Case Digest: Air France vs. Gillego, G.R. No. 165266

 

Air France vs. Gillego, 638 SCRA 472, G.R. No. 165266, December 15, 2010

Subject: Transportation Law

FACTS

On May 16, 1993, respondent Bonifacio H. Gillego left Manila on board petitioner Air France’s aircraft bound for Paris, France. While waiting at the De’ Gaulle International Airport for his connecting flight to Budapest, respondent learned that petitioner had another aircraft bound for Budapest with an earlier departure time than his scheduled flight. He then went to petitioner’s counter at the airport and made arrangements for the change in his booking. He was given a corresponding ticket and boarding pass and also a new baggage claim stub for his checked-in luggage.

However, upon arriving in Budapest, the respondent was unable to locate his luggage and the petitioner airliner never delivered the lost luggage despite follow-up inquiries by the respondent. Upon his return to the Philippines, respondent’s lawyer immediately wrote petitioner’s Station Manager complaining about the lost luggage and the resulting damages he suffered while in Budapest.

The respondent filed a complaint for damages against the petitioner alleging that by reason of its negligence and breach of obligation to transport and deliver his luggage. As special and affirmative defense, petitioner contended that its liability for lost checked-in baggage is governed by the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage.

The trial court rendered its decision in favor of respondent and against the petitioner. Petitioner appealed to the CA, which affirmed the trial court’s decision.

ISSUE

Whether or not the award of moral and exemplary damages to the respondent is justifiable.

RULING

Yes, the award of moral and exemplary damages to the respondent is justifiable.

Under the law, in awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately injurious or the one responsible acted fraudulently or with malice or bad faith. Not every case of mental anguish, fright or serious anxiety calls for the award of moral damages. Bad faith should be established by clear and convincing evidence. The settled rule is that the law always presumes good faith such that any person who seeks to be awarded damages due to the acts of another has the burden of proving that the latter acted in bad faith or with ill motive.

In this case, while respondent failed to cite any act of discourtesy, discrimination or rudeness by petitioner’s employees, SC held that this did not make his loss and moral suffering insignificant and less deserving of compensation. In repeatedly ignoring respondent’s inquiries, petitioner’s employees exhibited an indifferent attitude without due regard for the inconvenience and anxiety the respondent experienced after realizing that his luggage was missing. Petitioner was thus guilty of bad faith in breaching its contract of carriage with the respondent, which entitles the latter to the award of moral damages.

Case Digest: Sulpicio Lines vs. Curso, G.R. No. 157009

 

Sulpicio Lines vs. Curso, 615 SCRA 575, G.R. No. 157009, March 17, 2010

Subject: Transportation Law

FACTS

In October 1988, Dr. Cenon E. Curso boarded MV Dona Marilyn of Sulpicio Lines, Inc., bound for Tacloban City. Due to Typhoon Unsang, the ship sank. Dr. Curso's body, along with hundreds others, was not recovered.

At the time of the ship's sinking, Dr. Curso was 48 years old, and was a resident physician at the Naval District Hospital in Naval, Biliran with a basic monthly salary of P3,940.00, and would have retired from government service by December 20, 2004 at the age of 65.

The surviving brothers and sisters of Dr. Curso filed an action for damages against Sulpicio Lines based on breach of contract of carriage by sea.

RTC dismissed the complaint and said there was no basis for the award of damages because the ship had sunk due to force majeure. The RTC also held that the crew and officers acted with diligence and that there was no basis to find the ship not seaworthy since the Special Board of Marine Inquiry absolved Sulpicio Lines of any liability.

CA reversed RTC's findings, saying there was inadequate proof to show Sulpicio Inc., as well as its officers and crew, exercised diligence

ISSUE

Whether or not the brothers and sisters of a deceased passenger in a case of breach of contract of carriage is entitled to an award of moral damages against the carrier.

RULING

 No.

As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract, unless there is fraud or bad faith. As an exception, moral damages may be awarded in case of breach of contract of carriage that results in the death of a passenger, in accordance with Article 1764, in relation to Article 2206 (3), of the Civil Code, which provide: "The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased."

In this case, the brothers and sisters of Dr. Curso are not entitled thereto due to the legislative intent to exclude them from the recovery of moral damages for mental anguish by reason of the death of the deceased, as can be seen from the omission of brothers and sisters from Article 2206 (3) of the Civil Code.

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.