transpo cases 1.1.2

8/13/2019 Transpo Cases 1.1.2

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[G.R. No. 8095. November 5, 1914 & March 31, 1915.]

F. C. FISHER,plaintiff, vs. YANGCO STEAMSHIP COMPANY, J. S. STANLEY, as ActingCollector of Custom of the Philippine Islands, IGNACIO VILLAMOR, as Attorney-General of the Philippine Islands, and W. H. BISHOP, as prosecuting attorney ofthe city of Manila,respondents.

Haussermann, Cohn & Fisher, for plaintiff.

Solicitor-General Harvey, for respondents.

SYLLABUS

1.COMMON CARRIERS; PREFERENCES AND DISCRIMINATIONS. Whatever may have been therule at common law, common carriers in this jurisdiction cannot lawfully decline to accept a particular classof goods for carriage to the prejudice of the traffic in those goods unless it appears that for some sufficientreason the discrimination against the traffic in such goods is reasonable and necessary. Mere prejudice or

whim will not suffice. The grounds of the discrimination must be substantial ones, such as will justify thecourts in holding the discrimination to have been reasonable and necessary under all the circumstances ofthe case.

2.ID.; ID.; PENAL PROVISIONS OF ACT NO. 98. The penalties prescribed for violations of Act No.98 of the Philippine Commission are neither excessive nor cruel and unusual in the sense in which thosewords are used in the organic legislation in force in the Islands.

3.ID.; ID.; ID. There is nothing in that statute which would deprive any person of his liberty "byrequiring him to engage in business against his will." The prohibition of the statute against undue,unnecessary, or unreasonable preferences and discriminations are merely the reasonable regulations whichthe legislator has seen fit to prescribe for the conduct of the business in which the carrier is engaged of hisown free will and accord.

4.ID.; CONTROL AND REGULATION OF CARRIERS. The nature of the business of a commoncarrier as a public employment is such that it is clearly within the power of the state to impose such justand reasonable regulations thereon in the interest of the public as the legislator may deem proper. Ofcourse such regulations must not have the effect of depriving an owner of his property without due courseof law, nor of confiscating or appropriating private property without just compensation, nor of limiting orprescribing irrevocably vested rights or privileges lawfully acquired under a charter or franchise. But asidefrom such constitutional limitations, the determination of the nature and extent of the regulations whichshould be prescribed rests in the hands of the legislator.

5.ID.; ID. The right to enter the public employment as a common carrier and to offer one'sservices to the public for hire does not carry with it the right to conduct that business as one pleases,

without regard to the interests of the public, and free from such reasonable and just regulations as may beprescribed for the protection of the public from the reckless or careless indifference of the carrier as to thepublic welfare and for the prevention of unjust and unreasonable discriminations of any kind whatsoever inthe performance of the carrier's duties as a servant of the public.

6.ID.; ID.; JUDICIAL, INTERFERENCE. The judiciary ought not to interfere with such regulationsestablished under legislative sanction unless they are so plainly and palpably unreasonable as to maketheir enforcement equivalent to the taking of property for public use without such compensation as underall the circumstances is just both to the owner and to the public; that is, judicial interference should neveroccur unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights of


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property under the guise of regulations as -to compel the court to say that the regulations in question willhave the effect to deny just compensation for private property taken for the public use.

7.ID.; ID. When one devotes his property to a use in which the public has an interest, he, ineffect, grants to the public an interest in that use and must submit to be controlled by the public for thecommon good to the extent of the interest he has thus created. He may withdraw his grant bydiscontinuing the use, but so long as he maintains the use he must submit to control.

8.ID.; ID.; EXERCISE OF POWER THROUGH BOARDS OF COMMISSIONERS. So far beyond

question is this right of regulation that it is well settled that the power of the state to exercise legislativecontrol over railroad companies and other common carriers "in all respects necessary to protect the publicagainst danger, injustice and oppression" may be exercised through boards of commissioners.

9.ID.; ID.; ACT No. 98; STATUTORY PROVISIONS. Correctly construed, the provisions of thePhilippine statute (Act No. 98) do not force a common carrier to engage in any business against his will orto make use of his facilities in a manner or for a purpose for which they are not reasonably adapted. It isonly when he offers his facilities as a common carrier to the public for hire, that the statute steps in andprescribes that he must treat all alike, that he may not pick and choose which customer he will serve, and,specifically, that he shall not make any undue or unreasonable preferences or discriminations whatsoeverto the prejudice not only of any person or locality, but also of any particular kind of traffic.

10.ID.; PREFERENCES AND DISCRIMINATIONS; EXPLOSIVES. It cannot be doubted that therefusal of a "steamship company, the owner of a large number of vessels" engaged in the coastwise tradeof the Philippine Islands as a common carrier of merchandise, to accept explosives for carriage on any ofits vessels subjects the traffic in such explosives to a manifest prejudice and discrimination, and in eachcase it is a question of fact whether such prejudice or discrimination is undue, unnecessary orunreasonable.

11.ID.; ID.; ID.; CONSIDERATION OF ATTENDANT CIRCUMSTANCES. The making of a findingas to whether a refusal, by a steamship company engaged in the coastwise trade in the Philippine Islandsas a common carrier, to carry such products subjects any person, locality, or the traffic in such products toan unnecessary, undue or unreasonable prejudice or discrimination, involves a consideration of thesuitability of the vessels of the company for the transportation of such products; the reasonable possibilityof danger or disaster resulting from their transportation in the form and under the conditions in which they

are offered for carriage; the general nature of the business done by the carrier, and, in a word, all theattendant circumstances which might affect the question of the reasonable necessity for the refusal by thecarrier to undertake the transportation of this class of merchandise.

12.ID.; ID.; ID.; ID. The mere fact that violent and destructive explosions can be obtained bythe use of dynamite under certain conditions is not sufficient in itself to justify the refusal of a vessel, dulylicensed as a common carrier of merchandise, to accept it for carriage, if it can be proven that in thecondition in which it is offered for carriage there is no real danger to the carrier nor reasonable ground tofear that his vessel or those on board his vessel will be exposed to unnecessary or unreasonable risks intransporting it, having in mind the nature of his business as a common carrier engaged in the coastwisetrade in the Philippine Islands, and his duty as a servant of the public engaged in a public employment.

13.ID.; ID.; ID.; ID. If by the exercise of due diligence, taking all reasonable precautions, thedanger of explosions can be eliminated, the carrier would not be justified in subjecting the traffic in thiscommodity to prejudice or discrimination by proof that there would be a possibility of danger fromexplosion when no such precautions are taken.

14.ID.; ID.; ID.; ID. The traffic in dynamite, gunpowder and other explosives is vitally essentialto the material and general welfare of the inhabitants of these Islands, and if these products are tocontinue in general use throughout the Philippines they must be transported by water from port to port inthe various islands which make up the Archipelago. It follows that the refusal by a particular vesselengaged as a common carrier of merchandise in the coastwise trade in the Philippine Islands to accept


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such explosives for carriage constitutes a violation of the prohibitions against discrimination penalizedunder the statute, unless it can be shown that there is so real and substantial a danger of disasternecessarily involved in the carriage of any or all of these articles of merchandise as to render such refusala due or a necessary or a reasonable exercise of prudence and discretion on the part of the shipowner.

D E C I S I O N

CARSON,J p:

The real question involved in these proceedings is whether the refusal of the owners and officers ofa steam vessel, duly licensed to engage in the coastwise trade of the Philippine Islands and engaged inthat trade as a common carrier, to accept for carriage "dynamite, powder or other explosives" from anyand all shippers who may offer such explosives for carriage can be held to be a lawful act without regardto any question as to the conditions under which such explosives are offered for carriage, or as to thesuitableness of the vessel for the transportation of such explosives, or as to the possibility that the refusalto accept such articles of commerce in a particular case may have the effect of subjecting any person or

locality or the traffic in such explosives to an undue, unreasonable or unnecessary prejudice ordiscrimination.

Summarized briefly, the complaint alleges that plaintiff is a stockholder in the Yangco SteamshipCompany, the owner of a large number of steam vessels, duly licensed to engage in the coastwise trade ofthe Philippine Islands; that on or about June 10, 1912, the directors of the company adopted a' resolutionwhich was thereafter ratified and affirmed by the shareholders of the company, "expressly declaring andproviding that the classes of merchandise to be carried by the company in its business as a commoncarrier do not include dynamite, powder or other explosives, and expressly prohibiting the officers, agentsand servants of the company from offering to carry, accepting for carriage or carrying said dynamite,powder or other explosives;" that thereafter the respondent Acting Collector of Customs demanded andrequired of the company the acceptance and carriage of such explosives; that he has refused andsuspended the issuance of the necessary clearance documents of the vessels of the company unless anduntil the company consents to accept such explosives for carriage; that plaintiff is advised and believesthat should the company decline to accept such explosives for carriage, the respondent Attorney-Generalof the Philippine Islands and the respondent prosecuting attorney of the city of Manila intend to instituteproceedings under the penal provisions of sections 4, 5, and 6 of Act No. 98 of the Philippine Commissionagainst the company, its managers, agents and servants, to enforce the requirements of the Acting-Collector of Customs as to the acceptance of such explosives for carriage; that notwithstanding thedemands of the plaintiff stockholder, the manager, agents and servants of the company decline and refuseto cease the carriage of such explosives, on the ground that by reason of the severity of the penalties withwhich they are threatened upon failure to carry such explosives, they cannot subject themselves to "theruinous consequences which would inevitably result" from failure on their part to obey the demands andrequirements of the Acting Collector of Customs as to the acceptance for carriage of explosives; that

plaintiff believes that the Acting Collector of Customs erroneously construes the provisions of Act No. 98 inholding that they require the company to accept such explosives for carriage notwithstanding the abovementioned resolution of the directors and stockholders of the company, and that if the Act does in factrequire the company to carry such explosives it is to that extent unconstitutional and void; thatnotwithstanding this belief of complainant as to the true meaning of the Act, the questions involved cannotbe raised by the refusal of the company or its agents to comply with the demands of the Acting Collectorof Customs, without the risk of irreparable loss and damage resulting from his refusal to facilitate thedocumentation of the company's vessels, and without assuming a risk of pains and penalties under the


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jurisdiction are defined and fully set forth in Act No. 98 of the Philippine Commission, and, until and unlessthat statute be declared invalid or unconstitutional, we are bound by its provisions.

Sections 2, 3 and 4 of the Act are as follows:

"SEC. 2.It shall be unlawful for any common carrier engaged in the transportation ofpassengers or property as above set forth to make or give any unnecessary or unreasonable preferenceor advantage to any particular person, company, firm, corporation or locality, or any particular kind oftraffic in any respect whatsoever, or to subject any particular person, company, firm, corporation or

locality, or any particular kind of traffic, to any undue or unreasonable prejudice or discriminationwhatsoever, and such unjust preference or discrimination is also hereby prohibited and declared to beunlawful.

"SEC. 3.No common carrier engaged in the carriage of passengers or property as aforesaidshall, under any pretense whatsoever, fail or refuse to receive for carriage, and as promptly as it is ableto do so without discrimination, to carry any person or property offering for carriage, and in the orderin which such persons or property are offered for carriage, nor shall any such common carrier enterinto any arrangement, contract or agreement with any other person or corporation whereby the latter

is given an exclusive or preferential privilege over any other person or persons to control or monopolizethe carriage of any class or kind of property to the exclusion or partial exclusion of any other person orpersons, and the entering into any such arrangement, contract or agreement, under any form orpretense whatsoever, is hereby prohibited and declared to be unlawful.

"SEC. 4.Any willful violation of the provisions of this Act by any common carrier engaged in thetransportation of passengers or property as hereinbefore set forth is hereby declared to be punishableby a fine not exceeding five thousand dollars money of the United States, or by imprisonment not

exceeding two years, or both, within the discretion of the court."

The validity of this Act has been questioned on various grounds, and it is vigorously contended thatin so far as it imposes any obligation on a common carrier to accept for carriage merchandise of a classwhich he makes no public profession to carry, or which he has expressly or impliedly announced hisintention to decline to accept for carriage from all shippers alike, it is ultra vires, unconstitutional and void.

We may dismiss without extended discussion any argument or contention as to the invalidity of thestatute based on alleged absurdities inherent in its provisions or on alleged unreasonable or impossiblerequirements which may be read into it by a strained construction of its terms.

We agree with counsel for petitioner that the provision of the Act which prescribes that, "Nocommon carrier . . . shall, under any pretense whatsoever, fail or refuse to receive for carriage, and . . . tocarry any person or property offering for carriage," is not to be construed in its literal sense and withoutregard to the context, so as to impose an imperative duty on all common carriers to accept for carriage,and to carry all and any kind of freight which may be offered for carriage without regard to the facilitieswhich they may have at their disposal. The legislator could not have intended and did not intend toprescribe that a common carrier running passenger automobiles for hire must transport coal in hismachines; nor that the owner of a tank steamer, expressly constructed in small watertight compartmentsfor the carriage of crude oil must accept a load of cattle or of logs in the rough; nor that any commoncarrier must accept and carry contraband articles, such as opium, morphine, cocaine, or the like, the merepossession of which is declared to be a criminal offense; nor that common carriers must accept eggs

offered for transportation in paper parcels or any merchandise whatever so defectively packed as to entailupon the company unreasonable and unnecessary care or risks.

Read in connection with its context this, as well as all the other mandatory and prohibitoryprovisions of the statute, was clearly intended merely to forbid failures or refusals to receive persons orproperty for carriage involving any "unnecessary or unreasonable preference or advantage to anyparticular person, company, firm, corporation or locality, or any particular kind of traffic in any respectwhatsoever," or which would "subject any particular person, company, firm, corporation or locality, or anyparticular kind of traffic to any undue or unreasonable prejudice or discrimination whatsoever."


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The question, then, of construing and applying the statute, in cases of alleged violations of itsprovisions, always involves a consideration as to whether the acts complained of had the effect of makingor giving an "unreasonable or unnecessary preference or advantage" to any person, locality or particularkind of traffic, or of subjecting any person, locality, or particular kind of traffic to any undue orunreasonable prejudice or discrimination. It is very clear therefore that the language of the statute itselfrefutes any contention as to its invalidity based on the alleged unreasonableness of its mandatory orprohibitor provisions.

So also we may dismiss without much discussion the contentions as to the invalidity of the statute,which are based on the alleged excessive severity of the penalties prescribed for violation of its provisions.Upon general principles it is peculiarly and exclusively within the province of the legislator to prescribe thepains and penalties which may be imposed upon persons convicted of violations of the laws in force withinhis territorial jurisdiction. With the exercise of his discretion in this regard the courts have nothing to do,save only in cases where it is alleged that excessive fines or cruel and unusual punishments have beenprescribed, and even in such cases the courts will not presume to interfere in the absence of the clearestand most convincing argument and proof in support of such contentions. (Weems vs. United States, 217 U.S., 349; U. S. vs. Pico, 18 Phil. Rep., 386.) We need hardly add that there is no ground upon which to resta contention that the penalties prescribed in the statute under consideration are either excessive or crueland unusual, in the sense in which these terms are used in the organic legislation in force in the PhilippineIslands.

But it is contended that on account of the penalties prescribed the statute should be held invalidupon the principles announced in Ex parteYoung (209 U. S., 123, 147, 148); Cotting vs. Godard (183 U.S., 79, 102); Mercantile Trust Co. vs. Texas Co. (51 Fed., 529); Louisville Ry. vs. McCord (103 Fed., 216);Cons. Gas Co. vs. Mayer (416 Fed., 150). We are satisfied however that the reasoning of those cases is notapplicable to the statute under consideration. The principles announced in those decisions are fairlyindicated in the following citations found in petitioner's brief:

"But when the legislature, in an effort to prevent any inquiry of the validity of a particular

statute, so burdens any challenge thereof in the courts that the party affected is necessarilyconstrained to submit rather than take the chances of the penalties imposed, then it becomes a serious

question whether the party is not deprived of the equal protection of the laws. (Cotting vs. Godard, 183U. S., 79, 102.)

"It may therefore be said that when the penalties for disobedience are by fines so enormous

and imprisonment so severe as to intimidate the company and its officers from resorting to the courtsto test the validity of the legislation, the result is the same as if the law in terms prohibited the

company from seeking judicial construction of laws which deeply affect its rights.

"It is urged that there is no principle upon which to base the claim that a person is entitled todisobey a statute at least once, for the purpose of testing its validity, without subjecting himself to thepenalties for disobedience provided by the statute in case it is valid. This is not an accurate statementof the case. Ordinarily a law creating offenses in the nature of misdemeanors or felonies relates to asubject over which the jurisdiction of the legislature is complete in any event. In the case, however, ofthe establishment of certain rates without any hearing, the validity of such rates necessarily depends

upon whether they are high enough to permit at least some return upon the investment (how much itis not now necessary to state), and an inquiry as to that fact is a proper subject of judicialinvestigation. If it turns out that the rates are too low for that purpose, then they are illegal. Now, toimpose upon a party interested the burden of obtaining a judicial decision of such a question (no priorhearing having ever been given) only upon the condition that, if unsuccessful, he must sufferimprisonment and pay fines, as provided in these acts, is, in effect, to close up all approaches to the

courts, and thus prevent any hearing upon the question whether the rates as provided by the acts arenot too low, and therefore invalid. The distinction is obvious between a case where the validity of theact depends upon the existence of a fact which can be determined only after investigation of a very


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complicated and technical character, and the ordinary case of a statute upon a subject requiring nosuch investigation, and over which the jurisdiction of the legislature is complete in any event.

"We hold, therefore, that the provisions of the acts relating to the enforcement of the rates,either for freight or passengers, by imposing such enormous fines and possible imprisonment as aresult of an unsuccessful effort to test the validity of the laws themselves, are unconstitutional on theirface, without regard to the question of the insufficiency of those rates. (Ex parteYoung, 209 U. S.,123, 147, 148.)"

An examination of the general provisions of our statute, of the circumstances under which it wasenacted, the mischief which it sought to remedy and of the nature of the penalties prescribed for violationsof its terms convinces us that, unlike the statutes under consideration in the above cited cases, itsenactment involved no attempt to prevent common carriers "from resorting to the courts to test thevalidity of the legislation;" no "effort to prevent any inquiry" as to its validity. It imposes no arbitraryobligation upon the company to do or to refrain from doing anything. It makes no attempt to compel suchcarriers to do business at a fixed or arbitrarily designated rate, at the risk of separate criminal prosecutionsfor every demand of a higher or a different rate. Its penalties can be imposed only upon proof of"unreasonable," "unnecessary" and "unjust" discriminations, and range from a maximum which is certainlynot excessive for willful, deliberate and contumacious violations of its provisions by a great and powerfulcorporation, to a minimum which may be a merely nominal fine. With so wide a range of discretionconferred upon the courts, there is no substantial basis for a contention on the part of any common carrier

that it or its officers are "intimidated from resorting to the courts to test the validity" of the provisions ofthe statute prohibiting such "unreasonable," "unnecessary" and "unjust" discriminations, or to test in anyparticular case whether a given course of conduct does in fact involve such discrimination. We will notpresume, for the purpose of declaring the statute invalid, that there is so real a danger that the Courts ofFirst Instance and this court on appeal will abuse the discretion thus conferred upon us, as to intimidateany common carrier, acting in good faith, from resorting to the courts to test the validity of the statute.Legislative enactments, penalizing unreasonable discriminations, unreasonable restraints of trade, andunreasonable conduct in various forms of human activity are so familiar and have been so frequentlysustained in the courts, as to render extended discussion unnecessary to refute any contention as to theinvalidity of the statute under consideration, merely because it imposes upon the carrier the obligation ofadopting one of various courses of conduct open to it, at the risk of incurring a prescribed penalty in theevent that the course of conduct actually adopted by it should be held to have involved an unreasonable,unnecessary or unjust discrimination. Applying the test announced in Ex parteYoung, supra, it will be seenthat the validity of the Act does not depend upon the existence of a fact which can be determined onlyafter investigation of a very complicated and technical character," and that "the jurisdiction of thelegislature'" over the subject with which the statute deals "is complete in any event." There can be no realquestion as to the plenary power of the legislature to prohibit and to penalize the making of undue,unreasonable and unjust discriminations by common carriers to the prejudice of any person, locality orparticular kind of traffic. (See Munn vs. Illinois, 94 U. S., 113, and other cases hereinafter cited in supportof this proposition.)

Counsel for petitioner contends also that the statute, if construed so as to deny the right of thesteamship company to elect at will whether or not it will engage in a particular business, such as that ofcarrying explosives, is unconstitutional "because it is a confiscation of property, a taking of the carrier'sproperty without due process of law," and because it deprives him of his liberty by compelling him toengage in business against his will. The argument continues as follows:

"To require of a carrier, as a condition to his continuing in said business, that he must carryanything and everything is to render useless the facilities he may have for the carriage of certain linesof freight. It would be almost as complete a confiscation of such facilities as if the same weredestroyed. Their value as a means of livelihood would be utterly taken away. The law is a prohibition tohim to continue in business; the alternative is to get out or to go into some other business the samealternative as was offered in the case of the Chicago & N. W. Ry. vs. Dey (35 Fed. Rep., 866, 880), andwhich was there commented on as follows:


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"'Whatever of force there may be in such arguments, as applied to mere personal propertycapable of removal and use elsewhere, or in other business, it is wholly without force as againstrailroad corporations, so large a proportion of whose investment is in the soil and fixtures appertainingthereto, which cannot be removed. For a government, whether that government be a single sovereignor one of the majority, to say to an individual who has invested his means in so laudable an enterpriseas the construction of a railroad, one which tends so much to the wealth and prosperity of thecommunity, that, if he finds that the rates imposed will cause him to do business at a loss, he may quitbusiness, and abandon that road, is the very irony of despotism. Apples of Sodom were fruit of joy in

comparison. Reading, as I do, in the preamble of the Federal Constitution, that it was ordained to"establish justice," I can never believe that it is within the power of state or nation thus practically to

confiscate the property of an individual invested in and used for a purpose in which even the Arguseyes of the police power can see nothing injurious to public morals, public health, or the general

welfare. I read also in the first section of the bill of rights of this state that "all men are by nature freeand equal, and have certain inalienable rights, among which are those of enjoying and defending lifeand liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety and

happiness;" and I know that, while that remains as the supreme law of the state, no legislature candirectly or indirectly lay its withering or destroying hand on a single dollar invested in the legitimate

business of transportation.' " (Chicago & N. W. Ry. vs. Dey, 35 Fed. Rep., 866, 880.)

It is manifest, however, that this contention is directed against a construction of the statute, which,as we have said, is not warranted by its terms. As we have already indicated, the statute does not "require

of a carrier, as a condition to his continuing in said business, that he must carry anything and everything,"and thereby "render useless the facilities he may have for the carriage of certain lines of freight." It merelyforbids failures or refusals to receive persons or property for carriage which have the effect of giving an"unreasonable or unnecessary preference or advantage" to any person, locality or particular kind of traffic,or of subjecting any person, locality or particular kind of traffic to any undue or unreasonable prejudice ordiscrimination.

Counsel expressly admits, that the statute, "as a prohibition against discrimination is a fair,reasonable and valid exercise of government," and that "it is necessary and proper that such discriminationbe prohibited and prevented," but he contends that "on the other hand there is no reasonable warrant norvalid excuse for depriving a person of his liberty by requiring him to engage in business against his will. If

he has a rolling boat, unsuitable and unprofitable for passenger trade, he may devote it to lumber carrying.To prohibit him from using it unless it is fitted out with doctors and stewards and staterooms to carrypassengers would be an invalid confiscation of his property. A carrier may limit his business to thebranches thereof that suit his convenience. If his wagon be old, or the route dangerous, he may avoidliability for loss of passengers' lives and limbs by carrying freight only. If his vehicles require expensivepneumatic tires, unsuitable for freight transportation, he may nevertheless carry passengers. The onlylimitation upon his action that it is competent for the governing authority to impose is to require him totreat all alike. His limitations must apply to all, and they must be established limitations. He cannot refuseto carry a case of redjusi on the ground that he has carried for others onlyjusi that was green, or blue, orblack. But he can refuse to carry redjusi, if he has publicly professed such a limitation upon his businessand held himself out as unwilling to carry the same for anyone."

To this it is sufficient answer to say that there is nothing in the statute which would deprive anyperson of his liberty "by requiring him to engage in business against his will." The prohibitions of thestatute against undue, unnecessary or unreasonable preferences and discriminations are merely thereasonable regulations which the legislator has seen fit to prescribe for the conduct of the business inwhich the carrier is engaged of his own free will and accord. In so far as the self-imposed limitations bythe carrier upon the business conducted by him, in the various examples given by counsel, do not involvean unreasonable or unnecessary discrimination the statute would not control his action in any wisewhatever. It operates only in cases involving such unreasonable or unnecessary preferences ordiscriminations. Thus in the hypothetical case suggested by the petitioner, a carrier engaged in the


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carriage of green, blue or blackjusi, and duly equipped therefor would manifestly be guilty of "giving anunnecessary and unreasonable preference to a particular kind of traffic" and of subjecting to "an undueand unreasonable prejudice a particular kind of traffic," should he decline to carry redjusi, to the prejudiceof a particular shipper or of those engaged in the manufacture of that kind ofjusi, basing his refusal on theground of "mere whim or caprice" or of mere personal convenience. So a public carrier of passengerswould not be permitted under this statute to absolve himself from liability for a refusal to carry aChinaman, a Spaniard, an American, a Filipino, or a mestizo by proof that from "mere whim or caprice orpersonal scruple," or to suit his own convenience, or in the hope of increasing his business and thusmaking larger profits, he had publicly announced his intention not to carry one or other of these classes ofpassengers.

The nature of the business of a common carrier as a public employment is such that it is clearlywithin the power of the state to impose such just and reasonable regulations thereon in the interest of thepublic as the legislator' may deem proper. Of course such regulations must not have the effect of deprivingan owner of his property without due process of law, nor of confiscating or appropriating private propertywithout just compensation, nor of limiting or prescribing irrevocably vested rights or privileges lawfullyacquired under a charter or franchise. But aside from such constitutional limitations, the determination ofthe nature and extent of the regulations which should be prescribed rests in the hands of the legislator.

Common carriers exercise a sort of public office, and have duties to perform in which the public is

interested. Their business is, therefore, affected with a public interest, and is subject of public regulation.(New Jersey Steam Nav. Co. vs. Merchants Bank, 6 How., 344, 382; Munn vs. Illinois, 94 U. S., 113, 130.)Indeed, this right of regulation is so far beyond question that it is well settled that the power of the stateto exercise legislative control over railroad companies and other carriers "in all respects necessary toprotect the public against danger, injustice and oppression" may be exercised through boards ofcommissioners. (New York etc. R. Co. vs. Bristol, 151 U. S., 556, 571; Connecticut etc. R. Co. vs.Woodruff, 153 U. S., 689.)

Regulations limiting the number of passengers that may be carried in a particular vehicle or steamvessel, or forbidding the loading of a vessel beyond a certain point, or prescribing the number andqualifications of the personnel in the employ of a common carrier, or forbidding unjust discrimination as torates, all tend to limit and restrict his liberty and to control to some degree the free exercise of hisdiscretion in the conduct of his business. But since the Granger cases were decided by the Supreme Courtof the United States no one questions the power of the legislator to prescribe such reasonable regulationsupon property clothed with a public interest as he may deem expedient or necessary to protect the publicagainst danger, injustice or oppression. (Munn vs. Illinois, 94 U. S., 113, 130; Chicago etc. R. Co. vs. Cutts,94 U. S., 155; Budd vs. New York, 143 U. S., 517; Cotting vs. Godard, 183 U. S., 79.) The right to enterthe public employment as a common carrier and to offer one's services to the public for hire does not carrywith it the right to conduct that business as one pleases, without regard to the interests of the public andfree from such reasonable and just regulations as may be prescribed for the protection of the public fromthe reckless or careless indifference of the carrier as to the public welfare and for the prevention of unjustand unreasonable discrimination of any kind whatsoever in the performance of the carrier's duties as aservant of the public.

Business of certain kinds, including the business of a common carrier, holds such a peculiar relationto the public interest that there is super induced upon it the right of public regulation. (Budd vs. New York,143 U. S., 517, 533.) When private property is "affected with a public interest it ceases to bejurisprivati only." Property becomes clothed with a public interest when used in a manner to make it of publicconsequence and affect the community at large. "When, therefore, one devotes his property to a use inwhich the public has an interest, he, in effect, grants to the public an interest in that use, and must submitto be controlled by the public for the common good, to the extent of the interest he has thus created. Hemay withdraw his grant by discontinuing the use, but so long as he maintains the use he must submit tocontrol." (Munn vs. Illinois, 94 U. S., 113; Georgia R. & Bkg. Co. vs. Smith, 128 U. S., 174; Budd vs. New

York, 143 U. S., 517; Louisville etc. Ry. Co. vs. Kentucky, 161 U. S., 677, 695.)


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Of course this power to regulate is not a power to destroy, and limitation is not the equivalent ofconfiscation. Under pretense of regulating fares and freight the state can not require a railroad corporationto carry persons or property without reward. Nor can it do that which in law amounts to a taking of privateproperty for public use without just compensation, or without due process of law. (Chicago etc. R. Co. vs.Minnesota, 134 U. S., 418; Minneapolis Eastern R. Co.vs. Minnesota, 134 U. S., 467.) But the judiciaryought not to interfere with regulations established under legislative sanction unless they are so plainly andpalpably unreasonable as to make their enforcement equivalent to the taking of property for public usewithout such compensation as under all the circumstances is just both to the owner and to the public, thatis, judicial interference should never occur unless the case presents, clearly and beyond all doubt, such aflagrant attack upon the rights of property under the guise of regulations as to compel the court to saythat the regulation in question will have the effect to deny just compensation for private property taken forthe public use. (Chicago etc. R. Co. vs. Wellman, 143 U. S., 339; Smyth vs. Ames, 169 U. S., 466, 524;Henderson Bridge Co. vs. Henderson City, 173 U. S., 592, 614.)

Under the common law of England it was early recognized that common carriers owe to the publicthe duty of carrying indifferently for all who may employ them, and in the order in which application ismade, and without discrimination as to terms. True, they were allowed to restrict their business so as toexclude particular classes of goods, but as to the kinds of property which the carrier was in the habit ofcarrying in the prosecution of his business he was bound to serve all customers alike (State vs. Cincinnatietc. R. Co., 47 Ohio St., 130, 134, 138; Louisville etc. Ry. Co. vs. Queen City Coal Co., 13 Ky. L. Rep.,

832); and it is to be observed in passing that these common law rules are themselves regulationscontrolling, limiting and prescribing the conditions under which common carriers were permitted to conducttheir business. (Munn vs. Illinois, 94 U. S., 113, 133.)

It was found, in the course of time, that the correction of abuses which had grown up with theenormously increasing business of common carriers necessitated the adoption of statutory regulationscontrolling the business of common carriers, and imposing severe and drastic penalties for violations oftheir terms. In England, the Railway Clauses Consolidation Act was enacted in 1845, the Railway and CanalTraffic Act in 1854, and since the passage of those Acts much additional legislation has been adoptedtending to limit and control the conduct of their business by common carriers. In the United States, thebusiness of common carriers has been subjected to a great variety of statutory regulations. Among othersCongress enacted "The Interstate Commerce Act" (1887 ) and its amendments, and the Elkins Act as

amended (1906); and most if not all of the States of the Union have adopted similar legislation regulatingthe business of common carriers within their respective jurisdictions Unending litigation has arisen underthese statutes and their amendments, but nowhere has the right of the state to prescribe just andreasonable regulations controlling and limiting the conduct of the business of common carriers in the publicinterest and for the general welfare been successfully challenged, though of course there has been widedivergence of opinion as to the reasonableness, the validity and legality of many of the regulations actuallyadopted.

The power of the Philippine legislator to prohibit and to penalize all and any unnecessary orunreasonable discriminations by common carriers may be maintained upon the same reasoning which

justified the enactment by the Parliament of England and the Congress of the United States of the abovementioned statutes prohibiting and penalizing the granting of certain preferences and discriminations inthose countries. As we have said before, we find nothing confiscatory or unreasonable in the conditionsimposed in the Philippine statute upon the business of common carriers. Correctly construed they do notforce him to engage in any business against his will or to make use of his facilities in a manner or for apurpose for which they are not reasonably adapted. It is only when he offers his facilities as a commoncarrier to the public for hire, that the statute steps in and prescribes that he must treat all alike, that hemay not pick and choose which customer he will serve, and, specifically, that he shall not make any undueor unreasonable preferences or discriminations whatsoever to the prejudice not only of any person orlocality but also of any particular kind of traffic.


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would involve many persons, firms and enterprises in utter ruin, and would disastrously affect the interestsof the public and the general welfare of the community.

It would be going far to say that a refusal by a steam vessel engaged in the business oftransporting general merchandise as a common carrier to accept for carriage a shipment of matches, solelyon the ground of the dangers incident to the explosive quality of this class of merchandise, would notsubject the traffic in matches to an unnecessary, undue or unreasonable prejudice or discriminationwithout proof that for some special reason the particular vessel is not fitted to carry articles of that nature.

There may be and doubtless are some vessels engaged in business as common carriers of merchandise,which for, lack of suitable deck space or storage rooms might be justified in declining to carry kerosene oil,gasoline, and similar products, even when offered for carriage securely packed in cases; and few vesselsare equipped to transport those products in bulk. But in any case of a refusal to carry such products whichwould subject any person, locality or the traffic in such products to any prejudice or discriminationwhatsoever, it would be necessary to hear evidence before making an affirmative finding that suchprejudice or discrimination was or was not unnecessary, undue or unreasonable. The making of such afinding would involve a consideration of the suitability of the vessel for the transportation of such products;the reasonable possibility of danger or disaster resulting from their transportation in the form and underthe conditions in which they are offered for carriage; the general nature of the business done by thecarrier and, in a word, all the attendant circumstances which might affect the question of the reasonablenecessity for the refusal by the carrier to undertake the transportation of this class of merchandise.

But it is contended that whatever the rule may be as to other explosives, the exceptional powerand violence of dynamite and gunpowder in explosion will always furnish the owner of a vessel with areasonable excuse for his failure or refusal to accept them for carriage or to carry them on board his boat.We think however that even as to dynamite and gunpowder we would not be justified in making such aholding unaided by evidence sustaining the proposition that these articles can never be carried withreasonable safety on any vessel engaged in the business of a common carrier. It is said that dynamite is soerratic and uncontrollable in its action that it is impossible to assert that it can be handled with safety inany given case. On the other hand it is contended that while this may be true of some kinds of dynamite, itis a fact that dynamite can be and is manufactured so as to eliminate any real danger from explosionduring transportation. These are of course questions of fact upon which we are not qualified to pass

judgment without the assistance of expert witnesses who have made special studies as to the chemical

composition and reactions of the different kinds of dynamite, or attained a thorough knowledge of itsproperties as a result of wide experience in its manufacture and transportation.

As we construe the Philippine statute, the mere fact that violent and destructive explosions can beobtained by the use of dynamite under certain conditions would not be sufficient in itself to justify therefusal of a vessel, duly licensed as a common carrier of merchandise, to accept it for carriage, if it can beproven that in the condition in which it is offered for carriage there is no real danger to the carrier, norreasonable ground to fear that his vessel or those on board his vessel will be exposed to unnecessary andunreasonable risk in transporting it, having in mind the nature of his business as a common carrierengaged in the coastwise trade in the Philippine Islands, and his duty as a servant of the public engaged ina public employment. So also, if by the exercise of due diligence and the taking of reasonable precautionsthe danger of explosions can be practically eliminated, the carrier would not be justified in subjecting the

traffic in this commodity to prejudice or discrimination by proof that there would be a possibility of dangerfrom explosion when no such precautions are taken.

The traffic in dynamite, gunpowder and other explosives is vitally essential to the material andgeneral welfare of the people of these Islands. If dynamite, gunpowder and other explosives are tocontinue in general use throughout the Philippines, they must be transported by water from port to port inthe various islands which make up the Archipelago. We are satisfied therefore that the refusal by aparticular vessel, engaged as a common carrier of merchandise in the coastwise trade of the Philippine


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Islands, to accept any or all of these explosives for carriage would constitute a violation of the prohibitionsagainst discriminations penalized under the statute, unless it can be shown by affirmative evidence thatthere is so real and substantial a danger of disaster necessarily involved in the carriage of any or all ofthese articles of merchandise as to render such refusal a due or a necessary or a reasonable exercise ofprudence and discretion on the part of the shipowner.

The complaint in the case at bar lacking the necessary allegations under this ruling, the demurrermust be sustained on the ground that the facts alleged do not constitute a cause of action.

A number of interesting questions of procedure are raised and discussed in the briefs of counsel. Asto all of these questions we expressly reserve our opinion, believing as we do that in sustaining thedemurrer on the grounds indicated in this opinion we are able to dispose of the real issue involved in theproceedings without entering upon the discussion of the nice questions which it might have beennecessary to pass upon had it appeared that the facts alleged in the complaint constitute a cause of action.

We think, however, that we should not finally dispose of the case without indicating that since theinstitution of these proceedings the enactment of Acts No. 2307 and No. 2362 (creating a Board of PublicUtility Commissioners and for other purposes) may have materially modified the right to institute andmaintain such proceedings in this jurisdiction. But the demurrer having been formally submitted for

judgment before the enactment of these statutes, counsel have not been heard in this connection. Wetherefore refrain from any comment upon any questions which might be raised as to whether or not there

may be another adequate and appropriate remedy for the alleged wrong set forth in the complaint. Ourdisposition of the question raised by the demurrer renders that unnecessary at this time, though it may notbe improper to observe that a careful examination of those acts confirms us in the holding upon which webase our ruling on this demurrer, that is to say "That whatever may have been the rule at the commonlaw, common carriers in this jurisdiction cannot lawfully decline to accept a particular class of goods forcarriage, to the prejudice of the traffic in those goods, unless it appears that for some sufficient reason thediscrimination against the traffic in such goods is reasonable and necessary. Mere prejudice or whim willnot suffice. The grounds of the discrimination must be substantial ones, such as will justify the courts inholding the discrimination to have been reasonable and necessary under all the circumstances of the case."

Unless an amended complaint be filed in the meantime let judgment be entered ten days hereaftersustaining the demurrer and dismissing the complaint with costs against the complainant, and twenty days

thereafter let the record be filed in the archives of original actions in this court. So ordered.

Arellano, C.J.,and Trent, J.concur.

TorresandJohnson, JJ.,concur in the result.

[G.R. No. 8686. July 30, 1915.]

THE UNITED STATES,plaintiff-appellee, vs. PASCUAL QUINAJON and EUGENIOQUITORIANO,defendants-appellants.

Irineo Javier for appellants.

Attorney-General Villamor for appellee.

SYLLABUS


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belonging to the provincial government of Ilocos Norte, P. I., that had come from Manila, P. I., whichsacks were unloaded from the steamers in which they had been shipped and were carried to thestorage warehouses in which they were deposited; that the said accused did willfully, unlawfully, andcriminally demand and collect from the provincial treasurer for the unloading of each one of the saidsacks of rice 10 centavos, which amount was paid in the said port, instead of 6 centavos which, as setforth in the preceding paragraph, they have been regularly charging for such services in the unloadingof the same kind of merchandise and under virtually the same circumstances and conditions; that thetotal sum of the payments so made by the provincial treasurer amounted to P598.60 for the aforesaid

5,986 sacks of rice, the provincial government of Ilocos Norte, P. I., being thereby damaged in the sumof P359.16, inasmuch as it should have paid only P239.44, in accordance with the said rate of 6

centavos for each package.

"Acts committed in violation of the said Act No. 98 of the Civil Commission."

Upon that complaint the defendants were duly arraigned, tried, found guilty of the crime charged,and sentenced by the Honorable Dionisio Chanco, judge, to pay a fine of $100 (P200) and costs, and toreturn to the provincial government of the Province of Ilocos Norte the sum of P359.16.

From that sentence each of the defendants appealed to this court. In this court they allege that thelower court committed the following errors:

"1.The court erred in holding that the accused had been regularly collecting 6 centavos for the

loading or the unloading of each sack of rice from steamers in the port of Currimao.

"2.The court erred in holding that the defendants established preferential privileges and madediscriminations in favor of certain shippers, against the provincial government of Ilocos Norte, in theloading or unloading of merchandise on to or from the steamers in the port of Currimao.

"3.The court erred, further, in sentencing the accused to pay to the provincial government ofIlocos Norte the sum of P359.16."

The first assignment of error presents a question of fact only. The appellants allege that the lowercourt committed an error in its conclusions of fact. They allege that the lower court committed an error indeciding that they had regularly charged 6 centavos for each sack of rice loaded or unloaded at the port ofCurrimao. The decision of the lower court contains the following statement of facts:

"It is proven that the defendants, acting as representatives of the Union Obrera, established atthe port of Currimao, Ilocos Norte, and engaged by means of virayes as common carriers of passengersand in loading and unloading freight from steamers anchoring at said port, to the shore or to the

warehouses, and vice versa, have regularly collected, during the last four years, 6 centavos for eachsack of rice loaded or unloaded by said association.

"It is likewise proven that the same defendants, representing the same association, collectedfrom the provincial government of Ilocos Norte 10 centavos for each of the 5,986 sacks of rice whichthey unloaded from the steamers during the months of June, July, and September, as property

belonging to the said government, a price which differed from the usual charge of 6 centavos made toother shippers of said commodity.

"The provincial fiscal presented as witnesses in support of the information the Chinesemerchants Cu Chatco, Cu Joco, Sy Yacco, Lim Anco, and Francisco Castro, who testified that they paid

to the defendants for loading and unloading supplies from the steamers at Currimao 6 centavos for

each package of any kind of supplies, large or small, heavy or light. The two first named, Cu Chatcoand Cu Joco, testified, furthermore, that formerly they paid transportation charges for the loading anddischarge of their supplies from the steamers according to the weight and size of each package, forwhich purpose a classification was previously made by weighing and measuring said packages ormerchandise. Cu Joco does not remember how much was paid at that time for each package, but CuChatco states that 10 centavos was paid for the transportation of each sack of rice weighing 60 kilos ormore. The two above-named witnesses, Cu Chatco and Cu Joco, add that as the task of weighing andmeasuring was very annoying to the Chinese merchants at Laoag, Ilocos Norte, they suggested to thedefendants, and entered into an agreement with them, to pay by the lot the transportation charges


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covering supplies loaded onto or unloaded from the steamers, at the rate of 6 centavos for eachpackage, heavy or light, large or small."

We have made a careful examination of the evidence adduced during the trial of the cause, andconclude that said facts are substantially sustained thereby. The evidence clearly shows that the defendantcollected 6 centavos for each package, of whatever kind of merchandise, large or small, heavy or light,from those merchants only with whom they had a special contract. From other merchants, with whom theyhad not made said special contract, as well as the Province of Ilocos Norte, they collected a different rate.

The evidence shows that they collected from the Province of Ilocos Norte 10 centavos for each sack of ricewhich they unloaded from the steamers during the months of June, July, and September. There seems tobe no reason for reversing or modifying the conclusions of the lower court based upon said finding offacts. The effect of collecting a different amount from different persons for exactly analogous or similarservice performed by the defendants will be discussed when we come to a discussion of the law applicableto the foregoing facts.

The second assignment of error, to wit, that "the lower court committed an error in holding that thedefendants established preferential privileges in favor of certain shippers," presents the question whetheror not the defendants and appellants, in view of the foregoing facts, have violated the provisions of said

Act No. 98.

The facts, as they are disclosed by the record and the findings of the lower court, may be statedconcretely as follows: (1) The defendants, as common carriers, charged and collected fromsome shippers and merchants, a certain price for each package of merchandise, loaded or unloaded,according to a certain schedule. (See Exhibit A.) The prices fixed in the schedule depended upon the sizeand weight of the package. (2) The defendants entered into a special contract with certain merchants,under and by virtue of the terms of which they charged and collected, for loading and unloadingmerchandise in said port, the sum of 6 centavos for each package, without reference to its size or weight.

It is not contended that it cost any more to load or unload the rice for the province than it did forthe merchants with whom the special contract was made. There is no proof that the conditions weredifferent. There is no proof that the services rendered by the defendants for the different parties wereunlike or even not contemporaneous. The defendants justify their acts by the fact that they handled all the

merchandise of some merchants, whether the packages were large or small, at the same price. Underthese facts, the question is squarely presented whether or not the defendants are guilty of a violation ofthe spirit or the letter of said Act No. 98. Said Act No. 98 was largely borrowed from the Act of Congress ofFebruary 4, 1887. The language of the two Acts, so far as they relate to the present case, is practically thesame. Said Act of Congress has been construed by the Federal courts of the United States in severaldecisions. In view of the similarity of the two Acts, we feel justified in adopting the interpretation given bythe Federal courts of the United States to said Act of Congress.

The similarity of Act No. 98 and the Act of Congress may be seen in the following quotations:

(Sec. 1, Act No. 98.)

"No person or corporation engaged as a common carrier of passengers or property shall

directly or indirectly by any special rate, rebate,, drawback or other device, charge, demand, collect orreceive from any person or persons, a greater or less compensation for any service rendered in thetransportation of passengers or property on land or water between any points in the Philippine Islands

than such common carriers charges, demands, collects or receives from any other person or personsfrom doing for him a like or contemporaneous service in the transportation of a like kind of traffic undersubstantially similar circumstances and conditions, and any such unjust discrimination is hereby

prohibited and declared to be lawful."

(Sec. 2, Act of Congress, Feb. 4, 1887.)


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"That if any common carrier subject to the provision of this Act shall, directly, or indirectly, byany special rate, rebate, drawback, or other device, charge, demand, collect, or receive from anyperson or persons a greater or less compensation for any service rendered, or to be rendered, in thetransportation of passengers or property, subject to the provisions of this Act, than it charges,demands, collects, or receives from any person or persons for doing for him or them a like andcontemporaneous service in the transportation of a like kind of traffic under substantially similarcircumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination,which is hereby prohibited and declared to be unlawful."

(Sec. 2, Act No. 98.)

"It shall be unlawful for any common carrier engaged in the transportation of passengers orproperty as above set forth to make or give any unnecessary or unreasonable preference or advantageto any particular person, company, firm, corporation or locality, or any particular kind of traffic in anyrespect whatsoever, or to subject any particular person, company, firm, corporation or locality or anykind of traffic, to any undue or unreasonable prejudice or discrimination is also hereby prohibited anddeclared to be unlawful."

(Sec. 3, Act of Congress, Feb. 4, 1887.)

"That it shall be unlawful for any common carrier subject to the provision of this Act to make orgive any undue or unreasonable preference or advantage to any particular person, company, firm,corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice

or disadvantage in any respect whatsoever."

Said Act No. 98 is "An Act to regulate commerce in the Philippine Islands." Its purpose, so far as itis possible, is to compel common carriers to render to all persons exactly the same or analogous service forexactly the same price, to the end that there may be no unjust advantage or unreasonable discrimination.It applies to persons or corporations engaged as common carriers of passengers or property. A commoncarrier is a person or corporation whose regular business is to carry passengers or property for all personswho may choose to employ and remunerate him. A common carrier is a person or corporation whoundertakes to carry goods or persons for hire. The appellants admit that they are common carriers. Theonly question presented is whether or not, under the facts, they have violated the Act regulatingcommerce in the Philippine Islands.

The law provides that no common carrier shall directly or indirectly, by any special rate, rebate,

drawback, or other device, charge, demand, collect, or receive from any person or persons, a greater orless compensation for any service rendered in the transportation of passengers or property, betweenpoints in the Philippine Islands, than he charges, demands, collects, or receives from any other person orpersons, for doing a like or contemporaneous service, under substantially similar conditions orcircumstances.

The law prohibits any common carrier from making or giving any unnecessary or unreasonablepreference or advantage to any particular person, company, firm, corporation or locality, or any particularkind of traffic, or to subject any particular person, company, firm, corporation, or locality, or any particularkind of traffic, to any undue or unreasonable prejudice or discrimination whatsoever.

It will be noted that the law requires common carriers to carry for all persons, either passengers orproperty, for exactly the same charge for a like or contemporaneous service in the transportation of like

kind of traffic under substantially similar circumstances or conditions. The law prohibits common carriersfrom subjecting any person, etc., or locality, or any particular kind of traffic, to any undue or unreasonableprejudice or discrimination whatsoever. The law does not require that the same charge shall be made forthe carrying of passengers or property, unless all the conditions are alike and contemporaneous. It is notbelieved that the law prohibits the charging of a different rate for the carrying of passengers or propertywhen the actual cost of handling and transporting the same is different. It is not believed that the lawintended to require common carriers to carry the same kind of merchandise, even at the same price, underdifferent and unlike conditions and where the actual cost is different. The actual cost of handling andtransporting the same quantity of rice, for example, might be different, depending upon the form of the


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merchant who ships pianos alone, unless there is some other actual additional cost in the one case, whichdoes not exist in the other. A common carrier can not discriminate upon the ground that he carries all ofthe goods of one shipper, while he does not of another.

In the present case there is no pretense that it actually cost more to handle the rice for theprovince than it did for the merchants with whom the special contracts were made. From the evidence itwould seem that there was a clear discrimination made against the province. Discrimination is the thingwhich is specifically prohibited and punished under the law.

It is not believed that the law prohibits common carriers from making special rates for the handlingand transporting of merchandise, when the same are made for the purpose of increasing their business,and to manage their important interests upon the same principles which are regarded as sound, andadopted in other trades and pursuits. It is not believed that the law requires absolute equality in all cases.Circumstances and conditions may make it injurious to the carrier. Absolute equality, under certaincircumstances and conditions, may give some shippers an advantage over others. It is only unjust, undue,and unreasonable discrimination which the law forbids. The law of equality is in force only where theservices performed in the different cases are substantially the same, and the circumstances and conditionsare similar. Many considerations may properly enter into the agreement for the carriage or shipment rate,such as the quantity carried, its nature, its risks, the expense of carriage at different periods of time, andthe like. Numerous circumstances may intervene, which bear upon the cost and expense of transportation,

and it is but just to the carrier that he be permitted to take these circumstances into consideration, indetermining the rate or amount of his compensation. A question of fact is raised in each case for thecourts to decide.

The foregoing conclusions are based upon literally hundreds of decisions of the courts of differentstates, and the Supreme Court of the United States, as well as those of England, which have interpretedstatutes analogous to the one under consideration.

In the third assignment of error the appellants allege that the lower court committed an error incondemning them to pay or return to the provincial government the sum of P359.16. It is not exactly clearfrom the decision of the lower court just how he arrived at that conclusion. Section 5 of Act No. 98provides that any person or corporation, who may be damaged by reason of the doing by a commoncarrier of any matters and things prohibited, shall be entitled to sue for and recover all damages so

incurred, etc. It would seem that the defendants and appellants had a right to charge the provincialgovernment 6 centavos for each sack of rice unloaded. They unloaded for the province 5,986 sacks, forwhich they charged the sum of P598.60. They had a right to collect 6 centavos, or the sum of P359.16.The appellants therefore collected from the province more than they had a right to collect, the differencebetween P598.60 and P359.16, or P239.44. They should be required, therefore, to return to the provincethe excess which they collected, or the sum of P239.44. The judgment of the lower court, therefore,should be modified in this respect. The defendants are hereby ordered to return to the Province of IlocosNorte the sum P239.44, for which sum a judgment is hereby ordered to be entered against them, forwhich execution may issue when this judgment becomes final, in case the same is not paid.

After a careful analysis of the facts, and the law applicable thereto, the judgment of the lowercourt, as herein modified, should be and is hereby affirmed with costs. So ordered.

Arellano, C.J., Torres, CarsonandAraullo, JJ.,concur.

Trent, J.,dissents.

[G.R. No. 131621. September 28, 1999.]

LOADSTAR SHIPPING CO., INC.,petitioner, vs. COURT OF APPEALS and THE MANILAINSURANCE CO., INC.,respondents.


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King Capuchino Tan & Associates for petitioner.

Zapa Law Office for private respondent.

SYNOPSIS

When LOADSTAR's M/V "Cherokee" sank off Limasawa Island, Manila Insurance, Co., Inc., as insurer of itswood shipment, paid the total loss thereof, then filed a complaint against LOADSTAR. The trial court ruled infavor of MIC, and the Court of Appeals affirmed the same. Hence, this appeal with the issue: whether M/V"Cherokee" is a public carrier and, whether LOADSTAR observed due diligence in the premises.

LOADSTAR is a common carrier under Art. 1732 of the Civil Code. It is not necessary that the carrier be issueda certificate of public convenience and that the carriage of the goods was periodic or unscheduled. Further, onthat fateful day, the vessel was not chartered for a special cargo or to a special person only. It was carrying aparticular type of cargo for one shipper, but that is no reason to convert the vessel from a common to aprivate carrier, especially as it was also carrying passengers. On the second issue, the Court found M/V"Cherokee" not seaworthy as it was not even sufficiently manned at the time. The Court affirmed the decisionof the Court of Appeals.

SYLLABUS

1.CIVIL LAW; SPECIAL CONTRACTS; COMMON CARRIERS; ELUCIDATED. LOADSTAR is a common carrier.It is not necessary that the carrier be issued a certificate of public convenience, and this public character is notaltered by the fact that the carriage of the goods in question was periodic, occasional, episodic orunscheduled. In the case of De Guzman v. Court of Appeals, the Court juxtaposed the statutory definition of"common carriers" with the peculiar circumstances of that case, viz: The Civil Code defines "common carriers"in the following terms: "Article 1732. Common carriers are persons, corporations, firms or associationsengaged 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 above article makes no distinction between onewhoseprincipalbusiness activity is the carrying of persons or goods or both, and one who does such carryingonly as an ancillaryactivity (in local idiom, as "a sideline." Article 1732 also carefully avoids making anydistinction between a person or enterprise offering transportation service on a regular or scheduled basisandone offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732distinguish between a carrier offering its services to the "general public," i.e., the general community orpopulation, and one who offers services or solicits business only from a narrowsegmentof the generalpopulation. We think that Article 1733 deliberately refrained from making such distinctions. SacTCA

2.ID.; ID.; ID.; CASE OF HOME INSURANCE CO. V. AMERICAN STEAMSHIP AGENCIES, INC. [23 SCRA 24(1968)]; NOT APPLICABLE IN ABSENCE OF EVIDENCE THAT VESSEL WAS SPECIALLY CHARTERED. 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 personbecomes a private carrier that is not subject to the provisions of the Civil Code. However, the records do notdisclose that the M/V "Cherokee," on the date in question, undertook to carry a special cargo or was charteredto a special person only. There was no charter party. The bills of lading failed to show any specialarrangement, but only a general provision to the effect that the M/V "Cherokee" was a "general cargo carrier."Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears tobe 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.


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3.ID.; ID.; ID.; FAILURE TO KEEP VESSEL SEAWORTHY. M/V "Cherokee" was not seaworthy when itembarked on its voyage on 19 November 1984. The vessel was not even sufficiently manned at the time. "Fora vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient numberof competent officers and crew. The failure of a common carrier to maintain in seaworthy condition its vesselinvolved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code."

4.ID.; ID.; ID.; DOCTRINE OF LIMITED LIABILITY; NOT APPLICABLE WHERE THERE WAS NEGLIGENCE ONPART OF THE VESSEL OWNER. The doctrine of limited liability does not apply where there was negligenceon the part of the vessel owner or agent. LOADSTAR was at fault or negligent in not maintaining a seaworthyvessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In any event, itdid not sink because of any storm that may be deemed asforce majeure, inasmuch as the wind condition inthe 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 vesseland its cargo.

5.ID.; ID.; ID.; STIPULATION OF SHIPMENTS MADE AT OWNER'S RISK; VOID. The stipulation in the caseat bar effectively reduces the common carrier's liability for the loss or destruction of the goods to a degree lessthan extraordinary (Articles 1744 and 1745), that is, the carrier is not liable for any loss or damage toshipments made at "owner's risk." Such stipulation is obviously null and void for being contrary to public

policy. It has been said: Three kinds of stipulations have often been made in a bill of lading. Thefirst is oneexempting the carrier from any and all liability for loss or damage occasioned by its own negligence.The secondis one providing for an unqualified limitation of such liability to an agreed valuation. Andthe thirdis one limiting the liability of the carrier to an agreed valuation unless the shipper declares a highervalue and pays a higher rate of freight. According to an almost uniform weight of authority, the first andsecond kinds of stipulations are invalid as being contrary to public policy, but the third is valid and enforceableSince the stipulation in question is null and void, it follows that when MIC paid the shipper, it was subrogatedto all the rights which the latter has against the common carrier, LOADSTAR.

6.ID.; ID.; ID.; PRESCRIPTION OF CLAIMS FOR LOSS. MIC's cause of action had not yet prescribed at thetime it was concerned. Inasmuch as neither the Civil Code nor the Code of Commerce states a specific

prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA)

which provides for a one-yearperiod of limitation on claims for loss of, or damage to, cargoes sustained during transit may be appliedsuppletorily to the case at bar. This one-year prescriptive period also applies to the insurer of the goods. Inthis case, the period for filing the action for recovery has not yet elapsed. Moreover, a stipulation reducing theone-year period is null and void; it must, accordingly, be struck down. STcADa

D E C I S I O N

DAVIDE,JR.,C.J p:

Petitioner Loadstar Shipping Co., Inc. (hereafter LOADSTAR), in this petition for review on certiorariunderRule 45 of the 1997 Rules of Civil Procedure, seeks to reverse and set aside the following: (a) the 30 January1997 decision1of the Court of Appeals in CA-G.R. CV No. 36401, which affirmed the decision of 4 October19912of the Regional Trial Court of Manila, Branch 16, in Civil Case No. 85-29110, ordering LOADSTAR to payprivate respondent Manila Insurance Co. (hereafter MIC) the amount of P6,067,178, with legal interest fromthe filing of the complaint until fully paid, P8,000 as attorney's fees, and the costs of the suit; and (b) itsresolution of 19 November 1997,3denying LOADSTAR's motion for reconsideration of said decision.
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The facts are undisputed. LLjur

On 19 November 1984, LOADSTAR received on board its M/V "Cherokee" (hereafter, the vessel) the followinggoods for shipment:

a)705 bales of lawanit hardwood;

b)27 boxes and crates of tilewood assemblies and others; and

c)49 bundles of mouldings R & W (3) Apitong Bolidenized.

The goods, amounting to P6,067,178, were insured for the same amount with MIC against various risksincluding "TOTAL LOSS BY TOTAL LOSS OF THE VESSEL." The vessel, in turn, was insured by PrudentialGuarantee & Assurance, Inc. (hereafter PGAI) for P4 million. On 20 November 1984, on its way to Manilafrom the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off Limasawa Island. As aresult of the total loss of its shipment, the consignee made a claim with LOADSTAR which, however, ignoredthe same. As the insurer, MIC paid P6,075,000 to the insured in full settlement of its claim, and the latterexecuted a subrogation receipt therefor.

On 4 February 1985, MIC filed a complaint against LOADSTAR and PGAI, alleging that the sinking of the vesselwas due to the fault and negligence of LOADSTAR and its employees. It also prayed that PGAI be ordered topay the insurance proceeds from the loss of the vessel directly to MIC, said amount to be deducted from MIC'sclaim from LOADSTAR.

In its answer, LOADSTAR denied any liability for the loss of the shipper's goods and claimed that the sinking ofits vessel was due toforce majeure. PGAI, on the other hand, averred that MIC had no cause of action againstit, LOADSTAR being the party insured. In any event, PGAI was later dropped as a party defendant after it paidthe insurance proceeds to LOADSTAR.

As stated at the outset, the court a quorendered judgment in favor of MIC, prompting LOADSTAR to elevate

the matter to the Court of Appeals, which, however, agreed with the trial court and affirmed its decision intoto.

In dismissing LOADSTAR's appeal, the appellate court made the following observations:

1)LOADSTAR cannot be considered a private carrier on the sole ground that there was a single shipperon that fateful voyage. The court noted that the charter of the vessel was limited to the ship,but LOADSTAR retained control over its crew.4

2)As a common carrier, it is the Code of Commerce, not the Civil Code, which should be applied in

determining the rights and liabilities of the parties.

3)The vessel was not seaworthy because it was undermanned on the day of the voyage. If it had beenseaworthy, it could have withstood the "natural and inevitable action of the sea" on 20November 1984, when the condition of the sea was moderate. The vessel sank, not becauseofforce majeure, but because it was not seaworthy. LOADSTAR'S allegation that the sinkingwas probably due to the "convergence of the winds," as stated by a PAGASA expert, was notduly proven at the trial. The "limited liability" rule, therefore, is not applicable considering that,in this case, there was an actual finding of negligence on the part of the carrier.5
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strengthened wind velocity in the area, naturally producing strong waves and winds, in turn, causing thevessel to list and eventually sink. LibLex

LOADSTAR goes on to argue that, being a private carrier, any agreement limiting its liability, such as whattranspired in this case, is valid. Since the cargo was being shipped at "owner's risk," LOADSTAR was not liablefor any loss or damage to the same. Therefore, the Court of Appeals erred in holding that the provisions of thebills of lading apply only to the shipper and the carrier, and not to the insurer of the goods, which conclusionruns counter to the Supreme Court's ruling in the case ofSt. Paul Fire & Marine Insurance Co. v.Macondray &Co., Inc.,9and National Union Fire Insurance Company of Pittsburgh v. Stolt-Nielsen Phils., Inc.10

Finally, LOADSTAR avers that MIC's claim had already prescribed, the case having been instituted beyond theperiod stated in the bills of lading for instituting the same suits based upon claims arising from shortage,damage, or non-delivery of shipment shall be instituted within sixty days from the accrual of the right ofaction. The vessel sank on 20 November 1984; yet, the case for recovery was filed only on 4 February 1985.

MIC, on the other hand, claims that LOADSTAR was liable, notwithstanding that the loss of the cargo was duetoforce majeure, because the same concurred with LOADSTAR's fault or negligence.

Secondly, LOADSTAR did not raise the issue of prescription in the court below; hence, the same must be

deemed waived.

Thirdly, the "limited liability" theory is not applicable in the case at bar because LOADSTAR was at fault ornegligent, and because it failed to maintain a seaworthy vessel. Authorizing the voyage notwithstanding itsknowledge of a typhoon is tantamount to negligence.

We find no merit in this petition.

Anent the first assigned error, we hold that LOADSTAR is a common carrier. It is not necessary that the carrierbe issued a certificate of public convenience, and this public character is not altered by the fact that thecarriage 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 SteamshipAgencies, Inc.,11where this Court held that a common carrier transporting special cargo or chartering thevessel to a special person becomes a private carrier that is not subject to the provisions of the Civil Code. Anystipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent isvoid only if the strict policy governing common carriers is upheld. Such policy has no force where the public atlarge is not involved, as in the case of a ship totally chartered for the use of a single party. LOADSTAR alsocitedValenzuela Hardwood and Industrial Supply, Inc. v. Court of Appeals12and National Steel Corp. v. Courtof Appeals,13both of which upheld the Home Insurancedoctrine. LLjur

These cases invoked by LOADSTAR are not applicable in the case at bar for the simple reason that the factualsettings are different. The records do not disclose that the M/V "Cherokee," on the date in question, undertookto carry a special cargo or was chartered to a special person only. There was no charter party. The bills oflading failed to show any special arrangement, but only a general provision to the effect that the M/V"Cherokee" was a "general cargo carrier."14Further, the bare fact that the vessel was carrying a particulartype of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert thevessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel wasalso carrying passengers.
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Under the facts and circumstances obtaining in this case, LOADSTAR fits the definition of a common carrierunder Article 1732 of the Civil Code. In the case of De Guzman v. Court of Appeals,15the Court juxtaposedthe statutory definition of "common carriers" with the peculiar circumstances of that case, viz.:

The Civil Code defines "common carriers" in the following terms:

"ARTICLE 1732.Common carriers are persons, corporations, firms or associations engaged inthe business of carrying or transporting passengers or goods or both, by land, water, or air for

compensation, offering their services to the public."

The above article makes no distinction between one whoseprincipal business activity is the carrying ofpersons or goods or both, and one who does such carrying only as an ancillaryactivity (in local idiom,as "a sideline". Article 1732 also carefully avoids making any distinction between a person or enterpriseoffering transportation service on a regular or scheduled basisand one offering such service onan occasional, episodi

transpo cases 1.1.2

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