First Philippine Industrial Corp. v. CA, Paterno Tac-an, Bantangas City, andAdoracion Arellano (treasurer of Batangas) G.R. No.

125948 December 29, 1998 Martinez, J. FACTS: F P I C g r a n t e e o f a p i p e l i n e c o n c e s s i o n u n d e r R e p u b l i c A c t N o . 3 8 7 , a s a m e n d e d , t o contract, install and operate oil pipelines It applied for a mayors permit with the Office of the Mayor of Batangas City. Before the permit could be issued, it was required by the City Treasurer to pay a local tax based on itsgross receipts for the fiscal year 1993 pursuant to the Local Government Code. It paid thetax under protest. It filed a complaint for tax refund alleging that 1) t he imposition and collection of thebusiness tax on its gross receipts violates Section 133 of the Local Government Code which grants tax exemption to common carriers; 2) the authority of cities to impose andcollect a tax on the gross receipts of contractor s and independent contractors under Sec.141 (e) and 151 does not include the authority to collect such taxes on transportationc o n t r a c t o r s for, as defined under Sec. 131 (h), the term c o n t r a c t o r s e x c l u d e s transportation contractors; and, 3) the City Treasurer illegally and erroneously imposedand collected the said tax, thus meriting the immediate refund of the tax paid. ISSUES: 1. WON FPIC is a common carrier; 2. WON it is exempted from paying the taxes required by the City Treasurer HELD: 1 . Y e s . F P I C i s e n g a g e d i n t h e b u s i n e s s o f t r a n s p o r t i n g o r c a r r y i n g g o o d s , i . e . petroleum products, for hire as a public employment. It undertakes to carry for all personsindifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation.c o m m o n c a r r i e r - h o l d s h i m s e l f o u t t o t h e p u b l i c a s e n g a g e d i n t h e b u s i n e s s o f transporting persons or property from place to p l a c e , f o r c o m p e n s a t i o n , o f f e r i n g h i s services to the public generally (see also Art. 1732)test for determining whether a party is a common carrier of goods: a. engaged in the business of carrying goods for others as a public employment, and musthold himself out as ready to engage in the transportation of goods for person generally asa business and not as a casual occupation; b. undertakes to carry goods of the kind to which his business is confined c. undertakes to carry by the method by which his business is conducted and over his established roads d. transportation is for hirecommon service coincides with public servicepublic service includes every person that now or hereafter may own, operate. manage,or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, anycommon carrier, railroad, street railway, traction railway, subway motor vehicle, either forf r e i g h t o r p a s s e n g e r , or both, with or without fixed route and whatever may be itsclassification, freight or carrier service of any class, ex press service, steamboat, orsteamship line, pontines, ferries and water c r a f t , e n g a g e d i n t h e t r a n s p o r t a t i o n o f passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system gas, electric light heat and power, water supplyand power petroleum, sewerage system, wire or wireless communications systems, wire orwireless broadcasting stations and other similar public services (CA No. 1416, as amended,otherwise known as the Public Service Act) FPIC - considered a common carrier under Art. 86 of the Petroleum Act of the Philippines(RA 387), which provides that: Art. 86. Pipe line concessionaire as common carrier. A pipe line shall have the preferential right to utilize installations for the transportation of petroleum owned by him, but is obligated to utilize the remaining transportation capacitypro rata for the transportation of such other petroleum as may be offered by others for transport, and to charge without discrimination such rates as may have been approved bythe Secretary of Agriculture and Natural Resources. FPIC is also a public utility pursuant to Art. 7 of RA 387 which states that everything relating to the exploration for and exploitation of petroleum . . . and everything relating tothe manufacture, refining, storage, or transportation by special methods of petroleum, ishereby declared to be a public utility 2. Yes. Legal basis is Section 133 (j), of the Local Government Code which provides thatUnless otherwise provided herein, the exercise of the taxing powers of provinces, cities,municipalities, and barangays shall not extend to the levy of the following: Taxes on thegross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers b y a i r , l a n d o r w a t e r , e x c e p t a s provided in this Code. Reason for the exception: to avoid duplication of tax

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 Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods only for those it chose under a spec ial 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 seaworthy in all respec ts 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: 1. Whether or not Vlazons is a private carrier. 2. Whether or not the provisions of the Civil Code on common carriers pursuant to which there exists a presumption of negligence against the common carrier in case of loss or damage to the cargo are applicable to a private carrier. HELD: 1. 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 business of carrying or transporting passengers or goods or both, by land, water, or air, for comp ensation, offering their services to the public. It has been held that the true test of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to avail themselves of its transportationservice for a fee. A carrier which does not qualify under the above test is deemed a private carrier. Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. 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 concl uded 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. 2. No. In a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. It has been held that the true test of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to avail themselves of its transportation service for a fee [Mendoza vs. Philippine Airlines, Inc., 90 Phil. 836, 842-843 (1952)]. A carrier which does not qualify under the above test is deemed a private carrier. Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. Because the MV Vlasons I was a private carrier, the ship owners obligations are governed by the foregoing provisions of the Code of Commerce and not by the Civil Code which, as a general rule, places the prima facie presumption of negligence on a common carrier

Valenzuela Hardwood vs. CA (GR 102316, 30 June 1997) FACTS: Valenzuela Hardwood and Industrial Supply, Inc. (VHIS) entered into an agreement with the Seven Brothers whereby the latter undertook to load on board its vessel M/V Seven Ambassador the formers lauan round logs numbering 940 at the port of Maconacon, Isabela for shipment to Manila. VHIS insured the logs against loss and/or damage with South Sea Surety and Insurance Co. The said vessel sank resulting in the loss of VHIS insured logs. VHIS demanded from South Sea Surety the payment of the proceeds of the policy but the latter denied liability under the policy for non-payment of premium. VHIS likewise filed a formal claim with Seven Brothers for the value of the lost logs but the latter denied the claim. The RTC ruled in favor of the petitioner.Both Seven Brothers and South Sea Surety appealed. The Court of Appeals affirmed the judgment except as to the liability of Seven Brothers.South Sea Surety and VHIS filed separate petitions for review before the Supreme Court. In a Resolution dated 2 June 1995, the Supreme Court denied the petition of South Sea Surety. The present decision concerns itself to the petition for review filed by VHIS. ISSUE: Is a stipulation in a charter party that the (o)wners shall not be responsible for loss, split, short-landing, breakages and any kind of damages to the cargo valid? HELD: Yes. Xxx [I]t is undisputed that private respondent had acted as a private carrier in transporting petitioners lauan logs. T hus, Article 1745 and other Civil Code provisions on common carriers which were cited by petitioner may not be applied unless expressly stipulated by the parties in their charter party. In a contract of private carriage, the parties may validly stipulate that responsibility for the cargo rests solely on the charterer, exempting the shipowner from liability for loss of or damage to the cargo caused even by the negligence of the ship captain. Pursuant to Article 1306 of the Civil Code, such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law, morals, good customs, public order, or public policy. Indeed, their contract of private carriage is not even a contract of adhesion. We stress that in a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers.

xxx The general public enters into a contract of transportation with common carriers without a hand or a voice in the preparation thereof. The riding public merely adheres to the contract; even if the public wants to, it cannot submit its own stipulations for the approval of the common carrier. Thus, the law on common carriers extends its protective mantle against one-sided stipulations inserted in tickets, invoices or other documents over which the riding public has no understanding or, worse, no choice. Compared to the general public, a charterer in a contract of private carriage is not similarly situated. It can -- and in fact it usually does -- enter into a free and voluntary agreement. In practice, the parties in a contract of private carriage can stipulate the carriers obligations and liabilities over the shipment which, in turn, determine the price or consideration of the charter. Thus, a charterer, in exchange for convenience and economy, may opt to set aside the protection of the law on common carriers. When the charterer decides to exercise this option, he takes a normal business risk. Loadstar Shipping Co. v. CA Facts: On November 19, 1984, Loadstar received on board its vessel M/V Cherokee the following goods for shipment: 1. 705 bales of lawanit hardwood 2. 27 boxes and crates of tilewood assemblies and others 3. 49 bundles of mouldings R & W (3) Apitong Bolidenized The goods, amounting to P6,067,178, were insured by Manila Insurance Co. The vessel is insured by Prudential Guarantee and Assurance, Inc. On November 20, 1984, on its way to Manila from Agusan, the vessel sank off Limasawa Island. MIC paid the consignee P6,075,000 for the value of the goods lost, and filed a complaint against Loadstar and PGAI, claiming subrogation into the rights of the consignee. When PGAI paid Loadstar, it was dropped from the complaint. The trial court ruled against Loadstar, and this was affirmed by the Court of Appeals. Loadstar submits that the vessel was a private carrier because it was not issued a certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one consignee for a special cargo." In refutation, MIC argues that the issue as to the classification of the M/V "Cherokee" was not timely raised below; hence, it is barred by estoppel. While it is true that the vessel had on board only the cargo of wood products for delivery to one consignee, it was also carrying passengers as part of its regular business. Moreover, the bills of lading in this case made no mention of any charter party but only a statement that the vessel was a "general cargo carrier." Neither was there any "special arrangement" between LOADSTAR and the shipper regarding the shipment of the cargo. The singular fact that the vessel was carrying a particular type of cargo for one shipper is not sufficient to convert the vessel into a private carrier. LOADSTAR argues that as a private carrier, it cannot be presumed to have been negligent, and the burden of proving otherwise devolved upon MIC. It also maintains that the vessel was seaworthy, and that the loss was due to force majeure. LOADSTAR goes on to argue that, being a private carrier, any agreement limiting its liability, such as what transpired in this case, is valid. Since the cargo was being shipped at "owners risk," LOADSTAR was not liable for any loss or damage to the same. Finally, LOADSTAR avers that MICs claim had already prescribed, the case having been instituted beyond the period 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 of action. MIC, on the other hand, claims that LOADSTAR was liable, notwithstanding that the loss of the cargo was due to force majeure, because the same concurred with LOADSTARs fault or negligence. Secondly, LOADSTAR did not raise the is sue 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 or negligent, and because it failed to maintain a seaworthy vessel. Authorizing the voyage notwithstanding its knowledge of a typhoon is tantamount to negligence. Issues: (1) (2) (3) (4) Whether Whether Whether Whether Loadstar was a common carrier or a private carrier Loadstar exercised the degree of diligence required under the circumstances the stipulation that the goods are at the owners risk is valid the action has prescribed

Held: (1) We hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. There was no charter party. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V "Cherokee" was a "general cargo carrier." Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers. (2) The doctrine of limited liability does not apply where there was negligence on the part of the vessel owner or agent. LOADSTAR was at fault or negligent in not maintaining a seaworthy vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In any event, it did not sink because of any storm that may be deemed as force majeure, inasmuch as the wind condition in the area where it sank was determined to be moderate. Since it was remiss in the performance of its duties, LOADSTAR cannot hide behind the "limited liability" doctrine to escape responsibility for the loss of the vessel and its cargo. (3) Three kinds of stipulations have often been made in a bill of lading. The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own negligence. The second is one providing for an unqualified limitation of such liability to an

agreed valuation. And the third is one limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight. According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public policy, but the third is valid and enforceable. Since the stipulation in question is null and void, it follows that when MIC paid the shipper, it was subrogated to all the rights which the latter has against the common carrier, LOADSTAR. (4) MICs cause of action had not yet prescribed at the time it was concerned. Inasmuch as neither the Civil Code nor the Cod e of Commerce states a specific prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA) which provides for a oneyear period of limitation on claims for loss of, or damage to, cargoes sustained during transit may be applied suppletorily to the case at bar. This one-year prescriptive period also applies to the insurer of the goods. In this case, the period for filing the action for recovery has not yet elapsed. Moreover, a stipulation reducing the one-year period is null and void; it must, accordingly, be struck down.

EASTERN SHIPPING LINES v. IAC Facts: Sometime in or prior to June, 1977, M/S Asiatica, a vessel operated by Eastern Shipping Lines (ESL) loaded at Kobe, Japan, for transportation to Manila, 5K pieces of calorized lance pipes in 28 packages valued at P256,039 consigned to Philippine Blooming Mills Co. (BMCI) and 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc. (CTMI). Both sets of goods were insured against marine risk for their stated value with Development Insurance and Surety Corp. (DISC). During the same period, the vessel took on board 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corp. (MAC), and 2 cases of surveying instruments consigned to Aman Enterprises and General Merchandise. (AEGM). The cartons were insured for their stated value by Nisshin Fire & Marine Insurance Co. (NFMI), and the 2 cases by Dowa Fire & Marine Insurance (DFMI). En route to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective insurers paid the marine insurance values to the consignees and were subrogated unto the rights of the latter as the insured. ESL denied liability on the ground that the lsos was due to extraordinary fortuitous event. It also held that the fire which caused the sinking of the ship is an exempting circumstance under Sec. 4(2)(b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss by fire was established, the burden of proving negligence of the vessel was shifted ot the cargo shipper. Issue: 1) Which law should govern, the Civil Code provisions on Common Carriers or the COGSA? 2) Who has the burden of proof to show negligence of the carrier? Held: 1) Civil Code. 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 ESL is governed primarily by the Civil Code. However, in all matters not regulated by the Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. Thus, the COGSA, a special law, is suppletory to the provisions of the Civil Code. ESL. Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over goods, according to all the circumstances of each case. Common carriers are responsible for the loss, destruction, or deterioration of the goods unless the same is due to any of the following causes only: 1) Flood, storm, earthquake, lightnight, or other natural disaster or calamity; xxx In this case, contrary to ESLs claim, fire may not be considered a natural disaster or calamity. This must be so as 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. It may even be caused by the actual fault or privity of the carrier. Hence, 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. Even if fire was deemed a natural disaster, it must have been the proximate and only cause of the loss. Here, the respective insurers have proven that the transported goods have been lost, and ESL has proven that the loss was caused by fire. The burden then is upon ESL to prove that it has exercised the extraordinary diligence required by law. Here, what appears is that, after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage. The crew could not even explain what could have caused the fire. When the smoke was noticed, the fire was already big, hence the fire must have started 24 hours before it was noticed

2)

Sabena Belgian World Airlines vs. CA (GR 104685, 14 March 1996) FACTS: Private respondent MA. PAULA SAN AGUSTIN was a passenger on board Flight SN 284 of defendant airline originating from Casablanca to Brussels, Belgium on her way back to Manila. She checked in her luggage which contained her valuables all amounting to $4,265.00, for which she was issued Tag No. 71423. She stayed overnight in Brussels and her luggage was left on board Flight SN 284. Upon Arrival in Manila, she learned that her luggage was missing and was advised to accomplish and submit a property Irregularity Report which she submitted and filed on the same day. Upon follow up, it remained missing; thus, she filed her formal complaint with the office of Ferge Massed, petitioners Local Manager, demanding immediate attention.

Two weeks later she was notified that her luggage was found. But unfortunately plaintiff was informed that the luggage was lost for the second time. She demanded payment but the airline refused to settle the claim. The trial court ruled in favor of Ma. Paula San Agustin. The appellate court affirmed in toto the trial courts judgment. Petitioner airline company, in contending that the alleged negligence of private respondent should be considered the primary cause for the loss of her luggage, avers that, despite her awareness that the flight ticket had been confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists that private respondent, being a seasoned international traveler, must have likewise been familiar with the standard provisions contained in her flight ticket that items of value are required to be hand-carried by the passenger and that the liability of the airline or loss, delay or damage to baggage would be limited, in any event, to only US$20.00 per kilo unless a higher value is declared in advance and corresponding additional charges are paid thereon. At the Casablanca International Airport, private respondent, in checking in her luggage, evidently did not declare its contents or value. Petitioner cites Section 5(c), Article IX, of the General Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929, as amended by the Hague Protocol of 1955, generally observed by International carriers, stating, among other things, that: Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable papers, securities or other valuables. ISSUE: Whether or not the airline is negligent? Whether respondents neg ligence is the sole and proximate of the loss? HELD: Yes.Fault or negligence consists in the omission of that diligence which is demanded by the nature of an obligation and corresponds with the circumstances of the person, of the time, and of the place. When the source of an obligation is derived from a contract, the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor. This rule is not different in the case of common carriers in the carriage of goods which, indeed, are bound to observe not just the due diligence of a good father of a family but that of extraordinary care in the vigilance over the goods. The appellate court has aptly obser ved: x x x Art. 1733 of the [Civil] Code provides that from the very nature of their business and by reasons of public policy, common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. This extraordinary responsibility, according to Art. 1736, lasts from the time the goods are unconditionally placed in the possession of and received by the carrier until they are delivered actually or constructively to the consignee or person who has the right to receive them. Art. 1737 states that the common carriers duty to observe extraordinary diligence in the vigilance over the goods transported by them remains in full force and effect even when they are temporarily unloaded or stored in transit. And Art. 1735 establishes the presumption tha t if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they had observed extraordinary diligence as required in Article 1733. The above rules remain basically unchanged even when the contract is breached by tort although noncontradictory principles on quasidelict may then be assimilated as also forming part of the governing law. Petitioner is not thus entirely off track when it has likewise raised in its defense the tort doctrine of proximate cause. Unfortunately for petitioner, however, the doctrine cannot, in this particular instance, support its case. Proximate cause is that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury and without which the result would not have occurred. The above findings, which certainly cannot be said to be without basis, foreclose whatever rights petitioner might have had to the possible limitation of liabilities enjoyed by international air carriers under the Warsaw Convention . The Warsaw Convention however denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to wilful misconduct, or if the damage is (similarly) caused x x x by any agent of the carrier acting within the scope of his employment. The Convention does not thus operate as an exclusive enumeration of the instances of an airlines liability, or as an absolute limit of the extent of that liability. ( Loss of baggage twice shows gross negligence)

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. None- phlam

Sarkies Tours Philippines, Inc. v. CA, Elino Fortades, Marisol Fortades and FatimaMinerva Fortades G.R. No. 108897 October 2, 1997 Romero, J. FACTS: Fatima boarded Sarkies Tours bus in Manila on her way to Legazpi City. She had her 3 pieces of luggage containing all of her optometry review books, materials and equipment,trial lenses, trial contact lenses, passport and visa, as well as her mother Marisols U.S.immigration (green) card, among other important documents and person al belongingsloaded in the bus luggage compartment. During a stopover at Daet, it was discovered thatonly one bag remained in the open compartment. The others, including Fatimas things,were missing and might have dropped along the way. Fatima filed an action against Sarkies Tours, claiming that the loss was due to its failure toobserve extraordinary diligence in the care of her luggage and that Sarkies Tours dealt with them in bad faith from the start ISSUE: WON Sarkies Tours is liable HELD: Yes. Common carriers, from the nature of their business and for reasons of public p o l i c y , a r e b o u n d t o o b s e r v e e x t r a o r d i n a r y d i l i g e n c e i n t h e v i g i l a n c e o v e r t h e g o o d s transported by them, and this liability lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same aredelivered, actually or constructively, by the carrier to the person who has a right to receivethem, unless the loss is due to any of the excepted causes under Art. 1734. The ca use of the loss was Sarkies Tours negligence in not ensuring that the doors of thebaggage 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

Coastwise Lighterage Corp. vs. CA (GR 114167, 12 July 1995) Third Division, Francisco R. (J): 4 concur Facts: Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to Manilawith Coastwise Lighterage Corp., using the latters dumb barges. The barges were towed in tandem by thetugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila Bay, while approachingP i e r 1 8 , o n e o f t h e b a r g e s , C o a s t w i s e 9 , s t r u c k a n u n k n o w n s u n k e n o b j e c t . T h e f o r w a r d b u o y a n c y compartment was damaged, and water gushed in through a hole 2 inches wide and 22 inches long. As aconsequence, the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. This prompted the consignee, Pag-asa Sales, Inc. to reject the shipment of molasses as a total loss.Thereafter, Pag -asa Sales, Inc. filed a formal claim with the insurer of its lost cargo, Philippine GeneralInsurance Company (PhilGen) and against the carrier, Coastwise Lighterage. Coastwise Lighterage denied theclaim and it was PhilGen which. paid the consignee, Pag-asa Sales the amount of P700,000.00 representingthe value of the damaged cargo of molasses.In turn, PhilGen then filed an action against Coastwise Lighterage before the RTC of Manila, see king torecover the amount of P700,000.00 which it paid to Pag - asa Sales for the latters lost cargo PhilGen nowclaims to be subrogated to all the contractual rights and claims which the consignee may have against thecarrier, which is presumed to have viola ted the contract of carriage. The RTC (Branch 35) awarded the amount prayed for by PhilGen, i.e. the principal amount of P700,000.00 plus interest thereon at the legal ratec o m p u t e d f r o m 2 9 M a r c h 1 9 8 9 , t h e d a t e t h e c o m p l a i n t w a s f i l e d u n t i l f u l l y p a i d a n d a n o t h e r s u m o f P100,000.00 as attorneys fees and costs.On Coastwise Lighterages appeal to the Court of Appeals, the award was affirmed on 17 December 1993. Hence, the petition for review.The Supreme Court denied the petition, and affirmed the appealed decision. bencam(none SAMAR MINING CO., INC. VS. NORDEUTSCHER LLOYD (132 SCRA 529) Facts: Samar Mining imported 1 crate optima welded wire (amounting toaround USD 424 or PhP 1,700) f r o m G e r m a n y , w h i c h w a s s h i p p e d o n a vessel owned by Nordeutscher Lloyd (M/S Schwabenstein). The shipmentw a s u n l o a d e d i n M a n i l a i n t o a b a r g e f o r t r a n s s h i p m e n t t o D a v a o a n d t e m p o r a r i l y stored in a bonded warehouse owned by AMCYL. The goods n e v e r r e a c h e d D a v a o a n d w e r e n e v e r d e l i v e r e d t o o r r e c e i v e d b y t h e consignee, Samar Mining Co.CFI ruled in favor of Samar Mining holding Nordeutscher Lloyd liable.However, defendants may recoup whatever they may pay Samar Mining byenforcing the judgment against third party defendant AMCYL. Issue: W h e t h e r N o r d e u s t s c h e r L l o y d i s l i a b l e f o r t h e l o s s o f t h e g o o d s a s common carrier? Held: No. At the time of the loss of the goods, the character of possession of Nordeutscher Lloyd shifted from common carrier to agent of Samar MiningCo.The Bill of Lading is serves both as a receipt of goods and is likewisethe contract to transport and deliver the same as stipulated. It is a contractand is therefore the law between the parties. The Bill of Lading in question stipulated that Nordeutscher Lloyd only undertook to transport the goods in itsvessel only up to the port of discharge from ship, which is Manila. The Bill of Lading further stipulated that the goods were to be transshipped by the carrier from Manila to the port of destination Davao. By unloading the shipment inManila and delivering the goods to the warehouse of AMCYL, the appellant was acting within the contractual stipulations contained in the Bill of Lading.Article 1736 of the Civil Code relives the carrier of responsibility over the shipment as soon as the carrier makes actual or constructive d elivery of the goods to the consignee or to the person who has a right to receive them.Under the Civil Code provisions governing Agency, an agent can only b e h e l d l i a b l e i n c a s e s w h e r e h i s a c t s a r e a t t e n d e d b y f r a u d , n e g l i g e n c e , deceit or if there is a conflict of interest between him and the principal. Under the same law an agent is likewise liable if he appoints a substitute when he w a s n o t g i v e n t h e p o w e r t o a p p o i n t o n e o r o t h e r w i s e a p p o i n t s o n e t h a t i s n o t o r i o u s l y i n c o m p e t e n t o r i n s o l v e n t . T h e s e f a c t s w e r e n o t p r o v e n i n t h e record.