27. Eastern Shipping Lines, Inc. vs. Margarina-Verkausfs-Union, 93 SCRA 257

Facts:Respondent corporation, a West German corporation not engaged in business in the

Philippines, was the consignee of 500 long tons of Philippine copra in bulk with a total value of US$ 108,750.00 shipped from Cebu City on board petitioner's (a Philippine corporation) vessel, the SS "EASTERN PLANET" for discharge at Hamburg, Germany. Petitioner's bill of lading for the cargo provided as follows: …Except as otherwise stated herein and in - the Charter Party, this contract shag be governed by the laws of the Flag of the Ship carrying the goods. In case of average, same shall be adjusted according to York-Antwerp Rules of 1950.

While the vessel was off Gibraltar, a fire broke out aboard and caused water damage to the copra shipment in the amount of US$ 591.38. Petitioner corporation rejected respondent's claim for payment of the and respondent filed on June 18, 1966 in the Manila court of first instance its complaint against petitioner as defendant for recovery of the same and US$ 250.00 - attorney's fees and expenses of litigation.

Issue:Whether or not the respondent is entitled to claim damages

Ruling:The Court finds no error and upholds the lower court's ruling sustaining respondent's

damage claim although the amount thereof did not exceed 5% of respondent's interest in the cargo and would have been barred by the cited article of the Commerce Code. We hold that the lower court correctly ruled the cited codal article to be "not applicable in this particular case for the reason that the bill of lading (Exhibit "F") contains "an agreement to the contrary" for it is expressly provided in the last sentence of the first paragraph (Exhibit "1-A") that "In case of average, same shall be adjusted according to York-Antwerp Rules of 1950." The insertion of said condition is expressly authorized by Commonwealth Act No. 65 which has adopted in toto the U.S. Carriage of Goods by Sea Act. Now, it has not been shown that said rules limit the recovery of damage to cases within a certain percentage or proportion that said damage may bear to claimant's interest either in the vessel or cargo as provided in Article 848 of the Code of Commerce On the contrary, Rule 3 of said York-Antwerp Rules expressly states that "Damage done to a ship and cargo, or either of them, by water or otherwise, including damage by breaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall be made good as general average."

Insofar as the present case is concerned, the lower court made no finding that it falls within any of the exceptions that would justify the award for attorney's fees, such as gross and evident bad faith in refusing to satisfy a plainly valid, just and demandable claim. Even under the broad eleventh exception of the cited article which allows the imposition of attorney's fees "in any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered," the Court stressed in Buan, supra, that "the conclusion must be borne out by findings of facts and law. What is just and equitable in a given case is not a mere matter of feeling but of demonstration. Hence, the exercise of judicial discretion in the award of attorney's fees under Article 2208 (11) of the Civil Code demands a factual, legal or equitable justification upon the basis of which the court exercises its discretion. Without such a justification, the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture." The summary award of counsel's fees made in the appealed judgment must therefore be set aside.

28. American Insurance Co. vs. CompaniaMaritima, 21 SCRA 998

Facts:In 1962, certain cargo insured with plaintiff corporation was shipped in New York, U.S.

aboard "M/S TOREADOR", of which the general agent in the Philippines is appellee

Macondray& Co., Inc. The cargo, with an invoice value of $3,539.61 CIF Cebu, was consigned to the order of the importer Atlas Consolidated Mining and Development Corporation.

Inasmuch as the final port of call of the "M/S TOREADOR" was Manila, the carrier, in accepting the cargo at the point of shipment, agreed to transship the same, after its discharge in Manila, aboard an inter-island vessel to its destination in Cebu. On September 18, 1962, the "M/S TOREADOR" arrived at the port of Manila and on the same date discharged the cargo in question. Pursuant to the arrangement the cargo was subsequently loaded aboard the "SS SIQUIJOR", an inter-island vessel. The shipment was finally discharged in Cebu on September 24, 1962.

When the consignee took delivery of the shipment it was found to be short of two (2) pieces of tractor parts worth $2,834.88, or P11,063.12 at the exchange rate of P3.9025. Plaintiff paid the insured value of the lost merchandise to the consignee. To recover the said sum of P11,063.12 plaintiff, as subrogee of the consignee rights, filed on September 24, 1963 a complaint against the CompañiaMaritima and the Visayan Cebu Terminal Co., Inc. as alternative defendants. The former was sued as operator and owner of "SS SIQUIJOR" and the latter as operator of the arrastre service at the port of Cebu charged with the care and custody of all cargo discharged there.In view of Maritima's allegation in its answer that the lost merchandise had not actually been delivered to it, plaintiff filed on November 6, 1964 a motion to admit its amended complaint impleading Macondray and Luzon Brokerage Corporation as additional defendants and eliminating the Visayan Cebu Terminal Co., Inc.

Issue:Whether or not the cargo in question was a transshipment cargo wherein the

discharge thereof in Manila terminated the obligation of Macondray as carrier

Ruling:No. According to paragraph 4 of the amended complaint the cargo was loaded on

board the "M/S TOREADOR" in New York, "freight prepaid to Cebu City . . . pursuant to the bill of lading No. 13." In other words, the action is based on the contract of carriage up to the final port of destination, which was Cebu City, for which the corresponding freight had been prepaid. The following provisions of the bill of lading are the ones directly in point:

1. This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States of America, approved April 16, 1936, which shall be deemed to be incorporated herein and nothing herein contained shall be deemed a surrender by the Carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act. The provisions stated in said Act (except as may be otherwise specifically provided herein) shall govern before the goods are loaded on and after they are discharged from the ship and throughout the entire time the goods are in the custody of the Carrier. . . .19. In any event the Carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. . . .The transshipment of the cargo from Manila to Cebu was not a separate transaction

from that originally entered into by Macondray, as general agent for the "M/S TOREADOR". It was part of Macondray's obligation under the contract of carriage and the fact that the transshipment was made via an inter-island vessel did not operate to remove the transaction from the operation of the Carriage of Goods by Sea Act.

29. Aboitiz Shipping Corporation vs. Court of Appeals, 188 SCRA 387

Facts:AnacletoViana was a passenger of M/V Antonia bound for Manila which was owned by

defendant Aboitiz. After the said vessel has landed, the Pioneer Stevedoring Corp., as the arrastre operator, took over the exclusive control of the cargoes loaded on it. One hour after the passengers had disembarked, Pioneer Stevedoring started operation by unloading the

cargoes using its crane. Viana who had already disembarked remembered that some of his cargoes were still inside the vessel. While pointing to the crew of the vessel the place where his cargoes were, the crane hit him, pinning him between the side of the vessel and the crane which resulted to his death. Viana’s wife filed a complaint for damages against Aboitiz for breach of contract f carriage. Aboitiz, however filed a third party complaint against Pioneer since it had control completely over the vessel during the incident. Furthermore, petitioner contends that one hour has already elapsed from the time Viana disembarked, thus he has already ceased to be a passenger.

Issue:Whether or not Aboitiz is liable for the death of Viana

Ruling:Yes. The Supreme Court held that the failure of Aboitiz to exercise extraordinary

diligence for the safety of its passengers makes Aboitiz liable. It has been recognized as a rule that the relation of the carrier and passenger does not cease the moment the passenger alights from the carrier’s vehicle, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier’s premises. A reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near the petitioner’s vessel. In the case at bar, such justifiable cause exists because he had to come back for his cargo. Aboitiz has failed to safeguard its passenger with extraordinary diligence in requiring or seeing to it that precautionary measures were strictly and actually enforced to subserve their purpose of preventing entry into a forbidden area.

30. Alitalia v. Intermediate Appellate Court, 192 SCRA 9

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.

When she got back to Manila she demanded that Alitalia compensate her for the damages that she suffered. Petitioner herein offered free airline tickets in order to compensate for the alleged damages, however she rejected this offer and instead filed a case. Subsequently it was found out that the luggages of Dr. Pablo were 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 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. The Court held that 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.

31. Sabena Belgian World Airlines vs. CA, March 15, 1996

Facts:Private respondent MA. PAULA SAN AGUSTIN was a passenger on board Flight SN 284

of defendant airline originating from Casablanca to Brussels, Belgium on her way back to Manila. She checked in her luggage which contained her valuables all amounting to $4,265.00, for which she was issued Tag No. 71423. She stayed overnight in Brussels and her luggage was left on board Flight SN 284. Upon Arrival in Manila, she learned that her luggage was missing and was advised to accomplish and submit a property Irregularity Report which she submitted and filed on the same day.

Upon follow up, it remained missing; thus, she filed her formal complaint with the office of Ferge Massed, petitioner’s Local Manager, demanding immediate attention.Two weeks later she was notified that her luggage was found. But unfortunately plaintiff was informed that the luggage was lost for the second time. She demanded payment but the airline refused to settle the claim. The trial court ruled in favor of Ma. Paula San Agustin. The appellate court affirmed in toto the trial court’s judgment.

Petitioner airline company, in contending that the alleged negligence of private respondent should be considered the primary cause for the loss of her luggage, avers that, despite her awareness that the flight ticket had been confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists that private respondent, being a seasoned international traveler, must have likewise been familiar with the standard provisions contained in her flight ticket that items of value are required to be hand-carried by the passenger and that the liability of the airline or loss, delay or damage to baggage would be limited, in any event, to only US$20.00 per kilo unless a higher value is declared in advance and corresponding additional charges are paid thereon. At the Casablanca International Airport, private respondent, in checking in her luggage, evidently did not declare its contents or value. Petitioner cites Section 5(c), Article IX, of the General Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929, as amended by the Hague Protocol of 1955, generally observed by International carriers, stating, among other things, that:“Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable papers, securities or other valuables.”

Issue: Whether or not the airline is negligentWhether or not respondent’s negligence is the sole and proximate cause of the loss

Ruling:Yes.Fault or negligence consists in the omission of that diligence which is demanded

by the nature of an obligation and corresponds with the circumstances of the person, of the time, and of the place. When the source of an obligation is derived from a contract, the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor. This rule is not different in the case of common carriers in the carriage of goods which, indeed, are bound to observe not just the due diligence of a good father of a

family but that of “extraordinary” care in the vigilance over the goods. The appellate court has aptly observed:“x xx Art. 1733 of the [Civil] Code provides that from the very nature of their business and by reasons of public policy, common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. This extraordinary responsibility, according to Art. 1736, lasts from the time the goods are unconditionally placed in the possession of and received by the carrier until they are delivered actually or constructively to the consignee or person who has the right to receive them. Art. 1737 states that the common carrier’s duty to observe extraordinary diligence in the vigilance over the goods transported by them ‘remains in full force and effect even when they are temporarily unloaded or stored in transit.’ And Art. 1735 establishes the presumption that if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they had observed extraordinary diligence as required in Article 1733.

The above rules remain basically unchanged even when the contract is breached by tort although non-contradictory principles on quasi-delict may then be assimilated as also forming part of the governing law. Petitioner is not thus entirely off track when it has likewise raised in its defense the tort doctrine of proximate cause. Unfortunately for petitioner, however, the doctrine cannot, in this particular instance, support its case. Proximate cause is that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury and without which the result would not have occurred.

The above findings, which certainly cannot be said to be without basis, foreclose whatever rights petitioner might have had to the possible limitation of liabilities enjoyed by international air carriers under the Warsaw Convention.

The Warsaw Convention however denies to the carrier availment ‘of the provisions which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to wilful misconduct,’ or ‘if the damage is (similarly) caused x xx by any agent of the carrier acting within the scope of his employment.’The Convention does not thus operate as an exclusive enumeration of the instances of an airline’s liability, or as an absolute limit of the extent of that liability. (Loss of baggage twice shows gross negligence)

32. Filipino Merchants Insurance Company, Inc. vs. Judge Jose Alejandro, 145 SCRA 42

Facts:In 1976, ChoaTiekSeng contracted FrotaOceanicaBrasiliera for the latter to deliver

goods. ChoaTiekSeng insured the goods with Filipino Merchants Insurnace Company. The goods left the port of Manila on December 13, 1976 and reached its point of destination on December 17, 1976. The goods were however damaged.

ChoaTiekSeng then filed an insurance claim. Filipino Merchants refused to pay so in August 1977, it was sued by ChoaTiekSeng. In January 1978, Filipino Merchants filed a third party complaint against the carrier FrotaOceanicaBrasiliera as it alleged that it is the carrier who is liable to pay damages to ChoaTiekSeng. Judge Jose Alejandro of the trial court ruled against Filipino Merchants. The Court of Appeals affirmed the ruling of the judge. The lower courts ruled that Filipino Merchants is already barred from filing a claim because under the Carriage of Goods by Sea Act, the suit against the carrier must be filed “within one year after delivery of the goods or the date when the goods should have been delivered” or one year from December 17, 1976. The insurance company is already barred for it filed its third party complaint only in January 1978.

Issue:Whether or not Filipino Merchants is precluded by the said time-bar rule

Ruling:Yes. The pertinent provision of the Carriage of Goods by Sea Act does not only apply

to the shipper but also applies to the insurer. The coverage of the Carriage of Goods by Sea Act includes the insurer of the goods. Otherwise, what the Act intends to prohibit after the lapse of the one year prescriptive period can be done indirectly by the shipper or owner of the goods by simply filing a claim against the insurer even after the lapse of one year. This would be the result if the insurer can, at any time, proceed against the carrier and the ship since it is not bound by the time-bar provision. In this situation, the one year limitation will be practically useless. This could not have been the intention of the law which has also for its purpose the protection of the carrier and the ship from fraudulent claims by having “matters affecting transportation of goods by sea be decided in as short a time as possible” and by avoiding incidents which would “unnecessarily extend the period and permit delays in the settlement of questions affecting the transportation.”

33. Ang vs. American Steamship Agencies, Inc., 19 SCRA 123

Facts:YauYue Commercial Bank Ltd. of Hongkong, sell 140 packages of galvanized steel

durzinc sheets to one Herminio G. Teves, shipped by Tokyo Boeki Ltd. of Tokyo, Japan with American Steamship Agencies, Inc. as the agent in the Philippines, under a shipping agreement. The bill of lading was indorsed to the order of and delivered to YauYue by the shipper. Upon receipt thereof, YauYue drew a demand draft together with the bill of lading against Herminio G. Teves, through the Hongkong&Shanghai Bank. Upon arrival, Hongkong& Shanghai Bank notified Teves, the “notify party” under the bill of lading, of the arrival of the goods and requested payment of the demand draft representing the purchase price of the articles. Teves, however, did not pay the demand draft, prompting the bank to make the corresponding protest. The bank likewise returned the bill of lading and demand draft to YauYue which indorsed the said bill of lading to Domingo Ang. Despite non-payment Teves was able to secure a “Permit To Deliver Imported Articles” which he presented to the Bureau of Customs which in turn released to him the articles covered by the bill of lading. Subsequently, Domingo Ang claimed for the articles from American Steamship Agencies, Inc., by presenting the indorsed bill of lading, but he was informed by the latter that it had delivered the articles to Teves. A complaint was filed by Ang against American Steamship for having allegedly wrongfully delivered and/or converted the goods covered by the bill of lading. Defendant filed a motion to dismiss upon the ground that plaintiff’s cause of action has prescribed under the Carriage of Goods by Sea Act.Lower court dismissed the case on the ground of prescription. Hence, an appeal was filed to SC.

Issue:Whether or not the plaintiff-appellant’s cause of action prescribed under Section 3(6),

paragraph 4 of the Carriage of Goods by Sea Act

Ruling:From the allegations of the complaint, therefore, the goods cannot be deemed “lost”.

They were delivered to Herminio G. Teves, so that there can only be either delivery, if Teves really was entitled to receive them, or misdelivery, if he was not so entitled. It is not for Us now to resolve whether or not delivery of the goods to Teves was proper, that is, whether or not there was rightful delivery or misdelivery.

The point that matters here is that the situation is either delivery or misdelivery, but not nondelivery. Thus, the goods were either rightly delivered or misdelivered, but they were not lost. There being no loss or damage to the goods, the aforequoted provision of the Carriage of Good by Sea Act stating that “In any event, the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered,”

does not apply. The reason is not difficult to see. Said one-year period of limitation is designed to meet the exigencies of maritime hazards. In a case where the goods shipped were neither last nor damaged in transit but were, on the contrary, delivered in port to someone who claimed to be entitled thereto, the situation is different, and the special need for the short period of limitation in cases of loss or damage caused by maritime perils does not obtain.Wherefore, the dismissal order appealed from is hereby reversed and set aside and this case is remanded to the court a quo for further proceedings.

34. Ang vs. CompaniaMaritima, 133 SCRA 600

Facts:Ang on September 26, 1963, as the assignee of a bill of lading held by YauYue

Commercial Bank, Ltd. of Hongkong, sued CompaniaMaritima, Maritime Company of the Philippines and C.L. Diokno. He prayed that the defendants be ordered to pay him solidarily the sum of US$130,539.68 with interest from February 9, 1963 plus attorney's fees and damages.

Ang alleged that YauYue Commercial Bank agreed to sell to Herminio G. Teves under certain conditions 559 packages of galvanized steel, Durzinc sheets. The merchandise was loaded on May 25, 1961 at Yawata, Japan in the M/S Luzon a vessel owned and operated by the defendants, to be transported to Manila and consigned "to order" of the shipper, Tokyo Boeki, Ltd., which indorsed the bill of lading issued by CompaniaMaritima to the order of YauYue Commercial Bank. Ang further alleged that the defendants, by means of a permit to deliver imported articles, authorized the delivery of the cargo to Teves who obtained delivery from the Bureau of Customs without the surrender of the bill of lading and in violation of the terms thereof. Teves dishonored the draft drawn by YauYue against him.

The Hongkong and Shanghai Banking Corporation made the corresponding protest for the draft's dishonor and returned the bill of lading to YauYue. The bill of lading was indorsed to Ang. The defendants filed a motion to dismiss Ang's complaint on the ground of lack of cause of action. Ang opposed the motion. As already stated, the trial court on May 22, 1964 dismissed the complaint on the grounds of lack of cause of action and prescription since the action was filed beyond the one-year period provided in the Carriage of Goods by Sea Act.

Issue:Whether or not the present case is already barred by prescription

Ruling:No.In the American Steamship Agencies cases, it was held that the action of Ang is

based on misdelivery of the cargo which should be distinguished from loss thereof. The one-year period provided for in section 3 (6) of the Carriage of Goods by Sea Act refers to loss of the cargo. What is applicable is the four-year period of prescription for quasi-delicts prescribed in article 1146 (2) of the Civil Code or ten years for violation of a written contract as provided for in article 1144 (1) of the same Code.

As Ang filed the action less than three years from the date of the alleged misdelivery of the cargo, it has not yet prescribed. Ang, as indorsee of the bill of lading, is a real party in interest with a cause of action for damages.