First Philippine Industrial Corp. vs.

CA
Facts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995,
petitioner applied for mayor’s 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 motor 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.
Planters Products, Inc. v. CA
Facts:

Planters Products, Inc. purchased from Mitsubishi International Corporation 9,329.7069 metric tons of Urea
46% fertilizer, which the latter shipped aboard the cargo vessel M/V Sun Plum on June 16, 1974. Prior to its
voyage, a time-charter party was entered into between Mitsubishi as shipper, and Kyosei Kisen Kabushiki
Kaisha as shipowner. Before loading the fertilizer aboard the vessel, four of her holds were presumably
inspected by the charterer’s representative and found it fit to take the load. After loading the cargo, the steel
hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin then tied with steel bonds. It
remained sealed throughout the entire voyage.

Upon arrival of the vessel, petitioner unloaded the cargo, which took 11 days. A private marine and cargo
surveyor, Cargo Superintendents Company, Inc. (CSCI) was hired by petitioner to determine the outturn of
the cargo shipped. CSCI reported shortage of 106.726 metric tons, and contamination of 18 metric tons
due to dirt. PPI sent a claim letter against Soriamont Steamship Agencies, the resident agent of KKKK. The
request was denied, hence, PPI filed an action for damages before the CFI Manila. The lower court
sustained the petitioner’s claim, but such decision was reversed by the appellate court, which absolved the
carrier from liability. The appellate court ruled that the vessel was a private carrier and not a common
carrier by reason of the charter party.

Issues:

(1) Whether a common carrier becomes a private carrier by reason of a charter party

(2) Whether the ship owner was able to prove the exercise of the diligence required under the
circumstances

Held:

(1) A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by
the owner to another person for a specified time or use; Charter parties are of two types: (a) contract of
affreightment which involves the use of shipping space on vessels leased by the owner in part or as a
whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the
whole vessel is let to the charterer with a transfer to him of its entire command and possession and
consequent control over its navigation, including the master and the crew, who are his servants. Contract of
affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for a single voyage.

Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The
definition extends to carriers either by land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation as a public employment and not as a
casual occupation. The distinction between a "common or public carrier" and a "private or special carrier"
lies in the character of the business, such that if the undertaking is a single transaction, not a part of the
general business or occupation, although involving the carriage of goods for a fee, the person or
corporation offering such service is a private carrier. Article 1733 of the New Civil Code mandates that
common carriers, by reason of the nature of their business, should observe extraordinary diligence in the
vigilance over the goods they carry. In the case of private carriers, however, the exercise of ordinary
diligence in the carriage of goods will suffice. Moreover, in case of loss, destruction or deterioration of the
goods, common carriers are presumed to have been at fault or to have acted negligently, and the burden of
proving otherwise rests on them. On the contrary, no such presumption applies to private carriers, for
whosoever alleges damage to or deterioration of the goods carried has the onus of proving that the cause
was the negligence of the carrier.

When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were
under the employ of the shipowner and therefore continued to be under its direct supervision and control.
Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for
his cargo when the charterer did not have any control of the means in doing so. This is evident in the
present case considering that the steering of the ship, the manning of the decks, the determination of the
course of the voyage and other technical incidents of maritime navigation were all consigned to the officers
and crew who were screened, chosen and hired by the shipowner. It is only when the charter includes both
the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar
as the particular voyage covering the charter-party is concerned.

(2) In an action for recovery of damages against a common carrier on the goods shipped, the shipper or
consignee should first prove the fact of shipment and its consequent loss or damage while the same was in
the possession, actual or constructive, of the carrier. Thereafter, the burden of proof shifts to respondent to
prove that he has exercised extraordinary diligence required by law or that the loss, damage or
deterioration of the cargo was due to fortuitous event, or some other circumstances inconsistent with its
liability. To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima
facie presumption of negligence.

Before the fertilizer was loaded, the four (4) hatches of the vessel were cleaned, dried and fumigated. After
completing the loading of the cargo in bulk in the ship's holds, the steel pontoon hatches were closed and
sealed with iron lids, then covered with three (3) layers of serviceable tarpaulins which were tied with steel
bonds. The hatches remained close and tightly sealed while the ship was in transit as the weight of the
steel covers made it impossible for a person to open without the use of the ship's boom. It was also shown
during the trial that the hull of the vessel was in good condition, foreclosing the possibility of spillage of the
cargo into the sea or seepage of water inside the hull of the vessel. When M/V "Sun Plum" docked at its
berthing place, representatives of the consignee boarded, and in the presence of a representative of the
shipowner, the foreman, the stevedores, and a cargo surveyor representing CSCI, opened the hatches and
inspected the condition of the hull of the vessel. The stevedores unloaded the cargo under the watchful
eyes of the shipmates who were overseeing the whole operation on rotation basis.

The period during which private respondent was to observe the degree of diligence required of it as a public
carrier began from the time the cargo was unconditionally placed in its charge after the vessel's holds were
duly inspected and passed scrutiny by the shipper, up to and until the vessel reached its destination and its
hull was re-examined by the consignee, but prior to unloading. A shipowner is liable for damage to the
cargo resulting from improper stowage only when the stowing is done by stevedores employed by him, and
therefore under his control and supervision, not when the same is done by the consignee or stevedores
under the employ of the latter.

Common carriers are not responsible for the loss, destruction or deterioration of the goods if caused by the
character of the goods or defects in the packaging or in the containers. The primary cause of these
spillages is the clamped shell which does not seal very tightly. Also, the wind tends to blow away some of
the materials during the unloading process. The probability of the cargo being damaged or getting mixed or
contaminated with foreign particles was made greater by the fact that the fertilizer was transported in "bulk,"
thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of
equipment used in transporting and hauling it. If there was loss or contamination of the cargo, it was more
likely to have occurred while the same was being transported from the ship to the dump trucks and finally to
the consignee's warehouse.

Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage, more so, with a
variable weather condition prevalent during its unloading, as was the case at bar. This is a risk the shipper
or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent
character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its
packaging which further contributed to the loss. On the other hand, no proof was adduced by the petitioner
showing that the carrier was remiss in the exercise of due diligence in order to minimize the loss or damage
to the goods it carried.
Loadstar v Pioneer G.R. No. 157481 January 24, 2006

Facts:
Petitioner Loadstar Shipping is the registered owner and operator of the vessel M/V Weasel. On June 6,
1984, it entered into a voyage-charter with Northern Mindanao Transport Company, Inc. for the carriage of
65,000 bags of cement from Iligan City to Manila. The shipper was Iligan Cement Corporation, while the
consignee in Manila was Market Developers, Inc.

67,500 bags of cement were loaded on board M/V Weasel and stowed in the cargo holds for delivery to the
consignee. Prior to the voyage, the consignee insured the shipment of cement with respondent Pioneer
Asia Insurance Corporation for P1,400,000, for which there was a marine policy issued.

The vessel ran aground. Consequently, the entire shipment of cement was good as gone due to exposure
to sea water. Petitioner thus failed to deliver the goods to the consignee in Manila.

The consignee demanded from petitioner full reimbursement of the cost of the lost shipment. Petitioner
refused to reimburse despite repeated demands. The insurance company paid the consignee P1,400,000
plus an additional amount ofP500,000, the value of the lost shipment of cement. In return, the consignee
executed a Loss and Subrogation Receipt in favor of respondent concerning the latter’s subrogation rights
against petitioner.

Respondent filed a complaint against petitioner in the trial court for the recovery of the sum it paid. The trial
court ruled in favor of the insurance company.

Petitioner’s defense of force majeure was found bereft of factual basis. The RTC called attention to the
PAG-ASA report that at the time of the incident, tropical storm “Asiang” had moved away from the
Philippines. Further, records showed that the sea and weather conditions in the area of Hinubaan, Negros
Occidental from 8:00 p.m. of June 24, 1984 to 8:00 a.m. the next day were slight and smooth. Thus, the
trial court concluded that the cause of the loss was not tropical storm “Asiang” or any other force majeure,
but gross negligence of petitioner.

Petitioner appealed to the Court of Appeals. It affirmed the RTC Decision with modification that Loadstar
shall only pay the sum of 10% of the total claim for attorney’s fees and litigation expenses.
Hence this petition.

Issue:
1. WON petitioner is a common or a private carrier?
2. In either case, did petitioner exercise the required diligence: the extraordinary diligence of a common
carrier or the ordinary diligence of a private carrier?

Held: common carrier, No. Petition denied.

Ratio:

Petitioner is a corporation engaged in the business of transporting cargo by water and for compensation,
offering its services indiscriminately to the public. Thus, without doubt, it is a common carrier. The voyage-
charter agreement between petitioner and Northern Mindanao Transport Company, Inc. did not in any way
convert the common carrier into a private carrier.

Conformably, petitioner remains a common carrier notwithstanding the existence of the charter agreement
with the Northern Mindanao Transport Company, Inc. since the said charter is limited to the ship only and
does not involve both the vessel and its crew. As elucidated in Planters Products, this charter is only a
voyage-charter, not a bareboat charter.

It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common
carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned.
Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although
her holds may, for the moment, be the property of the charterer.

As a common carrier, petitioner is required to observe extraordinary diligence in the vigilance over the
goods it transports. When the goods placed in its care are lost, petitioner is presumed to have been at fault
or to have acted negligently. Petitioner therefore has the burden of proving that it observed extraordinary
diligence in order to avoid responsibility for the lost cargo.

Article 1734 enumerates the instances when a carrier might be exempt from liability for the loss of the
goods. These are:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity
Petitioner claims that the loss of the goods was due to a fortuitous event under paragraph 1. Yet, its claim
is not substantiated. On the contrary, there was evidence that the loss of the entire shipment of cement
was due to the gross negligence of petitioner.

Records show that in the evening of June 24, 1984, the sea and weather conditions in the vicinity of Negros
Occidental were calm. The records reveal that petitioner took a shortcut route, instead of the usual route,
which exposed the voyage to unexpected hazard. Petitioner has only itself to blame for its misjudgment.
BA Finance Corporation vs. CA
161 SCRA 608

Facts: Augusto Yulo, respondent, secured a loan from the petitioner, BA Finance Corp., as evidenced by
his signature on a promissory note in behalf of the A & L Industries. About two months prior to the loan,
however, Augusto Yulo had already left Lily Yulo and their children and had abandoned their conjugal
home. When the obligation became due and demandable, Augusto Yulo failed to pay the same.

Petitioner filed its amended complaint against the spouses on the basis of the promissory note. They also
prayed for the issuance of a writ of attachment that the said spouses were guilty of fraud in contracting the
debt. The trial court issued the writ of attachment thereby enabling the petitioner to attach the properties of
A & L Industries. Private respondent Lily Yulo filed her answer with counterclaim, alleging that Augusto had
already abandoned her and their children five months before the filing of the complaint and that they were
already separated when the promissory note was executed. She also alleged that her signature was forged
in the special power of attorney procured by Augusto.

Petitioner contends that even if the signature was forged or even if the attached properties were her
exclusive property, the same can be made answerable to the obligation because the said properties form
part of the conjugal partnership of the spouses Yulo.

Issue: Whether or not the exclusive property of private respondent forms part of the conjugal partnership of
the spouses and be made answerable to the obligation.

Ruling: SC ordered the release of the attachment of the said property. Though it is presumed that the single
proprietorship established during the marriage is conjugal and even if it is registered in the name of only
one of the spouses. However, for the said property to be held liable, the obligation contracted by the
husband must have redounded to the benefit of the conjugal partnership.

In the case at bar, the obligation which the petitioner is seeking to enforce against the conjugal property
managed by the private respondent was undoubtedly contracted by Augusto Yulo for his own benefit
because at the time he incurred the obligation he had already abandoned his family and had left their
conjugal home.
PHILIPPINE AIRLINES vs. COURT OF APPEALS and LEOVIGILDO A. PANTEJO
275 SCRA 621 G.R. No. 120262
July 17, 1997
FACTS:
On October 23, 1988, Leovegildo Pantejo, then City Fiscal of Surigao City, boarded a PAL plane in Manila
and disembarked in Cebu City where he was supposed to take his connecting flight to Surigao City.
However, due to typhoon Osang, the connecting flight to Surigao City was cancelled. PAL initially gave out
cash assistance of P100 and, the next day, P200 for their expected stay of two days in Cebu. Pantejo
requested instead that he be accommodated in a hotel at the expense of PAL as he did not have cash with
him at that time but PAL refused. Fortunately, Pantejo was accommodated by Andoni Dumlao and he
shared a room with the latter at Sky View Hotel with the promise to pay his share of the expenses upon
reaching Surigao. When the flight for Surigao was resumed, Pantejo was informed that the hotel expenses
of his co-passengers were reimbursed by PAL. At this point, Pantejo informed the Manager for Departure
Services of PAL at Mactan Airport that he was going to sue the airline for discriminating against him. The
manager offered to pay Pantejo P300 which the latter declined. Pantejo filed a suit for damages against
PAL in the Regional Trial Court of Surigao City. Said court rendered judgment in favor of Pantejo, ordering
PAL to pay Pantejo P300 for actual damages, P150,000 as moral damages, P100,000 as exemplary
damages, P15,000 as attorney's fees, and 6% interest from the time of the filing of the complaint until said
amounts shall have been fully paid, plus costs of suit. On appeal, CA affirmed the decision, but with the
exclusion of the award of attorney's fees and litigation expenses. Hence, this petition.
ISSUE:
Whether or not PAL was liable for damages.
HELD:
Yes. A contract to transport passengers is quite different in kind and degree from any other
contractual relation because of the relation which an air carrier sustains with the public. Its business is
mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The
contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance
of the carrier's employees naturally could give ground for an action for damages.
In this case, there was bad faith on the part of PAL. Contrary to the claim of PAL that cash
assistance was given instead because of non-availability of rooms in hotels, the evidence showed that Sky
View Hotel, where respondent Pantejo was billeted, had plenty of rooms available. Pantejo only came to
know about the reimbursements when other passengers informed him that they were able to obtain the
refund for their own hotel expenses. PAL offered to pay P300.00 to Pantejo only after the latter had
confronted the manager of PAL about the discrimination committed against Pantejo, which the manager
realized was an actionable wrong. The hotel accommodation was not a mere amenity or privilege. It was a
company policy whenever a flight is cancelled as testified by several witnesses. And even if it was a mere
privilege, PAL was still liable for damages for its blatant refusal to accord the so-called amenities equally to
all its stranded passengers. No compelling or justifying reason was advanced for such discriminatory and
prejudicial conduct. It was not also true that Pantejo was not listening to the announcements. In fact,
Pantejo immediately proceeded to the office of PAL and requested for hotel accommodations. He was not
only refused accommodations, but he was not even informed that he may later on be reimbursed for his
hotel expenses. The refund of hotel expenses was surreptitiously and discriminatorily made by PAL as only
handful of passengers knew about it. Pantejo was exposed to humiliation and embarrassment especially
because of his government position and social prominence. The discriminatory act of PAL against Pantejo
made PAL liable for moral damages under Article 21 in relation to Article 2219 (10) of the Civil Code. As
held in Alitalia Airways vs. CA, such inattention to and lack of care by petitioner airline for the interest of its
passengers who were entitled to its utmost consideration, particularly as to their convenience, amounted to
bad faith which entitled the passenger to the award of moral damages. Under the peculiar circumstances of
this case, the awards for actual, moral and exemplary damages granted in the judgment of CA were just
and equitable. But the interest of 6% imposed should be computed from the date of rendition of judgment
and not from the filing of the complaint. The judgment of Court of Appeals was AFFIRMED, subject to the
MODIFICATION regarding the computation of the 6% legal rate of interest on the monetary awards granted
therein to private respondent.
Nat’l Development Co. v. CA and Development Insurance & Surety Corp.
G.R. No. L-49407 August 19, 1988

Maritime Co. of the Philippines v. CA and Development Insurance & Surety Corp.
G.R. No. L-49469 August 19, 1988
Paras, J.

FACTS:
In accordance with a memorandum agreement entered into between defendants NDC and MCP,
NDC appointed MCP as its agent to manage and operate Dona Nati vessel for and in its behalf and
account
E. Philipp Corporation loaded on board the vessel 1200 bales of American raw cotton consigned to
the order of Manila Banking Corporation, Manila and the People’s Bank and Trust Company acting for and
in behalf of the Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporatio; also
loaded on the same vessel were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila
Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 10 cases of aluminum foil

En route to Manila the vessel figured in a collision with a Japanese vessel as a result of which 550
bales of aforesaid cargo of American raw cotton as well as the cargo of Kyokuto Boekui, Kaisa, Ltd were
lost and/or destroyed
Development Insurance & Surety Corp. paid the insurance and filed an action for recovery of
money against NDC and MCP

ISSUES: 1. which laws govern loss or destruction of goods due to collision of vessels outside Philippine
waters; 2. what is the extent of liability as well as the rules of prescription provided thereunder

HELD: 1. “[T]he 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” (Art. 1753). Since the goods in question
are transported from San Francisco, California and Tokyo, Japan to the Philippines and that they were lost
or due to a collision which was found to have been caused by the negligence or fault of both captains of the
colliding vessels the laws of the Philippines will apply.
Art 1735: in all other than those mentioned is Article 1734 thereof, 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
collision – not one of those enumerated under Art. 1734; hence, carrier is presumed to be at fault
or to have acted negligently
2. Art. 826 of the Code of Commerce: where collision is imputable to the personnel of a vessel, the
owner of the vessel at fault, shall indemnify the losses and damages incurred after an expert appraisal. But
more in point
Art. 827, ditto: if the collision is imputable to both vessels, each one shall suffer its own damages
and both shall be solidarily responsible for the losses and damages suffered by their cargoes
Art 826 to 839, ditto: the shipowner or carrier is not exempt from liability for damages arising from
collision due to the fault or negligence of the captain; primary liability is imposed on the shipowner or carrier
in because of the accepted doctrine that the shipmaster or captain is merely the representative of the
owner who has the actual or constructive control over the conduct of the voyage
 both the owner (NDC) and agent (MPC) of the offending vessel are liable for the damage done
where both are impleaded; that in case of collision, both the owner and the agent are civilly—jointly and
severally— responsible for the acts of the captain since the obligation which is the subject of the action had
its origin in a tortious act and did not arise from contract
208 SCRA 343 – Civil Law – Transportation – Civil Code vs Code of Commerce (which is to be applied in
the presence of negligence in cases of lost of goods)

Mayleen Paper, Inc. contracted the services of the National Marine Corporation (NMC) to transport 5,000
bales of paper from Taiwan to the Philippines. Upon arrival in Manila, it was discovered that 122 bales were
lost. Mayleen demanded payment of losses from NMC but NMC did not respond. As the papers were
insured by the American Home Assurance Company (AHAC), Mayleen recovered insurance from AHAC
which AHAC promptly paid. AHAC then filed suit for recovery against NMC. NMC filed a motion to dismiss
claiming lack of cause of action on the part of AHAC. NMC argued that under the Code of Commerce,
claims for general averages cannot be granted if the claim does not exceed 5% of the total value of the
cargo. Accordingly, 122 bales is just amounting to 0.18% worth of damage. AHAC argued that the Code of
Commerce is not applicable but rather it is the Civil Code.

ISSUE: Whether or not the applicable rule is the Code of Commerce.

HELD: No. In the Philippines, the liability of the carrier is governed primarily by the Civil Code and 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. Liability here is present due to NMC’s negligence which it
hypothetically admitted when it filed a Motion to Dismiss due to lack of cause action before the lower court.
Thus, American Home Assurance Company is entitled to reimbursement of what it paid to Mayleen Paper,
Inc. as insurer.