1. Extraordinary diligence Eastern Shipping v. IAC
Facts: This is a consolidation of three cases concerning the same instance filed by respondents Nisshin Fire and Marine Insurance, Dowa Fire and Marine Insurance and Development Insurance and Surety Corp. M/S ASIATICA, operated by petitioner Eastern Shipping loaded several articles that were insured by private respondents. Enroute from Japan to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respondent Insurers paid the corresponding marine insurance values to the concerned consignees and were thus subrogated unto the rights of the latter as the insured. Eastern denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting circumstance under COGSA. Issues: 1. Which law should govern – the Civil Code provisions on common carriers or COGSA?
Held: 1. Applicable law – the law of the country to which the goods are to be transported governs the liability of the common carriers in case of their loss, destruction or deterioration. Hence, the Civil Code of the Philippines must govern but in matters not regulated by the said Code, the Code of Commerce and COGSA (being a special law) is suppletory to the provisions of the Code. 2. The civil code only exculpates a carrier if the loss is due to a fortuitous event. Fire may not be considered a natural disaster or calamity. It does not fall within the category of an act of God unless caused by lighting or by other natural disaster or calamity. As the peril not comprehended within the exception, the is common carrier shall be presumed to have been at fault, unless it has proved that extraordinary diligence has been observed. On the other hand, COGSA considers that the carriers are not liable for loss due to fire unless the latter is at fault. 3. Both the TC and IAC found that there was ACTUAL FAULT of the carrier as shown by LACK OF DILIGENCE based on the fact that when the smoke was noticed, the fire was already big and must have been existing for 24 hrs and that the no regular inspection was made as to the condition of the cargoes. 4. Other matters: a. Liability of carrier was decreased to the set amount of COGSA to $500 per package b. Attorney‘s fees were decreased from35k to 5k for Development Insurance
DELSAN TRANSPORT vs. CA FACTS Caltex engaged into a contract of affreightment with the petitioner, Delsan Transport Lines, Inc.(Delsan), for a period of one year whereby the said common carrier agreed to transport Caltex‘s industrial fuel oil from the Batangas-Bataan Refinery to different parts of the country. Under the contract, petitioner took on board its vessel, MT Maysun, 2,277.314 kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. The shipment was insured with private respondent, American Home Assurance Corporation (American Home)
The vessel sank in the early morning of August 15, 1986 near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil. Subsequently, American Home paid Caltex the sum of Php 5,096,635.57 representing the insured value of the cargo. Exercising its right to subrogation under Article 2207 of the New Civil Code, the American Home demanded the Delsan the same amount it paid to Caltex. Due to its failure to collect from Delsan despite prior demand, American Home filed a complaint with the RTC of Makati for collection of a sum of money. The trial court dismissed the complaint against Delsan. It ruled that the vessel, MT Maysun, was seaworthy and that the incident was caused by unexpected inclement
weather condition or force majeure, thus exempting the common carrier from liability for the loss of its cargo. The CA reversed. It gave credence to the weather report issued by PAGASA which stated that the waves were only .7 to 2 meters in height in the vicinity of the Panay Gulf at the day the ship sank, in contrast to the claim of the crew of the ship that the waves were 20 feet high. Delsan contends the following 1. Delsan theorized that when the American Home paid Caltex the value of its lost cargo, the act of American Home is equivalent to a tacit recognition that the ill-fated vessel was seaworthy; otherwise, American Home was not legally liable to Caltex due to the latter‘s breach of implied warranty under the marine insurance policy that the vessel was seaworthy. 2. Delsan avers that although chief officer had merely a 2nd officer‘s license, he was qualified to act as the vessel‘s chief officer. In fact, all the crew and officers of MTT Maysun were exonerated in the administrative investigation.
ISSUES
1. W/N the payment made by American Home to Caltex for the insured value of the lost cargo amounted to an admission that the vessel was seaworthy, thus precluding any action for recovery against the petitioner. NO
2. W/N the non-presentation of the marine insurance policy bars the complaint for recovery of sum of money for lack of cause of action. NO RULING
First Issue: The payment made by American Home for the insured value of the lost cargo operates as waiver of its right to enforce the term of the implied warranty against Caltex under the marine insurance policy. However, the same cannot be validly interpreted as an automatic admission of the vessel‘s seaworthiness by American Home as to foreclose recourse against Delsan for any liability under its contractual obligation as a common carrier. The fact of payment grants American Home subrogatory right which enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against Delsan, the common carrier. From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them, according to all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods, common carriers shall be responsible unless the same is brought about, among others, by flood, storm, earthquake, lightning or other natural disaster or calamity. In all other cases, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted
negligently, unless they extraordinary diligence.
prove
they
observed
In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex, Delsan attributes the sinking of MT Maysun to fortuitous event or force majeure. Although the testimony of the captain and chief mate that there were strong winds and waves 20 feet high was effectively rebutted and belied by the weather report of PAGASA. Thus, as the CA correctly ruled, Delsan‘s vessel, MT Maysun, sank with its entire cargo for the reason that it was not seaworthy. There was no squall or bad weather or extremely poor sea condition in the vicinity where the said vessel sank. Additionally, the exoneration of MT Maysun‘s officers and crew merely concern their respective administrative liabilities. It does not in any way operate to absolve Delsan the common carrier from its civil liability arising from its failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of its employees, the determination of which properly belongs to the courts. In the case at bar, Delsan is liable for the insured value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the presumption of fault or negligence as common carrier occasioned by the unexplained sinking of its vessel, MT Maysun, while in transit. Second Issue: It is the view of the SC that the presentation in evidence of the marine insurance policy is not indispensable in this
case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. The subrogation receipt, by itself, is sufficient to establish not only the relationship of American Home as insurer and Caltex, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance claim. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim.
Philippine Charter Insurance Corp. vs. Unknown Owner PHILIPPINE CHARTER INSURANCE CORPORATION vs. UNKNOWN OWNER OF THE VESSEL M/V “NATIONAL HONOR,” NATIONAL SHIPPING CORPORATION OF THE PHILIPPINES and INTERNATIONAL CONTAINER SERVICES, INC. [G.R. No. 161833. July 8, 2005] FACTS:
Petitioner Philippine Charter Insurance Corporation (PCIC) is the insurer of a shipment on board the vessel M/V ―National Honor,‖ represented in the Philippines by its agent, National Shipping Corporation of the Philippines (NSCP). The M/V ―National Honor‖ arrived at the Manila International Container Terminal (MICT). The International Container Terminal Services, Incorporated (ICTSI) was furnished with a copy of the crate cargo list
and bill of lading, and it knew the contents of the crate. The following day, the vessel started discharging its cargoes using its winch crane. The crane was operated by Olegario Balsa, a winch man from the ICTSI, exclusive arrastre operator of MICT. Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor of the ICTSI, conducted an inspection of the cargo. They inspected the hatches, checked the cargo and found it in apparent good condition. Claudio Cansino, the stevedore of the ICTSI, placed two sling cables on each end of Crate No. 1. No sling cable was fastened on the mid-portion of the crate. In Dauz‘s experience, this was a normal procedure. As the crate was being hoisted from the vessel‘s hatch, the mid-portion of the wooden flooring suddenly snapped in the air, about five feet high from the vessel‘s twin deck, sending all its contents crashing down hard, resulting in extensive damage to the shipment. PCIC paid the damage, and as subrogee, filed a case against M/V National Honor, NSCP and ICTSI. Both RTC and CA dismissed the complaint. ISSUE: Whether or not the presumption of negligence is applicable in the instant case. HELD: No. We agree with the contention of the petitioner that common carriers, from the nature of their business and for reasons of public policy, are mandated to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. he Court has defined extraordinary diligence in the vigilance over the goods as follows: The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for sale, carriage and delivery. It requires common carriers to render service with the greatest skill and foresight and ―to use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.‖ The common carrier‘s duty to observe the requisite diligence in the shipment of goods lasts from the time the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for transportation until delivered to, or until the lapse of a reasonable time for their acceptance, by the person entitled to receive them. When the goods shipped are either lost or arrive in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. To overcome the presumption of negligence in the case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence.
However, under Article 1734 of the New Civil Code, the presumption of negligence does not apply to any of the following causes: 1. Flood, storm, earthquake, lightning or other natural disaster or calamity; 2. Act of the public enemy in war, whether international or civil; 3. Act or omission of the shipper or owner of the goods; 4. The character of the goods or defects in the packing or in the containers; 5. Order or act of competent public authority. It bears stressing that the enumeration in Article 1734 of the New Civil Code which exempts the common carrier for the loss or damage to the cargo is a closed list. To exculpate itself from liability for the loss/damage to the cargo under any of the causes, the common carrier is burdened to prove any of the a fore cited causes claimed by it by a preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted to the shipper to prove that the carrier is negligent. ―Defect‖ is the want or absence of something necessary for completeness or perfection; a lack or absence of something essential to completeness; a deficiency in something essential to the proper use for the purpose for which a thing is to be used. On the other hand, inferior means of poor quality, mediocre, or second rate. A thing may be of inferior quality but not necessarily defective. In other words, ―defectiveness‖ is not synonymous with ―inferiority.‖
x
x
x
In the present case, the trial court declared that based on the record, the loss of the shipment was caused by the negligence of the petitioner as the shipper: The same may be said with respect to defendant ICTSI. The breakage and collapse of Crate No. 1 and the total destruction of its contents were not imputable to any fault or negligence on the part of said defendant in handling the unloading of the cargoes from the carrying vessel, but was due solely to the inherent defect and weakness of the materials used in the fabrication of said crate. The crate should have three solid and strong wooden batten placed side by side underneath or on the flooring of the crate to support the weight of its contents. x x x
Saludo Jr. v. CA Facts: Crispina Galdo Saludo, mother of the petitioners, died in Chicago, Illinois. Pomierski and Son Funeral Home of Chicago, made the necessary preparations and arrangements for the shipment of the remains from
Chicago to the Philippines. Pomierski brought the remains to Continental Mortuary Air Services (CMAS) at the Chicago Airport which made the necessary arrangements such as flights, transfers, etc. CMAS booked the shipment with PAL thru the carrier‘s agent Air Care International. PAL Airway Bill Ordinary was issued wherein the requested routing was from Chicago to San Francisco on board Trans World Airline (TWA) and from San Francisco to Manila on board PAL. Salvacion (one of the petitioners), upon arrival at San Francisco, went to the TWA to inquire about her mother‘s remains. But she was told they did not know anything about it. She then called Pomierski that her mother‘s remains were not at the West Coast terminal. Pomierski immediately called CMAS which informed that the remains were on a plane to Mexico City, that there were two bodies at the terminal, and somehow they were switched. CMAS called and told Pomierski that they were sending the remains back to California via Texas. Petitioners filed a complaint against TWA and PAL fir the misshipment and delay in the delay of the cargo containing the remains of the late Crispina Saludo. Petitioners alleged that private respondents received the casketed remains of Crispina on October 26, 1976, as evidenced by the issuance of PAL Airway Bill by Air Care and from said date, private respondents were charged with the responsibility to exercise extraordinary diligence so much so that the alleged switching of the caskets on
October 27, 1976, or one day after the private respondents received the cargo, the latter must necessarily be liable.
essence a receipt alone, is not conclusive, but may be explained, varied or contradicted by parol or other evidence.
Issues:
In other words, on October 26, 1976 the cargo containing the casketed remains of Crispina Saludo was booked for PAL Flight Number PR-107 leaving San Francisco for Manila on October 27, 1976, PAL Airway Bill No. 07901180454 was issued, not as evidence of receipt of delivery of the cargo on October 26, 1976, but merely as a confirmation of the booking thus made for the San Francisco-Manila flight scheduled on October 27, 1976. Actually, it was not until October 28, 1976 that PAL received physical delivery of the body at San Francisco, as duly evidenced by the Interline Freight Transfer Manifest of the American Airline Freight System and signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.
Whether or not there was delivery of the cargo upon mere issuance of the airway bill Whether or not the delay in the delivery of the casketed remains of petitioners‘ mother was due to the fault of respondent airline companies Held: NO to both, but TWA was held to pay petitioners nominal damages of P40,000 for its violation of the degree of diligence required by law to be exercised by every common carrier Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier for transportation but, when issued, is competent and prima facie, but not conclusive, evidence of delivery to the carrier. A bill of lading, when properly executed and delivered to a shipper, is evidence that the carrier has received the goods described therein for shipment. Except as modified by statute, it is a general rule as to the parties to a contract of carriage of goods in connection with which a bill of lading is issued reciting that goods have been received for transportation, that the recital being in
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled to receive them. And, there is delivery to the carrier when the goods are ready for and have been placed in the
exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the carrier, the liability of the common carrier commences eo instanti. Hence, while we agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. Only when such fact of delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked. As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the cargo to the carrier on October 26, 1976. Rather, as earlier explained, the body intended to be shipped as agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which was not caused by them, and subsequent events caused thereby, private respondents cannot be held liable.
The oft-repeated rule regarding a carrier's liability for delay is that in the absence of a special contract, a carrier is not an insurer against delay in transportation of goods. When a common carrier undertakes to convey goods, the law implies a contract that they shall be delivered at destination within a reasonable time, in the absence, of any agreement as to the time of delivery. But where a carrier has made an express contract to transport and deliver property within a specified time, it is bound to fulfill its contract and is liable for any delay, no matter from what cause it may have arisen. This result logically follows from the well-settled rule that where the law creates a duty or charge, and the party is disabled from performing it without any default in himself, and has no remedy over, then the law will excuse him, but where the party by his own contract creates a duty or charge upon himself, he is bound to make it good notwithstanding any accident or delay by inevitable necessity because he might have provided against it by contract. Whether or not there has been such an undertaking on the part of the carrier to be determined from the circumstances surrounding the case and by application of the ordinary rules for the interpretation of contracts. Echoing the findings of the trial court, the respondent court correctly declared that — In a similar case of delayed delivery of air cargo under a very similar stipulation contained in the airway bill which
reads: "The carrier does not obligate itself to carry the goods by any specified aircraft or on a specified time. Said carrier being hereby authorized to deviate from the route of the shipment without any liability therefor", our Supreme Court ruled that common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation. Said rights and obligations are created by a specific contract entered into by the parties ( Mendoza vs. PAL, 90 Phil. 836). There is no showing by plaintiffs that such a special or specific contract had been entered into between them and the defendant airline companies. And this special contract for prompt delivery should call the attention of the carrier to the circumstances surrounding the case and the approximate amount of damages to be suffered in case of delay (See Mendoza vs. PAL, supra). There was no such contract entered into in the instant case.‖ A common carrier undertaking to transport property has the implicit duty to carry and deliver it within reasonable time, absent any particular stipulation regarding time of delivery, and to guard against delay. In case of any unreasonable delay, the carrier shall be liable for damages immediately and proximately resulting from such neglect of duty. As found by the trial court, the delay
in the delivery of the remains of Crispina Saludo, undeniable and regrettable as it was, cannot be attributed to the fault, negligence or malice of private respondents, a conclusion concurred in by respondent court and which we are not inclined to disturb.
LORENZO SHIPPING vs. BJ MATHEL FACTS
Petitioner Lorenzo Shipping Corporation is a domestic corporation engaged in coastwise shipping. Respondent BJ Marthel International, Inc. is an importer and distributor of different brands of engines and spare parts. Respondent supplied petitioner with spare parts for the latter's marine engines. According to the quotation it sent, deliveries of such items are ―within 2 months after receipt of firm order.‖ Petitioner thereafter issued to respondent Purchase Order No. 13839 for the procurement of one set of cylinder liner, valued at P477,000, to be used for M/V Dadiangas Express. The purchase order was cosigned by Jose Go, Jr., petitioner's vice-president, and Henry Pajarillo, respondent‘s sales manager. Instead of paying the 25% down payment (indicated in the purchase order) for the first cylinder liner, petitioner issued in favor of respondent ten postdated checks. The checks were supposed to represent the full payment of the aforementioned cylinder liner.
Subsequently, petitioner issued Purchase Order No. 14011, for another unit of cylinder liner. This purchase order stated the term of payment to be "25% upon delivery, balance payable in 5 bi-monthly equal installments." Like the first purchase order, the second purchase order did not state the date of the cylinder liner's delivery. On 26 January 1990, respondent deposited petitioner's check that was postdated 18 January 1990, however, the same was dishonored by the drawee bank due to insufficiency of funds. The remaining nine postdated checks were eventually returned by respondent to petitioner. Petitioner claimed that it replaced said check with a good one, the proceeds of which were applied to its other obligation to respondent. For its part, respondent insisted that it returned said postdated check to petitioner. On 20 April 1990, Pajarillo delivered the two cylinder liners at petitioner's warehouse in Manila. The sales invoices evidencing the delivery of the cylinder liners both contain the notation "subject to verification" under which the signature of petitioner's warehouseman, appeared. Respondent sent a Statement of Account and respondent's vice-president sent a demand letter dated to petitioner requiring the latter to pay. Petitioner sent the former a letter offering to pay only P150,000 for the cylinder liners. In said letter, petitioner claimed that as the cylinder liners were delivered late and due to the scrapping of the M/V Dadiangas Express, it (petitioner)
would have to sell the cylinder liners in Singapore and pay the balance from the proceeds of said sale. Respondent filed an action for sum of money and damages before the RTC. Prior to the filing of a responsive pleading, respondent filed an amended complaint with preliminary attachment. The amendments also pertained to the issuance by petitioner of the postdated checks and the amounts of damages claimed. The RTC granted respondent's prayer for the issuance of a preliminary attachment. Petitioner filed an Urgent ExParte Motion to Discharge Writ of Attachment attaching thereto a counter-bond which the RTC allowed. Petitioner afterwards filed its Answer alleging therein that time was of the essence in the delivery of the cylinder liners and that the delivery on 20 April 1990 of said items was late as respondent committed to deliver said items "within two (2) months after receipt of firm order." Respondent filed a Second Amended Complaint with Preliminary Attachment which dealt solely with the number of postdated checks issued by petitioner as full payment for the first cylinder liner it ordered from respondent. (In the first amended complaint, only nine postdated checks were involved, in its second amended complaint, there were ten postdated checks). Petitioner filed a Motion alleging therein that the cylinder liners run the risk of obsolescence and deterioration to the prejudice of the parties to this case. Thus, petitioner prayed that it be allowed to sell the cylinder liners at the
best possible price and to place the proceeds of said sale in escrow. This motion was granted. The RTC dismissed the complaint which ordered the plaintiff to pay P50,000.00 to the defendant. It held respondent bound to the quotation it submitted to petitioner particularly with respect to the terms of payment and delivery of the cylinder liners. It also declared that respondent had agreed to the cancellation of the contract of sale when it returned the postdated checks issued by petitioner. The CA reversed the decision of the RTC. ISSUES
1. Whether or not respondent incurred delay in performing its obligation under the contract of sale - NO 2. Whether or not said contract was validly rescinded by petitioner. –NO
RULING
Petitioner maintains that its obligation to pay fully the purchase price was extinguished because the adverted contract was validly terminated due to respondent's failure to deliver within the two-month period. The threshold question, then, is: Was there late delivery of the subjects of the contract of sale to justify petitioner to disregard the terms of the contract considering that time was of the essence thereof?
In determining whether time is of the essence in a contract, the ultimate criterion is the actual or apparent intention of the parties and before time may be so regarded by a court, there must be a sufficient manifestation, either in the contract itself or the surrounding circumstances of that intention. Petitioner insists that although its purchase orders did not specify the dates when the cylinder liners were supposed to be delivered, nevertheless, respondent should abide by the term of delivery appearing on the quotation it submitted to petitioner. Petitioner theorizes that the quotation embodied the offer from respondent while the purchase order represented its (petitioner's) acceptance of the proposed terms of the contract of sale. Thus, petitioner is of the view that these two documents "cannot be taken separately as if there were two distinct contracts." We do not agree. While this Court recognizes the principle that contracts are respected as the law between the contracting parties, this principle is tempered by the rule that the intention of the parties is primordial and "once the intention of the parties has been ascertained, that element is deemed as an integral part of the contract as though it has been srcinally expressed in unequivocal terms." In the present case, we cannot subscribe to the position of petitioner that the documents, by themselves, embody the terms of the sale of the cylinder liners. One can easily glean the significant differences in the terms as stated in the formal quotation and Purchase Order No. 13839 with regard to the due date of the down payment for the first cylinder liner and the date of its delivery as well as
Purchase Order No. 14011 with respect to the date of delivery of the second cylinder liner. While the quotation provided by respondent evidently stated that the cylinder liners were supposed to be delivered within two months from receipt of the firm order of petitioner and that the 25% down payment was due upon the cylinder liners' delivery, the purchase orders prepared by petitioner clearly omitted these significant items. The petitioner's Purchase Order No. 13839 made no mention at all of the due dates of delivery of the first cylinder liner and of the payment of 25% down payment. Its Purchase Order No. 14011 likewise did not indicate the due date of delivery of the second cylinder liner. In the instant case, the formal quotation provided by respondent represented the negotiation phase of the subject contract of sale between the parties. As of that time, the parties had not yet reached an agreement as regards the terms and conditions of the contract of sale of the cylinder liners. Petitioner could very well have ignored the offer or tendered a counter-offer to respondent while the latter could have, withdrawn or modified the same. The parties were at liberty to discuss the provisions of the contract of sale prior to its perfection. In this connection, we turn to the testimonies of Pajarillo and Kanaan, Jr., that the terms of the offer were, indeed, renegotiated prior to the issuance of Purchase Order No. 13839. The law implies, however, that if no time is fixed, delivery shall be made within a reasonable time, in the absence of anything to show that an immediate delivery intended.
We also find significant the fact that while petitioner alleges that the cylinder liners were to be used for dry dock repair and maintenance of its M/V Dadiangas Express between the later part of December 1989 to early January 1990, the record is bereft of any indication that respondent was aware of such fact. The failure of petitioner to notify respondent of said date is fatal to its claim that time was of the essence in the subject contracts of sale. Finally, the ten postdated checks issued in November 1989 by petitioner and received by the respondent as full payment of the purchase price of the first cylinder liner supposed to be delivered on 02 January 1990 fail to impress. It is not an indication of failure to honor a commitment on the part of the respondent. The earliest maturity date of the checks was 18 January 1990. As delivery of said checks could produce the effect of payment only when they have been cashed, respondent's obligation to deliver the first cylinder liner could not have arisen as early as 02 January 1990 as claimed by petitioner since by that time, petitioner had yet to fulfill its undertaking to fully pay for the value of the first cylinder liner. As explained by respondent, it proceeded with the placement of the order for the cylinder liners with its principal in Japan solely on the basis of its previously harmonious business relationship with petitioner. As an aside, let it be underscored that "[e]ven where time is of the essence, a breach of the contract in that respect by one of the parties may be waived by the other party's subsequently treating the contract as still in force." Petitioner's receipt of the cylinder liners when they were
delivered to its warehouse on 20 April 1990 clearly indicates that it considered the contract of sale to be still subsisting up to that time. Indeed, had the contract of sale been cancelled already as claimed by petitioner, it no longer had any business receiving the cylinder liners even if said receipt was "subject to verification." By accepting the cylinder liners when these were delivered to its warehouse, petitioner indisputably waived the claimed delay in the delivery of said items.
Sealoader shipping vs grand cement
We, therefore, hold that in the subject contracts, time was not of the essence. The delivery of the cylinder liners on 20 April 1990 was made within a reasonable period of time considering that respondent had to place the order for the cylinder liners with its principal in Japan and that
Facts:
the latter was, at that time, beset by heavy volume of work. There having been no failure on the part of the respondent to perform its obligation, the power to rescind the contract is unavailing to the petitioner. Here, there is no showing that petitioner notified respondent of its intention to rescind the contract of sale between them. Quite the contrary, respondent's act of proceeding with the opening of an irrevocable letter of credit on 23 February 1990 belies petitioner's claim that it notified respondent of the cancellation of the contract of sale. Truly, no prudent businessman would pursue such action knowing that the contract of sale, for which the letter of credit was opened, was already rescinded by the other party.
Doctrine: Contributory Negligence is cond uct on the part of the injured party, contributing as a legal ca use to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection
Sealoader executed a Time Charter Party Aggrement with Joyce Launch for the chartering of MT Viper in order to tow its unpropelled barges for a minimum of 15 days. Sealoder entered into a contract with Grand Cement for the loading of cement clinkers and the delivery thereof to Manila. On March 31, 1994, Sealoder‘s barge arrived at the wharf of Grand Cement tugged by MT Viper. It was not immediately loaded as the employees of Grand Cement were loaded another vessel. On April 4, typhoon Bising struck Cebu area. The barge was still docked at the wharf of Grand Cement. As it became stronger, MT Viper tried to tow the barge away but it was unsuccessful because the towing line connecting the vessels snapped since the mooring lines were not cast off, which is the ultimate cause. Hence, the barge rammed the wharf causing significant damage.
Grand Cement filed a complaint for damages (P2.4M) since Sealoader ignored its demands. They allege that Sealoader was negligent when it ignored its employee‘s advice to move the vessels after it had received weather updates. Sealoader filed a motion to dismiss on the ground that Joyce Launch is the one liable since it was the owner of MT Viper, who‘s employees were manning the vessel. Sealoader filed a cross-claim against Joyce Launch. Joyce maintains that the damages were due to force majeure and faulted Grand Cement‘s employees for abandoning the wharf leaving them helpless and for not warning them early on. Upon testimonies, the RTC rendered judgment in favor of Grand Cement holding the two companies liable since there was complete disregard of the storm signal, the captain of the vessel was not present and the vessel was not equipped with a radio or any navigational facility, which is mandatory. Joyce launch did not appeal. On appeal, the CA affirmed the decision but on MR, it partly reversed its decision finding Grand Cement to be guilty of contributory negligence since it was found that it was still loading the other vessel at the last minute just before the storm hit, hence Sealoder‘svessel did not move. Damages were reduced to 50%. Hence, petition for review to SC. Issue:
Who should be liable for damage sustained by the wharf of Grand Cement?
Ruling:
Sealoader is liable for its negligence. First because it was not equipped with a radio or a navigational facility and it failed to monitor the prevailing weather conditions. Second, it cannot pass the responsibility of casting off the mooring lines because the people at the wharf could not just cast off the mooring lines without any instructions from the crew of the vessel. It should have taken the initiative to cast off the mooring lines early on. With regard to Grand Cement‘s contributory negligence, the court found that it was not guilty thereof. It had timely informed the barge of the impending typhoon and directed the vessels to move to a safer place. Sealoader had the responsibility to inform itself of the prevailing weather conditions in the areas where its vessel was to sail. It cannot merely rely on other vessels for weather updates and warnings on approaching storms. For to do so would be to gamble with the safety of its own vessel, putting the lives of its crew under the mercy of the sea, as well as running the rick of causing damage to property of third parties for which it would necessarily be liable.
2.Presumption of negligence
DELSAN TRANSPORT LINES, INC. vs. AMERICAN HOME ASSURANCE CORPORATIONG.R. No. 149019 August 15, 2006GARCIA, J Facts:
479,262.57 for spillage, pursuant to Marine Risk Note, and P1,939,575.37 for backflow of the diesel oil pursuant to Inland Floater Policy. AHAC, as Caltex‘s subrogee, instituted Civil Case No. 85-29357 against Delsan for loss caused by the spillage.
Delsan is a domestic corporation which owns and operates the vessel MT Larusan. On the other hand, respondent American Home Assurance Corporation (AHAC for brevity) is a foreign insurance company duly licensed to do business in the Philippines through its agent, the American-International Underwriters, Inc. (Phils.). It is engaged, among others, in insuring cargoes for transportation within the Philippines. Delsan received on board MT Larusan a shipment consisting of 1,986.627
Issue: May Delsan be held liable for loss caused by the spillage of the diesel oil?
k/l Automotive Diesel Oil (diesel oil) at the Bataan Refinery Corporation for transportation and delivery to the bulk depot in Bacolod City of Caltex Phils., Inc. (Caltex), pursuant to a Contract of afreightment. The shipment was insured by respondent AHAC against all risks under Inland Floater Policy No. AH-IF64-1011549P and Marine Risk Note No. 34-5093-6. The shipment arrived in Bacolod City and immediately thereafter, unloading operations commenced. However, the discharging had to be stopped on account of the discovery that the port bow mooring of the vessel was intentionally cut or stolen by unknown persons, which caused the diesel oil to spill into the sea.As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but the latter refused to pay. Asinsurer, AHAC paid Caltex the sum of P
negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of negligence in case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence subject to exceptions under Art. 1734.The extraordinary responsibility of common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by, the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to a person who has the right to receive them. The discharging of oil products to Caltex Bulk Depot has not yet been finished, Delsan still has the duty to guard and to preserve the cargo. The carrier still has in it the responsibility to guard and preserve the goods, a duty incident to its having the goods transported
Held: Yes. The court declared that Delsan, being a common carrier, should have exercised extraordinary diligence in the performance of its duties. Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault or to have acted
MAERSK LINES vs. CA FACTS
Petitioner Maersk Line is engaged in the transportation of goods by sea, doing business in the Philippines through its general agent Compania de Tabacos de Filipinas, while private respondent Efren Castillo is the proprietor of Ethegal Laboratories, a firm engaged in the manufacture of pharmaceutical products. On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico 600,000 empty gelatin capsules for the manufacture of his pharmaceutical products. The capsules were placed in 6 drums of 100,000 capsules each valued at US$1,668.71. Shipper Eli Liily,Inc. advised Castillo through a Memorandum of Shipment that the products were already shipped on board MV ―Anders Maesrkline‖ and date of ar rival to be April 3, 1977. However, for unknown reasons, said cargoes of capsules were diverted to Richmond, VA and then transported back to Oakland, CA and with the goods finally arriving in the PI on June 10, 1977. Consignee Castillo refused to take delivery of the goods on account of its failure to arrive on time, and filed an action for rescission of contract with damages against Maersk and Eli Lilly alleging gross negligence and undue delay. Maersk contends that it is liable only in case of loss, destruction or deterioration of goods under Art 1734 NCC while Eli Lilly in its cross claim argued that the delay was
due solely to the negligence of Maersk Line. Trial Court dismissed the complaint against Eli Lilly and the latter withdrew cross claim but TC still held Maersk liable and CA affirmed with modifications. ISSUES 1. W/N a cause of action exists against Maersk Line given that there was a dismissal of the complaint against Eli Lilly? Yes, but not under the cross claim rather because Maersk was an srcinal party. 2. W/N Castillo is entitled to damages resulting from delay in the delivery of the shipment in the absence in the bill of lading of a stipulation on the delivery of goods? Yes. RULING The complaint was filed srcinally against Eli Lilly, Inc. as shipper-supplier and petitioner as carrier. Petitioner Maersk Line being an srcinal party defendant upon whom the delayed shipment is imputed cannot claim that the dismissal of the complaint against Eli Liily inured to its benefit. Petitioner contends as well that it cannot be held liable because there was no special contract under which the carrier undertook to deliver the shipment on or before a specific date and that the Bill of Lading provides that ―The Carrier does not undertake that the Goods shall arrive at port of discharge or the place of delivery at any particular
time…‖. However, although the SC stated that a bill of lading being a contract of adhesion will not be voided on that basis alone, it did declare that the questioned provision to be void because it has the effect of practically leaving the date of arrival of the subject shipment on the sole determination and will of the carrier. It is established that without any stipulated date, the delivery of shipment or cargo should be made within a reasonable time. In the case at hand, the SC declared that a delay in the delivery of the goods spanning a period of 2 months and 7 days falls way beyond the realm of reasonableness.
FGU INSURANCE vs. CA FACTS
Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was engaged in the shipping business. It owned the M/T ANCO tugboat and the D/B Lucio barge which were operated as common carriers. Since the D/B Lucio had no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for it to move from one place to another. The D/B Lucio was towed by the M/T ANCO all the way from Mandaue City to San Jose, Antique. The vessels arrived at San Jose, Antique, at about one o‘clock in the afternoon of 30 September 1979. The tugboat M/T ANCO left the barge immediately after reaching San Jose, Antique.
When the barge and tugboat arrived at San Jose, Antique, in the afternoon of 30 September 1979, the clouds over the area were dark and the waves were already big. The arrastre workers unloading the cargoes of SMC on board the D/B Lucio began to complain about their difficulty in unloading the cargoes. SMC‘s District Sales Supervisor, Fernando Macabuag, requested ANCO‘s representative to transfer the barge to a safer place because the vessel might not be able to withstand the big waves. ANCO‘s representative did not heed the request because he was confident that the barge could withstand the waves. This, notwithstanding the fact that at that time, only the M/T ANCO was left at the wharf of San Jose, Antique, as all other vessels already left the wharf to seek shelter. With the waves growing bigger and bigger, only Ten Thousand Seven Hundred Ninety (10,790) cases of beer were discharged into the custody of the arrastre operator. At about ten to eleven o‘clock in the evening of 01 October 1979, the crew of D/B Lucio abandoned the vessel because the barge‘s rope attached to the wharf was cut off by the big waves. At around midnight, the barge run aground and was broken and the cargoes of beer in the barge were swept away. As a result, ANCO failed to deliver to SMC‘s consignee Twenty-Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen and Five Hundred Fifty (550) cases of Cerveza Negra. The value per case of Pale Pilsen was Forty-Five Pesos and Twenty Centavos (P45.20).
The value of a case of Cerveza Negra was Forty-Seven Pesos and Ten Centavos (P47.10), hence, SMC‘s claim against ANCO amounted to One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00). As a consequence of the incident, SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO for the amount of One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00) plus interest, litigation expenses and Twenty-Five Percent (25%) of the total claim as attorney‘s fees. ISSUE
ANCO raised the defense that the breach was caused by a fortuitous event, thus it is exempted from liability. Is this contention correct? RULING
No. In order for fortuitous event to be a valid defense for a common carrier, the event must be: 1. Unforeseeable , or if foreseeable it must be inevitable. 2. It must be the proximate and the only cause of the loss. 3. The common carrier must exercise due diligence to prevent or minimize the loss (before, during after the occurrence of the event). Caso fortuito or force majeure (which in law are identical insofar as they exempt an obligor from liability)[19] by
definition, are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though foreseen, were inevitable. It is therefore not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. In this case, the calamity which caused the loss of the cargoes was not unforeseen nor was it unavoidable. In fact, the other vessels in the port of San Jose, Antique, managed to transfer to another place, a circumstance which prompted SMC‘s District Sales Supervisor to request that the D/B Lucio be likewise transferred, but to no avail. The D/B Lucio had no engine and could not maneuver by itself. Even if ANCO‘s representatives wanted to transfer it, they no longer had any means to do so as the tugboat M/T ANCO had already departed, leaving the barge to its own devices. The captain of the tugboat should have had the foresight not to leave the barge alone considering the pending storm. While the loss of the cargoes was admittedly caused by the typhoon Sisang, a natural disaster, ANCO could not escape liability to respondent SMC. The records clearly show the failure of petitioners‘ representatives to exercise the extraordinary degree of diligence mandated by law. To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss. There must have been no contributory negligence on the part of the common carrier. As held in the case of Limpangco Sons v. Yangco Steamship Co.:
. . . To be exempt from liability because of an act of God, the tug must be free from any previous negligence or misconduct by which that loss or damage may have been occasioned. For, although the immediate or proximate cause of the loss in any given instance may have been what is termed an act of God, yet, if the tug unnecessarily exposed the two to such accident by any culpable act or omission of its own, it is not excused.
C.F. Sharp issued International Bill of Lading for the cargo – the port of discharge for the cargo was at the Khor Fakkan port and the port of delivery was Riyadh, Saudi Arabia, via Port Dammam. The cargo was loaded in M/S ―Arabian Senator.‖
Therefore, as correctly pointed out by the appellate court, there was blatant negligence on the part of M/T ANCO‘s crewmembers, first in leaving the engine-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of
On June 7, 1993, M/S ―Arabian Senator‖ left the Manila South Harbor for Saudi Arabia with the cargo on board. When the vessel arrived in Khor Fakkan Port, the cargo was reloaded on board DSR-Senator Lines‘ feeder vessel, M/V ―Kapitan Sakharov,‖ bound for Port Dammam, Saudi Arabia.
SMC‘s representatives to have the barge transferred to a safer place, as was done by the other vessels in the port; thus, making said blatant negligence the proximate cause of the loss of the cargoes.
However, while in transit, the vessel and all its cargo caught fire.
DSR-SENATOR vs. FEDERAL FACTS Berde Plants delivered 632 units of artificial trees to C.F. Sharp, the General Ship Agent of DSR-Senator Lines, a foreign shipping corporation, for transportation and delivery to the consignee, Al-Mohr International Group, in Riyadh, Saudi Arabia.
Federal Phoenix Assurance insured the cargo against all risks.
On July 5, 1993, DSR-Senator Lines informed Berde Plants that M/V ―Kapitan Sakharov‖ with its cargo was gutted by fire and sank on or about July 4, 1993. On December 16, 1993, C.F. Sharp issued a certification to that effect Consequently, Federal Phoenix Assurance paid Berde Plants P941,429.61 corresponding to the amount of insurance for the cargo. In turn Berde Plants executed in its favor a ―Subrogation Receipt‖ dated January 17, 1994. On February 8, 1994, Federal Phoenix Assurance sent a letter to C.F. Sharp demanding payment of P941,429.61 on the basis of the Subrogation Receipt. C.F. Sharp
denied any liability on the ground that such liability was extinguished when the vessel carrying the cargo was gutted by fire. On March 11, 1994, Federal Phoenix Assurance filed with the RTC, Branch 16, Manila a complaint for damages against DSR-Senator Lines and C.F. Sharp, praying that the latter be ordered to pay actual damages of P941,429.61, compensatory damages of P100,000.00 and costs. ISSUE W/N DSR-Senator is liable – YES
need not be an express finding of negligence to hold it liable. Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. Respondent Federal Phoenix Assurance raised the presumption of negligence against petitioners. However, they failed to overcome it by sufficient proof of extraordinary diligence.
RULING
Under Article 1734, Fire is not one of those enumerated under the above provision which exempts a carrier from liability for loss or destruction of the cargo. Since the peril of fire is not comprehended within the exceptions in Article 1734, then 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 natural disaster must have been the proximate and only cause of the loss, and that the carrier has exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster. When the goods shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there
PHILAMGEN vs. SWEET LINES FACTS A total 7,000 bags of low density polyethylene (600 bags of polyethylene 641 and 6,400 bags of polyethylene 647) were shipped from Baton Rouge, LA to Manila on board SS Vishva Yash, a vessel belonging to the Shipping Corporation of India (SCI). From Manila, the cargoes were shipped to Davao on board MV Sweet Love, a vessel owned by Sweet Lines. The consignee was Far East Bank with arrival notice to Tagum Plastics, Inc., Tagum, Davao City. The cargoes were insured by Far East Bank with the Philippine American General Insurance Co (Philamgen) and were covered by bills of lading which contained the following stipulation in paragraph 5:
Claims for shortage, damage, must be made at the time of delivery to consignee or agent, if container shows exterior signs of damage or shortage. Claims for nondelivery, misdelivery, loss or damage must be filed within 30 days from accrual. Suits arising from shortage, damage or loss, nondelivery or misdelivery shall be instituted within 60 days from date of accrual of right of action. Failure to file claims or institute judicial proceedings as herein provided constitutes waiver of claim or right of action. In no case shall carrier be liable for any delay, non-delivery, misdelivery, loss of damage to cargo while cargo is not in
and SCI and F.E. Zuellig, thus, only Sweet Lines and Davao Arrastre remained as defendants. The trial court ruled in favour of Philamgen and Tagum Plastics. The CA reversed on the ground of prescription and denied the motion for reconsideration.
actual custody of carrier.
defense was seasonably raised by Sweet Lines in its answer. Though the bills of lading were not presented in evidence, the SC said that: ―As petitioners are suing upon SLI's contractual obligation under the contract of carriage as contained in the bills of lading, such bills of lading can be categorized as actionable documents which under the Rules must be properly pleaded either as causes of action or defenses, and the genuineness and due execution of which are deemed admitted unless specifically denied under oath by the adverse party. The rules on actionable documents cover and apply to both a cause of action or defense based on said documents.‖ In their answer, Sweet Lines included the prescriptive period under paragraph 5 of the bills of lading. Philamgen did not deny the existence of the bill of lading under oath. Instead, in its reply to the answer, Philamgen asserted that the bills of lading were contracts of adhesion and that such provisions were ―contrary to law and public
On May 15, 1977, the shipment(s) were discharged from the interisland carrier into the custody of the consignee. A survey conducted on July 8, 1977 showed that of the shipment totalling 7,000 bags, srcinally contained in 175 pallets, only a total of 5,820 bags were delivered to the consignee in good order condition, leaving a balance of 1,080 bags. Some of the 1,080 bags were either MISSING OR DAMAGED beyond the point of being useful for the intended purpose. FEBTC and Tagum Plastics sued the international carrier, SCI, the inter-island carriers, Sweet Lines, the arrastre company, Davao Arrastre and FE Zuellig (which I assume is the shipper). Before trial, a compromise agreement was entered into between the complainants
ISSUES (1) Was there a prescriptive period? (2) If yes, was the prescriptive period valid and legal? (3) If it was valid and legal, did Philamgen act within the prescriptive period? RULING (1) Yes. There was a prescriptive period. When the complaint was filed, prescription as an affirmative
policy‖ and thus, Sweet Lines cannot avail of such prescriptive period as a valid defense. The SC said that Philamgen‘s failure to deny under oath the existence of the bills of lading was tantamount to an admission of its existence, together with paragraph 5 containing the prescriptive period. Thus, the existence of the prescriptive period was duly proved even if the bills of lading were not presented in court. (2) Yes. The prescriptive periods were valid and legal. Philamgen insists that the bills of lading were contracts of adhesion and that the prescriptive periods stated therein were void for being contrary to law and public policy. The SC, citing Ong Yu vs CA, said ―that contracts of adhesion are not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres he gives his consent.‖ Philamgen, thus, gave its consent to the contracts – the bills of lading – including consent to the prescriptive periods therein. The SC also agreed with the CA that parties can stipulate a shorter prescriptive period for the filing of suits. The SC quoted the CA, ―It must be noted, at this juncture, that the aforestated time limitation (paragraph 5) in the presentation of claim for loss or damage, is but a restatement of the rule prescribed under Art. 366 of the Code of Commerce... ‖ The SC said that, ―... the validity of a contractual limitation of time for filing the suit itself against a carrier shorter than the statutory period therefor has generally been upheld as such stipulation merely affects the shipper's remedy and does not affect the liability of the carrier. In the absence of any statutory limitation and subject only to the requirement on the reasonableness of the stipulated limitation period, the parties to a contract of
carriage may fix by agreement a shorter time for the bringing of suit on a claim for the loss of or damage to the shipment than that provided by the statute of limitations. Such limitation is not contrary to public policy for it does not in any way defeat the complete vestiture of the right to recover, but merely requires the assertion of that right by action at an earlier period than would be necessary to defeat it through the operation of the ordinary statute of limitations.‖ The SC also said that, ―..., the shortened period for filing suit is not unreasonable and has in fact been generally recognized to be a valid business practice in the shipping industry.‖ This is in recognition of the inherent dangers of carriage by sea. (3) No. Philamgen did not act within the prescriptive period. The shipment was discharged into the custody of the consignee on May 15, 1977, and it was from this date that petitioners' cause of action accrued, with thirty (30) days therefrom within which to file a claim with the carrier for any loss or damage which may have been suffered by the cargo and thereby perfect their right of action. Claim was filed only on April 28, 1978, way beyond the period provided in the bills of lading and violative of the contractual provision, the inevitable consequence of which is the loss of petitioners' remedy or right to sue. The SC said, ―Even the filing of the complaint on May 12, 1978 is of no remedial or practical consequence, since the time limits for the filing thereof, whether viewed as a condition precedent or as a prescriptive period, would in this case be productive of the same result, that is, that petitioners had no right of action to begin with or, at any rate, their claim was time-barred.‖
Other things discussed by the SC: 1. ―...where the contract of shipment contains a reasonable requirement of giving notice of loss of or injury to the goods, the giving of such notice is a condition precedent to the action for loss or injury or the right to enforce the carrier's liability. Such requirement is not an empty formalism. The fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but reasonably to inform it that the shipment has been damaged and that it is charged with liability therefor, and to give it an opportunity to examine the nature and extent of the injury. This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims.‖ 2. Philamgen also asserted that since the purpose of the notice of claim or loss was to charge Sweet Lines with actual knowledge of the loss and damage involved, then the issuance of Sweet Lines of a ―Report on Losses and Damage‖ dated May 15, 1977, ―would obviate the need for or render superfluous the filing of a claim within the stipulated period.‖ The SC said, ―The report on losses and damages is not the claim referred to and required by the bills of lading for it does not fix responsibility for the loss or damage, but merely states the condition of the goods shipped. The claim contemplated herein, in whatever form, must be something more than a notice that the goods have been lost or damaged; it must contain a claim for compensation or indicate an intent to
claim.‖ Furthermore, the report bears an annotation at its lower part that says ―this Copy should be submitted together with your claim invoice or receipt within 30 days from date of issue otherwise your claim will not be honored." 4. The claim against the carrier, Sweet Lines, has prescribed but what about the claim against Davao Arrastre. The SC said that there was not enough proof to pinpoint the party responsible for the lost and damaged bags. (What I found surprising was that the SC also said, ―Unlike a common carrier, an arrastre operator does not labor under a presumption of negligence in case of loss, destruction or deterioration of goods discharged into its custody. In other words, to hold an arrastre operator liable for loss of and/or damage to goods entrusted to it there must be preponderant evidence that it did not exercise due diligence in the handling and care of the goods.‖
BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES, INC., petition ers, vs. PHILIPPINE FIRST INSURANCE CO., INC., respondent. PANGANIBAN, J .:
Facts: CMC Trading A.G. shipped on board the MN ‗Anangel Sky‘ at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss. Despite receipt of a formal demand, Phil. First insurance refused to submit to the consignee‘s claim. Consequently, Belgian Overseas paid the consignee
P506,086.50, and was subrogated to the latter‘s rights and causes of action against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for recovery of the amount paid by them, to the consignee as insured. Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their representatives. In addition thereto, defendants-appellees argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading and other pertinent laws. Finally, defendants-appellees averred that, in any event, they exercised due diligence and foresight required by law to prevent any damage/loss to said shipment.‖
Issue: Whether or not petitioners have overcome the presumption of negligence of a common carrier Held:No.Petitioners contend that the presumption of fault imposed on common carriers should not be applied on the basis of the lone testimony offered by private respondent. The contention is untenable. Well-settled is the rule that common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport. Thus, common carriers are required to render service with the greatest skill and foresight and ―to use all reasonable means to ascertain the nature and characteristics of the goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.‖ The extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of and received for transportation by the carrier until they are delivered, actually or constructively, to the consignee or to the person who has a right to receive them. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such diligence.
However, the presumption of fault or negligence will not arise if the loss is due to any of the following causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) an act of the public enemy in war, whether international or civil; (3) an act or omission of the shipper or owner of the goods; (4) the character of the goods or defects in the packing or the container; or (5) an order or act of competent public authority. This is a closed list. If the cause of destruction, loss or deterioration is other than the enumerated circumstances, then the carrier is liable therefor. Corollary to the foregoing, mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no
- The Bills of Lading contain the stipulation ―that in case of claim for loss or for damage to the shipped merchandise or property, the liability of the common carrier shall not exceed the value of the goods appearing in the Bill of Lading‖ - Nestor was both the shipper and consignee of the cargo - Feliciana Legaspi insured the cargo of the 2 bills of lading for the amount of 50, 000 and 100,000 pesos ―against all risks‖ - Fire ensured in the engine room and destroyed the entire vessel and all the cargo therin - Feliciana filed a claim for the value of the cargo, it was approved for the amount of 49,500 and 99,000 pesos for both bills of lading
adequate explanation is given as to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held responsible. That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by a review of the records and more so by the evidence adduced by respondent
filed a complaint in the RTC for the - Respondent collection of 148,500 pesos, the total principal amount it paid to Feliciana Legaspi - Petitioners argued that after settling his claim, Nestor Angelia executed the Release and Quitclaim hence it was absolved of any liability for the loss of the cargo and even if it was, its liability should not exceed the value of the cargo as stated in the Bills of Lading - CA held that petitioner ―is not bound by the valuation of the cargo under the Bills of Lading, nor is the value of the cargo under said Bills of Lading conclusive on the respondent—the goods were insured with the respondent for the total amount of 150,000 pesos, which amount may be considered as the face value of the goods
EDGAR COKALIONG SHIPPING LINES, INC. VS UCPB Facts:
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Nestor Angelia and Zosimo Mercado both delivered to petitioner cargo, valued on its face 6,500 and 14,000 pesos respectively
Issue:
Amount of liability of petitioner: WON it is that which was stated in the Bills of Lading, or the extent of the amount paid by the insurance company
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Between the two of them, the insurer should bear the loss in excess of the value declared in the bill of lading, this is a just and equitable solution
Sarkies Tours Held: That which is stated in the Bills of Lading
Philippines, Inc. Fortades, Marisol Fortades and Fortades G.R. No. 108897 October 2, 1997
v. CA, Elino FatimaMinerva
Ratio:
Romero, J.
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A stipulation that limits liability is valid as long as it is not against public policy A stipulation in the Bill of Lading limiting the common
FACTS:
carrier‘s liability for loss destruction of a declares cargo to a certain sum, unless the or shipper or owner a greater value, is sanctioned by law [1749, 1750] The present stipulation is not against public policy, it is just and reasonable; the shippers/consignees may recover the full value of the goods by the simple expedient of declaring the true value of the shipment in the bill of lading In fact, they even committed fraud in deliberately undervaluing the goods Purpose of the limiting stipulation is to protect the common carrier—to notify it of the amount it may be liable for and be able to take appropriate measures to cover or protect itself i.e. getting insurance For assuming a higher risk, the insurance company was paid the correct higher premium while the petitioner was paid a fee lower for transporting the goods that had been deliberately undervalued
her way to Legazpi City. She had her 3pieces 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 Mari sol‘s U.S.immigration (green) card, among other important documents and personal belongings loaded in the bus‘ luggage compartment. During a stopover at Daet, it was discovered thatonly one bag remained in the open compartment. The others, including Fatima‘s things, were missing and might have dropped along the way.
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Fatima boarded Sarkies
Tours‘ bus in Manila on
Fatima filed an action against Sarkies Tours, claiming that the loss was due to its failure too bs er ve extraordinary diligence in the care of her luggage and that Sarkies Tours dealtwith 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 pu bl ic policy, are bound to observe extraordin ary diligence in the vigilance over the goodst ransported 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 are delivered, actually or constructively, by the carrier to the person who has a right to receive them, unless the loss is due to any of the
excepted causes under Art. 1734. Th e ca us e of th e loss was Sarkies Tours‘ 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.
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 former‘s 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 THIS. 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, It is undisputed that private respondent had acted as a private carrier in transporting petitioner‘s lauan
logs. Thus, 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 ship owner 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. 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 carrier‘s 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
lberta Yobido and Cresencio Yobido v. CA, Leny Tumboy, Ardee Tumboy and Jasmin Tumboy Romero, J. FACTS:
Spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin, boardeda Yobido Liner bus bound for Davao City. Along the trip, the left front tire of the bus exploded. The bus fell into a ravine around 3 ft. from the road and struck a tr ee . Th e incident resulted in the death of Tito and physical injuries to other passengers. Factual backdrop based on testimony of Leny: the winding road the bus traversed was not cemented and was wet due to the rain; it was rough with crushed rocks. The bus which was full of passengers had cargoes on top. Since it was running fast, (at a speed of 50-60kph based on another witness‘ testimony) she cautioned the driver to slow down but he merely stared at her through the mirror. A complaint for breach of contract of carriage was filed by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio Yobido, its driver; Yobidos raised the affirmative defense of caso fortuito; they als o filed a third party complaint against Philippine Phoenix Surety and Insurance, Inc. Upon a finding that the third party defendant was not liable under the insurance contract, the lower court dismissed the third party complaint. ISSUE: WON the tire blowout was a caso fortuito as to exempt Yobidos from liability
HELD: No. tire blowout - mechanical defect of the conveyance or a fault in its equipment which was easi ly dis cov era ble if the bus had been subjected to a more thorough or rig id che ck- up before it took to the road
when a passenger boards a common carrier, he takes the risks incidental to the mode of travel he has taken. After all, a carrier is not an insurer of the safety of its passengers and is not bound absolutely and at all events to carry them safely and without injury. However, when a passenger is injured or dies while travelling, the law presumes that the common carrier is negligent. (see Art. 1756) Art. 1755 provides that a common carrier is bound to carry the passengers safely as far ashuman care and for esight can p rovide, usin g the u tmost diligence of very cautiousper so ns, with a due regard for all the circumstanc es . In cu lpa co nt rac tua l, onc e ap assenger dies or is injured, the carrier is presumed to have been at fault or to have acted neg lig ent ly. This disputable presumption may only be overcome by evidence that the carrier had observed extraordinary diligence as prescribed by Arts. 1733, 1755 and 1756 or that the death or injury of the passenger was due to a fortuitous event.
Characteris tics of fortuitous event: a) the ca use of the u nforeseen and unexpectedocc ur r ence, or the failure of the debtor to com pl y w it h hi s obl iga ti on s, mus t be independen t of human will; b) it must be impossible to foresee the event which constitutesthe caso fortuito, or if it can be foreseen, it must be impossible to avoid; c) the occurrencemust be such as to render it impossible for the debtor to fulfill his obligation in a normalmanner; and d) the obligor must be free from any participation in the aggravation of theinjury resulting to the creditor Art 1174: no person shall be responsible for a fortu itou s even t whic h coul d not befo reseen, or which, though foreseen, was inevitable the explosion of the new tire may not be considered a fortuitous event; there are humanfactors involved in the situation; the fact that the tire was new did not imply that it wasentirely free from manufacturing defects or that it was properly mounted on the vehicle.
3. Defenses and condition
CENTRAL SHIPPING COMPANY, INC., petitioner, vs. INSURANCE COMPANY OF NORTH AMERICA, respondent. Doctrine of Limited Liability does not apply to situations in which the loss or the injury is due to the concurrent negligence of the shipowner and the captain. Facts:
1. On July 25, 1990 at Puerto Princesa, Palawan, the petitioner received on board its vessel, the M/V ‗Central Bohol,‘ 376 pieces of Philippine Apitong Round Logs and undertook to transport said shipment to Manila for delivery to Alaska Lumber Co., Inc. 2. During the voyage the degree of the position of the ship would change due to the shifting of the logs inside. Eventually at about 15 degrees the captain ordered for everyone to abandon the ship. 3. Respondent alleged that the total loss of the shipment was caused by the fault and negligence of the petitioner and its captain. Petitioner while admitting the sinking of the vessel, interposed the defense that the vessel was fully manned, fully equipped and in all respects seaworthy; that all the logs were properly loaded and secured; that the vessel‘s master exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the storm.
No it does not.
4. ―It raised as its main defense that the proximate and only cause of the sinking of its vessel and the loss of its cargo was a natural disaster, a tropical storm which neither [petitioner] nor the captain of its vessel could have foreseen.‖ 5. The RTC was unconvinced that the sinking of M/V Central Bohol had been caused by the weather or any other caso fortuito. It noted that monsoons, which were common occurrences during the months of July to December, could have been foreseen and provided for by an ocean-going vessel. Applying the rule of presumptive fault or negligence against the carrier, the trial court held petitioner liable for the loss of the cargo. 6. The CA affirmed the trial court‘s finding that the southwestern monsoon encountered by the vessel was not unforeseeable. Given the season of rains and monsoons, the ship captain and his crew should have anticipated the perils of the sea. Citing Arada v. CA,7 it said that findings of the BMI were limited to the administrative liability of the owner/operator, officers and crew of the vessel. However, the determination of whether the carrier observed extraordinary diligence in protecting the cargo it was transporting was a function of the courts, not of the BMI. Issue:
Whether or not the Doctrine of Limited Liability applies. Held:
Common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case; In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence. From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods, common carriers are responsible; that is, unless theywas can brought prove that such loss, destruction or deterioration about—among others—by ―flood, storm, earthquake, lightning or other natural disaster or calamity.‖ In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence. The doctrine of limited liability under Article 587 of the Code of Commerce is not applicable to the present case. This rule does not apply to situations in which the loss or the injury is due to the concurrent negligence of the shipowner and the captain. It has already been established that the sinking of M/V Central Bohol had been caused by the fault or negligence of the ship captain and the crew, as shown by the improper stowage of the cargo of logs. ―Closer supervision on the part of the shipowner could have prevented this fatal miscalculation.‖ As such,
the shipowner was equally negligent. It cannot escape liability by virtue of the limited liability rule.
affirmed by the Court of Appeals. Thus, this instant petition.
Everett Steamship Corporation vs. CAG.R. No.122494, October 8, 1998
ISSUES: 1.Is the petitioner liable for the actu al value and not the maximum value recoverable under the bill of lading?
FACTS: Private respondent imported 3 crates of bus spare parts marked as MARCO C/No. 12,MARCO C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading Company,Ltd. (Maruman Trading), a foreign corporation based in Inazawa, Aichi, Japan. The crates we re sh ip pe d fr om
Nagoya, to Manila in board Japan "ADELFAEVERETTE," a vessel owned by petitioner's principal, Everett Orient Lines. Upon arrival at the port of Manila,it was discovered that the crate ma rked MARCO C/No. 14 was missing. Priv ate respondent claim upon petitioner for the value of the lost cargo amounting to One Million Five Hundred Fifty Two Thousand Fiv e Hundred (Y1,552 ,500.00) Ye n, theamo un t shown in an Invoice No. MTM941, dated No ve mb er 14 , 19 91 . Ho we ve r, petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner. Private respondent rejected the offer and thereafter instituted a suit for collection. The trial court rendered a decision in favor of the private respondents and this was
2. Is p rivate respondent, as consignee, who is not a signatory to the bill of lading bound by the stipulations thereof? ARGUMENTS:
1.The Petitioner is only liable for the maximum value recoverable under the bill of lading. Clause 18 of the covering bill of lading:18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of the shipper's net invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier be liable for any loss of possible profits or any consequential loss. The carrie r s hall not be liabl e f or any loss of or any damage to or in any connection with, goods in an amount exceeding One Hundred tho usa nd Yen in Japan ese Cur rency (Y100,000.00) or its equivalent in any other currency per package or customary freight unit (whichever is least) un less the value of the goods higher than this amount is declared in writing by the shipper before receipt of the goods by the
carrier and inserted in the Bill of Lading and extra freight is paid as required . (Emphasis supplied)Pertinent provisions that is applicable as to this case: Art . 174 9. A sti pul ati on that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely and fairly agreed upon. Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common carrier's liability for loss m ust be "reasonab le and just u nder t hec irc umstances, and has been freely and fairly agreed upon." The above stipulations are reasonable and just. In the bill of lading, the carrier made it clear that its liability would only be up to One Hundred Thousand (Y100,000.00) Yen.
Cruz vs son holidays case digest
SOUTHERN LINES INC vs CA and CITY OF ILOILO DOCTRINE:If the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom.
FACTS:
The City of Iloilo requisitioned for rice from the National Rice and Corn Corporation (NARIC). - NARIC shipped 1,726 sacks of rice consigned to the City of Iloilo on board of SS General Wright belong to Southern Lines. - The City of Iloilo received the shipment and paid the amount stated in the bill of lading (around Php 63K). - However, at the bottom of the bill of lading, it was noted that City of Iloilo received the merchandise in the same condition as when shipped, except that it received only 1,685 sacks. - Upon actual weighing, it was discovered that the shortage was equal to 41 sacks of rice. - Thus, the City of Iloilo filed a complaint against NARIC and Southern Lines for the recovery of the value of the shortage of the shipment of rice (Php 6,486.35). The lower court absolved NARIC but sentenced Southern Lines to pay the amount.
- CA affirmed. - Hence, this petition for review. - Southern Lines claims exemption from liability by contending that the shortage in the shipment of rice was due to such factors as shrinkage, leakage or spillage of the rice on account of the bad condition of the sacks at the time it received the same and negligence of the agents of City of Iloilo in receiving the shipment. ISSUES:
- Whether Southern Lines is liable for the loss or shortage of the rice shipped. YES - Whether the City of Iloilo is precluded from filing an action for damages on account of its failure to present a claim within 24 hours from receipt of the shipment as stated in the bill of lading. NO
not take the precaution adopted by careful persons.It held that if the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom. - NO. The SC noted that Southern Lines failed to plead this defense in its answer to City of Iloilo‘s complaint and, therefore, the same is deemed waived and cannot be raised for the first time.The SC also cited the finding of the CA that City of Iloilo filed the action within a reasonable time; that the action is one for the refund of the amount paid in excess, and not for damages or the recovery of shortage; the bill of lading does not at all limit the time for the filing of action for the refund of money paid in excess.
HELD:
- YES. The SC held that the contention of Southern Lines with respect to the improper packing is untenable.Under Art. 361 of the Code of Commerce, the carrier, in order to free itself from liability, was only obliged to prove that the damages suffered by the goods were ―by virtue of the nature or defect of the articles.‖ Under Art. 362, the plaintiff, in order to hold the defendant liable, was obliged to prove that the damages to the goods is by virtue of their nature, occurred on account of its negligence or because the defendant did
4. Duration of Responsibility MITSUI VS. CA, 287 SCRA 366 MENDOZA,J.:
Facts:
Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage through
Meister transport, Inc., an international freight forwarder, with private respondent Larine Loungewear Manufacturing corporation to transport goods of the latter from Manila to Le Havre, France. Petitioner undertook& to deliver the goods to France '( days from initial loading. On) july 24, 2009, petitioner-s "vessel loaded private respondent-s container van for carriage at the said port of srcin. However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with the result that the shipment arrived in Le Havre only on November 14, 1991. The consignee allegedly paid only half the value of the said goods on the ground that they did not arrive in France until the ―off season‖ in that country. The remaining half was allegedly charged to the account of private respondent which in turn demanded payment from petitioner through its agent. Issue: Whether or not private respondent-s action is for ―loss or damage‖ to goods shipped, within the meaning of the carriage of 1oods by Sea Act 2(COGSA) Ruling: No. the suit is not for ―loss or damage‖ to goods contemplated in §3(6), the question of prescription of action is governed not by the COGSA but by Art.1144 of the Civil Code which provides for a prescriptive period of ten years. As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the carriage of goods by Sea Act, ―loss‖ contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a !ay that their existence is unknown or they cannot be recovered. There would be
some merit in appellant-s insistence that the damages suffered by hi$ as a result of the delay in the shipment of his cargo are not covered by the prescriptive provision of the carriage of 1oods by Sea Act above referred to, if such damages were due, not to the deterioration and decay of the goods while in transit, but to other causes independent of the condition of the cargo upon arrival, like a drop in their market value
SULPICIO V. CA FACTS:
Sulpicio Lines and ALC entered into a Contract of Carriage for the transport of latter‘s timber from Surigao del Sur. On a late date, Sulpicio sent its tugboat ―MT Edmund‖ and barge ―Solid VI‖ to pick up ALC‘s timber but no loading could be made because of the heavy downpour. The next morning, several stevedores of CBL, who were hired by ALC, boarded ―Solid VI‖ and opened its storeroom despite being warned by the employees of Sulpicio of the gas and heat generated by the copra stored in the holds of the ship. Leonicio Pamalaran was one of those who entered the ship. He lost consciousness and eventually died of gas poisoning.
Pamalaran‘s heirs filed a Civil Case for damages against Sulpicio, CBL, ALC and its manager, Ernie Santiago.
ISSUE: Whether Sulpicio Lines, Inc. is liable as a common carrier despite the fact that Pamalaran was never a passenger.
HELD: YES. ALC had a contract of carriage with petitioner. The presence of the stevedores sent by ALC on board the barge of Sulpicio was called for by the contract of carriage. Petitioner knew of the presence and role of the stevedores, as those who place the timbers on board the ship, and thus, consented to their presence. Hence, petitioner was responsible for their safety while on board the barge. Moreover, Sulpicio‘s claim that its employees even warned the stevedores and tried to prevent their entry into the storeroom does not have merit. It failed to prove that its employees were actually trained or given specific instructions to see to it that the barge is fit and safe not only in transporting goods but also for people who would be loading the cargo into the bodega of the barge. Thus,
it failed to exercise due diligence in the selection and supervision of its employees.
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 Pagasa, 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 wellsettled 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.
phil first insurance vs wallem first shipping case digest
Samar Mining Co., Inc. V. Nordeutcher Lloyd, Et. Al.(1984) Lessons Applicable: Bill of Lading (Transportation) Laws Applicable: Article 1736, Article 1738,Article 1884,Article 1889,Article 1892,Article 1909 FACTS: Samar Mining Company, Inc. imported1 crate of welded wedge wire sieves shipped through Nordeutscher Lloyd Bill of Lading No. 18: transshipped at port of discharge: davao Section 1, paragraph 3 of Bill of Lading No. 18 The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage occurring before the goods enter ship's tackle to be loaded or after the goods leave ship's tackle to be discharged, transshipped or forwarded ... Section 11: Whenever the carrier or m aster may deem it advisable or in any case where the goods are placed at carrier's disposal at or consigned to a point where
the ship does not expect to load or discharge, the carrier or master may, without notice, forward the whole or any part of the goods before or after loading at the srcinal port of shipment, ... This carrier, in making arrangements for any transshipping or forwarding vessels or means of transportation not operated by this carrier shall be considered solely the forwarding agent of the shipper and without any other responsibility whatsoever even though the freight for the whole transport has been collected by him. ... Pending or during forwarding or transshipping the carrier may store the goods ashore or afloat solely as agent of the shipper and at risk and expense of the goods and the carrier shall not be liable for detention nor responsible for the acts, neglect, delay or failure to act of anyone to whom the goods are entrusted or delivered for storage, handling or any service incidental thereto When the goods arrived in the port of Davao, it was delivered in good order and condition to the bonded warehouse of AMCYL but it was not delivered and received by Samar Mining Company, Inc. Samar filed a claim against Nordeutscher and C.F. Sharp who brought in AMCYL as third party defendant RTC: favored Samar Nordeutscher and C.F. Sharp laible but may enforce judgment against AMCYL
ISSUE: W/N the stipulations in bills of lading exempting the carrier from liability for loss or damage to the goods when the same are not in its actual custody is valid
HELD: YES. Reversed
Article 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of article 1738. - applicable Article 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them. - no applicable since article contemplates a situation where the goods had already reached their place of destination and are stored in the warehouse of the carrier Article 1884. The agent is bound by his acceptance to carry out the agency, and is liable for
the damages which, through his non-performance, the principal may suffer. Article 1889. The agent shall be liable for damages if, there being a conflict between his interests and those of the principal, he should prefer his own. Article 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one;
(2) When he was given such power but without designating the person and the person appointed was notoriously incompetent or insolvent Article 1909. The agent is responsible not only for fraud, but also for negligence which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation. The records fail to reveal proof of negligence, deceit or fraud committed by appellant or by its representative in the Philippines. Neither is there any showing of notorious incompetence or insolvency on the part of AMCYT, which acted as appellant's substitute in storing the goods awaiting transshipment
Ganzon V. CA (1988) FACTS: Gelacio > Ganzon (via Capt. Niza) > Lighter ―Batman‖ (common carrier) (loaded half)
HELD: YES. Petition is DENIED. Ganzon thru his employees, actually received the scraps is freely admitted. Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right to receive them. The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract of transportation as the goods remained in the custody and control of the carrier, albeit still unloaded. failed to show that the loss of the scraps was due to any of the following causes enumerated in Article 1734 of the Civil Code, namely:
November 28, 1956: Gelacio Tumambing (Gelacio) contracted the services of of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the light LCT ―Batman‖ December 1, 1956: Gelacio delivered the scrap iron to Filomeno Niza, captain of the lighter, for loading which was actually begun on the same date by the crew of the lighter under the captain‘s supervisor. When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan arrived and demanded P5000 from Gelacio Upon resisting, the Mayor fired at Gelacio so he had to be taken to the hospital Loading of the scrap iron was resumed December 4, 1956: Acting Mayor Basilio Rub (Rub), accompanied by 3 policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked Later on Rub had taken custody of the scrap iron RTC: in favor of Gelacio and against Ganzon
ISSUE: W/N Ganzon should be held liable under the contract of carriage
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Hence, the petitioner is presumed to have been at fault or to have acted negligently.
By reason of this presumption, the court is not even required to make an express finding of fault or negligence before it could hold the petitioner answerable for the breach of the contract of carriage. exempted from any liability had he been able to prove that he observed extraordinary diligence in the vigilance over the goods in his custody, according to all the circumstances of the case, or that the loss was due to an unforeseen event or to force majeure. As it was, there was hardly any attempt on the part of the petitioner to prove that he exercised such extraordinary diligence. We cannot sustain the theory of caso fortuito - "order or act of competent public authority"(Art. 1174 of the Civil Code) no authority or power of the acting mayor to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. Ganzon was not duty bound to obey the illegal order to dump into the sea the scrap iron. Moreover, there is absence of sufficient proof that the issuance of the same order was attended with such force or intimidation as to completely overpower the will of the petitioner's employees. The mere difficulty in the fulfillment of the obligation is not considered force majeure.
Saludo Jr. v. CA Facts: Crispina Galdo Saludo, mother of the petitioners, died in Chicago, Illinois. Pomierski and Son Funeral Home of Chicago, made the necessary preparations and arrangements for the shipment of the remains from Chicago to the Philippines. Pomierski brought the remains to Continental Mortuary Air Services (CMAS) at the Chicago Airport which made the necessary arrangements such as flights, transfers, etc. CMAS booked the shipment with PAL thru the carrier‘s agent Air Care International. PAL Airway Bill Ordinary was issued wherein the requested routing was from Chicago to San Francisco on board Trans World Airline (TWA) and from San Francisco to Manila on board PAL. Salvacion (one of the petitioners), upon arrival at San Francisco, went to the TWA to inquire about her mother‘s remains. But she was told they did not know anything about it. She then called Pomierski that her mother‘s remains were not at the West Coast terminal. Pomierski immediately called CMAS which informed that the remains were on a plane to Mexico City, that there were two bodies at the terminal, and somehow they were switched. CMAS called and told Pomierski that they were sending the remains back to California via Texas.
Petitioners filed a complaint against TWA and PAL fir the misshipment and delay in the delay of the cargo containing the remains of the late Crispina Saludo. Petitioners alleged that private respondents received the casketed remains of Crispina on October 26, 1976, as evidenced by the issuance of PAL Airway Bill by Air Care and from said date, private respondents were charged with the responsibility to exercise extraordinary diligence so much so that the alleged switching of the caskets on October 27, 1976, or one day after the private respondents received the cargo, the latter must necessarily be liable.
when issued, is competent and prima facie, but not conclusive, evidence of delivery to the carrier. A bill of lading, when properly executed and delivered to a shipper, is evidence that the carrier has received the goods described therein for shipment. Except as modified by statute, it is a general rule as to the parties to a contract of carriage of goods in connection with which a bill of lading is issued reciting that goods have been received for transportation, that the recital being in essence a receipt alone, is not conclusive, but may be explained, varied or contradicted by parol or other evidence.
Issues:
In other words, on October 26, 1976 the cargo containing the casketed remains of Crispina Saludo was booked for PAL Flight Number PR-107 leaving San Francisco for Manila on October 27, 1976, PAL Airway Bill No. 07901180454 was issued, not as evidence of receipt of delivery of the cargo on October 26, 1976, but merely as a confirmation of the booking thus made for the San Francisco-Manila flight scheduled on October 27, 1976. Actually, it was not until October 28, 1976 that PAL received physical delivery of the body at San Francisco, as duly evidenced by the Interline Freight Transfer Manifest of the American Airline Freight System and signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.
Whether or not there was delivery of the cargo upon mere issuance of the airway bill Whether or not the delay in the delivery of the casketed remains of petitioners‘ mother was due to the fault of respondent airline companies Held:
NO to both, but TWA was held to pay petitioners nominal damages of P40,000 for its violation of the degree of diligence required by law to be exercised by every common carrier Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier for transportation but,
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common
carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled to receive them. And, there is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the carrier, the liability of the common carrier commences eo instanti. Hence, while we agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. Only when such fact of delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked. As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the cargo to the carrier on October 26, 1976. Rather, as earlier
explained, the body intended to be shipped as agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which was not caused by them, and subsequent events caused thereby, private respondents cannot be held liable. The oft-repeated rule regarding a carrier's liability for delay is that in the absence of a special contract, a carrier is not an insurer against delay in transportation of goods. When a common carrier undertakes to convey goods, the law implies a contract that they shall be delivered at destination within a reasonable time, in the absence, of any agreement as to the time of delivery. But where a carrier has made an express contract to transport and deliver property within a specified time, it is bound to fulfill its contract and is liable for any delay, no matter from what cause it may have arisen. This result logically follows from the well-settled rule that where the law creates a duty or charge, and the party is disabled from performing it without any default in himself, and has no remedy over, then the law will excuse him, but where the party by his own contract creates a duty or charge upon himself, he is bound to make it good notwithstanding any accident or delay by inevitable necessity because he might have provided against it by
contract. Whether or not there has been such an undertaking on the part of the carrier to be determined from the circumstances surrounding the case and by application of the ordinary rules for the interpretation of contracts.
And this special contract for prompt delivery should call the attention of the carrier to the circumstances surrounding the case and the approximate amount of damages to be suffered in case of delay (See Mendoza vs. PAL, supra). There was no such contract entered into in the instant case.‖
Echoing the findings of the trial court, the respondent court correctly declared that — In a similar case of delayed delivery of air cargo under a very similar stipulation contained in the airway bill which reads: "The carrier does not obligate itself to carry the goods by any specified aircraft or on a specified time. Said carrier being hereby authorized to deviate from the route of the shipment without any liability therefor", our Supreme Court ruled that common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation. Said rights and obligations are created by a specific contract entered into by the parties (Mendoza vs. PAL, 90 Phil. 836). There is no showing by plaintiffs that such a special or specific contract had been entered into between them and the defendant airline companies.
A common carrier undertaking to transport property has the implicit duty to carry and deliver it within reasonable time, absent any particular stipulation regarding time of delivery, and to guard against delay. In case of any unreasonable delay, the carrier shall be liable for damages immediately and proximately resulting from such neglect of duty. As found by the trial court, the delay in the delivery of the remains of Crispina Saludo, undeniable and regrettable as it was, cannot be attributed to the fault, negligence or malice of private respondents, a conclusion concurred in by respondent court and which we are not inclined to disturb.
MACAM vs. COURT OF APPEALS GR No. 125524; August 25, 1999 Facts:
Benito Macam, doing business under name Ben-Mac Enterprises, shipped on board vessel Nen-Jiang, owned
and operatedby respondent China Ocean Shipping Co.
instructed delivery of various shipments to the respective
through local agent Wallem Philippines Shipping Inc.,
consignees
3,500 boxes of watermelon covered by Bill of Lading No.
lading and bank guarantee per the respective shipper‘s
HKG 99012, and 1,611 boxes of fresh mangoes covered
request since ―for prepaid shipt ofrt charges already fully
byBill of Lading No. HKG 99013. The shipment was
paid.‖ MACAM, however, argued that, assuming there
bound for Hongkongwith PAKISTAN BANK as consignee
was such an instruction, the consignee referred to was
and Great Prospect Company of Rowloon (GPC) as
PAKISTAN BANK and not GPC.
notify party.
without need of presenting the bill of
The RTC ruled for MACAM and ordered value of
Upon arrival in Hongkong, shipment was delivered by
shipment. CA reversed RTC‘s decision.
respondent WALLEM directly to GPC, not to PAKISTAN BANK and without the required bill of lading having been surrendered. Subsequently, GPC failed to pay PAKISTAN
BANK,
such
that
the
latter,
still
in possessionof srcinal bill of lading, refused to pay
Issue: Are the respondents liable to the petitioner for
releasing the goods to GPC without the bills of lading or bank guarantee?
petitioner thru SOLIDBANK. Since SOLIDBANK already
Held: It is a standard maritime practice when immediate
pre-paid the value of shipment, it demanded payment
delivery is of the essence, for shipper to request or
from respondent WALLEM but was refused. MACAM
instruct the carrier to deliver the goods to the buyer upon
constrained to return the amount paid by SOLIDBANK
arrival at the port of destination without requiring
and demanded payment from WALLEM but to no avail.
presentation of bill of lading as that usually takes time. Thus, taking into account that subject shipment consisted
WALLEM submitted in evidence a telex dated 5 April
of perishable goods and SOLIDBANK pre-paid the full
1989 as basis for delivering the cargoes to GPC without
amount of value thereof, it is not hard to believe the
the bills of lading and bank guarantee. The telex
claim of respondent WALLEM that petitioner indeed
requested the release of the goods to GPC without
WALLEM and in his complaint before the trial court. This
presentation of the bills of lading and bank guarantee.
premise draws us to conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably
To implement the said telex instruction, the delivery of
with Art. 1736 had, other than the consignee, the right to
the shipment must be to GPC, the notify party or real
receive them was proper.
importer/buyer of the goods and not the PAKISTANI BANK since the latter can very well present the srcinal Bills of Lading in its possession. Likewise, if it were the PAKISTANI BANK to whom the cargoes were to
5. Stipulation Limiting Carrier’s Liability
be strictly delivered, it will no longer be proper to require a bank guarantee as a substitute for the Bill of Lading. To construe otherwise will render meaningless the telex
PAL vs. CA
instruction.
FACTS Isidro Co, accompanied by his wife and son, arrived at the Manila International Airport aboard PAL airline's Flight from San Francisco. Soon after his embarking, Co proceeded to the baggage retrieval area to claim his checks in his possession. He found 8 of his luggage, but despite diligent search, he failed to locate his 9 th luggage.
After
all,
the
cargoes
consist
of
perishable fresh fruits and immediate delivery thereof the buyer/importer is essentially a factor to reckon with. We emphasize that the extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent
Co then immediately notified PAL through its employee, Willy Guevarra, who was then in charge of the PAL claim counter at the airport. Willy filled up the printed form known as a Property Irregularity Report, acknowledging the luggage to be missing, and signed it. The incontestable evidence further shows that plaintiff lost luggage was a Samsonite suitcase worth about US$200 and containing various personal effects
purchased by plaintiff and his wife during their stay in the US and similar other items sent by their friends abroad to be given as presents to relatives in the Philippines worth around $1,800. Co on several occasions unrelentingly called PAL‘s office in order to pursue his complaint about his missing luggage but no avail was given. Thus, Co wrote a demand letter to PAL, through its manager of the Central Baggage Services. PAL replied acknowledging that they have been unable to locate the baggage despite careful search and extended their sincere apologies for the inconvenience. PAL never found the missing luggage or paid its corresponding value. Co then filed his present complaint against PAL for damages. The RTC found PAL liable and ordered said company to pay damages. The CA affirmed in toto the trial court's award. PAL Contends: The Lower Courts were in error in not applying the limit of liability under the Warsaw Convention which limits the liability of an air carrier of loss, delay or damage to checked-in baggage to US$20.00 based on weight; and ISSUE
W/N the Lower Courts should apply the limit of liability under the Warsaw Convention? – NO
RULING
In Alitalia vs. IAC, the Warsaw Convention limiting the carrier's liability was applied because of a simple loss of baggage without any improper conduct on the part of the officials or employees of the airline, or other special injury sustained by the passengers. The petitioner therein did not declare a higher value for his luggage, much less did he pay an additional transportation charge. PAL contends that under the Warsaw Convention, its liability, if any, cannot exceed US $20.00 based on weight as private respondent Co did not declare the contents of his baggage nor pay traditional charges before the flight. We find no merit in that contention. In Samar Mining Company, Inc. vs. Nordeutscher Lloyd, this Court ruled: The liability of the common carrier for the loss, destruction or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New Civil Code. In all matters not regulated by said Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by Special Laws.
Cathay Pacific v. CA FACTS: Respondent Alcantara was a first class passenger of a Cathay Pacific flight to Jakarta to attend a business conference with the Director General of Trade of Indonesia. Upon his arrival in Jakarta, he discovered that his luggage was missing. He was informed that his luggage was left behind in Hongkong and was offered $20.00 as "inconvenience money" to buy his immediate personal needs. He had to seek postponement of his prearranged conference. And when his luggage finally reached Jakarta after a day, it was required to be picked up by an official of the Philippine Embassy.
The trial court ordered Cathay to pay. The CA affirmed but increased the award of damages. SC affirmed but modified the award of damages. Cathay argues that the one-day delay was not made in bad faith because it had a mechanical trouble wherein all pieces of luggage on board the first aircraft bound for Jakarta were unloaded and transferred to the second aircraft which departed an hour and a half later. Cathay also argues that he was not treated rudely and arrogantly by its employees. Also, that the CA erred in failing to apply the Warsaw Convention on the liability of a carrier to its passengers. ISSUE: W/N Cathay breached its contract of carriage with Alcantara and acted in bad faith?
YES. Cathay failed to deliver his luggage at the designated place and time, it being the obligation of a common carrier to carry its passengers and their luggage safely to their destination, which includes the duty not to delay their transportation. It was not even aware that the luggage was left behind until its attention was called by the Hongkong Customs authorities. It also refused to deliver the luggage at his hotel and required him to pick it up with an official of the Philippine Embassy The Cathay employees were also discourteous, rude, and insulting. He was simply advised to buy anything he wanted with only $20.00 which was certainly not enough to purchase comfortable clothing appropriate for an executive conference. Cathay‘s agents only replied, "What can we do, the baggage is missing. I cannot do anything . . . Anyhow, you can buy anything you need, charged to Cathay Pacific." Moral and exemplary damages are proper where in breaching the contract of carriage bad faith or fraud is shown. In the absence of fraud or bad faith, liability is limited to the natural and probable consequences of the breach of obligation which the parties had foreseen or could have reasonably foreseen. Further, Cathay contends that the extent of its liability should be limited absolutely to that set forth in the Warsaw Convention. The said treaty does not operate as an exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable for damages in the enumerated cases and under certain limitations.
However, it must not be construed to preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if wilfull misconduct on the part of the carrier's employees is found or established, as in this case.
Trans-Asia Shipping Lines vs. CA (GR 118126, 4 March 1996) FACTS:
Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein petitioner for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991. At around 5:30 in the evening of November 12, 1991, respondent boarded the M/V Asia Thailand vessel during which he noticed that some repairs were being undertaken on the engine of the vessel. The vessel departed at around 11:00 in the evening with only one (1) engine running. After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded to their request and thus the
vessel headed back to Cebu City. In Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Petitioner, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant. On account of this failure of defendant to transport him to the place of destination on November 12, 1991, respondent Arroyo filed before the trial court ―an action for damage arising from bad faith, breach of contract and from tort,‖ against petitioner. The trial court ruled only for breach of contract. The CA reversed and set aside said decision on appeal. ISSUE: Whether or not the petitioner Trans-Asia was negligent? HELD: Yes. Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of one of the vessel‘s engines. But even before it could finish these repairs, it allowed the vessel to leave the port of srcin on only one functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime after it had run its course, it conked out. This caused the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a vessel
to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew.[21] The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil Code.
Sweet Lines, Inc. v. Teves, 83 SCRA 361 (1978) FACTS: Private respondents Atty. Leovigildo Tandog and Rogelio Tiro, a contractor by professions, bought tickets Nos. 0011736 and 011737 for Voyage 90 on December 31, 1971 at the branch office of petitioner, a shipping company transporting inter-island passengers and cargoes, at Cagayan de Oro City. Respondents were to board petitioner's vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port of Cebu. Upon learning that the vessel was not proceeding to Bohol, since many passengers were bound for Surigao, private respondents per advice, went to the branch office for proper relocation to M/S "Sweet Town". Because the said vessel was already filled to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard." Private respondents alleged that they were, during the trip," "exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits," and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were constrained to pay for other tickets. In view thereof, private
respondents sued petitioner for damages and for breach of contract of carriage in the alleged sum of P10,000.00 before respondents Court of First Instance of Misamis Oriental. Petitioner moved to dismiss the complaint on the ground of improper venue. This motion was premised on the condition printed at the back of the tickets, i.e., Condition No. 14, which reads: It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu. ISSUE: WON the stipulation ‖any action arising out of the conditions and provisions can be filed only in
competent court of cebu city‖ in the ticket valid and enforceable. RULING: There is no question that there was a valid contract of carriage entered into by petitioner and private respondents and that the passage tickets, upon which the latter based their complaint, are the best evidence thereof. All the essential elements of a valid contract, i.e., consent, cause or consideration and object, are present.
To the same effect and import, and, in recognition of the character of contracts of this kind, the protection of the disadvantaged is expressly enjoined by the New Civil Code — In all contractual property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance indigence, mental weakness, tender age and other handicap, the courts
must be vigilant for his protection. Considered in the light Of the foregoing norms and in the context Of circumstances Prevailing in the inter-island ship. ping industry in the country today, We find and hold that Condition No. 14 printed at the back of the passage tickets should be held as void and unenforceable for the following reasons first, under circumstances obligation in the inter-island ship. ping industry, it is not just and fair to bind passengers to the terms of the conditions printed at the back of the passage tickets, on which Condition No. 14 is Printed in fine letters, and second, Condition No. 14 subverts the public policy on transfer of venue of proceedings of this nature, since the same will prejudice rights and interests of innumerable passengers in different s of the country who, under Condition No. 14, will have to file suits against petitioner only in the City of Cebu. 1. It is a matter of public knowledge, of which we can take judicial notice, that there is a dearth of and acute shortage in inter- island vessels plying between the country's several islands, and the facilities they offer leave much to be desired. Thus, even under ordinary circumstances, the piers are congested with passengers and their cargo waiting to be transported. The conditions are even worse at peak and/or the rainy seasons, when Passengers literally scramble to whatever accommodations may be availed of, even though circuitous routes, and/or at the risk of their safety — their immediate concern, for the moment, being to be able to board vessels with the hope of reaching their
destinations. The schedules are — as often as not if not more so — delayed or altered. This was precisely the experience of private respondents when they were relocated to M/S "Sweet Town" from M/S "Sweet Hope" and then any to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits, " because even the latter was filed to capacity. Under these circumstances, it is hardly just and proper to expect the passengers to examine their tickets received from crowded/congested counters, more often than not during rush hours, for conditions that may be printed much charge them with having consented to the conditions, so printed, especially if there are a number of such conditions m fine print, as in this case. Again, it should be noted that Condition No. 14 was prepared solely at the ms of the petitioner; respondents had no say in its preparation. Neither did the latter have the opportunity to take into account prior to the purpose chase of their tickets. For, unlike the small print provisions of contracts — the common example of contracts of adherence — which are entered into by the insured in his awareness of said conditions, since the insured is afforded the op to and co the same, passengers of inter-island v do not have the same chance, since their alleged adhesion is presumed only from the fact that they purpose chased the tickets. It should also be stressed that slapping companies are franchise holders of certificates of public convenience and therefore, possess a virtual monopoly over the business of transporting passengers between the ports
covered by their franchise. This being so, shipping companies, like petitioner, engaged in inter-island shipping, have a virtual monopoly of the business of transporting passengers and may thus dictate their terms of passage, leaving passengers with no choice but to buy their tickets and avail of their vessels and facilities. Finally, judicial notice may be taken of the fact that the bulk of those who board these inter-island vessel come from the low-income groups and are less literate, and who have little or no choice but to avail of petitioner's vessels. 2. Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although venue may be changed or transferred from one province to another by agreement of the parties in writing t to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the claimants, such as the private respondents herein. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvenience to, much less prejudice, petitioner.
Public policy is ". . . that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good ... Under this principle" ... freedom of contract or private dealing is restricted by law for the good of the public. Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared void and unenforceable, as contrary to public policy — to make the courts accessible to all who may have need of their services. WHEREFORE, the petition for prohibition is DISMISS. ED. The restraining order issued on November 20, 1973, is hereby LIFTED and SET ASIDE. Costs against petitioner.
6. AMOUNT OF LIABILITY Ysmael v. Barreto Facts: On 25 October 1922, Juan Ysmael & Co. (―JY&Co.‖) supposedly delivered 164 cases of its merchandise to the steamer Andres, which is owned by Gabino Barretto & Co. (―GB&Co.‖), to be shipped to Surigao. GB&Co. claims that they only received 160 cases of JY&Co.‘s merchandise. They also alleged that, under provision 12 of the bill of lading, they are not liable in excess of three
hundred pesos for any package of silk unless the value and contents of such packages are correctly declared in the bill of lading at the time of the shipment. JY&Co. instituted suit to recover P9,940.95, the alleged value of the missing four cases. Issues: Whether the provision in the bill of lading limiting the liability of the carrier (GB&Co.) not to exceed three hundred pesos is valid? Held: No. A common carrier cannot lawfully stipulate for exemption from liability, unless such exemption is just and reasonable and the contract is freely and fairly made. The evidence shows that 164 cases were shipped and
that the value of each case was very near P2,500. In this case, the limit of GB&Co.‘s liability for each case of silk ―for loss or damage from any cause or for any reason‖ would put it in the power of GB&Co. to have taken the whole cargo of 164 cases of silk at a valuation of P300 for each case, or less than one-eighth of its actual value. If this is sustained, no silk would ever be shipped from one island to another in the Philippines. Such a limitation of value is unconscionable and void as against public policy. As the contract of the carrier is to carry and deliver the goods, and a contract that undertakes to relieve the carrier from any liability or loss or damage accruing or arising from its own negligence would in legal effect nullify the contract. The natural effect of a limitation of liability against negligence is to induce want of care on the part of the carrier in the performance of its duty. By the weight of modern authority, the carrier cannot limit its
liability for injury to or loss of goods shipped where such injury or loss was caused by its own negligence.
Shewaram v. Pal FACTS: Parmanand Shewaram was a paying passenger on a PAL flight from Zamboanga City bound for Manila. PAL is a common carrier engaged in air line transportation in the Philippines, offering its services to the public to carry and transport passengers and cargoes from and to different
points Philippines. checked in three (3) pieces inofthe baggages, oneShawaram of which is a suitcase. When Shewaram arrived in Manila his suitcase did not arrive with his flight because it was mistakenly sent to Iligan. When the suitcase finally arrived in Manila the Transistor Radio 7 and the Rollflex Camera were missing. Shewaram instituted an action to recover damages suffered by him due to PAL‘s failure to observe extraordinary vigilance and carriage of his luggage. The trial court undoubtebly found that the suitcase was tampered, and the transistor radio and the camera contained therein were lost, and that the loss of those articles was due to the negligence of the employees of PAL. The evidence shows that the transistor radio cost
P197.00 and the camera cost P176.00, so the total value of the two articles was P373.00. ISSUE:
Whether the liability of PAL should be to the amount stated in the conditions of carriage printed at the back of the plane ticket stub.
agreed" to those conditions. The trial court has categorically stated in its decision that the "PAL admits that passengers do not sign the ticket, much less did Shewaram sign his ticket when he made the flight. Therefore, Shewaram is not, and can not be, bound by the conditions of carriage found at the back of the ticket stub issued to him when he made the flight.
HELD: NO. PAL should pay the value of the lost items
The liability of the appellant in the present case should be governed by the provisions of Articles 1734 and 1735 of the New Civil Code, which provides:
Article 1750 of the New Civil Code provides that the
ART. 1734. Common carriers are responsible for the
pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It is required, however, that the contract must be "reasonable and just under the circumstances and has been fairly and freely agreed upon."
loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority.
In this case before us the SC believed that the requirements of said article have not been met. It cannot be said that the Shewaram had actually entered into a contract with the appellant, embodying the conditions as printed at the back of the ticket stub that was issued by the appellant to the appellee. The fact that those conditions are printed at the back of the ticket stub in letters so small that they are hard to read would not warrant the presumption that the appellee was aware of those conditions such that he had "fairly and freely
ART. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding article, 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 observed
extraordinary diligence as required in Article 1733. It having been clearly found by the trial court that the transistor radio and the camera of the appellee were lost as a result of the negligence of the appellant as a common carrier, the liability of the appellant is clear — it must pay the appellee the value of those two articles.
Augusto Ong Yiu v. Court of Appeals 91 SCRA 223 Facts:
Petitioner was paying passenger of respondent Philippine Airlines on board flight No. 946-R from Mactan Cebu bound for Butuan City. He was scheduled to attend the trial in the Court of First instance , Br. II thereat. As a passenger, he checked in one piece of luggage, a bull maleta. The plane left Mactan Airport, Cebu City at about 1pm and arrived at Bacasi Airport, Butuan City at past 2pm of the same day. Upon arrival, petitioner claimed his luggage but it could not be found. According to petitioner, it was only after reacting indignantly to the loss that the matter was attended by the porter clerk which however, the later denied. When the luggage was delivered to the petitioner with the information that the lock was open, he found out that the folder containing documents and transcripts were missing, aside from the two gift items for his parents-inlaw. Petitioner refused to accept the luggage.
Issue:
Whether or not PAL acted with gross negligence so as to entitle petitioner to an award of moral and exemplary damages. Held:
PAL did not act in bad faith. It was the duty of PAL to look for petitioner‘s luggage which had been miscarried. PAL exerted diligent efforts to locate the plaintiff‘s baggage. Petitioner is neither entitled to exemplary damages. Exemplary damages can only be granted if the defendant asked in a wanton, fraudulent, reckless, oppressive or malevolent manner, which loss, in accordance with the stipulation written at the back of the ticket is limited to P100 per luggage plaintiff not having declared a greater value and not having called the attention of the defendant on its value ad paid the tariff thereon. Wherefore, for lack of merit, the instant petition is hereby denied, and judgment sought to be reviewed is hereby affirmed.
Sea-Land Service, Inc. v. Intermediate Appellate Court 153 SCRA 552 Facts:
Sea-Land, a foreign shipping and forwarding company licensed to do business in the Philippines, received from Sea-borne Trading Company in California, a shipment consigned to Sen Hiap Hing, the business name used by Cue. The shipper not having declared the value of the shipment , no value was indicated in the bill of lading. The shipment was discharged in Manila, and
while awaiting transshipment to Cebu, the cargo was stolen and never recovered. The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency value of the lost cargo, P55, 814 for unrealized profit and P25,000 for attorney‘s fees. CA affirmed the trial court‘s decision. Issue:
Whether or not Sea-Land is liable to pay Cue.
alone of Article 1749 and 1750 of the Civil Code. The justices of such stipulation is implicit in its giving the owner or shipper the option of avoiding accrual of liability limitation by the simple expedient of declaring the value of the shipment in the bill of lading. The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment covered by said rule to US$500 per package unless the shipper declares the value of the shipment and pays additional charges is valid and binding on Cue.
Held:
There is no question of the right of a consignee in a bill of lading to recover from the carrier or shipper for loss of, or damage to, goods being transported under said bill, although that document may have been drawn up only by the consignor and the carrier without the intervention of the consignee. Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage os governed by the laws of the country of destination and the goods in question were shipped from the United States to the Philippines, the liability of SeaLand has Cue is governed primarily by the Civil Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of these supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the carriage by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65. Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation clause in the bill of lading here are fully substantial on the basis
Citadel Lines v. CA Facts: o
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Manila Wine Merchants (consignee) is the importer of Dunhill Cigarettes from England. Petitioner Citadel Lines (carrier) is the general agent of the vessel ―Cardigan Bay/Strait Enterprise‖. On or about March 17, 1979, the vessel "Cardigan Bay/Strait Enterprise" loaded on board at Southampton, England, for carriage to Manila, 180 Filbrite cartons of mixed British manufactured cigarettes called "Dunhill International Filter" and "Dunhill International Menthol‖. The shipment arrived at the Port of Manila Pier 13, on April 18, 1979 Due to lack of space at the Special Cargo Coral, the aforesaid cigarettes were placed in two containers with two pallets in the srcinal container, and four pallets in the other container, with both containers duly padlocked and sealed by the representative of the CARRIER.
o
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In the morning of May 1, 1979, the CARRIER'S headchecker discovered that one of the container vans had a different padlock and the seal was tampered with. The matter was reported to Jose G. Sibucao, Pier Superintendent, Pier 13, and upon verification, it was found that 90 cases of imported British manufactured cigarettes were missing. Per investigation conducted by the ARRASTRE, it was revealed that the cargo in question was not formally turned over to it by the CARRIER but was kept the inside container van which was padlocked and sealed by the representatives of the CARRIER without any participation of the ARRASTRE. When the CONSIGNEE learned that 90 cases were missing, it filed a formal claim with the CARRIER, demanding the payment of P315,000.00 representing the market value of the missing cargoes. The CARRIER, in its reply letter. admitted the loss but alleged that the same occurred at Pier 13, an area absolutely under the control of the ARRASTRE. In view thereof, the CONSIGNEE filed a formal claim with the ARRASTRE, demanding payment of the value of the goods but said claim was denied. After trial, the lower court rendered a decision exonerating the ARRASTRE of any liability on the ground that the subject container van was not formally turned over to its custody.
ISSUES:
1. Whether the loss occurred while the cargo in question was in the custody of E. Razon, Inc. or of Citadel Lines, Inc; and 2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee. HELD: 1.
The first issue is factual in nature. On the basis of the evidence presented, the subject cargo which was placed in a container van, padlocked and sealed by the representative of the CARRIER was still in its possession and control when the loss occurred, there having been no formal turnover of the cargo to the ARRASTRE. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. 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 observed extra ordinary diligence as required in Article 1733 of
the Civil Code. The duty of the consignee is to prove merely that the goods were lost. Thereafter, the burden is shifted to the carrier to prove that it has exercised the extraordinary diligence required by law. And, its extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has the right to receive them. Considering, therefore, that the subject shipment was lost while it was still in the custody of the CARRIER, and considering further that it failed to prove that the loss was occasioned by an excepted cause, the inescapable conclusion is that the CARRIER was negligent and should be held liable. 2.
The CONSIGNEE itself admits in its memorandum that the value of the goods shipped does not appear in the bills of lading. 16 Hence, the stipulation on the carrier's limited liability applies. There is no question that the stipulation is just and reasonable under the circumstances and have been fairly and freely agreed upon.
The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per carton. Since 90 cartons were lost and the weight of said cartons is 2,233.80 kilos, at $2.00 per kilo the CARRIER's liability amounts to only US$4,467.60.
British Airways v. Court of Appeals G.R. No. 121824 Facts:
On April 6, 1989, Mahtani decided to visit his relative in Bombay, India. In anticipation of his visit, he obtained the services of a certain Mr. Gemar to prepare his travel plan. Since british Airways had no ticket flights from Manila to Bombay, Maktani had to take a connecting flight to Bombay on board British Airways. Prior to his departure, Maktani checked in the PAL counter in Manila his two pieces of luggage containing his clothing and personal effects, confident that upon reaching Hong Kong, the same would be transferred to the BA flight bound for Bombay, Unfortunately, when Maktani arrived in Bombay, he discovered that his luggage was missing and that upon inquiry from the BA representatives, he was told that the same might have been diverted to London. After plaintiff waiting for his luggage for one week, BA finally advised him to file a claim accomplishing the property. Issue:
Whether or not defendant BA is liable for compulsory damages and attorney‘s fee, as well
as the dismissal of its third party complaint against PAL Held:
The contract of transportation was exclusively between Maktani and BA. The latter merely endorsing the Manila to Hong Kong log of the former‘s journey to PAL, as its subcontractor or agent. Conditions of contacts was one of continuous air transportation from Manila to Bombay. The Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by reason of its negligent act. Since the instant petition was based on breach of contract of carriage, Maktani can only sue BA and not PAL, since the latter was not a party in the contract.
Loadstar Shipping Co. Inc. v. Court of Appelas G.R. No. 131621 Facts:
On November 19, 1984 herein petitioner shipping company carried, a shipment of (3) three bulk items on board its M/V Cherokee, which amounted to P6,067,178.00, the same being insured by the Manila Insurance Co. (MIC). The vessel in turn was insured by
Prudential Guarantee and Assurance, Inc. of P4 million. Unfortunately the ship sank in the are of Limasawa. MIC settled the insurance with the consignee and asked for the subrogation receipt, then MIC filed a claim against Loadstar. PGAI alleging the sinking was due to the fault and negligence of Loadstar. In their defense, Loadstar set up the argument of force majuere. PGAI was dropped from the case afer proving MIC had no locus standi against them. Inter alia all other defenses, Loadstar argues that it cannot be considered a common carrier because it was issued a certificate of public convenience and that it carried a particular type of cargo for a particular shipper. Issues: 1. Whether or not Loadstar‘s Cherokee is a common carrier; 2. Wheter or not, considering the type of carriage the M/V is, the required amount of diligence was observed; Held: 1. The court rules the affirmative that the M/V Cherokee is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience and their public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic, or unscheduled. Additionally, the second argument of Loadstar must fail; that the M/V Cherokee was carrying a particular type of cargo for one shipper
which appears to be purely coincidental is not reason enough to convert a vessel that is a common carrier to a private one, especially where, as in the case, it was shown that the vessel was also carrying passengers. 2. The court rules the negative. Loadstar should have exercised extraordinary diligence since it is a common carrier; and the fact that it still allowed the voyage despite the knowledge of a typhoon present counters their exercise of extra ordinary diligence required.
7.
PASSENGER’S BAGGAGES
Quisumbing Sr. vs. Court of Appeals 189 SCRA 605 Facts:
Norberto Quisumbing and Gunther Loeffler were passengers of PAL‘s Fokker ―Friendship‖ plane flying from Macatan City bound to Manila. A senior NBI agent, Florencio O. Villarin, a senior NBI agent and also one of the passengers of the said plane, saw a certain ―Zaldy‖ boarded on the same flight. Zaldy was a suspect for the killing of a Judge Valdez. Villarin sent a note to the Captain of the plane requesting that they contact the NBI director to send agents on their point of destination because of the presence of Zaldy. However, Captain
Luis Bonnevie came out of the cockpit and informed Villarin the he could not send the message because it would be heard by all ground aircraft stations. Villarin advised the Captain of the danger having Zaldy and his companions onboard. Consequently, gunshots ensued between Zaldy‘s group and Villarin. Zaldy announced a hold-up and obtained the belongings of the passengers. Zaldy and his companions successfully escaped upon landing in Manila. Petitioners now demand from PAL indemnity for their lost belongings. The petitioners contended that PAL is liable for breach of contract of carriage, for not transporting them and their belongings at the point of destination without loss or damage. As a defense, PAL interposed that the incident was force majeure. Issue:
Whether PAL can be held liable for the loss of petitioners‘ belongings due to the hi-jacking? Held:
The Supreme Court held that PAL cannot be held liable for the loss of property. Where the defendants has faithfully complied with the requirements of government agencies and adhered to the established procedures and precautions of the airline industry and particular time, its failure to take certain steps that a passenger in hindsight believes should have been done is not the negligence or misconduct which mingles with force majeure as an
active and cooperative cause. It was proven that PAL cannot be faulted with negligence. Hence, there was no breach of contract of carriage because there was no clear evidence that PAL acted in bad faith in their obligation to transport the passengers and their properties at the point of destination. The mandatory use of the most sophisticated electronic devices may have minimized hijackings but all these have proved ineffective against truly determined highjackers. Such incident which occurred was indeed force majeure.
PAN AMERICAN WORLD AIRWAYS V. RAPADAS FACTS: Private respondent Jose Rapadas was standing in line to board the flight at the Guam airport when he was ordered by Pan Am‘s employee to check-in his Samsonite attaché case. Rapadas protested. He stepped out of the line only to get back again at the end of it to try if he can get through without having to register his attaché case. However, the same man in charge of handcarry control did not fail to notice him and ordered him again to register his baggage.
For fear that he would miss the flight if he insisted, he acceded to checking it in. He then gave his attaché case to his brother who happened to be around but without declaring its contents or the value of its contents. Rapadas was given a baggage claim tag.
Upon arriving in Manila, Rapadas discovered that his attaché case was missing. Pan Am exerted efforts to locate the missing luggage, but to no avail. Pan Am offered Mr. Rapadas the sum of one hundred sixty dollars ($160.00) representing the petitioner‘s alleged limit of liability for loss or damage to a passenger‘s personal property under the contract of carriage between Rapadas and Pan Am. Rapadas refused the settlement. He filed an action for damages. The RTC decided in favor of Mr. Rapadas and rejected Pan Am‘s contention limiting it‘s liability to $160. The Court of Appeals affirmed. ISSUE: Whether a passenger is bound by the terms of a passenger ticket declaring that the limitations of liability set forth in the Warsaw Convention shall apply in case of loss, damage or destruction to a registered luggage of a passenger? HELD: Yes.The Notice and paragraph 2 of the ―Conditions of Contract‖ (which provides that carriage is subject to rules and limitations established by the Warsaw Convention) should be sufficient notice showing the applicability of the Warsaw limitation. It is not required under the Warsaw Convention that there be a detailed notice of baggage liability limitation in the passenger ticket.
Contracts of adhesion, such as the one involved here, are not entirely prohibited, unless there are facts and
circumstances showing its one-sided nature. This does not obtain here. Passengers are expected to be vigilant insofar as his luggage is concerned. If the passenger fails to adduce evidence to overcome the stipulations, he cannot avoid the application of the liability limitations. Had Mr. Rapadas not wavered in his decision to register his luggage, he could have had enough time to disclose the true worth of the articles in it and pay the extra charges or remove them from the checked-in-luggage. Unless the contents are declared, it will always be the word of a passenger against that of the airline. If the loss of life or property is caused by the gross negligence or arbitrary acts of the airline or the contents of the lost luggage are proved by satisfactory evidence other than the self-serving declarations of one party, the Court will not hesitate to disregard the fine print in a contract of adhesion. Otherwise, the contract would have to be enforced, as it is the only reasonable basis to arrive at a just award.
