Case Digest: Manila Steamship Co., Inc. vs. Abdulhaman, 100 Phil 32, G.R. No. L-9534

 

Manila Steamship Co., Inc. vs. Abdulhaman, 100 Phil 32, G.R. No. L-9534, September 29, 1956

Subject: Transportation Law

FACTS

This case was begun in the Court of First Instance of Zamboanga (Civil Case No. 170) by Insa Abdulhaman against the Manila Steamship Co., owner of the M/S "Bowline Knot", and Lim Hong To, owner of the M/L "Consuelo V", to recover damages for the death of his (plaintiff's) five children and loss of personal properties on board the M/L "Consuelo V" as a result of a maritime collision between said vessel and the M/S "Bowline Knot" on May 4, 1948, a few kilometers distant from San Ramon Beach, Zamboanga City.

ISSUE

Whether or not shipowner and agents have liability.

RULING

Yes.

Under the law, in case of collision between two vessels imputable to both of them, each vessel shall suffer her own damage and both shall be solidarily liable for the damages occasioned to their cargoes. The characteristic language of the law in making the "vessels" solidarily liable for the damages due to the maritime collision emphasizes the direct nature of the responsibilities on account of the collision incurred by the shipowner under maritime law, as distinguished from the civil law and mercantile law in general. This direct responsibility is recognized in Article 618 of the Code of Commerce under which the captain shall be civilly liable to the ship agent, and the latter is the one liable to third persons.

In fact, it is a general principle, well established maritime law and custom, that shipowners and ship agents are civilly liable for the acts of the captain (Code of Commerce, Article 586) and for the indemnities due the third persons (Article 587); so that injured parties may immediately look for reimbursement to the owner of the ship, it being universally recognized that the ship master or captain is primarily the representative of the owner 

Case Digest: Chua Yek Hong v. IAC, G.R. No. 74811

 

Chua Yek Hong v. IAC, G.R. No. 74811, September 30, 1988

Subject: Transportation Law

FACTS

Petitioner is a duly licensed copra dealer based at Puerta Galera, Oriental Mindoro, while private respondents are the owners of the vessel, "M/V Luzviminda I," a common carrier engaged in coastwise trade from the different ports of Oriental Mindoro to the Port of Manila.

In October 1977, petitioner loaded 1,000 sacks of copra, on board the vessel "M/V Luzviminda I" for shipment from Puerta Galera, Oriental Mindoro, to Manila. Said cargo, however, did not reach Manila because somewhere between Cape Santiago and Calatagan, Batangas, the vessel capsized and sank with all its cargo.

On 30 March 1979, petitioner instituted before the then Court of First Instance of Oriental Mindoro, a Complaint for damages based on breach of contract of carriage against private respondents.

In their Answer, private respondents averred that even assuming that the alleged cargo was truly loaded aboard their vessel, their liability had been extinguished by reason of the total loss of said vessel.

The Trial Court rendered its Decision in favor of the petitioner and ordered private respondents jointly and severally, to pay the petitioner.

On appeal, respondent Appellate Court reversed the lower court decision and ruled that private respondents' liability, as ship owners, for the loss of the cargo is merely co-extensive with their interest in the vessel such that a total loss thereof results in its extinction.

ISSUE

Whether or not the private respondents as common carrier can invoke doctrine of limited liability under Article 587 of the Code of Commerce.

RULING

Yes, common carrier can invoke doctrine of limited liability under Article 587 of the Code of Commerce.

Art. 587 of the code of commerce provides that the ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipment and the freight it may have earned during the voyage.

In this case, respondents' liability, as ship owners, for the loss of the cargo is merely co-extensive with their interest in the vessel such that a total loss thereof results in its extinction and none of the exceptions to the rule on limited liability being present, the liability of private respondents for the loss of the cargo of copra must be deemed to have been extinguished.

Case Digest: Yangco vs. Laserna, 73 Phil. 330, G.R. No. L-47447-47449

 

Yangco vs. Laserna, 73 Phil. 330, G.R. No. L-47447-47449, October 29, 1941

Subject: Transportation Law

FACTS

The steamer S.S. Negros, belonging to petitioner, Teodoro R. Yangco, left the port of Romblon on its return trip to Manila. Typhoon signal No. 2 was up, of which the captain was duly advised, however, the vessel proceeded to set sail.

The boat encountered strong winds and rough seas. As the sea became increasingly violent, the captain ordered the vessel to turn left, evidently to return to port, but in the maneuver, the vessel was caught sidewise by a big wave which caused it to capsize and sink.

The respondents instituted in CFI of Capiz separate civil actions against the petitioner to recover damages for the death of their loved ones. The court awarded the heirs of Antolin and Victorioso Aldana the sum of P2,000; the heirs of Casiana Laserna, P590; and those of Genaro Basana, also P590.

After the rendition of the judgment to this effect, the petitioner by a verified pleading, sought to abandon the vessel to the plaintiffs in the three cases, together with all its equipment, without prejudice to his right to appeal. The abandonment having been denied, an appeal was taken to the Court of Appeals, wherein all the judgments were affirmed except that which sums were increased to P4,000.

Petitioner, now deceased, appealed and is here represented by his legal representative.

ISSUE

Whether or not the shipowner or agent, notwithstanding the total loss of the vessel as a result of the negligence of its captain, be properly held liable in damages for the consequent death of its passengers.

RULING

No, the shipowner cannot be properly held liable.

Under the law, the agent shall be civilly 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 carried; but he may exempt himself therefrom by abandoning the vessel with all her equipment and the freight he may have earned during the voyage.

In this case, it is a fact that the ill-fated steamship Negros, as a vessel engaged in interisland trade, is a common carrier and that the relationship between the petitioner and the passengers who died in the mishap rests on a contract of carriage. Assuming that the petitioner is liable for a breach of contract of carriage, the exclusively "real and hypothecary nature" of maritime law operates to limit such liability to the value of the vessel, or the insurance thereon, if any. However, it does not appear that the vessel was insured. The abandonment of the vessel sought by the petitioner is immaterial. The vessel having perished, any act of abandonment would be an idle ceremony. Therefore, the petitioner cannot be properly held liable in damages for the consequent death of its passengers. 

Case Digest: Philippine National Bank vs. CA, 337 SCRA 381, G.R. No. 128661

 

Philippine National Bank vs. CA, 337 SCRA 381, G.R. No. 128661, August 8, 2000

Subject: Transportation Law

FACTS

To finance the acquisition of 7 shipping vessels, the Philippine International Shipping Corporation (PISC) applied for and was granted by National Investment Development Corporation (NIDC) guaranty accommodations. As security for these guaranty accommodations, PISC executed chattel mortgages on the vessels to be acquired by it.

Meanwhile, PISC entered into a contract with Hong Kong United Dockyards, Ltd. for the repair and conversion of one of the vessels, M/V Asean Liberty. The Central Bank of the Philippines authorized PISC to open with China Banking Corporation (CBC) a standby letter of credit for US$545,000 in favor of Citibank, N.A. to cover the repair and partial conversion of the vessel M/V Asean Liberty.

PISC executed an Application and Agreement for Commercial Letter of Credit for US$545,000 with CBC in favor of Citibank. CBC then issued its Irrevocable Standby Letter of Credit forUS$545,000 in favor of Citibank for the account of PISC. PISC executed a promissory note for US$545,000 in favor of Citibank pursuant to the Loan Agreement between PISC and Citibank.

Upon failure of PISC to fulfill its obligations, Citibank sent CBC a letter drawing on the Letter of Credit. CBC then instructed its correspondent Irving Trust Co. to pay to Citibank the amount of US$242,225. Subsequently, for failure of PISC to settle its obligations under the guaranty accommodations, the Philippine National Bank (PNB) conducted an auction sale of the mortgaged vessels. NIDC emerged as the highest bidder in these auctions. PISC, claiming that the foreclosure sale of its mortgaged vessels was illegal and irregular, instituted a civil case for the annulment of the foreclosure and auction sale. CBC filed a complaint in intervention for recovery upon a maritime lien against the proceeds of the sale of the foreclosed vessels.

ISSUE

Whether or not CBC’s claim as evidenced by its Irrevocable Letter of Credit is in the nature of a maritime lien under the provisions of P.D. No. 1521.

RULING

Yes, CBC’s claim as evidenced by its Irrevocable Letter of Credit is a maritime lien under the provisions of P.D. No. 1521.

Under the provisions of P.D. No. 1521, any person furnishing repairs, supplies, or other necessities to a vessel on credit will have a maritime lien. Such maritime lien, if it arose prior to the recording of a preferred mortgage lien, shall have priority over the said mortgage lien.

In this case, it was Hong Kong United Dockyards, Ltd. Which originally possessed a maritime lien over the vessel M/V Asean Liberty by virtue of its repair of the said vessel on credit. CBC, however, stands as guarantor of the loan extended by Citibank to PISC. It was Citibank which advanced the money to PISC. It was only upon the failure of PISC to fulfill its obligations under its promissory note to Citibank that CBC was called upon by Citibank to exercise its duties under the Stand by Letter of Credit.

Case Digest: Barrios vs. Go Thing, 7 SCRA 535, G.R. No. L17192

Barrios vs. Go Thing, 7 SCRA 535, G.R. No. L17192, March 30, 1963

Subject: Transportation Law

FACTS

Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received or otherwise intercepted an S.O.S. distress signal by blinkers from the MV Alfredo, owned and/or operated by respondent Carlos Go Thong & Company. Thereafter, he altered the course of said vessel, and steered and headed towards the beckoning MV Don Alfredo, which Barrios found to be in trouble, due to engine failure and the loss of her propeller. Upon getting close to the MV Don Alfreco, with the consent and knowledge of the captain and/or master of the MV Don Alfredo, Barrios caused the latter vessel to be tied to, or well-secured and connected with tow lines from the MV Henry, and proceeded moving until such time that a sister ship of MV Don Alfredo was sighted so that the tow lines were also released. Brought to the CFI of Manila, the court therein dismissed the case; with cost against Barrios. Barrios interposed an appeal.

ISSUE

Whether or not the service rendered by plaintiff to the defendant constituted "salvage" or "towage", and if so, whether the plaintiff may recover from the defendant compensation for such service.

RULING

No, it is not a salvage service.

Salvage defined “Salvage” has been defined as “the compensation allowed to persons by whose assistance a ship or her cargo has been saved, in whole or in part, from impending peril on the sea, or in recovering such property from actual loss, as in case of shipwreck, derelict, or recapture.”  Three elements are necessary to a valid salvage claim, namely, (1) a marine peril, (2) service voluntarily rendered when not required as an existing duty or from a special contract, and (3) success in whole or in part, or that the service rendered contributed to such success.

In this case, no marine peril to justify valid salvage claim by Barrios against Go Thong. In case of danger of stranding, its anchor could be released, to prevent such occurrence. There was no danger that Go Thong’s vessel would sink given the smoothness of the sea and the fairness of the weather. That danger was absent shown by the fact that said vessel or its crew did not even find it necessary to lower its launch and two motor boats, to evacuate its passengers aboard. Neither did they find occasion to jettison the vessel’s cargo as a safety measure. Neither the passengers nor the cargo were in danger of perishing. All that the vessel’s crew members could not do was to move the vessel on its own power. That did not make the vessel a quasi-derelict. Contract of towage perfected even without written agreement

In consenting to Barrios’ offer to tow the vessel, Go Thong (through the captain of its vessel MV Don Alfredo) thereby impliedly entered into a juridical relation of “towage” with the owner of the vessel MV Henry I, captained by Barrios, the William Lines. Only the owner is entitled to remuneration in towage If the contract thus created is one for towage, then only the owner of the towing vessel, to the exclusion of the crew of the said vessel, may be entitled to remuneration.

Case Digest: Compania vs. Allied Workers, 77 SCRA 24, G.R. No. 107653

 

Compania vs. Allied Workers, 77 SCRA 24, G.R. No. 107653, February 05, 1996

Subject: Transportation Law

FACTS

In 1952, the Compañia Maritima and the Allied Free Workers Union entered into a written contract whereby the union agreed to perform arrastre and stevedoring work for the consignees. vessels at Iligan City. The union agreed to the stipulation that the company would not be liable for the payment of the services of the union "for the loading, unloading and deliveries of cargoes" and that the compensation for such services would be paid "by the owners and consignees of the cargoes" as "has been the practice in the port of Iligan City" of which the union found out later to be oppressive.

The shippers and consignees paid the union for the arrastre work only. They claimed that the shipowner was the one obligated to pay for the stevedoring service because the bill of lading provided that the unloading of the cargo was at the shipowner's expense.

The union filed in the Court of Industrial Relations (CIR) a petition praying that it be certified as the sole collective bargaining unit. Despite the case, the company served a written notice on the union that in accordance with payment of the 1952 contract, the same would be terminated. Because of that notice, the union later on filed in the CIR charges of unfair labor practices against the company.

The company entered into a new stevedoring and arrastre contract with the Iligan Stevedoring Association. On the following day, the union members picketed the wharf and prevented the Iligan Stevedoring Association from performing arrastre and stevedoring work.

The company sued the union and its officers in the CFI of Lanao for the rescission of the 1952 contract, to enjoin the union from interfering with the loading and unloading of the cargo, and for the recovery of damages.

After trial, the lower court rendered a decision in favor of the company and awarded CM 450K as damages; it held that the officers of the union are solidarily liable for this amount. Union appealed.

ISSUE

Whether or not the evidence presented by Compania Maritima warrants the award of damages in its favor.

RULING

No, it does not warrant.

In this case, the company argues that the accountants' reports are admissible in evidence because of the rule that "when the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole", the original writings need not be produced (Sec. 2[e], Rule 130, Rules of Court).

Sc held that the rule cannot be applied in this case because the voluminous character of the records, on which the accountants' reports were based, was not duly established. It is also a requisite for the application of the rule that the records and accounts should be made accessible to the adverse party so that the correctness of the summary may be tested on cross-examination. What applies to this case is the general rule "that an audit made by, or the testimony of, a private auditor, is inadmissible in evidence as proof of the original records, books of accounts, reports or the like". That general rule cannot be relaxed in this case because the company failed to make a preliminary showing as to the difficulty or impossibility attending the production of the records in court and their examination and analysis as evidence by the court.

Case Digest: Summa Insurance vs. Court of Appeals, 253 SCRA 175, G.R. No. 84860

 

Summa Insurance vs. Court of Appeals, 253 SCRA 175, G.R. No. 84860, February 06, 1996

Subject: Transportation Law

 

FACTS

The S/S "Galleon Sapphire", a vessel owned by the National Galleon Shipping Corporation (NGSC), arrived at Pier 3, South Harbor, Manila, carrying a shipment consigned to the order of Caterpillar Far East Ltd. with Semirara Coal Corporation (Semirara) as "notify party". The shipment, including a bundle of PC 8 U blades. The shipment was discharged to the custody of private respondent, formerly known as E. Razon, Inc., the exclusive arrastre operator at the South Harbor. Accordingly, three good-order cargo receipts were issued by NGSC, duly signed by the ship's checker and a representative of private respondent.

The forwarder, Sterling International Brokerage Corporation, withdrew the shipment from the pier and loaded it on the barge "Semirara 8104". However, when Semirara inspected the shipment at its warehouse, the bundle of PC8U blades was missing.

Semirara then filed with petitioner, private respondent and NGSC its claim for the value of the lost bundle. Petitioner paid Semirara the invoice value of the lost shipment. Semirara thereafter executed a release of claim and subrogation receipt. Consequently, petitioner filed its claims with NGSC and private respondent but it was unsuccessful.

The petitioner then filed a complaint with the RTC of Manila against NGSC and private respondent for collection of a sum of money, damages and attorney's fees.

The trial court rendered a decision absolving NGSC from any liability but finding private respondent liable to petitioner. On appeal, the CA modified the decision of the trial court and reduced private respondent's liability. Petitioner's motion for reconsideration was also denied. Hence, the instant petition.

ISSUE

Whether or not an arrastre operator is legally liable for the loss of a shipment in its custody.

RULING

Yes, the arrastre operator is legally liable for the loss of a shipment in its custody.

Under Article 1733 of the Civil Code and Section 3(8) of the Warehouse Receipts Law, being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.

In this case, the relationship therefore between the consignee and the arrastre operator s much akin to that existing between the consignee or owner of shipped goods and the common carrier, or that between a depositor and a warehouseman. In the performance of its obligations, an arrastre operator should observe the same degree of diligence as that required of a common carrier and a warehouseman as enunciated from the above provision. It has been established that the shipment was lost while in the custody of private respondent. We find private respondent liable for the loss.

Case Digest: Brillo vs. Court of Appeals, 260 SCRA 383, G.R. No. 109090

 

Brillo vs. Court of Appeals, 260 SCRA 383, G.R. No. 109090, August 07, 1996

Subject: Transportation Law

FACTS

Daily Overland Express, Inc. was a forwarding business that charged freight for goods from Legaspi City to Manila. Brillo Handicrafts, Inc. was one of its regular customers, with an outstanding balance of P153,204.10. Daily filed a complaint in December 1990 for the balance, claiming it was exorbitant and overstated. The matter was referred to a certified public accountant, who calculated the liability as P109,741.66 and the defendant's insisted rate of P2.20 per ton per kilometer. The trial court had to determine which computation was applicable in the case. The Regional Manager of the Land Transportation Franchising and Regulatory Board informed the trial court that the fixed rate was issued by the Philippine Federation of Petroleum Haulers Association, not Daily.

ISSUE

Whether or not appellant is liable for the balance of freight.

RULING

Yes, the applicable rate for freight charges should be the one agreed upon by the parties, and it should have the force of law between them, if a party has already partially paid the amount and did not object to the rate being charged, they cannot belatedly challenge the amount being collected. Estoppel may set in if a party has engaged in a business relationship for a ling time without objecting to the billing.

In this case, appellant has engaged the trucking services of plaintiff years before this litigation. Plaintiff has been charging freight rates to which defendant never objected. it would have been easily for appellant to manifest its objection to plaintiff's billing from the start of their business relations, but it did not. Appellant was silent for so long a time until this suit was filed against it. It was too late, estoppel had already set in.

Case Digest: Litonjua Shipping Company Inc. vs. National Seamen Board, G.R. No. L-51910

 

Litonjua Shipping Company Inc. vs. National Seamen Board, G.R. No. L-51910, August 10, 1989

Subject: Transportation Law

FACTS

Petitioner is the duly appointed local crewing managing office of the Fairwind Shipping Corporation. On September 11, 1976 M/V Dufton Bay an ocean-going vessel of foreign registry owned by the R.D. Mullion ship broking agency under charter by Fairwind, while in the port of Cebu contracted the services (among others) of Gregorio Candongo as Third Engineer for 12 months with a monthly wage of US$500.00. The agreement was executed before the Cebu Area Manning Unit of the NSB, after which respondent boarded the vessel.

On December 28, 1976 before the expiration of contract, respondent was required to disembark at Port Kilang, Malaysia. Describe in his seaman’s handbook is the reason “by owner’s arrange.”

Condongo filed a complaint against Mullion (Shipping company) for violation of contract and against Litonjua as agent of shipowner. On February 1977, NSB rendered a judgment by default for failure of petitioners to appear during the initial hearing, rendering the same to pay Candongo because there was no sufficient or valid cause for the respondents to terminate the service of the complainant.

Litonjua contends that the shipowner, nor the charterer, was the employer of private respondent; and that liability for damages cannot be imposed upon petitioner which was a mere agent of the charterer.

ISSUE

Whether or not the charterer Fairwind was properly regarded as the employer of private respondent Candongo whom will be liable for damages.

RULING

No, the charterer Fairwind was properly regarded as the employer of private respondent Candongo whom will be liable for damages.

Under the law, a time charter, upon the other hand, like a demise charter, is a contract for the use of a vessel for a specified period of time or for the duration of one or more specified voyages. The owner of a time-chartered vessel retains possession and control through the master and crew who remain his employees. What the time charterer acquires is the right to utilize the carrying capacity and facilities of the vessel and to designate her destinations during the term of the charter. A voyage charter, or trip charter, is simply a contract of affreightment, that is, a contract for the carriage of goods, from one or more ports of loading to one or more ports of unloading, on one or on a series of voyages. In a voyage charter, master and crew remain in the employ of the owner of the vessel.

In this case, NSB decision was affirmed by the SC. It is the respondent Litonjua Shipping Co., Inc. is the authorized Philippine agent of Fairwind Shipping Corporation, charterer of the vessel 'Dufton Bay, wherein complainant, served as 3rd Engineer from 17 September until disembarkation on December 28, 1976. It is also clear from the complainant's wages account bearing the heading 'Fairwind Shipping Corporation', signed by the Master of the vessel that the Philippine agency referred to herein directed to pay the said withdrawn wages of $13.19 is no other than Litonjua Shipping Company, Inc. Thus, Litonjua Shipping is liable for the damages before private respondent.

Case Digest: Julius C. Ouano vs. CA and San Miguel, G.R. No. 142025

 

Julius C. Ouano vs. CA and San Miguel, G.R. No. 142025, July 4, 2002

Subject: Transportation Law

FACTS

San Miguel Corporation (SMC) entered into a Time Charter Party Agreement with Julius Ouano's J. Ouano Marine Services for the M/V Doa Roberta from June 1, 1989, to May 31, 1991, to transport SMC's beverage products. The agreement held Ouano responsible for crew negligence and shortlanded shipments. On November 12, 1990, despite Typhoon Ruping warnings, SMC issued sailing orders to Captain Inguito, leading to the sinking of M/V Doa Roberta on November 13, 1990. Ouano alleged SMC's negligence, initiating legal proceedings. Ouano, in lieu of the deceased captain, filed a Marine Protest. In response, Ouano filed an answer with cross-claim, alleging SMC's negligence as the proximate cause. The trial court found SMC liable, but both SMC and Ouano appealed.

ISSUE

Whether or not the petitioner is liable for the loss of the M/V Doa Roberta, the deaths of its crew, and damages to the cargo.

RULING

Yes, Ouano was held vicariously liable for Captain Inguito's negligence, lacking due diligence in selection and supervision. The Supreme Court upheld the appellate decision, affirming Ouano's liability, but absolving SMC of responsibility. Ouano was ordered to pay damages to the heirs of officers and crew members, excluding Captain Sabiniano Inguito, and indemnify SMC for cargo damages amounting to P10,278,542.40. The ruling emphasized Ouano's failure to ensure the vessel's seaworthiness and his vicarious liability for Captain Inguito's negligence, while dismissing SMC's liability for the sinking.

Case Digest: Maritime Agencies vs. Court of Appeals, 187 SCRA 709, G.R. No. 77638

 

Maritime Agencies vs. Court of Appeals, 187 SCRA 709, G.R. No. 77638, July 12, 1990

Subject: Transportation Law

FACTS

Transcontinental Fertilizer Company of London chartered from Hongkong Island Shipping Company of Hongkong the motor vessel named "Hongkong Island" for the shipment of 8,073.35 MT (gross) bagged urea from Novorossisk, Odessa, USSR to the Philippines. Part of the shipment will be discharged in Cebu and another in Manila. The goods were insured by the consignee with the Union Insurance Society of Canton, Ltd. against all risks.

Maritime Agencies & Services, Inc. was appointed as the charterer's agent and Macondray Company, Inc. as the owner's agent.

On October 31, 1979, the consignee filed a formal claim against Maritime, copy furnished Macondray, for the amount of P87,163.54, representing C & F value of the 1,383 shortlanded bags. On January 12, 1980, the consignee filed another formal claim, this time against Viva Customs Brokerage, for the amount of P36,030.23, representing the value of 574 bags of net unrecovered spillage.

These claims having been rejected, the consignee then went to Union, which on demand paid the total indemnity pursuant to the insurance contract. As subrogee of the consignee, Union then filed a complaint for reimbursement of this amount, with legal interest and attorney's fees, against Hongkong Island Company, Ltd., Maritime Agencies & Services, Inc. and/or Viva Customs Brokerage.  On April 20, 1981, the complaint was amended to drop Viva and implead Macondray Company, Inc. as a new defendant.

After trial, the trial court rendered judgment holding the defendants liable. On appeal, CA modified RTC’s decision. Maritime and Union filed separate motions for reconsideration which were both denied. Hence, this petition.

ISSUE

Whether or not Maritime Agencies, as the charterer's agent, was liable for the cargo loss.

RULING

Maritime Agencies, as the charterer's agent, was not liable for the cargo loss.

Under the law, a voyage charter being a private carriage, the parties may freely contract respecting liability for damage to the goods and other matters. The basic principle is that "the responsibility for cargo loss falls on the one who agreed to perform the duty involved" by the terms of most voyage charters. It is a well-settled principle that the agent shall be liable for the act or omission of the principal only if the latter is undisclosed.

In this case, the charterer did not represent itself as a carrier and indeed assumed responsibility only for the unloading of the cargo, i.e, after the goods were already outside the custody of the vessel. In supervising the unloading of the cargo and issuing daily report for the discharge of the cargo, Maritime acted in representation of the charterer and not of the vessel. It thus cannot be considered a ship agent. As a mere charterer's agent, it cannot be held solidarily liable with Transcontinental for the losses/damages to the cargo outside the custody of the vessel. Notably, Transcontinental was disclosed as the charterer's principal and there is no question that Maritime acted within the scope of its authority. The liability imposable upon it cannot be borne by Maritime which, as a mere agent, is not answerable for injury caused by its principal.

Case Digest: Belgian Overseas vs. Philippine First, 383 SCRA 23, G.R. No. 143133

 

Belgian Overseas vs. Philippine First, 383 SCRA 23, G.R. No. 143133, June 05, 2002

Subject: Transportation Law

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.

Philippine First Insurance refused to submit to the consignee’s claim.  Consequently, Belgian Overseas paid the consignee and was subrogated to the latter’s rights and causes of action against the defendants-appellees. Subsequently, the 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 a notation in the bill of lading at the time of loading is sufficient to show pre-shipment damage and to exempt herein defendants from liability.

RULING

No, a notation in the bill of lading at the time of loading is insufficient

Under the law, 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 adequate explanation is given as to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held responsible.

In this case, petitioners failed to rebut the prima facie presumption of negligence. True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill of Lading; however, there is no showing that petitioners exercised due diligence to forestall or lessen the loss. Having failed to discharge the burden of proving that they have exercised the extraordinary diligence required by law, petitioners cannot escape liability for the damage to the four coils

Case Digest: Eastern Shipping vs. Court of Appeals, 190 SCRA 512, G.R. No. 80936

 

Eastern Shipping vs. Court of Appeals, 190 SCRA 512, G.R. No. 80936, October 17, 1990

Subject: Transportation Law

FACTS

Nanyo Corporation of Japan shipped five packages of supplies and materials to Manila via Eastern Shipping's vessel. The bill of lading was consigned to "Shipper's Order" with an "Address Arrival Notice" to Consolidated Mines Inc. (CMI).

Eastern Shipping released the shipment to CMI without requiring the surrender of the original bill of lading, based on CMI's undertaking to indemnify Eastern Shipping from any claims or liabilities.

Several months later, Hongkong & Shanghai Banking Corporation (HSBC), which financed the shipment, claimed that the cargo was misdelivered and demanded compensation from ESLI.

HSBC wrote another demand letter through counsel in contemplation of a legal action against ESLI should it not make good HSBC's claim.

On the other hand, CMI wrote a letter to HSBC admitting that they received the shipment in question due to a guarantee executed by them and requested HSBC that legal action be held off for at least thirty (30) days, promising to settle its account with HSBC from the funds it was expecting from Benguet Corporation.

CMI having failed to fulfill its promise, HSBC filed a complaint before the then CFI of Rizal against the petitioner praying for actual and compensatory damages, exemplary damage and attorney's fees plus expenses of litigation and judicial costs.

After two motions for extensions, the petitioner-carrier filed its answer with a counterclaim.

On August 15, 1981, the petitioner-carrier filed a third-party complaint against CMI seeking reimbursement from the latter of whatever pecuniary obligations the petitioner may be liable to HSBC, as well as moral damages.

During the trial, CMI filed a Motion to Stay Action given the pendency of involuntary insolvency proceedings commenced against it in the meantime by its creditors which included HSBC. This motion was denied by the trial court.

Based on the evidence presented by HSBC and the petitioner, as CMI failed to present its evidence, the court decided in favor of the plaintiff and against the defendant Eastern Shipping Lines, Inc., ordering the latter to pay.

Petitioner’s motion for reconsideration was denied, thus, they appealed to the CA. The CA AFFIRMED in toto CFI’s (now RTC) decision. Hence, this petition for review.

ISSUE

Whether or not the petitioner carrier "committed gross error and negligence when it released the cargo to CMI", whose name appear as notify party in the bill of lading.

RULING

No, the petitioner carrier did not commit gross error and negligence when it released the cargo to CMI.

Article 353 of the Corporation Code states that if in case of loss or for any other reason whatsoever, the consignee cannot return upon receiving the merchandise the bin of lading subscribed by the carrier, he shall give said carrier receipt of the goods delivered this receipt producing the same effects as the return of the bill of lading.

In this case, exceptional circumstances allow a deviation from the general rule regarding the surrender of the bill of lading. The rule cannot always be absolute. The petitioner cannot be faulted for releasing the goods to CMI under the circumstances, due to its lack of knowledge as to who was the real consignee, given CMI's strong representations and letter of undertaking wherein it stated that the bill of lading would be presented later; precisely the situation covered by the last paragraph of Art. 353 of the Corporation Code. Under the exceptional circumstances and applying especially strong considerations of equity, the petitioner did not commit any fault sufficient to render it liable to HSBC. On the contrary, it was HSBC and CMI who were obviously in bad faith in dealing with the petitioner-carrier.

Case Digest: Provident Insurance vs. Court of Appeals, G.R. No. 118030

Provident Insurance vs. Court of Appeals, G.R. No. 118030, January 15, 2004

Subject: Transportation Law

FACTS

On or about June 5, 1989, the vessel MV "Eduardo II" took and received on board at Sangi, Toledo City a shipment of 32,000 plastic woven bags of various fertilizer in good order and condition for transportation to Cagayan de Oro City. The subject shipment was consigned to Atlas Fertilizer Corporation and covered by Bill of Lading No. 01 and Marine Insurance Policy No. CMI-211/89-CB. Upon its arrival at General Santos City on June 7, 1989, the vessel MV "Eduardo II" was instructed by the consignee's representative to proceed to Davao City and deliver the shipment to its Davao Branch in Tabigao.

On June 10, 1989, the MV "Eduardo II" arrived in Davao City where the subject shipment was unloaded. In the process of unloading the shipment, three bags of fertilizer fell overboard and281 bags were considered to be unrecovered spillages. Because of the mishandling of the cargo, it was determined that the consignee incurred actual damages in the amount of P68,196.16. As the claims were not paid, petitioner Provident Insurance Corporation indemnified the consignee Atlas Fertilizer Corporation for its damages. Thereafter, the petitioner, as subrogee of the consignee, filed on June 3, 1991, a complaint against the respondent carrier seeking reimbursement for the value of the losses/damages to the cargo.

ISSUE

Whether or not stipulations in the bill of lading, the requirement to file a notice of claim in case of damaged goods, is binding upon the consignee.

RULING

Yes, there can be no question about the validity and enforceability of Stipulation No. 7 in the bill of lading.

The twenty-four-hour requirement under the said stipulation is, by agreement of the contracting parties, a sine qua non for the accrual of the right of action to recover damages against the carrier. Carriers and depositaries sometimes require the presentation of claims within a short time after delivery as a condition precedent to their liability for losses. Such a requirement is not an empty formalism. It has a definite purpose, i.e., to afford the carrier or depositary a reasonable opportunity and facilities to check the validity of the claims while the facts are still fresh in the minds of the persons who took part in the transaction and the document are still available.

Case Digest: Erlanger vs. Swedish East, 34 SCRA 178, G.R. No. 10051

 

Erlanger vs. Swedish East, 34 SCRA 178, G.R. No. 10051, March 09, 1916

Subject: Transportation Law

FACTS

S.S. Nippon was bound for Manila to Singapore, loaded mainly with copra and with some other general merchandise. The ship struck the Scarborough Reef, and it was filled with water. Immediately the chief officer wired the Director of Navigation at Manila for assistance for rescue. Shortly thereafter, the captain and crew left the Nippon and went on board of SS. Marchuria and headed for Hong Kong.

Plaintiff Erlanger and Galinger applied to the Director of Navigation for a charter of a coast guard cutter. Through the said cutter, the Nippon was floated and towed to Olangapo, where temporary repairs were made, and then brought to Manila.

The trial court found that the plaintiffs were “entitled to recover one-half of the net proceeds from the property salved and sold, and one-half the value of the property delivered to the claimants.

ISSUES

1)      Whether or not the ship abandoned

2)      Whether or not the salvage conducted with skill, diligence, and efficiency

3)      Whether or not the award is justified

RULING

The relief of property from an impending peril of the sea, by the voluntary exertions of those who are under no legal obligation to render assistance, and the consequent ultimate safety of the property, constitute a case of salvage.

Three elements necessary for a valid salvage claim: (1) A marine peril. (2) Service voluntarily rendered when not required as an existing duty or from a special contract. (3) Success, in whole or in part, or that the service rendered contributed to such success.

(1) The evidence proves that the Nippon was in peril; that the captain left in order to protect his life and the lives of the crew; that the animo revertendi was slight.

When a man finds property thus temporarily left to the mercy of the elements, whether from necessity or any other cause, though not finally abandoned and legally derelict, and he takes possession of it with the bona fide intention of saving it for the owner, he will not be treated as a trespasser. On the contrary, if by his exertions he contributed materially to the preservation of the property, he will entitle himself to a remuneration according to the merits of his service as a salvor.

(2) The plaintiffs were diligent in commencing the work and were careful and efficient in its pursuit and conclusion. While the plaintiff entered upon the salvage proceedings without proper means and not being adapted by their business to conduct their work, and while it may appear that possibly the salvage might have been conducted in a better manner and have accomplished somewhat better results in the saving of the copra cargo, yet it appears that they quickly remedied their lack of means and corrected the conduct of the work so that it accomplished fairly good results.

(3) The award granted to the plaintiff must be reduced. Compensation as salvage is a reward given for perilous services, voluntarily rendered, and as an inducement to mariners to embark in such dangerous enterprises to save life and property. One of the grounds for liberality in salvage awards is the risk assumed by the salvor, that he can have no recompense for service or expense unless he is successful in the rescue of property, and that his reward must be withing the measure of his success. In other words, he can only have a portion, in any event; and the fact that his exertions were meritorious and that their actual value, or the expense actually incurred, exceeded the amount produced by the service, cannot operate to absorb the entire proceeds against the established rules of salvage.

Case Digest: Lusteveco vs. Court of Appeals, 156 SCRA 169, G.R. No. L-58897

 

Lusteveco vs. Court of Appeals, 156 SCRA 169, G.R. No. L-58897, December 03, 1987

Subject: Transportation Law

FACTS

On May 30, 1968 at past 6:00 in the morning a maritime collision occurred within the vicinity of the entrance to the North Harbor, Manila between the tanker LSCO "Cavite" owned by Luzon Stevedoring Corporation and MV "Fernando Escano" a passenger ship owned by Hijos de F. Escano, Inc. as a result of which said passenger ship sunk. An action in admiralty was filed by Hijos de F. Escano, Inc. and Domestic Insurance Company of the Philippines against the Luzon Stevedoring Company (LSC) in the Court of First Instance of Cebu.

In the course of the trial, the trial court appointed two commissioners representing the plaintiffs and defendant to determine the value of the LSCO "CAVITE." Said commissioners found the value thereof to be P180,000.00.

After trial on the merits, a decision was rendered on January 24, 1974 finding that LSCO "Cavite" was solely to blame for the collision.

Not satisfied therewith the defendant interposed an appeal therefrom to the Court of Appeals which affirmed the decision of the lower court.

ISSUE

Whether or not Luzon Stevedoring Corporation can invoke Art. 837 of the code of commerce. 

RULING

No.

Under the Code of Commerce abandonment of vessel at fault is necessary in order that the liability of owner of said vessel shall be limited only to the extent of the value thereof, its appurtenances and freightage earned in the voyage.

In this case, undeniably petitioner has not abandoned the vessel. Hence petitioner can not invoke the benefit of the provisions of Article 837 of the Code of Commerce to limit its liability to the value of the vessel, all the appurtenances and freightage earned during the voyage.