Case Digest: Regional Container Lines v. Netherlands Insurance, G.R. No. 168151

 

Regional Container Lines v. Netherlands Insurance, 598 SCRA 304, G.R. No. 168151, September 4, 2009

Subject: Transportation Law

FACTS

In October 1995, 405 cartons of Epoxy Molding Compound were consigned to be shipped from Singapore to Manila for Temic Telefunken Microelectronics Philippines. U-Freight Singapore PTE Ltd., a forwarding agent based in Singapore, contracted the services of Pacific Eagle Lines PTE. Ltd. to transport the subject cargo. As the cargo was highly perishable, the inside of the container had to be kept at a temperature of 0º Celsius. Pacific Eagle loaded the refrigerated container on board the M/V Piya Bhum, a vessel owned by RCL, with which Pacific Eagle had a slot charter agreement.

However, when Temic received the shipment, the cargo completely damaged. It was found that during unloading from the ship, the chart temperature reading of the container fluctuated to 33º Celsius.

Temic then filed a claim for cargo loss against Netherlands Insurance. As subrogee, Netherlands Insurance filed a complaint for subrogation of insurance settlement with the RTC of Manila.

The trial court dismissed the complaint on demurrer to evidence. On appeal, CA reversed the decision of RTC. Motion for reconsiderations to CA were also dismissed. Hence this petition.

ISSUE

Whether or not the CA correctly held RCL and EDSA Shipping liable as common carriers under the theory of presumption of negligence

RULING

Yes, CA correctly held that RCL and EDSA Shipping are liable.

Under the law, a common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be responsible for the damage.

In this case, RCL and EDSA Shipping failed to prove that they did exercise the degree of diligence required by law over the goods they transported. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier; RCL and EDSA Shipping failed to dispute this. RCL and EDSA Shipping, however, failed to satisfy this standard of evidence and offered no evidence at all; a reversal of a dismissal based on a demurrer to evidence bars the defendant from presenting evidence supporting its allegations.

Case Digest: Cathay Pacific v. Court of Appeals, 219 SCRA 520, G.R. No. 60501

 

Cathay Pacific v. Court of Appeals, 219 SCRA 520, G.R. No. 60501, 5 March 1993

Subject: Transportation Law

FACTS

On 19 October 1975, respondent Tomas L. Alcantara was a first-class passenger of petitioner Cathay Pacific Airways, Ltd. on its Flight No. CX-900 from Manila to Hongkong and onward from Hongkong to Jakarta on Flight No. CX-711. The purpose of his trip was to attend the following day, 20 October 1975, a conference with the Director General of Trade of Indonesia, Alcantara being the Executive Vice-President and General Manager of Iligan Cement Corporation, Chairman of the Export Committee of the Philippine Cement Corporation, and representative of the Cement Industry Authority and the Philippine Cement Corporation. He checked in his luggage which contained not only his clothing and articles for personal use but also papers and documents he needed for the conference.

Upon his arrival in Jakarta, respondent discovered that his luggage was missing. When he inquired about his luggage from CATHAY's representative in Jakarta, private respondent was told that his luggage was left behind in Hongkong. For this, respondent Alcantara was offered $20.00 as "inconvenience money" to buy his immediate personal needs until the luggage could be delivered to him.

His luggage finally reached Jakarta more than twenty-four (24) hours after his arrival. However, it was not delivered to him at his hotel but was required by petitioner to be picked up by an official of the Philippine Embassy.

On 1 March 1976, respondent filed his complaint against petitioner with the Court of First Instance (now RTC) of Lanao del Norte. RTC rendered a decision in favor of Alcantara. On appeal, CA affirms the decision of CFI with modifications. Hence this petition.

ISSUE

Whether or not the Warsaw Convention on the liability of a carrier to its passengers is applicable in this case.

RULING

No, it is not.

The Warsaw Convention itself provides in Art. 25 that:

“(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 wilfull 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 wilfull 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 Warsaw Convention declares the carrier liable for damages in the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's employees is found or established, which is clearly the case before us. When petitioner airline misplaced respondent's luggage and failed to deliver it to its passenger at the appointed place and time, some special species of injury must have been caused to him.

Case Digest: PAL v. Court of Appeals, 207 SCRA 100, G.R. No. 92501

 

PAL v. Court of Appeals, 207 SCRA 100, G.R. No. 92501, 6 March 1992

Subject: Transportation Law

FACTS

Isidro Co, plaintiff, accompanied by his wife and son, arrived at the Manila International Airport aboard defendant airline's PAL Flight No. 107 from San Francisco, California, U.S.A. Soon after his embarking, plaintiff proceeded to the baggage retrieval area to claim his checks in his possession. Plaintiff found eight of his luggage, but despite diligent search, he failed to locate ninth luggage, with claim check number 729113 which is the one in question in this case.

Plaintiff then immediately notified defendant company through its employee, Willy Guevarra, who was then in charge of the PAL claim counter at the airport. Willy Guevarra, who testified during the trial court on April 11, 1986, filled up the printed form known as a Property Irregularity Report, acknowledging one of the plaintiff's luggage to be missing, and signed after asking plaintiff himself to sign the same document. In accordance with this procedure in cases of this nature, Willy Guevarra asked plaintiff to surrender to him the nine claim checks corresponding to the nine luggage, i.e., including the one that was missing.

Plaintiff on several occasions unrelentingly called at defendant's office in order to pursue his complaint about his missing luggage but no avail. Thus, on April 15, 1985, plaintiff through his lawyer wrote a demand letter to defendant company though Rebecca V. Santos, its manager, Central Baggage Services. Despite the letter of apology from the inconvenience, however, defendants never found plaintiff's missing luggage or paid its corresponding value. Consequently, in May 1985, plaintiff filed his present complaint against said defendants.

RTC rendered a decision in favor of plaintiff. CA affirmed RTC decision in toto. Hence this petition.

Petitioner contends that under the Warsaw Convention, its liability, if any, cannot exceed US $20.00 based on weight as private respondent Co did not declare the contents of his baggage nor pay traditional charges before the flight.

ISSUE                                                                                           

Whether or not CA erred in disregarding the limit of liability under the Warsaw Convention which limits the liability of an air carrier of loss, delay or damage to checked-in baggage to US$20.00 based on weight.

RULING

No, it is not applicable.

Under the law, the liability of the common carrier for the loss, destruction or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New Civil Code. In all matters not regulated by said Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by Special Laws.

In this case, since the passenger's destination in this case was the Philippines, Philippine law governs the liability of the carrier for the loss of the passenger's luggage as contemplated in Articles 1733, 1735 and 1753 of the Civil Code. Petitioner failed to overcome, not only the presumption, but more importantly, the private respondent's evidence, proving that the carrier's negligence was the proximate cause of the loss of his baggage. Furthermore, petitioner acted in bad faith in faking a retrieval receipt to bail itself out of having to pay Co's claim. Therefore, CA did not err in disregarding the limits of liability under the Warsaw Convention.

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.