Transportation Law Digests 4 Cases

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Transportation Digests (c/o Marge) – Set 3, for October 2, 2012

LU DO & LU YM CORPORATION vs BINAMIRA
FACTS:
Parties:
Delta Photo Supply Company of NY - Supplier
Lu Do and Lu Ym Corp – Petitioners-DEFENDANT, Agent of Common Carrier
Binamira – Respondent, consignee
Cebu Stevedoring Company – Stevedore, tasked to unload cargo
Visayan Cebu Terminal Company Inc – arrastre operator of the port, appointed by the Bureau of Customs

-

Merchandise (photo supplies) shipped on board M/S Fernside at NY USA to be sent to Cebu
During discharge in Cebu, the stevedore separated the good and bad cargo
All cargo was received at the pier by the arrastre, double checked by both arrastre and terminal
company
Merchandise was not in the list of bad cargo so therefore, it was received in good condition
Consignee discovers that the goods had signs of pilfirage upon delivery, surveyors assess
missing supplies at P324.

ISSUE/S:
Is the carrier responsible for the loss considering that it occurred after the shipment was DISCHARGED
from the ship and placed in the possession and custody of customs authority?
HELD:
CA decision reversed, carrier is NOT LIABLE. CA made the wrong interpretation of the law and ignored
stipulations in the Bill of Lading regarding limitation of liability while cargo is still under the carrier’s
custody and control ONLY. There are very clear stipulations in the Bill of Lading quoted in the decision.
- A common carrier is responsible for the loss, destruction or deterioration of the goods it assumes to
carry from one place to another unless the same is due to any to any of the causes mentioned in Article
1734 on the new Civil Code, and that, if the goods are lost, destroyed or deteriorated, for causes other
that those mentioned, the common carrier is presumed to have been at fault or to have acted negligently,
unless it proves that it has observed extraordinary diligence in their care (Article 1735) and that this
extraordinary liability lasts from the time the goods are placed in the possession of the carrier until they
are delivered to the consignee, or "to the person who has the right to receive them" (Article 1736), but
these provisions only apply when the loss, destruction or deterioration takes place while the
goods are in the possession of the carrier, and not after it has lost control of them. The reason is
obvious. While the goods are in its possession, it is but fair that it exercise extraordinary diligence in
protecting them from damage, and if loss occurs, the law presumes that it was due to its fault or
negligence. This is necessary to protect the interest the interest of the owner who is at its mercy. The
situation changes after the goods are delivered to the consignee.

REGIONAL CHARTER LINES OF SG et al vs THE NETHERLANDS INSURANCE Co.
FACTS:
Parties:
Regional Charter Lines – DEFENDANT, Carrier, based in SG
EDSA Shipping Agency – Agent of RCL
Netherlands Insurance – insured the goods shipped, paid claims, subrogated RCL
Temic Telefunken Microelectronices (Temic) – Consignee
U Freight – forwarding agent based in SG contracted services of Eagle Lines
Eagle Lines – tasked by U Freight to transport cargo, contracted services of RCL (as a ship owner)

-

Epoxy Molding Compound (the merchandise) was to be shipped from SG to Manila.
The merchandise is temperature sensitive thus it is refrigerated in transit at O degrees Celsius.
Unloaded from the ship in good condition, refrigerator was working well.
However, goods were damaged because temperature in the ref fluctuated to 33 degree C
allegedly because of burnt condenser more of the ref container
Temic claimed from Netherlands, Netherlands paid the insurance claim
Netherlands filed a complaint for subrogation of insurance settlement against RCL
RCL and agent EDSA Shipping denied any negligence in the shipment, and that there is no valid
subrogation

ISSUE/S:
W/N RCL and EDSA Shipping is liable as CC under the theory of presumption of negligence?

HELD:
YES. SC held CC is presumed to have been negligent if it fails to prove that it exercised extraordinary
vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged
condition, a presumption arises against the carrier of its failure to observe that diligence, and there need
not be an express finding of negligence to hold it liable.
RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law
over the goods they transported. Indeed, there is sufficient evidence showing that the fluctuation of the
temperature in the refrigerated container van, as recorded in the temperature chart, occurred after the
cargo had been discharged from the vessel and was already under the custody of the arrastre operator,
ICTSI. This evidence, however, does not disprove that the condenser fan – which caused the fluctuation
of the temperature in the refrigerated container – was not damaged while the cargo was being unloaded
from the ship. It is settled in maritime law jurisprudence that cargoes while being unloaded generally
remain under the custody of the carrier;RCL and EDSA Shipping failed to dispute this. – BURDEN OF
PROOF HAS SHIFTED TO THE SHIPPER.

ONG YIU vs CA et al
FACTS:
Parties:
Ong Yiu – Petitioner, lawyers and businessman
PAL – DEFENDANT, Carrier
-

-

Yiu is a passenger of PAL, from Butuan to Cebu.
He was going to Cebu for a trial. His checked-in luggage (“maleta”) contained documents and
transcripts he needed as evidence for the trial.
Upon arrival in Cebu, he realized his luggage was lost. Many attempts were made to recover the
luggage and bring it from Butuan to Cebu. Long story short, however, he had to ask for
postponment of hearing.
Luggage was eventually recovered but it was already opened despite the lock and some items
were missing (gifts to the parents in law and some documents and exhibits of sensitive nature).
PAL’s ticket as stipulation at the back that in the event of loss, it’s liability is only limited to P100
unless passenger declares a high value – IMPORTANT!
CA held PAL is guilty of simple negligence only, no moral and exemplary damages

ISSUE/S:
1. W/N PAL as CC is guilty of simple negligence and NOT bad faith in the breach of its contract of
transportation w Yiu?
2. W/N PAL’s liability is only limited to P100? – RELEVANT ISSUE!
HELD:
1. PAL has NOT acted in BAD FAITH. There was no gross negligence or fraud on its part. In the absence
of a wrongful act or omission, petitioner is NOT entitled to moral and exemplary damages.
2. PAL’s liability is only limited. Passenger did NOT declare higher value or pay additional transportation
charge. Art 1750 of CC (on limited liability)’s conditions have been complied with. Stipulation is VALID.
Even if petitioner has not signed the ticket, he is still bound by its provisions. A ticket is a CONTRACT OF
ADHESION. Petitioner cannot recover excess amount.

SARKIES TOUR PHILS INC vs CA et al
FACTS:
Parties:
Elino, Marisol and Fatima Fortades – Respondents, Passengers
Sarkies Tour – DEFENDANT- petitioner, owner of bus

-

-

Fatima Fortades boarded the Sarkies bus from Manila to Legaspi
They loaded 3 luggage at the belly of the bus containing optometry review materials and
equipment and documents such as passport and US Visa and greencard
The luggage was lost because the door to the cargo hold of the bus was apparently left opened.
So the bags got lost in transit to Bicol
The Fortades demanded the return of the luggage from Sarkies and also exhausted other means
such as radio announcements and soliciting the help of the drivers of Victory Liner who take the
same route.
Since efforts were fruitless, after NINE MONTHS, the Fortades instituted a suit against Sarkies
for recovery, claiming that carrier failed to exercise extraordinary diligence

ISSUE/S:
W/N Sarkies as carrier is liable?
HELD:
YES! Petitioner claims that Fatima did not bring any piece of luggage with her, and even if she did, none
was declared at the start of the trip. The documentary and testimonial evidence presented at the trial,
however, established the contrary. In its letter dated October 1, 1984, Sarkies tacitly admitted its liability
by apologizing to respondents and assuring them that efforts were being made to recover the lost items.
Besides, the Fortades would not have gone through all the trouble in recovering items if the luggage was
not really lost.
Furthermore, other passengers had suffered a similar fate: Dr. Lita Samarista testified that petitioner
offered her P1,000.00 for her lost baggage and she accepted it; Carleen Carullo-Magno lost her chemical
engineering review materials, while her brother lost abaca products he was transporting to Bicol.
Under the Civil Code, "(c)ommon carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over the goods . . .
transported by them," and this liability "lasts from the time the goods are unconditionally placed
in the possession of, and received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to . . . the person who has a right to receive them," unless
the loss is due to any of the excepted causes under Article 1734 thereof.
The cause of the loss in the case at bar was Sarkies’ negligence in not ensuring that the doors of the
baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all of the
luggage was lost, to the prejudice of the paying passengers.

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