Facts

In 1948, Jose Mendoza was the owner of the Cita Theater located in the City of Naga, Camarines Sur,
where he used to exhibit movie pictures booked from movie producers or film owners in Manila. The
fiesta or town holiday of the City of Naga, held on September 17 and 18, yearly, was usually attended by
a great many people, mostly from the Bicol region, especially since the Patron Saint Virgin of Peña
Francia was believed by many to be miraculous.

As a good businessman, he took advantage of these circumstances and decided to exhibit a film which
would fit the occasion and have a special attraction and significance to the people attending said fiesta.
A month before the holiday, he contracted with the LVN pictures Inc., a movie producer in Manila for
him to show during the town fiesta the Tagalog film entitled “Himala ng Birhen” or Miracle of the Virgin.
He made extensive preparations; he had 2,000 posters printed and later distributed not only in the City
of Naga but also in the neighboring towns. He also advertised in a weekly of general circulation in the
province. The posters and advertisement stated that the film would be shown in the Cita Theater on the
17th and 18th of September, corresponding to the eve and day of the fiesta itself.

In pursuance of the agreement between the LVN Pictures Inc. and Mendoza, the former on September
17th, 1948, delivered to the Philippine Airlines (PAL) whose planes carried passengers and cargo and
made regular trips from Manila to the Pili Air Port near Naga, Camarines Sur, a can containing the film
“Himala ng Birhen” consigned to the Cita Theater.

For this shipment, PAL issued its Air Way Bill 317133. This can of films was loaded on PAL flight 113, the
plane arriving at the Air Port at Pili a little after 4:00 p.m. of the same day, September 17th. For reasons
not explained by PAL, but which would appear to be the fault of its employees or agents, this can of film
was not unloaded at Pili Air Port and it was brought back to Manila.

Mendoza who had completed all arrangements for the exhibition of the film beginning in the evening of
September 17th, to exploit the presence of the big crowd that came to attend the town fiesta, went to
the Air Port and inquired from PAL’s station master there about the can of film. Said station master
could not explain why the film was not unloaded and sent several radiograms to his principal in Manila
making inquiries and asking that the film be sent to Naga immediately. After investigation and search in
the Manila office, the film was finally located the following day, September 18th, and then shipped to
the Pili Air Port on September 20th. Mendoza received it and exhibited the film but he had missed his
opportunity to realize a large profit as he expected for the people after the fiesta had already left for
their towns.

To recoup his losses, Mendoza brought this action against the PAL. After trial, the lower court found that
because of his failure to exhibit the film “Himala ng Birhen” during the town fiesta, Mendoza suffered
damages or rather failed to earn profits in the amount of P3,000.00, but finding the PAL not liable for
said damages, dismissed the complaint.

Issues
Whether or not PAL is a common Carrier
WN PAL is liable for the late delivery of goods to consignee Mendoza

Ruling:
1. YES. The reason is that at least in the present case the transportation company (PAL) is a
common carrier; besides, air transportation is clearly similar or analogous to land and water
transportation. The obvious reason for its non-inclusion in the Code of Commerce was that at
the time of its promulgation, transportation by air on a commercial basis was not yet known. In
the United Sates where air transportation has reached its highest development, an airline
company engaged in the transportation business is regarded as a common carrier. There can be
no doubt, under the general law of common carriers, that those air lines and aircraft owners
engaged in the passenger service on regular schedules on definite routes, who solicit the
patronage of the traveling public, advertise schedules for routes, time of leaving, and rates of
fare, and make the usual stipulation as to baggage, are common carriers by air.

The test of whether one is a common carrier by air is whether he holds out that he will carry for
hire, so long as he has room, goods of everyone bringing goods to him for carriage, not whether
he is carrying as a public employment or whether he carries to a fixed place.

2. NO. Under Art. 1107 of the Civil Code, a debtor in good faith like the defendant herein, may be
held liable only for damages that were foreseen or might have been foreseen at the time the
contract of the transportation was entered into. The trial court correctly found that the
defendant company could not have foreseen the damages that would be suffered by Mendoza
upon failure to deliver the can of film on the 17th of September, 1948 for the reason that the
plans of Mendoza to exhibit that film during the town fiesta and his preparations, specially the
announcement of said exhibition by posters and advertisement in the newspaper, were not
called to the defendant's attention.

Common carriers are not obligated by law to carry and to deliver merchandise, and persons are
not vested with the right of prompt delivery, unless such common carriers previously assume
the obligation. Said rights and obligations are created by a specific contract entered into by the
parties.
G.R. No. 112287. December 12, 1997
National Steel Corp vs. CA and Vlasons Shipping, Inc.
G.R. No. 112350. December 12, 1997
Vlasons Shipping vs. CA and NSC
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. It is undisputed that the ship is a private carrier. And it is in this
capacity that its owner, Vlasons Shipping, Inc., entered into a contract of affreightment or contract of
voyage charter hire with National Steel Corporation.

On July 17, 1974, plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons
Shipping, Inc. (VSI) as Owner, entered into a Contract of Voyage Charter Hire 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.

On August 6, 7 and 8, 1974, in accordance with the Contract of Voyage Charter Hire, the MV ‘VLASONS I’
loaded at plaintiff’s pier at Iligan City, the NSC’s shipment of 1,677 skids of tinplates and 92 packages of
hot rolled sheets or a total of 1,769 packages with a total weight of about 2,481.19 metric tons for
carriage to Manila. The shipment was placed in the three (3) hatches of the ship.

The vessel arrived with the cargo at Pier 12, North Harbor, Manila, on August 12, 1974. The following
day, August 13, 1974, when the vessel’s three (3) hatches containing the shipment were opened by
plaintiff’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. Unloading
was completed only on August 24, 1974 after incurring a delay of eleven (11) days due to the heavy rain
which interrupted the unloading operations.

To determine the nature and extent of the wetting and rusting, NSC called for a survey of the shipment
by the Manila Adjusters and Surveyors Company (MASCO). In a letter to the NSC dated March 17, 1975
(Exhibit ‘G’), MASCO made a report of its ocular inspection conducted on the cargo, both while it was
still on board the vessel and later at the NDC warehouse in Pureza St., Sta. Mesa, Manila where the
cargo was taken and stored. MASCO reported that it found wetting and rusting of the packages of hot
rolled sheets and metal covers of the tinplates; that tarpaulin hatch covers were noted torn at various
extents; that container/metal casings of the skids were rusting all over. MASCO ventured the opinion
that ‘rusting of the tinplates was caused by contact with SEA WATER sustained while still on board the
vessel as a consequence of the heavy weather and rough seas encountered while en route to
destination. It was also reported that MASCO’s surveyors drew at random samples of bad order packing
materials of the tinplates and delivered the same to the M.I.T. Testing Laboratories for analysis. On
August 31, 1974, the M.I.T. Testing Laboratories issued Report No. 1770 which in part, states, ‘The
analysis of bad order samples of packing materials xxx shows that wetting was caused by contact with
SEA WATER’.
On September 6, 1974, on the basis of the aforesaid Report No. 1770, plaintiff filed with the defendant
its claim for damages suffered due to the downgrading of the damaged tinplates in the amount
of P941,145.18.

NSC demanded damages of P941,145.18 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 defendant’s
undertaking under their Contract of Voyage Charter Hire.

Vlasons Shipping denied liability for the alleged damages; 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; 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, Vlasons 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; that furthermore the
Voyage Charter Party provides that loading and discharging of the cargo was on FIOST terms which
means that the vessel was free of risk and expense in connection with the loading and discharging of the
cargo

RTC rendered decision in favor of Vlasons Shipping; that the vessel is seaworthy, properly manned,
equipped and supplied, and that there is no proof of willful negligence of the vessel’s officers
CA modified the decision of RTC regarding the awards of damages.
ISSUE: Whether or not the provisions of the Civil Code of the Philippines on common carriers pursuant to
which there exist[s] a presumption of negligence against the common carrier in case of loss or damage to
the cargo are applicable to a private carrier.
HELD: 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 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.
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 [Mendoza vs.
Philippine Airlines, Inc., 90 Phil. 836, 842-843 (1952)]. 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.

Because the MV Vlasons I was a private carrier, the ship owner’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.