First Philippine Industrial Corp. vs.

Court of Appeals , 300 SCRA 661, 1998 Facts: Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995, petitioner applied for mayors permit in Batangas. However, the Treasurer required petitioner to pay a local tax based on gross receipts amounting to P956,076.04. In order not to hamper its operations, petitioner paid the taxes for the first quarter of 1993 amounting to P239,019.01 under protest. On January 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt from local tax since it is engaged in transportation business. The respondent City Treasurer denied the protest, thus, petitioner filed a complaint before the Regional Trial Court of Batangas for tax refund. Respondents assert that pipelines are not included in the term common carrier which refers solely to ordinary carriers or m otor vehicles. The trial court dismissed the complaint, and such was affirmed by the Court of Appeals. Issue: Whether a pipeline business is included in the term common carrier so as to entitle the petitioner to the exemption Held: Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public." The test for determining whether a party is a common carrier of goods is: (1) He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; (2) He must undertake to carry goods of the kind to which his business is confined; (3) He must undertake to carry by the method by which his business is conducted and over his established roads; and (4) The transportation must be for hire. Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier VLASONS SHIPPING, INC vs. CA and NATIONAL STEEL CORPORATION, [G.R. No. 112350. December 12, 1997] NATIONAL STEEL CORPORATION vs. CA and VLASONS SHIPPING, INC. [G.R. No. 112287. December 12, 1997]

FACTS: National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract of Voyage Charter Hire (Affreightment) whereby NSC hired VSIs vessel, the MV VLASONS I to make one (1) voyage to load steel products at Ilig an City and discharge them at North Harbor, Manila. VSI carried passengers or goods only for those it chose u nder a special contract of charter party. The vessel arrived with the cargo in Manila, but when the vessels three (3) hatches containing the shipment were opened, nea rly all the skids of tin plates and hot rolled sheets were allegedly found to be wet and rusty. NSC filed its complaint against defendant before the CFI wherein it claimed that it sustained losses as a result of the act, neglect and default of the master and crew in the management of the vessel as well as the want of due diligence on the part of the defendant to make the vessel seaworthy -- all in violation of defendants undertaking under their Contract of Voyage Charter Hire. In its answer, defendant denied liability for the alleged damage claiming that the MV VLASONS I was seawort hy in all respects for the carriage of plaintiffs cargo; that said vessel was not a common carrier inasmuch as she was under voyage charter contract with the plaintiff as charterer under the charter party. The trial court ruled in favor of VSI; it was affirmed by the CA on appeal. ISSUE: Whether or not Vlazons is a private carrier. HELD:Yes. At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as a private carrier. The resolution of this preliminary question determines the law, standard of diligence and burden of proof applicable to the present case. Article 1732 of the Civil Code defines a common carrier as persons, corporations, firms or associations engaged in the busin ess of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. It has been hel d that the true test of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to avail themselves of its transportation service for a fee. A carrier which does not qualify under the above test is deemed a private carrier. General ly, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. The most typical, although not the only form of private carriage, is the charter party, a maritime contract by which the charterer, a party other than the shipowner, obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages. In the instant case, it is undisputed that VSI did not offer its services to the general public. As found by the Regional Trial Court, it carried passengers or goods only for those it chose under a special contract of charter party. As correctly concluded by the Court of Appeals, the MV Vlasons I was not a common but a private carrier. Consequently, the rights and obligations of VSI and NSC, including their respective liability for damage to the cargo, are determined primarily by stipulations in their contract of private carriage or charter party. Recently, in Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation, the Court ruled: x x x *I+n a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers.

Valenzuela Hardwood and Industial Supply Inc. vs Court of Appeals, 274 scra 642 Waiver of Patrimonial Rights On January 16, 1984 plaintiff Valenzuela Hardwood and Industrial Supply Inc. entered into an agreement with the defendant Seven Brothers whereby the latter undertook to load on board its vessel the formers lavan round logs. On January 20, 1984 plaintiff insured the loss and/or damages with defendant South Sea Surety and insured company for 2 million pesos on January 24, 1984, plaintiff gave the check in payment of the premium on the insurance policy. In the meantime, the said vessel sank on January 25, 1984 resulting in the loss of the p laintiffs insured logs. Plaintiff demanded payment of the proceeds and lost claim for the value of the lost logs to insurance company and Seven Brothers Shipping Corporation respectively to which both of them denied liability. After due hearing, the RTC rendered judgment in favor of plaintiff. Both defendants appealed. The CA affirmed in part the RTC judgment by sustaining liability of South Sea Surety but modified it by holding that the Seven Brothers was not liable for the lost of the cargo. The CA held that the stipulation in the character party that the ship owner would be exempted from liability in case of loss or even for negligence of its agent is valid. ISSUE: Whether or not patrimonial rights may be waived. HELD: As a general rule, patrimonial rights may be waived. In the case at bar, the waiver of petitioner per contractual stipulation and that it is solely responsible for any damage to the cargo, thereby exempting the private carrier from any responsibility for loss or damage thereto. The Supreme Court cited Article 6 of the Civil Code which states that rights may be waived unless the waiver is contrary to law, public order, public policy, morals or good customs or prejudicial to a person of a right recognized by law.

Loadstar Shipping vs. Court of Appeals, 315 SCRA 339, 1999 Facts: On November 19, 1984, loadstar received on board its M/V Cherokee bales of lawanit hardwood, tilewood and Apitong Bo lidenized for shipment. The goods, amounting to P6,067, 178. Were insured for the same amount with the Manila Insurance Company against various risks including Total Loss by Total Loss of the Vessel. On November 20, 1984, on its way to Manila from the port of Nasipit, Agus an Del Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with loadstar which, however, ignored the same. As the insurer, MIC paid to the insured in full settlement of its claim, and the latter executed a subrogation receipt therefor. MIC thereafter filed a complaint against loadstar alleging that the sinking of the vessel was due to fault and negligence of loadstar and its employees. In its answer, Loadstar denied any liability for the loss of the shippers goods and claimed that the sinking of its vess el was due to force majeure. The court a quo rendered 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 in toto. On appeal, loadstar maintained that the vessel was a private carrier because it was not issued a Certificate of Public Convenience, it did not have a regular trip or schedule nor a fixed route, and there was only one shipper, one consignee for a special crago. Issue: Whether or not M/V Cherokee was a private carrier so as to exempt it from the provisions covering Common Carrier? Held: Loadstar is a common carrier. The Court held that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely co-incidental; it is no 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. Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. Eastern Shipping Lines Inc. VS. Intermediate Appellate Court , (150 SCRA 463) Facts: Sometime in or prior to June 1977, the M/S Asiatica, a vessel operated by petitioner Eastern Shipping Lines Inc., loaded at Kobe, Japan for transportation to Manila loaded 5,000 pieces of calorized pipes valued at P256,039.00 which was consigned to Philippine Blooming Mills Co, Inc. and 7 cases of spare parts valued at P92, 361.75 consigned to Central Textile Mills. Both sets of goods were inured against marine risk for their stated value with respondent Development Insurance and Surety Corp. In the same vessel, 2 containers of garment fabrics were also loaded which was consigned to Mariveles Apparel Corp worth $46,583. The said cargoes were consigned to Nisshin Fire and Marine Insurance. Another cargo loaded to the vessel was the surveying instruments consigned to Aman Enterprises and General Merchandise and insured against respondent Dowa Fire & Marine Insurance for $1,385.00. On the way to Manila, M/S Asiatica caught fire and sank. This resulted to the loss of the ship and its cargoes. The respective Insurers paid the corresponding marine insurance values and were thus subrogated to the rights of the insured. The insurers filed a suit against the petitioner carrier for recovery of the amounts paid to the insured. However, petitioner contends that it is not liable on the ground that the loss was due to an extraordinary fortuitous event. Issue: Whether the Civil Code provisions on Common Carriers or the Carriage of the Goods by Sea Act will govern the case at bar? Held: The law of the country to which the goods are to be transported governs the liability of common carrier in case of their loss, destruction or deterioration. The liability of petitioner is governed primarily by the Civil Code however, in all matters not regulated by the Civil Code, the

Code of Commerce and Special Laws will govern with respect to the rights and obligations of the carrier. Therefore COGSA is suppletory to the provisions of the Civil Code. Eastern Shipping Lines, Inc. v. IAC and Development Insurance & Surety Corp., G.R. No. L-69044 May 29, 1987 Eastern Shipping Lines, Inc. v. The Nisshin Fire and Marine Insurance Co., andDowa Fire & Marine Insurance Co., Ltd., G.R. No. 71478 May 29, 1987 FACTS: (G.R. No. L-69044): a vessel operated by petitioner Eastern Shipping Lines, Inc., loaded atKobe, Japan for transportation to Manila, 5000 pieces of calorized lance pipes in 28packages consigned to Philippine Blooming Mills Co., Inc., and 7 cases of spare partsconsigned to Central Textile Mills, Inc.; both sets of goods were insured with Development Insurance and Surety Corp. (G.R. No. 71478): the same vessel took on board 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation, and two cases of surveying instruments consigned to Aman Enterprises and General Merchandise the vessel caught fire and sank, resulting in the total loss of ship and cargo ISSUES: 1. which law should govern the Civil Code provisions on Common carriers or the Carriage of Goods by Sea Act?; 2. who has the burden of proof to show negligence of the carrier? 3. what is the extent of the carriers liability? HELD: 1. The law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. As the cargoes were transported from Japan to the Philippines, the liability of Petitioner Carrier is governed primarily by the Civil Code. However, in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code. 2. Article 1735 of the Civil Code provides that all cases than those mention in Article 1734,the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law. The burden is upon Eastern Shipping Lines to prove that it has exercised the extraordinary diligence required by law. Note: fire not considered a natural disaster or calamity within the contemplation of Art.1734 for it arises almost invariably from some act of man or by human means; it does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity having failed to discharge the burden of proving that it had exercised the extraordinary diligence required by law, Eastern Shipping Lines cannot escape liability for the loss of the cargo As it was at fault, it cannot seek the protective mantle of Sec. 4(2) of Carriage of Goods by Sea Act which provides: Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from x x x (b) Fire, unless caused by the actual fault or privity of the carrier. there was actual fault of the carrier shown by lack of diligence in that when the smoke was noticed, the fire was already big; that the fire must have started 24 hours before the same was noticed; and that after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage. 3. See Art. 1749.G.R. No. 69044: no stipulation in the Bills of Lading limiting the carriers liability fo r the loss or destruction of the goods; no declaration of a higher value of the goods; Hence, Eastern Shipping Lines liability should not exceed US $500 per package (a s provided in 4(5) of the COGSA), or its peso equivalent, at the time of payment of the value of the goods lost, but in no case more than the amount of damage actually sustained TABACALERA INSURANCE CO., PRUDENTIAL GUARANTEE & ASSURANCE, INC., and NEW ZEALAND INSURANCE CO., LTD. vs. NORTH FRONT SHIPPING SERVICES, INC., and COURT OF APPEALS [G.R. No. 119197. May 16, 1997] FACTS: Petitioners are insurers of a shipment of sacks of corn grains consigned to Republic Flour Mills Corporation in Manila. The cargo was shipped by North Front Shipping Services, Inc. The consignee was advised of its arrival but the unloading was delayed for six days for unknown reason, and the merchandise was already moldy, rancid and deteriorating. The moisture content and the wetting was due to contact with salt water but the mold growth was only incipient and not sufficient to make the corn grains toxic and unfit for consumption. In fact the mold growth could still be arrested by drying. However, Republic Flour rejected the entire cargo which therefore forced the petitioners to pay the former. Now, as subrogees, they lodged a complaint for damages against respondents claiming that the loss was exclusively attributable to the fault and negligence of the carrier. The Marine Cargo Adjusters hired by the insurance companies conducted a survey and found cracks in the bodega of the barge and heavy concentration of molds on the tarpaulins and wooden boards. They did not notice any seals in the hatches. The tarpaulins were not brand new as there were patches on them, contrary to the claim of North Front Shipping Services, Inc., thus making it possible for water to seep in. They also discovered that the bulkhead of the barge was rusty. The trial court dismissed the complaint and ruled that the contract entered into between North Front Shipping Services, Inc., and Republic Flour Mills Corporation was a charter-party agreement. As such, only ordinary diligence in the care of goods was required. On the other hand, the Court of Appeals ruled that as a common carrier required to observe a higher degree of diligence North Front 777 satisfactorily complied with all the requirements hence was issued a Permit to Sail after proper inspection. ISSUE: Whether or not a charter-party agreement between P and R requires extraordinary diligence. HELD: Yes. The charter-party agreement between North Front Shipping Services, Inc., and Republic Flour Mills Corporation did not in any way convert the common carrier into a private carrier. xxx North Front Shipping Services, Inc., is a corporation engaged in the business of transporting cargo and offers its services indiscriminately to the public. It is without doubt a common carrier. As such it is required to observe extraordinary diligence in its vigilance over the goods it transports. When goods placed in its care are lost or damaged, the carrier is presumed to have been at fault or to have acted negligently. North Front Shipping Services, Inc., therefore has the burden of proving that it observed extraordinary diligence in order to avoid responsibility for the lost cargo.

However, we cannot attribute the destruction, loss or deterioration of the cargo solely to the carrier. We find the consignee Republic Flour Mills Corporation guilty of contributory negligence. It was seasonably notified of the arrival of the barge but did not immediately start the unloading operations. No explanation was proffered by the consignee as to why there was a delay of six (6) days. Had the unloading been commenced immediately the loss could have been completely avoided or at least minimized. As testified to by the chemist who analyzed the corn samples, the mold growth was only at its incipient stage and could still be arrested by drying. The corn grains were not yet toxic or unfit for consumption. Sarkies Tours Phils. V. IAC Facts: On August 31, 1984, Fatima boarded petitioners bus from Manila to Legazpi. Her belongings consisting of 3 bags were kept at the baggage compartment of the bus, but during the stopover in Daet, it was discovered that only one remained. The others might have dropped along the way. Other passengers suggested having the route traced, but the driver ignored it. Fatima immediately told the incident to her mother, who went to petitioners office in Legazpi and later in Manila. Petitioner offered P1,000 for each bag, but she turned it down. D isapointed, she sought help from Philtranco bus drivers and radio stations. One of the bags was recovered. She was told by petitioner that a team is looking for the lost luggage. After nine months of fruitless waiting, respondents filed a case to recover the lost items, as well as moral and exemplary damages, attorneys fees and expenses of litigation. The trial court ruled in favor of respondents, which decision was affirm ed with modification by the Court of Appeals, deleting moral and exemplary damages. Issues: (1) Whether petitioner is liable for the loss of the luggage (2) Whether the damages sought should be recovered Held: (1) The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors of the baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all of the luggage was lost, to the prejudice of the paying passengers. (2) There is no dispute that of the three pieces of luggage of Fatima, only one was recovered. Respondents had to shuttle between Bicol and Manila in their efforts to be compensated for the loss. During the trial, Fatima and Marisol had to travel from the United States just to be able to testify. Expenses were also incurred in reconstituting their lost documents. Under these circumstances, the Court agrees with the Court of Appeals in awarding P30,000.00 for the lost items and P30,000.00 for the transportation expenses, but disagrees with the deletion of the award of moral and exemplary damages which, in view of the foregoing proven facts, with negligence and bad faith on the fault of petitioner having been duly established, should be granted to respondents in the amount of P20,000.00 and P5,000.00, respectively. Coastwise Lighterage Corporation v. CA Facts: Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila Bay, one of the barges, "Coastwise 9", struck an unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in through a hole "two inches wide and twenty-two inches long". As a consequence, the molasses at the cargo tanks were contaminated. Pag-asa filed a claim against Philippine General Insurance Company, the insurer of its cargo. Philgen paid P700,000 for the value of the molasses lost. Philgen then filed an action against Coastwise to recover the money it paid, claiming to be subrogated to the claims which the consignee may have against the carrier. Both the trial court and the Court of Appeals ruled against Coastwise. Issues: (1) Whether Coastwise was transformed into a private carrier by virtue of the contract it entered into with Pag-asa, and whether it exercised the required degree of diligence (2) Whether Philgen was subrogated into the rights of the consignee against the carrier Held: (1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to another, but the possession, command mid navigation of the vessels remained with petitioner Coastwise Lighterage. Coastwise Lighterage, by the contract of affreightment, was not converted into a private carrier, but remained a common carrier and was still liable as such. The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier. It follows then that the presumption of negligence that attaches to common carriers, once the goods it is sports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case. Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Had the patron been licensed he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of extraordinary diligence. (2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured operated as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any private of contract or upon written assignment of, claim. It accrues simply upon payment of the insurance claim by the insurer.