Case Digest: Cruz v. Sun Holidays, 622 SCRA 389, G.R. No. 186312

 

Cruz v. Sun Holidays, 622 SCRA 389, G.R. No. 186312, June 29, 2010

Subject: Transportation Law

FACTS

Spouses Dante and Leonora Cruz (petitioners) lodged a complaint against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on September 11, 2000 on board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the couple had stayed at Coco Beach Island Resort (Resort) owned and operated by respondent.

The newly wed Ruelito and his wife stayed at the resort from September 9 to 11, 2000 by virtue of a tour package-contract with respondent that included transportation to and from the Resort and the point of departure in Batangas.

Respondent denied any responsibility for the incident which it considered to be a fortuitous event. It nevertheless offered, as an act of commiseration, the amount of ₱10,000 to petitioners upon their signing of a waiver. Petitioners declined respondent’s offer and filed the complaint, as earlier reflected, alleging that respondent was a common carrier guilty of negligence in allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by PAG-ASA.

RTC dismissed petitioners’ complaint and respondent’s counterclaim. On appeal, CA affirmed the decision of RTC that respondent is a private carrier which is only required to observe ordinary diligence; that respondent in fact observed extraordinary diligence in transporting its guests on board M/B Coco Beach III; and that the proximate cause of the incident was a squall, a fortuitous event.

ISSUE

Whether or not, respondent is a private carrier; if not, whether or not the event is caso fortuito, a case exempting liability of a common carrier.

RULING

No. Respondent is a common carrier, and this is not a fortuitous event.

Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence for the safety of the passengers transported by them, according to all the circumstances of each case. They are bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. When a passenger dies or is injured in the discharge of a contract of carriage, it is presumed that the common carrier is at fault or negligent. In fact, there is even no need for the court to make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence.

In this case, petitioner’s contention that they complied with all the requirements to set sail and that the event is a fortuitous event are untenable. For fortuitous event to take effect, one of its elements is it should be free from human intervention. Based on circumstantial evidence, the occurrence of squalls was expected under the weather condition of September 11, 2000, and that M/B Coco Beach III suffered engine trouble before it capsized and sank. The incident was, therefore, not completely free from human intervention. Respondent failed to prove that it exercised the extraordinary diligence required of common carriers, it is presumed to have acted recklessly, thus warranting the award of damages.

Case Digest: Everett Steamship v. Court of Appeals, 297 SCRA 496, G.R. No. 122494

 

Everett Steamship v. Court of Appeals, 297 SCRA 496, G.R. No. 122494, October 8, 1998

Subject: Transportation Law

FACTS

Hernandez Trading Co. Inc., private respondent, imported three 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 were shipped from Nagoya, Japan to Manila on board "ADELFAEVERETTE," a vessel owned by petitioner's principal, Everett Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN.

Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was missing. Private respondent thereafter made a formal claim upon petitioner for the value of the lost cargo, the amount shown in its commercial invoice. However, 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 against petitioner before the RTC. After trial, RTC rendered judgment in favor of private respondent considering defendant's categorical admission of loss and its failure to overcome the presumption of negligence and fault.

On appeal, CA affirms the decision of RTC with the additional observation that private respondent cannot be bound by the terms and conditions of the bill of lading because it was not privy to the contract of carriage. Hence this petition.

ISSUE

1. Whether or not the carrier's limited package liability as stipulated in the bill of lading does apply in the instant case.

2. Whether or not the consent of the consignee to the terms and conditions of the bill of lading is necessary to make such stipulations binding upon it.

RULING

1. Yes, the stipulations in the bill of lading is applicable in the instant case.

Under the law, (Art. 1749) a stipulation 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.

In this case, SC held that the trial court's ratiocination that private respondent could not have "fairly and freely" agreed to the limited liability clause in the bill of lading because the said conditions were printed in small letters does not make the bill of lading invalid. The stipulation stated in the bill of lading is mind, reasonable and just. The carrier made it clear that its liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. Therefore, the stipulations on the bill of lading applies.

2. Yes, even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier, the consignee can still be bound by the contract.

In this case, SC held that when private respondent formally claimed reimbursement for the missing goods from petitioner and subsequently filed a case against the latter based on the very same bill of lading, private respondent accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it. Thus, private respondent cannot now reject or disregard the carrier's limited liability stipulation in the bill of lading. Therefore, private respondent is bound by the whole stipulations in the bill of lading and must respect the same.

Case Digest: Central Shipping v. Insurance Company, 438 SCRA 511, G.R. No. 150751

 

Central Shipping v. Insurance Company, 438 SCRA 511, G.R. No. 150751, September 20, 2004.

Subject: Transportation Law

FACTS

In July 1990 at Puerto Princesa, Palawan, Central Shipping 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. Upon completion of loading of the cargo, the vessel left Palawan and commenced the voyage to Manila. However, the vessel sunk while in route to Manila on July 26, 1990 and the cargo was totally lost due to the shifting of logs in hold.

Respondent alleged that the total loss of the shipment was caused by the fault and negligence of the petitioner and its captain and as direct consequence thereof the consignee suffered damage. Alaska Lumber Co. Inc. presented a claim for the value of the shipment to the [petitioner] but the latter failed and refused to settle the claim, hence [respondent], being the insurer, paid said claim and now seeks to be subrogated to all the rights and actions of the consignee as against the [petitioner].

Petitioner 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."

RTC was unconvinced that the sinking of M/V Central Bohol had been caused by the weather or any other caso fortuito. CA affirmed RTC’s decisions and concluded that the doctrine of limited liability was not applicable, in view of petitioner’s negligence—particularly its improper stowage of the logs. Hence, this Petition.

ISSUE

1. Whether the carrier is liable for the loss of the cargo.

2. Whether the doctrine of limited liability is applicable.

RULING

1. Yes, the carrier is liable for the loss of the cargo.

Under the law, common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to: (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; and, (5) Order or act of competent public authority.

In this case, the weather condition encountered by petitioner’s vessel was not a "storm" or a natural disaster comprehended in the law. Given the known weather condition prevailing during the voyage, the manner of stowage employed by the carrier was insufficient to secure the cargo from the rolling action of the sea. The carrier took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now disclaim any liability for the loss.

2. No. 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.

Case Digest: Coastwise Lighterage Corp. v. CA, G.R. No. 114167

 

Coastwise Lighterage Corp. v. CA, G.R. No. 114167, July 12, 1995

Subject: Transportation Law

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, while approaching Pier 18, 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 consequence, the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. This prompted the consignee, Pag-asa Sales, Inc. to reject the shipment of molasses as a total loss. Thereafter, Pag-asa Sales, Inc. filed a formal claim with the insurer of its lost cargo, herein private respondent, Philippine General Insurance Company (PhilGen, for short) and against the carrier, herein petitioner, Coastwise Lighterage. Coastwise Lighterage denied the claim and it was PhilGen which paid the consignee, Pag-asa Sales, Inc.

As subrogee, PhilGen then filed an action against Coastwise Lighterage before the RTC of Manila, seeking to recover the amount it paid to Pag-asa Sales, Inc.,

RTC awarded the amount prayed for by PhilGen. On appeal, CA affirmed RTC’s decision. Hence, this petition.

ISSUE

1. Whether or not petitioner Coastwise Lighterage was transformed into a private carrier, by virtue of the contract of affreightment which it entered with the consignee, Pag-asa Sales, Inc.

2. Whether or not, if it were in fact transformed into a private carrier, did it exercise the ordinary diligence to which a private carrier is in turn bound.

RULING

1. No, Coastwise Lighterage was not transformed into a private carrier.  

In Puromines case, a contract of affreightment is one in which the owner of the vessel lease part or all its space to haul goods for others. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner retains the possession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire.  An owner who retains possession of the ship though the hold is the property of the charterer, remains liable as carrier and must answer for any breach of duty as to the care, loading and unloading of the cargo. 

In this case, SC held that a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment on account of aforementioned definition. 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 and navigation of the vessels remained with petitioner Coastwise Lighterage. Pursuant to existing jurisprudence, Coastwise Lighterage was not converted to private carrier. Hence, the presumption of negligence remains to the common carrier.

2. No, it was not diligent in the exercise of its duties.

Under the law, 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.

In this case, petitioner’s contention that nothing could have prevented the event because of PCG’s failure to chart sunken derelicts in the Manila North Harbor, making it beyond the pale of even the exercise of extraordinary diligence because of uncharted sunken derelicts in the Manila harbor was the cause of the mishap was trashed by SC. Based on record, Coastwise Lighterage embarks on a voyage with an unlicensed patron, a clear violation of Article 609 of the Civil Code. It appeared that the carrier was culpably remiss in the observance of its duties.

Case Digest: Mirasol v. The Robert Dollar Co., G.R. No. L-29721

 

Mirasol v. The Robert Dollar Co., G.R. No. L-29721, March 27, 1929

Subject: Transportation Law

FACTS

Plaintiff alleges that he is the owner and consignee of two cases of books, shipped in good order and condition at New York, U.S.A., on board the defendant's steamship President Garfield, for transport and delivery to the plaintiff in the City of Manila.

The two cases arrived in Manila on September 1, 1927, in bad order and damaged condition, resulting in the total loss of one case and a partial loss of the other. Hence, plaintiff filed his claims, and defendant has refused and neglected to pay, giving as its reason that the damage in question "was caused by sea water."

Defendant made a general and specific denial and alleged the following: 

1. that the steamship President Garfield at all the times alleged was in all respects seaworthy and properly manned, equipped and supplied, and fit for the voyage; hence they are not liable on the grounds of being unseaworthy.

2. that in the bill of lading issued by the defendant to plaintiff, it was agreed in writing that defendant should not be "held liable for any loss of, or damage to, any of said merchandise resulting from “Acts of God, perils of the sea or other waters," and that plaintiff's damage, if any, was caused by "Acts of God" or "perils of the sea."

3. defendant quoted clause 13 of the bill of lading, in which it is stated that in no case shall it be held liable "for or in respect to said merchandise or property beyond the sum of $250 for any piece, package or any article not enclosed in a package, unless a higher value is stated herein and ad valorem freight paid or assessed thereon," and that there was no other agreement.

4. defendant alleges that the damage, if any, was caused by "sea water," and that the bill of lading exempts defendant from liability for that cause. That damage by "sea water" is a shipper's risk, and that defendant is not liable.

After trial, RTC rendered judgment in favor of plaintiff.

ISSUE

Whether or not defendant has presented sufficient evidence to prove its exercise of extraordinary diligence required of a common carrier to merit its exemption from liability given the conditions stated on the bill of lading.

RULING

No, there was no sufficient proof to merit defendant’s exemption from liability.

Under the law, even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.

In this case, there is no claim or pretense that the two cases were not in good order when received on board the ship, and it is admitted that they were in bad order on their arrival at Manila. Hence, they must have been damaged in transit. In the very nature of things, if they were damaged by reason of a tempest, rocks, icebergs, foundering, stranding or the perils of the sea, that would be a matter exclusively within the knowledge of the officers of defendant's ship, and in the very nature of things would not be within plaintiff's knowledge, and upon all such questions, there is a failure of proof. Hence, defendant shall not be exempt from liability.

Case Digest: Maersk Lines v. Court of Appeals, 222 SCRA 108, G.R. 94761

 

Maersk Lines v. Court of Appeals, 222 SCRA 108, G.R. 94761, May 17, 1993.

Subject: Transportation Law

FACTS

Petitioner Maersk Line is engaged in the transportation of goods by sea, doing business in the Philippines through its general agent Compania General de Tabacos de Filipinas. Private respondent Efren Castillo, on the other hand, is the proprietor of Ethegal Laboratories, a firm engaged in the manufacturer of pharmaceutical products.

Through a Memorandum of Shipment, the shipper Eli Lilly, Inc. of Puerto Rico advised private respondent as consignee that the 600,000 empty gelatin capsules in six (6) drums of 100,000 capsules each, were shipped on board MV "Anders Maerskline"  for shipment to the Philippines via Oakland, California. In said Memorandum, shipper Eli Lilly, Inc. specified the date of arrival to be April 3, 1977.

For reasons unknown, said cargo of capsules were mishipped and diverted to Richmond, Virginia, USA and then transported back Oakland, Califorilia. The goods finally arrived in the Philippines on June 10, 1977 or after two (2) months from the date specified in the memorandum. As a consequence, private respondent as consignee refused to take delivery of the goods on account of its failure to arrive on time.

Private respondent alleging gross negligence and undue delay in the delivery of the goods, filed an action before RTC for rescission of contract with damages against petitioner and Eli Lilly, Inc. as defendants.

Denying that it committed breach of contract, petitioner alleged in its that answer that the subject shipment was transported in accordance with the provisions of the covering bill of lading and that its liability under the law on transportation of good attaches only in case of loss, destruction or deterioration of the goods as provided for in Article 1734 of Civil Code.

Defendant Eli Lilly, Inc. filed its answer with compulsory and crossclaim alleging that the delay in the arrival of the subject merchandise was due solely to the gross negligence of petitioner Maersk Line. The issues having been joined, private respondent moved for the dismissal of the complaint against Eli Lilly, Inc. on the ground that the evidence on record shows that the delay in the delivery of the shipment was attributable solely to petitioner. Responding to this, RTC dismissed the complaint against Eli Lilly, Inc.

After trial RTC rendered judgment in favor of respondent Castillo. On appeal, CA affirmed the decision of RTC with modification as to the awarding of corresponding damages and attorney’s fees. Hence this appeal.

ISSUE

Whether or not 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 period of delivery.

RULING

Yes, Castillo is entitled to damages despite absence in the bill of lading of a stipulation on the period of delivery.

Under the law and existing jurisprudence, 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 to deliver at a given date or time, delivery of shipment or cargo should at least be made within a reasonable time.

In this case, a delay in the delivery of the goods spanning a period of two (2) months and seven (7) days falls was beyond the realm of reasonableness for it was through petitioner's negligence that the cargo was mishipped to Richmond, Virginia. Hence, petitioner's insistence that it cannot be held liable for the delay finds no merit. While there was no special contract (aside from the bill of lading which is a contract of adhesion) entered into by the parties indicating the date of arrival of the subject shipment, petitioner nevertheless, was very well aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself. SC held that there is no need to execute another contract for the purpose as it would be a mere superfluity.

Case Digest: Delsan Transport v. American Home, G.R. No. 149019

Delsan Transport v. American Home, G.R. No. 149019, August 15, 2006.

Subject: Transportation Law

FACTS

Delsan is a domestic corporation which owns and operates the vessel MT Larusan while 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.

In Aust 1984, Delsan received on board MT Larusan a shipment consisting of 1,986.627 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 and Marine Risk Note.

The shipment arrived in Bacolod City. The discharging of the diesel oil started at about 1:30 PM, however, at about 10:30 PM, 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. Because there was nothing holding it, the vessel drifted westward, dragged and stretched the flexible rubber hose attached to the riser, broke the elbow into pieces, severed completely the rubber hose connected to the tanker from the main delivery line at seabed level and ultimately caused the diesel oil to spill into the sea. To avoid further spillage, the vessel’s crew tried water flushing to clear the line of the diesel oil but to no avail. In the meantime, the shore tender, who was waiting for the completion of the water flushing, was surprised when the tanker signaled a "red light" which meant stop pumping. Unaware of what happened, the shore tender, thinking that the vessel would, at any time, resume pumping, did not shut the storage tank gate valve. As all the gate valves remained open, the diesel oil that was earlier discharged from the vessel into the shore tank backflowed.

As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but the latter refused to pay. As insurer, AHAC paid Caltex for spillage and for backflow pursuant to Marine Risk Note and Inland Floater Policy respectively. Subsequently, AHAC, as subrogee to Caltex, instituted two separate civil cases against Delsan before the Manila RTC for the loss caused by the spillage and for the backflow.

In August 1989, RTC rendered its decision in favor of AHAC holding Delsan liable for the loss of the cargo for its negligence in its duty as a common carrier. On appeal, CA affirmed the decision of RTC hence this petition.

Delsan insists that the CA committed reversible error in ruling that Article 1734 of the Civil Code cannot exculpate it from liability for the loss of the subject cargo and in not applying the rule on contributory negligence against Caltex, the shipper-owner of the cargo, and in not taking into consideration the fact that the loss due to backflow occurred when the diesel oil was already completely delivered to Caltex.

ISSUE

Whether or not, Delsan, as common carrier, is absolve from liability.

RULING

No.

Under the law, 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.

In this case, SC held that Delsan’s argument that it should not be held liable for the loss of diesel oil due to backflow because the same had already been actually and legally delivered to Caltex at the time it entered the shore tank holds no water. The subject cargo was still in the custody of Delsan because the discharging thereof has not yet been finished when the backflow occurred. Since the discharging of the cargo into the depot has not yet been completed at the time of the spillage when the backflow occurred, there is no reason to imply that there was actual delivery of the cargo to the consignee. 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.