Case Digest: Switzerland vs. Ramirez, 96 SCRA 297, G.R. No. L48264

 

Switzerland vs. Ramirez, 96 SCRA 297, G.R. No. L48264, February 21, 1980

Subject: Transportation Law

FACTS

Switzerland insured a shipment of 60,000 bags of Urea Nitrogen from Japan to the Philippines. The shipment was discharged from the vessel into lighters owned by Mabuhay Brokerage Co., Inc.

When the shipment was delivered to the consignee, it was found to have sustained losses and damages. Switzerland, as the insurer, paid the consignee for the damages and became subrogated to their rights.

Switzerland filed an admiralty case against the carrier (Oyama Lines), the local agent of the carrier (Citadel Lines), and the lighterage company (Mabuhay Brokerage Co., Inc.). After trial, the trial court rendered decision in favor of petitioner as against therein defendant Oyama Shipping Co., Ltd., but absolving Citadel Lines, Inc. and Mabuhay Brokerage Co., Inc. from liability. 

ISSUE

Whether or not the respondent Citadel Lines, Inc., the local agent of a foreign ocean-going vessel, the S/S "St. Lourdes", may be held primarily liable for the loss/damage found to have been sustained by subject shipment while on board and/or still in the custody of the said vessel.

RULING

Yes, the respondent Citadel Lines, Inc. may be held primarily liable for the loss/damage.

Under the Code of Commerce, it provides that the ship agent shall also be liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carrier.

In this case, it appears that the Citadel Lines is the ship agent for the vessel S/S "St. Lourdes" at the port of Manila, it is, therefore, liable to the petitioner, solidarily with its principal, Oyama Shipping Co., Ltd., in an amount representing the value of the goods lost and or damaged. The insolvency of Oyama Lines has no bearing on the instant case insofar as the liability of Citadel Lines, Inc. is concerned. The law does not make the liability of the ship agent dependent upon the solvency or insolvency of the ship owner.

Case Digest: Caltex vs. Sulpicio Lines, G.R. No. 131166

 

Caltex vs. Sulpicio Lines, 315 SCRA 709, G.R. No. 131166, September 30, 1999

Subject: Transportation Law

FACTS

MT Vector, a tramping motor tanker owned and operated by Vector Shipping Corporation, left the port of Limay, Bataan carrying petroleum products of Caltex Philippines, Inc. (petitioner) en route to Masbate by a charter contract. While MV Doña Paz, a passenger and cargo vessel owned and operated by Sulpicio Lines, left the port of Tacloban headed for Manila.

On December 20, 1987, the two vessels collided in the open sea. Among those who perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old), both unmanifested passengers but proved to be on board the vessel.

After investigation, it was found that the MT Vector was at fault and responsible for its collision with MV Doña Paz.

Sebastian Cañezal's wife and mother filed a complaint for "Damages Arising from Breach of Contract of Carriage" against Sulpicio Lines, Inc. with the RTC of Manila. Sulpicio, in turn, filed a third-party complaint against Francisco Soriano, Vector Shipping Corporation, and Caltex (Philippines), Inc.

The trial court rendered a decision dismissing the third-party complaint against the petitioner. On appeal, CA modified the trial court's ruling and included petitioner Caltex as one of those liable for damages. Hence this petition.

ISSUE

Whether or not Caltex, the charterer of a sea vessel, is liable for damages resulting from a collision between the chartered vessel and a passenger ship.

RULING

No, Caltex, the charterer of a sea vessel, is not liable for damages.

Under the law, a charter party or a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.

In this case, Caltex and Vector entered into a voyage charter, which retains the character of the vessel (MT Vector) as a common carrier. The charterer of a vessel has no obligation before transporting its cargo to ensure that the chartered vessel complies with all legal requirements. The duty rests upon the common carrier simply for being engaged in "public service”. The nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargo.

Case Digest: Western Shipping vs. NLRC, G.R. No. 109717

 

Western Shipping vs. NLRC, 253 SCRA 405, G.R. No. 109717, February 9, 1996

Subject: Transportation Law

FACTS

Petitioner Western Shipping Agency, Inc. and its principal Yeh Shipping Co., Ltd., owners of M/V Sea Wealth, faced a legal challenge initiated by the private respondent, the vessel's master. Discharged on January 14, 1989, the master was accused of misconduct, particularly failing to notify the company about the vessel's arrival in Manila and allowing unauthorized passengers on board. The dismissal led to a complaint filed on March 1, 1989, alleging illegal termination, underpayment of salary, fixed overtime pay, and non-payment of wages.

Western Shipping justified the dismissal citing the master's failure to communicate and alleged safety violations. The Philippine Overseas Employment Administration (POEA) found in favor of the master, declaring his dismissal illegal. The POEA ordered petitioners to pay a total of US$45,643.00 representing salary for the unexpired contract, salary differentials, underpayment of family allotment, and conversion differences, plus attorney's fees.

Petitioners appealed to the National Labor Relations Commission (NLRC), which modified the POEA decision on March 20, 1992. The NLRC set aside the award for alleged salary differentials but affirmed the US$5,643.00 for the unexpired portion of the contract. It held Western Shipping and Yeh Shipping jointly and severally liable, with the bonding company, Philippine British Assurance Company, Inc., also held accountable.

ISSUE

Whether or not, Alexander Bao was rightfully dismissed for his failure to notify the petitioner of the vessel’s arrival in Manila and to provide life-saving equipment for the passengers he had allowed to board, as required by Section 1019 of the Philippine Merchant Marine Rules and Regulation.

RULING

No, Alexander Bao was illegally dismissed.

Under the law, Loss of confidence is a valid ground for the dismissal of managerial employees like petitioner herein, who was the master of a vessel. The loss of confidence must be substantiated by evidence. The burden of proof is on the employer to show grounds justifying the loss of confidence.

In this case, petitioners failed to discharge this burden, as the POEA and the NLRC found that: (1) the private respondent had taken on board the vessel the fifteen passengers with the knowledge of Noimi Zabala, the president of Western Shipping; (2) the clearance to sail issued by the Coast Guard, an agency of the government charged with the seaworthiness of vessels, establishes approval of the application for the boarding of the additional passengers and the safety of the vessel was not endangered by the presence of the additional passengers; (3) the vessel had adequate life-saving equipment; and (4) additional passengers were not ordinary passengers but the wives and children of the vessel’s complement, including private respondent’s wife. The private respondent, who had 15 years of maritime experience behind him, would unlikely allow unsafe passage. Therefore, the dismissal was illegal. 

Case Digest: Aboitiz vs. New India, G.R. No. 156978

 

Aboitiz vs. New India, 488 SCRA 563, G.R. No. 156978, May 02, 2006

Subject: Transportation Law

FACTS

Societe Francaise Des Colloides loaded a cargo of textiles and auxiliary chemicals from France on board a vessel owned by Franco-Belgian Services, Inc. The cargo was consigned to General Textile, Inc., in Manila and insured by respondent New India Assurance Company, Ltd. While in Hongkong, the cargo was transferred to M/V P. Aboitiz for transshipment to Manila.

While at sea, the vessel received a report of a typhoon moving within its general path. To avoid the typhoon, the vessel changed its course. However, it was still at the fringe of the typhoon when its hull leaked. On October 31, 1980, the vessel sank.

General Textile lodged a claim with New India for the amount of its loss. Respondent paid General Textile and was subrogated to the rights of the latter. Then the respondent filed a complaint for damages against petitioner Aboitiz, Franco-Belgian Services, and the latter’s local agent, F.E. Zuellig, Inc.

The trial court, citing the Court of Appeals decision in General Accident Fire and Life Assurance Corporation v. Aboitiz Shipping Corporation involving the same incident, ruled in favor of the respondent. On appeal, the appellate court affirmed in toto the trial court’s decision. Hence, this petition for review.

Petitioner contends that respondent’s claim for damages should only be against the insurance proceeds and limited to its pro-rata share in view of the doctrine of limited liability.

ISSUE

Whether or not the limited liability doctrine, which limits the respondent’s award of damages to its pro-rata share in the insurance proceeds, applies in this case.

RULING

No, the limited liability doctrine does not apply on this case.

Under the law, in the event of loss, destruction or deterioration of the insured goods, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence. Moreover, where the vessel is found unseaworthy, the shipowner is also presumed to be negligent since it is tasked with the maintenance of its vessel. Though this duty can be delegated, still, the shipowner must exercise close supervision over its men.

In this case, the petitioner has the burden of showing that it exercised extraordinary diligence in the transport of the goods it had on board to invoke the limited liability doctrine. Considering the evidence presented and the circumstances obtained in this case, the petitioner failed to discharge this burden. Both the trial and the appellate courts found that the sinking was not due to the typhoon but to its unseaworthiness. Evidence on record showed that the weather was moderate when the vessel sank. Where the shipowner fails to overcome the presumption of negligence, the doctrine of limited liability cannot be applied. Therefore, the petitioner is liable for the total value of the lost cargo.

Case Digest: Santiago Lighterage vs. Court of Appeals, G.R. No. 139629

 

Santiago Lighterage vs. Court of Appeals, G.R. No. 139629, June 21, 2004 

Subject: Transportation Law

FACTS

Square filed a complaint against Pelaez, claiming damages for a failed voyage to South Korea on MV Christine Gay. Pelaez, in turn, filed a third-party complaint against petitioner, alleging damages and attaching a preliminary writ. The trial court summarized the case, stating that Pelaez offered MV Christine Gay to C-Square, representing it as seaworthy. A Voyage Charter Agreement was signed, with a provision for rescission if the vessel was unfit. Pelaez, having signed a Bareboat Charter Agreement with petitioner, received the vessel in Manila but encountered engine issues on the way to Zambales. Repairs proved inadequate, and the vessel, loaded with chromite ores, had to return to Manila due to seaworthiness concerns. The plaintiff rescinded the Charter Agreement, citing damages. Pelaez sought payment from third parties, and MARINA later declared MV Christine Gay "dead." Consequently, plaintiff had to contract with other companies to transport its chromite ores to South Korea and this entailed additional expenses. The trial court held that MV Christine Gay was not seaworthy, which was thereby affirmed by the appellate courts. Hence this instant petition.

ISSUE

Whether or not MV Christine Gay is seaworthy.

RULING

No, MV Christine Gay is not seaworthy.

According to Maritime Law, to be seaworthy, a vessel “must have that degree of fitness which an ordinary, careful and prudent owner would require his vessel to have at the commencement of her voyage, having regard to all the probable circumstances of it.” Thus, the degree of seaworthiness varies in relation to the contemplated voyage.

In this case, petitioner asserts that MV Christine Gay is “sufficient in materials, construction, equipment and outfit” as shown by the documents the Philippine Coast Guard (“Coast Guard”) and the Maritime Industry Authority (“MARINA”) issued to petitioners. However, the trial court relied on the testimonies of Engineer Panaguiton and Captain Sorongon, who found numerous defects during a survey of the hull and superstructures. The petitioner's claim of seaworthiness is challenged, especially considering that the voyage across the Atlantic requires stronger equipment than sailing across the Visayan Sea. The obligation of seaworthiness is absolute, and even if the shipowner takes precautions, failure to ensure actual seaworthiness is not excusable. MV Christine Gay was deemed unseaworthy for the intended purpose in the bare-boat charter agreement, and the charterer's right to inspect the vessel before loading doesn't absolve the shipowner of the obligation to provide a cargoworthy ship.

Case Digest: Philippine Refining Co. vs. Francisco Jarque, G.R. No. L-41506

 

Philippine Refining Co. vs. Francisco Jarque, 61 Phil. 229, G.R. No. L-41506, March 25, 1935

Subject: Transportation Law

FACTS

Philippine Refining Co., Inc., and Francisco Jarque executed three mortgages on the motor vessels Pandan and Zaragoza. These documents were recorded in the record of transfers and incumbrances of vessels for the port of Cebu and each was therein denominated a "chattel mortgage".

Neither of the first two mortgages had appended an affidavit of good faith. The third mortgage contained such an affidavit, but this mortgage was not registered in the customs house or within the period of thirty days prior to the commencement of insolvency proceedings against Francisco Jarque; also, while the last-mentioned mortgage was subscribed by Francisco Jarque and M. N. Brink, there was nothing to disclose in what capacity the said M. N. Brink signed.

A fourth mortgage was executed by Francisco Jarque and Ramon Aboitiz on the motorship Zaragoza and was entered in the chattel mortgage registry of the register of deeds on May 12, 1932, or again within the thirty-day period before the institution of insolvency proceedings.

A petition was filed with the Court of First Instance of Cebu in which it was prayed that Francisco Jarque be declared an insolvent debtor, which soon thereafter was granted, with the result that an assignment of all the properties of the insolvent was executed in favor of Jose Corominas.

Judge Jose M. Hontiveros declined to order the foreclosure of the mortgages, but on the contrary, sustained the special defenses of fatal defectiveness of the mortgages. In so doing we believe that the trial judge acted advisedly.

ISSUE

Whether or not the mortgages are defective.

RULING

Yes, they are defective.

Under Article 585 of the Code of Commerce, for all purposes of law not modified or restricted by the provisions of this Code, vessels shall continue to be considered as personal property.

In this case, article 585 of the Code of Commerce is in force. Vessels are considered personal property under the civil law. A mortgage on a vessel is in nature a chattel mortgage. The only difference between a chattel mortgage of a vessel is that a record of documents affecting the title to a vessel must be entered in the record of the Collector of Customs at the port of entry. Section 5 of the Chattel Mortgage Law provides that a good chattel mortgage includes the requirement of an affidavit of good faith appended to the mortgage and recorded therewith. A chattel mortgage of a vessel that lacks the affidavit of good faith is unenforceable against third persons.

Case Digest: McMicking vs. Banco Espanol, G.R. No. 5029

 

McMicking vs. Banco Espanol, 13 Phil 429, G.R. No. 5029, April 1, 1909

Subject: Transportation Law

FACTS

In 1907, Sanchez and Cue Suan owned the Hock-Tay steamship. They borrowed P3,000 from El Banco Español-Filipino and provided a chattel mortgage as security. The mortgage was recorded in the port's collector of customs and register of property. In October, El Banco Español-Filipino delivered the mortgage to Manila's sheriff, requesting the ship's sale. The sheriff informed the mortgagors of the request and the ship would be sold in accordance with the law. The sale was scheduled for October 27th, and the steamer was sold to the highest bidder for P30,000. The transaction was documented in various records.

ISSUE

Whether or not appellant has liens existing in this case.

RULING

Yes, the appellant has existing liens.

Under Article 580 of the Code of Commerce, the wages of the crew and expenses incurred for the ship during the last voyage have a preference over the claim of a mortgagee.

In this case, this reference is known as a legal lien and takes priority over a lien created by giving the ship as security for money borrowed. The sale of a ship under a mortgage does not affect the right of prior lien holders, and their remedies lie in foreclosing their liens against the ship itself.

 

Case Digest: China Airlines vs. Court of Appeals, G.R. No. 45985

 

China Airlines vs. Court of Appeals, 185 SCRA 449, G.R. No. 45985, 18 May 1990

Subject: Transportation Law

FACTS

Jose Pagsibagan, General Manager of Rentokil (Phil.) Inc. purchased an airline ticket for Manila-Taipei-Hong Kong-Manila with Philippine Airlines which at that time was a sales and ticketing agent of China Air Lines. His plane ticket indicated that he is booked on CAL CI Flight No. 812 to depart from Manila for Taipei on June 10, 1968 at 5:20 p.m. as issued by PAL, through its ticketing clerk defendant Roberto Espiritu. One hour before his flight, Pagsibagan was informed that Flight No. 812 bound to Taipei had already left at 10:20. 

Immediately, PAL employees made appropriate arrangements for Pagsibagan to take the next flight to Taipei the following day, to which he arrived around noontime. Pagsibagan filed a complaint for damages, alleging further the negligence of Roberto Espiritu. PAL on its defense alleges that its ticketing office through Roberto Espiritu asked for confirmation from CAL before issuing the ticket to Mr. Pagsibagan, which CAL confirmed. Defendant China Air Lines, for its part, disclaims liability for the negligence and incompetence of the employees of PAL. 

Moreover, CAL avers that it had properly notified PAL of the flight schedule. RTC ruled that PAL and its employee shall indemnify Pagsibagan. Complaint is dismissed with respect to CAL. CA sustained the ruling of the RTC denying Pagsibagan’s claim for moral damages.

ISSUE

Whether or not multi carriers may be held liable in one contract of carriage.   

RULING

No.

Under the law, when an injury is caused by the negligence of an employee, there is instantly arises a presumption of law that there was negligence on the part of the employer either in the selection of the employee or in the supervision over him after such selection. The presumption, however, may be rebutted by a clear showing on the part of the employer that it has exercised the care and diligence of a good father of a family in the selection and supervision of his employee.

In this case, CAL was absolved because the court said that the latter did not contribute to the negligence committed by therein defendants-appellants PAL and Roberto Espiritu. PAL and Roberto Espiritu are declared jointly and severally liable to pay the sum of P10,000.00 by way of nominal damages, without prejudice to the right of PAL to recover from Roberto Espiritu reimbursement of the damages that it may pay respondent Jose Pagsibigan.

Case Digest: Lufthansa vs. Court of Appeals, G.R. No. 83612

 

Lufthansa vs. Court of Appeals, 238 SCRA 290, G.R. No. 83612, November 24, 1994

Subject: Transportation Law

FACTS

Tirso V. Antiporda, Sr., an associate director of the Central Bank of the Philippines and a consultant for various international organizations, was issued a confirmed Lufthansa ticket for a five-leg trip to Malawi, Africa, involving different airlines. However, during a layover in Bombay, Antiporda was informed that his seat on the Air Kenya flight to Nairobi had been given to another passenger, causing him to miss his appointment in Blantyre, Malawi.

Antiporda demanded damages from Lufthansa, but the airline denied liability. Antiporda then filed a complaint against Lufthansa for breach of contract before the Regional Trial Court, which ruled in his favor. The Court held that Lufthansa had the obligation to transport Antiporda for the entire five-leg trip, and the refusal to transport him to his final destination constituted a breach of contract.

The trial court also found that Lufthansa's conduct was aggravated by the discourteous and arbitrary behavior of its officials in Bombay. Antiporda was awarded moral and exemplary damages, as well as attorney's fees. Lufthansa appealed to the Court of Appeals, which affirmed the trial court's decision.

ISSUE

Whether or not Lufthansa is liable for damages for the "bumping-off" incident that occurred during Antiporda's layover in Bombay.

RULING

Yes, Lufthansa is liable for damages.

Article 30 of the Warsaw Convention provides: (1) In the case of transportation to be performed by various successive carriers and falling within the definition set out in the third paragraph of Article I, each carrier who accepts passengers, baggage, or goods shall be subject to the rules set out in the convention, and shall be deemed to be one of the contracting parties to the contract of transportation insofar as the contract deals with that part of the transportation which is performed under his supervision. (2) In the case of transportation of this nature, the passenger or his representative can take action only against the carrier who performed the transportation during which the accident or the delay occurred, save in the case where, by express agreement, the first carrier has assumed liability for the whole journey.

In this case, SC rejected Lufthansa's argument that its responsibility ceased at Bombay Airport and that it was merely a ticket-issuing agent for the other carriers. The Court emphasized that the confirmed Lufthansa ticket covered the entire journey, and Lufthansa, as the principal in the contract of carriage, guaranteed Antiporda a sure seat with Air Kenya. The Warsaw Convention's provisions invoked by Lufthansa did not apply to the circumstances of the case, as the refusal to transport Antiporda was not a result of an accident or delay but rather the airline's decision to accommodate another passenger. Moreover, the Court upheld the award of moral and exemplary damages, as well as attorney's fees, based on Lufthansa's bad faith and the discourteous behavior of its officials in Bombay. The Court considered Antiporda's high government position and the impact of the incident on his professional commitments in Malawi.

Case Digest: KLM Dutch Airlines vs. Court of Appeals, G.R. No. L-31150

KLM Dutch Airlines vs. Court of Appeals, 65 SCRA 237, G.R. No. L-31150, July 22, 1975

Subject: Transportation Law

FACTS

The Philippine Travel Bureau to which Reyes was an accredited agent for international air carriers which are members of the International Air Transport Association, popularly known as the "IATA," of which both the KLM and the Aer Lingus are members.

The respondents approached Tirso Reyes, branch manager of the Philippine Travel Bureau for consultations about a world tour which they were intending to make with their daughter and a niece. Reyes submitted to them, after preliminary discussions, a tentative itinerary that prescribed a trip of thirty-five legs.

When the respondents left the Philippines, they were issued KLM tickets for their entire trip. However, their coupon for the Aer Lingus portion (Flight 861 for June 22, 1965) was marked "RQ" which meant "on request".

They went on with the trip. However, in Barcelona airport, the Spouses Mendoza were off-loaded the Aer Lingus and were denied of means going to Lourdes. Hence, they were forced to take a train to Lourdes and pay the fare from their own pockets. 

In March 1966, the respondents, referring to KLM as the principal of Aer Lingus, filed a complaint for damages with the CFI of Manila arising from breach of contract of carriage and for the humiliating treatment received by them at the hands of the Aer Lingus manager in Barcelona.

After due hearing, the trial court awarded damages to the respondents. Both parties appealed to the Court of Appeals. The KLM sought complete exoneration; the respondents prayed for an increase in the award of damages. Hence, the present recourse by the KLM.

ISSUE

Whether or not KLM should be liable for the damages

RULING

Yes, KLM is liable for the damages.

Under the Warsaw Convention, Art. 25. (1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court to which the case is submitted, is considered to be equivalent to willful misconduct. (2) Similarly, the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused under the same circumstances by any agent of the carrier acting within the scope of his employment.

In this case, SC held that as the airline that issued those tickets with the knowledge that the respondents would be flown on the various legs of their journey by different air carriers, the KLM was chargeable with the duty and responsibility of specifically informing the respondents of conditions prescribed in their tickets or, in the very least, to ascertain that the respondents read them before they accepted their passage tickets. A thorough search of the record fails to show KLM officials or employees exerted effort to discharge, in a proper manner, their responsibility to the respondents. Hence, the respondents cannot be bound by the provision in question by which KLM unilaterally assumed the role of a mere ticket-issuing agent for other airlines and limited its liability only to untoward occurrences on its own lines.

Case Digest: New Zealand vs. Joy, G.R. No. L-7311

 

New Zealand vs. Joy, 97 Phil. 646, G.R. No. L-7311, September 30, 1955

Subject: Transportation Law

FACTS

A cargo of oats was consigned to Muller and Phipps (Manila) Ltd. The cargo was insured against all risks by The New Zealand Insurance Co., Ltd. When the cargo was discharged several cartons which contained the oats were in bad order. The consignee filed a claim against the insurer for the value of the damaged goods which the latter paid in the amount of P18,148.69. The insurer as subrogee of the consignee sued E. Razon, Inc. who was the arrastre operator. The insurer demanded reimbursement in the amount of P17,025.87. The lower figure is due to the fact that the carrier responded for its share of the loss in the sum of P1,121.02.

RTC ordered E. Razon to pay. On appeal, the CA reversed RTC’s decision on the ground of prescription.

ISSUE

Whether or not E. Razon is not liable due to prescription based on Art. 366 of the Code of Commerce.

RULING

No. 

Under Article 366 of the Code of Commerce, there are two requisites before claim for damages may be demanded: (1) consignment of goods through a common carrier, by a consignor in one place to a consignee in another place; and (2) the delivery of the merchandise by the carrier to the consignee at the place of destination.

In the instant case, the consignor is the branch office of Lee Teh & Co., Inc., at Catarman, Samar, which placed the cargo on board the ship Jupiter, and the consignee, its main office at Manila. The lower court found that the cargo never reached Manila, its destination, nor was it ever delivered to the consignee, the office of the shipper in Manila, because the ship ran aground upon entering Laoang Bay, Samar on the same day of the shipment. It follows that the aforesaid Article 366 does not have application because the cargo was never received by the consignee. Moreover, under the bill of lading issued by the carrier, it was the letter's undertaking to bring the cargo to its destination—Manila—and deliver it to consignee, which undertaking was never complied with. The carrier, therefore, breached its contract, and, as such, it forfeited its right to invoke in its favor the conditions required by Article 366.

Case Digest: Tan Pho vs. Hassamal, G.R. No. 45598

 

Tan Pho vs. Hassamal, 67 Phil. 555, G.R. No. 45598, April 26, 1939

Subject: Transportation Law

FACTS

Enrique Aldeguer purchased on credit from Hassamal Dalamal certain merchandise valued at P583.60. Hassamal Dalamal, the plaintiff and herein respondent, shipped said merchandise on the ship of Tan Pho, defendant and herein petitioner, and endorsed the bill of lading to the Chartered Bank of China, India & Australia, which, in turn, endorsed it to the Philippine National Bank. The said bill of lading was made to order and contains the initials of Enrique Aldeguer, "E. A."

Upon arrival of the goods in Sorsogon, the agent of the defendant-petitioner delivered the merchandise to Enrique Aldeguer who presented the invoice and signed a receipt. The plaintiff-respondent; upon learning that Aldeguer had received the merchandise, made him sign a forty-day draft for the value of said merchandise.

The Philippine National Bank, with the consent of the plaintiff-respondent, gave Aldeguer an extension of ten days to pay the amount of the merchandise in question, and upon the expiration of the period, the plaintiff-respondent required Aldeguer to pay the merchandise. Unable to get such payment, the plaintiff-respondent brought suit on November 28, 1934, that is, after the expiration of 174 days from the delivery of the merchandise to Aldeguer.

The court decided in favor of the defendant and against the plaintiff upon the theory that the delivery of the goods to Aldeguer constitutes nondelivery, wherefore, the claim not having been filed within thirty days nor the action instituted within sixty days, the plaintiff-respondent waived his claim or right of action against the defendant.

On appeal the Court of Appeals upheld the contrary view and rendered judgment in favor of the plaintiff and against the defendant. Hence the defendant has taken this appeal on certiorari.

ISSUE

Whether or not the delivery of certain merchandise by the carrier to an agent without presenting the bill of lading, constitutes misdelivery or nondelivery.

RULING

Yes, it constitutes misdelivery, not a case of nondelivery.

Under the Article 368 of the Code of Commerce, the carrier must deliver to the consignee without any delay or difficulty the merchandise received by him, by reason of the mere fact of being designated in the bill of lading to receive it; and should said carrier not do so he shall be liable for the damages which may arise therefrom.

In this case, the bill of lading was issued to the order of the shipper, the carrier was under a duty not to deliver the merchandise mentioned in the bill of lading except upon presentation of the bill of lading duly endorsed by the shipper. Defendant Tan Pho having delivered the goods to Enrique Aldeguer without the presentation by the latter of the bill of lading duly endorsed to him by the shipper, the said defendant made a misdelivery and violated the bill of lading, because his duty was not only to transport the goods entrusted to him safely, but to deliver them to the person indicated in the bill of lading. In addition, SC held that when the owner of the goods transported attempts to secure the value thereof from the person to whom they have been delivered by mistake, he cannot be deemed to have ratified the misdelivery or to have waived his right against the carrier. 

Case Digest: Aboitiz Shipping vs. Insurance Company, G.R. No. 168402

 

Aboitiz Shipping vs. Insurance Company, G.R. No. 168402, August 08, 2008

Subject: Transportation Law

FACTS

STIP was the consignee of a cargo containing wooden tools and workbenches insured with Insurance Company of North America. The container van was shipped from Germany to Singapore, then to Manila. In Manila, the container van was received by Aboitiz Shipping and was then boarded on Aboitiz’s ship which arrived in Cebu. On August 11, 1993, the cargo was withdrawn from the port by the representative of STIP and was delivered to Don Bosco Technical School Cebu. It was received by Mr. Bernhard Willig.

On August 13, 1993, Willig called the Claims Head of Aboitiz Shipping, Mr. Mayo Perez, informing him that the cargo sustained water damage. Perez immediately went to the warehouse and checked the condition of the container and other cargoes. He found that the bottom of the crate was slightly broken but the crate had no water marks. However, he confirmed that the tools which were stored inside the crate were already corroded. In a letter dated August 15, 1993, Willig informed Aboitiz of the damage noticed up on opening of the cargo.

STIP contacted ICNA for insurance claims. On September 21, 1993, the consignee STIP filed a formal claim with Aboitiz for the damage to its cargo. Aboitiz refused to settle the claim. ICNA paid the consignee and filed a complaint for collection of damages against Aboitiz. The RTC ruled in favor of Aboitiz but the CA reversed.

Aboitiz disavowed any liability and asserted that the claim had no factual and legal bases. It countered that the complaint stated no cause of action, plaintiff ICNA had no personality to institute the suit, the cause of action was barred, and the suit was premature there being no claim made upon Aboitiz.

ISSUE

Whether or not respondent ICNA the real party-in-interest that possesses the right of subrogation to claim reimbursement from petitioner Aboitiz.

RULING

Yes, ICNA is a real party-in-interest that possesses the right of subrogation to claim reimbursement from petitioner Aboitiz.

Under a settled jurisprudence, payment by the insurer to the assured operates as an equitable assignment of all remedies the assured may have against the third party who caused the damage. Subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer.

In this case, respondent's cause of action is founded on it being subrogated to the rights of the consignee of the damaged shipment. Upon payment to the consignee of indemnity for damage to the insured goods, ICNA's entitlement to subrogation equipped it with a cause of action against petitioner in case of a contractual breach or negligence. This right of subrogation, however, has its limitations. First, both the insurer and the consignee are bound by the contractual stipulations under the bill of lading. Second, the insurer can be subrogated only to the rights as the insured may have against the wrongdoer. If by its own acts after receiving payment from the insurer, the insured releases the wrongdoer who caused the loss from liability, the insurer loses its claim against the latter.

Case Digest: Load Star Shipping vs. Court of Appeals, 315 SCRA 339, G.R. No. 131621

 

Load Star Shipping vs. Court of Appeals, 315 SCRA 339, G.R. No. 131621, September 28, 1999

Subject: Transportation Law

FACTS

On 19 November 1984, Loadstar received on board its M/V "Cherokee" (hereafter, the vessel) the following goods for shipment a) 705 bales of lawanit hardwood b) 27 boxes and crates of tilewood assemblies and the others and c) 49 bundles of mouldings R & W (3) Apitong Bolidenized.

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

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

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

ISSUE

Whether or not claim and suit has already prescribed.

RULING

No, the claim and suit have  not prescribed.

Under the law the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA) — which provides for a one-year period of limitation on claims for loss of, or damage to, cargoes sustained during transit

In this case, one-year prescriptive period also applies to the insurer of the goods. In this case, the period for filing the action for recovery has not yet elapsed. Moreover, a stipulation reducing the one-year period is null and void; it must, accordingly, be struck down.

Case Digest: Philippine Charter vs. Chemoil, G.R. No. 136888

 

Philippine Charter vs. Chemoil, 463 SCRA 202, G.R. No. 136888, June 29, 2005

Subject: Transportation Law

FACTS

Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of non-life insurance. Respondent Chemoil Lighterage Corporation is also a domestic corporation engaged in the transport of goods.

Samkyung Chemical Company, Ltd., based in South Korea, shipped 62.06 metric tons of the liquid chemical DIOCTYL PHTHALATE (DOP) on board MT “TACHIBANA  and another 436.70 metric tons of DOP to the Philippines.

The consignee was Plastic Group Phils., Inc. in Manila. PGP insured the cargo with Philippine Charter Insurance Corporation against all risks.

The ocean tanker MT “TACHIBANA” unloaded the cargo to the tanker barge, which shall transport the same to Del Pan Bridge in Pasig River and haul it by land to PGP’s storage tanks in Calamba, Laguna. Upon inspection by PGP, the samples taken from the shipment showed discoloration demonstrating that it was damaged. PGP then sent a letter where it formally made an insurance claim for the loss it sustained. Petitioner paid PGP the full and final payment for the loss and issued a Subrogation Receipt. Meanwhile, PGP paid the respondent the full payment for the latter’s services.

An action for damages was instituted by the petitioner-insurer against the respondent carrier before the RTC, Br.16, City of Manila. The RTC decided in favor of the plaintiff. The counterclaims are DISMISSED. On appeal, CA reversed the trial court’s decision.

ISSUE

Whether or not the damage to the cargo was due to the fault or negligence of the respondent. 

RULING

No, the damage was not due to the fault or negligence of the respondent. 

Under the law, within twenty-four hours following the receipt of the merchandise a claim may be made against the carrier on account of damage or average found upon opening the packages. After the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.

In this case, PGP failed to file any notice, claim or protest within the period required by Article 366 of the Code of Commerce, which is a condition precedent to the accrual of a right of action against the carrier and the transportation charges have been paid by PGP which estopped petitioners to claim whatsoever against the carrier.

Case Digest: Southern Lines, Inc. vs Court of Appeals and City of Iloilo, G.R. No. L-16629

 

Southern Lines, Inc. vs Court of Appeals and City of Iloilo, G.R. No. L-16629, January 31, 1962

Subject: Transportation Law

FACTS

National Rice and Corn Corporation (NARIC) shipped 1,726 sacks of rice consigned to the City of Iloilo on board the SS "General Wright" belonging to the Southern Lines, Inc. Each sack of rice weighed 75 kilos, and the shipment indicated in the bill of lading had a total weight of 129,450 kilos.

The City of Iloilo received the shipment and paid. However, the actual merchandise received by the City of Iloilo was short of 13,319 kilos, the proportionate value of which was P6,486.35.

With this, the City of Iloilo filed a complaint in the Court of First Instance of Iloilo against NARIC and Southern Lines, Inc. for the recovery of the amount. After trial, the lower court absolved NARIC but sentenced Southern Lines, Inc. to pay the amount of P4,931.41 which is the difference between the sum of P6,486.35 and P1,554.94 representing the latter's counterclaim for handling and freight. On appeal, CA affirmed the judgment of the trial court. Hence, this petition for review.

ISSUE

Whether or not the defendant-carrier (the petitioner) is liable for the loss or shortage of the rice shipped.

RULING

Yes, it is liable for the loss or shortage of the rice shipped.

Under the provisions of Article 361, the defendant-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 the provisions of Article 362, the plaintiff, in order to hold the defendant liable, was obliged to prove that the damages to the goods by virtue of their nature, occurred on account of its negligence or because the defendant did not take the precaution adopted by careful persons.

In this case, SC 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. Furthermore, CA found that the “appellant (petitioner) itself frankly admitted that the strings that tied the bags of rice were broken; some bags were with holes and plenty of rice were spilled inside the hull of the boat, and that the personnel of the boat collected no less than 26 sacks of rice which they had distributed among themselves." This finding shows that the shortage resulted from the negligence of the petitioner. Therefore, the defendant-carrier is liable for the loss.