Case Digest: Pollard vs. NDC, G.R. No. 143866

 

Pollard vs. NDC, G.R. No. 143866, August 22, 2005

Subject: Transportation Law

FACTS

Poliand is an assignee of the of the rights of Asian Hardwood over the outstanding obligation of National Development Corporation (NDC), the latter being the owner of Galleon which previously secured credit accommodations from Asian Hardwood for its expenses on provisions, oil, repair, among others. Galleon also obtained loans from Japanese lenders to finance acquisition of vessels which was guaranteed by DBP in consideration of a promise by Galleon to secure a first mortgage on the vessels. DBP later transferred ownership of the vessel to NDC.  A collection suit was filed after repeated demands of Poliand for the satisfaction of the obligation from Galleon, NDC and DBP went unheeded.

ISSUE

Whether or not Poliand has a maritime lien enforceable against NDC or DBP.

RULING

Yes, Poliand has a maritime lien which is more superior than DBP’s mortgage lien. Before POLIAND’s claim may be classified as superior to the mortgage constituted on the vessel, it must be shown to be one of the enumerated claims which Section 17, P.D. No. 1521 declares as having preferential status in the event of the sale of the vessel. One of such claims enumerated under Section 17, P.D. No. 1521 which is considered to be superior to the preferred mortgage lien is a maritime lien arising prior in time to the recording of the preferred mortgage. Such maritime lien is described under Section 21, P.D. No. 1521.

Under the aforequoted provision, the expense must be incurred upon the order of the owner of the vessel or its authorized person and prior to the recording of the ship mortgage. Under the law, it must be established that the credit was extended to the vessel itself.

In this case, the trial court found that GALLEON’s advances obtained from Asian Hardwood were used to cover for the payment of bunker oil/fuel, unused stores and oil, bonded stores, provisions, and repair and docking of the GALLEON vessels.

Case Digest: Crescent Petroleum vs. MV Lor, G.R. No. 155014

 

Crescent Petroleum vs. MV Lor, G.R. No. 155014, November 11, 2005

Subject: Transportation Law

FACTS

Respondent M/V "Lok Maheshwari" (Vessel) is an oceangoing vessel of Indian registry that is owned by respondent Shipping Corporation of India (SCI), a corporation organized and existing under the laws of India. It was time-chartered by respondent SCI to Halla Merchant Marine Co. Ltd. (Halla), a South Korean company.

Halla, in turn, sub-chartered the Vessel through a time charter to Transmar Shipping, Inc. (Transmar). Transmar further sub-chartered the Vessel to Portserv Limited (Portserv). Both Transmar and Portserv are corporations organized and existing under the laws of Canada. November 1, 1995, Portserv requested petitioner Crescent, a corporation organized and existing under the laws of Canada that is engaged in the business of selling petroleum and oil products for the use and operation of oceangoing vessels, to deliver marine fuel oils to the Vessel.

Petitioner Crescent granted and confirmed the request through an advice via facsimile dated November 2, 1995. Crescent received two (2) checks as security payment. Crescent then contracted the supplier, Marine Petrobulk Limited, another Canadian corporation, for the physical delivery of the bunker fuels to the Vessel.

On November 4, 1995, Marine Petrobulk delivered the bunker fuels at the port of Pioneer Grain, Vancouver, Canada and was acknowledge and received the delivery receipt by the Chief Engineer.    

On May 2, 1996, while the Vessel was docked at the port of Cebu City, petitioner Crescent instituted before the RTC of Cebu City an action "for a sum of money with prayer for temporary restraining order and writ of preliminary attachment" against respondents Vessel and SCI, Portserv and/or Transmar and was granted.

ISSUE

Whether or not Ship Mortgage Decree provides for relief to Crescent Petroleum for its unpaid claim.

RULING

Yes. 

Under P.D. No. 1521 or the Ship Mortgage Decree of 1978, the following are the requisites for maritime liens on necessaries to exist: (1) the "necessaries" must have been furnished to and for the benefit of the vessel; (2) the "necessaries" must have been necessary for the continuation of the voyage of the vessel; (3) the credit must have been extended to the vessel; (4) there must be necessity for the extension of the credit; and (5) the necessaries must be ordered by persons authorized to contract on behalf of the vessel.

In this case, Not enjoying the presumption of authority, petitioner Crescent should have proved that Portserv was authorized by the shipowner to contract for supplies. Thus, Crescent Petroleum failed.

Case Digest: United Airlines vs. Uy, G.R. No. 127768

 

United Airlines vs. Uy, G.R. No. 127768, November 19, 1999

Subject: Transportation Law

FACTS

In October 13, 1989, Willie J. Uy, a revenue passenger on United Airlines Flight No. 819 from San Francisco to Manila, faced humiliation from United Airlines employees over an overweight luggage issue. Despite complying with repacking, issues arose when the airline refused to honor his miscellaneous charge order (MCO) for overweight charges. Upon arrival in Manila, Uy discovered one of his bags had been slashed and its contents stolen, totaling around US $5,310.00. He notified United Airlines of his losses and sought reimbursement, but the airline offered payment based on the maximum liability of US $9.70 per pound. Uy made additional demands for an out-of-court settlement, which the airline rejected.

Legal proceedings ensued as on June 9, 1992, Uy filed a complaint against United Airlines, alleging ill treatment, humiliation, and property loss. United Airlines moved to dismiss, invoking Art. 29 of the Warsaw Convention, citing a two-year limitation for filing damages from the date of arrival. Uy argued for reconciliation with local laws determining the period of limitation. The trial court granted United Airlines' motion, asserting the action must be brought within two years from arrival, excluding local interruption rules. Despite Uy's motion for reconsideration, the trial court denied it. Subsequently, Uy filed a notice of appeal two days after receiving the denial order. United Airlines moved for dismissal, asserting the notice of appeal was filed out of time.

The Court of Appeals, citing relevant jurisprudence allowing the review of orders despite procedural lapses, accepted the appeal. The Court of Appeals ruled that the Warsaw Convention did not override the Civil Code and other laws, asserting Uy's cause of action had not prescribed. Dissatisfied, United Airlines filed a petition for review on certiorari, challenging the timeliness of the notice of appeal and contesting the applicability of the Warsaw Convention.

ISSUE

1. Whether the notice of appeal was timely filed.

2. Whether Art. 29 of the Warsaw Convention should apply to the case.

RULING

1. The Court, considering the unique and peculiar facts of the case and the serious question of law it poses, inclined to give due course to the appeal despite the two-day delay in filing the notice of appeal.

2. The Court affirmed the ruling of the Court of Appeals that the Warsaw Convention did not preclude the operation of the Civil Code and other laws. While respondent's second cause of action was time-barred under the Warsaw Convention, the delaying tactics employed by United Airlines justified the filing of the action beyond the prescribed period. Therefore, respondent's second cause of action could proceed.

Case Digest: Alitalia vs. IAC, 192 SCRA 9

 

Alitalia vs. IAC, 192 SCRA 9

Subject: Transportation Law

FACTS

Dr. Felipa Pablo, a professor from UP was invited to attend a meeting by the United Nations in Ispra, Italy. She was to read a paper regarding foreign substances in food and the agriculture environment which she had specialized knowledge of. She booked a flight to Italy with Alitalia airlines, petitioner herein. She had arrived in Milan the day before the meeting however her luggage did not arrive with her. The airline informed her that her luggage was delayed because it was placed in one of the succeeding flights to Italy. She never got her luggage.

Back in Manila, she demanded that Alitalia compensate her for the damages that she suffered. Petitioner herein offered free airline tickets to compensate for the alleged damages, however, she rejected this offer and instead filed a case. Subsequently, it was found out that the luggage of Dr. Pablo was not placed in the succeeding flights. She received her luggage 11 months after and after she had already instituted a case against Alitalia.

The lower court rendered a decision in favor of Dr. Pablo and ordered the plaintiff to pay damages. On appeal, the Court of Appeals affirmed the decision and even increased the amount of damages to be awarded to Dr. Pablo. Hence this petition for certiorari.

ISSUE

Whether or not Alitalia is liable for damages incurred by Dr. Pablo.

RULING

Yes, Alitalia is liable to pay Dr. Pablo for nominal damages.

The Warsaw Convention provides that an air carrier is made liable for damages when: (1) the death, wounding or other bodily injury of a passenger if the accident causing it took place on board the aircraft or in the course of its operations of embarking or disembarking; (2) the destruction or loss of, or damage to, any registered luggage or goods, if the occurrence causing it took place during the carriage by air"; and (3) delay in the transportation by air of passengers, luggage or goods. However, the claim for damages may be brought subject to limitations provided in the said convention.

In this case, Dr. Pablo did not suffer any other injury other than not being able to read her paper in Italy. This was due to the fact that Alitalia misplaced her luggage. There was no bad faith or malice on the part of Alitalia in the said delay in the arrival of her luggage. Dr. Pablo received all her things which were returned to her in good condition although 11 months late. Therefore, she shall receive nominal damages for the special injury caused.

Case Digest: Luna v. Court of Appeals, 216 SCRA 107

 

Luna v. Court of Appeals, 216 SCRA 107

Subject: Transportation Law

FACTS

In May 1989, petitioners Rufino Luna, Rodolfo Alonso, and Porfirio Rodriguez encountered issues with Northwest Airlines during their trip to the Rotary International Convention in Seoul. Due to engine trouble, they were transferred to a Korean Airlines plane, resulting in the loss of their luggage, which allegedly ended up in Seattle. After a four-day delay, they recovered their belongings but missed most of the convention. Despite sending claims to Northwest Airlines, the airline disowned liability, prompting the petitioners to file a complaint for breach of contract.

Their complaints were initially dismissed for not stating prior claims within the prescribed period. The petitioners appealed, but the Court of Appeals, applying the Warsaw Convention, dismissed Luna and Alonso's petition, citing that certiorari was not a substitute for a lost appeal. Rodriguez's petition was referred to the Court of Appeals. The petitioners argued three grounds, including the Convention's non-exclusive nature and the inapplicability of its reglementary period in cases of willful misconduct.

Northwest Airlines claimed the dismissal orders were final due to the petitioners' failure to appeal within the reglementary period. They argued that no demand letter was received within the 21-day period stipulated in the Conditions of Contract. Referring to foreign jurisprudence, they contended that the Warsaw Convention's limitation of liability in cases of willful misconduct only applied to the monetary ceiling on damages.

ISSUE

Whether or not Northwest Airlines is liable for damages for breach of contract.

RULING

 Yes.

The Warsaw Convention does not operate as an exclusive enumeration of the instances for declaring an airline liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Convention merely declares the carrier liable for damages in the enumerated cases, if the conditions therein specified are present.  For sure, it does not regulate the liability, much less exempt, the carrier for violating the rights of others which must simply be respected in accordance with their contracts of carriage. The application of the Convention must not therefore be construed to preclude the operation of the Civil Code and other pertinent laws.

In this case, petitioners' alleged failure to file a claim with the common carrier as mandated by the provisions of the Warsaw Convention should not be a ground for the summary dismissal of their complaints since private respondent may still be held liable for breach of other relevant laws which may provide a different period or procedure for filing a claim. Considering that petitioners indeed filed a claim which private respondent admitted having received on 21 June, 1989, their demand may have very well been filed within the period prescribed by those applicable laws. Consequently, respondent trial courts, as well as respondent appellate court, were in error when they limited themselves to the provisions of the Warsaw Convention and disregarding completely the provisions of the Civil Code.

Case Digest: Northwest Airlines vs. Court of Appeals, 284 SCRA 408

 

Northwest Airlines vs. Court of Appeals, 284 SCRA 408

Subject: Transportation Law

FACTS

The plaintiff, [Torres], allegedly on a special mission to purchase firearms for the Philippine Senate, purchased a round trip ticket from defendant [Northwest] for his travel to Chicago and back to Manila. Via defendant's flight, plaintiff left for United States.

On  the way back to Manila, plaintiff checked-in his two identical baggage, one of which contained firearms. After document verification by the airline staff, plaintiff thereafter sealed the baggage and defendant's representative placed a red tag on the baggage with firearms with the marking "CONTAINS FIREARMS".

In Manila, plaintiff was not able to claim one of his baggages for it was recalled back to Chicago by defendant for US Customs verification. A telex to this effect was shown to plaintiff. Later on plaintiff was able to claim his other baggage in the presence of defendant's representative and found out that the firearms were missing.

On account of continuous refusal of defendant to settle amicably, plaintiff then prayed before the trial court that defendant be ordered to pay damages.

Northwest argued in its motion for summary judgment that the Warsaw Convention and the contract of carriage limited its liability to US$640 and that the evidence presented by Torres did not entitle him to moral, exemplary, and temperate damages and attorney's fees.

The trial court ordered Northwest to pay Torres. Both appeal to the CA. The affirmed the trial court's finding as to the right of Torres to actual damages but set aside the rest of the appealed decision. It then remanded the case to the court a quo for further proceedings. Hence, this petition.

ISSUE

Whether or not limiting liability stated in Section 22(2) of the Warsaw Convention applies in this case.

RULING

No, Northwest's liability for actual damages may not be limited to that prescribed in Section 22(2) of the Warsaw Convention.

In this case, SC held that a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any willful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of contract by the carrier" or misconduct of its officers and employees, or for some particular or exceptional type of damage.

Case Digest: ICTS vs. Prudential Guarantee, 320 SCRA 244, G.R. No. 134514

 

ICTS vs. Prudential Guarantee, 320 SCRA 244, G.R. No. 134514, December 8, 1999

Subject: Transportation Law

FACTS

Mother vessel Tao He loaded and received on board in San Francisco, California, a shipment of five lots of canned foodstuff complete and in good order and condition for transport to Manila in favor of Duel Food Enterprises (consignee) under “shipper’s load and count”.

The shipment arrived at the port of Manila and discharged by the vessel MS Wei He in favor of ICTSI for safekeeping. The brokerage withdrew the shipment and delivered the same to the consignee. An inspection there revealed that 161 cartoons were missing valued at P85,984.40. Consignee learned of such shortage on June 4, 1990. It filed claim for loss on October 2, 1990. Claim for indemnification of the loss having been denied by ICTSI and the brokerage, consignee sought payment from Prudential (insurer) under the marine cargo policy.

The appellate court found ICTSI negligent in its duty to exercise due diligence over the shipment. It also ruled that the filing of a claim depended on the issuance of a certificate of loss by ICTSI based on the liability clause printed on the back of the arrastre and wharfage receipt. Since ICTSI did not issue such a certificate despite being informed of the shortage, the 15-day period given to the consignee for filing a formal claim never began. Prudential, therefore can hold the ICTSI liable for the shortage.

ISSUE/S

1) Whether or not ICTSI negligent in its duty to exercise due diligence over the shipment. 

2) Whether or not the consignee fail to file a formal claim within the period stated on the dorsal side of the arrastre and wharfage receipt. 

RULING

1)  No. The consigned goods were shipped under “shipper’s load and count”. This means that the shipper was solely responsible for the loading of the container, while the carrier was oblivious to the contents of the shipment. Protection against pilferage of the shipment was the consignee’s lookout. The arrastre operator was not required to verify the contents of the container received and to compare them with those declared by the shipper because as earlier stated, the cargo was at the shipper’s load and count. In this case, the arrastre operator was expected to deliver to the consignee only the container received from the carrier. The legal relationship between the arrastre and consignee is akin to that between a warehouseman and a depositor. As to both the nature of the functions and the place of their performance, arrastre operator’s services are clearly not maritime in character.

2)  Yes. In order to hold the arrastre operator liable for lost or damaged goods, the claimant should file with the operator a claim for the value of said goods “within the 15-day period from the date of discharge of the last package from the carrying vessel.” The filing within the period is in the nature of a prescriptive period for bringing an action and is a condition precedent to holding the arrastre operator liable. In an endeavor to promote fairness, equity and justness, however, a long line of cases has held that the 15-day period for filing claims should be counted from the date the consignee learns of the loss, damage or misdelivery of goods.

In this case, by the time the claim for the loss was filed on October 2, 1990, four months had already elapsed from the date of delivery. In any event, within 15 days from the time the loss was discovered, the consignee could have filed a provisional claim, which would have constituted substantial compliance with the rule. Its failure to do so relieved the arrastre operator of any liability for the non-delivery of the goods. The rationale between the time limit is that, without it, a consignee could too easily concoct or fabricate claims and deprive the arrastre operator of the best opportunity to prove immediately their veracity.