Dec 12, 2012

138. Don Luciano Cordoba vs Warner, Barnes and Co. (08/26/1901)

Ponente: Smith

DOCTRINE: Having voluntarily discharged the packages, Warner cannot now be permitted to urge that the failure to examine the cases on board was a bar to the claim of appellant

FACTS:

In June 1900, Cahn, Nickelsberg and Co. and Trieste and Co. delivered to the Pacific Mail Steamship Company on board its steamship Rio de Janeiro, for shipment to Manila via Hong Kong 20 cases of shoes and 5 cases of hats prepaid as per “accountable receipt” or “way bill.”

The goods were consigned to Cordoba in Manila and properly marked with his name.

On arrival at HK, they were delivered by the Pacific Mail to the steamer Diamante in good condition for transhipment to Manila Bay.

The steamship arrived June 11, 1900 under consignment to the defendants Warner.

10 days later the 5 cases of hats and and 6 of the 20 cases of shoes were discharged into the lighters of Carman and Co, agents of the Cordoba, empowered to receive and transport them from the ship’s side to the custom house.

Before receiving the consignment of Cordoba, Carman and Co. called the attention of the Warner to the condition of the cases and verifying the contents of the packages and without demanding an examination of them on board, voluntarily delivered them to the lighter men, who under customs supervision and control, brought them to the custom house where they were deposited in the bodega set apart for broken packages.

On the 25th or 27th of June, while the goods were still at the custom house, Cordoba wrote Warner, notifying them that the 5 cases of hats and 6 cases of shoes bore evidence of having been tampered with and asking that they name a representative to be present at the customs examination of the cases in order to note any shortage which might be disclosed thereby.

Warner named Senor Abren as their representative and together with the customs officials, he examined the cases in bad condition and reported to his principals that some of the packages were missing.

The packages left were received by Cordoba from the customhouse on the 29th of June.

Warner declined to settle with the Cordoba regarding the missing goods because the protested packages were not opened and examined before they left the ship’s side as required by the bill of lading and also because the claim of loss was not presented within 24 hours after delivery of the goods to the lighter for transportation to the customs house.

Trial court ruled in favor of defendants.

ISSUE: Whether the trial court erred.

HELD: YES

RATIO:

The bill of lading provided that “in event of any packages being refused on account of condition, they are, if in bad order to be examined on board the steamer and contents certified to, when steamer’s responsibility will cease” gave the defendants the undoubted right to retain on board and examine all refused packages

This right however being exclusively for their own protection, they could waive it and they did waive it by discharging the goods, notwithstanding the protest, and accepting a receipt which specified on its face that the cases were in bad condition when delivered for transportation to the custom house

Also, plaintiff presented its claim not later than the 27th of June and he did not receive consignment within the meaning of ART 366 of the Commercial Code before the 29th of the same month

The discharge of the merchandise into the lighters of the Carman and Co. For delivery at the custom house under customs supervision and control was not the receipt of the merchandise contemplated under ART 366

The packages were in the hands of the government and their owner could not exercise dominion over them until duties were paid

The time prescribe by ART 366 within which claims must be made does not begin until the consigner has received such possession of the merchandise that he may exercise over it the ordinary control pertinent to ownership

139. New Zealand Ins. Co. v. Adriana Choa Toy

New Zealand Ins. Co., Ltd. V. Choa Joy, etcD: In order that the condition provided for in Art 36 of Code of Commerce may be demanded, two requisites must first be satisfied: (a) there should

be consignment of goods, through a common carrier, by a consignor in one place to a consignee in another place; and (b) delivery of the

merchandize by the carrier to the consignee at the place of destination

Facts:1. The ship Jupiter received at Samar in good order and condition 107 bundles

of first class loose weight hemp valued at 6k+ around 9kg from Lee The & Coh for transpo and delivery to Manila under a bill of lading

2. The ship was owned by defendant Adriano Choa Joy while the cargo was shipped by the branch office of Lee The & co., at Samar for transpo and delivery to its main office at Manila

3. The cargo failed to arrive in Manila because the vessel ran aground while entering the ALoang Bay, Samar due to negligence of the captain

4. Of the cargo, only around 7kg or 120 piculs of hemp were saved and because of the damaged conditions, they were sold for P2k

5. The consignor, Lee The having spent P500 for salvage, he incurred losses in the sum of P5k+

6. Thus, since the cargo was insured by New Zealand Insurance Co., the losses were paid by the insurance company to the shipper and was then subrogated

7. New Zealand demanded payment from carrier to no avail. Thus, it filed an action for recovery of sum of money P5k+ and interest to CFI

8. CFI however held that the liability of the carrier did not attach because the shipper or consignee failed to file its claim within 24 hours as mandated by Art 366 of the Code of Commerce

9. Thus, plaintiff bought this case directly to SC on appeal

Issue: WON Art 366 of the Code of Commerce is applicableHeld: NoRatio:

1. In order that the condition provided for in Art 36 of Code of Commerce may be demanded, two requisites must first be satisfied: (a) there should be consignment of goods, through a common carrier, by a consignor in one place to a consignee in another place; and (b) delivery of the merchandize by the carrier to the consignee at the place of destination

2. In this case, consignor (branch office of Lee Teh & Co) placed the cargo on board the ship Jupiter. The consignee was its main office in manila. CFI found that the cargo never reached Manila, its destination, nor was it delivered to the consignee because the ship ran aground. Such being the case, Art 366 of Code of Commerce found no application in this case

3. In the case of Roldan v. Lim Ponzo & Co, the court elaborated on the application of Art 366 of Code of Commerce: “Article 366 of the Code of Commerce is limited to cases of claims for damages to goods actually turned over by the carrier and received by the consignee, whether those damages be apparent from an examination of the packages in which the goods are delivered, or of such character that the nature and extent of the damage is not apparent until the packages are opened and the contents examined. Clearly it has no application in cases wherein the goods entrusted to the carrier are not delivered by the carrier to the consignee. In such cases there can be no question of a claim for damages suffered by the goods while in transport, since the claim for damages arises exclusively out of the failure to make delivery”

140. Lorenzo Shipping Corp. v. Chubb & Sons Inc.

141. Philamgen v. Sweet Lines

142. Federal Express Corp. v. American Home Assurance Co.

143. PHILIPPINE CHARTER INSURANCE CORPORATION v. CHEMOIL LIGHTERAGE CORPORATION

Justice CHICO-NAZARIO

Facts:

Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of non-life insurance. Chemoil Lighterage Corporation is also a domestic corporation engaged in the transport of goods.

On 24 January 1991, Samkyung Chemical Company, Ltd(Korean Company) shipped 2 separate cargos of DOP chemical on board MT "TACHIBANA" under 2 separate Bills of Lading bound for the Philippines. The consignee was Plastic Group Phils., Inc. (PGP) in Manila. PGP insured the cargo with herein petitioner Philippine Charter Insurance Corporation against all risks.

The ocean tanker MT "TACHIBANA" unloaded the cargo to Tanker Barge LB-1011 of respondent Chemoil Lighterage Corporation, which shall transport the same to Del Pan Bridge in Pasig River. Tanker Barge LB-1011 would unload the cargo to tanker trucks, also owned by the respondent, and haul it by land to PGP’s storage tanks in Calamba, Laguna.

Upon inspection by PGP, the samples from the shipment revealed that the cargo was damaged. PGP sent Philippine Charter a letter for an insurance claim.

PGP requested an independent insurance adjuster, the GIT Insurance Adjusters, Inc. (GIT), to conduct a Quantity and Condition Survey of the shipment. On 22 February 1991, GIT issued a Report, part of which states: “As unloading progressed, it was observed on February 14, 1991 that DOP samples taken were discolored from yellowish to amber. Inspection of cargo tanks showed manhole covers of ballast tanks’ ceilings loosely secured. Furthermore, it was noted that the rubber gaskets of the manhole covers of the ballast tanks re-acted to the chemical causing shrinkage thus, loosening the covers and cargo ingress to the rusty ballast tanks…”

The plant representative of PGP allegedly made a phone call to Chemoil as notice of contamination of the goods at the time of the delivery of the goods. This was denied by the witness of Chemoil.

On 13 May 1991, Philippine Charter paid PGP the amount of P5,000,000.00 as full and final payment for the loss. PGP issued a Subrogation Receipt to Phil. Charter. While Chemoil was paid by PGP for the former’s services.

Philippine Charter then filed a collection suit against Chemoil.

Chemoil raised as defense the following:

Before the DOP was loaded into its barge (LB-1011), the surveyor/representative of PGP, Adjustment Standard Corporation, inspected it and found the same clean, dry, and fit for loading.

The entire loading and unloading of the shipment were also done under the control and supervision of PGP’s surveyor/representative.

It was also mentioned by the respondent that the contract between it and PGP expressly stipulated that it shall be free from any and all claims arising from contamination, loss of cargo or part thereof; that the consignee accepted the cargo without any protest or notice; and that the cargo shall be insured by its owner sans recourse against all risks.

As subrogee, Philippine Charter was bound by these stipulations. As carrier, no fault and negligence can be attributed against respondent as it exercised extraordinary diligence in handling the cargo

RTC: Chemoil should pay Philippine Charter. CA: reversed RTC.

ISSUE: WON the action was filed within the required period

Held: No

RATIO:

Article 366 of the Code of Commerce provides that:

“ Within twenty-four hours following the receipt of the merchandise a claim may be made against the carrier on account of damage or average found upon opening the packages, provided that the indications of the damage or average giving rise to the claim cannot be ascertained from the exterior of said packages, in which case said claim shall only be admitted at the time of the receipt of the packages.

After the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.”

Both the RTC and CA found that, indeed, a telephone call was made by Alfredo Chan to Encarnacion Abastillas, informing the latter of the contamination. However, nothing in the trial court’s decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately or within a period of twenty-four hours from the time the goods were received. The Court of Appeals made the same finding. Having examined the entire records of the case, we cannot find a shred of evidence that will precisely and ultimately point to the conclusion that the notice of claim was timely relayed or filed.

The testimony of Chan in court proved that he had no personal knowledge that the drivers of the respondent were informed of the contamination.

The object sought to be attained by the requirement of the submission of claims in pursuance of this article is to compel the consignee of goods entrusted to a carrier to make prompt demand for settlement of alleged damages suffered by the goods while in transport, so that the carrier will be enabled to verify all such claims at the time of delivery or within twenty-four hours thereafter, and if necessary fix responsibility and secure evidence as to the nature and extent of the alleged damages to the goods while the matter is still fresh in the minds of the parties.

Where the contract of shipment contains a reasonable requirement of giving notice of loss of or injury to the goods, the giving of such notice is a condition precedent to the action for loss or injury or the right to enforce the carrier’s liability. Such requirement is not an empty formalism. The fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but reasonably to inform it that the shipment has been damaged and that it is charged with liability therefore, and to give it an opportunity to examine the nature and extent of the injury. This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims.

The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do

so, no right of action against the carrier can accrue in favor of the former. The aforementioned requirement is a reasonable condition precedent; it does not constitute a limitation of action.

The second paragraph of Article 366 of the Code of Commerce is also edifying. It is not only when the period to make a claim has elapsed that no claim whatsoever shall be admitted, as no claim may similarly be admitted after the transportation charges have been paid.

In this case, there is no question that the transportation charges have been paid, as admitted by Phil. Charter, and the corresponding official receipt duly issued. But the Phil. Charter is of the view that the payment for services does not invalidate its claim. It contends that under the second paragraph of Article 366 of the Code of Commerce, it is clear that if notice or protest has been made prior to payment of services, claim against the bad order condition of the cargo is allowed.

However, this is not the case at hand. There was no evidence to confirm that the notice of claim was filed within the period provided for under Article 366 of the Code of Commerce. Philippine Charter contention proceeds from a false presupposition that the notice of claim was timely filed. Therefore, Chemoil is not liable.

144. UCPB General Insurance Co. v. Aboitiz Shipping Corp, et al. (02/10/2009)

Justice Tinga

D: The law clearly requires that the claim for damage on carriage must be made within 24 hours from receipt of the merchandise if, as in this case, damage cannot be ascertained merely from the outside packaging of the cargo.

D: We have construed the 24-hour claim requirement as a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. Otherwise, no right of action against the carrier can accrue in favor of the former.

Facts:

On June 18, 1991, three (3) units of waste water treatment plant with accessories were purchased by San Miguel Corporation (SMC) from Super Max Engineering Enterprises, Co., Ltd. of Taipei, Taiwan. The goods came from Charleston, U.S.A. and arrived at the port of Manila on board MV "SCANDUTCH STAR". The same were then transported to Cebu on board MV "ABOITIZ SUPERCON II". After its arrival at the port of Cebu and clearance from the Bureau of Customs, the goods were delivered to and received by SMC at its plant site on August 2, 1991. It was then discovered that one electrical motor of DBS Drive Unit Model DE-30-7 was damaged.

Pursuant to an insurance agreement, UCPB paid SMC the amount of P1,703,381.40 representing the value of the damaged unit. In turn, SMC executed a Subrogation Form dated March 31, 1992 in favor of UCPB.

Consequently, UCPB filed a Complaint on July 21, 1992 as subrogee of SMC seeking to recover from Aboitiz Shippin Corp. the amount it had paid SMC.

On September 20, 1994, plaintiff-appellee moved to admit its Amended Complaint whereby it impleaded East Asiatic Co. Ltd. (EAST) as among the defendants for being the "general agent" of DAMCO. In its Order dated September 23, 1994, the lower court admitted the said amended complaint.

Upon plaintiff-appellee’s motion, defendant DAMCO was declared in default by the lower court in its Order dated January 6, 1995.

Accordingly, the court a quo noted the dismissal of the complaint against defendant EAST in its Order dated December 5, 1997. Thus, trial ensued with respect to the remaining defendants.

On November 29, 1999, the lower court rendered its assailed Decision declaring DAMCO and Aboitiz solidarily liable to UCPB for the damaged shipment and ordered them to pay UCPB.

The Court of Appeals reversed the decision of the trial court and ruled that UCPB’s right of action against respondents did not accrue because UCPB failed to file a formal notice of claim within 24 hours from (SMC’s) receipt of the damaged merchandise as required under Art. 366 of the Code of Commerce. According to the Court of Appeals, the filing of a claim within the time limitation in Art. 366 is a condition precedent to the accrual of a right of action against the carrier for the damages caused to the merchandise.

Issue: Whether a claim should have been made by SMC, or UCPB as SMC's subrogee, within the 24-hour period prescribed by Art. 366 of the Code of Commerce.

?Held: Yes. The Court construed the 24-hour claim requirement as a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. Otherwise, no right of action against the carrier can accrue in favor of the former.

?Ratio:

Art. 366. Within twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average which may be found therein upon opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt.

After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.

The law clearly requires that the claim for damage or average must be made within 24 hours from receipt of the merchandise if, as in this case, damage cannot be ascertained merely from the outside packaging of the cargo.

The requirement to give notice of loss or damage to the goods is not an empty formalism. The fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but reasonably to inform it that the shipment has been damaged and that it is charged with liability therefor, and to give it an opportunity to examine the nature and extent of the injury. This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is still fresh and easily investigated so as to safeguard itself from false and fraudulent claims.

We have construed the 24-hour claim requirement as a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. Otherwise, no right of action against the carrier can accrue in favor of the former.

The shipment in this case was received by SMC on August 2, 1991. However, as found by the Court of Appeals, the claims were dated October 30, 1991, more than three (3) months from receipt of the shipment and, at that, even after the extent of the loss had already been determined by SMC’s surveyor. The claim was, therefore, clearly filed beyond the 24-hour time frame prescribed by Art. 366 of the Code of Commerce.

But what of the damage already discovered in the presence of Eagle Express’s representative at the time the shipment was discharged in Manila? The Request for Bad Order Survey and Turn Over Survey of Bad Order Cargoes, respectively dated June 17, 1999 and June 28, 1991, evince the fact that the damage to the cargo was already made known to Eagle Express and, possibly, SMC, as of those dates.

Sec. 3(6) of the COGSA provides a similar claim mechanism as the Code of Commerce but prescribes a period of three (3) days within which notice of claim must be given if the loss or damage is not apparent.

Sec. 3(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 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 of 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.

UCPB seizes upon the last paragraph which dispenses with the written notice if the state of the goods has been the subject of a joint survey which, in this case, was the opening of the shipment in the presence of an Eagle Express representative. It should be noted at this point that the applicability of the above-quoted provision of the COGSA was not raised as an issue by UCPB before the trial court and was only cited by UCPB in its Memorandum in this case.

UCPB, however, is ambivalent as to which party Eagle Express represented in the transaction. By its own manifestation, East Asiatic, and not Eagle Express, acted as the agent through which summons and court notices may be served on DAMCO. It would be unjust to hold that Eagle Express’s knowledge of the damage to the cargo is such that it served to preclude or dispense with the 24-hour notice to the carrier required by Art. 366 of the Code of Commerce. Neither did the inspection of the cargo in which Eagle Express’s representative had participated lead to the waiver of the written notice under the Sec. 3(6) of the COGSA. Eagle Express, after all, had acted as the agent of the freight consolidator, not that of the carrier to whom the notice should have been made.

At any rate, the notion that the request for bad order survey and turn over survey of bad cargoes signed by Eagle Express’s representative is construable as compliant with the notice requirement under Art. 366 of the Code of Commerce was foreclosed by the dismissal of the complaint against DAMCO’s representative, East Asiatic.

Finally, UCPB’s misrepresentation that the applicability of the Code of Commerce was not raised as an issue before the trial court warrants the assessment of double costs of suit against it.

145. US Lines v. Cia Maritima

147. SMC v United Phil Corp.?

Ponente: JBL Reyes?

D: Notation serves the purpose of a claim to afford the carrier or depositary a reasonable opportunity as well as facilities to check the validity of the claim while the facts are still fresh in the minds of the persons who took part in the transaction and the documents are still available.

FACTS:

1. San Miguel Corporation sought to recover damages from the Unitel Phil. Lines or the Luzon Stevedoring Corporation for the alleged failure of either of them to live up to its contract for the transportation and delivery of all 1,200 bags of cocoa beans.

2. Defendant Luzon Stevedoring Corporation received onto its lighter 1,184 bags, taking exception 18 bags as in bad order condition. Also, the customs broker of the plaintiff corporation rejected another 10 bags due to foul odor.

3. All in all, the exceptions annotated on the lighter receipt, made at the unloading of the cargo from the lighter shows that 52 bags were B O or in damaged condition, and after a follow-up survey 10 bags were rejected due to foul odor.

4. The trial court opined that defendant should be held liable for the non-delivery to the consignee of the 10 bags.

?ISSUE:?WON the trial court erred in not holding that no cause of action accrued in favor of plaintiff-appellee.

?HELD:?YES.??RATIO:

1. Article 366 of the Code of Commerce states that:

Within the 24 hours following the receipt of the merchandise, a claim may be brought against the carrier on account of damage or average found therein on opening the packages, provided that the signs of the damage or average giving rise to the claim may not be known from the exterior part of the packages, and in case that they may be so ascertained, said claim shall only be admitted at the time of the receipt of the package.

a. In this case, although the claim was filed only after 2 months, the mentioned provision has been complied with given that the customs broker made a notation on the lighter receipt based on the exterior signs of damage.

b. Such notation serves the purpose of a claim to afford the carrier or depositary a reasonable opportunity as well as facilities to check the validity of the claim while the facts are still fresh in the minds of the persons who took part in the transaction and the documents are still available.

c. According to jurisprudence, when there are exterior signs of damage to the goods, the notation on the delivery receipt is a substantial compliance with the provisions of Article 366 of the Code of Commerce.

149 Yueng Sheng & Exchange Co. v. Urrutia & Co

FACTS:

PRELIMINARY FACTS:

The captain and engineer of steamer Cebu were engaged, on the date of the execution of the contract, by Smith, Bell & Co., a partnership organized in accordance with the laws in force in the Philippine Islands, and from this company G. Urrutia & Co. chartered steamer Cebu.

On the date in question — that is, on July 21, 1906 — the second typhoon signal had been hoisted at the semaphore station; this signal announced a distant typhoon, and gave warning that certain precautions should be taken in case the typhoon should approach

However, the announcement did not prevent the crews from containing their ordinary tasks while the said typhoon continued at a distance

It was at this time that the Cebu approached the Minas de Batan for the purpose of taking on cargo from the latter.

While the Cebu was approaching Minas de Batan, the Buen Viaje approached the other side of the Minas de Batan, also to take on cargo from the latter, causing no damage to the Minas de Batan or to her cargo, in spite of the condition of the sea and of the weather.

Y.B. Sontua loaded rice on the Minas de Batan, which sailed from Saigon, and arrived in the port of Manila with the said cargo of rice and in good condition.

While the said Minas de Batan lay in the inner harbor of Manila, on July, 21, 1906, the steamer Cebu approached her, carrying her port anchor penetrated the starboard side of the Minas de Batan, and as a result the water entered the said steamer, and wet a portion of her cargo of rice; 5,008 sacks, valued at P27,193.93, were completely ruined.

Yueng Sheng Exchange and Trading Company, as insurance company, paid Y.B. Sontua the sum of P15,995.85, and the Hip On Insurance Company, Limited, paid the said Sontua the sum of P11,198.08.

The first- named company, by virtue of its contract and rights transferred by the latter, commenced the present suit against G. Urrutia & Co. for the above-named sum of P27,193.93, as damages.

Yueng Sheng considering steamer Cebu liable and responsible for the acts of its officers and crew, who, on account of their recklessness and negligence caused damages occasioned to the steamer Minas de Batan.

The lower court ruled in favor G. Urrutia. Yueng Sheng appealed.

Yueng Sheng contended that "the charterer of a vessel, under the conditions stipulated in the charter party in question, is the owner pro hac vice of the ship and takes upon himself the responsibilities of the owner."

ISSUE:

whether the Yueng Sheng has a right of action against the G. Urrutia & Co.,for damages caused through the fault, carelessness, or negligence, of the officers of the Cebu, resulting in damage to the Minas de Batan, on account of which a portion of the cargo of rice was spoiled.

HELD:

NO.

G. Urrutia & Co. is not the agent of steamer Cebu

If G. Urrutia & Co. by virtue of the above mentioned contract, became the agents of Cebu, then they must respond for the damages claimed, because the owner and the agent are civilly responsible for the acts of the captain.

But G. Urrutia & Co. could not in any way exercise the powers of rights of an agent.

They could not represent the ownership of the vessel, nor could they, in their own name and in such capacity, take judicial or extrajudicial steps in all that relates to commerce

Article 603 authorizes the agent to the discharge at will, before the vessel goes out to sea, the captain and members of the crew in whose contracts a definite period or a definite voyage is not stipulated. G Urrutia & Co. does not have such authority

The contract executed by Smith, Bell & Co., as agents for the Cebu, and G. Urrutia & Co. as charterers of the vessel, did not put the latter in the place of the former, nor make them agents of the owner or owners of the vessel.

The contract simply granted G. Urrutia & Co. the lease of the Cebu for the voyages expressed in the sixth clause, namely, from Manila to certain ports, "and they could not arrange for the vessel to make voyages to other ports not mentioned, without the express authority of Messrs. Smith, Bell & Co." Their possession was, therefore, the uncertain title of lease, not a possession representing the true and real possession of the owner, such as is that of the agent, who is fully subrogated to the place of the owner in regard to the dominion, possession, free administration, and navigation of the vessel.

G. Urrutia & Co. had only the use of the Cebu for the voyages stipulated in the contract, the right to transport their own cargo, and to profits accruing from carriage of extra freight belonging to other persons.

150. PUROMINES, INC. vs. COURT OF APPEALS, ET. AL.

220 SCRA 281, Ponente: Nocon, J.

DOCTRINE: American jurisprudence defines charter party as a contract by which an entire ship or some principal part thereof is let by the owner to another person for a specified time or use. Charter parties are of two kinds: Charter of demise of bareboat and contracts of affreightment.

FACTS:

Puromines, Inc. (Petitioner) and Makati Agro Trading, Inc. entered into a contract with Philipp Brothers Oceanic, Inc. (Respondent) for the sale of prilled Urea in bulk. The contract contained an arbitration clause which states that any disputes arising under the contract shall be settled by arbitration in London.

On May 22, 1988, the vessel M/V “Liliana Dimitrova” loaded on board at Yuzhny, USSR a shipment of 15,500 metric tons of prilled Urea in bulk complete and in good order condition for transport to Iloilo and Manila to be delivered to the Petitioner.

Three bills of lading were issued by the ship-agent in the Philippines, Maritime Factors, Inc.

The shipment covered by Bill of Lading No. 2 was discharged in Iloilo City complete and in good order and condition.

However, the shipments covered bu Bill of Lading Nos. 1 and 3 were discharged in Manila in bad order and condition, caked, hardened and lumpy, discolored, and contaminated with rust and dirt. Damages were valued at PhP683,056.29.

The Petitioner then filed a complaint with the trial court for breach of contract of carriage against Maritime Factors, Inc. (not included as respondent in this case) as ship agent in the Philippines for the owners of the vessel M/V “Liliana Dimitrova”, while Respondent, was impleaded as charterer f the said vessel and proper party to accord petitioner complete relief.

Maritime Factors, Inc. filed its answer to the complaint, while private respondent filed a motion to dismiss, on the grounds that the complaint states no cause of action, and that petitioner should comply with the Arbitration clause in the sales contract.

The Motion to dismiss was opposed by the Petitioner contending the inapplicability of the arbitration clause inasmuch as the cause of action did not arise from a violation of the terms of the sales contract but rather for claims of cargo damages where there is nor arbitration agreement.

The trial court denied the Motion to Dismiss.

Elevationg the matter to the CA, Petitioner’s complaint was dismissed. The CA found that the arbitration provision in the contract and the bills of lading is applicable.

ISSUE/S:

Whether or not the phrase “any dispute arising under this contract” in the arbitration clause of the sales contract covers a cargo claim against the vessel for breach of contract of carriage. YES.

HELD:

The sales contract is comprehensive enough to include claims for damages arising from carriage and delivery of the goods. As a general rule, the seller has the obligation to transmit the goods to the buyer, and concomitant thereto, the contracting of the carrier to deliver the same.

Assuming arguendo, that the liability of respondent is not based on the sales contract, but rather on the contract of carriage, being the charterer of the vessel MV “Liliana Dimitrova” it would therefore material to show that kind of charter party the respondent had with the shipowner to determine Respondent’s liability.

American jurisprudence defines charter party as a contract by which an entire ship or some principal part thereof is let by the owner to another person for a specified time or use. Charter parties are of two kinds: Charter of demise of bareboat and contracts of affreightment.

Under the demise or bareboat charter of the vessel, the charterer will generally be considered as owner for the voyage or service stipulated. The charterer mans the vessel with his own people and becomes, in effect, the owner pro hac vice, subject to liability to others for damages caused by negligence. To create a demise the owner of a vessel must completely and exclusively relinquish possession, command and navigation thereof to the charterer; anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all.

On the other hand, a contract of affreightment is one in which the owner of the vessel leases part or all of its space to haul goods for others. It is a contract for a special service to be rendered by the owner of the vessel and under such contract the general owner retains the possession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire. If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights, responsibilities of ownership rest on the owner and the charterer is usually free from liability to third persons in respect of the ship.

Responsibility to third persons for goods shipped on board a vessel follows the vessel's possession and employment; and if possession is transferred to the charterer by virtue of a demise, the charterer, and not the owner, is liable as carrier on the contract of affreightment made by himself or by the master with third persons, and is answerable for loss, damage or nondelivery of goods received for transportation. An owner who retains possession of the ship, though the hold is the property of the charterer, remains liable as carrier and must answer for any breach of duty as to the care, loading or unloading of the cargo.

Assuming that in the present case, the charter party is a demise or bareboat charter, then Philipp Brothers is liable to Puromines, Inc., subject to the terms and conditions of the sales contract. On the other hand, if the contract between respondent and the owner of the vessel MV "Liliana Dimitrova" was merely that of affreightment, then it cannot be held liable for the damages caused by the breach of contract of carriage, the evidence of which is the bills of lading.

In any case, whether the liability of respondent should be based on the sales contract or that of the bill of lading, the parties are nevertheless obligated to respect the arbitration provisions on the sales

contract and/or the bill of lading. Petitioner being a signatory and party to the sales contract cannot escape from his obligation under the arbitration clause as stated therein.

151. International Harvester Company in Russia vs. Hamburg American Line

(G.R. No. 11515, 1918)

FACTS:

In 1914, International Harvester Company in Russia (IHCR), an American Company, delivered to Hamburg American Line (HAL) at Baltimore, Maryland, 852 boxes and parcels of agricultural machinery, to be laden on HAL’s steamer, “the Bulgaria”, such goods to be transported from Maryland to Hamburg, Germany. It was further provided that after it reached Hamburg, the crates were to be delivered, at the order of the consignor, to Vladivostock, Russia.

The bill of lading issued to IHCR in Maryland provided that the goods should be forwarded by HAL from Hamburg to Vladivostock at the ship’s expense, but at the risk of the owner of the goods. It was also provided that goods thus destined for points beyond Hamburg should be subject to the terms expressed in the customary form of bill of lading in use at the time of shipment by the carrier completing the transit.

When the shipment arrived at Hamburg the carrier company transferred the cargo to the Suevia, a ship of its own line, and issued to itself, as forwarding agent, another bill of lading in the customary form then in use in the port of Hamburg, covering the transportation from Hamburg to Vladivostock.

During Suevia’s journey, war broke out between Russia and Germany. Suevia’s captain ordered the ship to be placed on neutral ground, which happened to be the nearest port of Manila. IHCR demanded HAL to forward the cargo to Vladivostock, if not by the Suevia, then by some other steamer. HAL declined. IHCR then sued HAL in Manila.

The RTC of Manila issued a writ of replevin allowing IHCR to recover its cargoes. The cargoes were then able to reach Vladivostock through the contracting by IHCR of a separate ship to continue the transport. HAL claimed that IHCR is liable for general averages for the expenses of the Suevia while at the port of Manila, amounting to P63,024.50. On the other hand, IHCR claimed that HAL is liable for the expenses it incurred in contracting a different shipping line.

ISSUES:

Whether or not the cargo belonging to IHCR is liable to be made to contribute, by way of general average, to the costs and expenses incurred by reason of the internment of the Suevia in the port of Manila; and

Whether or not the defendant is liable for the expenses of transferring the cargo to another ship and transporting it to the port of destination.

HELD:

No. The agricultural machinery sought to be transported, being neutral goods, was not liable to forfeiture in the event of capture by the enemies of the ship’s flag. When the master of the Suevia decided to take refuge in the port of Manila, he acted exclusively with a view to the protection of his vessel. There was no common danger to the ship and cargo; and therefore it was not a case for a general average.

Yes. The original bill of lading issued to the shipper in Baltimore contained the provision that the goods should be forwarded from Hamburg to Vladivostock at the steamer's expense and this term appeared not only in paragraph 17 in the body of the bill of lading but was also conspicuously printed in the shipping direction on the face of the instrument. Further, in the tenth paragraph of the General Rules contained in the bill of lading which was issued at Hamburg upon account of the Suevia, for the forwarding of the cargo to Vladivostock, there is found the following provision: “If on account of… war disturbances… the master is in doubt as to whether he can safely reach the port of destination… or proceed thence on his voyage unmolested he is at liberty to discharge the goods at another place or harbour which he may consider safe, whereby his obligations are fulfilled… If the goods for any reason whatsoever cannot be discharged … at the port of destination, the ship is at liberty to … forward them by some other means to the port of destination, for ship's account but not at ship's risk.” Lastly, in the Special Clauses section of the bill of lading, it was provided that “The shipowner further to be entitled to forward the goods by rail from the port of discharge to the final place of destination, at his expense, but at the risk of the owner, shipper or consignee.”

By the terms of the contract of affreightment the defendant company was bound to forward the cargo to Vladivostock at the steamer's expense, not necessarily by a steamer belonging to the defendant company; and it does not by any means follow that it is not liable for the expense incurred by the owner in completing the unfinished portion of the voyage in another ship. Furthermore, in the special condition to rule X, the defendant company recognizes its responsibility with respect to the forwarding of goods; and where it is said in paragraph X that the master's obligation will be fulfilled by discharge in another port, it must be understood that reference is had to the obligations incident to the carriage of the goods on the instant voyage.

In the present case, the court finds no reason for holding HAL as being absolved by the outbreak of war from its contractual obligation to bear the expenses of forwarding the goods to Vladivostock, even though it is immediately absolved from the duty to convey them on its own ship.

154. Litonjua Shipping Company, Inc. vs. National Seamen Board (NSD)

Doctrine:

Facts: Litonjua is the duly appointed crewing Managing Office of Fairwind. The M/V Dufton Bay is a vessel of foreign registry owned by Mullion. While the Dufton Bay was in Cebu, the vessel’s master

recruited Candongo to serve as Third Engineer for a period of 12 months. However, before the expiration of his contract, he was discharged in Malaysia on the ground “by owner’s arrange”.

Candongon filed a complaint before NSD for violation of contract against Mullion and Litonjua as agent of the shipowner and charterer of the vessel. At first, Litonjua was declared in default by the hearing officer and rendered judgment against Litonjua for dismissal without sufficient cause. On appeal, the order of default was lifted but affirmed the initial decision. It found that Litonjua is the authorized Philippine agent of Fairwind, chartere of the vessel Dufton Bay as evidenced by complainant’s wage account, which indicated Litonjua authorized to pay wages. Hence, Litonjua filed for petition for certiorari.

Issue: WON Litonjua can be made liable.

Ruling: Yes. Litonjua argues that being the agent of the charterer and not of the shipowner, it should not have been held liable on the contract of employment of Candongon.

SC based their decision on the ff:

First, the charter party which existed between Mullion and Fairwind. In modern maritime law and usage, there are 3 distinguishable types of charter party a. bareboat or demise charter; b. time charter; c. voyage or trip charter. A bareboat or demise charter is where the shipowner turns over possession of his vessel to the charterer, with the latter undertaking to provide crew, vituals, supplies and fuel during the term of the charter. It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, the charterer assuming in large measure the customary rights and liablilities of the shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the Master of the vessel is the agent of the charterer and not of the shipowner. The owner pro hac vice is held liable for the expenses of the voyage including the wages of the seamen. Since Litonjua did not present a copy of the charter party, the court assumed that they entered into a bare boat or demise party on the theory that submission of such copy will work against them. Treating Fairwind as owner pro hac vice, Litonjua as Phil. agent of the charterer is liable.

Second, because the charterer had benefitted from the employment of Candongon and others since if he had not agreed to serve as Third Engineer, the ship would not have been able to proceed with its voyage.

Third, by not holding it liable, it will create extreme hardship for the claimant since the vessel is of foreign registry and not ordinarily doing business in the Phil. While wages of crew members constitute maritime lien, he is in no position to enforce it as oppose to holding Litonjua liable who can effectively secure reimbursement.

Dec 15, 2012

157 Overseas Factors, Inc v South Sea Shipping

F: Overseas Factor (Seller), entered into a contract to supply 5,000 Metric tons of Kangni rice with National Rice and Corn Corp(Purchaser). The two entered into an agreement that the shipment shall be imported from Pakistan aboard a ship owned by South Sea Shipping (Carrier). A co-financier of Seller entered into a surety bond agreement with an Insurance company owned by the carrier to guarantee the payment by the charterers from HK of the losses that may arise, in favor of the Carrier.

Upon arrival of the goods in Manila, the Carrier refused to unload the rice unless the balance of the freight and other charges were paid. The Carrier was paid in rupees, but it wanted to be paid in British sterling or pesos. This resulted to a delay of 8 days, and demurrage. A complaint was filed against the Carrier to accept the payment and to allow unloading of the cargo. The Carrier lost and appealed.

I: W/n the Carrier had a right to hold the cargo?

H: Carrier's lien exists if freight was not paid. The fact that the freight was already included in the purchase price of the goods paid by the purchaser to the appellees(Seller), did not free the cargo from the carrier's lien as as provided for in Article 665 of the Code of Commerce, if the freight has not yet been fully paid by the Charter-Seller.

Moreover, under clause No. 8 of the charter party, provides: "Owners shall have a lien on the cargo for freight, deadfreight, demurrage, and damages for detention. Charterers shall remain responsible for dead-freight and demurrage(including damages for detention), incurred at the port of loading. Charterers shall also remain responsible for freight and demurrage(including damages for detention) incurred at port of discharge, but to such extent as the Owners have been unable to obtain payment thereof by exercising the lien on the cargo.

Someone sent this as #157 too, I don't know the right number of this case. PHILIPPINE REFINING CO., INC. vs. FRANCISCO JARQUE, JOSE COROMINAS, and ABOITIZ & CO., defendants. JOSE COROMINAS

Doctrine: It is essential that a record of documents affecting the title to a vessel be entered in the record of the Collector of Customs at the port of entry. Otherwise a mortgage on a vessel is generally like other chattel mortgages as to its requisites and validity

Facts: Philippine Refining Co., Inc., and Francisco Jarque executed three mortgages on the motor vessels Pandan and Zaragoza. These documents were recorded in the record of transfers and incumbrances of vessels for the port of Cebu and each was therein denominated a "chattel mortgage".

Neither of the first two mortgages had appended an affidavit of good faith. The third mortgage contained such an affidavit, but this mortgage was not registered in the customs house until the period of thirty days prior to the commencement of insolvency proceedings against Francisco Jarque;

A fourth mortgage was executed by Francisco Jarque and Ramon Aboitiz on the motorship Zaragoza and was entered in the chattel mortgage registry of the register of deeds on within the thirty-day period before the institution of insolvency proceedings.

Francisco was declared an insolvent with the result that an assignment of all the properties of the insolvent was executed in favor of Jose Corominas.

Judge Jose M. Hontiveros declined to order the foreclosure of the mortgages, but on the contrary sustained the special defenses of fatal defectiveness of the mortgages.

Issue: Whether or not the mortgages were defective.

Held: Yes. Vessels are considered personal property under the civil law. Similarly under the common law, vessels are personal property although occasionally referred to as a peculiar kind of personal property. They are subject to mortgage agreeably to the provisions of the Chattel Mortgage Law.

The only difference between a chattel mortgage of a vessel and a chattel mortgage of other personalty is that it is not now necessary for a chattel mortgage of a vessel to be noted in the registry of the register of deeds, but it is essential that a record of documents affecting the title to a vessel be entered in the record of the Collector of Customs at the port of entry. Otherwise a mortgage on a vessel is generally like other chattel mortgages as to its requisites and validity.

In the case, the absence of the affidavit vitiates a mortgage as against creditors and subsequent encumbrancers. As a consequence a chattel mortgage of a vessel wherein the affidavit of good faith required by the Chattel Mortgage Law is lacking, is unenforceable against third persons.

162. TELENGTAN BROTHERS(LA SUERTE CIGAR) V. COURT OF APPEALS

FACTS:

Private respondent K-Line is a foreign shipping company doing biz in PH, its shipping agent is respondent Smith, Bell & Co., Inc. It is a member of the Far East Conference, the body which fixes rates by agreement of its member-shipowners. The conference is registered with the U.S. Federal Maritime Commission.

Van Reekum Paper, Inc. entered into a contract of affreightment with the K-Line for the shipment of 468 rolls of container board liners from Georgia to Manila, consigned to herein petitioner La Suerte Cigar. The contract of affreightment was embodied in Bill of Lading issued by the carrier to the shipper. The expenses of loading and unloading were for the account of the consignee (La Suerte).

The shipment was packed in 12 container vans. At Tokyo, the cargo was transhipped on two vessels of the K-Line. Ten (10) container vans were loaded on the 1st vessel, while two (2) were loaded on another vessel.

On June 11, the first vessel arrived at the port of Manila. La Suerte was notified in writing of the ship's arrival, together with information that container demurrage would be charged unless the consignee took delivery of the cargo within ten (10) days.

On June 21, the other vessel arrived and was discharged of its contents the next day. On the same day the shipping agent Smith, Bell & Co. released the Delivery Permit for twelve (12) containers to the broker upon payment of freight charges on the bill of lading.

On June 22, La Suerte’s broker presented the shipping documents to the Bureau of Customs. But the latter refused to act on them because the manifest of the 1st vessel covered only 10 containers, whereas the bill of lading covered 12 containers.

The broker therefore sent back the manifest to Smith, Bell & Co with the request that the manifest be amended. Smith, Bell & Co. refused on the ground that an amendment would violate the Tariff and Customs Code relating to unmanifested cargo.

Later however, it agreed to add a footnote reading "Two container vans carried by other vessel to complete the shipment of twelve containers under the bill of lading."

The manifest was approved for release only on July 3.

On July 11, when the broker tried to secure the release of the cargo, it was informed by Smith, Belle, & Co. that the free time for removing the containers from the container yard had expired on June 26 for the first vessel, and on July 9, in the case of the 2nd vessel, and that demurrage charges had begun to run a day after the free time, respectively.

On July 13, La Suerte paid P47,680 representing the total demurrage charges on all the containers, but it was not able to obtain its goods. It was able to obtain only a partial release of the cargo because of the breakdown of the arrastre's equipment at the container yard.

On July 16, La Suerte sent a letter to Smith, Bell & Co. requesting reconsideration of the demurrage charges, but was refused.

Subsequently, La Suerte refused to pay any more demurrage charges on the ground that the delay in the release of the cargo was not due to its fault but to the breakdown of the equipment at the container yard.

La Suerte filed this suit in the RTC for specific performance to compel respondents to release 7 container vans consigned to it free of charge.

In their answer, private respondents claimed that they were not free to waive these charges because under the United States Shipping Act of 1916 it was unlawful for any common carrier engaged in transportation involving the foreign commerce to charge or collect a greater or lesser compensation that the rates and charges specified in its tariffs on file with the Federal Maritime Commission.

RTC dismissed petitioner's complaint. It cited the bill of lading which provided:

23. The ocean carrier shall have a lien on the goods, which shall survive delivery, for all freight, dead freight, demurrage, damages, loss, charges, expenses and any other sums whatsoever payable or chargeable to or for the account of the Merchant under this bill of lading . . . .

RTC likewise invoked clause 29 of the bill of lading which provided:

29. . . .The terms of the ocean carrier's applicable tariff, including tariffs covering intermodal transportation on file with the Federal Maritime Commission and the Interstate Commission or any other regulatory body which governs a portion of the carriage of goods, are incorporated herein.

18. The RTC held that the bill of lading was the contract between the parties and, therefore, petitioner was liable for demurrage charges. It rejected petitioner's claim of force majeure in such a way that the delay in the delivery of the containers was caused by the breaking down of the equipment of the arrastre operator. The Court reasoned that still plaintiff has to pay the corresponding demurrage charges. The possibility that the equipment would break down was not only foreseeable, but actually, foreseen, and was not caso fortuito.

CA affirmed.

ISSUE: W/N La Suerte is liable for demurrage for delay in removing its cargo from the containers - YES but only for the period July 3 - 13, 1979 with respect to ten containers and from July 10 - July 13, 1979, in respect of two other containers

HELD:

Payment of demurrage

La Suerte's contention is that the bill of lading does not provide for the payment of container demurrage, as Clause 23 of the bill of lading only says "demurrage," i.e., damages for the detention of vessels. Here there is no detention of vessels. It invokes a case where SC defined "demurrage" as follows:

Demurrage, in its strict sense, is the compensation provided for in the contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is the claim for damages for failure to accept delivery…

Whatever may be the merit of petitioner's contention, the fact is that clause 29(a) also of the bill of lading, in relation to Rule 21 of the Far East Conference Tariff , specifically provides for the payment by the consignee of demurrage for the detention of containers and other equipment after the so-called "free time."

A bill of lading is both a receipt and a contract. As a contract, its terms and conditions are conclusive on the parties, including the consignee. The enforcement of the rules of the Far East Conference and the Federal Maritime Commission is in accordance with R.A. 1407 which declares that the Philippines, in common with other maritime nations, recognizes the international character of shipping in foreign

trade and existing international practices in maritime transportation and that it is part of the national policy to cooperate with other friendly nations in the maintenance and improvement of such practices.

Period of Demurrage

With respect to the period of La Suerte’s liability, La Suerte cannot be held liable for demurrage starting June 27 on the 10 containers because the delay in obtaining release of the goods was not due to its fault.

The evidence shows that the Bureau of Customs refused to give an entry permit to petitioner because the manifest issued by K-Line stated only 10 containers whereas the bill of lading also issued by the K-Line showed there were 12 containers. For this reason, petitioner's broker had to see Smith, Bell & Co. on June 22, but the latter did not immediately do something to correct the manifest. Smith, Bell & Co. was asked to "amend" the manifest, but it refused to do so on the ground that this would violate the law. It was only on June 29 that it thought of adding instead a footnote, by which time the "free time" had already expired.

Now June 29 was a Friday. Again it is probable the correct manifest was presented to the Bureau of Customs only on Monday, July 2, and therefore it was only on July 3 that it was approved.

It was therefore only from July 3 that La Suerte could have claimed its cargo and charged for any delay With respect to the other two containers, demurrage was properly considered to have accrued on July 10 since the "free time" expired on July 9.

The period of delay, however, for all the 12 containers must be deemed to have stopped on July 13, because on this date petitioner paid P47,680.00. If it was not able to get its cargo from the container vans, it was because of the breakdown of the shifter or cranes of the arrastre service operation. It would be unjust to charge demurrage after July 13, since the delay in emptying the containers was not due to the fault of La suerte

In sum, we hold that petitioner can be held liable for demurrage only for the period July 3-13, 1979 and that in accordance with the stipulation in its bill of lading.

166. Endeisa vs. Taleon

Facts:

The case at bar involves a dispute over the ownership of a lorcha (a kind of boat) named Leal.

As found by the trial court, the lorcha formerly belonged to Francisco Elorriaga. After his death, his widow decided to sell the boat. After a series of sales, it eventually ended up with Pedro Endeisa.

Meanwhile, Jesusa Laureano secured the attachment of the lorcha as being property of Luis Rivera. It was sold at public auction by the Sheriff Jose Taleon despite notice from Pedro Endeisa that the lorcha belonged to him.

Hence, the present suit filed by Endeisa claiming ownership over the lorcha.

Luis Rivera claims that he is the owner of the boat since he was the one in possession and not Endeisa.

Issue: Who is the rightful owner of the lorcha?

Held: Pedro Endeisa.

Luis Rivera indeed had possession of the lorcha at the time it was attached and sold. However, was no proof as to when the said possession commenced and how it was acquired.

Paragrah 2 of Article 573 of the Code of Commerce states that the ownership of a vessel may be acquired by possession. However such possession must be in good faith, continued for three years, and with good title duly recorded. None of these requisites have been proven in favor of possession of Luis Rivera.

Hence, Pedro Endeisa is entitled to the possession of the lorcha.

Dec 17, 2012

177.BEHN, MEYER & CO v. EL BANCO ESPANOL-FILIPINO

FACTS:

The German steamship Hilary was chartered by Sander, Wieler & Co. (the Charterer) to Siu Liong & Co (S-Company) of Manila to proceed to Saigon to take on a cargo of rice, then proceed to Kamranh Bay or at Phu Yen Harbor to load as many head of cattle as the steamer could carry. It will then proceed to Manila to end its voyage. The cattle to be loaded in Kamranh Bay or Phu Yen Harbor was the subject matter of a contract for transportation between Siu Liong (S-Company) and another Manila company, Pujalte & Co (P-Company) wherein P-Company contracted the services of S-Company for the transportation of the cattle.

After arriving in Saigon, the rice was loaded into the steamer. It then proceeded to Phu Yen Harbor where she arrived in the afternoon of November 18, 1906. An agent of P-Company was there and informed the captain that he was going to load 150 cows and 42 carabaos, totaling 202 heads of cattle. The captain allowed the cows but refused to load the carabaos. The captain and the agent negotiated on the matter but failed to reach a satisfactory agreement. The agent left the captain at 1 am the following day, November 19, and proceeded to the town of Sung Cau where the Governor advised him to procure a notary and to make a protest.

The agent returned to Phu Yen at 10 AM that same day, Nov. 19, armed with the notary and by virtue of which the captain consented to the loading of the carabaos. However, by then, the weather was already very stormy and no cattle could be loaded.

The stormy weather continued until Nov. 27 and the cattle could not be loaded during this time. The steamer already had some cattle on board which were to be delivered to a certain Lichauco in Manila. Because of the delay, the water supply for this load of cattle would no longer be enough to nourish them for the journey back to Manila if the Captain waited any longer. On Nov. 27, the captain decided to leave Phu Yen, without the 202 heads of cattle that P-Company was expecting.

The vessel arrived in Manila on December 3. As soon as the boat arrived, the captain applied to Behn Meyer & Co, herein plaintiffs, to act as HIS AGENTS and to attend to the business while in Manila. Behn Meyer had never before acted as agents for the steamer.

Meanwhile, S-Company wanted to unload part of the rice in Iloilo and made a contract with the agents of the shipowner, Sander, Wieler & Co. for such transport of goods, for HKD 800.

The terms of the original charter called for payment of HKD 9,250 on or before delivery of the cargo in Manila. S-company did not want to pay until the cargo was unloaded in Iloilo. On the other hand, Behn Meyer refused to allow the vessel to leave until payment of the freight and all claims for demurrage had been paid OR secured.

S-Company therefore deposited Php13,000 with El Banco Espanol-Filipino. The bank thereafter wrote to Behn Meyer informing them that it guarantees payment of PHP12,000 in behalf of S-Company if S-Company fails to make payment for the price stipulated and the demurrage upon completion of the unloading.

The vessel was unloaded in Manila on December 5 and then went to Iloilo. On Dec. 10, Behn Meyer presented to the charterer S-Company an account totaling HKD 12,350 which S-Company refused to pay. Behn Meyer then made a demand against The Bank which also refused to pay. Behn Meyer thus filed a complaint in court for collection of payment against The Bank.

S-Company asked to intervene and joined The Bank in opposing the claim. They denied the allegations of the complaint and set up a counterclaim for damages for the ship captain's refusal to load the cattle in Phu Yen, thus violating a part of the terms of the original charter party.

The counterclaim filed by S-Company consisted of:

a. Lost income it would have gotten from P-Company had the cattle been delivered

b. The difference between the value of the rice on the day on which it actually arrived and the value when it would have arrived had there been no delay in Phu Yen

c. The losses which P-Company and Lichauco suffered because of the delay which resulted to death of some of the cattle and their depreciation value.

d. Claim for 6 days demurrage

The lower court denied the counterclaim and ruled in favor of Behn Meyer and ordered S-Company and The Bank to pay Php12,081, with interest and costs.

ISSUE:

1.) Whether the counterclaim set up by S-Company is proper – ONLY THE CLAIM FOR LOST INCOME MAY BE AWARDED

2.) Whether Behn Meyer can recover freight due to the ship/shipowner from the charter parties with S-Company - YES

HELD:

1.) It clearly appears that if the captain had agreed to take the carabaos on board - when there was enough space for them - he would have left Phu Yen on the afternoon of November 19 and he would have had enough water for the 4-day journey back to Manila.

Because of this unreasonable and unexplained refusal of the captain to load the carabaos, S-Company was deprived of Php2,476 which they were supposed to receive from P-Company upon completion of the contract between the two.

However, the captain and the ship cannot be held liable for the other claims. Evidence shows that while in Phu Yen, the captain contacted S-Company, informing it of the issues in Phu Yen. In reply, S-Company directed the captain to wait at Phu Yen. After such instruction to wait, the ship cannot be held responsible for damages that may have arisen because of the delay. ??For the death and depreciation of the cattle, it was found that Lichauco and P-Company never commenced any action against S-Company for damages, nor did S-Company pay anything to them. The court found this claim to be too remote already and reiterated that damages caused by delay after specific instructions to wait from the charterer S-Company cannot be attributed to the ship.

As for the claim of demurrage, the court found in evidence that the charter party provided for nine lay days during which the cargo should be taken on board and discharged, and for five days of demurrage thereafter at the rate of HKD 250 a day. S-Company’s claim for demurrage is not proper because there was no delay. The 9-day provision for lay days was just enough to cover the voyage: 1 day in Saigon, not more than 2 days in Phu Yen (had the Captain complied and there was no delay) and not more than 3 days in unloading in Manila, for a total of 6 days. The trip to Iloilo cannot be counted because that was a special contract. So, even if the delay in Phu Yen from Nov. 24 to Nov. 27 is counted, still the total number of lay days would be 9 days, which is the number provided for in the charter party. (The court started counting the supposed delay from Nov. 24, not counting the period from Nov. 21-24. I don’t know why they didn’t count those days).

2.) S-Company admitted that it owed HKD 9,250 freight for the Saigon-Manila voyage and an additional HKD 800 for the Manila-Iloilo voyage. Converted to Pesos, this amounts to PHP10,753.50.

From here, the court deducted the lost income due to S-Company so the total amount that S-Company must pay Behn Meyer is PHP 8,277.50.

There was a brief discussion on whether Behn Meyer can file the suit given that it was not a party to the original charter party. The court held that Behn Meyer contracted in its own name with The Bank. There was even evidence shown that the Bank did not know that Behn Meyer was acting in behalf of another. The case was filed by Behn Meyer against the Bank based on the letter of guaranty issued by the bank. Behn Meyer is therefore a real party in interest in this case.

171. K.K. SHELL SEKIYU OSAKA HATSUBAISHO v COURT OF APPEALS, ATLANTIC VENUS CO., S.A. and THE VESSEL M/V “ESTRELLA”

(30 JULY 1990)

Ponente: Cortes, J.

FACTS

On 7 Jan 1987, Kumagai Kaiun Kaisha Ltd. (Kumagai), a Japanese corporation, filed a collection of a sum of money with preliminary attachment against:

Atlantic Venus Co., S.A. (Atlantic), a corporation registered in Panama

The vessel MV Estella (owned by Atlantic)

Crestamonte Shipping Corp, a Philippine corporation.

The complaint alleged that Crestamonte, as bareboat charterer and operator of MV Estella, appointed N.S. Shipping Corporation (NSS), a Japanese corporation, as its general agent in Japan. The appointment was formalized by an Agency Agreement. NSS in turn appointed Kumagai as its local agent in Osaka, Japan. Kumagai supplied the MV Estella with supplies and services but despite repeated demands, Crestamonte failed to pay the amounts due.

NSS and Keihin Corporation filed complaints-in-intervention.

On 19 May 1987, petitioner Fu Hing Oil, a corporation organized in Hong Kong and not doing business in the Phils, filed a motion for leave to intervene with an attached complaint-in-intervention, alleging that they supplied marine diesel to the MV Estella and incurred barge expenses for the sum of $152, 412.56 and such has remained unpaid. The issuance of a writ of attachment was also prayed for

On 16 July 1987, K.K. Shell, a corporation organized in Japan and not doing business in the Phils, likewise filed a motion to intervene with an attached complaint-in-intervention, alleging that upon request of NSS, Crestamonte’s general agent in Japan, K.K. Shell provided and supplied marine diesel to MV Estella at the ports of Tokyo and Mutsure in Japan and that Crestamonte has failed to pay the amount of

$16,996.96 and One Million Yen. The complaint also sought the issuance of a writ of preliminary attachment.

The TC allowed the intervention of Fu Hing and KK Shell and issued Writs of Preliminary Attachment.

Atlantic and MV Estella moved to dismiss the complaints-in-intervention filed by Fu Hing and KK Shell

Atlantic and MV Estella moved to dismiss the complaints-in-intervention filed by Fu Hing and KK Shell. In the meantime, they filed a petition in the CA against the TC Judge, Kumagai, NSS and Keihin. The omnibus order denied the motion to reconsider the order allowing Fu Hing’s intervention and granted KK Shell’s motion to intervene. Again, Fu Hing and KK Shell intervened, and the CA case 12999 was consolidated with another case.

The CA annulled the orders of the TC and directed it to cease and desist from proceeding with the case. According to the CA, Fu Hing and KK Shell were not suppliers but sub-agents of NSS, hence they were bound by the Agency Agreement between Crestamonte and NSS, particularly, the choice of forum which provides that the agreement shall be governed by the Laws of Japan and shall be subject to the exclusive jurisdiction of the District Courts of Japan. Thus, the CA concluded that the TC should have disallowed their motions to intervene.

A motion for reconsideration was filed by Fu Hing and KK Shell, but was denied by the CA. Hence this appeal.

Fu Hing and the respondents have reached an amicable settlement, thus the SC only reviewed the case as to KK Shell.

ISSUE: Whether or not KK Shell can be allowed to intervene in the case before the trial court.

HELD: YES.

RULING:

The Court finds reversible error on the part of the CA in so far as it disallowed KK Shell’s intervention in the case before the TC.

1. A reading of the Agency Agreement fails to support the conclusion that KK Shell is a sub-agent of NSS and is therefore bound by the agreement. No express reference to the contracting of sub-agents or the applicability of the terms of the agreement, particularly the choice-of-forum clause, to sub-agents is made in the text of the agreement. What the contract clearly states are NSS' principal duties, i.e., that it shall provide for the necessary services required for the husbanding of Crestamonte's vessels in Japanese ports (section 2.0) and shall be responsible for fixing southbound cargoes with revenues sufficient to cover ordinary expenses (section 3.0) [Kindly refer to the original text of the case to see the provisions of the agency agreement].

Moreover, the complaint-in-intervention filed by K.K. Shell merely alleges that it provided and supplied the MV Estella with marine diesel oil/fuel, upon request of NSS who was acting for and as duly appointed agent of Crestamonte. here is thus no basis for the Court of Appeal's finding, as regards K.K Shell in relation to its intervention in Civil Case No. 87-38930, that "the sub-agents admitted in their pleadings that they were appointed as local agent/sub-agent or representatives by NSS by virtue of said Agency Agreement" . What the Court of Appeals could have been referring to was K.K. Shell's Urgent Motion for Leave to Intervene dated February 24, 1987 in another case (Civil Case No. 86-38704) in another court and involving other vessels (NW Ofelia and MV Christina C), where it was alleged that K.K. Shell is "one of the representatives of NS Shipping Corporation for the supply of bunker oil, fuel oil, provisions and other necessaries to vessels of which NS Shipping Corporation was the general agent." However, this allegation does not conclusively establish a sub-agency between NSS and K.K. Shell. It is therefore surprising how the Court of Appeals could have come to the conclusion, just on the basis of the Agency Agreement and the pleadings filed in the trial court, that "Crestamonte is the principal, NSS is the agent and ... Fu Hing and K.K Shell are the sub-agents."

In view of the inconclusiveness of the Agency Agreement and the pleadings filed in the trial court, additional evidence, if there be any, would still have to be presented to establish the allegation that K.K. Shell is a sub-agent of NSS.

In the same vein, as the choice-of-forum clause in the agreement (paragraph 12.0) has not been conclusively shown to be binding upon K.K. Shell, additional evidence would also still have to be presented to establish this defense, K.K. Shell cannot therefore, as of yet, be barred from instituting an action in the Philippines.

2. Private respondents have anticipated the possibility that the courts will not find that K.K. Shell is expressly bound by the Agency Agreement, and thus they fall back on the argument that even if this were so, the doctrine offorum non conveniens would be a valid ground to cause the dismissal of K.K. Shell's complaint-in-intervention.

K.K. Shell counters this argument by invoking its right as maritime lienholder. It cites Presidential Decree No. 1521, the Ship Mortgage Decree of 1978, which provides:

SEC. 21. Maritime Lien for Necessaries; person entitled to such lien-Any person furnishing repairs, supplies, to wage, use of dry dock or marine railway, or other necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was given to the vessel.

Private respondents on the other hand argue that even if P.D. No. 1521 is applicable, K.K. Shell cannot rely on the maritime lien because the fuel was provided not exclusively for the benefit of the MV Estella, but for the benefit of Crestamonte in general. Under the law it must be established that the credit was extended to the vessel itself. Now, this is a defense that calls precisely for a factual determination by the

trial court of who benefitted from the delivery of the fuel. Hence, again, the necessity for the reception of evidence before the trial court.

In other words, considering the dearth of evidence due to the fact that the private respondents have yet to file their answer in the proceedings below and trial on the merits is still to be conducted, whether or not petitioners are indeed maritime lienholders and as such may enforce the lien against the MV Estella are matters that still have to be established.

Neither are we ready to rule on the private respondents' invocation of the doctrine of forum non conveniens, as the exact nature of the relationship of the parties is still to be established. We leave this matter to the sound discretion of the trial court judge who is in the best position, after some vital facts are established, to determine whether special circumstances require that his court desist from assuming jurisdiction over the suit.

175. Sweet Lines vs. Teves

[83 SCRA 361]

Facts:

Private respondents bought tickets for Voyage 90 at the Cagayan de Oro branch office of petitioner, a shipping company transporting inter-island passengers and cargoes. Respondents were to board petitioner's vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port of Cebu. Upon learning that the vessel was not proceeding to Bohol, since many passengers were bound for Surigao, private respondents per advice, went to the branch office for proper relocation to M/S "Sweet Town". Because the said vessel was already filled to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard." Private respondents alleged that they were, during the trip," "exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits," and that the tickets they bought were not honored and they were constrained to pay for other tickets. In view thereof, private respondents sued petitioner for damages and for breach of contract of carriage before the Court of First Instance of Misamis Oriental.

Petitioner moved to dismiss the complaint on the ground of improper venue. This motion was premised on the condition printed at the back of the tickets, i.e., Condition No. 14, which reads:

14. It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu.

The motion was denied by the trial court. Petitioner moved to reconsider the order of denial, but no avail. Hence, this instant petition.

ISSUES:? 1. W/N Condition No. 14, which limits the venue of actions in Cebu only, is valid.

2. W/N there existed a contract of carriage.

HELD:?1. No. The Court held that Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although venue may be changed or transferred from one province to another by agreement of the parties in writing according to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the claimants, such as the private respondents herein. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs, as well as his witnesses, and to promote the ends of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvenience to, much less prejudice, petitioner.

Public policy is "...that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good." Under this principle "...freedom of contract or private dealing is restricted by law for the good of the public." Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared void and unenforceable, as contrary to public policy — to make the courts accessible to all who may have need of their services.

2. Yes. There is no question that there was a valid contract of carriage entered into by petitioner and private respondents and that the passage tickets, upon which the latter based their complaint, are the best evidence thereof. All the essential elements of a valid contract, i.e., consent, cause or consideration and object, are present. As held in Peralta de Guerrero, et al. v. Madrigal Shipping Co., Inc.,

"It is a matter of common knowledge that whenever a passenger boards a ship for transportation from one place to another he is issued a ticket by the shipper which has all the elements of a written contract, Namely: (1) the consent of the contracting parties manifested by the fact that the passenger boards the ship and the shipper consents or accepts him in the ship for transportation; (2) cause or consideration which is the fare paid by the passenger as stated in the ticket; (3) object, which is the transportation of the passenger from the place of departure to the place of destination which are stated in the ticket."