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

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

Subject: Transportation Law

FACTS

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

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

ISSUE

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

RULING

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

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

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

 

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

Subject: Transportation Law

FACTS

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

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

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

ISSUES

1)      Whether or not the ship abandoned

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

3)      Whether or not the award is justified

RULING

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

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

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

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

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

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

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

 

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

Subject: Transportation Law

FACTS

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

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

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

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

ISSUE

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

RULING

No.

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

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

Case Digest: Sulpicio Lines vs. Court of Appeals, 305 SCRA 478 G.R. No. 93291

 

Sulpicio Lines vs. Court of Appeals, 305 SCRA 478 G.R. No. 93291, March 29, 1999

Subject: Transportation Law

FACTS

The two (2) fishing boats, F/B Aquarius ‘C’ and F/B Aquarius ‘G’, had a speed of about 7.5 to 8 knots per hour while M/V Don Sulpicio was running about 15.5 knots per hour. The weather at that time the accident happened was clear and visibility was good. In other words, the men of Don Sulpicio could see the 2 fishing boats which were ahead about 4 miles and likewise, the men of the 2 fishing boats could see M/V Don Sulpicio following.

The plaintiff claims that they are on the same speed when they were rammed by M/V Don Sulpicio. Hence a complaint for damages of Aquarius Fishing Co., Inc. against Sulpicio Lines, Inc. and Cresencio G. Castaneda was filed before RTC in Bacolod City.

After the trial, RTC decided in favor of the plaintiff and against the defendants. On appeal, CA affirmed the decision of the trial court. The motion for reconsideration by the appellants was also denied. Hence, this petition for review.

Petitioners asserted that private respondent, through its patron, admitted that the vessel had no lookout during the collision despite the absolute rule provided in Rule 9 of the Rules of Road. To bolster its stance, it contended that it was a privileged vessel pursuant to Rules 19, 21, 22, 23 of the Regulations for the Prevention of Collisions at Sea.

ISSUE

Whether or not the collision between M/V Don Sulpicio and F/B Aquarius ‘G’ was due to the negligence of the defendant (petitioner).

RULING

Yes, the collision was due to the negligence of the defendant (petitioner).

Art 827 states that if the collision is imputable to both vessels, each one shall suffer her own damage, and both shall be solidarily liable for the damages occasioned to their cargoes. Art 828 further states that provisions of the preceding article are applicable to case in which it cannot be determined which od the two vessels has caused the collision.

In this case, SC hold firm with the findings of the court a quo. Whether or not the collision sued upon occurred in a crossing situation is immaterial, CA relied on Rule 24-C of the Regulations for Preventing Collisions at the Sea and ruled that the duty to keep out of the way remained even if the overtaking vessel cannot determine with certainty whether she is forward of or abaft more than 2 points from the vessel. M/V "Don Sulpicio" must assume responsibility as it was in a better position to avoid the collision. It should have blown its horn or given signs to warn the other vessel that it was to overtake it. Assuming argumenti ex gratia that F/B Aquarius "G" had no lookout during the collision, the omission does not suffice to exculpate Sulpicio Lines from liability.

Case Digest: Smith Bell vs. Court of Appeals, 197 SCRA 201, G.R. No. 56294

 

Smith Bell vs. Court of Appeals, 197 SCRA 201, G.R. No. 56294, May 20, 1991

Subject: Transportation Law

FACTS

M/V “Don Carlos,” an inter-island vessel owned and operated by private respondent Go Thong was sailing southbound for Cebu, when it collided with M/S “Yotai Maru,” a merchant vessel of Japanese registry which was approaching the port of Manila coming in from Kobe, Japan. The bow of the “Don Carlos” rammed the left side of the “Yotai Maru” inflicting a gaping hole through which seawater rushed in and flooded the hatch, damaging all the cargo stowed therein.

The consignees of the damaged cargo having been paid by their insurance companies, the latter in turn commenced actions against private respondent Go Thong for damages sustained by the various shipments.

Two cases were filed before the RTC. The first case, Smith Bell and Sumitomo Insurance v. Go Thong, reached the SC which ruled in finality that negligence was with the officers and crew of “Don Carlos.” On the contrary, the second case, Smith Bell and Tokyo Insurance v. Go Thong, was decided by the CA holding the officers and crew of “Yotai Maru” at fault in the collision.

Hence this petition.

ISSUE

Whether or not Don Carlos" had been negligent, or so negligent as to have proximately caused the collision between them.

RULING

Yes, Don Carlos" had been negligent, or so negligent as to have proximately caused the collision between them.

In this case, there are three (3) principal factors that are constitutive of negligence on the part of the “Don Carlos,” which negligence was the proximate cause of the collision.

(1) The first of these factors was the failure of the “Don Carlos” to comply with the requirements of Rule 18 (a) of the International Rules of the Road which provides as follows: (a) When two power-driven vessels are meeting end on, or nearly end on, so as to involve risk of collision, each shall alter her course to starboard, so that each may pass on the port side of the other. The evidence on this factor state that “Don Carlos” altered its course by five degrees to the left instead of to the right which maneuver was the error that caused the collision in question. Why it did so is because “Don Carlos” was overtaking another vessel, the “Don Francisco”, and was then at the right side of the aforesaid vessel. It was in the process of overtaking “Don Francisco” that “Don Carlos” was finally brought into a situation where he was meeting end-on or nearly end-on “Yotai Maru, thus involving risk of collision.

(2) The second circumstance constitutive of negligence on the part of the “Don Carlos” was its failure to have on board that night a “proper look-out” as required by Rule I (B) Under Rule 29 of the same set of Rules, all consequences arising from the failure of the “Don Carlos” to keep a “proper look-out” must be borne by the “Don Carlos.” In the case at bar, the failure of the “Don Carlos” to recognize in a timely manner the risk of collision with the “Yotai Maru” coming in from the opposite direction, was at least in part due to the failure of the “Don Carlos” to maintain a proper look-out.

(3) The third factor constitutive of negligence on the part of the “Don Carlos” relates to the fact that Second Mate Benito German was, immediately before and during the collision, in command of the “Don Carlos.” Second Mate German simply did not have the level of experience, judgment and skill essential for recognizing and coping with the risk of collision as it presented itself that early morning when the “Don Carlos,” running at maximum speed and having just overtaken the “Don Francisco” then approximately one mile behind to the right side of the “Don Carlos,” found itself head-on or nearly head on vis-a-vis the “Yotai Maru. ” It is essential to point out that this situation was created by the “Don Carlos” itself. Under the law, a "proper look-out" is one who has been trained as such and who is given no other duty save to act as a look-out and who is stationed where he can see and hear best and maintain good communication with the officer in charge of the vessel, and who must, of course, be vigilant.

Case Digest: Philippine Home Assurance vs. Court of Appeals, 257 SCRA 468, G.R. No. 196999

 

Philippine Home Assurance vs. Court of Appeals, 257 SCRA 468, G.R. No. 196999, June 20, 1996

Subject: Transportation Law

FACTS

Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan, a shipment for carriage to Manila and Cebu, freight pre-paid and in good order and condition. While the vessel was off Okinawa, Japan, a small flame was detected on the acetylene cylinder. As the crew was trying to extinguish the fire, the acetylene cylinder exploded causing death and severe injuries to the crew and instantly setting fire to the whole superstructure of the vessel. The incident forced the master and the crew to abandon the ship.

Several hours later, a tugboat pulled the ship to port, and firefighting operations were again conducted. After the fire was extinguished, the cargoes were saved and loaded to another vessel for delivery to their original ports of destination. ESLI charged the consignees several amounts corresponding to additional freight and salvage charges.

The charges were all paid by Philippine Home Assurance Corporation (PHAC) under protest for and in behalf of the consignees.

PHAC, as subrogee of the consignees, filed a complaint before the RTC of Manila against ESLI to recover the sum paid under protest on the ground that the same were damages directly brought about by the fault, negligence, illegal act and/or breach of contract of ESLI.

ESLI contended that it exercised the diligence required by law in the handling, custody and carriage of the shipment; that the fire was caused by an unforeseen event; that the additional freight charges are due and demandable under the Bill of Lading; and that salvage charges are properly collectible under Act No. 2616, known as the Salvage Law.

The trial court dismissed PHAC's complaint and ruled in favor of ESLI. On appeal, the CA affirmed RTC's findings and conclusions. Hence, this petition for review.

ISSUE

Whether or not the expenses or averages incurred in saving the cargo constitute a general average.

RULING

No, the expenses incurred in saving the cargo do not constitute a general average.

Under the law, general or gross averages include all damages and expenses that are deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known risk.

In this case, strong evidence indicates that the acetylene cylinder caught fire because of the fault and negligence of respondent ESLI, its captain, and its crew. While the instant case may technically fall within the purview of the said provision, the formalities prescribed under Articles 813 and 814 of the Code of Commerce to incur expenses and cause damage corresponding to the gross average were not complied with. The cargo consignees cannot be made liable to the respondent carrier for additional freight and salvage charges. Therefore, the respondent carrier must refund the petitioner the amount it paid under protest for additional freight and salvage charges on behalf of the consignees.

Case Digest: International Harvest vs. Hamburg American, 42 Phil 845, G.R. No. 11515

 

International Harvest vs. Hamburg American, 42 Phil 845, G.R. No. 11515, July 29, 1918

Subject: Transportation Law

FACTS

In 1914, the International Harvester Company in Russia (plaintiff) delivered a consignment of agricultural machinery consisting of 852 boxes, crates, and parcels to the Hamburg-American Line (defendant) in Baltimore for transportation to Vladivostock, Russia. The bill of lading stipulated that the goods would be forwarded from Hamburg to Vladivostock at the ship's expense but at the owner's risk. Due to the outbreak of war in Europe, the cargo was transferred to the Suevia, a German vessel, which sought refuge in Manila. The plaintiff demanded the cargo's forwarding to Vladivostock, but the defendant insisted on subjecting the cargo to liability for general average expenses incurred during the Suevia's stay in Manila. The plaintiff refused, demanding immediate delivery. The defendant offered delivery on the condition of a 20% deposit for general average costs.

IHCR then instituted the present action in the Court of First Instance of the city of Manila, seeking to recover the possession of the cargo and damages for breach of contract and unlawful detention. The court ruled in favor of the plaintiff, recognizing its right to possession and awarding damages for the expenses incurred in forwarding the goods to Vladivostock. The defendant appealed this judgment.

ISSUE

Whether or not the cargo belonging to IHCR is liable to be made to contribute, by way of general average, to the costs and expenses incurred by reason of the internment of the Suevia in the port of Manila

RULING

No, the cargo in question is not liable to a general average.

Under the law, when a ship shall have entered a port of refuge in consequence of accident, sacrifice, or other extraordinary circumstance which renders that necessary for the common safety, the expense of entering such port shall be admitted as general average.

In this case, it is not claimed that this agricultural machinery was contraband of war; and being neutral goods, it was not liable to forfeiture in the event of capture by the enemies of the ship's flag. It follows that when the master of the Suevia decided to take refuge in the port of Manila, he acted exclusively with a view to the protection of his vessel. There was no common danger to the ship and cargo; and therefore, it was not a case for a general average. Moreover, HAL is liable for the expenses incurred by IHCR in contracting a different shipper. By the terms of the contract of affreightment HAL was bound to forward the cargo to Vladivostock at the steamer’s expense, not necessarily by a steamer belonging to HAL.