Bill of Lading
Transshipment defined Transshipment, in maritime
Magellan Mfg. Marketing Corp v. CA, supra.
Facts: On 20 May 1980, Magellan Manufacturers
Marketing Corp. (MMMC) entered into a contract with
Choju Co. of Yokohama, Japan to export 136,000 anahaw
fans for and in consideration of $23,220.00. As payment
thereof, a letter of credit was issued to MMMC by the
buyer. Through its president, James Cu, MMMC then
contracted F.E. Zuellig, a shipping agent, through its
solicitor, one Mr. King, to ship the anahaw fans through
Orient Overseas Container Lines, Inc., (OOCL) specifying
that he needed an on-board bill of lading and that
transshipment is not allowed under the letter of credit. On
30 June 1980, MMMC paid F.E. Zuellig the freight charges
and secured a copy of the bill of lading which was
presented to Allied Bank. The bank then credited the
amount of US$23 ,220.00 covered by the letter of credit to
appellants account. However, when MMMCs president
James Cu, went back to the bank later, he was informed
that the payment was refused by the buyer allegedly
because there was no on-board bill of lading, and there
was a transshipment of goods. As a result of the refusal of
the buyer to accept, upon MMMCs request, the anahaw
fans were shipped back to Manila by OOCL and FE Zuellig,
for which the latter demanded from MMMC payment of
P246,043.43. MMMC abandoned the whole cargo and
asked OOCL and FE Zuellig for damages. On 20 July 1981
MMMC filed the complaint in this case praying that OOCL
and FE Zuellig be ordered to pay whatever MMMC was not
able to earn from Choju Co., Ltd., amounting to
P174,150.00 and other damages like attorneys fees since
OOCL and FE Zuellig are to blame for the refusal of Choju
Co., Ltd. to accept the Anahaw fans. In answer thereto the
latter alleged that the bill of lading clearly shows that there
will be a transshipment and that MMMC was well aware
that MV (Pacific) Despatcher was only up to Hongkong
where the subject cargo will be transferred to another
vessel for Japan. They this filed a counterclaim praying
that MMMC be ordered to pay freight charges from Japan
to Manila and the demurrages in Japan and Manila
amounting to P298,150.93. The lower court decided the
case in favor of OOCL and FE Zuellig. On appeal to the
Court of Appeals, the finding of the lower court that
MMMC agreed to a transshipment of the goods was
affirmed but the finding that petitioner is liable for
P298,150.93 was modified. It was reduced to P52,102.45
which represents the freight charges and demurrages
incurred in Japan but not for the demurrages incurred in
Manila. MMMC, dissatisfied with the decision moved for
reconsideration. Denied, it filed a petition for review on
certiorari. The Supreme Court affirmed the judgment of
the Court of Appeals with the modification that MMMC is
likewise absolved of any liability, thus setting aside the
award of P52,102.45 with legal interest granted by the
appellate court on OOCL and FE Zuelligs counterclaim,
said counterclaim being dismissed, without
pronouncement as to costs.
Held:
1.
law, is defined as the act of taking cargo out of one
ship and loading it in another, or the transfer of
goods from the vessel stipulated in the contract of
affreightment to another vessel before the place of
destination named in the contract has been reached,
or the transfer for further transportation from one
ship or conveyance to another. Either in its ordinary
or its strictly legal acceptation, there is transshipment
whether or not the same person, firm or entity owns
the vessels. In other words, the fact of transhipment is
not dependent upon the ownership of the transporting
ships or conveyances or in the change of camera, but
rather on the fact of actual physical transfer of cargo
from one vessel to another.
2. Transshipment exists in present case There was
transhipment, as there unmistakably appears on the
face of the bill of lading the entry Hong Kong in the
blank space labeled Transshipment, which can only
mean that transshipment actually took place. This fact
is further bolstered by the certification issued by F.E.
Zuellig, Inc. dated 19 July 1980, although it carefully
used the term transfer instead of transshipment.
Nonetheless, no amount of semantic juggling can mask
the fact that transshipment in truth occurred in this
case.
3. A bill of lading operates both as a receipt and as
a contract A bill of lading operates both as a
receipt and as a contract. It is a receipt for the
goods shipped and a contract to transport and
deliver the same as therein stipulated. As a
contract, it names the parties, which includes
the consignee, fixes the route, destination, and
freight rates or charges, and stipulates the
rights and obligations assumed by the parties.
Being a contract, it is the law between the
parties who are bound by its terms and
conditions provided that these are not contrary
to law, morals, good customs, public order and
public policy. A bill of lading usually becomes
effective upon its delivery to and acceptance by
the shipper. It is presumed that the stipulations
of the bill were, in the absence of fraud,
concealment or improper conduct, known to the
shipper, and he is generally bound by his
acceptance whether he reads the bill or not.
4. Claims of mistake militates against nature of bill of
lading The claim that there was a mistake in
documentation on the part of OOCL and FE Zuellig
militates against the conclusiveness of the bill of lading
insofar as it reflects the terms of the contract between
the parties, as an exception to the parol evidence rule,
and would therefore permit it to explain or present
evidence to vary or contradict the terms of the written
agreement, that is, the bill of lading involved.
5. Receipt of bill lading without objection presumed to
mean acceptance of contents as correct and assent
thereto A shipper who receives a bill of lading without
objection after an opportunity to inspect it, and permits
the carrier to act on it by proceeding with the shipment
is presumed to have accepted it as correctly stating the
contract and to have assented to its terms. The acceptance
of the bill without dissent raises the presumption that all
the terms therein were brought to the knowledge of the
shipper and agreed to by him and, in the absence of fraud
or mistake, he is estopped from thereafter denying that he
assented to such terms. This rule applies with particular
force where a shipper accepts a bill of lading with full
knowledge of its contents and acceptance under such
circumstances makes it a binding contract.
6. Parol evidence rule vis--vis contracts Under the parol
evidence rule, the terms of a contract are rendered
conclusive upon the parties, and evidence aliunde is not
admissible to vary or contradict a complete and
enforceable agreement embodied in a document, subject to
well defined exceptions which do not obtain in this case.
The parol evidence rule is based on the consideration that
when the parties have reduced their agreement on a
particular matter into writing, all their previous and
contemporaneous agreements on the matter are merged
therein. Accordingly, evidence of a prior or
contemporaneous verbal agreement is generally not
admissible to vary, contradict or defeat the operation of a
valid instrument. The mistake contemplated as an
exception to the parol evidence rule is one which is a
mistake of fact mutual to the parties. Furthermore, the
rules on evidence, as amended, require that in order that
parol evidence may be admitted, said mistake must be put
in issue by the pleadings, such that if not raised inceptively
in the complaint or in the answer, as the case may be, a
party can not later on be permitted to introduce parol
evidence thereon.
7. Terms of contract in bill of lading clear and conclusive
The terms of the contract as embodied in the bill of lading
are clear and thus obviates the need for any interpretation.
The intention of the parties which is the carriage of the
cargo under the terms specified thereunder and the
wordings of the bill of lading do not contradict each other.
The terms of the contract being conclusive upon the
parties and judging from the contemporaneous and
subsequent actuations of petitioner, to wit, personally
receiving and signing the bill of lading and paying the
freight charges, there is no doubt that petitioner must
necessarily be charged with full knowledge and unqualified
acceptance of the terms of the bill of lading and that it
intended to be bound thereby.
8. Transshipment of freight without legal excuse is a
violation of contract; No cause to suppose shippers to be
unaware of custom It is a well-known commercial usage
that transshipment of freight without legal excuse,
however competent and safe the vessel into which the
transfer is made, is a violation of the contract and an
infringement of the right of the shipper, and subjects the
carrier to liability if the freight is lost even by a cause
otherwise excepted. It is highly improbable to suppose that
OOCL and FE Zuellig, having been engaged in the shipping
business for so long, would be unaware of such a custom of
the trade as to have undertaken such transshipment
without petitioners consent and unnecessarily expose
themselves to a possible liability. They could only have
undertaken transshipment with the shippers
permission, as evidenced by the signature of James Cu.
9. Knowledge of difference between bill of lading and
on board bill of lading expected from those engaged in
export industry for long periods The refusal of
acceptance of the cargo of anahaw fans by Choju Co.,
Ltd. was also made on the ground that the bill of lading
that was issued was not an on board bill of lading, in
clear violation of the terms of the letter of credit issued
in favor of MMMC. MMMC knew from the onset that
its buyer, Choju Co., Ltd., particularly required that
there be an on board bill of lading, obviously due to the
guaranty afforded by such a bill of lading over any
other kind of bill of lading. The buyer could not have
insisted on such a stipulation on a pure whim or
caprice, but rather because of its reliance on the
safeguards to the cargo that having an on board bill of
lading ensured. Herein petitioner cannot feign
ignorance of the distinction between an or board and
a received for shipment bill of lading. It is only to be
expected that those long engaged in the export industry
should be familiar with business usages and customs.
10. On board bill of lading defined An on board bill of
lading is one in which it is stated that the goods have
been received on board the vessel which is to carry the
goods, whereas a received for shipment bill of lading is
one in which it is stated that the goods have been
received for shipment with or without specifying the
vessel by which the goods are to be shipped. Received
for shipment bills of lading are issued whenever
conditions are not normal and there is insufficiency of
shipping space. An on board bill of lading is issued
when the goods have been actually placed aboard the
ship with every reasonable expectation that the
shipment is as good as on its way. It is, therefore,
understandable that a party to a maritime contract
would require an on board bill of lading because of its
apparent guaranty of certainty of shipping as well as
the seaworthiness of the vessel which is to carry the
goods.
11. FE Zuelligs certification cannot qualify bill of lading
into an ob board bill of lading Transportation Law,
2004 ( 294 ) Haystacks (Berne Guerrero) The
certification of F.E. Zuellig, Inc. cannot qualify the bill
of lading, as originally issued, into an on board bill of
lading as required by the terms of the letter of credit
issued in favor of MMMC. For one, the certification was
issued only on 19 July 1980, way beyond the expiry
date of 30 June 1980 specified in the letter of credit for
the presentation of an on board bill of lading. Thus,
even assuming that by a liberal treatment of the
certification it could have the effect of converting the
received for shipment bill of lading into an on board of
bill of lading, such an effect may be achieved only as of
the date of its issuance, that is, on 19 July 1980 and
onwards. The fact remains, though, that on the crucial
date of 30 June 1980 no on board bill of lading was
presented by petitioner in compliance with the terms of
the letter of credit and this default consequently
negates its entitlement to the proceeds thereof. Said
certification, if allowed to operate retroactively, would
render illusory the guaranty afforded by an on board bill of
lading, that is, reasonable certainty of shipping the loaded
cargo aboard the vessel specified, not to mention that it
would indubitably be stretching the concept of substantial
compliance too far.
12. Claim of contract of adhesion cannot be upheld as bill
of lading is clear MMMC cannot escape liability by
adverting to the bill of lading as a contract of adhesion,
thus warranting a more liberal consideration in its favor to
the extent of interpreting ambiguities against OOCL and
FE Zuellig as allegedly being the parties who gave rise
thereto. The bill of lading is clear on its face. There is no
occasion to speak of ambiguities or obscurities whatsoever.
All of its terms and conditions are plainly worded and
commonly understood by those in the business.
13. Certain contracts of adhesion, such as bill of lading, not
prohibited It is conceded that bills of lading constitute a
class of contracts of adhesion. However, as ruled in the
earlier case of Ong Yiu us. Court of Appeals, et al. and
reiterated in Servando, et al. vs. Philippine Steam
Navigation Co., plane tickets as well as bills of lading are
contracts not entirely prohibited. The one who adheres to
the contract is in reality free to reject it entirely; if he
adheres, he gives his consent.
14. Violation of letter of credit would defeat right to collect
proceeds thereof Any violation of the terms and conditions
of the letter of credit as would defeat its right to collect the
proceeds thereof was, therefore, entirely of MMMCs
making for which it must bear the consequences. Whether
there was a violation of the terms and conditions of the
letter of credit, or whether such violation was the cause or
motive for the rejection by MMMCs Japanese buyer
should not affect OOCL and FE Zuellig since they were not
privies to the terms and conditions of MMMCs letter of
credit and cannot therefore be held liable for any violation
thereof by any of the parties thereto.
15. Demurrage defined Demurrage, in its strict sense, is
the compensation provided for in the contract of
affreightment for the detention of the vessel beyond the
time agreed on for loading and unloading. Essentially,
demurrage is the claim for damages for failure to accept
delivery. In a broad sense, every improper detention of a
vessel may be considered a demurrage. Liability for
demurrage, using the word in its strictly technical sense,
exists only when expressly stipulated in the contract. Using
the term in its broader sense, damages in the nature of
demurrage are recoverable for a breach of the implied
obligation to load or unload the cargo with reasonable
dispatch, but only by the party to whom the duty is owed
and only against one who is a party to the shipping
contract. Notice of arrival of vessels or conveyances, or of
their placement for purposes of unloading is often a
condition precedent to the right to collect demurrage
charges.
16. Abandonment of goods releases MMMC from liability
from demurrage charges Ordinarily, the shipper is liable
for freightage due to the fact that the shipment was made
for its benefit or under its direction and, correspondingly,
the carrier is entitled to collect charges for its shipping
services. By virtue of the exercise of its option to
abandon the goods so as to allow OOCL and FE Zuellig
to sell the same at a public auction and to apply the
proceeds thereof as payment for the shipping and
demurrage charges, MMMC was released from liability
for the sum of P52,102.43 since such amount
represents the shipping and demurrage charges from
which it is considered to have been released due to the
abandonment of goods.
17. OOCL offered MMMC option, cannot renege of offer
unilaterally OOCL and FE Zuellig unequivocally offered
MMMC, on 20 March 1981, the option of paying the
shipping and demurrage charges in order to take
delivery of the goods or of abandoning the same so that
the former could sell them at public auction and
thereafter apply the proceeds in payment of the
shipping and other charges. Responding thereto, in a
letter dated 3 April 1981, MMMC seasonably
communicated its decision to abandon to the goods in
favor of the former with the specific instruction that
any excess of the proceeds over the legal costs and
charges be turned over to MMMC. Having given such
option, especially since it was accepted by MMMC,
OOCL and FE Zuellig are estopped from reneging
thereon. To allow either of them to unilaterally back
out on the offer and on the exercise of the option would
be to countenance abuse of rights as an order of the
day, doing violence to the long entrenched principle of
mutuality of contracts.
18. Grounds for abandonment of goods In overland
transportation, an unreasonable delay in the delivery of
transported goods is sufficient ground for the
abandonment of goods. By analogy, this can also apply
to maritime transportation. Further, MMMC can
properly abandon the goods, not only because of the
unreasonable delay in its delivery but because of the
option which was categorically granted to and exercised
by it as a means of settling its liability for the cost and
expenses of reshipment. Said choice having been duly
communicated, the same is binding upon the parties on
legal and equitable considerations of estoppel.
Samar Mining Co., Inc. v. Nordeutcher Lloyd, et al.,
132 SCRA 529 (1984)
FACTS:
Samar Mining Company, Inc. imported1 crate
of welded wedge wire sieves shipped
through Nordeutscher Lloyd
Bill of Lading No. 18:
transshipped at port of discharge: davao
Section 1, paragraph 3 of Bill of Lading No. 18
The carrier shall not be liable in any capacity
whatsoever for any delay, loss or damage occurring
before the goods enter ship's tackle to be loaded or
after the goods leave ship's tackle to be discharged,
transshipped or forwarded ...
Section 11:
Whenever the carrier or m aster may deem it
advisable or in any case where the goods are placed
 at carrier's disposal at or consigned to a point where
the ship does not expect to load or discharge, the
carrier or master may, without notice, forward the
whole or any part of the goods before or after loading at
the original port of shipment, ... This carrier, in making
arrangements for any transshipping or forwarding
vessels or means of transportation not operated by this
carrier shall be considered solely the forwarding agent
of the shipper and without any other responsibility
whatsoever even though the freight for the whole
transport has been collected by him. ... Pending or
during forwarding or transshipping the carrier may
store the goods ashore or afloat solely as agent of the
shipper and at risk and expense of the goods and the
carrier shall not be liable for detention nor responsible
for the acts, neglect, delay or failure to act of anyone to
whom the goods are entrusted or delivered for storage,
handling or any service incidental thereto
When the goods arrived in the port of Davao, it
was delivered in good order and condition to the
bonded warehouse of AMCYL but it was not delivered
and received by Samar Mining Company, Inc.
Samar filed a claim against Nordeutscher and C.F.
Sharp who brought in AMCYL as third party defendant
RTC: favored Samar
Nordeutscher and C.F. Sharp laible but may enforce
judgment against AMCYL
ISSUE: W/N the stipulations in bills of lading exempting
the carrier from liability for loss or damage to the goods
when the same are not in its actual custody is valid
HELD:
It is clear that in discharging the goods from the ship at the
port of Manila, and delivering the same into the custody of
AMCYL, the bonded warehouse, appellants were acting in
full accord with the contractual stipulations contained in
Bill of Lading No. 18. The delivery of the goods to AMCYL
was part of appellants' duty to transship (meaning to
transfer for further transportation from one ship or
conveyance to another) the goods from Manila to their
port of destination-Davao.
The extent of appellant carrier's responsibility and/or
liability in the transshipment of the goods in question are
spelled out and delineated under Section 1, paragraph 3 of
Bill of Lading No. 18, to wit: the carrier shall not be liable
in any capacity whatsoever for any delay, loss or damage
occurring before the goods enter ship's tackle to be loaded
or after the goods leave ship's tackle to be discharged,
transshipped or forwarded. Further, in Section 11 of the
same bill, it was provided that this carrier, in making
arrangements for any transshipping or forwarding vessels
or means of transportation not operated by this carrier
shall be considered solely the forwarding agent of the
shipper and without any other responsibility whatsoever
even though the freight for the whole transport has been
collected by him Pending or during forwarding or
transshipping the carrier may store the goods ashore or
afloat solely as agent of the shipper
We find merits in Nordeutschers contention that they
are not liable for the loss of the subject goods by
claiming that they have discharged the same in full and
good condition unto the custody of AMCYL at the port
of discharge from ship Manila, and therefore,
pursuant to the aforequoted stipulation (Sec. 11) in the
bill of lading, their responsibility for the cargo had
ceased.The validity of stipulations in bills of lading
exempting the carrier from liability for loss or damage
to the goods when the same are not in its actual
custody has been upheld by Us in PHOENIX
ASSURANCE CO., LTD. vs. UNITED STATES LINES,
22 SCRA 674 (1968), ruling that pursuant to the terms
of the Bill of Lading, appellee's responsibility as a
common carrier ceased the moment the goods were
unloaded in Manila and in the matter of
transshipment, appellee acted merely as an agent of the
shipper and consignee
In the present case, by the authority of the above
pronouncements, and in conformity with the pertinent
provisions of the Civil Code, Section 11 of Bill of Lading
No. 18 and the third paragraph of Section 1 thereof are
valid stipulations between the parties insofar as they
exempt the carrier from liability for loss or damage to
the goods while the same are not in the latter's actual
custody.
Acareful perusal of the provisions of the New Civil Code
on common carriers directs our attention to Article
1736, which reads: The extraordinary responsibility of
the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier
to the consignee, or to the person who has a right to
receive them, without prejudice to the provisions of
article 1738. In relation to this, Article 1738 provides:
the extraordinary liability of the common carrier
continues to be operative even during the time the
goods are stored in a warehouse of the carrier at the
place of destination, until the consignee has been
advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove them or
otherwise dispose of them.
Art. 1738 finds no applicability to the instant case. The
said article contemplates a situation where the goods
had already reached their place of destination and are
stored in the warehouse of the carrier. The subject
goods were still awaiting transshipment to their port of
destination, and were stored in the warehouse of a
third party when last seen and/or heard of. However,
Article 1736 is applicable to the instant suit. Under said
article, the carrier may be relieved of the responsibility
for loss or damage to the goods upon actual or
constructive delivery of the same by the carrier to the
consignee, or to the person who has a right to receive
them. There is actual delivery in contracts for the transport
of goods when possession has been turned over to the
consignee or to his duly authorized agent and a reasonable
time is given him to remove the goods. In the present case,
there was actual delivery to the consignee through its duly
authorized agent, the carrier.
Lastly, two undertakings are embodied in the bill of lading:
the transport of goods from Germany to Manila, and the
transshipment of the same goods from Manila to Davao,
with Samar Mining acting as the agent of the consignee.
The moment the subject goods are discharged in Manila,
Samar Minings personality changes from that of carrier to
that of agent of the consignee. Such being the case, there
was, in effect, actual delivery of the goods from appellant
as carrier to the same appellant as agent of the consignee.
Upon such delivery, the appellant, as erstwhile carrier,
ceases to be responsible for any loss or damage that may
befall the goods from that point onwards. This is the full
import of Article 1736.
But even as agent of the consignee, the appellant cannot be
made answerable for the value of the missing goods. It is
true that the transshipment of the goods, which was the
object of the agency, was not fully performed. However,
appellant had commenced said performance, the
completion of which was aborted by circumstances beyond
its control. An agent who carries out the orders and
instructions of the principal without being guilty of
negligence, deceit or fraud, cannot be held responsible for
the failure of the principal to accomplish the object of the
agency.
Contract: Contract of Adhesion
Sweet Lines, Inc. v. Teves, 83 SCRA 361 (1978)
NATURE OF THE CASE: This case was elevated to the
SC to restrain the CFI of Misamis Oriental to proceed in
the complaint filed by Tandog and Tiro against Sweet
Lines on the ground that the venue was improperly laid.
FACTS:
Sweet Lines is a shipping company which transports
inter-island passengers and cargoes at Cagayan de Oro
City. Rogelio Tiro, a contractor, and Atty. Leovigildo
Tandog bought tickets from Sweet Lines and were bound
to Bohol. When they were about to board M/S Sweet
Hope which was bound for Tagbilaran City via the port of
Cebu, they were informed that the vessel will not proceed
to Bohol because most of the passengers were bound to
Surigao. They were advised to relocate and board to M/S
Sweet Town. However, the said vessel was already full
and they were forced to agree to hide at the cargo section
to avoid inspection of the officers of the Philippine
Coastguard." Private respondents alleged that they were,
during the trip," "exposed to the scorching heat of the sun
and the dust coming from the ship's cargo of corn grits.
Further, the tickets they bought at Cagayan de Oro City for
Tagbilaran were not honored and they were constrained to
pay for other tickets. Thus, Tandog and Tiro filed a
complaint against Sweet Lines for damages and breach of
contract of carriage in the CFI of Misamis Oriental
(Cagayan de Oro is the capital of Misamis Oriental).
SWEET LINES: It moved to dismiss the complaint on
the ground of improper venue. This was based on the
condition printed at the back of the tickets purchased
by Tandog and Tiro which reads:
14. It is hereby agreed and understood that any and all
actions arising out of the conditions and provisions of
this ticket, irrespective of where it is issued, shall be
filed in the competent courts in the City of Cebu.
CFI: Denied the motion to dismiss.
Sweet Lines: Motion for Reconsideration.
CFI: Denied the motion for reconsideration.
---Hence, this petition.
ISSUE: WON a common carrier engaged in inter-
island shipping may stipulate thru condition printed at
the back of passage tickets to its vessels that any and all
actions arising out of the contract of carriage should be
filed only in a particular province or city, in this case
the City of Cebu, to the exclusion of all others.
WON the venue of the action should be in the City of
Cebu as stipulated by the condition in the ticket bought
by Tandog and Tiro.
SWEET LINES: The condition is valid and
enforceable since Tandog and Tiro acceded to it when
they purchased the tickets at its Cagayan de Oro branch
office and took its vessel M/S "Sweet Town" for passage
to Tagbilaran, Bohol. Moreover, venue may be validly
waived and it is clear that the ticket stipulates that the
condition had fixed the venue in the City of Cebu. Thus,
the orders of the CFI Judge are an unwarranted
departure from established jurisprudence governing
the case; and that he acted without or in excess of his
jurisdiction in is the orders complained of.
TANDOG AND TIRO: The condition in the ticket is
not valid as it is not an essential element of the contract
of carriage, being in itself a different agreement which
requires the mutual consent of the parties to it. Tandog
and Tiro had no say in its preparation, the existence of
which they could not refuse, hence, they had no choice
but to pay for the tickets and to avail of petitioner's
shipping facilities out of necessity. Further, the carrier
"has been exacting too much from the public by
inserting impositions in the passage tickets too
burdensome to bear," and the condition which was
printed in fine letters is an imposition on the riding
public and does not bind respondents. Lastly, while
venue of actions may be transferred from one province
to another, such arrangement requires the "written
agreement of the parties", not to be imposed
unilaterally; and that assuming that the condition is
valid, it is not exclusive and does not, therefore,
exclude the filing of the action in Misamis Oriental.
HELD: No, the actuations of Sweet Lines (putting a
condition at the back of its tickets fixing the venue for
any complaints filed against them in the City of Cebu)
is contrary to public policy. Thus, the venue was not
improperly laid in the CFI of Misamis Oriental.
There is no question that there was a valid contract of
carriage entered into by petitioner and private
respondents and that the passage tickets, upon which the
latter based their complaint, are the best evidence thereof.
All the essential elements of a valid contract, i.e., consent,
cause or consideration and object, are present.
However, with respect to the condition which is in issue in
this case printed at the back of the passage tickets, these
are commonly known as "contracts of adhesion," the
validity and/or enforceability of which will have to be
determined by the peculiar circumstances obtaining in
each case and the nature of the conditions or terms sought
to be enforced. For, "(W)hile generally, stipulations in a
contract come about after deliberate drafting by the parties
thereto, ... there are certain contracts almost all the
provisions of which have been drafted only by one party,
usually a corporation. Such contracts are called contracts
of adhesion, because the only participation of the party is
the signing of his signature or his 'adhesion' thereto.
Insurance contracts, bills of lading, contracts of make of
lots on the installment plan fall into this category"
By the peculiar circumstances under which contracts of
adhesion are entered into namely, that it is drafted only
by one party, usually the corporation, and is sought to be
accepted or adhered to by the other party, in this instance
the passengers, private respondents, who cannot change
the same and who are thus made to adhere thereto on the
"take it or leave it" basis certain guidelines in the
determination of their validity and/or enforceability have
been formulated in order to that justice and fair play
characterize the relationship of the contracting parties.
To the same effect and import, and, in recognition of the
character of contracts of this kind, the protection of the
disadvantaged is expressly enjoined in Art. 24 of the New
Civil Code
In all contractual property or other relations, when one of
the parties is at a disadvantage on account of his moral
dependence, ignorance indigence, mental weakness,
tender age and other handicap, the courts must be vigilant
for his
protection.
Considered in the light Of the foregoing norms and in the
context of circumstances prevailing in the inter-island
shipping industry in the country today, the SC declared the
condition at the back of the passage to be void and
unenforceable. First, under circumstances obligation in
the inter-island shipping industry, it is not just and fair to
bind passengers to the terms of the conditions printed at
the back of the passage tickets. Second, the condition
subverts the public policy on transfer of venue of
proceedings of this nature, since the same will prejudice
rights and interests of innumerable passengers in different
s of the country who, under the said condition, will have to
file suits against petitioner only in the City of Cebu.
Moreover, it is hardly just and proper to expect the
passengers to examine their tickets received from
crowded/congested counters, more often than not during
rush hours, for conditions that may be printed much
charge them with having consented to the conditions, so
printed, especially if there are a number of such conditions
m fine print, as in this case. Thus, passengers cannot be
expected to read all the conditions much less consider
the public policies that the conditions therein violate.
Additionally, although venue may be changed or
transferred from one province to another by agreement
of the parties in writing t to Rule 4, Section 3, of the
Rules of Court, such an agreement will not be held
valid where it practically negates the action of the
claimants, such as the private respondents herein. The
philosophy underlying the provisions on transfer of
venue of actions is the convenience of the plaintiffs as
well as his witnesses and to promote the ends of justice.
Considering the expense and trouble a passenger
residing outside of Cebu City would incur to prosecute
a claim in the City of Cebu, he would most probably
decide not to file the action at all. The condition will
thus defeat, instead of enhance, the ends of justice.
Upon the other hand, petitioner has branches or offices
in the respective ports of call of its vessels and can
afford to litigate in any of these places. Hence, the filing
of the suit in the CFI of Misamis Oriental, as was done
in the instant case, will not cause inconvenience to,
much less prejudice, petitioner.
Public policy is ". . . that principle of the law which
holds that no subject or citizen can lawfully do that
which has a tendency to be injurious to the public or
against the public good ... 22 Under this principle" ...
freedom of contract or private dealing is restricted by
law for the good of the public. Clearly, the subject
condition, if enforced, will be subversive of the public
good or interest, since it will frustrate in meritorious
cases, actions of passenger cants outside of Cebu City,
thus placing petitioner company at a decided advantage
over said persons, who may have perfectly legitimate
claims against it. The said condition should, therefore,
be declared void and unenforceable, as contrary to
public policy to make the courts accessible to all who
may have need of their services. Thus, PETITION IS
DENIED.
Servando v. Philippine Steam Navigation Co., 117
SCRA 832 (1982)
Facts:
1. Clara UyBico and AmparoServando loaded on
board a vessel of Philippine Steam Navigation Co. for
carriage from Manila to Negros Occidental 1,528
cavans of rice and 44 cartons of colored paper, toys and
general merchandise.
2. The contract of carriage of cargo was evidenced by
a Bill of Lading (B/L). There was a stipulation limiting
the responsibility of the carrier for loss or damage that
may be caused to the shipment
a. carrier shall not be responsible for loss or
damage to shipments billed owners risk unless such
loss or damage is due to the negligence of the carrier.
Nor shall the carrier be responsible for loss or
damage caused by force majeure, dangers or accidents
of the sea, war, public enemies, fire.
3. Upon arrival of the vessel at its destination, the
cargoes were discharged in good condition and placed
inside the warehouse of the Bureau of Customs.
4. UyBico was able to take delivery of 907 cavans of rice.
5. Unfortunately, the warehouse was razed by fire of
unknown origin later that same day destroying the
remaining cargoes.
6. UyBico and Servando filed a claim for the value of the
goods against the carrier.
7. The lower court ruled in their favor. It held that the
delivery of the shipment to the warehouse is not the
delivery contemplated by Art. 1736 of the CC. And since
the burning of the warehouse occurred prior to the actual
or constructive delivery of the goods, the loss is chargeable
against the vessel.
Issue:Whether or not the carrier is liable for the loss of the
goods.
Held:No.
1. Article 1736 of the CC imposes upon common carriers
the duty to observe extraordinary diligence from the
moment the goods are unconditionally placed in their
possession "until the same are delivered, actually or
constructively, by the carrier to the consignee or to the
person who has a right to receive them, without prejudice
to the provisions of Article 1738. The court a quo held that
the delivery of the shipment in question to the warehouse
of the Bureau of Customs is not the delivery contemplated
by Article 1736; and since the burning of the warehouse
occurred before actual or constructive delivery of the
goods to the appellees, the loss is chargeable against the
appellant.
2. It should be pointed out, however, that in the bills of
lading issued for the cargoes in question, the parties
agreed to limit the responsibility of the carrier. The
stipulation is valid not being contrary to law, morals or
public policy.
3. The petitioners however, contend that the stipulation
does not bind them since it was printed at the back of the
B/L and that they did not sign the same. However, as the
Court held in OngYiu vs. CA, while it may be true that a
passenger had not signed the plane ticket, he is
nevertheless bound by the provisions thereof. Such
provisions have been held to be a part of the contract of
carriage, and valid and binding upon the passenger
regardless of the latter's lack of knowledge or assent to the
regulation.
4. Also, where fortuitous event is the immediate and
proximate cause of the loss, the obligor is exempt from
liability for non-performance.In the case at bar, the
burning of the customs warehouse was an extraordinary
event which happened independently of the will of the
appellant. The latter could not have foreseen the event.
5. There is nothing in the record to show that the
carrier incurred in delay in the performance of its
obligation. It appears that it had not only notified
UyBico and Servando of the arrival of their shipment,
but had demanded that the same be withdrawn. In fact,
pursuant to such demand, UyBico had taken delivery of
907 cavans of rice before the burning of the warehouse.
6. Nor can the carrier or its employees be charged
with negligence. The storage of the goods in the
Customs warehouse pending withdrawal thereof by
UyBico and Servando was undoubtedly made with their
knowledge and consent. Since the warehouse belonged
to and was maintained by the government, it would be
unfair to impute negligence to the carrier, the latter
having no control whatsoever over the same.
Stipulations
Civil Code
Art. 1745. Any of the following or similar stipulations
shall be considered unreasonable, unjust and contrary
to public policy: (1) That the goods are transported at
the risk of the owner or shipper;
(2) That the common carrier will not be liable for any
loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any
diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of
diligence less than that of a good father of a family, or
of a man of ordinary prudence in the vigilance over the
movables transported;
(5) That the common carrier shall not be responsible
for the acts or omission of his or its employees;
(6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is
dispensed with or diminished;
(7) That the common carrier is not responsible for the
loss, destruction, or deterioration of goods on account
of the defective condition of the car, vehicle, ship,
airplane or other equipment used in the contract of
carriage.
Art. 1746. An agreement limiting the common carrier's
liability may be annulled by the shipper or owner if the
common carrier refused to carry the goods unless the
former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause,
delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the
common carrier's liability cannot be availed of in case
of the loss, destruction, or deterioration of the goods.
Art. 1748. An agreement limiting the common carrier's
liability for delay on account of strikes or riots is valid.
Art. 1749. A stipulation that the common carrier's
liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a
greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered.
by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and
just under the circumstances, and has been fairly and
freely agreed upon.
Art. 1751. The fact that the common carrier has no
competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into consideration
on the question of whether or not a stipulation limiting the
common carrier's liability is reasonable, just and in
consonance with public policy.
Art. 1752. Even when there is an agreement limiting the
liability of the common carrier in the vigilance over the
goods, the common carrier is disputably presumed to have
been negligent in case of their loss, destruction or
deterioration.
Art. 1757. The responsibility of a common carrier for the
safety of passengers as required in Articles 1733 and 1755
cannot be dispensed with or lessened by stipulation, by the
posting of notices, by statements on tickets, or otherwise.
Code of Commerce 706-718
ARTICLE 350. The shipper as well as the carrier of
merchandise or goods may mutually demand that a bill of
lading be made, stating:
1. The name, surname and residence of the shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the person to
whom or to whose order the goods are to be sent or
whether they are to be delivered to the bearer of said bill.
4. The description of the goods, with a statement of their
kind, of their weight, and of the external marks or signs of
the packages in which they are contained.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the
consignee shall be made.
9. The indemnity to be paid by the carrier in case of
delay, if there should be any agreement on this matter.
ARTICLE 351. In transportation made by railroads or
other enterprises subject to regulation rate and time
schedules, it shall be sufficient for the bills of lading or the
declaration of shipment furnished by the shipper to refer,
with respect to the cost, time and special conditions of the
carriage, to the schedules and regulations the application
of which he requests; and if the shipper does not
determine the schedule, the carrier must apply the rate of
those which appear to be the lowest, with the
conditions inherent thereto, always including a
statement or reference to in the bill of lading which he
delivers to the shipper.
ARTICLE 352. The bills of lading, or tickets in cases
of transportation of passengers, may be diverse, some
for persons and others for baggage; but all of them
shall bear the name of the carrier, the date of shipment,
the points of departure and arrival, the cost, and, with
respect to the baggage, the number and weight of the
packages, with such other manifestations which may be
considered necessary for their easy identification.
ARTICLE 706. The captain of the vessel and the
shipper shall have the obligation of drawing up the bill
of lading in which shall be stated: 1. The name, registry,
and tonnage of the vessel. 2. The name of the captain
and his domicile. 3. The port of loading and that of
unloading. 4. The name of the shipper. 5. The name of
the consignee, if the bill of lading is issued in the name
of a specified person. 6. The quantity, quality, number
of packages and marks of the merchandise. 7. The
freightage and the primage stipulated. The bill of lading
may be issued to bearer, to order, or in the name of a
specified person, and must be signed within twenty-
four hours after the cargo has been received on board,
the shipper being entitled to demand the unloading at
the expense of the captain should the latter not sign it,
and, in every case, the losses and damages suffered
thereby. cdasia ARTICLE 707. Four true copies of the
original bill of lading shall be made, and all of them
shall be signed by the captain and the shipper. Of these,
the shipper shall keep one and send another to the
consignee; the captain shall take two, one for himself
and another for the ship agent. There may also be
drawn up as many copies of the bill of lading as may be
considered necessary by the person interested; but
when they are issued to order or to bearer, they shall be
stated in all the copies, be they the first four or the
subsequent ones, the destination of each one, stating
whether it is for the agent, for the captain, for the
shipper, or for the consignee. If the copy sent to the
latter should have a duplicate, this circumstance and
the fact that it is not valid except in default of the first
one must be stated therein. ARTICLE 708. Bills of
lading issued to bearer and sent to the consignee shall
be transferable by actual delivery of the instrument;
and those issued to order, by virtue of an indorsement.
In either case, the person to whom the bill of lading is
transferred shall acquire all the rights and actions of
the transferor or indorser with regard to the
merchandise mentioned in the same. ARTICLE 709. A
bill of lading drawn up in accordance with the
provisions of this title shall be proof as between all
those interested in the cargo and between the latter and
the insurers, proof to the contrary being reserved for
the latter. ARTICLE 710. If the bills of lading do not
agree, and no change or erasure can be observed in any
of them, those possessed by the shipper or consignee
signed by the captain shall be proof against the captain
or ship agent in favor of the consignee or shipper; and
those possessed by the captain or ship agent signed by the
shipper shall be proof against the shipper or consignee in
favor of the captain or ship agent. ARTICLE 711. The
legitimate holder of a bill of lading who fails to present it
to the captain of the vessel before the unloading obliging
the latter thereby to unload it and place it in deposit, shall
be responsible for the expenses of warehousing and other
expenses arising therefrom. ARTICLE 712. The captain
may not by himself change the destination of the
merchandise. In admitting this change at the instance of
the shipper, he must first take up the bill of lading which
he may have issued, under pain of being liable for the
cargo to the legitimate holder of the same. ARTICLE 713. If
before the delivery of the cargo a new bill of lading should
be demanded of the captain, on the allegation that the
failure to present the previous ones is due to their loss or
to any other just cause, he shall be obliged to issue it,
provided that security for the value of the cargo is given to
his satisfaction, but without changing the consignment,
and stating therein the circumstances prescribed in the
last paragraph of Article 707, under penalty, should he not
so state, of being held liable for said cargo if improperly
delivered through his fault. ARTICLE 714. If before the
vessel puts to sea the captain should die or should cease to
hold his position through any cause, the shippers shall
have the right to demand of the new captain the
ratification of the first bills of lading, and the latter must
do so, provided that all the copies previously issued be
presented or returned to him, and it should appear from
all examination of the cargo that they are correct. The
expenses arising from the examination of the cargo shall
be defrayed by the ship agent, without prejudice to the
right of action of the latter against the first captain if he
ceased to be such through his own fault. Should said
examination not be made, it shall be understood that the
new captain accepts the cargo as it appears from the bills
of lading issued. ARTICLE 715. Bills of lading will give rise
to a most summary action or to judicial, compulsion
("accion sumarisima o de apremios"), according to the
case, for the delivery of the cargo and the payment of the
freightage and the expenses thereby incurred. ARTICLE
716. If several persons should present bills of lading issued
to bearer or to order, indorsed in their favor, demanding
the same merchandise, the captain shall prefer, in making
delivery the person who presents the copy first issued,
except when the latter one was issued on proof of the loss
of the first, and both are presented by different persons. In
such case, as well as when only second subsequent copies,
issued without this proof, are presented, the captain shall
apply to the judge or court, so that he may order the
deposit of the merchandise and their delivery, through
him, to the proper person. ARTICLE 717. The delivery of
the bill of lading shall effect the cancellation of all the
provisional receipts of prior date given by the captain or
his subordinates for partial deliveries of the cargo which
may have been made. ARTICLE 718. After the cargo has
been delivered the bill of lading which the captain signed,
or at least the copy by reason of which the delivery is
made, shall be returned to him, with the receipt for the
merchandise mentioned therein. The delay on the part
of the consignee shall make him liable for the damages
which such delay may cause the captain.
Carriage of Goods by Sea Act
RESPONSIBILITIES AND LIABILITIES
Sec. 3. (1) The carrier shall be bound before and at the
beginning of the voyage to exercise due diligence to
(a) Make the ship seaworthy;
(b) Properly man,equip, and supply the ship;
(c) Make the holds, refrigerating and cooling
chambers, and all other parts of the ship in which
goods are carried, fit and safe for their reception,
carriage, and preservation.
(2) The carrier shall properly and carefully load,
handle, stow, carry, keep, care for,and discharge the
goods carried.
(3) After receiving the goods into his carrier, or the
master or agent of the carrier, shall, on demand of the
shipper, issue to the shipper a bill of lading showing
among other things chanrobles virtual law library
(a) The loading marks necessary for identification of
the goods as the same are furnished in writing by the
shipper before the loading of such goods starts,
provided such marksare stamped or otherwise shown
clearly upon the goods if uncovered,in such a manner
as should ordinarily remain legible until the end of the
voyage. chanrobles virtual law library
(b) Either the number of packages or pieces, or the
quantity or weight, as the casemay be, as furnished in
writing by the shipper.
(c) The apparent order and conditions of the goods:
Provided, that no carrier, master, or agent of the
carrier, shall be bound to state or show in the bill of
lading any marks, number, quantity, or weight which
he has reasonable ground for suspecting not accurately
to represent the good actually received or which he has
had no reasonable means of checking. chanrobles
virtual law library
(4) Such a bill of lading shall be prima facie evidence of
the receipt by the carrier of the goods as therein
described in accordance with paragraphs (3) (a), (b),
and (c), of this section: (The rest of the provision is not
applicable to the Philippines).
(5) The shipper shall be deemed to have guaranteed to
the carrier the accuracy at the time of shipment of the
marks, number, quantity, and weight, as furnished by
him; and the shipper shall indemnify the carrier
against all loss, damages, and expenses arising or
resulting from inaccuracies in such particulars. The
right of the carrier to such indemnity shall in no way
limit his responsibility and liability under the contract
of carriage to any person other than the
shipper. chanrobles virtual law library
(6) Unless notice or loss or damage and the general
nature of such loss or damage by given in writing to the
carrier or his agent at the port of discharge or at the
time of the removal of the goods into the custody of the
person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of the
delivery by the carrier of the goods as described in the bill
of lading. If the loss or damage is not apparent, the notice
must be given within three days of the delivery. chanrobles
virtual law library
Said notice of loss or damage may be endorsed upon the
receipt for the goods given by the person taking delivery
thereof.
The notice in writing need not be given if the state of the
goods has at the time of their receipt been the subject of
joint survey or inspection.
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:
Provided, that, if a notice of loss or damage, either
apparent or concealed, is not given as provided for in this
section, that fact shall not affect or prejudice the right of
the shipper to bring suit within one year after the delivery
of the goods or the date when the goods should have been
delivered.
In the case of any actual or apprehended loss or damage,
the carrier and the receiver shall give all reasonable
facilities to each other for inspecting and tallying the
goods.chanrobles virtual law library
(7) After the goods are loaded the bill of lading to be
issued by the carrier, master, or agent of the carrier to the
shipper shall if the shipper so demands, be a "shipped" bill
of lading: Provided, that if the shipper shall have
previously taken up any document of title to such goods,
he shall surrender the same as against the issue of the
"shipped" bill of lading, but at the option of the carrier
such document of title may be noted at the port of
shipment by the carrier, master, or agent with the name or
names of the ship or ships upon which the goods have
been shipped and the date or dates of shipment, and when
so noted the same shall for the purpose of this section be
deemed to constitute a "shipped" bill of lading.
(8) Any clause, covenant, or agreement in a contract of
carriage relieving the carrier of the ship from liability for
loss or damage to or in connection with the goods, arising
from negligence, fault, or failure in the duties and
obligations provide in this section or lessening such
liability otherwise than as provided in this Act, shall be
null and void and of no effect. A benefit of insurance in
favor of the carrier, or similar clause, shall be deemed to
be a clause relieving the carrier from liability.
RIGHTS AND IMMUNITIES
Sec. 4. (1) Neither the carrier nor the ship shall be liable
for loss or damage arising or resulting from
unseaworthiness unless caused by want of due diligence on
the part of the carrier to make the ship seaworthy and to
secure that the ship is properly manned, equipped, and
supplied, and to make the holds, refrigerating and cooling
chambers, and all other parts of the ship in which goods
are carried fit and safe for their reception, carriage, and
preservation, in accordance with the provisions of
paragraph (1) of Section (3). Whenever loss or damage
has resulted from unseaworthiness, the burden of
proving the exercise of due diligence shall be on the
carrier or other person claiming exemption under this
section. chanrobles virtual law library
(2) Neither the carrier nor the ship shall be responsible
for loss or damage arising or resulting from
(a) Act, neglect, or default of the master, mariner,
pilot, or the servants of the carrier in the navigation or
in the management of the ship;
(b) Fire, unless caused by the actual fault or privity of
the carrier; chanrobles virtual law library
(c) Perils, dangers, and accidents of the sea or other
navigable water; chanrobles virtual law library
(d) Act of God; chanrobles virtual law library
(e) Act of war; chanrobles virtual law library
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or
seizure under legal process;
(h) Quarantine restrictions; chanrobles virtual law
library
(i) Act or omission of the shipper or owner of the
goods, his agent or representative;chanrobles virtual
law library
(j) Strikes or lockouts or stoppage or restraint of labor
from whatever cause, whether partial or general:
Provided, that nothing herein contained shall be
construed to relieve a carrier from responsibility for the
carrier's own acts; chanrobles virtual law library
(k) Riotsand civil commotions; chanrobles virtual law
library
(l) Saving or attempting to save life or property at
sea; chanrobles virtual law library
(m) Wastage in bulk or weight or any other loss or
damage arising from inherent defect, quality, or vice of
the goods;
(n) Insufficiency or packing;
(o) Insufficiency or inadequacy of marks; chanrobles
virtual law library
(p) Latent defects not discoverable by due diligence;
and chanrobles virtual law library
(q) Any other cause arising without the actual fault and
privity of the carrier and without the fault or neglect of
the agents or servants of the carrier, but the burden of
proof shall be on the person claiming the benefit of this
exception to show that neither the actual fault or privity
of the carrier nor the fault or neglect of the agents or
servants of the carrier contributed to the loss or
damage.
(3) The shipper shall not be responsible for loss or
damage sustained by the carrier or the ship arising or
resulting from any cause without the act, or neglect of
the shipper, his agents, or his servants. chanrobles
virtual law library
(4) Any deviation in saving or attempting to save life or
property at sea, or any reasonable deviation shall not
be deemed to be an infringement or breach or this Act or
of the contract of carriage, and carrier shall not be liable
for any loss or damage resulting therefrom: Provided,
however, that if the deviation is for the purpose of loading
or unloading cargo or passengers it shall, prima facie, be
regarded as unreasonable. chanrobles virtual law library
(5) Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection
with the transportation of goods in an amount exceeding
$500 per package of lawful money of the United States, or
in case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other
currency, unless the nature and value of such goods have
been declared by the shipper before shipment and inserted
in the bill of lading. This declaration, if embodied in the
bill of lading, shall be prima facie evidence, but shall not
be conclusive on the carrier. chanrobles virtual law library
By agreement between the carrier, master or agent of the
carrier, and the shipper another maximum amount than
that mentioned in this paragraph may be fixed: Provided,
that such maximum shall not be less than the figure above
named. In no event shall the carrier be liable for more than
the amount of damage actually sustained.chanrobles
virtual law library
Neither the carrier nor the ship shall be responsible in any
event for loss damage to or in connection with the
transportation of the goods if the nature or value thereof
has been knowingly and fraudulently misstated by the
shipper in the bill of lading. chanrobles virtual law library
(6) Goods of an inflammable, explosive, or dangerous
nature to the shipment whereof, the carrier, master or
agent of the carrier, has not consented with knowledge of
their nature and character, may at any time before
discharge be landed at any place or destroyed or rendered
innocuous by the carrier without compensation, and the
shipper of such goods shall be liable for all damages and
expenses directly or indirectly arising out of or resulting
from such shipment. If any such goods shipped with such
knowledge and consent shall become a danger to the ship
or cargo, they may in like manner be landed at any place,
or destroyed or rendered innocuous by the carrier without
liability on the part of the carrier except to general average
if any. cha
Warsaw Convention on Air Transport
LIABILITY OF THE CARRIER
Article 17 The carrier is liable for damage sustained in the
event of the death or wounding of a passenger or any other
bodily injury suffered by a passenger, if the accident which
caused the damage so sustained took place on board the
aircraft or in the course of any of the operations of
embarking or disembarking.
Article 18 1. The carrier is liable for damage sustained in
the event of the destruction or loss of, or of damage to, any
registered luggage or any goods, if the occurrence which
caused the damage so sustained took place during the
carriage by air. 2. The carriage by air within the meaning
of the preceding paragraph comprises the period during
which the luggage or goods are in charge of the carrier,
whether in an aerodrome or on board an aircraft, or, in
the case of a landing outside an aerodrome, in any
place whatsoever. 3. The period of the carriage by air
does not extend to any carriage by land, by sea or by
river performed outside an aerodrome. If, however,
such a carriage takes place in the performance of a
contract for carriage by air, for the purpose of loading,
delivery or transshipment, any damage is presumed,
subject to proof to the contrary, to have been the result
of an event which took place during the carriage by air.
Article 19 The carrier is liable for damage occasioned by
delay in the carriage by air of passengers, luggage or
goods.
Article 22 1. In the carriage of passengers the liability of
the carrier for each passenger is limited to the sum of
125,000 francs. Where, in accordance with the law of
the Court seised of the case, damages may be awarded
in the form of periodical payments, the equivalent
capital value of the said payments shall not exceed
125,000 francs. Nevertheless, by special contract, the
carrier and the passenger may agree to a higher limit of
liability. 2. In the carriage of registered luggage and of
goods, the liability of the carrier is limited to a sum of
250 francs per kilogram, unless the consignor has
made, at the time when the package was handed over
to the carrier, a special declaration of the value at
delivery and has paid a supplementary sum if the case
so requires. In that case the carrier will be liable to pay
a sum not exceeding the declared sum, unless he
proves that that sum is greater than the actual value to
the consignor at delivery. 3. As regards objects of which
the passenger takes charge himself the liability of the
carrier is limited to 5,000 francs per passenger. 4. The
sums mentioned above shall be deemed to refer to the
French franc consisting of 65 milligrams gold of
millesimal fineness 900. These sums may be converted
into any national currency in round figures.
Article 24 1. In the cases covered by Articles 18 and 19
any action for damages, however founded, can only be
brought subject to the conditions and limits set out in
this Convention. 2. In the cases covered by Article 17
the provisions of the preceding paragraph also apply,
without prejudice to the questions as to who are the
persons who have the right to bring suit and what are
their respective rights.
H.E. Heacock Co. v. Macondray & Company, Inc., 42
Phil 205 (1921)
Shipper: HE Heacock Co. (plaintiff and appellant)
Common Carrier: Macondray & Co. (defendant and
appellant)
Goods: four cases of merchandise, one of which
contained twelve (12) 8-day Edmond Clocks, properly
boxed
Destination: New York to Manila
Condition: No delivery of one case which contained
twelve (12) 8-day Edmond Clock
Facts:
Plaintiff Heacock caused to deliver the four
cases of merchandise on board in the steamship Bolton
Castle. In which one of which contained twelve (12) 8-day
Edmond Clocks.
When the vessel arrived in the port of Manila,
neither the master of the vessel nor the defendant, as its
agent, delivered to the plaintiff the one case of
merchandise which contained twelve (12) 8-day Edmond
Clocks,
Lower Court: in favor of Plaintiff; Ruled in
accordance with clause 9 of the Bill of Lading; defendant is
ordered to pay P226.02, this being the invoice value of the
clocks in question plus freight and insurance, with legal
interest
Both parties appealed
Other important facts of the case:
1. the market value of the merchandise in city of New
York was P22 and in the Manila was P420.
2. The bill of lading issued and delivered to the
plaintiff by the master of the said steamship Bolton Castle
contained, among others, the following clauses:
1. It is mutually agreed that the value of the goods
receipted for above does not exceed $500 per freight ton,
or, in proportion for any part of a ton, unless the value be
expressly stated herein and ad valorem freight paid
thereon.
9. Also, that in the event of claims for short delivery of, or
damage to, cargo being made, the carrier shall not be liable
for more than the net invoice price plus freight and
insurance less all charges saved, and any loss or damage
for which the carrier may be liable shall be adjusted pro
rata on the said basis.
3. The case containing the aforesaid twelve 8-day
Edmond clocks measured 3 cubic feet, and the freight ton
value thereof was $1,480, U. S. currency.
4. No greater value than $500, U. S. currency, per
freight ton was declared by the plaintiff on the aforesaid
clocks, and no ad valorem freight was paid thereon.
On or about October 9, 1919, the defendant tendered to the
plaintiff P76.36, the proportionate freight ton value of the
aforesaid twelve 8-day Edmond clocks, in payment of
plaintiff's claim, which tender plaintiff rejected.
Issue: May a Common Carrier, by stipulations
inserted in the bill of lading, limit its liability for
the loss of or damage to the cargo to an agreed
valuation of the latter Yes.
Contentions of the parties:
1. The plaintiff-appellant insists that it is entitled to
recover from the defendant the market value of the clocks
in question, to wit: the sum of P420. The defendant-
appellant, on the other hand, contends that, in accordance
with clause 1 of the bill of lading, the plaintiff is entitled to
recover only the sum of P76.36, the proportionate freight
ton value of the said clocks.
2. The claim of the plaintiff is based upon the
argument that the two clause in the bill of lading above
quoted, limiting the liability of the carrier, are contrary to
public order and, therefore, null and void. The defendant,
on the other hand, contends that both of said clauses
are valid, and the clause 1 should have been applied by
the lower court instead of clause 9.
Held:
1. Contents of the Bill of Lading (see clause
1 and clause 9)
2. Three kinds of stipulations often found
in a bill of lading
Three kinds of stipulations have often
been made in a bill of lading. The first is one
exempting the carrier from any and all liability for loss
or damage occasioned by its own negligence. The
second is one
providing for an unqualified limitation of such liability
to an agreed valuation. And the third is one limiting the
liability of the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate
of freight.
According to an almost uniform weight of
authority, the first and second kinds of
stipulations are invalid as being contrary to
public policy, but the third is valid and
enforceable.
3. Authorities supporting invalidity of
absolute exemption from liability and
unqualified limitation to an agreed valuation
The Harter Act (Act of Congress of 13 February 1893),
Louisville Ry. Co. vs. Wynn (88 Tenn., 320), and Galt
vs. Adams Express Co. (4 McAr., 124; 48 Am. Rep.,
742) support the proposition that the first and second
stipulations in a bill of lading are invalid which either
exempt the carrier from liability for loss or damage
occasioned by its negligences or provide for an
unqualified limitation of such liability to an agreed
valuation.
4. Hart vs. Pennsylvania RR Co.
In the case of Hart vs. Pennsylvania R. R. Co., it was
held that where a contract of carriage, signed by the
shipper, is fairly made with a railroad company,
agreeing on a valuation of the property carried, with
the rate of freight based on the condition that the
carrier assumes liability only to the extent of the agreed
valuation, even in case of loss or damage by the
negligence of the carrier, the contract will be upheld as
proper and lawful mode of recurring a due proportion
between the amount for which the carrier may be
responsible and the freight he receives, and protecting
himself against extravagant and fanciful valuations.
5. Union Pacific Railway Co. vs. Burke
In the case of Union Pacific Railway Co. vs. Burke, the
court said: it has been declared to be the settled Federal
law that if a common carrier gives to a shipper the
choice of two rates, the lower of them conditioned upon
his agreeing to a stipulated valuation of his property in
case of loss, even by the carriers negligence, if the
shipper makes such a choice, understandingly and freely,
and names his valuation, he cannot thereafter recover
more than the value which he thus places upon his
property As a matter of legal distinction, estoppel is made
the basis of this ruling, that, having accepted the benefit
of the lower rate, in common honesty the shipper may not
repudiate the conditions on which it was obtained, but
the rule and the effect of it are clearly established.
6. Limited Liability of a Carrier, based upon
an agreed value, not contrary to public policy
A carrier may not, by a valuation agreement with a
shipper, limit its liability in case of the loss by negligence
of an interstate shipment to less than the real value
thereof, unless the shipper is given a choice of
rates, based on valuation.
A limitation of liability based upon an agreed value
to obtain a lower rate does not conflict with any sound
principle of public policy; and it is not conformable to
plain principle of justice that a shipper may understate
value in order to reduce the rate and then recover a larger
value in case of loss.
7. Clauses 1 and 9 falls within third kind of
stipulation; Article 1255, OCC (article 1306, NCC)
A reading of clauses 1 and 9 of the bill of
lading clearly shows that the present case falls
within the third stipulation, to wit: That a clause in a
bill of lading limiting the liability of the carrier to a certain
amount unless the shipper declares a higher value and
pays a higher rate of freight, is valid and enforceable.
Clauses 1 and 9 are not contrary to public order.
Article 1255 Old Civil Code (Art. 1306 NCC)
provides that the contracting parties may establish any
agreements, terms and conditions they may deem
advisable, provided they are not contrary to law, morals or
public order. Said clauses of the bill of lading are,
therefore, valid and binding upon the parties thereto.
Issue No. 2: WON Clause 1 and clause 9 of the Bill
of Lading is to be adopted as the measure of
defendants liability.
the Court held that there us irreconcilable conflict
between Clauses 1 and 9 with regard to the measure of
Macondrays liability.
It is difficult to reconcile them without doing violence to
the language used and reading exceptions and conditions
into the undertaking contained in clause 9 that are not
there.
this being the case, the bill of lading in question should
be interpreted against the defendant carrier, which drew
the conytact.
1. Irreconcilable conflict between Clauses 1
and 9 with regard to the measure of Macondrays
liability
Whereas clause 1 contains only an implied undertaking to
settle in case of loss on the basis of not exceeding $500 per
freight ton, clause 9 contains an express undertaking to
settle on the basis of the net invoice price plus freight
and insurance less all charges saved.
Any loss or damage for which the carrier may
be liable shall be adjusted pro rata on the said basis,
clause 9 expressly provides. It seems that there is an
irreconcilable conflict between the two clauses with
regard to the measure of Macondrays liability. It is
difficult to reconcile them without doing violence to the
language used and reading exceptions and conditions
into the undertaking contained in clause 9 that are not
there.
2. A contract, in case of doubt, be
interpreted against the party who drew the
contract
The bill of lading should be interpreted against the
carrier, which drew said contract. A written contract
should, in case of doubt, be interpreted against the
party who has drawn the contract. (6 R. C. L., 854.) It
is a well-known principle of construction that
ambiguity or uncertainty in an agreement must be
construed most strongly against the party causing it. (6
R. C. L., 855.) These rules are applicable to contracts
contained in bills of lading. In construing a bill of
lading given by the carrier for the safe transportation
and delivery of goods shipped by a consignor, the
contract will be construed most strongly against the
carrier, and favorably to the consignor, in case of doubt
in any matter of construction.
Ruling: The Supreme Court affirmed the judgment
appealed from, without any finding as to costs.
Edgar Cokaliong Shipping Lines, Inc. v. UCPB Gen
Insurance Co., supra.
DOCTRINE: The liability of a common carrier for the
loss of goods may, by stipulation in the bill of lading, be
limited to the value declared by the shipper. On the
other hand, the liability of the insurer is determined by
the actual value covered by the insurance policy and
the insurance premiums paid therefor, and not
necessarily by the value declared in the bill of lading.
FACTS:
Shipper: ZosimaMercardo, Nestor Amelia
Carrier: EDGAR COKALIONG SHIPPING LINES,
INC.
Vessel: M/V Tandag
Insurer: UCPB General Insurance Co. Inc. (Feliciana
Legaspi insured the cargoes)
Event: FIRE
Edgar did not pay UCPB. UCPB filed a complaint. RTC
absolved Edgar of any liability. CA affirmed.
Sometime on December 11, 1991, Nestor Angelia
delivered to the Edgar Cokaliong Shipping Lines, Inc.
(now Cokaliong Shipping Lines), [petitioner] for
brevity, cargo consisting of one (1) carton of Christmas
dcor and two (2) sacks of plastic toys, to be transported
on board the M/V Tandag on its Voyage No. T-189
scheduled to depart from Cebu City, on December 12,
1991, for Tandag, Surigao del Sur. [Petitioner] issued Bill
of Lading No. 58, freight prepaid, covering the cargo.
Nestor Angelia was both the shipper and consignee of the
cargo valued, on the face thereof, in the amount of
P6,500.00. Zosimo Mercado likewise delivered cargo to
[petitioner], consisting of two (2) cartons of plastic toys
and Christmas decor, one (1) roll of floor mat and one (1)
bundle of various or assorted goods for transportation
thereof from Cebu City to Tandag, Surigao del Sur, on
board the said vessel, and said voyage. [Petitioner] issued
Bill of Lading No. 59 covering the cargo which, on the face
thereof, was valued in the amount of P14,000.00. Under
the Bill of Lading, Zosimo Mercado was both the shipper
and consignee of the cargo.
On December 12, 1991, Feliciana Legaspi insured the
cargo, covered by Bill of Lading No. 59, with the UCPB
General Insurance Co., Inc., [respondent] for brevity, for
the amount of P100,000.00 against all risks under Open
Policy No. 002/91/254 for which she was issued, by
[respondent], Marine Risk Note No. 18409 on said date.
She also insured the cargo covered by Bill of Lading No.
58, with [respondent], for the amount of P50,000.00,
under Open Policy No. 002/91/254 on the basis of which
[respondent] issued Marine Risk Note No. 18410 on said
date.
When the vessel left port, it had thirty-four (34)
passengers and assorted cargo on board, including the
goods of Legaspi. After the vessel had passed by the
Mandaue-Mactan Bridge, fire ensued in the engine room,
and, despite earnest efforts of the officers and crew of the
vessel, the fire engulfed and destroyed the entire vessel
resulting in the loss of the vessel and the cargoes therein.
The Captain filed the required Marine Protest.
Shortly thereafter, Feliciana Legaspi filed a claim, with
[respondent], for the value of the cargo insured under
Marine Risk Note No. 18409 and covered by Bill of Lading
No. 59. She submitted, in support of her claim, a Receipt,
dated December 11, 1991, purportedly signed by Zosimo
Mercado, and Order Slips purportedly signed by him for
the goods he received from Feliciana Legaspi valued in the
amount of P110,056.00. [Respondent] approved the claim
of Feliciana Legaspi and drew and issued UCPB Check No.
612939, dated March 9, 1992, in the net amount of
P99,000.00, in settlement of her claim after which she
executed a Subrogation Receipt/Deed, for said amount, in
favor of [respondent]. She also filed a claim for the value
of the cargo covered by Bill of Lading No. 58. She
submitted to [respondent] a Receipt, dated December 11,
1991 and Order Slips, purportedly signed by Nestor
Angelia for the goods he received from Feliciana Legaspi
valued at P60,338.00. [Respondent] approved her claim
and remitted to Feliciana Legaspi the net amount of
P49,500.00, after which she signed a Subrogation
Receipt/Deed, dated March 9, 1992, in favor of
[respondent].
On July 14, 1992, [respondent], as subrogee of
Feliciana Legaspi, filed a complaint anchored on torts
against [petitioner], with the Regional Trial Court of
Makati City, for the collection of the total principal
amount of P148,500.00, which it paid to Feliciana
Legaspi for the loss of the cargo, praying that judgment
be rendered in its favor and against the [petitioner].
ISSUE: 1. W/N Edgar is liable
2. What is the basis of liability? Amount in the bill of
lading or actual amount?
RULING:
1. Yes. The uncontroverted findings of the Philippine
Coast Guard show that the M/V Tandag sank due to a
fire, which resulted from a crack in the auxiliary engine
fuel oil service tank. Fuel spurted out of the crack and
dripped to the heating exhaust manifold, causing the
ship to burst into flames. The crack was located on the
side of the fuel oil tank, which had a mere two-inch gap
from the engine room walling, thus precluding
constant inspection and care by the crew.
Having originated from an unchecked crack in the fuel
oil service tank, the fire could not have been caused by
force majeure. May refer to Eastern Shipping Lines,
Inc. v. Intermediate Appellate Court.
A stipulation that limits liability is valid as long as it is
not against public policy.
Art. 1749. A stipulation that the common carriers
liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares
a greater value, is binding.
Art. 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and
has been freely and fairly agreed upon.
2. Bill of lading. The bill of lading subject of the present
controversy specifically provides, among others:
18. All claims for which the carrier may be liable shall
be adjusted and settled on the basis of the shippers net
invoice cost plus freight and insurance premiums, if
paid, and in no event shall the carrier be liable for any
loss of possible profits or any consequential loss.
The carrier shall not be liable for any loss of or any
damage to or in any connection with, goods in an
amount exceeding One Hundred Thousand Yen in
Japanese Currency (100,000.00) or its equivalent in
any other currency per package or customary freight
unit (whichever is least) unless the value of the goods
higher than this amount is declared in writing by the
shipper before receipt of the goods by the carrier and
inserted in the Bill of Lading and extra freight is paid
as required.
In the present case, the stipulation limiting petitioners
liability is not contrary to public policy. In fact, its just
and reasonable character is evident. The
shippers/consignees may recover the full value of the
goods by the simple expedient of declaring the true value
of the shipment in the Bill of Lading. Other than the
payment of a higher freight, there was nothing to stop
them from placing the actual value of the goods therein. In
fact, they committed fraud against the common carrier by
deliberately undervaluing the goods in their Bill of Lading,
thus depriving the carrier of its proper and just transport
fare.
It is well to point out that, for assuming a higher risk (the
alleged actual value of the goods) the insurance company
was paid the correct higher premium by Feliciana Legaspi;
while petitioner was paid a fee lower than what it was
entitled to for transporting the goods that had been
deliberately undervalued by the shippers in the Bill of
Lading. Between the two of them, the insurer should bear
the loss in excess of the value declared in the Bills of
Lading.
Eastern Shipping Lines, Inc. v. The Nisshin Fire and
Marine Insurance Co., et al., supra.
Facts: This is a consolidation of three cases concerning
the same instance filed by respondents Nisshin Fire and
Marine Insurance, Dowa Fire and Marine Insurance and
Development Insurance and Surety Corp.
M/S ASIATICA, operated by petitioner Eastern Shipping
loaded several articles that were insured by private
respondents. Enroute from Japan to Manila, the vessel
caught fire and sank, resulting in the total loss of ship and
cargo. The respondent Insurers paid the corresponding
marine insurance values to the concerned consignees and
were thus subrogated unto the rights of the latter as the
insured.
Eastern denied liability on the principal grounds that the
fire which caused the sinking of the ship is an exempting
circumstance under COGSA.
Issues:
3. Which law should govern the Civil Code provisions
on common carriers or COGSA?
Held:
1. Applicable law the law of the country to which
the goods are to be transported governs the liability
of the common carriers in case of their loss,
destruction or deterioration. Hence, the Civil Code
of the Philippines must govern but in matters not
regulated by the said Code, the Code of Commerce
and COGSA (being a special law) is suppletory to
the provisions of the Code.
2. The civil code only exculpates a carrier if the loss is
due to a fortuitous event. Fire may not be
considered a natural disaster or calamity. It does
not fall within the category of an act of God unless
caused by lighting or by other natural disaster or
calamity. As the peril is not comprehended within
the exception, the common carrier shall be
presumed to have been at fault, unless it has
proved that extraordinary diligence has been
observed. On the other hand, COGSA considers
that the carriers are not liable for loss due to fire
unless the latter is at fault.
3. Both the TC and IAC found that there was
ACTUAL FAULT of the carrier as shown by
LACK OF DILIGENCE based on the fact that
when the smoke was noticed, the fire was
already big and must have been existing for 24
hrs and that the no regular inspection was
made as to the condition of the cargoes.
4. Other matters:
a. Liability of carrier was decreased to the
set amount of COGSA to $500 per
package
b. Attorneys fees were decreased from35k
to 5k for Development Insurance
FACTS:
(G.R. No. L-69044): a vessel operated by petitioner
Eastern Shipping Lines, Inc., loaded at Kobe, Japan
for transportation to Manila, 5000 pieces of calorized
lance pipes in 28 packages consigned to Philippine
Blooming Mills Co., Inc., and 7 cases of spare parts
consigned to Central Textile Mills, Inc.; both sets of
goods were insured with Development Insurance and
Surety Corp.
(G.R. No. 71478): the same vessel took on board 128
cartons of garment fabrics and accessories, in 2
containers, consigned to Mariveles Apparel
Corporation, and two cases of surveying instruments
consigned to Aman Enterprises and General
Merchandise
the vessel caught fire and sank, resulting in the total
loss of ship and cargo
ISSUES: 1. which law should govern the Civil Code
provisions on Common carriers or the Carriage of
Goods by Sea Act?; 2. who has the burden of proof to
show negligence of the carrier? 3. what is the extent of
the carriers liability?
HELD: 1. The law of the country to which the goods
are to be transported governs the liability of the
common carrier in case of their loss, destruction or
deterioration. As the cargoes were transported from
Japan to the Philippines, the liability of Petitioner
Carrier is governed primarily by the Civil Code.
However, in all matters not regulated by said Code, the
rights and obligations of common carrier shall be
governed by the Code of Commerce and by special
laws. Thus, the Carriage of Goods by Sea Act, a special
law, is suppletory to the provisions of the Civil Code.
2. Article 1735 of the Civil Code provides that all cases
than those mention in Article 1734, the common
carrier shall be presumed to have been at fault or to
have acted negligently, unless it proves that it has
observed the extraordinary diligence required by law.
The burden is upon Eastern Shipping Lines to prove
that it has exercised the extraordinary diligence
 required by law. proven petitioners' claim that the loss or the deterioration
Note: fire not considered a natural disaster or calamity of the goods was due to pre-shipment damage.
within the contemplation of Art. 1734 for it arises almost
invariably from some act of man or by human means; it ISSUES: Whether petitioners have overcome the
does not fall within the category of an act of God unless presumption of negligence of a common carrier
caused by lightning or by other natural disaster or calamity RULING:
having failed to discharge the burden of proving that it had
No. A review of the records and more so by the evidence
exercised the extraordinary diligence required by law, shows
Eastern Shipping Lines cannot escape liability for the loss
of the cargo First, as stated in the Bill of Lading, petitioners received
As it was at fault, it cannot seek the protective mantle of the subject shipment in good order and condition in
Hamburg, Germany.
Sec. 4(2) of Carriage of Goods by Sea Act which provides:
Neither the carrier nor the ship shall be responsible for Second, prior to the unloading of the cargo, an
loss or damage arising or resulting from x x x (b) Fire, Inspection Report prepared and signed by
unless caused by the actual fault or privity of the carrier. representatives of both parties showed the steel bands
there was actual fault of the carrier shown by lack of broken, the metal envelopes rust-stained and heavily
diligence in that when the smoke was noticed, the fire was buckled, and the contents thereof exposed and rusty.
already big; that the fire must have started 24 hours before Third, Bad Order Tally Sheet No. 154979 issued by
the same was noticed; and that after the cargoes were Jardine Davies Transport Services, Inc., stated that
stored in the hatches, no regular inspection was made as to the four coils were in bad order and condition.
their condition during the voyage. Normally, a request for a bad order survey is made in
3. See Art. 1749. case there is an apparent or a presumed loss or
G.R. No. 69044: no stipulation in the Bills of Lading damage.
limiting the carriers liability for the loss or destruction of Fourth, the Certificate of Analysis stated that, based
the goods; no declaration of a higher value of the goods; on the sample submitted and tested, the steel sheets
Hence, Eastern Shipping Lines liability should not exceed found in bad order were wet with fresh water.
US $500 per package (as provided in 4(5) of the COGSA), Fifth, petitioners -- in a letter addressed to the
or its peso equivalent, at the time of payment of the value Philippine Steel Coating Corporation and dated
of the goods lost, but in no case more than the amount of October 12, 1990 -- admitted that they were aware of
damage actually sustained. the condition of the four coils found in bad order and
condition.
Belgian Overseas Chartering and Shipping, N.V. v. Phil
Further, petitioners failed to prove that they observed
First Insurance Co., supra.
the extraordinary diligence and precaution which the
DOCTRINE: Proof of the delivery of goods in good order to
law requires a common carrier to know and to follow
a common carrier and of their arrival in bad order at their
to avoid damage to or destruction of the goods
destination constitutes prima facie fault or negligence on the
entrusted to it for safe carriage and delivery.
part of the carrier. If no adequate explanation is given as to
how the loss, the destruction or the deterioration of the goods True, the words "metal envelopes rust stained and
happened, the carrier shall be held liable therefor. slightly dented" were noted on the Bill of Lading;
however, there is no showing that petitioners
FACTS: exercised due diligence to forestall or lessen the
Shipper: CMC Trading A.G. loss. The master of the vessel should have known at
Carrier: BELGIAN OVERSEAS CHARTERING AND the outset that metal envelopes in the said state would
SHIPPING N.V. eventually deteriorate when not properly stored while
Subject: coils of various Prime Cold Rolled Steel sheets in transit.The master of the vessel and his crew should
Consignee: Philippine Steel Trading Corporation have undertaken precautionary measures to avoid
Insurer: PHILIPPINE FIRST INSURANCE CO., INC. possible deterioration of the cargo. But none of these
measures was taken.
Goods found to be in bad order. Belgian refused to pay. Thus, In their attempt to escape liability, petitioners further
Phil First did. Impugning the propriety of the suit against contend that they are exempted from liability under
them, defendants-appellees imputed that the damage and/or Article 1734(4) of the Civil Code. They cite the
loss was due to pre-shipment damage, to the inherent nature, notation "metal envelopes rust stained and slightly
vice or defect of the goods, or to perils, danger and accidents dented" printed on the Bill of Lading as evidence that
of the sea, or to insufficiency of packing thereof, or to the act the character of the goods or defect in the packing or
or omission of the shipper of the goods or their the containers was the proximate cause of the damage
representatives. From the evidence on record, it cannot be reasonably
concluded that the damage to the four coils was due to
RTC dismissed. CA ruled that Belgian liable. Failed to the condition noted on the Bill of
overcome presumption of negligence. Belgian inadequately Lading.Theaforecitedexception refers to cases when
goods are lost or damaged while in transit as a result of
the natural decay of perishable goods or the fermentation
or evaporation of substances liable therefor, the
necessary and natural wear of goods in transport, defects
in packages in which they are shipped, or the natural
propensities of animals. None of these is present in the
instant case.
Further, even if the fact of improper packing was known
to the carrier or its crew or was apparent upon ordinary
observation, it is not relieved of liability for loss or injury
resulting therefrom, once it accepts the goods
notwithstanding such condition.
May 2nd at 3rd issue pa pero di konasinama. Notice of loss.
Dapat within 3 days dawsiyanagfile, 1 yr prescription if
there was an inspection. Limited liability. No stipulation
in the bill of lading, Letter of credit attached to the bill of
lading does not count.
Shewaram v. PAL, 17 SCRA 606 (1966)
Facts: Philippine Airlines (PAL) is a common carrier
engaged in air line transportation in the Philippines,
offering its services to the public to carry and transport
passengers and cargoes from and to different points in
the Philippines. Parmanand Shewaram was, on 23
November 1959, a paying passenger with ticket 4-30976,
on PALs aircraft flight 976/910 from Zamboanga City
bound for Manila. On said date, he checked in 3 pieces of
baggages a suitcase and two 2 other pieces, The
suitcase was mistagged by PALs personnel in Zamboanga
City, as I.G.N. (for Iligan) with claim check B-3883,
instead of MNL (for Manila). When Shewaram arrived in
Manila on the same date, his suitcase did not arrive with
his flight because it was sent to Iligan. He made a claim
with PALs personnel in Manila airport and another
suitcase similar to his own which was the only baggage
left for that flight, the rest having been claimed and
released to the other passengers of said flight, was given
to Shewaram for him to take delivery but he did not and
refused to take delivery of the same on the ground that it
was not his, alleging that all his clothes were white and
the National transistor 7 and a Rollflex camera were not
found inside the suitcase, and moreover, it contained a
pistol which he did not have nor placed inside his suitcase
(the suitcase belonged to a certain Del Rosario). After
inquiries made by PALs personnel in Manila from
different airports where the suitcase in question must
have been sent, it was found to have reached Iligan and
the station agent of the PAL in Iligan caused the same to
be sent to Manila for delivery to Mr. Shewaram and
which suitcase belonging to Shewaram arrived in Manila
airport on 24 November 1959. When Shewarams suitcase
arrived in Manila, he was informed by Mr. Tomas Blanco,
Jr., the acting station agent of the Manila airport of the
arrival of his suitcase but of course minus his Transistor
Radio 7 and the Rollflex camera. Shewaram made
demand for these 2 items or for the value thereof but the
same was not complied with by PAL. Before the
municipal court of Zamboanga City, Shewaram instituted
an action to recover damages suffered by him due to the
alleged failure of PAL to observe extraordinary
diligence in the vigilance and carriage of his luggage.
After trial the municipal court of Zamboanga City
rendered judgment ordering PAL to pay Shewaram
P373.00 as actual damages, P100.00 as exemplary
damages, P150.00 as attorneys fees, and the costs of
the action. PAL appealed to the CFI of Zamboanga
City. After hearing the CFI of Zamboanga City
modified the judgment of the inferior court by
ordering PAL to pay Shewaram only the sum of
P373.00 as actual damages, with legal interest from 6
May 1960, and the sum of P150.00 as attorneys fees,
eliminating the award of exemplary damages. From
the decision of the CFI of Zamboanga City, PAL
appeals to the Supreme Court on a question of law.
The Supreme Court affirmed the decision appealed
from, with costs against PAL.
1. Extraordinary diligence required of common
carrier PAL is a common carrier. As such common
carrier PAL, from the nature of its business and for
reasons of public policy, is bound to observe
extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by it
according to the circumstances of each case. Herein,
The suitcase of Shewaram was tampered, and the
transistor radio and the camera contained therein
were lost. As the loss of the transistor radio and the
camera of Shewaram, costing P373.00 (The transistor
radio costs P197.00 and the camera costs P176.00),
was due to the negligence of the employees of PAL, it
is clear that PAL should be held liable for the payment
of said loss.
2. Condition of carriage printed at the back of plane
ticket stub The conditions of carriage printed at the
back of the plane ticket stub, which conditions are
embodied in Domestic Tariff Regulations 2, which
was filed with the Civil Aeronautics Board. One of
those conditions, provides as follows: The liability, if
any, for loss or damage to checked baggage or for
delay in the delivery thereof is limited to its value and,
unless the passenger declares in advance a higher
valuation and pay an additional charge therefor, the
value shall be conclusively deemed not to exceed
P100.00 for each ticket.
3. Article 1750 NCC Article 1750 of the New Civil Code
provides that A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and
has been fairly and freely agreed upon. In accordance
with Article 1750 of the New Civil Code, the pecuniary
liability of a common carrier may, by contract, be
limited to a fixed amount. It is required, however, that
the contract must be reasonable and just under the
circumstances and has been fairly and freely agreed
upon.
4. Requirements of Article 1750 must be complied
with before common carrier may claim limitation of
liability The requirements provided in Article 1750 of
the New Civil Code must be complied with before a
common carrier can claim a limitation of its pecuniary
liability in case of loss, destruction or deterioration of the
goods it has undertaken to transport. Herein, the
requirements of said article have not been met. It can not
be said that Shewaram had actually entered into a
contract with PAL, embodying the conditions as printed
at the back of the ticket stub that was issued by PAL to
Shewaram. The fact that those conditions are printed at
the back of the ticket stub in letters so small that they are
hard to read would not warrant the presumption that
Shewaram was aware of those conditions such that he
had fairly and freely agreed to those conditions.
Inasmuch as passengers do not sign the ticket, much less
did Shewaram sign his ticket when he made the flight on
23 November 1959, Shewaram is not, and can not be,
bound by the conditions of carriage found at the back of
the ticket stub issued to him when he made the flight on
PALs plane.
5. Article 1734 NCC Article 1734 of the Civil Code
provides that Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless the
same is due to any of the following causes only: (1) Flood,
storm, earthquake, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international
or Civil; (3) Act or omission of the shipper or owner of the
goods; (4) The character of the goods or defects in the
packing or in the containers; and (5) Order or act of
competent public authority.
6. Article 1735 NCC Article 1735. of the Civil Code
provides that In all cases other than those mentioned in
Nos. 1, 2, 3, 4, and 5 of the preceding article, 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 observed
extraordinary diligence as required in Article 1733.
7. Carrier cannot limit liability for injury caused by its
own negligence In the case of Ysmael and Co. vs.
Barretto, 51 Phil. 90, the Court had laid down the rule
that the carrier can not limit its liability for injury to or
loss of goods shipped where such injury or loss was
caused by its own negligence.
8. Corpus Juris, volume 10, p. 154; Paragraph 194.6,
Reasonableness of Limitation Paragraph 194.6.
(Reasonableness of Limitation) provides that The
validity of stipulations limiting the carriers liability is to
be determined by their reasonableness and their
conformity to the sound public policy, in accordance with
which the obligations of the carrier to the public are
settled. It cannot lawfully stipulate for exemption from
liability, unless such exemption is just and reasonable,
and unless the contract is freely and fairly made. No
contractual limitation is reasonable which is subversive of
public policy.
9. Corpus Juris, volume 10, p. 154; Paragraph 195.7(a),
What Limitations of Liability Permissible, Negligence
Paragraph 195. 7 (What Limitations of Liability
Permissible) provides that a. Negligence (1) Rule in
America (a) In Absence of Organic or Statutory
Provisions Regulating Subject aa. Majority Rule. In
the absence of statute, it is settled by the weight of
authority in the United States, that whatever
limitations against its common-law liability are
permissible to a carrier, it cannot limit its liability for
injury to or loss of goods shipped, where such injury
or loss is caused by its own negligence. This is the
common law doctrine and it makes no difference that
there is no statutory prohibition against contracts of
this character.
10. Corpus Juris, volume 10, p. 154; Paragraph 196.bb,
Considerations on which Rule Based Paragraph
196.bb (Considerations on which Rule Based)
provides that The rule, it is said, rests on
considerations of public policy. The undertaking is to
carry the goods, and to relieve the shipper from all
liability for loss or damage arising from negligence in
performing its contract is to ignore the contract itself.
The natural effect of a limitation of liability against
negligence is to induce want of care on the part of the
carrier in the performance of its duty. The shipper and
the common carrier are not on equal terms; the
shipper must send his freight by the common carrier,
or not at all; he is therefore entirely at the mercy of
the carrier unless protected by the higher power of the
law against being forced into contracts limiting the
carriers liability. Such contracts are wanting in the
element of voluntary assent.
11. Corpus Juris, volume 10, p. 154; Paragraph 197.cc,
Application and Extent of Rule, Negligence of servants
Paragraph 197.cc (Application and Extent of Rule)
provides that (aa) Negligence of Servants. The rule
prohibiting limitation of liability for negligence is
often stated as a prohibition of any contract relieving
the carrier from loss or damage caused by its own
negligence or misfeasance, or that of its servants; and
it has bean specifically decided in many cases that no
contract limitation will relieve the carrier from
responsibility for the negligence, unskillfulness, or
carelessness of its employees.
Northwest Airlines, Inc. v. Cuenca, 14 SCRA 1063
(1965)
FACTS
Respondent Nicolas L. Cuenca (Cuenca) was the
Commissioner of Public Highways; he was the
official delegate of the Philippines to a conference
in Tokyo and, thus, he purchased a first class ticket
from petitioner Northwest Airlines, Inc.
(Northwest).
o His ticket was marked W/L meaning he
was waitlisted but his attention was never called
thereto and he wasnt advised what it meant.
Cuenca was given first class accommodation
upon boarding the plane in Manila but, upon
arrival at Okinawa, he was transferred to the tourist
class.
o Although he revealed that he was traveling
in his official capacity, an agent of Northwest
rudely compelled him in the presence of other
 passengers to move, over his objection, to the
tourist class, under threat of otherwise leaving him
in Japan.
Cuenca brought suit in the CFI in Manila which
held Northwest liable for damages; this was affirmed
by the CA.
ISSUES/HELD
Does Cuenca have a cause of action against
Northwest? YES.
Is the award of nominal damages proper? YES.
RATIONALE
1ST ISSUE
The instances specified in Arts. 17-19 of the
Warsaw Convention merely declare the carrier liable
for damages in the enumerated cases, if the conditions
therein specified are present.
Neither said provisions nor others in the
aforementioned Convention regulate or exclude
liability for other breaches of contract by the carrier.
Otherwise, an air carrier would be exempt from any
liability for damages in the event of its absolute refusal,
in bad faith, to comply with a contract of carriage.
Thus, Cuenca has a cause of action for breach of
contract against Northwest.
2ND ISSUE
The award of nominal damages is proper
considering that the CA has adjudicated no
compensatory, moral, and exemplary damages to
Cuenca.
Also, it is proper considering the following
circumstances:
o Cuenca was never advised that he was
merely waitlisted;
o After having been given first class
accommodation in Manila, Cuenca was entitled to
believe that his first class reservation was
confirmed and would continue until his ultimate
destination, Tokyo;
o Notwithstanding this, Northwest rudely
breached the contract, even with full knowledge of
the fact that Cuenca was an official representative
of the Philippines;
o Northwest never explained that the person
to whom Cuencas first class seat was given had a
better right thereto.
At any rate, considering the Northwests agent had
acted in a wanton, reckless, and oppressive manner,
said award may also be considered as one for
exemplary damages.
China Airlines v. Chiok, 407 SCRA 432 (2003)
Facts: On September 18, 1981, Daniel Chiok purchased
from China Airlines, Ltd. (CAL for brevity) a passenger
ticket for air transportation covering Manila-Taipei-
Hongkong-Manila. Said ticket was exclusively endorsable
to Philippine Airlines, Ltd. (PAL for brevity)
Subsequently, on November 21, 1981, Chiok took his
trip from Manila to Taipei using the CAL ticket. Before
he left for said trip, the trips covered by the ticket were
pre-scheduled and confirmed by the former. When he
arrived in Taipei, he went to the CAL office and
confirmed his Hongkong to Manila trip on board PAL
Flight No. PR 311. The CAL office attached a yellow
sticker indicating that his flight status was OK.
When Chiok reached Hongkong, he went to the PAL
office and sought to reconfirm his flight back to
Manila. The PAL office also confirmed his return trip
on board Flight No. PR 311 and attached its own
sticker.
On November 24, 1981, Chiok proceeded to Hongkong
International Airport for his return trip to
Manila. However, upon reaching the PAL counter,
Chiok saw a poster stating that PAL Flight No. PR 311
was cancelled due to typhoon in Manila. He was then
informed that all the confirmed ticket holders of PAL
Flight No. PR 311 were automatically booked for the
next flight the following day.
On November 25, 1981, Chiok was not able to board the
plane because his name did not appear in PALs
computer list of passengers. Chiok then sought to
recover his luggage but found only two and realized
that his new Samsonite luggage was missing which
contained cosmetics worth HK$14,128.80
He then proceeded to PAL and confronted the
reservation officer who previously confirmed his flight
back to Manila. However, the reservation officer
showed him that his name was on the list.
Chiok then decided to use his CAL ticket and asked
PALs reservation officer if he could use the ticket to
book him for the said flight; The latter, once again,
booked and confirmed the formers trip on a flight
scheduled to depart that evening
Later, Chiok went to the PAL check-in counter and it
was Carmen Chan, PALs terminal supervisor who
attended to him. As this juncture, Chiok had already
placed his travel documents, including his clutch bag,
on top of the PAL check-in counter.Thereafter, Carmen
directed PAL personnel to transfer counters. In the
ensuing commotion, Chiok lost his clutch bag
containing the following, to wit: (a) $2,000.00; (b)
HK$2,000.00; (c) Taipei $8,000.00;
(d) P2,000.00; (e) a three-piece set of gold (18 carats)
cross pens valued atP3,500; (f) a Cartier watch worth
about P7,500.00; (g) a tie clip with a garnet birthstone
and diamond worth P1,800.00; and (h) a [pair of]
Christian Dior reading glasses. Subsequently, he was
placed on stand-by and at around 7:30 p.m., PAL
personnel informed him that he could now check-in
Consequently, Chiok as plaintiff, filed a Complaint on
November 9, 1982 for damages, against PAL and CAL,
as defendants, docketed as Civil Case No. 82-13690,
with Branch 31, Regional Trial Court, National Capital
Judicial Region, Manila.
RTC: held CAL and PAL jointly and severally liable to
respondent but didnt rule on respective cross-claims
CA: affirmed RTCs decision and debunked petitioners
claim that it had merely acted as an issuing agent for the
ticket covering HK-Manila leg; Cited the decision in KLM
Royal Dutch Airlines v CA:
Article 30 of the Warsaw providing that in case of
transportation to be performed by various successive
carriers, the passenger can take action only against the
carrier who performed the transportation during which
the accident or the delay occurred presupposes the
occurrence of either an accident or delay in the course of
the air trip, and does not apply if the damage is caused by
the willful misconduct on the part of the carriers employee
or agent acting within the scope of his employment.
On PALs appeal, CA ruled that the airlines negligence was
the proximate cause of the incident since in spite of the
confirmations he had secured, his name didnt appear in
the list of passengers
Issues:
5. W/N CA committed judicial misconduct in finding
liability against CAL on the basis of misquotation
from KLM Royal Dutch v CA and in magnifying its
misconduct by denying CALs motion for
reconsideration on a mere syllabus, unofficial at
that;
6. W/N CAL is liable for damages;
Ruling:
Yes, CA committed a lapse when it relied merely on the
unofficial syllabus of our ruling in KLM v. C.A Indeed,
lawyers and litigants are mandated to quote decisions
of this Court accurately. However, since this case is not
administrative in nature, we cannot rule on the CA
justices administrative liability, if any, for this
lapse. In the case at bar, we can only determine
whether the error in quotation would be sufficient to
reverse or modify the CA Decision.
In the instant case, the CA ruled that under the
contract of transportation, petitioner -- as the
ticket-issuing carrier (like KLM) -- was liable
regardless of the fact that PAL was to perform or
had performed the actual carriage. It elucidated on
this point as follows:
By the very nature of their contract, defendant-
appellant CAL is clearly liable under the contract of
carriage with [respondent] and remains to be so,
regardless of those instances when actual carriage was to
be performed by another carrier. The issuance of a
confirmed CAL ticket in favor of [respondent] covering his
entire trip abroad concretely attests to this. This also
serves as proof that defendant-appellant CAL, in effect
guaranteed that the carrier, such as defendant-appellant
PAL would honor his ticket, assure him of a space therein
and transport him on a particular segment of his trip.
Notwithstanding the errant quotation, we have
found after careful deliberation that the assailed
Decision is supported in substance by KLM v.
CA. The misquotation by the CA cannot serve as
basis for the reversal of its ruling.
Yes, CAL is liable for damages;
It is significant to note that the contract of air
transportation was between petitioner and
respondent, with the former endorsing to PAL
the Hong Kong-to-Manila segment of the
journey. Such contract of carriage has always
been treated in this jurisdiction as a single
operation. This jurisprudential rule is
supported by the Warsaw Convention, to which
the Philippines is a party, and by the existing
practices of the International Air Transport
Association (IATA).
Article 1, Section 3 of the Warsaw Convention
states:
Transportation to be performed by several successive
air carriers shall be deemed, for the purposes of this
Convention, to be one undivided transportation, if it
has been regarded by the parties as a single operation,
whether it has been agreed upon under the form of a
single contract or of a series of contracts, and it shall
not lose its international character merely because one
contract or a series of contracts is to be performed
entirely within a territory subject to the sovereignty,
suzerainty, mandate, or authority of the same High
Contracting Party.
Article 15 of IATA-Recommended Practice
similarly provides: Carriage to be performed by
several successive carriers under one ticket, or under a
ticket and any conjunction ticket issued therewith, is
regarded as a single operation.
In American Airlines v. Court of Appeals, we have
noted that under a general pool partnership agreement,
the ticket-issuing airline is the principal in a contract of
carriage, while the endorsee-airline is the agent.
Likewise, as the principal in the contract of
carriage, the petitioner in British Airways v. Court of
Appeals was held liable, even when the breach of
contract had occurred, not on its own flight, but on that
of another airline. The Decision followed our ruling
in Lufthansa German Airlines v. Court of Appeals, in
which we had held that the obligation of the ticket-
issuing airline remained and did not cease, regardless
of the fact that another airline had undertaken to carry
the passengers to one of their destinations.
In the instant case, following the jurisprudence
cited above, PAL acted as the carrying agent of CAL. In
the same way that we ruled against British Airways and
Lufthansa in the aforementioned cases, we also rule
that CAL cannot evade liability to respondent, even
though it may have been only a ticket issuer for the
Hong Kong-Manila sector.
Santos, III v. CA, 210 SCRA 256 (1992)
INTERNATIONAL LAW: Warsaw Convention is
constitutional, a treaty commitment voluntarily
assumed by the Philippine government and, as such,
has the force and effect of law in this country.
INTERNATIONAL LAW: Warsaw Convention,
when applicable: To all "international
transportations of persons by aircraft for hire." Whether
the transportation is "international" is determined by the
contract of the parties, which in the case of passengers is
the ticket. When the contract of carriage provides for the
transportation of the passenger between certain
designated terminals "within the territories of two High
Contracting Parties," the provisions of the Convention
automatically apply and exclusively govern the rights and
liabilities of the airline and its passenger.
INTERNATIONAL LAW: Warsaw Convention,
jurisdiction: Place of Destination vis-a-vis Agreed
Stopping Place: The contract is a single undivided
operation, beginning with the place of departure and
ending with the ultimate destination. The use of the
singular in this expression indicates the understanding of
the parties to the Convention that every contract of
carriage has one place of departure and one place of
destination. An intermediate place where the carriage may
be broken is not regarded as a "place of destination."
FACTS:
Petitioner is a minor and a resident of the Philippines.
Private respondent Nortwest Orient Airlines (NOA) is a
foreign corporation with principal office in Minnesota,
U.S.A. and licensed to do business and maintain a branch
office in the Philippines. The petitioner purchased from
NOA a round-trip ticket in San Francisco, U.S.A. In
December 19, 1986, the petitioner checked in the at the
NOA counter in the San Francisco airport for his departure
to Manila. Despite a previous confirmation and re-
confirmation, he was informed that he had no reservation
for his flight for Tokyo to Manila. He therefore had to be
wait-listed. On March 12, 1987, the petitioner sued NOA
for damages in RTC Makati. NOA moved to dismiss the
complaint on the ground of lack of jurisdiction.
ISSUE:
Whether or not Article 28 (1) of the Warsaw
Convention is in accordance with the constitution
so as to deprive the Philippine Courts jurisdiction
over the case
HELD:
Art. 28. (1) An action for damage must be brought at the
option of the plaintiff, in the territory of one of the High
Contracting Parties, either before the court of the domicile
of the carrier or of his principal place of business, or where
he has a place of business through which the contract has
been made, or before the court at the place of destination.
Constitutionality of the Warsaw Convention
The Republic of the Philippines is a party to the
Convention for the Unification of Certain Rules Relating to
International Transportation by Air, otherwise known as
the Warsaw Convention. It took effect on February 13,
1933. The Convention was concurred in by the Senate,
through its Resolution No. 19, on May 16, 1950. The
Philippine instrument of accession was signed by
President Elpidio Quirino on October 13, 1950, and was
deposited with the Polish government on November 9,
1950. The Convention became applicable to the
Philippines on February 9, 1951. On September 23,
1955, President Ramon Magsaysay issued Proclamation
No. 201, declaring our formal adherence thereto. "to
the end that the same and every article and clause
thereof may be observed and fulfilled in good faith by
the Republic of the Philippines and the citizens
thereof."
The Convention is thus a treaty commitment
voluntarily assumed by the Philippine government and,
as such, has the force and effect of law in this country.
Does the Warsaw Convention apply in this case?
By its own terms, the Convention applies to all
international transportation of persons performed by
aircraft for hire.
International transportation is defined in paragraph
(2) of Article 1 as follows:
(2) For the purposes of this convention, the expression
"international transportation" shall mean any
transportation in which, according to the contract
made by the parties, the place of departure and the
place of destination, whether or not there be a break in
the transportation or a transshipment, are situated
[either] within the territories of two High Contracting
Parties . . .
Whether the transportation is "international" is
determined by the contract of the parties, which in the
case of passengers is the ticket. When the contract of
carriage provides for the transportation of the
passenger between certain designated terminals
"within the territories of two High Contracting Parties,"
the provisions of the Convention automatically apply
and exclusively govern the rights and liabilities of the
airline and its passenger.
Since the flight involved in the case at bar is
international, the same being from the United States to
the Philippines and back to the United States, it is
subject to the provisions of the Warsaw Convention,
including Article 28(1), which enumerates the four
places where an action for damages may be brought.
Does Article 28(1) refer to Jurisdiction or Venue?
...where the matter is governed by the Warsaw
Convention, jurisdiction takes on a dual concept.
Jurisdiction in the international sense must be
established in accordance with Article 28(1) of the
Warsaw Convention, following which the jurisdiction of
a particular court must be established pursuant to the
applicable domestic law. Only after the question of which
court has jurisdiction is determined will the issue of venue
be taken up. This second question shall be governed by the
law of the court to which the case is submitted.
Was the case properly filed in the Philippines, since the
plaintiffs destination was Manila?
The place of destination, within the meaning of the
Warsaw Convention, is determined by the terms of the
contract of carriage or, specifically in this case, the ticket
between the passenger and the carrier. Examination of the
petitioner's ticket shows that his ultimate destination is
San Francisco. Although the date of the return flight was
left open, the contract of carriage between the parties
indicates that NOA was bound to transport the petitioner
to San Francisco from Manila. Manila should therefore be
considered merely an agreed stopping place and not the
destination.
Article 1(2) also draws a distinction between a
"destination" and an "agreed stopping place." It is the
"destination" and not an "agreed stopping place" that
controls for purposes of ascertaining jurisdiction under the
Convention.
The contract is a single undivided operation, beginning
with the place of departure and ending with the ultimate
destination. The use of the singular in this expression
indicates the understanding of the parties to the
Convention that every contract of carriage has one place of
departure and one place of destination. An intermediate
place where the carriage may be broken is not regarded as
a "place of destination."
WHEREFORE, the petition is DENIED, with costs against
the petitioner. It is so ordered.
United Airlines v. Uy, 318 SCRA 576 (1999)
INTERNATIONAL LAW: Applicability of the
Warsaw Convention: the Convention's provisions 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. Neither may the Convention be invoked to
justify the disregard of some extraordinary sort of
damage resulting to a passenger and preclude recovery
therefor beyond the limits set by said Convention.
Likewise, we have held that the Convention does not
preclude the operation of the Civil Code and other
pertinent laws. It does not regulate, much less exempt,
the carrier from liability for damages for violating the
rights of its passengers under the contract of carriage,
especially if willful misconduct on the part of the carrier's
employees is found or established
FACTS:
October 13, 1989 Respondent Willie Uy is a passenger
of petitioner United Airlines, bound from San
Francisco to Manila. While in San Francisco, it was
found that one piece of his luggage was over the
maximum weight allowance of 70 kg. per bag. A
United Airlines employee rebuked him and in a loud
voice, in front of the milling crowd, ordered him to
repack his things accordingly. Wishing not to create a
scene, Willie did as asked. Unfortunately, his luggage
was still overweight so the airline billed him
overweight charges. Willie offered to pay the charges
with a Miscellaneous Charge Order (MCO) or an
airline pre-paid credit but the same employee, and an
airline supervisor, refused to honor it, contending that
there were discrepancies in the figures. Thus, Willie
was forced to pay the charges with his American
Express credit card. Upon arrival in Manila, Willie
discovered that one of his bags had been slashed and
its contents, amounting to US$5,310.00, stolen.
October 16, 1989 he sent his first letter of demand to
United Airlines. The airline did not refute Willies
allegations and mailed a check representing payment
of his loss based on the maximum liability of US$9.70
per pound. Willie, thinking the amount to be grossly
inadequate to compensate him for his losses as well as
for the indignities he was subjected to, sent two more
letters to petitioner airline, one dated January 4, 1990
and the other dated October 28, 1991, demanding out-
of-court settlement of P1,000,000.00.
June 9, 1992 Willie filed a complaint for damages
before the Philippine courts. He had two causes of
action: (1) the shabby and humiliating treatment he
received from petitioners employees at the San
Francisco Airport which caused him extreme
embarrassment and social humiliation; and (2) the
slashing of his luggage and the loss of personal effects
amounting to US$5,310.00.
For its part, United Airlines moved to dismiss the
complaint on the ground that it was filed out of time.
Under Art. 29 of the Warsaw Convention, the right to
damages shall be extinguished if an action is not
brought within 2 years. However, the second
paragraph of the said provision stated that the method
of calculating the period of limitation shall be
determined by the law of the court to which the case is
submitted. It is Willies position that our rules on
interruption of prescriptive period should apply.
When he sent his letters of demand, the 2-year period
was tolled, giving him ample time to file his
complaint.
The trial court ordered the dismissal of the case,
holding that Art. 29(2) refers not to the local forums
rules in interrupting the prescriptive period but only
to the rules of determining the time in which the
action was deemed commenced (meaning filed).
Willie filed his motion for reconsideration of the order
of dismissal only on the 14th day. The trial court
denied his motion and 2 days later Willie filed his notice
of appeal. United Airlines this time contended that the
notice of appeal was filed beyond the 15-day reglementary
period and should therefore be dismissed. The CA,
however, took cognizance of the case in the interest of
justice and ruled in favour of respondent. Hence, this
petition for certiorari.
ISSUE: Whether or not the action for damages is barred
by the lapse of the 2-year prescriptive period under Art.
29 of the Warsaw Convention
HELD:
Supreme Court held that although the 2-year prescriptive
period under the Warsaw Convention has lapsed, it did
not preclude the application of other pertinent provisions
of the Civil Code. Thus, the action for damages could still
be filed based on tort which can be filed within 4 years
from the time cause of action accrued. As for the action
pertaining to the loss of the contents of the luggage, while
it was well within the bounds of the Warsaw Convention,
the Supreme Court found that there was an exception to
the applicability of the 2-year prescriptive period that is
when the airline employed delaying tactics and gave the
passenger the run-around.
Applicability of the Warsaw Convention: Courts have
discretion whether to apply them or not
Within our jurisdiction we have held that the Warsaw
Convention can be applied, or ignored, depending on the
peculiar facts presented by each case. Thus, we have ruled
that the Convention's provisions 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. Neither
may the Convention be invoked to justify the disregard of
some extraordinary sort of damage resulting to a
passenger and preclude recovery therefor beyond the
limits set by said Convention. Likewise, we have held that
the Convention does not preclude the operation of the
Civil Code and other pertinent laws. It does not regulate,
much less exempt, the carrier from liability for damages
for violating the rights of its passengers under the
contract of carriage, especially if willful misconduct on
the part of the carrier's employees is found or established.
Respondent's complaint reveals that he is suing on two
(2) causes of action: (a) the shabby and humiliating
treatment he received from petitioner's employees at the
San Francisco Airport which caused him extreme
embarrassment and social humiliation; and, (b) the
slashing of his luggage and the loss of his personal effects
amounting to US $5,310.00.
While his second cause of action - an action for damages
arising from theft or damage to property or goods - is well
within the bounds of the Warsaw Convention, his first
cause of action -an action for damages arising from the
misconduct of the airline employees and the violation
of respondent's rights as passenger - clearly is not.
Action for damages arising from the misconduct of the
airline employees and the violation of the
respondents rights as passengers is covered under the
Civil Code
Consequently, insofar as the first cause of action is
concerned, respondent's failure to file his complaint
within the two (2)-year limitation of the Warsaw
Convention does not bar his action since petitioner
airline may still be held liable for breach of other
provisions of the Civil Code which prescribe a
different period or procedure for instituting the
action, specifically, Art. 1146 thereof which prescribes
four (4) years for filing an action based on torts.
Exception to the Application of the 2-year prescriptive
period: When airline employed delaying tactics
As for respondent's second cause of action, indeed the
travaux preparatories of the Warsaw Convention
reveal that the delegates thereto intended the two (2)-
year limitation incorporated in Art. 29 as an absolute
bar to suit and not to be made subject to the various
tolling provisions of the laws of the forum. This
therefore forecloses the application of our own rules
on interruption of prescriptive periods. Article 29,
par. (2), was intended only to let local laws determine
whether an action had been commenced within the
two (2)-year period, and within our jurisdiction an
action shall be deemed commenced upon the filing of
a complaint. Since it is indisputable that respondent
filed the present action beyond the two (2)-year time
frame his second cause of action must be barred.
Nonetheless, it cannot be doubted that respondent
exerted efforts to immediately convey his loss to
petitioner, even employed the services of two (2)
lawyers to follow up his claims, and that the filing of
the action itself was delayed because of petitioner's
evasion.
Verily, respondent filed his complaint more than two
(2) years later, beyond the period of limitation
prescribed by the Warsaw Convention for filing a
claim for damages. However, it is obvious that
respondent was forestalled from immediately filing an
action because petitioner airline gave him the
runaround, answering his letters but not giving in to
his demands. True, respondent should have already
filed an action at the first instance when his claims
were denied by petitioner but the same could only be
due to his desire to make an out-of-court settlement
for which he cannot be faulted. Hence, despite the
express mandate of Art. 29 of the Warsaw Convention
that an action for damages should be filed within two
(2) years from the arrival at the place of destination,
such rule shall not be applied in the instant case
because of the delaying tactics employed by petitioner
airline itself. Thus, private respondent's second cause of
action cannot be considered as time-barred under Art. 29
of the Warsaw Convention.
WHEREFORE, the assailed Decision of the Court of
Appeals reversing and setting aside the appealed order of
the trial court granting the motion to dismiss the
complaint, as well as its Resolution denying
reconsideration, is AFFIRMED. Let the records of the
case be remanded to the court of origin for further
proceedings taking its bearings from this disquisition.
Evidence
Code of Commerce
ARTICLE 353. The legal evidence of the contract
between the shipper and the carrier shall be the bills of
lading, by the contents of which the disputes which may
arise regarding their execution and performance shall be
decided, no exceptions being admissible other than those
of falsity and material error in the drafting.
After the contract has been complied with, the bill of
lading which the carrier has issued shall be returned to
him, and by virtue of the exchange of this title with the
thing transported, the respective obligations and actions
shall be considered cancelled, unless in the same act the
claim which the parties may wish to reserve be reduced to
writing, with the exception of that provided for in Article
366.
In case the consignee, upon receiving the goods, cannot
return the bill of lading subscribed by the carrier, because
of its loss or of any other cause, he must give the latter a
receipt for the goods delivered, this receipt producing the
same effects as the return of the bill of lading.
ARTICLE 709. A bill of lading drawn up in accordance
with the provisions of this title shall be proof as between
all those interested in the cargo and between the latter
and the insurers, proof to the contrary being reserved for
the latter. ARTICLE 710. If the bills of lading do not
agree, and no change or erasure can be observed in any of
them, those possessed by the shipper or consignee signed
by the captain shall be proof against the captain or ship
agent in favor of the consignee or shipper; and those
possessed by the captain or ship agent signed by the
shipper shall be proof against the shipper or consignee in
favor of the captain or ship agent.
Carriage of Goods by Sea Act
RESPONSIBILITIES AND LIABILITIES
Sec. 3. (1) The carrier shall be bound before and at the
beginning of the voyage to exercise due diligence to
(a) Make the ship seaworthy;
(b) Properly man,equip, and supply the ship;
(c) Make the holds, refrigerating and cooling chambers,
and all other parts of the ship in which goods are carried,
fit and safe for their reception, carriage, and preservation.
(2) The carrier shall properly and carefully load, handle,
stow, carry, keep, care for,and discharge the goods carried.
(3) After receiving the goods into his carrier, or the
master or agent of the carrier, shall, on demand of the
shipper, issue to the shipper a bill of lading showing
among other things chanrobles virtual law library
(a) The loading marks necessary for identification of
the goods as the same are furnished in writing by the
shipper before the loading of such goods starts,
provided such marksare stamped or otherwise shown
clearly upon the goods if uncovered,in such a manner
as should ordinarily remain legible until the end of the
voyage. chanrobles virtual law library
(b) Either the number of packages or pieces, or the
quantity or weight, as the casemay be, as furnished in
writing by the shipper.
(c) The apparent order and conditions of the goods:
Provided, that no carrier, master, or agent of the
carrier, shall be bound to state or show in the bill of
lading any marks, number, quantity, or weight which
he has reasonable ground for suspecting not accurately
to represent the good actually received or which he has
had no reasonable means of checking. chanrobles
virtual law library
(4) Such a bill of lading shall be prima facie evidence of
the receipt by the carrier of the goods as therein
described in accordance with paragraphs (3) (a), (b),
and (c), of this section: (The rest of the provision is not
applicable to the Philippines).
(5) The shipper shall be deemed to have guaranteed to
the carrier the accuracy at the time of shipment of the
marks, number, quantity, and weight, as furnished by
him; and the shipper shall indemnify the carrier
against all loss, damages, and expenses arising or
resulting from inaccuracies in such particulars. The
right of the carrier to such indemnity shall in no way
limit his responsibility and liability under the contract
of carriage to any person other than the
shipper. chanrobles virtual law library
(6) Unless notice or loss or damage and the general
nature of such loss or damage by given in writing to the
carrier or his agent at the port of discharge or at the
time of the removal of the goods into the custody of the
person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of
the delivery by the carrier of the goods as described in
the bill of lading. If the loss or damage is not apparent,
the notice must be given within three days of the
delivery. chanrobles virtual law library
Said notice of loss or damage may be endorsed upon
the receipt for the goods given by the person taking
delivery thereof.
The notice in writing need not be given if the state of
the goods has at the time of their receipt been the
subject of joint survey or inspection.
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: Provided, that, if a notice of loss
or damage, either apparent or concealed, is not given as
provided for in this section, that fact shall not affect or
prejudice the right of the shipper to bring suit within one
year after the delivery of the goods or the date when the
goods should have been delivered.
In the case of any actual or apprehended loss or damage,
the carrier and the receiver shall give all reasonable
facilities to each other for inspecting and tallying the
goods.chanrobles virtual law library
(7) After the goods are loaded the bill of lading to be
issued by the carrier, master, or agent of the carrier to the
shipper shall if the shipper so demands, be a "shipped" bill
of lading: Provided, that if the shipper shall have
previously taken up any document of title to such goods,
he shall surrender the same as against the issue of the
"shipped" bill of lading, but at the option of the carrier
such document of title may be noted at the port of
shipment by the carrier, master, or agent with the name or
names of the ship or ships upon which the goods have
been shipped and the date or dates of shipment, and when
so noted the same shall for the purpose of this section be
deemed to constitute a "shipped" bill of lading.
(8) Any clause, covenant, or agreement in a contract of
carriage relieving the carrier of the ship from liability for
loss or damage to or in connection with the goods, arising
from negligence, fault, or failure in the duties and
obligations provide in this section or lessening such
liability otherwise than as provided in this Act, shall be
null and void and of no effect. A benefit of insurance in
favor of the carrier, or similar clause, shall be deemed to
be a clause relieving the carrier from liability.
De Guerrero, et al. v. Madrigal Shipping Co., Inc., 105
Phil 485 (1959)
This is an action instituted before the court of First
Instance of Ilocos Norte to recover damages resulting
from the death of Pacifico Acacio when the ship where
the latter was riding as passenger capsized in San Jose,
Antique.
On April 30, 1957, the wife and daughter of Pacifico
Acacio, plaintiffs herein, filed a complaint against
defendant corporation alleging that on November 1, 1949
Pacifico Acacio entered into a contract of carriage with
defendant whereby for certain consideration the latter
undertook to carry the former on it vessel "M.S. Regulus"
from Malangas, Zamboanga, to the City of Manila; that
while the vessel was passing San Jose, Antique, its crew
without taking the necessary precaution managed and
steered the same in a reckless and imprudent manner
thereby causing the vessel to capsized and resulting to the
death of Pacifico Acacio.
Defendant filed a motion to dismiss on the ground that
plaintiff's cause of action has already prescribed. It
contended that they should have filed the action within six
years from the time of the alleged breach of contract, or on
November 1, 1955, or more than 7 years thereafter, the
complaint was filed out of time.
The lower court sustained the motion holding that since
the nature of the action is one for recovery of damages
which is not based on a written contract, the action is
already barred by the statute of limitations. Hence, the
present appeal.
It appears that the complaint was dismissed by the trail
court on the strength of a motion filed by defendant on
the ground that the cause of action has already
prescribed. No evidence was presented by any party in
support of or against the motion, the ruling of the court
having been based merely on the factula allegations of
the complaint. The question that now arise is: Do the
allegations of the complaint shows that the cause of
action of plaintiffs is merely for recovery of damages, as
found by the trial court, or is one based on a written
contract of carriage as claimed by appellants?
We are inclined to uphold the contention of the
appellants for cursory reading of the complaint would
show that their cause of action is predicated upon the
failure of appellee to comply with its contract of
carrying the deceased from Malangas, Zamboanga to
the City of Manila safely, in that the vessel on which he
was riding belonging to defendant capsized because of
the reckless and imprudent manner it was managed
and steered by its crew. It is true that the complaint
does not in so many words state that the transportation
was undertaken by virtue of a written contract of
carriage, but this can be implied from the complaint
because It is a matter of common knowledge that
whenever a passenger boards a ship for transportation
from one place to another he is issued a ticket by the
shipper wherein the terms of the contract are specified.
According to appellants, "This ticket is in itself a
complete written contract by and between the shipper
and the passenger. It has all the elements of a complete
contract, namely: (1) the consent of the contracting
parties manifested by the fact that the passenger board
the ship and the shipper consents or accepts him in the
sip for transportation; (2) cause or consideration which
is the fare paid by the passenger as stated in the ticket;
and (3) object, which is the transportation of the
passenger from the place of departure to the place of
destination which are stated in the ticket."
Considering that the ticket is not now before us because
the case has been decided merely on the motion to
dismiss, and this ticket is necessary to determine the
right of action of appellants, it would have been more
proper had action on the motion been deferred until
after trial on the merits. This is authorized by the rule if
the ground alleged in the motion does not appear to be
indubitable (Section 3, Rule 8 of the Rules of the
Court). We are therefore of the opinion that, in fairness
to the appellants the trial court should not have
dismissed the case out right but should have deferred
action on the motion until after trial for the evidence to
be presented may still show that the contract of the
parties is really written and merely oral as intimated by
the court a quo.
Wherefore, the order appealed is hereby set aside, and the ISSUES
case is remanded to the lower court for further (1) Was there a prescriptive period?
proceedings. No pronouncement as to costs. (2) If yes, was the prescriptive period valid and
legal?
(3) If it was valid and legal, did Philamgen act
Phil Am Gen Insurance Co., Inc. v. Sweet Lines, Inc. et
within the prescriptive period?
al., 212 SCRA 194 (1992)
FACTS
RULING
A total 7,000 bags of low density polyethylene (600 bags
(1) Yes. There was a prescriptive period. When the
of polyethylene 641 and 6,400 bags of polyethylene 647)
complaint was filed, prescription as an affirmative
were shipped from Baton Rouge, LA to Manila on board SS
defense was seasonably raised by Sweet Lines
Vishva Yash, a vessel belonging to the Shipping
in its answer. Though the bills of lading were not
Corporation of India (SCI). From Manila, the cargoes were
presented in evidence, the SC said that: As petitioners
shipped to Davao on board MV Sweet Love, a vessel owned
are suing upon SLI's contractual obligation under the
by Sweet Lines. The consignee was Far East Bank with
contract of carriage as contained in the bills of lading,
arrival notice to Tagum Plastics, Inc., Tagum, Davao City.
such bills of lading can be categorized as
The cargoes were insured by Far East Bank with the
actionable documents which under the Rules must
Philippine American General Insurance Co (Philamgen)
be properly pleaded either as causes of action or
and were covered by bills of lading which contained the
defenses, and the genuineness and due execution
following stipulation in paragraph 5:
of which are deemed admitted unless
specifically denied under oath by the adverse
Claims for shortage, damage, must be made
party. The rules on actionable documents cover and
at the time of delivery to consignee or
apply to both a cause of action or defense based on said
agent, if container shows exterior signs of
documents. In their answer, Sweet Lines included the
damage or shortage. Claims for non-
prescriptive period under paragraph 5 of the bills of
delivery, misdelivery, loss or damage
lading. Philamgen did not deny the existence of the bill
must be filed within 30 days from
of lading under oath. Instead, in its reply to the answer,
accrual. Suits arising from shortage,
Philamgen asserted that the bills of lading were
damage or loss, non-delivery or
contracts of adhesion and that such provisions were
misdelivery shall be instituted within
contrary to law and public policy and thus, Sweet
60 days from date of accrual of right
Lines cannot avail of such prescriptive period as a valid
of action. Failure to file claims or institute
defense. The SC said that Philamgens failure to deny
judicial proceedings as herein provided
under oath the existence of the bills of lading was
constitutes waiver of claim or right of
tantamount to an admission of its existence, together
action. In no case shall carrier be liable for
with paragraph 5 containing the prescriptive period.
any delay, non-delivery, misdelivery, loss of
Thus, the existence of the prescriptive period was duly
damage to cargo while cargo is not in actual
proved even if the bills of lading were not presented in
custody of carrier.
court.
On May 15, 1977, the shipment(s) were discharged from
(2) Yes. The prescriptive periods were valid and
the interisland carrier into the custody of the consignee. A
legal. Philamgen insists that the bills of lading
survey conducted on July 8, 1977 showed that of the
were contracts of adhesion and that the
shipment totalling 7,000 bags, originally contained in 175
prescriptive periods stated therein were void for
pallets, only a total of 5,820 bags were delivered to the
being contrary to law and public policy. The SC,
consignee in good order condition, leaving a balance of
citing Ong Yu vs CA, said that contracts of
1,080 bags. Some of the 1,080 bags were either MISSING
adhesion are not entirely prohibited. The one
OR DAMAGED beyond the point of being useful for the
who adheres to the contract is in reality free to
intended purpose.
reject it entirely; if he adheres he gives his
consent. Philamgen, thus, gave its consent to
FEBTC and Tagum Plastics sued the international carrier,
the contracts the bills of lading including
SCI, the inter-island carriers, Sweet Lines, the arrastre
consent to the prescriptive periods therein. The
company, Davao Arrastre and FE Zuellig (which I assume
SC also agreed with the CA that parties can
is the shipper). Before trial, a compromise agreement was
stipulate a shorter prescriptive period for the
entered into between the complainants and SCI and F.E.
filing of suits. The SC quoted the CA, It must
Zuellig, thus, only Sweet Lines and Davao Arrastre
be noted, at this juncture, that the aforestated
remained as defendants.
time limitation (paragraph 5) in the
The trial court ruled in favour of Philamgen and Tagum
presentation of claim for loss or damage, is but
Plastics. The CA reversed on the ground of prescription
a restatement of the rule prescribed
and denied the motion for reconsideration.
under Art. 366 of the Code of
Commerce... The SC said that, ... the
 validity of a contractual limitation of time
for filing the suit itself against a carrier
shorter than the statutory period therefor
has generally been upheld as such
stipulation merely affects the shipper's
remedy and does not affect the liability of
the carrier. In the absence of any statutory
limitation and subject only to the
requirement on the reasonableness of the
stipulated limitation period, the parties to a
contract of carriage may fix by agreement a shorter
time for the bringing of suit on a claim for the loss
of or damage to the shipment than that provided by
the statute of limitations. Such limitation is not
contrary to public policy for it does not in any way
defeat the complete vestiture of the right to
recover, but merely requires the assertion of that
right by action at an earlier period than would be
necessary to defeat it through the operation of the
ordinary statute of limitations. The SC also said
that, ..., the shortened period for filing suit is not
unreasonable and has in fact been generally
recognized to be a valid business practice in the
shipping industry. This is in recognition of the
inherent dangers of carriage by sea.
(3)
(4) (3) No. Philamgen did not act within the
prescriptive period. The shipment was discharged
into the custody of the consignee on May 15, 1977,
and it was from this date that petitioners' cause of
action accrued, with thirty (30) days therefrom
within which to file a claim with the carrier for any
loss or damage which may have been suffered by
the cargo and thereby perfect their right of action.
Claim was filed only on April 28, 1978, way
beyond the period provided in the bills of lading
and violative of the contractual provision, the
inevitable consequence of which is the loss
of petitioners' remedy or right to sue. The
SC said, Even the filing of the complaint on May
12, 1978 is of no remedial or practical consequence,
since the time limits for the filing thereof, whether
viewed as a condition precedent or as a prescriptive
period, would in this case be productive of the
same result, that is, that petitioners had no right of
action to begin with or, at any rate, their claim was
time-barred.
(5) Other things discussed by the SC:
(6) 1. ...where the contract of shipment contains a
reasonable requirement of giving notice of loss of
or injury to the goods, the giving of such notice
is a condition precedent to the action for
loss or injury or the right to enforce the
carrier's liability. Such requirement is not an
empty formalism. The fundamental reason or
purpose of such a stipulation is not to relieve the
carrier from just liability, but reasonably to inform
it that the shipment has been damaged and that it
is charged with liability therefor, and to give it an
opportunity to examine the nature and extent of
the injury. This protects the carrier by affording
it an opportunity to make an investigation of a
claim while the matter is fresh and easily
investigated so as to safeguard itself from false
and fraudulent claims.
(7) 2. Philamgen also asserted that since the
purpose of the notice of claim or loss was to
charge Sweet Lines with actual knowledge of
the loss and damage involved, then the issuance
of Sweet Lines of a Report on Losses and
Damage dated May 15, 1977, would obviate
the need for or render superfluous the filing of a
claim within the stipulated period. The SC
said, The report on losses and damages is
not the claim referred to and required by
the bills of lading for it does not fix
responsibility for the loss or damage, but
merely states the condition of the goods
shipped. The claim contemplated herein,
in whatever form, must be something
more than a notice that the goods have
been lost or damaged; it must contain a
claim for compensation or indicate an
intent to claim. Furthermore, the report
bears an annotation at its lower part that says
this Copy should be submitted together with
your claim invoice or receipt within 30 days
from date of issue otherwise your claim will not
be honored."
(8) 3. The claim against the carrier, Sweet Lines,
has prescribed but what about the claim against
Davao Arrastre. The SC said that there was not
enough proof to pinpoint the party responsible
for the lost and damaged bags. (What I found
surprising was that the SC also said, Unlike a
common carrier, an arrastre operator does not
labor under a presumption of negligence in case
of loss, destruction or deterioration of goods
discharged into its custody. In other words, to
hold an arrastre operator liable for loss of
and/or damage to goods entrusted to it there
must be preponderant evidence that it did not
exercise due diligence in the handling and care
of the goods.
Receipt
Saludo, Jr. v. CA, supra.
Facts: Crispina Galdo Saludo, mother of the
petitioners, died in Chicago, Illinois. Pomierski and
Son Funeral Home of Chicago, made the necessary
preparations and arrangements for the shipment of the
remains from Chicago to the Philippines. Pomierski
brought the remains to Continental Mortuary Air
Services (CMAS) at the Chicago Airport which made
the necessary arrangements such as flights, transfers,
etc. CMAS booked the shipment with PAL thru the
carriers agent Air Care International. PAL Airway Bill
Ordinary was issued wherein the requested routing was
from Chicago to San Francisco on board Trans World
Airline (TWA) and from San Francisco to Manila on board
PAL.
Salvacion (one of the petitioners), upon arrival at San
Francisco, went to the TWA to inquire about her mothers
remains. But she was told they did not know anything
about it. She then called Pomierski that her mothers
remains were not at the West Coast terminal. Pomierski
immediately called CMAS which informed that the
remains were on a plane to Mexico City, that there were
two bodies at the terminal, and somehow they were
switched. CMAS called and told Pomierski that they were
sending the remains back to California via Texas.
Petitioners filed a complaint against TWA and PAL fir the
misshipment and delay in the delay of the cargo containing
the remains of the late Crispina Saludo. Petitioners alleged
that private respondents received the casketed remains of
Crispina on October 26, 1976, as evidenced by the issuance
of PAL Airway Bill by Air Care and from said date, private
respondents were charged with the responsibility to
exercise extraordinary diligence so much so that the
alleged switching of the caskets on October 27, 1976, or
one day after the private respondents received the cargo,
the latter must necessarily be liable.
Issues:
Whether or not there was delivery of the cargo upon mere
issuance of the airway bill
Whether or not the delay in the delivery of the casketed
remains of petitioners mother was due to the fault of
respondent airline companies
Held:
NO to both, but TWA was held to pay petitioners nominal
damages of P40,000 for its violation of the degree of
diligence required by law to be exercised by every common
carrier. Ordinarily, a receipt is not essential to a complete
delivery of goods to the carrier for transportation but,
when issued, is competent and prima facie, but not
conclusive, evidence of delivery to the carrier. A bill of
lading, when properly executed and delivered to a shipper,
is evidence that the carrier has received the goods
described therein for shipment. Except as modified by
statute, it is a general rule as to the parties to a contract of
carriage of goods in connection with which a bill of lading
is issued reciting that goods have been received for
transportation, that the recital being in essence a receipt
alone, is not conclusive, but may be explained, varied or
contradicted by parol or other evidence.
In other words, on October 26, 1976 the cargo containing
the casketed remains of Crispina Saludo was booked for
PAL Flight Number PR-107 leaving San Francisco for
Manila on October 27, 1976, PAL Airway Bill No. 079-
01180454 was issued, not as evidence of receipt of delivery
of the cargo on October 26, 1976, but merely as a
confirmation of the booking thus made for the San
Francisco-Manila flight scheduled on October 27, 1976.
Actually, it was not until October 28, 1976 that PAL
received physical delivery of the body at San Francisco, as
duly evidenced by the Interline Freight Transfer Manifest
of the American Airline Freight System and signed for by
Virgilio Rosales at 1945H, or 7:45 P.M. on said date.
Explicit is the rule under Article 1736 of the Civil Code
that the extraordinary responsibility of the common
carrier begins from the time the goods are delivered to
the carrier. This responsibility remains in full force and
effect even when they are temporarily unloaded or
stored in transit, unless the shipper or owner exercises
the right of stoppage in transitu, and terminates only
after the lapse of a reasonable time for the acceptance,
of the goods by the consignee or such other person
entitled to receive them. And, there is delivery to the
carrier when the goods are ready for and have been
placed in the exclusive possession, custody and control
of the carrier for the purpose of their immediate
transportation and the carrier has accepted them.
Where such a delivery has thus been accepted by the
carrier, the liability of the common carrier commences
eo instanti.
Hence, while we agree with petitioners that the
extraordinary diligence statutorily required to be
observed by the carrier instantaneously commences
upon delivery of the goods thereto, for such duty to
commence there must in fact have been delivery of the
cargo subject of the contract of carriage. Only when
such fact of delivery has been unequivocally established
can the liability for loss, destruction or deterioration of
goods in the custody of the carrier, absent the excepting
causes under Article 1734, attach and the presumption
of fault of the carrier under Article 1735 be invoked.
As already demonstrated, the facts in the case at bar
belie the averment that there was delivery of the cargo
to the carrier on October 26, 1976. Rather, as earlier
explained, the body intended to be shipped as agreed
upon was really placed in the possession and control of
PAL on October 28, 1976 and it was from that date that
private respondents became responsible for the agreed
cargo under their undertakings in PAL Airway Bill No.
079-01180454. Consequently, for the switching of
caskets prior thereto which was not caused by them,
and subsequent events caused thereby, private
respondents cannot be held liable.
The oft-repeated rule regarding a carrier's liability for
delay is that in the absence of a special contract, a
carrier is not an insurer against delay in transportation
of goods. When a common carrier undertakes to convey
goods, the law implies a contract that they shall be
delivered at destination within a reasonable time, in
the absence, of any agreement as to the time of
delivery. But where a carrier has made an express
contract to transport and deliver property within a
specified time, it is bound to fulfill its contract and is
liable for any delay, no matter from what cause it may
have arisen. This result logically follows from the well-
settled rule that where the law creates a duty or charge,
and the party is disabled from performing it without
any default in himself, and has no remedy over, then
the law will excuse him, but where the party by his own
contract creates a duty or charge upon himself, he is
bound to make it good notwithstanding any accident or
delay by inevitable necessity because he might have
provided against it by contract. Whether or not there has
been such an undertaking on the part of the carrier to be
determined from the circumstances surrounding the case
and by application of the ordinary rules for the
interpretation of contracts.
Echoing the findings of the trial court, the respondent
court correctly declared that
In a similar case of delayed delivery of air cargo under a
very similar stipulation contained in the airway bill which
reads: "The carrier does not obligate itself to carry the
goods by any specified aircraft or on a specified time. Said
carrier being hereby authorized to deviate from the route
of the shipment without any liability therefor", our
Supreme Court ruled that 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. Said rights and obligations are created by a
specific contract entered into by the parties (Mendoza vs.
PAL, 90 Phil. 836).
There is no showing by plaintiffs that such a special or
specific contract had been entered into between them and
the defendant airline companies.
And this special contract for prompt delivery should call
the attention of the carrier to the circumstances
surrounding the case and the approximate amount of
damages to be suffered in case of delay (See Mendoza vs.
PAL, supra). There was no such contract entered into in
the instant case.
A common carrier undertaking to transport property has
the implicit duty to carry and deliver it within reasonable
time, absent any particular stipulation regarding time of
delivery, and to guard against delay. In case of any
unreasonable delay, the carrier shall be liable for
damages immediately and proximately resulting from
such neglect of duty. As found by the trial court, the delay
in the delivery of the remains of Crispina Saludo,
undeniable and regrettable as it was, cannot be attributed
to the fault, negligence or malice of private respondents, a
conclusion concurred in by respondent court and which
we are not inclined to disturb.
Wallem Phils Shipping, Inc., et al. v. Prudential
Guarantee & Assurance, Inc. et al., G.R. No. 152158 (07
February 2003)
Facts: General Milling Corporation (GMC) contracted
Wallem Philippines Shipping Inc. (WALLEM) to ship
Indian Toasted Soyabean Extraction Meal to its
warehouse in Pasig. During the weighing of the cargo in
Batangas, and after comparing its supposed weight from
that indicated in the bill of lading, it was found that there
was a shortage of 295.682 M/Tons in the shipment. The
said bill of lading was prepared by GMC.
Prudential Guarantee & Assurance Inc (PRUDENTIAL),
being GMCs insurer, received a claim from the latter
because of the shortage in the shipment. Prudential paid
GMC P995, 677.09, and the latter issued a subrogation
receipt to PRUDENTIAL. PRUDENTIAL thereafter sent a
demand letter to WALLEM to recover the amount paid to
GMC. WALLEM denied liability for the loss in the
shipment.
PRUDENTIAL brought an action for damages against
WALLEM and Seacoast Maritime Corp. with the RTC
of Makati City. The trial court ruled that PRUDENTIAL
failed to prove that there was shortage in the shipment.
Since PRUDENTIAL failed to establish that the bill of
lading was duly executed, the true and exact weight of
the shipment when it was loaded unto the vessel cannot
be determined. Hence, there was no way by which a
shortage could be determined. Also, since
PRUDENTIAL failed to present the contract of
insurance executed between it and GMC, it had no
cause of action against WALLEM.
On appeal, the CA reversed.
Issue: Whether or not PRUDENTIAL became
subrogated to the rights of GMC to claim indemnity
against WALLEM
Held: No, PRUDENTIAL did not become subrogated
to GMCs rights.
PRUDENTIAL claims that it is subrogated to the rights
of GMC pursuant to their insurance contract. For this
purpose, it submitted a subrogation receipt and a
marine cargo risk note. However, this is not sufficient.
As GMCs subrogee, PRUDENTIAL can exercise only
those rights granted to GMC under the insurance
contract. The contract of insurance must be presented
in evidence to indicate the extent of its coverage. By
itself alone, the subrogation receipt is not sufficient to
prove the PRUDENTIALs claim holding WALLEM
liable for the loss in the shipment.
Title
Civil Code
Art. 1507. A document of title in which it is stated that
the goods referred to therein will be delivered to the
bearer, or to the order of any person named in such
document is a negotiable document of title.
Art. 1508. A negotiable document of title may be
negotiated by delivery:
(1) Where by the terms of the document the carrier,
warehouseman or other bailee issuing the same
undertakes to deliver the goods to the bearer; or
(2) Where by the terms of the document the carrier,
warehouseman or other bailee issuing the same
undertakes to deliver the goods to the order of a
specified person, and such person or a subsequent
endorsee of the document has indorsed it in blank or
to the bearer.
Where by the terms of a negotiable document of title
the goods are deliverable to bearer or where a
negotiable document of title has been indorsed in
blank or to bearer, any holder may indorse the same
to himself or to any specified person, and in such case the
document shall thereafter be negotiated only by the
endorsement of such endorsee. (n)
Art. 1509. A negotiable document of title may be
negotiated by the endorsement of the person to whose
order the goods are by the terms of the document
deliverable. Such endorsement may be in blank, to bearer
or to a specified person. If indorsed to a specified person,
it may be again negotiated by the endorsement of such
person in blank, to bearer or to another specified person.
Subsequent negotiations may be made in like manner. (n)
Art. 1510. If a document of title which contains an
undertaking by a carrier, warehouseman or other bailee to
deliver the goods to bearer, to a specified person or order
of a specified person or which contains words of like
import, has placed upon it the words "not negotiable,"
"non-negotiable" or the like, such document may
nevertheless be negotiated by the holder and is a
negotiable document of title within the meaning of this
Title. But nothing in this Title contained shall be construed
as limiting or defining the effect upon the obligations of
the carrier, warehouseman, or other bailee issuing a
document of title or placing thereon the words "not
negotiable," "non-negotiable," or the like. (n)
Art. 1511. A document of title which is not in such form
that it can be negotiated by delivery may be transferred by
the holder by delivery to a purchaser or donee. A non-
negotiable document cannot be negotiated and the
endorsement of such a document gives the transferee no
additional right.
Art. 1513. A person to whom a negotiable document of
title has been duly negotiated acquires thereby:
(1) Such title to the goods as the person negotiating the
document to him had or had ability to convey to a
purchaser in good faith for value and also such title to
the goods as the person to whose order the goods were
to be delivered by the terms of the document had or
had ability to convey to a purchaser in good faith for
value; and
(2) The direct obligation of the bailee issuing the
document to hold possession of the goods for him
according to the terms of the document as fully as if
such bailee had contracted directly with him.
Art. 1515. Where a negotiable document of title is
transferred for value by delivery, and the endorsement
of the transferor is essential for negotiation, the
transferee acquires a right against the transferor to
compel him to endorse the document unless a contrary
intention appears. The negotiation shall take effect as
of the time when the endorsement is actually made.
Section 38, Negotiable Instruments Law
Sec. 38. Qualified indorsement. - A qualified
indorsement constitutes the indorser a mere assignor
of the title to the instrument. It may be made by adding
to the indorser's signature the words "without
recourse" or any words of similar import. Such an
indorsement does not impair the negotiable character
of the instrument.