TRANSPORTATION

LAW DIGESTS (2014 2015) ATTY. NORIANNE TAN

G.R. No. 141621 September 28, 1999 does Article 1732 distinguish between a carrier offering its services to
the general public, i.e., the general community or population, and one
LOADSTAR SHIPPING v. COURT OF APPEALS who offers services or solicits business only from a narrow segment of
the general population. As such, one who offers transportation service
PETITIONERS: LOADSTAR SHIPPING CO., INC. to a single shipper is not necessary a private carrier.
BACKGROUND
RESPONDENTS: CA and THE MANILA INSURANCE CO., INC. (MIC) November 19. 1984 LOADSTAR received on board its M/V
Cherokee the following goods for shipment: (a) 705 bales of
CASE: LOADSTAR received goods to be shipped. The goods were insured lawanit hardwood; (b) 27 boxes and crates of tilewood
with MIC various risks including Total Loss By Total Loss Of The Vessel. assemblies and others; and (c) 49 bundles of mouldings R & W
The vessel itself was insured Prudential Guarantee & Assurance, Inc. (3) Apitong Bolidenized.
(PGAI). The vessel sank during voyage. MIC was forced to pay the o The goods were insured with MIC various risks including
consignee because LOADSTAR would not pay the latter. As such, MIC Total Loss By Total Loss Of The Vessel.
was subrogated the rights of the consignee against LOADSTAR. MIC o The vessel itself was insured Prudential Guarantee &
filed a case against LOADSTAR claiming that the latters negligence Assurance, Inc. (PGAI).
caused the sinking of the vessel. November 20, 1984 The vessel sank near Limasawa Island on
its way to Manila from Agusan del Norte.
LOADSTAR claims that it is a private carrier because it was not issued a o The consignee made a claim with LOADSTAR, but was
certificate of public convenience, it did not have a regular trip or ignored so the insurer of the goods (i.e. MIC) paid the
schedule nor a fixed route, and there was only one shipper, one consignee and was issued a subrogation receipt.
consignee for a special cargo. This being the case, LOADSTAR claims February 4, 1985 MIC filed a complaint against LOADSTAR
that it is only liable to the extent dictated by the bill of lading, and MIC claiming that it was the latters negligence and fault that the
cannot claim more than what is in the same document. vessel sank. MIC impleaded PGAI since it was the vessels
insurer and prayed that PGAI be ordered to pay the insurance
The Supreme Court ruled that LOADSTAR is a common carrier as regular proceeds from the loss of the vessel directly to MIC, said
trips and service to multiple shippers or clients is not a requisite to be amount to be deducted from MICs claim from LOADSTAR.
considered a common carrier, nor is it required that the operator first o PGAI was later dropped as party defendant after it paid
secure a certificate of public convenience. LOADSTAR is liable to MIC, the insurance proceeds to LOADSTAR.
and the limitations imposed by the bill of lading on LOADSTARs liability Both the Trial Court and the Court of Appeals rendered
is null and void for being less than extraordinary diligence required by decisions in favor of MIC. The following are the arguments
law. made by the CA:
o LOADSTAR is a common carrier NOT A PRIVATE
DOCTRINE: That a vessel does not have regular schedule of offering its CARRIER governed by the Code of Commerce (not the
service to transport does not automatically transform it from common Civil Code)
carrier to private carrier Article 1732 does not distinguish. Neither

RACHELLE ANNE D. GUTIERREZ
TRANSPORTATION LAW DIGESTS (2014 2015) ATTY. NORIANNE TAN

o M/V Cherokee was not seaworthy because it was an ancillary activity (in local idiom, as a sideline).
undermanned on the day of the voyage. Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation
ISSUES TO BE RESOLVED service on a regular or scheduled basis and one offering
1. Whether or not M/V Cherokee is a private carrier. such service on an occasional, episodic or unscheduled
2. Whether or not LOADSTAR was seaworthy at the time it basis. Neither does Article 1732 distinguish between a
undertook the voyage. carrier offering its services to the general public, i.e.,
the general community or population, and one who
RESOLUTIONS AND ARGUMENTS offers services or solicits business only from a narrow
ISSUE 1: Whether or not M/V Cherokee is a private carrier NO. segment of the general population. We think that
Article 1733 deliberately refrained from making such
MAJOR POINT 1: LOADSTAR is a common carrier. This public character distinctions.
is not altered by the fact that the carriage of the goods in question was o It appears to the Court that private respondent is
periodic, occasional, episodic or unscheduled. properly characterized as a common carrier even
LOADSTAR submits that the vessel was a private carrier because though he merely back-hauled goods for other
it was not issued a certificate of public convenience, it did not merchants from Manila to Pangasinan, although such
have a regular trip or schedule nor a fixed route, and there was backhauling was done on a periodic or occasional rather
only one shipper, one consignee for a special cargo. than regular or scheduled manner, and even though
The records do not disclose that the M/V Cherokee, on the private respondents principal occupation was not the
date in question, undertook to carry a special cargo or was carriage of goods for others. There is no dispute that
chartered to a special person only. There was no charter party. private respondent charged his customers a fee for
The bills of lading failed to show any special arrangement, but hauling their goods; that that fee frequently fell below
only a general provision to the effect that the M/V Cherokee commercial freight rates is not relevant here.
was a general cargo carrier. Further, the bare fact that the
vessel was carrying a particular type of cargo for one shipper, MAJOR POINT 2: It is not necessary that the carrier be issued a
which appears to be purely coincidental, is not reason enough certificate of public convenience before it can be considered a
to convert the vessel from a common to a private carrier, common carrier.
especially where, as in this case, it was shown that the vessel A certificate of public convenience is not a requisite for the
was also carrying passengers. incurring of liability under the Civil Code provisions governing
Under the facts and circumstances obtaining in this case, common carriers. That liability arises the moment a person or
LOADSTAR fits the definition of a common carrier under Article firm acts as a common carrier, without regard to whether or not
1732 of the Civil Code. such carrier has also complied with the requirements of the
o Article 1732 makes no distinction between one whose applicable regulatory statute and implementing regulations and
principal business activity is the carrying of persons or has been granted a certificate of public convenience or other
goods or both, and one who does such carrying only as franchise.

RACHELLE ANNE D. GUTIERREZ
TRANSPORTATION LAW DIGESTS (2014 2015) ATTY. NORIANNE TAN

policy. Since the stipulation in question is null and void,
ISSUE 2 Whether or not LOADSTAR was seaworthy at the time it it follows that when MIC paid the shipper, it was
undertook the voyage NO. The vessel was not even sufficiently subrogated to all the rights which the latter has against
manned. the common carrier, LOADSTAR.

MAJOR POINT 1: The doctrine of limited liability does not apply where NO SEPARATE OPINIONS
there was negligence on the part of the vessel owner or agent.
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.
Under the rule of limited liability, the insurer is subrogated
merely to the rights of the assured, that is, it can recover only
the amount that may, in turn, be recovered by the latter. Since
the right of the assured in case of loss or damage to the goods is
limited or restricted by the provisions in the bills of lading, a suit
by the insurer as subrogee is necessarily subject to the same
limitations and restrictions.
o LOADSTAR claims that its liability is limited to what is
dictated in the bill of lading. However, limitation on the
carriers liability to an amount fixed in the bill of lading
which the parties may enter into is allowable only when
the same was freely and fairly agreed upon (Articles
1749-1750). On the other hand, the stipulation in the
case at bar effectively reduces the common carriers
liability for the loss or destruction of the goods to a
degree less than extraordinary (Articles 1744 and 1745),
that is, the carrier is not liable for any loss or damage to
shipments made at owners risk. Such stipulation is
obviously null and void for being contrary to public

RACHELLE ANNE D. GUTIERREZ