december 10 transportation law case digests

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TRANSPO Atty. Tesoro 3-D || Ateneo Law School DEC 10, 2012 CASES: 117-136 Other assigned cases: #s 57, 106 #117 Chua Kuy v Everret Steamship Corporation Facts: 1. Chua Kuy (Buyer), ordered from an Indentor 500 cases of evaporated milk of 96 babies, it was to come from Oregon. The Bill of Lading stated that loaded on board was 500 cases and 96 babies. Upon arrival at the port of Manila, it was delivered to the custody of Manila Terminal Company. The cargo was then delivered through Serrano Transportation to the Buyer. The receipt of the goods stated "500 packages, contains evaporated milk (48 babies)." The Buyer gave notice of the shortage in the cargo and filed a formal claim for loss. 2. Buyer contends that the prescriptive period in the Carriage of Goods by Sea Act has no application here because the period of prescription that should be considered is that embodied in the Code of Civil Procedure, which repealed the provisions of the Code of Commerce on the subject, and because, even assuming that the Carriage of Goods by Sea Act applies in this particular case, the prescriptive period provided therein could not apply because such time-bar can only be brought by the shipper and not by any other person interested in the transaction. Issue: W/n the Carriage of Goods by Sea Act is applicable to this particular case, as claimed by the Carrier or should it be governed by the Code of Commerce or other laws, as claimed by the buyer? Held: The current rule provides that jettisoned goods carried on deck, according to the custom of trade, by steam vessels navigating coastwise and inland waters, are entitled to contribution as a general average loss. That being said, the loss to be borne by the ship owner, the shipper, or any other party, will be determined or computed through the different interests involved, to wit, value of ship, value of cargo, and the earned but lost freight. Ratio: 1

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Page 1: December 10 Transportation law case digests

TRANSPOAtty. Tesoro

3-D || Ateneo Law School

DEC 10, 2012 CASES: 117-136

Other assigned cases: #s 57, 106

#117 Chua Kuy v Everret Steamship Corporation

Facts:

1. Chua Kuy (Buyer), ordered from an Indentor 500 cases of evaporated milk of 96 babies, it was to come from Oregon. The Bill of Lading stated that loaded on board was 500 cases and 96 babies. Upon arrival at the port of Manila, it was delivered to the custody of Manila Terminal Company. The cargo was then delivered through Serrano Transportation to the Buyer. The receipt of the goods stated "500 packages, contains evaporated milk (48 babies)." The Buyer gave notice of the shortage in the cargo and filed a formal claim for loss.

2. Buyer contends that the prescriptive period in the Carriage of Goods by Sea Act has no application here because the period of prescription that should be considered is that embodied in the Code of Civil Procedure, which repealed the provisions of the Code of Commerce on the subject, and because, even assuming that the Carriage of Goods by Sea Act applies in this particular case, the prescriptive period provided therein could not apply because such time-bar can only be brought by the shipper and not by any other person interested in the transaction.

Issue: W/n the Carriage of Goods by Sea Act is applicable to this particular case, as claimed by the Carrier or should it be governed by the Code of Commerce or other laws, as claimed by the buyer?

Held: The current rule provides that jettisoned goods carried on deck, according to the custom of trade, by steam vessels navigating coastwise and inland waters, are entitled to contribution as a general average loss. That being said, the loss to be borne by the ship owner, the shipper, or any other party, will be determined or computed through the different interests involved, to wit, value of ship, value of cargo, and the earned but lost freight.

Ratio:

1. Carriage of Goods by Sea Act applies. The Code of Civil Procedure is untenable for the simple reason that this is a general law which only applies to cases not covered by any Special Act. Since the Carriage of Goods by Sea Act is a special act, its provisions must of necessity limit or restrict a law of general application. As to the claim that prescription can only be brought about by the "shipper", the law must be read as a whole, and by doing so, will reveal that the said interpretation by the Buyer is wrong.

2. Prescriptive period is one year from delivery of the cargo. Furthermore, a mere proposal for arbitration or the fact that negotiations have been made for the adjustment of the controversy between the local importer and the carrier does not suspend the running of the period of prescription, unless there is an express agreement to the contrary.

3.

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#118. Ang vs. American S/S Agencies 19 SCRA 123

Facts:

1. Yau Yue Commercial Bank Ltd. of Hongkong, agreed to sell 140 packages of galvanized steel durzinc sheets to Herminio G, for the $32,458.26.

2. Said agreement was subject to the following terms and arrangements: (a) the purchase price should be covered by a bank draft for; the corresponding amount which should be paid by Teves in exchange for the delivery to him of the corresponding bill of lading to be deposited with a local bank, the Hongkong & Shanghai Bank of Manila; (b) upon arrival of the articles in Manila, Teves would be notified and he would have to pay the amount called for in the corresponding demand draft, after which the bill of lading would be delivered to him; and (c) Teves would present said bill of lading to the carrier’s agent, American Steamship Agencies, which would then issue the corresponding “Permit To Deliver Imported Articles” to be presented to the Bureau of Customs to obtain the release of the articles.

3. Pursuant to said terms and arrangements, Yau Yue, shipped the articles at Yawata, Japan, on April 30, 1961 aboard the S.S. TENSAI MARU, Manila, belonging to the Nissho Shipping of Japan, of which the American Steamship Agencies, Inc. is the agent in the Philippines.

4. the Bill of Lading, dated April 30, 1961, consigned “to order of the shipper”, wTeves as the party to be notified of the arrival of the 140 packages of galvanized steel durzinc sheets in Manila.

5. The bill of lading was indorsed to the order of and delivered to Yau Yue by the shipper. Upon receipt thereof, Yau Yue drew a demand draft together with the

bill of lading against Teves, through the Hongkong & Shanghai Bank.

6. When the articles arrived in Manila on or about May 9, 1961, Hongkong & Shanghai Bank notified Teves. however, he did not pay.

7. The bank returned the bill of lading and demand draft to Yau Yue which indorsed it to Domingo Ang.

8. Meanwhile, despite his non-payment of the purchase price of the articles, Teves was able to obtain a bank guaranty in favor of the American Steamship Agencies, to the effect that he would surrender the original and negotiable bill of lading duly indorsed by Yau Yue. On the strength of this guaranty, Teves succeeded in securing a “Permit To Deliver Imported Articles” from American Steamship, which he presented to the Bureau of Customs which in turn released to him the articles covered by the bill of lading.

9. Subsequently, Domingo Ang claimed for the articles from American Steamship by presenting the indorsed bill of lading, but he was inf ormed by the latter that it had delivered the articles to Teves.

10.On October 30, 1963 Domingo Ang filed a complaint in the Court of First Instance of Manila against the American Steamship for having allegedly wrongfully delivered and/or converted the goods covered by the bill of lading belonging to Ang, to the damage and prejudice of the latter.

11.The Defendant argued that the cargo should have been delivered to the person entitled to the delivery thereof, Ang, on May 9, 1961, the date of the vessel’s arrival in Manila, and that even allowing a reasonable time (even one month) after such arrival within which to make delivery, still, the action commenced on October 30, 1963

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was filed beyond the prescribed period of one year, due to loss.

Issue: W/N plaintiff-appellant’s cause of action prescribed under Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act -“In any event, the carrier and the ship shall be discharged from all liability in respect to 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.”

Ratio:

1. No. As defined in Article 1189 of the New Civil Code and as applied to paragraph 4, Section 3(6) of the Carriage of Goods by Sea Act, “loss” contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered. It does not include a situation where there was indeed delivery—but delivery to the wrong person, or a misdelivery. Nondelivery should be distinguished from misdelivery.

2. Where the imported goods were delivered to the wrong person, the one-year timebar in paragraph 4, section 3(6) of the Carriage of Goods by Sea Act, which refers to “loss or damage”, does not apply. Said one-year period of limitation is designed to meet the exigencies of maritime hazards. In a case where the goods shipped were neither lost nor damaged in transit but were, on the contrary, delivered in part to someone who claimed to be entitled thereto, the situation is different, and the special need for the short period of limitation in cases of loss or damage caused by maritime perils does not obtain.

#119. Mitsui O.S.K. Lines vs. Court of Appelas (287 SCRA 366)

D: “Loss” refers to the deterioration of disappearance of goods. The deterioration of goods due to delay in their

transportation constitutes “loss” or “damage” within the meaning of §3(6), so that as suit was not brought within

one year the action was barred.

Facts:

1. Mitsui is a foreign corporation represented in the Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage with Lavine Manufacturing to transport goods of the latter from Manila to France through Meister Transport, an international freight forwarder.

2. The parties agreed that the delivery of the goods to France is 28 days form initial loading. On July 24, 1991, Mitsui’s vessel loaded the goods at the point of origin.

3. However, in Taiwan the goods were not transshipped immediately and thus with the shipment arrived in France only on November 14, 1991.

4. The consignee of the goods allegedly paid half the value of the goods because the goods did not arrive in France until the “off season” in that country.

5. Lavine claimed and demanded from Mitsui for the unpaid value of the goods. Mitsui filed a motion to dismiss alleging that the claim against it had prescribed under the COGSA.

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6. The original complaint was filed on April 14, 1992. Amended complaint was filed on May 20, 1993.

7. TC ruled in favor or Lavine denying the motion to dismiss filed by Matsui and as well as the motion for reconsideration. CA sustained the ruling hence this appeal.

Issues:

1. Whether or not private respondent’s action is for “loss or damage” to goods shipped within the meaning of § 3(6) of the COGSA therefore barred by prescription. NO

Held:

1. In Ang v. American Steamship Agencies, Inc.., it was held that there was no loss because the goods had simply been misdelivered. “Loss” refers to the deterioration or disappearance of goods. This is as defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the COGSA.

2. The rationale behind limiting the said definitions to such parameters is not hard to find or fathom. Said one-year period of limitation is designed to meet the exigencies of maritime hazards. In a case where the goods shipped were neither lost nor damaged in transit but were, on the contrary, delivered in port to someone who claimed to be entitled thereto, the situation is different and the special need for the short period of limitation in cases of loss or damage caused by maritime perils does not establish.

- 3. In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the carrier’s breach of contract. Whatever reduction there may have been in the value of the goods is not due to their deterioration or disappearance because they had been damaged in transit.

- 4. What is in issue in this petition is not the liability of Mitsui for its handling of goods as provided by the provision of COGSA but Mitsui’s potential liability for the damages it has caused in the general sense, and, as such, the matter is governed by the Civil Code, the Code of Commerce and COGSA, for the breach of contract of carriage with respondent.

- 5. The SC concluded that the suit is not for “loss or damage” to goods contemplated in the COGSA, the question of prescription of action is governed not by the COGSA but by Art.1144 of the Civil Code which provides for a prescriptive period of ten years.

#120. Tan Liao vs. American President Lines (98 PHIL 203)D: Action to recover damages must be brought within one

year after DELIVERY of the goods or the date when the goods should have been delivered. Absent an agreement as to suspension, period does NOT accrue upon denial of

plaintiff’s claim for damages by defendant.

FACTS:

1. Tan Liao entered into a contract with the Kent Sales Co., Inc.,

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of New York City, through Kent’s agents in Manila (People’s Trading) for the importation of 2,000 cases of fresh hen eggs. Kent Sales Co., Inc. contracted with American President Lines to have the eggs shipped to Manila on the vessel S.S. “Marine Leopard” as refrigerated cargo, in accordance with B/L No. 5297 issued on August 6, 1946.

2. Upon arrival in San Francisco, California, on August 30, 1946, the Defendant unloaded the 2,000 cases of eggs from the S.S. “Marine Leopard”. It later resumed its voyage and arrived in Singapore in September, 1946. The eggs were later shipped on another of Defendant’s ships, the S.S. “General Meigs”, on November 27, 1946, which arrived in Manila on December 26, 1946.

3. Tan Liao hired marine surveyors to inspect the eggs. They reported that 587 of the cases were broken (eggs were leaking), while eggs in 1,413 cases were deteriorating. He claims that the discharge of his cargo at the port of San Francisco was wrongful and unjustified, and a violation of the bill of lading which provided that the eggs would be shipped to Manila on the S.S. “Marine Leopard”.yWhen the cargo was discharged in San Francisco, the eggs were exposed to the hot summer weather without having been placed in refrigeration from August 30 to September 12, 1946. Only on September 12 were they refrigerated again. He claims that the eggs could have been transhipped on August 31, 1946, on the S.S. “Clovis Victory”, also one of Defendant’s ships, that arrived in Manila on September 20, 1946. In sum, plaintiff Tan Liao is claiming that the damage to the eggs is because of the delay and careless handling of the eggs. Plaintiff alleges that he could have sold the entire shipment for P120,000. However, due to the need for immediate disposal of the eggs, he only sold them for P27,300. Thus, he suffered a loss of P92,700, plus P55 which was the fee for marine surveyors. Action is thus filed for the recovery of

P92,755, for damages allegedly due to the wrongful and unauthorized delay, transshipment, and careless handling in the transportation of a cargo of eggs.

4. Defendant, alleged in defense that under the terms of the Bill of Lading, it was at liberty to tranship the cargo in question on any other vessel. He claims the eggs were immediately refrigerated, and if they arrived deteriorating, it was because of defect of the eggs. Mention was made that delay was due to strike of longshoremen in the westcoast from Sept to November, and that immediately after the strike the cargo was loaded on SS General Meigs.

5. As a special defense, Defendant claimed that while Plaintiff received the goods in question on December 26, 1946, he filed a claim with Defendant for damages only on July 25, 1947 (denied on February 16, 1948), and brought suit on May 25, 1948, more than a year from the receipt of the goods, and so Plaintiff’s action had prescribed under section 3, paragraph 6 of the Carriage of Goods by Sea Act.

6. Lower court held that Tan Liao suffered P25,896.81 because of delayed arrival of cargo which could have been transshipped on SS Clovis Victory which left San Francisco before the strike. However, it also found the special defense of prescription meritorious, and dismissed the case. Thus this appeal.

ISSUE:Whether or not the action has prescribed under the Carriage of Goods by Sea Act?

RATIO:

1. Yes the action has prescribed. Suit must be brought within one year after DELIVERY of the goods or the date when the

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goods should have been delivered. Period does NOT accrue upon denial of plaintiff’s claim for damages by defendant.

2. The period may be suspended only if there is an agreement between the parties as to such. Meaning, parties can agree beforehand that the prescriptive period for the filing of an action for loss or damage to the goods would be suspended by the filing of a claim with the carrier for damages and pending action thereon. Absent any agreement as to suspension, action must be filed within one year from delivery of goods.

3. Carriage of Goods by Sea Act (section 3, paragraph 6):chanroblesvirtuallawlibrary

“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:c 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.”

Other issues:

1) action referred to therein is one for “loss or damage, either apparent or concealed” to the goods, and not one for a breach of the contract of carriage on the part of the carrier where, as in this case, it is guilty of delay in the shipment of the goods, causing losses and damages to the consignee.

Answer: The two are one and the same. all injury or damages suffered by the goods, while in transit and in

the custody of the carrier, amounts to a breach of the contract of carriage, unless due to fortuitous event. Because the carrier is bound to transport the goods safely and so breaches its contract if it neglects such duty.

2) distinction between damage to the goods and damages to the shipper or consignee, and claims that while the former falls within the prescriptive period in question, the latter is governed by the provisions of the Code of Civil Procedure

Answer:Whatever damage or injury is suffered by the goods while in transit would result in loss or damage to either the shipper or the consignee. As long as it is claimed, therefore, as it is done here, that the losses or damages suffered by the shipper or consignee were due to the arrival of the goods in damaged or deteriorated condition, the action is still basically one for damage to the goods, and must be filed within the period of one year from delivery or receipt, under the above-quoted provision of the Carriage of Goods by Sea Act.

3) refers only to loss or damage to the goods in relation to their “loading, handling, storage, carriage, custody, care, and discharge” (section 2, supra), and does not cover or include loss or damage due to the wrongful and unreasonable delay in their transportation.

a. The obligation of the carrier to carry the goods naturally includes the duty not to delay their transportation, so unjustified delay, the carrier is held liable therefor.

What may be NOT included in the prescriptive period under COGSA is a situation of damages due to causes independent of

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the condition of the cargo upon arrival (like a drop in market value)

But the ultimate objective of Appellant’s action being to recover damages suffered by reason of the decay and deterioration of his goods while in transit, the same is still governed by the prescriptive period of one year under the Carriage of Goods by Sea Act.

#121 Sverigen Angfartygs Assurans vs. Qua Chee Gan (105 PHIL 473)

FACTS:

1.) Defendant Qua Chee Gan, a sole propertorship, shipped on board the SS Nagara as per bills of lading 2 tons or 2,032,000 kilos of copra from Quezon to the port of Gydnia, Poland and Karlshamm, Sweden.

2.) It unloaded 964,919 kilos of Copra in Karlshamm, then the remaining 1,569,429 in Gydnia.

3.) The insurers therefore have to indemnify DAL International Trading, the consignee, for the loss. They thereon sued the shipowner, the Swedish East Asia Company.

4.) A settlement was later on agreed upon among the insurers of the polish cargo insurers and the shipowner. Plaintiff, Sverigen, claims to have been subrogated of the $60,733.53 that it paid to the insurers. It thereon sued the defendant, Qua Chee Gan, in CFI Manila. Defendant filed a counterclaim of his own.

5.) The lower court dismissed the complaint.

ISSUE: Was there really a short-shipment? Plaintiff contends that the defendant should have two shipments, 812,800 in Karlshamm and 2,032,000 in Gydnia which amounted to the 696,419 kilos loss of copra.

HELD:

1.) The bills of lading presented by the plaintiff showed that 2,032,000 kilos of copra that were loaded from Quezon will be shipped from Gydnia, Poland only. Plaintiff contends that the total number of his disillusioned kilos of copra will be both shipped at Gydnia and Karlshamm.

2.) The bills of lading which purports to the delivery of copra to Karlshamm cannot be presented by the plaintiff. The witness of plaintiff testified that there are 20 copies of the bills of lading that they issue therefore it is impossible for the plaintiff not to have the bills of lading pertaining to Karlshamm, Sweden.

# 122 Elser et al. vs. Court of Appeals (96 PHIL 264)D: The owner of a vessel and the agent shall be civilly liable

for the acts of the captain and for the obligations contracted by the latter to repair, equip, and provision the

vessel, provided the creditor proves that the amount claimed was invested therein.

D: when the agents buy in their own names, but really for the account of their principal, the seller has an option to

look to either for payment, unless (1) he trusted the agent exclusively; or (2) by the usage and understanding of the business the agent only is held; or (3) unless the special circumstances of the case show that only the agent was

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intended to be bound and the seller knew it or was chargeable with knowledge of it.

FACTS:

Petitioner Elser is the agent of consignee Udharam Bazar concerning goods shipped on the “S.S. Sea Hydra” of Isthmian Steamship Company, from New York to Manila, received by the consignee except for one case of vanishing cream valued at P159.78.

International Harvester Co., as agent for the shipping company answered that the goods were landed and delivered to the Customs authorities.

The goods were insured against damage or loss by the Atlantic Mutual Insurance Company. Udaharam Bazar claimed for indemnity of the loss from the insurer, and was paid by Elser Inc. the amount involved, i.e. P159.78.

Before the Court of Appeals, Elser unwittingly admitted that they were late in claiming the indemnity for the loss of the case of the vanishing cream as their written claim was made on April 25, 1946, or more than 30 days after they had been fully aware of said loss. And because of this failure, the Court said the action of petitioners should, and must, fall.

Elser now contends that this finding is erroneous in the light of the provisions of the Carriage of Goods by Sea Act of 1936, which apply to this case, the same having been made an integral part of the covenants agreed upon in the bill of lading.

ISSUE:

1. W/N the Court of Appeals erred when it held that petitioners have already lost their right to press their claim against

respondent because of their failure to serve notice thereof upon the carrier within 30 days after receipt of the notice of loss or damage as required by clause 18 of the bill of lading which was issued – YES

a. Which of these two provisions should prevail? Is it that contained in clause 18 of the bill of lading, or that appearing in the Carriage of Goods by Sea Act? – Carriage of Goods by Sea Act

HELD:

The Carriage of Goods by Sea Act of 1936 was accepted and adopted by our government by the enactment of Commonwealth Act No. 65 making said Act "applicable to all contracts for the carriage in foreign trade." The pertinent provisions of which are:

6. Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier of 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.

xxx xxx xxx

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:

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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 other words, regardless of whether the notice of loss or damage has been given, the shipper can still bring an action to recover said loss or damage within one year after the delivery of the goods. This is contrary to the provisions of clause 18 of the bill of lading.

Clause 18 must yield to the provisions of the Carriage of Goods by Sea Act in view of the proviso contained in the same Act which says:

"any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods . . . or lessening such liability otherwise than as provided in this Act, shall be null and void and of no effect." (section 3.)

This means that a carrier cannot limit its liability in a manner contrary to what is provided for in said act. Thus, clause 18 of the bill of lading must of necessity be null and void.

Not a foreign trade:

Respondents contend that while the Carriage of Goods by Sea Act of 1936 was adopted by our government by virtue of CA No. 65, however, said Act does not have any application to the present case because the shipment in question was made that time the Philippines was still a territory of the United States and,

therefore it may be said that the trade then between the Philippines and the United States was not a "foreign trade.

Granting arguendo that the trade was not foreign trade , the Court is still of the opinion that the Carriage of Goods by Sea Act of 1936 may have application to the present case it appearing that the parties have expressly agreed to make and incorporate the provisions of said Act as integral part of their contract of carriage.

This is an exception to the rule regarding the applicability of said Act, expressly recognized by section 13 of said Act:

Nothing in this Act shall be held to apply to contracts for carriage of gods by sea between any port of the United States or its possessions, and any other port of the United States or its possessions: Provided, however, That any bill of lading or similar document of title which evidence of a contract for the carriage of goods by sea between such ports, containing an express statement that it shall be subject to the provisions of this Act, shall be subjected hereto as fully as if subject hereto by the express provisions of this Act. (Emphasis supplied.).

Having reached the foregoing conclusion, it would appear clear that action of petitioners has not yet lapsed or prescribed, it appearing that the present action was brought within one year after the delivery of the shipment in question.

Notice given was sufficient.

As regards the contention of respondents that petitioners have the burden of showing that the loss complained of did not take place after the goods left the custody of the carrier because they

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failed to give notice of their loss or damage as required by law, which failure gives rise to the presumption that the goods were delivered in the bill of lading, suffice it to state that the required notice was given by the petitioners to the carrier or its agent on April 25, 1946. That notice is sufficient to overcome the above presumption within the meaning of the law.

#123 American Ins. Co. vs. Cia. Maritima (21 SCRA 998)

#124 Union Carbide Phil vs. MRR (77 SCRA 359)

FACTS:

1. On December 18 1961, the vessel Daishin Maru arrived in Manila with a cargo of 1000 bags of synthetic resin consigned to General Base Metals, Inc., which later sold the cargo to Petitioner

2. On the following day, the cargo was delivered in good condition to the Manila Port Service, except for 25 bags

3. On January 20 and February 6 and 8, 1962 eight hundred ninety-eight (898) bags of resin (out of the 1,000 bags) were delivered by the customs broker to the consignee. One hundred two bags were missing. The contents of twenty-five bags were damaged or pilfered while they were in the custody of the arrastre operator (Manila Port Service)

4. The 152 bags of resin (102 missing and 50 damaged) were valued at $12.65 a bag or a total value of $1,992.80, which amount at the prevailing rate of

exchange of P3.85 to the American dollar, is equivalent to P7,402.78

5. On January 3, 1962: Claims were made by the Petitioner-consignee with the Manila Port Service and American Steamship Agencies, Inc., but these remained unpaid

6. A complaint was then filed by Petitioner-consignee on December 21, 1962 in the CFI of Manila for the recovery of damages amounting to P7,402.78 as the value of the undelivered 102 bags of resin and the damaged 50 bags plus legal rate of interest from the filing of the complaint and P1,000 as attorney's fees

7. The case was submitted for decision on the basis of a stipulation of facts. The trial court in its decision of January 15, 1964 dismissed the case as to the carrier's agent on the ground that the action had already prescribed because it was not "brought within one year after delivery of the goods", as contemplated in section 3(6) of the Carriage of Goods by Sea Act. The one-year period was counted from December 19, 1961 when the cargo was delivered to the arrastre operator. As above stated, the action was brought on December 21, 196'2 or two days late, according to the trial court's reckoning

8. With respect to the consignee's claim against the arrastre operator, the trial court found that the provisional claim was filed within the fifteen-day period fixed in paragraph 15 of the arrastre contract. Yet, in spite of that finding, the trial court dismissed the action against the arrastre operator

Issue: W/N Union Carbide’s action was filed beyond the reglementary period.

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Decision:

9. YES. The one-year period within which the consignee should sue the carrier is computed from "the delivery of the goods or the date when the goods should have been delivered". The Carriage of Goods by Sea Act provides:

10.RESPONSIBILITIES AND LIABILITIES11.SEC. 3. xxx xxx xxx12.(6) Unless notice of loss or damage and the

general nature of such loss or damage be given in writing to the carrier or hi agent at the port of discharge before 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.

13.Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking delivery thereof.

14.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.

15. 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:

16.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.

17. 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. (Commonwealth Act No. 65, adopting U.S. Public Act No. 521 of April 16,1936).

18.What is the meaning of "delivery" in section 3(6) of the Carriage of Goods by Sea Act The trial court construed delivery as referring to the discharge or landing of the cargo. The sensible and practical interpretation is that delivery within the meaning of section 3(6) of the Carriage of Goods by Sea Law means delivery to the arrastre operator. That delivery is evidenced by tally sheets which show whether the goods were landed in good order or in bad order, a fact which the consignee or shipper can easily ascertain through the customs broker.

19.To use as basis for computing the one-year period the delivery to the consignee would be unrealistic and might generate confusion between the loss or damage sustained by the goods while in the carrier's custody and the loss or damage caused to the goods while in the arrastre operator's possession.

20.The trial court's decision is reversed insofar as it dismissed plaintiff's claim against the Manila Railroad Company, as arrastre operator. The Philippine National Railways, as the successor of the Manila

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Railroad Company (See. 22, Republic Act No. 4156), is hereby ordered to pay plaintiff Union Carbide Philippines, Inc. the sum of P6,185.22, as the value of the 127 bags of resin (102 bags missing and 25 bags damaged), with legal rate of interest from the filing of the complaint on December 21, 1962 up to the date of payment, Plus P1,000 as attorney's fees and litigation expenses, and the costs.

#125. F.H. Stevens Co. vs. Norddeuscher Lloyd (6 SCRA 180)

DOCTRINE: If, in an action commenced, in due time, a judgment for the plaintiff be reversed, or if the plaintiff fail

otherwise than upon the merits, and the time limited for the commencement of such action has, at the date of such

reversal or failure, expired, the plaintiff, or, if he die and the cause of action survive, his representatives may

commence a new action within one year after such date, and this provision shall apply to any claim asserted in any

pleading by a defendant.

FACTS:

Plaintiff F. H. Stevens Co. had shipped from Hamburg to Manila, aboard the “MS SCHWABENSTEIN”, a vessel of defendant Norddeuscher Lloyd, 2,000 pieces of prismatical thermometers valued at $650. On May 21, 1959, two days after it arrived in Manila, the master of said vessel notified the plaintiff, thru its broker, of the delivery of said goods; that, upon examination of the case containing the same, it turned out that 1,154 pieces of said thermometers valued at $342.74, were missing and/or destroyed. Plaintiff immediately filed the corresponding notice of

loss and/or short delivery, followed by the corresponding notice and formal claim for loss and/or short delivery; that, despite several demands, defendant had refused and failed to pay said sum of $342.74 thereby causing plaintiff to suffer other losses such as attorney’s fees and unrealized profits so it instituted actions on April 27, 1960. Municipal Court of Manila dismissed the case without any trial on the merits on June 13, 1960 upon the ground of lack of jurisdiction over the subject-matter of the case, inasmuch as the same involved the exercise of admiralty and maritime jurisdiction. Plaintiff appeals on June 24, 1960 while the defendant moves for dismissal on the ground of that plaintiff’s causes of action had prescribed, it having been filed on June 24, 1960, or more than a year from May 21, 1959, when plaintiff was notified of the delivery of the case containing the thermometers in question. Plaintiff on the other hand claims that the period was interrupted from April 27, 1960 up to June 13, 1960, meaning that the action on June 24, 1960 was still within the one year period.

ISSUE: W/N F. H. Stevens Co. cause of action has already prescribed

HELD: NO. By the Provisions of section 49 of Act No. 190, pursuant to which: If, in an action commenced, in due time, a judgment for the plaintiff be reversed, or if the plaintiff fail otherwise than upon the merits, and the time limited for the commencement of such action has, at the date of such reversal or failure, expired, the plaintiff, or, if he die and the cause of action survive, his representatives may commence a new action within one year after such date, and this provision shall apply to any claim asserted in any pleading by a defendant.

The action commenced by the plaintiff in the Municipal Court of Manila, on April 27, 1960, was dismissed June 13, 1960, or over twenty (20) days after the expiration of the period of one (1)

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year, beginning from May 21, 1959, within which plaintiff’s action could be brought pursuant to Commonwealth Act No. 65, in relation to the Carriage of Goods by Sea Act. Under said section of Act No. 190, the period within which plaintiff could initiate the present case was renewed, therefore, for another year, beginning from June 14, 1960. The case at bar was commenced on June 24, 1960, or within the period last mentioned.

#126. Rizal Surety & Ins. Co. vs. Macondray (22 SCRA 902)

Facts:

1. The carrier in this case is Barber Steamship Line Inc. while Macondray & Co. is its authorized agent here in Manila.

2. Several machinery parts were shipped on board the carrier’s vessel at New York. The shipment was consigned to Edwardson Manufacturing Corporation.

3. However, the cargo was not discharged by the vessel upon its arrival in Manila. In view of which, Rizal Surety & Insurance Co. had to pay the consignee the value of the cargo pursuant to an insurance contract between the two.

4. Rizal Surety seeks to recover from Macondray & Co. a sum of money in view of the latter’s failure to discharge the cargo.

5. Macondray set up the defense of prescription based on Section 3 of the Carriage of Goods by Sea Act (COGSA). The lower court ruled its favor, hence the present appeal.

Issue: What period of prescription should control in the case at bar?

Held: The Statute of Limitations as provided for under the COGSA.

1. Under Section 3, Title I, of the COGSA: “in any event the carrier and the ship shall be discharged from all liability in respect to loss or damages 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.”

2. Rizal Surety maintains the view that this is not controlling, and that our statute of limitations should be applied since the shipment in question has not been discharged from the carrying vessel.

3. The aforementioned provision contemplates not only the case of damage, but also, that of loss. It goes without saying that there could be no possible discharge of goods lost during the voyage and before reaching the destination. Then again, said provision, likewise, anticipates two (2) other possibilities, viz.: 1) that delivery has been made, in which case the action should be brought "within one year after delivery of the goods;" or 2) that no delivery has taken place, in which event said period should be computed from "the date when the goods should have been delivered." In the latter, the cause of such non-delivery is immaterial. If the goods have not been discharged from the vessel, the non-delivery is imputable to the carrier. So would it be, if the goods had been unloaded from the vessel, but not delivered to the consignee. Indeed, in such case of

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discharge of the goods from the vessel, the carrier would still be liable for non-delivery of the goods, because the same would be due to its own omission, if it undertook to make the delivery by itself, or to the omission of its agent, if the carrier entrusted the custody of the goods and/or its delivery to a third party.

4. Our statute of limitations of action cannot be applied to the present case because the corresponding bill of lading — which is the contract and, hence, the law between the parties — expressly stipulates that it is "subject to the Provisions of the Carriage by Sea Act of the U.S. of America, approved April 16, 1936, which shall be deemed to be incorporated" therein.

5. Inasmuch as the "SS Tai Ping" arrived at the Port of Manila on November 2, 1962 and left it on November 4, 1962, it was on the latter date that the carrier had the last opportunity to deliver the goods; that the period of one year within which the carrier could be sued commenced to run, therefore, from November 5, 1962 and expired on November 4, 1963; and that said period has expired before this action was commenced on February 10, 1964.

# 127. Universal Shipping Lines vs. IAC (188 SCRA 170)

Facts:

SEVALCO Limited, owned and operated by the petitioner, shipped from Rotterdam Netherlands, to Bangkok, Thailand, aboard its M/V "TAIWAN", 2 cargoes of 50 palletized cartons. They were respectively consigned to S. Lersen Company, Ltd. and Muang Ngarm Retreads,Ltd. Both shipments were insured

with the private respondent, Alliance Assurance Company, Ltd., a foreign insurance company domiciled in London, England.

Despite the arrival of the vessel at Bangkok, the cargo covered by Bill of Lading No. RB-15 was not unloaded nor delivered to the consignee, S. Lersen Company, Ltd. The shipment under Bill of Lading No. RB-16 was delivered to Muang Ngarm Retreads, Ltd. with a shortage in weight because the cargoes had been either totally or partially dissolved in saltwater which flooded the vessel where they had been stored.

Upon arrival in Manila, Arturo C. Saavedra, master of M/V "TAIWAN" filed a marine protest stating that the source of the water could not be definitely ascertained where it comes from. He was suspecting of some leakage of suction pipes and that hold No. 2 cannot be inspected on account of the full cargoes inside the hold, rendering it to be inaccessible.

The consignees filed their respective formal claims for loss and damage to their cargoes. The insurer paid both claims in the amounts of £I2,180 and £2,547.18 for the loss and damage to their cargoes.

Private respondent, as insurer-subrogee, filed an action in the Court of First Instance of Manila to recover from the petitioner and its Manila agent, Carlos Go Thong & Company, what it paid the consignees of the cargo.

Issue: 

1. Whether or not petitioner liable for the damage/loss suffered by the subject shipments

2. Whether or not private respondent has capacity to sue in this jurisdiction

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3. Whether or not in private respondent's cause of action has not yet prescribed

Held: 

1. No. It was incumbent upon the defendants to prove that the losses and damages were due to causes other than the negligence or fault of their employees. Said defendants have not adduced proof on this point. It having been shown that the losses and damages were incurred while the shipments were in the custody of the M/V' Taiwan' the liability of its owner/operator and shipping agent is clear-they must pay for the losses and damages sustained by the consignees as a consequence of the breach of contract of water transportation.

2. Yes, The private respondent may sue in Philippine courts upon the marine insurance policies issued by it abroad to cover international-bound cargoes shipped by a Philippine carrier, even if it has no license to do business in this country, for it is not the lack of the prescribed license (to do business in the Philippines) but doing business without such license, which bars a foreign corporation from access to our courts.

3. No. Section 3(6), Title I, of the Carriage of Goods by Sea Act (Commonwealth Act No. 65) which provides that:

... 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. ...

This provision of the law admits of an xception: if the one-year period is suspended by express agreement of the parties for in such a case, their agreement becomes the law for them.

The exchange of correspondence between the parties and/or their associates/representatives shows that the parties had mutually agreed to extend the time within which the plaintiff or its predecessors-in-interest may file suit until December 27,1976. When the complaint was filed on June 25, 1976, that deadline had not yet expired.

#128. Eastern & Australian S/S Co. vs. Great American Ins. Co. (108 SCRA 248)

Facts:

a. On December 10, 1971, the Jackson and Spring (Sydney) Pty. Ltd. shipped from Sydney, Australia, one case of impellers for warman pump on board the SS “Chitral,” a vessel owned and operated in the Philippines by Eastern & Australian Steamship Co., Ltd., (EASCO) thru its agent F.E. Zuellig, Inc. under Bill of Lading No. 31, for delivery to Manila, Philippines in favor of consignee Benguet Consolidated, Inc.

b. The shipment was insured with Great American Insurance, Co. (GAICO) for P 35,921.81 against all risks.

c. On December 22, 1971 the SS “Chitral” arrived in Manila but failed to discharge the shipment or any part thereof.

d. Demand was made on EASCO for the delivery of said shipment, but having failed to make delivery, a claim was presented against them for the value of the shipment. EASCO, likewise, failed to make good the claim.

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e. As a consequence of the loss of the shipment, private respondent GAICO was compelled to pay the consignee P 35,921,81.

f. As subrogee, GAICO filed a complaint against EASCO for recovery of said amount with legal interest and attorney's fees.

g. In the answer, EASCO alleged that their liability for the loss of the shipment is only limited to L100 Sterling or its peso equivalent of P1,544.40 as per stipulation in the Bill of Lading and that even before the filing of the complaint, they have signified their willingness to pay the claim up to their limit of liability as stipulated in the Bill of Lading.

h. The lower court found that under Section 4 (5) of the Carriage of Goods by Sea Act (COGSA), the carrier and the shipper may, in the absence of a declaration in the Bill of Lading of the value of the goods shipped, fix a maximum liability of the shipper for the cargo lost or damages, but such maximum shall not be less than $500.00 per package. Consequently, the agreement for a maximum liability of only L100 Sterling contained in Clause 17 of the Bill of Lading was declared void for being contrary to law and EASCO were held liable.

Issue:

Whether EASCO’s liability should be $500 or its peso equivalent in the sum of P3,217.50 pursuant to Sec. 4 (5) of the COGSA?

Held:

1. No, the stipulation in the Clause is valid and EASCO should be liable only up to P 1,544.40.

2. There is no inconsistency between Section 4 (5) of the COGSA and Clause 17 of the Bill of Lading. The first part of the provision of Section 4 (5) of the Carriage of Goods by Sea Act limits the melee, amount that may be recovered by the shipper in the absence of an agreement as to the nature and value of goods shipped. Said provision does not prescribe the minimum and hence, it could be any amount which is below $500.00. Clause 17 of the questioned Bill of Lading also provides the melee, for which the carrier is liable. It prescribes that the carrier may only be held liable for an amount not more than L100 Sterling which is below the melee, limit required in the COGSA.

3. It should be noted that both the COGSA and Clause 17 of the Bill of Lading allow the payment beyond the respective melee, limit imposed therein, provided that the value of the goods have been declared in the Bill of Lading.

4. The second paragraph of Section 4 (5) of the COGSA prescribing the melee, amount shall not be less than $500.00 refers to a situation where there is an agreement other than set forth in the Bill of Lading providing for a melee, higher than $500.00 per package.

5. In the case at bar, it is apparent that there had been no agreement between the parties, and hence, Clause 17 of the Bill of Lading shall prevail.

6. EASCO’s stand that the condition imposed in Clause 17 of the Bill of Lading should not be read in the light of second paragraph of Section 4 (5) of the Carriage of Goods by Sea Act, is well taken. Indeed, it would be to render ineffective the very intent of the law setting the

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sum of $500.00 as the melee, liability of the vessel/carrier, per package, in the, absence of a higher valuation of the goods as indicated in the Bail of Lading by providing that $500.00 is the maximum liability, the law does not disallow an agreement for liability at a lesser amount.

7. Significantly, Article 1749 of the New Civil Code expressly allow the limitation of the carrier's liability. “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.”

WHEREFORE, the decision of the court a quo is hereby reversed and another one is entered finding petitioners liable to private respondent in the amount of L100 Sterling or its peso equivalent of P1,544.40. Without pronouncement as to costs. SO ORDERED.

#129. Filipino Merchants Ins. Co. vs. Alejandro (145 SCRA 42)

FACTS:

On August 3, 1977, plaintiff Choa Tiek Seng filed a complaint against the petitioner before the then CFI of Manila for recovery of a sum of money under the marine insurance policy on cargo. Mr. Choa alleged that the goods he insured with the petitioner sustained loss and damage in the amount of P35,987.26. The vessel SS Frotario which was owned and operated by private respondent Frota Oceanica Brasiliera, (Frota) discharged the goods at the port of Manila on December 13, 1976. The said goods were delivered to the arrastre operator E. Razon, Inc., on December 17, 1976 and on the same date were received by the

consignee-plaintiff.

On December 19, 1977, the petitioner filed its amended answer disclaiming liability, imputing against the plaintiff the commission of fraud and counterclaiming for damages.

On January 9, 1978, the petitioner filed a third-party complaint against the carrier, private respondent Frota and the arrastre contractor, E. Razon, Inc. for indemnity, subrogation, or reimbursement in the event that it is held liable to the plaintiff.

Meanwhile, on August 10, 1977, Joseph Benzon Chua filed a similar complaint against the petitioner for recovery under the marine insurance policy for cargo alleging that the goods insured with the petitioner sustained loss and damage in the sum of P55,996.49. The goods were delivered to the plaintiff-consignee on or about January 25-28, 1977.

On May 31, 1978, the petitioner filed its answer. On September 28, 1978, it filed an amended third-party complaint against respondent carrier, the Australia-West Pacific Line (Australia-West).

In both cases, the private respondents filed their respective answers and subsequently filed a motion for preliminary hearing on their affirmative defense of prescription. The private respondents alleged in their separate answers that the petitioner is already barred from filing a claim because under the Carriage of Goods by Sea Act, the suit against the carrier must be filed within one year after delivery of the goods or the date when the goods should have been delivered.

The petitioner contended that the provision relied upon by the respondents applies only to the shipper and not to the insurer of

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the goods.

On April 30, 1980, the respondent judge in Civil Case No. 109911, upheld respondent Frota and dismissed the petitioner's third-party complaint. Likewise, on August 31, 1982, dismissed the petitioner's third-party complaint against respondent Australia-West on the ground that the same was filed beyond the prescriptive period provide in Section 3 (6) of the Carriage of Goods by Sea Act of 1936.

ISSUE:Whether or not the prescriptive period of one year under the said Act also applies to an insurer such as herein petitioner.

RATIO:YES. Section 3(b) of the Carriage of Goods by Sea Act provides:

(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before 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.

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 the 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. (Emphasis supplied)

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

In the case at bar, the petitioner's action has prescribed under

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the provisions of the Carriage of Goods by Sea Act. Hence, whether it files a third-party complaint or chooses to maintain an independent action against herein respondents is of no moment. Had the plaintiffs in the civil cases below filed an action against the petitioner after the one-year prescriptive period, then the latter could have successfully denied liability on the ground that by their own doing, the plaintiffs had prevented the petitioner from being subrogated to their respective rights against the herein respondents by filing a suit after the one-year prescriptive period. The situation, however, does not obtain in the present case. The plaintiffs in the civil cases below gave extra-judicial notice to their respective carriers and filed suit against the petitioner well within one year from their receipt of the goods. The petitioner had plenty of time within which to act.

#130. New World Int’l Devt. Inc. vs. NYK Fil-Japan Shipping Corp. (656 SCRA 129)

#131. Mayer Steel Pipes Corp. vs. Court of Appeals (274 SCRA 482)

Doctrine: Under Sec. 3(6) of COGSA, only the carrier's liability is extinguished if no suit is brought within one year. But the liability of the insurer is not extinguished because

the insurer's liability is based not on the contract of carriage but on the contract of insurance.

FACTS:

In 1983, petitioner Hongkong Government Supplies Department (Hongkong) contracted petitioner Mayer Steel Pipe Corporation (Mayer) to manufacture and supply various steel pipes and fittings. Prior to the shipping, petitioner Mayer insured the pipes and fittings against all risks with private respondents South Sea Surety and Insurance Co., Inc. (South Sea) and Charter Insurance Corp. (Charter). Industrial Inspection, inspector procured by parties to examine the condition of the pipes as regards its compliance with the contract, certified all the pipes and fittings to be in good order condition before they were loaded in the vessel. Nonetheless, when the goods reached Hongkong, a substantial portion thereof was damaged.

Petitioners filed a claim against private respondents for indemnity under the insurance contract. Respondent Charter paid petitioner Hongkong the amount of HK$64,904.75. Petitioners demanded payment of the balance of HK$299,345.30 representing the cost of repair of the damaged pipes. Private respondents refused to pay because the insurance surveyor's report allegedly showed that the damage is a factory defect. On April 17, 1986, petitioners filed an action against private respondents to recover the sum of HK$299,345.30. For their defense, private respondents averred that they have no obligation to pay because the damage to the goods is due to factory defects which are not covered by the insurance policies.

The trial court ruled in favor of petitioners. It found that the damage to the goods is not due to manufacturing defects. The Court of Appeals affirmed the said finding of the trial court but reversed its decision due to prescription because they filed

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the suit after more than 2 years. It ruled that Section 3(6) of COGSA, which provides that “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”applies not only to the carrier but also to the insurer citing Filipino Merchants Insurance Co. v. Alejandro.

ISSUE

Does Sec. 3(6) of COGSA apply to cases where the shipper files a suit against the insurer?

RULING

NO. Under Sec. 3(6) of COGSA, only the carrier's liability is extinguished if no suit is brought within one year. But the liability of the insurer is not extinguished because the insurer's liability is based not on the contract of carriage but on the contract of insurance. The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was the insurer which filed a claim against the carrier for reimbursement of the amount it paid to the shipper. In the case at bar, it was the shipper which filed a claim against the insurer. The ruling in Filipino Merchants does not apply in this case because when the Court said that Section 3(6) of the Carriage of Goods by Sea Act applies to the insurer, it meant that the insurer, like the shipper, may no longer file a claim against the carrier beyond the one-year period provided in the law. But it does not mean that the shipper may no longer file a claim against the insurer because the basis of the insurer's liability is the insurance contract and not the carriage contract.

#132. Dole Philippines Inc. vs. Maritime Co. of the Phils. (148 SCRA 118)

#133. Lufthansa vs. IAC and Sps. Henry and Teresita Alacantara (207 SCRA 350)

Facts: 

On January 1979, respondent Henry Alcantara shipped 13 pieces of luggage through petitioner Lufthansa from Teheran to Manila as evidenced by Lufthansa Air Waybill, which disclosed that the actual gross weight of the 13 pieces of luggage is 180 kg. Henry did not declare an inventory of the contents or the value of the luggages when he delivered them to Lufthansa.

On March 3, the 13 pieces of luggage were boarded in one of Lufthansa's flights which arrived in Manila on the same date. After the luggages arrived in Manila, the consignee, respondent Teresita Alcantara, was able to claim from the cargo broker Philippine Skylanders, Inc. on March 6, only 12 out of the 13 pieces of luggage with a total weight of 174 kg.  

The spouses advised Lufthansa of the loss of one of the luggages and of the contents thereof, prompting Lufthansa sent telex tracing messages to different stations and to PAL which actually carried the cargo. Since efforts to trace the missing luggage yielded negative results, Lufthansa informed Henry Alcantara accordingly and advised him to file a claim invoice.

On September 24, the private respondents wrote the petitioner demanding the production of the missing luggage within then (10) days from receipt. Since the petitioner failed to comply, the

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spouses filed a complaint for breach of contract with damages against the petitioner before the Manila CFI. 

The petitioner filed its answer alleging that the Warsaw Convention limits the liability of the carrier, if any, with respect to cargo to a sum of 250 francs per kilo ($20.00 per kilo or $9.07 per pound), unless a higher value is declared in advance and additional charges are paid by the passenger and the conditions of the contract as set forth in the air waybill expressly subject the contract of carriage of cargo to the Warsaw Convention. It also alleged that it never acted fraudulently or in bad faith so as to entitle respondent spouses to moral damages and attorney's fees, nor did it act in a wanton, fraudulent, reckless, oppressive or malevolent manner as to entitle spouses to exemplary damages.

The trial court rendered a decision in favor of plaintiffs-spouses, ordering Lufthansa to pay plaintiffs actual damages, attorney's fees and the costs of suit. The petitioner appealed to IAC, which affirmed with modification the CFI decision and later on denied the MR, hence the instant petition for review on certiorari. 

Issue: 

W/N the private respondents are entitled to an award of damages beyond the liability set forth in the Warsaw Convention and in the Airwaybill of Lading

Held: 

Yes. The petition is without merit. The loss of one luggage belonging to the private respondents while the same was in the custody of the petitioner is not disputed. The contract of air carriage generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees could give ground for an action for damages. Common carriers are liable for the missing goods for failure to comply with its duty.

The Warsaw Convention does not operate as an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent of that liability. It should be deemed a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any wilfull misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. 

The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of contract by the carrier" or misconduct of its officers and employees, or for some particular or exceptional type of damage. 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, which is absurd." Nor may it for a moment be supposed that if a member of the aircraft complement should inflict some physical injury on a passenger, or maliciously destroy or damage the latter's property, the Convention might successfully be pleaded as the sole gauge to determine the carrier's liability to the passenger. Neither may the Convention

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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. It is in this sense that the Convention has been applied, or ignored, depending on the peculiar facts presented by each case.

In the case at bar, the trial court found that: (a) petitioners airline has not successfully refuted the presumption established by Article 1735 of the Civil Code that the loss of the luggage in question was due to the negligence or fault of its employees; (b) the contents of the missing luggage of private respondents could not be replaced and were assessed at P200,000.00 by the latter; (c) respondent Henry spent about $15,000.00 in trying to locate said luggage in Frankfurt, Germany, London, United Kingdom and Hongkong; (d) there being no evidence to the contrary, the foregoing assessments made by private respondents were fair and reasonable; and (e) private respondents were unable to present ample evidence to prove fraud and bad faith and are therefore not entitled to moral damages under Article 2220 of the Civil Code.

Furthermore, IAC found that petitioner waived the applicability of the Warsaw Convention to the case at bar when it offered private respondent a higher amount than that which is provided in the said law and failed to raise timely objections during the trial when questions and answers were brought out regarding the actual claims and damages sustained by Alcantara which were even subjected to lengthy cross examination by Lufthansa's counsel. 

Petition dismissed. 

#134. Wallem Phils. Shipping Inc. vs. S.R. Farms, Inc. (624 SCRA 329)

Facts:

1. On March 25, 1992, Continental Enterprises, Ltd. loaded on board the vessel M/V “Hui Yang,” a shipment of Indian Soya Bean Meal weighing 1,100 metric tons, for transportation and delivery from India to Manila, with SR Farms as consignee. 

2. The vessel is owned and operated by Conti-Feed, with petitioner Wallem as its ship agent.

3. On April 11, 1992, the said vessel, M/V “Hui Yang” arrived at the port of Manila and was discharged and transferred into the custody of the receiving barges.

4. Upon checking the cargo, a shortage in the shipment of 80.467 metric tons was found.

5. Petitioner then filed a Complaint for damages against Conti-Feed and on June 7, 1993, respondent filed an Amended Complaint impleading herein petitioner as defendant.

6. Petitioner denied the allegations of respondent claiming, among others, that respondent’s claim is already barred by laches and/or prescription. RTC dismissed the petition. The CA reversed the decision of the RTC. Hence, this petition.

Issue:

Whether or not the claim against petitioner was timely filed.

Held: NO.

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Ratio: Under Section 3 (6) of the Carriage of Goods by Sea Act (COGSA), notice of loss or damages must be filed within three days of delivery. Admittedly, respondent did not comply with this provision. Under the same provision, however, a failure to file a notice of claim within three days will not bar recovery if a suit is nonetheless filed within one year from delivery of the goods or from the date when the goods should have been delivered. There is no dispute that the vessel carrying the shipment arrived at the Port of Manila on April 11, 1992 and that the cargo was completely discharged there from on April 15, 1992.

However, respondent erred in arguing that the complaint for damages, insofar as the petitioner is concerned, was filed on March 11, 1993.In the instant case, petitioner was only impleaded in the amended Complaint of June 7, 1993, or one (1) year, one (1) month and twenty-three (23) days from April 15, 1992, the date when the subject cargo was fully unloaded from the vessel. The filing of an amended pleading does not retroact to the date of the filing of the original; the statute of limitation runs until the submission of the amendment.

Hence, reckoned from April 15, 1992, the one-year prescriptive period had already lapsed.

#135. Luna vs. Court of Appeals (216 SCRA 107)

Facts:

Petitioners Rufino Luna, Rodolfo Alonso and Porfirio Rodriguez boarded Flight 020 of private respondent Northwest Airlines bound for Seoul, South Korea, to attend the four-day Rotary

International Convention. They checked in one (1) piece of luggage each. After boarding, however, due to engine trouble, they were asked to disembark and transfer to a Korean Airlines plane scheduled to depart four (4) hours later. They were assured that their baggage would be with them in the same flight. When petitioners arrived in Seoul, they discovered that their personal belongings were nowhere to be found instead, they were allegedly flown to Seattle, U.S.A. It was not until four (4) days later, and only after repeated representations with Northwest Airlines personnel at the airport in Korea were petitioners able to retrieve their luggage. By then the Convention, which they were hardly able to attend, was almost over.

Petitioners assert that after they recovered their luggage, they sent a written claim to private respondent's office. However, private respondent, in a letter, disowned any liability for the delay and averred that it exerted "its best efforts to carry the passenger and baggage with reasonable dispatch." Thus, petitioners filed a complaint for breach of contract with damages before the Regional Trial Court. However, upon motion of private respondent, both complaints were dismissed for lack of cause of action due to petitioners' failure to state in their respective complaints that they filed a prior claim with private respondent within the prescribed period.

Petitioners filed a petition for certiorari before the Court of Appeals to set aside the order of respondent Judge in granting private respondent's motion to dismiss. However, respondent Court of Appeals, applying the provisions of the Warsaw Convention and ruling that certiorari was not a substitute for a

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lost appeal, dismissed the petition and denied their motion for reconsideration. Hence, this present recourse by petitioners.

ISSUE:W/N non-observance of the prescribed period in the

Warsaw Convention to file a claim bars claimant's action in court for recovery.

HELD:No, the Court held that petitioners can still file a claim.

Previously, We ruled that the Warsaw Convention was a treaty commitment voluntarily assumed by the Philippine government; consequently, it has the force and effect of law in this country. But, in the same token, We are also aware of jurisprudence that the Warsaw Convention does not operate as an exclusive enumeration of the instances for declaring an airline liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Convention merely declares the carrier liable for damages in the enumerated cases, if the conditions therein specified are present. For sure, it does not regulate the liability, much less exempt, the carrier for violating the rights of others which must simply be respected in accordance with their contracts of carriage. The application of the Convention must not therefore be construed to preclude the operation of the Civil Code and other pertinent laws. In fact, in Alitalia v. IAC, We awarded Dr. Felipa Pablo nominal damages, the provisions of the Convention notwithstanding.

Hence, petitioners' alleged failure to file a claim with the common carrier as mandated by the provisions of the Warsaw Convention should not be a ground for the summary dismissal of their complaints since private respondent may still be held liable for breach of other relevant laws which may provide a different period or procedure for filing a claim. Considering that

petitioners indeed filed a claim which private respondent admitted having, their demand may have very well been filed within the period prescribed by those applicable laws. Consequently, respondent trial courts, as well as respondent appellate court, were in error when they limited themselves to the provisions of the Warsaw Convention and disregarding completely the provisions of the Civil Code.

Furthermore, We are not prepared to subscribe to petitioners' argument that the failure of private respondent to deliver their luggage at the designated time and place amounted ipso facto to willful misconduct. For willful misconduct to exist, there must be a showing that the acts complained of were impelled by an intention to violate the law, or were in persistent disregard of one's rights. It must be evidenced by a flagrantly or shamefully wrong or improper conduct.

#136. United Airlines vs. Uy (318 SCRA 576)

FACTS:

- On October 13, 1989, respondent Willie Uy, a passenger on United Airlines Flight No. 819 for the SF-MNL route, checked in. One piece of his luggage was found to be overweight at the airline counter.

- An employee of petitioner rebuked him saying that he should have known the max. weight allowance is 70 kgs. per bag and that he should have packed his things accordingly. Then, in a loud voice in front of the milling crowd, she told Uy to repack his things.

- Uy acceded only to find his luggage was still overweight. The airline then billed him overweight charges which he

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offered to pay with a miscellaneous charge order (MCO) or an airline pre-paid credit.

- However, the airline's employee, and later its airport supervisor, refused to honor the MCO pointing out that there were conflicting figures listed on it. Despite Uy’s explanation that the last figure written on the MCO represented his balance, petitioner's employees did not accommodate him. Faced with the prospect of leaving without his luggage, Uy paid the overweight charges with his American Express credit card.

- Uy's troubles did not end there. Upon arrival in Manila, he discovered that one of his bags had been slashed and its contents stolen.

- Uy wrote petitioner a letter dated October 16, 1989, bewailing the humiliating treatment he suffered in the hands of petitioner’s employees, notifying petitioner of his loss and requesting reimbursement therefor.

- Petitioner’s Central Baggage Specialist Joan Kroll, mailed a check representing the payment of his loss based on the maximum liability of US $9.70 per pound. Uy found the amount grossly inadequate to compensate him for his losses, and for the indignities he was subjected to. He sent (2) more letters to petitioner, one dated 4 January 1990 through a certain Atty. Pesigan, and another dated 28 October 1991 through Atty. Ramon U. Ampil demanding an out-of-court settlement of P 1M. However, petitioner did not accede to his demands.

- Uy then filed a complaint against petitioner, praying for moral damages of at least P1M, exemplary damages of

at least P500K, attorney's fees of at least P50K, and reimbursement for the damage to his luggage and its stolen contents.

- Petitioner moved to dismiss the complaint on the ground that the cause of action had prescribed, invoking Art. 29 of the Warsaw Convention which provides —

Art. 29 (1) The right to damages shall be extinguished if an action is not brought within two (2) years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the transportation stopped. (2) The method of calculating the period of limitation shall be determined by the law of the court to which the case is submitted.

- Uy countered that par. (1) of Art. 29 must be reconciled with par. (2) thereof which states that "the method of calculating the period of limitation shall be determined by the law of the court to which the case is submitted", and that according to Philippine laws the prescription of actions is interrupted "when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor", and that since he made several demands upon petitioner, the two (2)-year period of limitation had not yet been exhausted.

- The trial court dismissed the action. Uy filed his MR, which was denied. Thus, he appealed to the CA, which reversed the trial court’s decision.

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Whether respondent’s action is barred by Art. 29 of the Warsaw Convention.

HELD: No.

Within our jurisdiction, the Warsaw Convention can be applied, or ignored, depending on the facts of each case. 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 it 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, 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.

Uy is suing on (2) causes of action: (a) the humiliating treatment he received from petitioner's employees at the SF Airport; and, (b) the slashing of his luggage and the loss of his personal effects amounting to US $5,310.

1st cause of action (damages arising from the misconduct of the airline employees / violation of respondent's rights as passenger) is not covered by the Warsaw Convention. Therefore, failure to file the complaint within the (2)-year limitation of the Warsaw Convention does not bar the 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 (4) years for filing an action based on torts.

2nd cause of action (damages arising from theft or damage to property or goods) is within the Convention. The travaux preparatories of the Warsaw Convention reveal that the delegates thereto intended the (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.

Therefore our rules on interruption of prescriptive periods do not apply. Art. 29, par. (2), was intended only to let local laws determine whether an action had been commenced within the (2)-year period. Since it is indisputable that Uy filed the present action beyond the (2)-year period, his 2nd cause of action is barred.

Nonetheless, Uy tried to immediately convey his loss to petitioner. In this regard, PAL vs. CA (the case with the damaged microwave) is instructive. Here, the Court held that respondent’s claim was clearly not her fault, that the letter demanding damages could only be filed, after months of exasperating follow-up of the claim, and that if there was any failure at all to file the formal claim within the prescriptive period contemplated in the Air Waybill, was due to the carrier, the consequences of which could not be attributed to private respondent.

In the case at bar, Uy could not immediately file an action because petitioner gave him the runaround, answering his letters but not giving in to his demands. True, Uy 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 (2) years from the arrival at the place of destination, such

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rule shall not be applied in this case because of petitioner’s delaying tactics.

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