Case Digest: Philamgen vs. Court of Appeals, G.R. No. 101426

 

Philamgen vs. Court of Appeals, G.R. No. 101426, May 17, 1993

Subject: Transportation Law

FACTS

On September 4, 1985 the Davao Union Marketing Corporation of Davao City shipped on board the vessel M/V "Crazy Horse" operated by the Transpacific Towage, Inc. cargo consisting of 9,750 sheets of union brand GI sheets and 86,860 bags of union Pozzolan and union Portland Cement. The cargo was consigned to the Bicol Union Center of Pasacao, Camarines Sur, with a certain Pedro Olivan as the "Notify-Party."

The cargo was insured by the Philippine American General Insurance Co., Inc.

Upon arrival, the shipmaster notified the consignee's "Notify-Party" that the vessel was already (sic) to discharge the cargo. However, the discharging could not be affected immediately and continuously because of certain reasons one of which is that a super typhoon code-named "Saling" entered the Philippine area of responsibility and was felt in the eastern coast of the country; Pasacao was placed under Storm Signal No. 3. The discharging of the cargo had to be suspended.

Because of the storm, the vessel broke into two (2) parts and sank partially. The whole barrio outnumbered the crew and the guards, making them helpless to stop the pilferage and looting. As a result of the incident, the cargo of cement was damaged while the GI sheets were looted and nothing was left of the undischarged pieces.

Because the cargo was insured by it the Philippine American General Insurance Co., Inc. paid the shipper Davao Union Marketing Corporation. As a subrogee, the insurer made demands upon the Transpacific Towage, Inc. for the payment of said amount. The latter refused, hence, the Philippine American General Insurance Co., Inc. filed the present complaint.

The lower court found the defendant carrier had exposed the property to the accident and that the plaintiff is also guilty of contributory negligence. On appeal, CA reversed RTC’s decision.

ISSUE

Whether or not the private respondent is liable for the loss of the said insured cargo.

RULING

No, the private respondent is not liable for the loss of the said insured cargo.

Under the law, in order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods.

In this case, it is that there was indeed a delay in discharging the cargo from the vessel. However, neither of the parties herein could be faulted for such delay, for the same (delay) was due not to negligence, but to the natural conditions of the port of Pasacao and several other factors. The cargo having been lost due to typhoon "Saling", and the delay incurred in its unloading not being due to negligence, private respondent is exempt from liability for the loss of the cargo, pursuant to Article 1740 of the Civil Code. The records also show that before, during and after the occurrence of typhoon "Saling", private respondent through its shipmaster exercised due negligence to prevent or minimize the loss of the cargo. The diligence exercised by the shipmaster further supports the exemption of private respondent from liability for the loss of the cargo, in accordance with Article 1739 of the Civil Code.

Case Digest: Maersk Line vs. Court of Appeals, G.R. No. 94761

 

Maersk Line vs. Court of Appeals, 222 SCRA 108, G.R. No. 94761, May 17, 1993

Subject: Transportation Law

FACTS

Efren Castillo, proprietor of Ethegal Laboratories, ordered 600,000 empty gelatin capsules from Eli Lilly, Inc. for his pharmaceutical products in the Philippines. The capsules were placed in 6 drums of 100,000 capsules each valued at $1,668.71. Eli Lilly informed Castillo that the capsules were already shipped on board MV "Anders Maesrkline" and expected to arrive in the Philippines on April 3, 1977. However, the capsules were diverted to Richmond, VA, and then back to Oakland, CA, resulting in the goods arriving in the Philippines on June 10, 1977. Castillo refused to take delivery and filed an action for rescission of contract with damages against Maersk and Eli Lilly, alleging gross negligence and undue delay.

After trial, the court rendered judgment in favor of respondent Castillo. On appeal, respondent court affirmed the lower court's decision with modifications.

ISSUE

Whether or not the common carrier is liable for damages.

RULING

Yes, the common carrier is liable for damages.

Under settled 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, SC held that the petitioner is liable for damages due to the delay in the delivery of goods, based on the rule that contracts of adhesion are void. The lower court ruled that the exemption against liability for delay is against public policy and therefore void. The private respondent's action is anchored on Article 1170 of the NCC, not Admiralty law. The delay of two 2 months and seven 7 days was beyond reasonableness. The shipment was described as gelatin capsules for pharmaceutical products and was mishipped to Richmond, Virginia due to the petitioner's negligence. The petitioner's insistence that it cannot be held liable for the delay is found to be unfounded.

Case Digest: Cathay Pacific vs. Spouses Vasquez, G.R. No. 150843

 

Cathay Pacific v. Spouses Vasquez, G.R. 150843, March 14, 2003, 399 SCRA 207

Subject: Transportation Law

FACTS

Spouses Vasquez, private respondents were passengers of Cathay Pacific, petitioner and the former was booked on its flight CX-905 with the route of Manila-HK-Manila with their maid and 2 friends, went to HK for pleasure and business. The maid's boarding pass was for the Economy Class, the spouses and friends indicated that they were on the Business Class. However, while in Kai Tak Airport, a flight attendant who was checking on the boarding pass of the passenger informed the spouses that they were upgraded from Business Class to First Class since they were noted as frequent flyers and Gold members of Marco Polo Club.

Respondents refused as they are together with their 2 friends, and unless the latter will be upgraded to First Class, then they will accept the upgrade since they will talk business while on flight and it would not look nice for them as hosts to travel while their guest is in lower class.

Unusual reaction to a seat upgrade, Ms. Chiu after consulting with her supervisor, informed that if they would not avail the upgrade, they would not be allowed to take the flight, Dr. Vasquez agreed to take together with her spouse the First Class and the guests in Business Class.

Back in Manila, respondents filed a damage suit and asked for damages to include the attorney’s fees on the ground that the discourteous and humiliating behavior of the attendant, Ms. Chiu and the breached on the contract of carriage.

RTC ruled in favor of Spouses Vasquez awarded them P100,000 each as nominal damage, 2M each as moral damages, 5M each as exemplary damages and 1M each as attorney’s fees. CA then affirmed but deleted the award of exemplary damages and reduced the awards of moral, nominal and attorney’s fees.

ISSUE

Whether or not the Vasquezes are entitled to damages.

RULING

Yes.

Under the law, the requisites for the award of moral damages are: (1) there must be an injury clearly sustained by the claimant, whether physical, mental or psychological; (2) there must be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award for damages is predicated on any of the cases stated in Art 2219 of the Civil Code.

In this case, the petition was partly granted. Considering that the breach was intended to give more benefit and advantage to the Vasquezes by upgrading their accommodation because their being valued status as Marco Polo members however, a breach of contract committed by Cathay because without prior notice or consent over the respondents vigorous objection. The SC reduced the nominal damages from 100,000 to P5,000. Moral and exemplary damages excluded by the SC for the Cathay breaching the contract of carriage does not shown to have acted fraudulently or in bad faith. Liability for damages is limited to the natural and probable consequences of the breach of the obligation which the parties had foreseen or could have reasonably foreseen.

Case Digest: Northwest Airlines vs. Catapang, G.R. No. 174364

 

Northwest Airlines v. Catapang, 594 SCRA 401, G.R. No. 174364, July 30, 2009

Subject: Transportation Law

FACTS

Delfin S. Catapang, a lawyer and Assistant Vice President of the United Coconut Planters Bank (UCPB), was directed by UCPB to go on a business trip to Paris, intending to proceed to the United States afterward. Catapang requested First United Travel, Inc. (FUT) to issue him a ticket allowing rebooking or rerouting within the United States. FUT, as the authorized agent of Northwest Airlines, Inc. (petitioner), issued a ticket with a rebooking/rerouting scheme for an additional fee of US$50.

Upon Catapang's arrival in New York, petitioner's office informed him that his ticket was not rebookable or reroutable. He was advised to go to petitioner's nearest branch office. Catapang visited the World Trade Center branch, where an employee informed him that his ticket was of a "restricted type" and could only be rebooked by paying an additional US$644.00. Faced with no other option, Catapang paid the amount under protest.

In response, Catapang sent a letter of demand to petitioner, seeking damages for the airline's breach of contract, mistreatment by its personnel, and the additional expenses incurred. With no response from petitioner, Catapang filed a complaint for damages with the Regional Trial Court (RTC) of Makati. The RTC found petitioner liable for breach of contract of carriage and awarded damages. The Court of Appeals affirmed the decision with modifications, reducing the award of moral damages but upholding the overall decision.

ISSUE

Whether or not Northwest Airlines, Inc. breached the contract of carriage with Delfin S. Catapang and is liable for damages.

RULING

Yes, the Supreme Court ruled in favor of respondent and held petitioner liable for breach of contract of carriage. The court found that petitioner breached the contract of carriage by not allowing respondent to rebook or reroute his flight despite the agreement made with FUT. The court also noted that petitioner's agent in New York treated respondent rudely, which further aggravated the breach. The court held that passengers have the right to be treated with kindness, respect, courtesy, and due consideration by a carrier's employees. Therefore, petitioner was held liable for damages.

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.