22, 2011

FACTS:
Petitioner Tawang Multi-Purpose Cooperative (TMPC) was organized to provide domestic water services
in Brgy. Twang, La Trinidad, Benguet. Respondent La Trinidad Water District (LTWD) is a government
owned and controlled corporation, a local water utility created under PD No. 198, authorized to supply
water for domestic, industrial and commercial purpose within municipality of La Trinidad, Benguet.
October 9, 2000, TMPC filed with National Water Resources Board an application for Certificate of Public
Convenience (CPC) to operate and maintain a waterworks system in Brgy. Tawang LTWD claimed that
under Sec. 47 of PD No. 198, as amended, its franchise is exclusive.
August 15, 2002, the NWRB held that LTWD’s franchise cannot be exclusive since exclusive franchises
are unconstitutional under Sec. 2, Art. XII.
October 1, 2004, upon appeal of LTWD to the RTC, the latter cancelled TMPC’s CPC and held that Sec. 47
of PD No. 198 is valid; that the ultimate purpose of the Constitution is for the State, through its
authorized agencies or instrumentalities, to be able to keep and maintain ultimate control and
supervision over the operation of public utilities. What is repugnant to the Constitution is a grant of
franchise exclusive in character so as to preclude the State itself from granting a franchise to any other
person or entity than the present grantee when public interest so requires.
November 6, 2004, RTC denied the motion for reconsideration filed by TMPC.

ISSUE:
Whether RTC erred in holding that Sec. 47 of PD No. 198 is valid

HELD:
Yes, the Supreme Court ruled in favor of petitioner. Quando aliquid prohibetur ex directo, prohibetur et
per obliquum – Those that cannot be done directly cannot be done indirectly. Under Sec. 2 and 11, Art.
XII of the 1987 Constitution, The President, Congress, and Court cannot create indirectly franchises that
are exclusive in character by allowing the Board of Directors (BOD) of a water district and Local Water
Utilities Administration (LWUA) to create franchises that are exclusive in character. Sec. 47 of PD no. 198
is in conflict with the above-mentioned provision of the Constitution. And the rule is that in case of
conflict between the Constitution and a statute, the former prevails, because the constitution is the
basic law to which all other laws must conform to.

Crisostomo v. CA

G.R. No. 138334, August 25, 2003, 409 SCRA 528

FACTS:

Petitioner contracted the services of respondent Caravan Travel and Tours International, Inc. to arrange
and facilitate her booking, ticketing and accommodation in a tour dubbed Jewels of Europe. Pursuant to
said contract, the travel documents and plane tickets were delivered to the petitioner who in turn gave
the full payment for the package tour on June 12, 1991. Without checking her travel documents,
petitioner went to NAIA on Saturday, June 15, 1991, to take the flight for the first leg of her journey
from Manila to Hongkong. To petitioner’s dismay, 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 petitioner to take another tour- the British Pageant. Upon petitioner’s return from Europe, she
demanded from respondent the reimbursement of the difference between the sum she paid for Jewels
of Europe and the amount she owed respondent for the British Pageant tour.

Petitioner filed a complaint against respondent for breach of contract of carriage and damages alleging
that her failure to join Jewels of Europe was due to respondent’s fault since it did not clearly indicate the
departure date on the plane, failing to observe the standard of care required of a common carrier when
it informed her wrongly of the flight schedule. For its part, respondent company, denied responsibility
for petitioner’s failure to join the first tour, insisting that petitioner was informed of the correct
departure date, which was clearly and legibly printed on the plane ticket. The travel documents were
given to petitioner two days ahead of the scheduled trip. Respondent further contend that petitioner
had only herself to blame for missing the flight, as she did not bother to read or confirm her flight
schedule as printed on the ticket.

ISSUE:

Whether or not Caravan Travel & Tours International Inc. is negligent in the fulfilment of its obligation to
petitioner Crisostomo thus granting to the petitioner the consequential damages due her as a result of
breach of contract of carriage.

RULING:

Contention of petitioner has no merit. 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. Such person or association of persons are regarded as carriers and are
classified as private or special carriers and common or public carriers. Respondent is not an entity
engaged in the business of transporting either passengers or goods and is therefore, neither a private
nor a common carrier. Respondent did not undertake to transport petitioner from one place to another
since its covenant with its customers is simply to make travel arrangements in their behalf.
Respondent’s services as a travel agency include procuring tickets and facilitating travel permits or visas
as well as booking customers for tours.

The object of petitioner’s contractual relation with respondent is the service of arranging and facilitating
petitioners booking, ticketing and accommodation in the package tour. In contrast, the object of a
contract of carriage is the transportation of passengers or goods. It is in this sense that the contract
between the parties in this case was an ordinary one for services and not one of carriage. Since the
contract between the parties is an ordinary one for services, the standard of care required of
respondent is that of a good father of a family under Article 1173 of the Civil Code. The evidence on
record shows that respondent exercised due diligence in performing its obligations under the contract
and followed standard procedure in rendering its services to petitioner. As correctly observed by the
lower court, the plane ticket issued to petitioner clearly reflected the departure date and time, contrary
to petitioner’s contention. The travel documents, consisting of the tour itinerary, vouchers and
instructions, were likewise delivered to petitioner two days prior to the trip. Respondent also properly
booked petitioner for the tour, prepared the necessary documents and procured the plane tickets. It
arranged petitioner’s hotel accommodation as well as food, land transfers and sightseeing excursions, in
accordance with its avowed undertaking. The evidence on record shows that respondent company
performed its duty diligently and did not commit any contractual breach. Hence, petitioner cannot
recover and must bear her own damage.

CASE DIGEST (Transportation Law): Loadstar Shipping vs. CA

Loadstar Shipping vs. Court of Appeals
(GR 131621, 28 September 1999)

FACTS :

Loadstar Shipping Co. Inc. received on board its M/V “Cherokee” goods, amounting to P6,067,178, which
were insured for the same amount with the respondent Manila Insurance Co. (MIC) against various risks
including “total loss by total loss of the vessel.” The vessel, in turn, was insured by Prudential Guarantee
& Assurance, Inc. (PGAI) for P4 million. On its way to Manila from the port of Nasipit, Agusan del Norte,
the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the
consignee made a claim with Loadstar which, however, ignored the same. As the insurer, MIC paid
P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation receipt
therefor.

MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of the vessel was due to the
fault and negligence of Loadstar and its employees. PGAI was later dropped as a party defendant after it
paid the insurance proceeds to Loadstar. Loadstar submits that the vessel was a private carrier because
it was not issued a certificate of public convenience, it did not have a regular trip or schedule nor a fixed
route, and there was only "one shipper, one consignee for a special cargo. The trial court rendered
judgment in favor of MIC. Loadstar elevated the matter to the Court of Appeals, which affirmed the
RTC’s decision in toto.

ISSUE:

Whether or not Loadstar is a common carrier.

HELD:

Yes.

x x x [W]e hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a
certificate of public convenience, and this public character is not altered by the fact that the carriage of
the goods in question was periodic, occasional, episodic or unscheduled.

In support of its position, LOADSTAR relied on the 1968 case of Home Insurance Co. v. American
Steamship Agencies, Inc., where this 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. LOADSTAR also cited Valenzuela Hardwood and Industrial Supply, Inc. v. Court of
Appeals and National Steel Corp. v. Court of Appeals, both of which upheld the Home Insurance
doctrine.
These cases invoked by LOADSTAR are not applicable in the case at bar for simple reason that the factual
settings are different. The records do not disclose that the M/V "Cherokee," on the date in question,
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."14 ["A general ship carrying goods for hire, whether
employed in internal, in coasting, or in foreign commerce is a common carrier." (Baer, Senior & Co.’s
Successors v. La Compania Maritima, 6 Phil. 215, 217-218, quoting Liverpool Steamship Co. v. Phoenix
Ins. Co., 129 U.S. 397, 437), cited in 3 TEODORICO C. MARTIN, PHILIPPINE COMMERCIAL LAWS 118 (Rev.
Ed. 1989).] 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, as in this case, it was shown that the vessel was also carrying
passengers.

First Philippine Industrial Corp. vs. CA

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:

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.

National Steel vs. CA G.R. No. 112287 December 12,1997 VLASONS SHIPPING, INC. vs. CA AND
NATIONAL STEEL CORPORATION G.R. No. 112350. December 12, 1997 Article 1732 of the Civil Code,
Article 361 of the Code of Commerce, Article 362 of the Code of Commerce, common carrier,
transportation
OCTOBER 6, 2017

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 them at North
Harbor, Manila

The shipment was placed in the 3 hatches of the ship which arrived with the cargo at Pier 12, North
Harbor, Manila, on 12 August 1974. The following day, when the vessel’s 3 hatches containing the
shipment were opened by NSC’s agents, nearly all the skids of tinplates and hot rolled sheets were
allegedly found to be wet and rusty. The cargo was discharged and unloaded by stevedores hired by the
Charterer.

On 6 September 1974 NSC filed with VSI its claim for damages suffered due to the downgrading of the
damaged tinplates in the amount of P941,145.18. Then on 3 October 1974, NSC formally demanded
payment of said claim but VSI refused and failed to pay.

On appeal, and on 12 August 1993, the Court of Appeals modified the decision of the trial court by
reducing the demurrage from P88,000.00 to P44,000.00 and deleting the award of attorneys fees and
expenses of litigation. NSC and VSI filed separate motions for reconsideration. The CA denied both
motions. NSC and VSI filed their respective petitions for review before the Supreme Court.

ISSUE: Whether or not VSI contracted with NSC as a common carrier or a private carrier.

RULING:
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 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.

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 damage to the cargo arising or resulting from unseaworthiness, unless
the same was 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 other parts of the
vessel in which cargo was carried, fit and safe for its reception, carriage and preservation.” The
NANYOZAI Charter Party also provided that “owners shall not be responsible for split, chafing and/or
any damage unless caused by the negligence or default of the master or crew.”

Herein, NSC must prove that the damage to its shipment was caused by VSI’s willful negligence or failure
to exercise due diligence in making MV Vlasons I seaworthy and fit for holding, carrying and safekeeping
the cargo. Ineluctably, the burden of proof was placed on NSC by the parties’ agreement.

Article 361 of the Code of Commerce provides that “Merchandise shall be transported at the risk and
venture of the shipper, if the contrary has not been expressly stipulated. Therefore, the damage and
impairment suffered by the goods during the transportation, due to fortuitous event, force majeure, or
the nature and inherent defect of the things, shall be for the account and risk of the shipper. The burden
of proof of these accidents is on the carrier.”

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 him show that they occurred
on account of his negligence or his omission to take the precautions usually adopted by careful persons,
unless the shipper committed fraud in the bill of lading, making him to believe that the goods were of a
class or quality different from what they really were.”

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 general rule, places the prima
facie presumption of negligence on a common carrier.

The Supreme Court denied the consolidated petitions; and affirmed the questioned Decision of the
Court of Appeals with the modification that the demurrage awarded to VSI is deleted. No
pronouncement as to costs.

CASE DIGEST (Transportation Law): Valenzuela Hardwood vs. CA

(GR 102316, 30 June 1997)
FACTS:
Valenzuela Hardwood and Industrial Supply, Inc. (VHIS) entered into an agreement with the Seven
Brothers whereby the latter undertook to load on board its vessel M/V Seven Ambassador the former’s
lauan round logs numbering 940 at the port of Maconacon, Isabela for shipment to Manila. VHIS insured
the logs against loss and/or damage with South Sea Surety and Insurance Co.

The said vessel sank resulting in the loss of VHIS’ insured logs. VHIS demanded from South Sea Surety
the payment of the proceeds of the policy but the latter denied liability under the policy for non-
payment of premium. VHIS likewise filed a formal claim with Seven Brothers for the value of the lost logs
but the latter denied the claim.

The RTC ruled in favor of the petitioner.Both Seven Brothers and South Sea Surety appealed. The Court
of Appeals affirmed the judgment except as to the liability of Seven Brothers.South Sea Surety and VHIS
filed separate petitions for review before the Supreme Court. In a Resolution dated 2 June 1995, the
Supreme Court denied the petition of South Sea Surety. The present decision concerns itself to the
petition for review filed by VHIS.

ISSUE:
Is a stipulation in a charter party that the “(o)wners shall not be responsible for loss, split, short-landing,
breakages and any kind of damages to the cargo” valid?

HELD:
Yes. Xxx [I]t is undisputed that private respondent had acted as a private carrier in transporting
petitioner’s lauan logs. Thus, Article 1745 and other Civil Code provisions on common carriers which
were cited by petitioner may not be applied unless expressly stipulated by the parties in their charter
party.

In a contract of private carriage, the parties may validly stipulate that responsibility for the cargo rests
solely on the charterer, exempting the shipowner from liability for loss of or damage to the cargo caused
even by the negligence of the ship captain. Pursuant to Article 1306 of the Civil Code, such stipulation is
valid because it is freely entered into by the parties and the same is not contrary to law, morals, good
customs, public order, or public policy. Indeed, their contract of private carriage is not even a contract of
adhesion. We stress 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.

xxx

The general public enters into a contract of transportation with common carriers without a hand or a
voice in the preparation thereof. The riding public merely adheres to the contract; even if the public
wants to, it cannot submit its own stipulations for the approval of the common carrier. Thus, the law on
common carriers extends its protective mantle against one-sided stipulations inserted in tickets, invoices
or other documents over which the riding public has no understanding or, worse, no choice. Compared
to the general public, a charterer in a contract of private carriage is not similarly situated. It can -- and in
fact it usually does -- enter into a free and voluntary agreement. In practice, the parties in a contract of
private carriage can stipulate the carrier’s obligations and liabilities over the shipment which, in turn,
determine the price or consideration of the charter. Thus, a charterer, in exchange for convenience and
economy, may opt to set aside the protection of the law on common carriers. When the charterer
decides to exercise this option, he takes a normal business risk.