Eastern Shipping Lines, Inc. v. CA and The First Nationwide Assurance Corp.

G.R. No. 97412 July 12, 1994

FACTS:
13 coils of uncoated 7-wire stress relieved wire strand for pre-stressed concrete
wereshipped on board a vessel owned and operated by Eastern Shipping Lines
at Kobe, Japan,for delivery to Stresstek Post-Tensioning Phils., Inc. in Manila
While en route from Kobe to Manila, the carrying vessel encountered very
rough seas and stormy weather;
The coils wrapped in burlap cloth and cardboard paper were stored in the lower
hold of the hatch of the vessel which was flooded with water;
The water entered thehatch when the vessel encountered heavy weather en
route to Manila;
Upon request, a survey of bad order cargo was conducted at the pier in the
presence of the representatives of the consignee and E. Razon, Inc. and it was
found that 7 coils were rusty on one side each;
Upon survey conducted at the consignees warehouse it was found that the
wetting of the cargo was caused by fresh water that entered the hatch when the
vessel encountered heavy weather;
All 13 coils were extremely rusty and totally unsuitable forthe intended purpose
The First Nationwide Assurance Corp. indemnified the consignee in the amount
of P171,923.00 for damage and loss to the insured cargo

ISSUE:
WON Eastern Shipping Lines is liable

HELD:
Yes.
Under Art. 1733, common carriers are bound to observe extra-ordinary
vigilance overgoods according to all circumstances of each case
Art. 1735: In all cases other than those mentioned in Art. 1734, if the goods are
lost,destroyed or deteriorated, common carriers are presumed to have been at
fault or to haveacted negligently, unless they prove that they observed
extraordinary diligence.
Since the carrier has failed to establish any caso fortuito, the presumption by
law of faultor negligence on the part of the carrier applies; and the carrier must
present evidence thatit has observed the extraordinary diligence required by
Article 1733 of the Civil Code inorder to escape liability for damage or
destruction to the goods that it had admittedlycarried in this case. But no
evidence was presented; hence, the carrier cannot escapeliability.
Eastern Shipping Lines, Inc. v. IAC and Development Insurance & Surety Corp.
G.R. No. L-69044, May 29, 1987
Eastern Shipping Lines, Inc. v. The Nisshin Fire and Marine Insurance Co., and
Dowa Fire & Marine Insurance Co., Ltd.
G.R. No. 71478, May 29, 1987
FACTS:
These two cases, both for the recovery of the value of cargo insurance, arose from the
same incident, the sinking of the M/S Asiatica when it caught fire resulting to the total
loss of ship and cargo. In G.R. No. 69044, the M/S Asiatica, a vessel operated by
petitioner Eastern Shipping Lines (Petitioner carrier) loaded at Kobe, Japan for
transportation to Manila, 5,000 colorized lance pipes in 28 packages consigned to the
Philippine Blooming Mills, Co. and 7 cases of spare parts consigned to Central Textile
Mills, Inc. Both sets of goods were insured against marine risk. In G.R. No. 71478,
during the same period, the same vessel took on board 128 cartons of garment fabrics
and accessories, in 2 containers, consigned to Mariveles Apparel Co., and 2 cases of
surveying instruments consigned to Aman Enterprises and General Merchandise. En
route for Kolba, Japan to Manila, the vessel caught fire and sank, resulting in the total
loss of the ship and cargo. The respective respondent insurers paid the corresponding
marine insurance values.
ISSUE: Whether or not the provisions of the Civil Code on Common Carriers should
govern.
RULING: The law of the country to which the goods are to be transported governs the
liability of the common carrier oin 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 (COGSA), a
special law, is suppletory to the provisions of the Civil Code.
YAP, J., concurring and dissenting:
With respect to G.R. No. 71478, the majority opinion holds that the 128 cartons of textile
materials, and not the two (2) containers, should be considered as the shipping unit for
the purpose of applying the $500.00 limitation under the Carriage of Goods by Sea Act
(COGSA).
The majority opinion followed and applied the interpretation of the COGSA "package"
limitation adopted by the Second Circuit, United States Court of Appeals, in Mitsui & Co.,
Ltd. vs. American Export Lines, Inc., 636 F. 2d 807 (1981) and the Smithgreyhound v.
M/V Eurygenes, 666, F 2nd, 746. Both cases adopted the rule that carrier-furnished
containers whose contents are fully disclosed are not "packages" within the meaning of
Section 4 (5) of COGSA.
I cannot go along with the majority in applying the Mitsui and Eurygenes decisions to the
present case, for the following reasons: (1) The facts in those cases differ materially from
those obtaining in the present case; and (2) the rule laid down in those two cases is by
no means settled doctrine.
In Mitsui and Eurygenes, the containers were supplied by the carrier or shipping
company. In Mitsui the Court held: "Certainly, if the individual crates or cartons prepared
by the shipper and containing his goods can rightly be considered "packages" standing
by themselves, they do not suddenly lose that character upon being stowed in a carrier's
container. I would liken these containers to detachable stowage compartments of the
ship." Cartons or crates placed inside carrier-furnished containers are deemed stowed in
the vessel itself, and do not lose their character as individual units simply by being
placed inside container provided by the carrier, which are merely "detachable stowage
compartments of the ship.
In the case at bar, there is no evidence showing that the two containers in question were
carrier-supplied. This fact cannot be presumed. The facts of the case in fact show that
this was the only shipment placed in containers. The other shipment involved in the
case, consisting of surveying instruments, was packed in two "cases."
We cannot speculate on the meaning of the words "Say: Two (2) Containers Only, "
which appear in the bill of lading. Absent any positive evidence on this point, we cannot
say that those words constitute a mere estimate that the shipment could fit in two
containers, thereby showing that when the goods were delivered by the shipper, they
were not yet placed inside the containers and that it was the petitioner carrier which
packed the goods into its own containers, as authorized under paragraph 11 on the
dorsal side of the bill of lading, Exhibit A. Such assumption cannot be made in view of
the following words clearly stamped in red ink on the face of the bill of lading: "Shipper's
Load, Count and Seal Said to Contain." This clearly indicates that it was the shipper
which loaded and counted the goods placed inside the container and sealed the latter.
The two containers were delivered by the shipper to the carrier already sealed for
shipment, and the number of cartons said to be contained inside them was indicated in
the bill of lading, on the mere say-so of the shipper. The freight paid to the carrier on the
shipment was based on the measurement (by volume) of the two containers at $34.50
per cubic meter. The shipper must have saved on the freight charges by using
containers for the shipment. Under the circumstances, it would be unfair to the carrier to
have the limitation of its liability under COGSA fixed on the number of cartons inside the
containers, rather than on the containers themselves, since the freight revenue was
based on the latter.
The Mitsui and Eurygenes decisions are not the last word on the subject. The
interpretation of the COGSA package limitation is in a state of flux, 1 as the courts
continue to wrestle with the troublesome problem of applying the statutory limitation
under COGSA to containerized shipments. The law was adopted before modern
technological changes have revolutionized the shipping industry. There is need for the
law itself to be updated to meet the changes brought about by the container revolution,
but this is a task which should be addressed by the legislative body. Until then, this
Court, while mindful of American jurisprudence on the subject, should make its own
interpretation of the COGSA provisions, consistent with what is equitable to the parties
concerned. There is need to balance the interests of the shipper and those of the carrier.
In the case at bar, the shipper opted to ship the goods in two containers, and paid freight
charges based on the freight unit, i.e., cubic meters. The shipper did not declare the
value of the shipment, for that would have entailed higher freight charges; instead of
paying higher freight charges, the shipper protected itself by insuring the shipment. As
subrogee, the insurance company can recover from the carrier only what the shipper
itself is entitled to recover, not the amount it actually paid the shipper under the
insurance policy.
In our view, under the circumstances, the container should be regarded as the shipping
unit or "package" within the purview of COGSA. However, we realize that this may not be
equitable as far as the shipper is concerned. If the container is not regarded as a
"package" within the terms of COGSA, then, the $500.00 liability limitation should be
based on "the customary freight unit." Sec. 4 (5) of COGSA provides that in case of
goods not shipped in packages, the limit of the carrier's liability shall be $500.00 "per
customary freight unit." In the case at bar, the petitioner's liability for the shipment in
question based on "freight unit" would be $21,950.00 for the shipment of 43.9 cubic
meters.
I concur with the rest of the decision.
Cathay Pacific Airways vs. CA (1993) postponement of his pre-arranged conference with the Director General of Trade of the
host country.
Nature: Petition for review on certiorari of the decision of the Court of Appeals which In one case, his Court observed that a traveller would naturally suffer mental anguish,
affirmed with modification that of the trial court by increasing the award of damages in anxiety and shock when he finds that his luggage did not travel with him and he finds
favor of private respondent Tomas L. Alcantara. himself in a foreign land without any article of clothing other than what he has on.
Thus, respondent is entitled to moral and exemplary damages. We however find the
Facts: On 19 October 1975, respondent Tomas L. Alcantara was a first class passenger award by the Court of Appeals of P80,000.00 for moral damages excessive, hence, We
of petitioner Cathay Pacific Airways from Manila to Hongkong and onward from reduce the amount to P30,000.00. The exemplary damages of P20,000.00 being
Hongkong to Jakarta. The purpose of his trip was to attend the following day, October reasonable is maintained, as well as the attorney's fees of P25,000.00 considering that
20, 1975, a conference with the Director General of Trade of Indonesia. He checked in petitioner's act or omission has compelled Alcantara to litigate with third persons or to
his luggage which contained not only his clothing and articles for personal use but also incur expenses to protect his interest.
papers and documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his luggage was missing. Private
respondent was told that his luggage was left behind in Hongkong. For this, respondent
Alcantara was offered $20.00 as "inconvenience money" to buy his immediate personal
needs until the luggage could be delivered to him. The respondent, as a result of the
incident had to seek postponement of his pre-arranged conference.
When his luggage finally reached Jakarta more than twenty four hours later, it was not
delivered to him at his hotel but was required by petitioner to be picked up by an official
of the Philippine Embassy.
Respondent filed a case for damages in the CFI of Lanao del Norte which ruled in his
favour.
Both parties appealed to the Court of Appeals. Court of Appeals rendered its decision
affirming the decision of the CFI but by modifying its awards by increasing the damages.

Issue: Whether or not the Court of Appeals erred in not applying the Warsaw
Convention to limit the liability of the respondent airline.

Ruling: No.
xxx although the Warsaw Convention has the force and effect of law in this country,
being a treaty commitment assumed by the Philippine government, said convention does
not operate as an exclusive enumeration of the instances for declaring a carrier liable for
breach of contract of carriage or as an absolute limit of the extent of that liability. The
Warsaw Convention declares the carrier liable for damages in the enumerated cases
and under certain limitations. However, it must not be construed to 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 wilfull misconduct on the part of the carrier's
employees is found or established, which is clearly the case before Us. For, the Warsaw
Convention itself provides in Art. 25 that
"(1) The carrier shall not be entitled to avail himself of the provisions of this convention
which exclude or limit his liability, if the damage is caused by his wilfull misconduct or by
such default on his part as, in accordance with the law of the court to which the case is
submitted, is considered to be equivalent to wilfull misconduct."
(2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the
damage is caused under the same circumstances by any agent of the carrier acting
within the scope of his employment."
When petitioner airline misplaced respondent's luggage and failed to deliver it to its
passenger at the appointed place and time, some special species of injury must have
been caused to him. For sure, the latter underwent profound distress and anxiety, and
the fear of losing the opportunity to fulfill the purpose of his trip. In fact, for want of
appropriate clothings for the occasion brought about by the delay of the arrival of his
luggage, to his embarrassment and consternation respondent Alcantara had to seek
Pan American Airways v. IAC
G.R. 70642

FACTS:
Jose Rapaldas is on board a flight for Pan Am Flight 841 from Guam to Manila. While
standing in line to board the flight at the Guam airport, Rapadas was ordered by Pan
Am's handcarry control agent to check-in his Samsonite attache case. Rapadas
protested pointed to the fact that other co-passengers were permitted to handcarry
bulkier baggages. But for fear that he would miss the flight, he agreed to check it in. He
gave his attache case to his brother who happened to be around without declaring its
contents or the value of its contents. Upon his arrival in Manila, he was given all his
check-in baggages except the attache case. Because Rapadas felt ill, he sent his son to
request for search of the missing luggage. Eventually, Rapadas received a letter from
Pan Am's counsel offering to settle the claim for the sum of $160.00 representing Pan
Am's alleged limit of liability for loss or damage to a passenger's personal property under
the contract of carriage between Rapadas and Pan Am.

ISSUE:
Is Pan American Airways liable for the lost check-in baggage?

COURT RULING:
Notice of limited liability in airline tickets
On page 2 of the airline ticket, it states that the Warsaw Convention governs in case of
death or injury to the passenger or of loss, damage or destruction to a passenger's
luggage. It says: "If the passenger's journey involves an ultimate destination or stop in a
country, the Warsaw Convention may be applicable and the conversation governs and in
most cases, limits the liability of carriers for death or personal injury and in respect of
loss or damage to baggage."
Passenger is expected to be vigilant with respect to his baggages
In this case, Rapadas actually manifested a disregard with the airline rules insofar as his
baggages are concerned. He failed to state the value of the said check-in baggage and
failed to remove whatever check-in valuables he had in which should have been placed
in his allowable hand-carry baggage instead.