Case Digest: Mitsui Lines vs. Court of Appeals, G.R. No. 119571

 

Mitsui Lines vs. Court of Appeals, 287 SCRA 366, G.R. No. 119571, March 11, 1998

Subject: Transportation Law

FACTS

Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage through Meister Transport, Inc., an international freight forwarder, with private respondent Lavine Loungewear Manufacturing Corporation to transport goods of the latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to France 28 days from initial loading. On July 24, 1991, petitioner's vessel loaded private respondent's container van for carriage at the said port of origin.

However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with the result that the shipment arrived in Le Havre only on November 14, 1991. The consignee allegedly paid only half the value of the said goods on the ground that they did not arrive in France until the "off season" in that country. The remaining half was allegedly charged to the account of private respondent which in turn demanded payment from petitioner through its agent.

ISSUE

Whether or not private respondent's action is for "loss or damage" to goods shipped, within the meaning of the Carriage of Goods by Sea Act (COGSA).

RULING

No. The suit is not for "loss or damage" to goods contemplated in §3(6), the question of prescription of action is governed not by the COGSA but by Art. 1144 of the Civil Code.

Article 1144 of the Civil Code provides for a prescriptive period of ten years. As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act, "loss" contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered.

In this case, there would be some merit in appellant's insistence that the damages suffered by him as a result of the delay in the shipment of his cargo are not covered by the prescriptive provision of the Carriage of Goods by Sea Act above referred to, if such damages were due, not to the deterioration and decay of the goods while in transit, but to other causes independent of the condition of the cargo upon arrival, like a drop in their market value.

Case Digest: Campagnie vs. Hamburg-Amerika, G.R. No. L-10986

 

Campagnie vs. Hamburg-Amerika, 36 Phil. 590, G.R. No. L-10986, March 31, 1917

Subject: Transportation Law

FACTS

This is an action by the Compagnie de Commerce et de Navigation D'Extreme Orient, a corporation duly organized and existing under and by virtue of the laws of the Republic of France, with its principal office in the city of Paris, France, and a branch office in the city of Saigon, against the Hamburg Amerika Packetfacht Actien Gesellschaft, a corporation duly organized under and by virtue of the laws of the Empire of Germany, with its principal office in the city of Humburg, Germany, and represented in the city of Manila by Behn, Meyer & Company (Limited), a corporation. The plaintiff seeks to recover the full value if Saigon of a certain cargo of the steamship Sambia, alleged to amounts to the sum of P266,930, Philippine currency, and prays that certain proceeds of the sale of said cargo, amounting to P135,766.01, now on deposit in this court, be applied on said judgment, and that judgment be rendered in favor of the plaintiff and against the defendant for such sum as may represent the difference between the said amount and the value of the payment and delivery unto plaintiff from said deposit, with legal interest and costs of suit.

RTC decided in favor of the plaintiff and against the defendant and further, that the plaintiff to recover from the defendant the sum of P60,841.32 for the actual damages suffered by the plaintiff by the defendant's breach of the charter party in evidence, with legal interest thereon from the date of the filing of the complaint in this case until paid. The defendant's cross-complaint is hereby dismissed with the costs of this case against the defendant. Both plaintiff and defendant appealed to the Supreme Court as to the damages imposed.

ISSUE

Whether or not the master of the Sambia, when he fled from the port of Saigon and took refuge in the port of Manila, had reasonable grounds to apprehend that his vessel was in danger of seizure or capture by the public enemies of the flag under which he sailed.

RULING

Yes, the master of the Sambia had reasonable grounds to apprehend that his vessel was in danger of seizure or capture by the public enemies of the flag under which he sailed.

Under the general provisions of maritime law  and the express provisions of article 7 of the charter party, the act of God, the king's enemies, arrests and restraints of princes, rulers and people, perils of the seas, barratry of the master and crew, pirates, collisions, strandings, loss or damage from fire on board, in hulk or craft, or on shore; and act, neglect, default or error in judgment whatsoever of pilots, master, crew or other servant of the shipowners in the navigation of the steamer; and all and every the dangers and accidents of the seas, canals and rivers, and of navigation of whatever nature or kind always mutually excepted.

In this case, there is no question as to the necessity, arising out of the presence of enemy cruisers on the high seas which compelled the Sambia, once she had left the port of Saigon, to take refuge in the port of Manila and to stay there indefinitely pending the outcome of the war. The deviation of the Sambia from the route prescribed in her charter party, and the subsequent abandonment by the master of the voyage contemplated in the contract of affreightment, must be held to have been justified by the necessity under which he was placed to elect that course which would remove and preserve the vessel from danger of seizure by the public enemies of the flag under which she sailed; and that neither the vessel nor her owners are liable for the resultant damages suffered by the owner of the cargo.

Case Digest: Transasia Shipping vs. Court of Appeals, G.R. No. 118126

 

Transasia Shipping vs. Court of Appeals, 254 SCRA 260, G.R. No. 118126, March 04, 1996

Subject: Transportation Law

FACTS

Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein petitioner for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991.

The vessel departed with only one engine running. After an hour, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded to their request and thus the vessel headed back to Cebu City.

In Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Petitioner, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant.

Hence, respondent Arroyo filed before the trial court “an action for damage arising from bad faith, breach of contract and from tort,” against petitioner. The trial court ruled only for breach of contract. The CA reversed the trial court's decision and allowed only compensatory, moral, and exemplary damages. No actual damages was given for there was no designation of departure time as well as petitioner’s liability as to delay in departure.

ISSUE

Whether or not in case of interruption of a vessel's voyage and the consequent delay in that vessel's arrival at its port of destination, the right of a passenger affected thereby to be determined and governed by the vague Civil Code provision on common carriers, or in the absence of a specific provision thereon governed by Art. 698 of the Code of Commerce?

RULING

Art. 698 of the Code of Commerce applies suppletorily with the New Civil Code provisions.

The Civil Code is silent on the rights and duties arising from the delay in a vessel's voyage. However, the petitioner correctly cites Article 698 of the Code of Commerce, which outlines specific provisions for such situations. According to Article 698, passengers must pay a fare proportionate to the distance covered if a voyage is interrupted due to fortuitous events or force majeure. Passengers have a right to indemnity if the interruption is exclusively caused by the captain. The article applies suppletorily according to Article 1766 of the Civil Code.

In this case, the petitioner's failure to observe extraordinary diligence caused the delay. Article 698, in conjunction with other Civil Code articles, holds the petitioner liable for pecuniary losses or loss of profits suffered by the private respondent due to the delay. The private respondent's loss of income, assuming he stayed on the vessel, is considered. However, as the private respondent and some passengers chose not to complete the voyage, causing the vessel to return to its origin, any further delay was a result of his decision to disembark. Had the private respondent stayed on the first vessel, he would have reached his destination on time. Compensatory damages must be proven, and the private respondent failed to provide convincing evidence that he did not receive his salary for the specified date, or that his absence was not excused. Consequently, the petitioner may not be liable for compensatory damages.

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.