Aviation for the overweight charge using his MCO (airline prepaid credit)
but the airlines refused to honor such payment. Thus, he was
Federal Express Corporation v American Home Assurance
SMITHKLINE delivered to BURLINGTON (agent of Federal
Express) a shipment of 109 cartons of veterinary biologicals. It
was covered by Airway Bill with words refrigerate when not in
transit and perishable stamp on its face.
Burlington turned over the custody of cargoes to Federal Express
which transported the same to Manila. There were 2 shipments –
first, containing 92 cartons delivered immediately and the second
one, consisting of 17 cartons arrived 2 days later. Federal Express
informed GETC, the customs broker hired by SMITHKLINE of the
impending arrival of goods.
A customs broker assigned by GETC found out that the cargoes
were only stored in a room with two air conditioners instead of a
refrigerator. Upon instructions of GETC, the cargoes were not
withdrawn and instead, sampled were taken and brought to DAR
for examination. It was found the vaccines were damaged. Hence,
SMITHKLINE claimed for compensation from its insurance.
Petitioners pointed out that the claim of SMITHKLINE has already
been barred because it never filed with the carrier notice or
complaint regarding its claim for damage or loss to the subject
cargo within the period required by Warsaw Convention and/or in
the airway bill.
The Airway Bill states that the consignee must make a complaint
in writing in case of damage to the goods within 14 days from
receipt of goods (delay, 21 days from the date goods are
surrendered; non-delivery, 120 days from date of issue of airway
bill).
The Warsaw Convention, on the other hand, provides that receipt
by person entitled to delivery of baggage without complaint shall
be prima facie evidence that the same have been delivered in
good condition and in accordance with the document of
transportation. In case of damage, consignee must report to the
carrier within 3 days from receipt of the baggage and 7 days from
the date of receipt of goods.
The filing of claim with the carrier within the time limitations is a
condition precedent to the accrual of a right of action. Therefore,
no right of action can accrue unless the shipper or consignee
prove the fulfillment of such condition.
The requirement of notice serves to (1) inform the carrier that the
cargo has been damaged, and that it is being charged with liability
therefor and (2) to give it an opportunity to examine the nature and
the extent of the injury.
Being a condition precedent, the notice must precede the suit for
enforcement. As there is no allegation of compliance on the part
of respondents in this case, they cannot enforce their rights
against petitioners.
United Airlines v Uy
Uy is a passenger of United Air for SFO – Manila route. He was
found to have one overweight baggage and was rebuked by
United Air employees about not packing his bags carefully. Uy
tried to repack his things but it was still overweight. He tried paying
PAL claimed that the action has prescribed since the incident
compelled to pay using his credit card.
Upon arrival, he discovered that his luggage was slashed, and its
contents were stolen. The estimated amount of loss was around
$5K. In 1989, He requested reimbursement from the airlines but
was only paid $9 per pound. He sent two more letters in 1990 and
1991 demanding out of court settlement but was not acceded by
United Air. In 1992, Uy filed a complaint for damages against
United Air.
United Air filed a motion to dismiss on the ground that
respondents’ cause of action had prescribed. According to the
Warsaw Convention, the rights to damages shall extinguish if the
action is not brought 2 years from the date of arrival.
Respondent countered that the method of calculating the period
of limitation shall be determined by the law of the court which the
case is submitted. And according to Philippine laws, the
prescriptive period is interrupted when there is a written
extrajudicial demand by the creditors. Since the latest letter of
demand was sent in 1991, the prescriptive period had not yet been
exhausted.
The Court ruled that respondents in this case have two causes of
action. First, the humiliating treatment he received from
employees and second, the loss of his personal effects.
As regards the first action, damages arising from the misconduct
of the airline employees and the violations of rights as passenger
are not within the bounds of Warsaw Convention. Thus, the Civil
Code applies in this case. Actins arising from tort prescribed within
4 years from the time the plaintiff incurs injury.
As regards the second cause of action, the Warsaw Convention
intends that the two-year prescription be an absolute bar to suit,
not subject to tolling provisions of the laws of the forum. The
second paragraph of Art 29 only allows the Court to determine
when an action shall be deemed commenced.
Nevertheless, the Court took note of the efforts of respondent to
convey his loss to petitioner and found that the filing of the action
was delayed due to the latter’s evasion. The Airlines gave
petitioner a runaround by answering his demand letters but not
acceding to his demands. Thus, the filing of action was delayed
due to the desire of Uy to make an out-of-court settlement – an
intent for which he cannot be faulted. Thus, the Court held that
prescription shall not apply in cases where the carrier
employs delaying tactics to prevent the timely filing of a suit.
The action of Uy is not yet time barred.
Philippine Airlines v Savillo, Grino
Grino was invited to a golf tournament in Jakarta. He booked from
PAL tickets with points of passage MNL-SG-JKT-SG-MNL. They
were made to understand that PAL will take them from MNL-SG,
while Singapore Airlines (SAL) will take them from SG-JKT.
SAL rejected the tickets of respondents because they were not
indorsed by PAL. Thus, they were forced to purchase tickets from
a different airline. Both PAL and SAL disowned liability from the
mishap.
occurred in 1993, and the last demand letter received by PAL is in
1994 yet the action was only brought in 1997.
In order to determine whether the action is time barred, it must be
ascertained whether the all the claimed are covered by the
Warsaw Convention. Had the case involved merely claims
incidental to delay in transporting passengers, the action will be
time-barred. However, the case plaintiff also alleged that he
suffered distress, fear, anxiety, when he was prevented from
boarding the plane despite that assurance of PAL that SAL
confirmed his passage. These claims were not within the Warsaw
Convention but the Civil Code. It prescribes within four years upon
the injury to the plaintiff. Hence, the claims have not yet
prescribed.
American Airlines v Court of Appeals
Salas and Mendoza purchased from SAL conjunction tickets for
MNL- SG- ATH- LRN- RM- TRN- ZRC- GNV- CPN- NY.
Petitioners forego the Copenhagen trip and went straight to New
York. Since the conjunction tickets have no direct flight from
Geneva to New York, he exchanged the unused portion of his
tickets for a one-way ticket. American Air used its own ticket to the
respondent and claimed that value of the unused portion from the
IATA.
Respondent was prevented from boarding the plane in the
Geneva Airport and was detained for an hour. Because of the
embarrassment and mental anguish, he filed an action for
damages.
The petitioner contends that since the PH is not the place where
the contract was made, the PH courts have no jurisdiction. It
argues that the issuance of the exchange ticket is a separate and
distinct contract of carriage from the one entered into by the
respondents in Manila with SAL.
The court rejected the said argument. Members of the IATA are
under a general pool partnership agreement wherein they act as
agents of each other. When the petitioner accepted the unused
portion of the tickets, entered it in the IATA clearing house and
undertook to transport the respondent over the route covered by
the unused portion, there is a tacit commitment on its part to act
as agent of SAL. As such it took the place of the carrier originally
designated in the original ticket.
The new ticket was simply a replacement for the unused portion,
being of the same amount and having the same points of
departure and destination.
China Airlines v Chiok
Chiok purchased a China Air ticket covering MNL- TPI – HK – MNL
exclusively endorsable to PAL. From TPI, he went to CAL office to
confirm his flight to HK on board PAL. He was told that the flight
status was OK. In HK, he went to PAL office to confirm his flight
back to MNL.
Chiok saw a poster that the PAL flight was cancelled because of
a typhoon and that all ticket holders were automatically booked to
the next flight leaving the next day. He informed the PAL
personnel that he h has to reach Manila before November 25.
The following day, he was informed that his name was not in the
list of passengers and he could not be permitted to board. He
sought to recover his luggage but discovered that one is missing.
Chiok used another CAL ticket and asked if it could be used to
book him for the said flight. It was allowed. When he went to the
check-in counters, PAL personnel were directed to transfer
counters. Because of this, he lost personal items.
Chiok filed a complaint for damages alleging that despite several
confirmations, PAL refused to accommodate him. And that he was
ridiculed and humiliated in the presence of so many people. He
alleged that both PAL and CAL be solidarily liable for damages.
CAL argued that it should not be held liable with PAL since the
booking for the PAL sectors was only made upon his request.
The Court held that CAL is liable. The contract of air transport in
this case was between CAL and Chiok with the former merely
endorsing PAL for the HK-MNL segment. Under Art 1, Sec 3 of
the Warsaw Convention, such contract of carriage is treated as
single operation.
Thus, in this case, PAL acted as the carrying agent of CAL. Thus,
CAL cannot evade liability even though it may have been only a
ticket issuer for the HK-MNL segment.
Northwest Airlines v Laya
Laya is a medical practitioner bound for SFO via a first class
booking with NWA. He was approached by an employee to
proceed to a long table where passengers carrying samsonite
attache cases were being lined up and subjected to further
inspection. However, Dr. Laya noticed that his attache was treated
differently. While the other passengers were allowed to carry their
cases, he was asked to place his on a garbage bag and was given
two paper envelopes to store its contents.
He felt he was singled out. After explaining his plight, the airlines’
Assistant Manager answered him sarcastically. When he asked
for replacement for envelopes, he was given a used duty-free bag.
In SFO, he was accorded with VIP treatment. He wrote a letter to
NWA regarding the rude treatment he received. NWA wrote an
apology letter but refused to pay indemnity. Instead, it sent a
transportation voucher worth $100, which the respondent refused
to accept. He then filed a complaint for damages.
The Court found that the incident happened in light of 9/11 and
that the security procedures adopted by NWA were only a result
of re directive by the FAA. Thus, it does not appear that he was
singled out or discriminated by the employees of NWA.
However, the implementation of the said security measures must
still be attended by basic courtesy. Any security measure must
coincide with passenger’s right to be treated by the carrier with
kindness, respect, and utmost consideration on all matter relative
to his trip. The testimony of Dr Laya regarding the rude and
reprehensible manner of NWA employees while attending to him
were given credence by the court. Thus, for the mental anguish
and anxiety experience by Dr. Laya, he was awarded moral
damages.
Manay v Cebu Air
Jose purchased 20 Cebu Air roundtrip tickets for himself and his
relatives and friends. He told the ticketing agent of his desired date
and time of flights. Upon printing of the tickets, he was appraised
of only the first page. The other two pages were not read to him.
During their flight back to Manila, they discovered that nine tickets
were booked for earlier flights. Thus, they had no other option but
to rebook. Jose complained to the ticketing office of Cebu Pac
regarding the erroneous booking. He also demanded for a
reimbursement for the additional expenses incurred due to
rebooking of nine tickets.
Cebu Pac argued that Jose had been in possession of the tickets
for 37 days before the flight. Hence, he had sufficient opportunity
to check the information and itinerary. It further argues that the
ticketing agent did not neglect giving Jose the full recap of the
tickets since in the comments section there was a note that the full
recap was given to him.
Once a ticket is paid for and printed, the purchaser is presumed to
have agreed to all its terms and conditions. Even assuming that
the ticketing agent encoded wrong, the purchaser has the duty to
at least check if all the information is correct before making the
purchase. The petitioner in this case have no other evidence aside
from the testimony that the agent only recapped the first page to
him. It cannot prevail over the note in the comment box of the ticket
pages that the full recap was given to him.
Under the Air Passenger Bill of Rights, the passenger has right to
full, fair, and clear disclosure of all the terms and conditions of the
contract of carriage. And while he has the option to buy or not to
but the service, his decision to but the ticket binds him according
to its terms.
The duty of the carrier to disclose all necessary information does
not remove the correlative obligation of the passenger to exercise
ordinary diligence in the conduct of his or her affairs. The
passenger is still expected to read through the flight information
before making his purchase. All damages incurred by him for his
failure to exercise ordinary diligence should be borne by him.
Northwest Airlines v Catapang
Catapang went to United States from a business trip in Paris. In
relation to this, he requested First United Travel to issue a ticket
that would allow him to rebook or reroute flights within the United
States. He was informed that this request may be accommodated
provided that he pays additional $50 for every rebooking. He
agreed with the said condition. Thus, he was issued a ticket with
the annotation of rebooking/rerouting.
Upon arrival to New York, he called up the NWA office and he was
informed that his ticket is not rebookable since it was a restricted
type. Unless he pays $644, he cannot rebook. Thus, he is
compelled to pay the rebooking fee.
He wrote to NWA regarding the change in the tenor of his ticker
and the rude manner that NWA representative dealt with him. He
claimed for indemnity which were left unanswered, hence, he filed
the case for damages.
Petitioner claimed that the ticket of Catapang is a discounted one,
subject to the rules of applicability which could not be reflected on
the ticket.
The Court rejected the contention. It held that when FUT advised
the respondent that he could rebook for $50, he was not told that
the ticket being issued to him was a restricted type to call for
upgrading before rebooking. The only restriction reflected on the
ticket pertains to non-endorsement.
The breach was further aggravated when petitioner’s agent
exhibited rudeness while informing the respondent that the ticket
could not be rebooked. Passengers have the right to be treated by
the carrier’s employees with respect, courtesy and consideration.
They are protected against misconduct, injurious language and
indignities from employees. Any misconduct against passengers
by an employee gives rise to an action for damages.
Bernales v Northwest Airlines
Bernales was an economy class passenger of NWA flight MNL-
HNL via Narita. As a typhoon hit japan, the flight was cancelled.
Under NWA policy, affected passengers may be accommodated
in the next available flight subject to availability of seats. Priorities
were also given to first class and business class passengers.
He was rebooked to Flight No. 22. The petitioner was placed last
in the waitlist being an economy class passenger and the last
person to check in. To ensure departure before the curfew, NWA
gave out dummy boarding passes to waitlisted passengers.
Before the shuttle bus could leave, petitioners alleged that NWA
Customer Service Agent rudely informed him that there is no
available seat for him. Because of this, his companions refused to
board the plane unless he was allowed to board the flight. NWA
denied that rude treatment. It maintained that Ohashi has an
impeccable service record. [The Court agrees with NWA on this]
Flight No. 22 could not fly that day because it could not beat the
curfew. The passengers were made to stay in the airport because
all the hotels were fully booked. Because of this, petitioned filed
an action for damages.
The Court held that NWA is not liable for damages. The delay in
the transportation was due to a typhoon. Despite the attempt to
fly, it was prevented by mandatory airport curfew. Thus, there
were not ill motives for cancelling the flight. It also demonstrated
good faith when it tried to accommodate the passengers of the
cancelled flight. Although it failed to leave, there is no malice.
The dummy boarding passes issued by NWA allegedly resulted to
a passenger insulting the petitioner. The Court said that it is a
simple mistake which does not warrant award of moral damages.
There is no bad faith on failure to provide hotel accommodations.
Flight was cancelled at 1AM and all hotels are booked by other
delayed passengers due to typhoon. 1,500 other passengers had
to endure the same discomforts and he was not singled out. NWA
did the next best thing it could and gave passengers snacks,
blankets and other comforts available. Thus, it is not liable.
 Transportation Overland: Bill of Lading
Art 349. Transportation overland or river:
(1) Merchandise or any commercial goods
(2) The carrier is a merchant or is customarily engaged in
making transportation for public.
Art 350. Bill of Lading
(1) May be demanded by shipper and carrier
(2) Contents
a. The name, surname and domicile of the
shipper;
b. The name, surname, and domicile of the
carrier;
c. The name, surname and domicile of the
consignee, or whether the goods are to be
delivered to the bearer of the said bill;
d. A description of the goods, stating their
generic character, their weight, and external
marks or signs containing the same.
e. The cost of transportation;
f. The date on which the shipment is made;
g. The place of delivery to the carrier;
h. The place and time at which delivery is to be
made to the consignee.
i. The damages to be paid by the carrier in
case of delay, if an agreement is made on
this point.
Art 351. Shipment subject to schedule or time fixed by
regulation
o Bill of lading must declare the rate and special
conditions of transportations
o Should no schedule be determined, the rate of the
merchandise paying the lowest
o The statement must be included in the bill of
lading or at least referred to
Art 352. Bill of lading for passenger and baggage
- If there are separate tickets for passenger and
baggage
o All must indicate the name of the carrier
o Date of shipment
o Points of departure and arrival
o Price
o Weight of the packages
o Indications which makes them easily
identifiable
Art 353. Bill of Lading
- Evidence of contract between the shipper and the
carrier
o Disputes as regards due execution and
fulfillment are resolved based on the
stipulations in the bill of lading.
o No other evidence may be adduced except
for forgery or material errors in drafting
- Fulfillment
o Upon compliance of the contract of carriage,
bill of lading issued by the carrier shall be
returned to him
Upon return, all obligations of the
carrier are deemed cancelled
Unless the consignee reserve
rights to claims reduced in writing
Subject to the rule on period of
claiming under Art 366 – upon 24
hours within the receipt of
merchandise. After the lapse of
such period, no claim shall be
admitted as regard the condition
of the goods delivered.
- In case of loss of the bill of lading
o Consignee may give carrier a receipt of
goods delivered
o Receipt has the same legal effect as return
of bill of lading
Art 354. Absence of Bill of Lading
- Parties may adduce evidence to support their claims
against each other
Art 355. Duration of Liability
- From the moment the carrier receives the merchandise
personally or through an agent
- In the place indicated for reception
Art 356. Refusal to receive goods
- Packages unfit for transportation
- If transportation is made over a railroad and the
shipment is insisted
o The carrier shall transport the goods free
from all liability
o The objections must be stated in the bill of
lading
Art 357. Examination of packages
- Requisites
o Well founded suspicion as to the
correctness of the statement of the contents
o Must be done before a witness
o In the presence of the shipper or consignee
If shipper/consignee is absent –
examination may be made
before a notary public
Notary shall draft the result of
examination
- If the declaration of shipper is correct – expense in
examination and careful repacking shall be borne by
the carrier and vice versa.
Art 358. Period of Delivery
- No period fixed, forward goods in the first shipment of
similar merchandise
- Delivery made in the point of delivery
- If there is delay – liable for damages
Art 359. Road for transportation
- If there is an agreement as regards the route, the
carrier may not change routes
- EXCEPT: Force majeure
o Increase in transportation charges shall be
reimbursed upon proof of expense
- Failure to abide by the stipulated routes – liable for
damages besides the stipulated/liquidated damages
Art 360. Change of consignee binds the carrier
- No change of delivery place
- The bill of lading is returned
- Returned bill of lading is exchanges for another
containing the changed consignee
- Expenses defrayed by the shipper
Risk of transportation
- Art 361. Generally borne by the shipper
o Damages suffered by shipper on account of
force majeure, nature or defect of the
articles are borne by shipper
o Proof of accident – adduced by carrier
- Art 362. Exceptions
o If the loss occurred on account of
negligence of the carrier
o Failure to adopt precautions of a careful
person
- Exception to the exception
o Shipper committed fraud in the bill of lading
o Misrepresented the class and quality of the
goods
- DISPOSAL BY CARRIER through judicial authority
o If the carrier exercised precaution
o The goods run the risk of loss by its nature
o Owner has no time to dispose the same
Art 363. Obligation carrier
- Deliver the goods in the same condition state in the bill
of lading without impairment or detriment
o Except in force majeure or the nature or
defect in the articles
- Carrier is liable for damages for non-delivery at the
point or at the time stipulated
- Incomplete delivery (ABANDONMENT)
o Consignee may abandon the goods if
proven that the part of the goods delivered
cannot be used without the undelivered
parts
o OTHER ABANDONMENT
Damage to goods rendering it
useless (Art 365)
Delay on account of fault of
carrier (Art 371)
Art 364. If the effect of damage should be reduction of value
- The carrier is only liable for the reduced value, after
appraisal by experts
Art 365. Damage to goods rendering it useless
- Consignee may abandon and carrier is liable for
current market prices
- If part of the goods is in good condition and without any
defect
o Carrier is liable for the damaged ones
o Consignee shall receive the sound goods
o Unless – it is impossible to use the partially
good ones
Art 366. Period of claiming for damage
- Within 24 hours on damage or average found upon
opening
o The damage or average may not be
ascertained from the packaging
Otherwise, claims may only be
made upon receipt
- After the lapse of the period, no claim may be admitted
in relation to the condition of the goods received
Art 367. Dispute as regards the condition of goods
- Examined by experts appointed by the parties
o In case of disagreement, judicially
appointed expert may act as third witness
- Results must be adduced in writing
- If the parties do not report and the dispute is not settled
o The merchandise will be deposited to a
warehouse
o Parties will make use of their rights
Art 368. Deliver to consignee
- Carrier will deliver to the consignee indicated in the bill
of lading without delay or difficulty
- No additional requirement is needed. Else, carrier is
liable for damages.
Art 369. Consignee not found or nonpayment of
transportation charges
- The goods shall be deposited upon the order of the
municipal judge
- Placed at the disposal of either the shipper or sender
without prejudice to rights of third parties
- The deposit shall have the effect of delivery
Art 370. Stipulated period of delivery
- Must be made within the said period
- Otherwise, the carrier is liable only for stipulated
damages
- Without stipulated damages, the carrier is liable for
damages which may have been caused by the delay
Art 371. Abandonment on account of delay due to carrier’s
fault
- The consignee may abandon the goods before arrival
at the point of destination
- Informing the carrier in writing
- Carrier shall be liable for total value of goods as if it has
been loss or mislaid
- If there is no abandonment
o The indemnity for delay is limited to the
current price of goods at the time and place
of supposed delivery (as in all cases when
indemnity is due)
Art 372. Appraisement of loss and mislaid goods
- Fixed in accordance with the bill of lading
o No proof may be accepted regarding
articles of greater value
- Accessory means of transportation are obligated to the
shipper
o Except trains – obligation is upon the law of
concession
Art 373. Successive Agreements
- Carriers who enter into an agreement with other
carriers – assume obligation of the carriers who
precede him
o Reserving the right to proceed against the
latter for claims by shipper or consignee for
which he is not responsible
- Shipper or consignee has immediate right of action
against
o the carrier in the contract of carriage or
o other carriers who transported the goods
without reservation.
- Reservation shall not exempt the carrier from liabilities
due to its own acts
Art 374. Payment of charges
- Consignee (whom the remittance is made) cannot
defray payment if goods are received without 24 hours
upon stipulated time of delivery.
- Delay in payment – carrier may request for judicial sale
of goods to cover the amount of transportation charges
Art 375. Satisfaction of charges
- Made upon the goods transported
o Transportation fees
o Expenses incurred during the transportation
and delivery
- The right must be exercised within 8 days
o After 8 days, the carrier may only claim as
creditor (cannot judicially sell goods to
satisfy charges)
Art 376. The preference of carrier to the payment of
transportation charges shall not be affected by bankruptcy of
the consignee
- Action was brought within 8 days
Art 377. Formalities of public administration
- The carrier is bound to comply during the entire
duration of the trip until arrival
o Except when the omission arises from the
false statement of the shipper in the
declaration of the merchandise.
- If the carrier acted upon the formal order of the shipper
or consignee, they shall both incur liability
Art 378. Transportation agents shall keep a special registry
with the formalities require by Art 36
- Entered in progressive order of number and dates the
transportation undertaken
- Statement of the circumstances of Art 350
Art 379. Application of the provisions
- Also applies to persons who contract to transport
goods for a special of fixed transaction
- Agents
Art 349. A contract for all kinds of transportation overland or river
shall be considered commercial:
(1) When it involved merchandise or any commercial
goods.
(2) When not matter what its object may be, the carrier is
a merchant or is customarily engaged in making
transportation for the public.
Bill of Lading
Art 350. The shipper as well as the carrier of merchandise or
goods may mutually demand of each other the issue of a bill of
lading in which there be stated:
(1) The name, surname and domicile of the shipper;
(2) The name, surname, and domicile of the carrier;
(3) The name, surname and domicile of the consignee, or
whether the goods are to be delivered to the bearer of
the said bill;
(4) A description of the goods, stating their generic
character, their weight, and external marks or signs
containing the same.
(5) The cost of transportation;
(6) The date on which the shipment is made;
(7) The place of delivery to the carrier;
(8) The place and time at which delivery is to be made to
the consignee.
(9) The damages to be paid by the carrier in case of delay,
if an agreement is made on this point.
Bills of Lading over Railroads (Art 351)
o Subject to schedules –
o Bills of lading shall refer to the rate, terms
and conditions of the transportation,
schedules and regulations.
o If no schedule determined –
o Carrier must apply the rate of the
merchandise paying the lowest, always
including such statement in the bill of lading.
Cases
Unsworth Transportation v Court of Appeals
Sylvex delivered to UTI 27 drums of pharmaceutical products. UTI
issued a bill of lading covering the said shipment. On the same
day, it was loaded to the vessel of API transshipped to another
vessel for delivery to Unilab.
UTI received the shipment in its warehouse after it stamped Permit
to Deliver Imported Goods. The shipment was surveyed and a
gate pass was issued with a note that the materials were in
complete and good order. Upon arrival to Unilabs’s warehouse,
another survey was conducted and found that some materials
were unfit for purpose.
UTI denied liability on the damage by virtue of the gate pass. It
also asserted that it merely a freight forwarder.
The Court held that UTI is indeed a freight forwarder. A freight
forwarder is a firm holding out itself to the public to provide
transportation of property for compensation and:
(1) Assemble, consolidate, provide assembling and
consolidating shipments;
(2) Assuming responsibility for the transportation of goods
from the place of receipt to the place of destination; and
(3) To use for any part of the transportation a carrier
subject to federal law pertaining to common carriers.
A freight forwarder's liability is limited to damages arising from its
own negligence, including negligence in choosing the carrier;
- However, where the forwarder contracts to deliver
goods to their destination instead of merely arranging
for their transportation, it becomes liable as a common
carrier for loss or damage to goods.
A freight forwarder assumes the responsibility of a carrier,
which actually executes the transport, even though the
forwarder does not carry the merchandise itself.
Bill of Lading
UTI issued a bill of lading to Unilab. A bill of lading is a written
acknowledgement of the receipt of goods and an agreement to
deliver them at a specified place to a person name or on his order.
- Operates as a receipt – recites the date and place of
shipment, describes the goods (qty, weight,
dimensions, marks, value).
- Operates as a contract – names a contracting parties,
which include the consignee, fixes the route and freight
charges, rights and obligation of the parties.
Liability
The goods were received in the warehouse in good order
condition but when delivered to Unilab, there is already damage
which the petitioner failed to explain. This is a conclusive proof the
goods were damaged while in its possession.
Limitation of Liability
Section 4(5) of COGSA proves that the carrier shall not be liable
for loss or damage in an amount exceeding $500 unless the
nature and the value of such have been declared by the shipper
before shipment and inserted in the bill of lading.
- In this case, there is no higher valuation. Thus,
limitation on liability applies.
Keng Hua Paper v Court of Appeals
Sea-Land received in its Hong Kong Terminal a sealed container
containing bales of waste papers. A bill of lading was issued to
cover the shipment. Notice of arrival were given to Ken Hua but it
failed to discharge the shipment during the grace period. It
remained inside the container for 481 days. During the said time,
demurrage occurred. RTC found petitioner liable for demurrage.
Liability under the Bill of Lading
The acceptance of a bill of lading by the shipper and the
consignee, with full knowledge of its contents, gives rise to the
presumption that the same was perfected and binding contract.
- Section 17 of the Bill of Lading proves that the
consignee shall be liable for payment of demurrages
for failure to discharge shipment beyond the grace
period.
- Having the opportunity to examine the document, and
the acceptance without any objection or dissent binds
the petitioner.
Petitioner contends that it should not be bound by the bill of lading
because it never gave consent thereto. In support of its argument,
it cites the Notice of Refused of On Hand Freight it received from
Sea-Land.
- It only highlight the prolonged failure to object bill of
lading.
Petitioner contends that it did not receive or discharge the
shipment because it may violate customs law.
- Not substantiated.
Demurrage
An allowance of compensation for the delay or detention of a
vessel. Petitioner argued that before it may be obligated to pay,
Sea-Land should have filed a prior demand. Sea-Land asked for
different amount.
- Discrepancy is a result of variance of the dates of
demand.
Letter of Credit
Separate Contracts - Any discrepancy between the amount of the
goods described in the commercial invoice in the contract of sale
and the amount allowed in the letter of credit will not affect the
validity and enforceability of the contract of carriage as embodied
in the bill of lading.
Magellan Manufacturing (MMMC) v Court of Appeals
MMMC entered in a contract with Choju for purchase of Anahaw
fans. MMMC contracted Zuellig to ship the said order through
OOCL, specifying that an on-board Bill of Lading is needed and
transshipment is not allowed.
The goods were not accepted by Choju because the is no On-
Board Bill of Lading and there was a transshipment. As a result,
the goods were transported back to Manila, upon request of
MMMC and OOCL demanded payment of demurrage. MMMC
abandoned the whole cargo.
Violation of Terms of the Letter of Credit
Petitioner imputed the refusal of deliver by Choju.
- On board bill of lading. Petitioner claims that OOCL
made a mistake in documentation. Petitioner still
accepted the received for shipment bill of lading
despite knowing that it is clearly violative of the letter of
credit. Being aware of the practice, it cannot feign
ignorance.
o Compared with received for shipment bill of
lading. Goods are received without
specifying the vessel which the goods are
boarded. Hence, it was not yet aboard and
still subject to insufficiency of space.
- Transshipment. A shipper who receives a bill of lading
and permits the carrier to act upon it is presumed to
have assented to its terms. In this case, petitioner had
full knowledge since the President of MMMC itself
signed the bill of lading.
Demmurage
Notice of arrival of the vessel is a condition precedent. Despite
arrival in Manila on October, 1980, petitioners were only informed
on March, 1981. Thus, MMMC cannot be held liable for demurrage
during the said period.
Abandonment
On March 20, 1981, OOCL informed petitioner that it is given an
option to abandonment. MMMC agreed on April. Nevertheless,
OOCL claimed demurrage for period after the MMMC option to
abandon. The abandonment binds both parties.
Telengtan (TBS) v Court of Appeals
Van Reekim entered into a contract of affreightment with K-Line
for delivery of board liners consigned to La Suerte. The contract
was embodied in a bill of lading.
La Suerte received the copy of bill of lading and the notice of
arrival. It was also notified of demurrage charges. The shipment
were discharged the vessel but was not accepted by La Suerte
since there is a discrepancy in the delivery and the bill of lading.
La Suerte initially paid demurrage charges. However it refused to
pay additional charges because there was no agreement for
payment in the bill of lading and the delay in the release of cargo
was not due to its fault.
Petitoner is liable for demurrage for dealt but only for the period of
July 3 to 13, 1979.
- From June 27 to July 3, the release was due to the
discrepancy in the manifest and in the bill of lading. The
manifest was corrected only in June 29 and since it is
the weekend, there is a possibility that the same was
only approved July 3.
- The period stopped on July 13 because the delay to get
cargo was due to the breakdown of the crane that can
be imputed upon the arrastre, not the consignee. La
Suerte paid demurrage on July 13 already.
Provident insurance v Court of Appeals
Azucar shipping undertook to deliver woven bags consigned to
Atlas Fertilizer Corporation. Upon arrival to point of delivery, it was
instructed to proceed to a branch of Atlas. While being unloaded,
some of the cargoes fell overboard.
Provident indemnified Atlas for its damages. Thereafter, it filed a
complaint against Azucar for value of losses/damages to cargo.
Azucar moved to dismiss on the ground that petitioner’s claim is
extinguished based on the Stipulation No. 7 in the bill of lading.
- Damages must be made to the carrier within 24 hours
- Non-delivery or misdelivery – notice must be given
within 30 days upon arrival.
- In case of damages, the filing of the suit arising for
damage, delay, non-delivery or misdelivery shall be
instituted within one year.
The Court held that the stipulation is valid. The purpose of which
is to afford the carrier the opportunity to check the validity of the
claims while the facts are still fresh in the minds of the parties to
the transaction.
- The acknowledgment of the damage of the officer of
the carrier cannot be construed as compliance with the
said requirement.
The Court did not give credence to petitioner's allegation that the
lack of communications facilities in the place of delivery prevented
the consignee from making a prompt claim for recovery of
damages as prescribed by Stipulation No. 7. It is indeed hard to
believe that Atlas Fertilizer Corporation, being an established
corporation and a regular shipper, would be so inept as not to have
the necessary facilities to at least monitor, in the form of
communications equipment, the condition of its large shipment
involving 32,000 bags of fertilizer.
Republic v Lorenzo Shipping
Philippines and CARE entered into an agreement wherein CARE
would acquire donation from US and distribute it to beneficiaries
in the country. Pursuant to this, PH entered into a contract of
carriage with NFTC. The latter shipped that goods to Lorenzo
Shipping (LSC).
Upon arrival to point of delivery, the consignee of the government
was asked to surrender the bill of lading. However, only certified
true copies were presented. Upon completion, the respondent
signed the delivery receipts.
PH alleged that it did not receive the goods. The respondents
claimed that it was already delivered to the consignee. Petitioner
faulted the respondent for not securing the original copy of bill of
lading.
The Court held that although the original bills of lading were not
given to respondents, it still demanded the certified true copies
and also asked the consignee and its designated subordinates to
sign the cargo delivery receipts.
Art 353 of the Code of Commerce states that:
- In case the consignee, upon receiving the goods,
cannot return the bill of lading subscribed by the carrier,
because of its loss or of any other cause, he must give
the latter a receipt for the goods delivered, this receipt
producing the same effects as the return of the bill of
lading.
Thus, the surrender of the bill of lading is not a condition precedent
for a common carrier to be discharged of its contractual obligation.
If the surrender is not possible, acknowledgment of delivery by
signing the receipt suffices.
goods to the consignee even without the surrender of
the Bill of Lading.
The general rule is that upon receipt of the goods, the consignee
surrenders the bill of lading to the carrier and their respective
obligations are considered canceled.
- The law, however, provides two exceptions where the
goods may be released without the surrender of the bill
of lading:
(1) When the bill of lading gets lost;
(2) Or for other cause.
In either case, the consignee must issue a receipt to the carrier
upon the release of the goods. Such receipt shall produce the
same effect as the surrender of the bill of lading.
Clearly, law and jurisprudence is settled that the surrender of the
original bill of lading is not absolute; that in case of loss or any
other cause, a common carrier may release the goods to the
consignee even without it.
- In this case the bill of lading was not produced by DBI
because it was retained by DBI pending the full
payment of Ambiente.
- It is because of this that Ambiente and ASTI then
entered into the said agreement.
The applicable provision instead is Article 353 of the Code of
Commerce, which we have previously discussed. To reiterate, the
Article allows the release of the goods to the consignee even
without his surrender of the original bill of lading. In such case, the
duty of the carrier to exercise extraordinary diligence is not
violated. Nothing, therefore, prevented the consignee and the
carrier to enter into an indemnity agreement of the same nature
as the one they entered here. No law or public policy is
contravened upon its execution.

Designer Baskets (DBI) v Air Sea Transport (ASTI)

Ambiente ordered from DBI 223 cartons of wooden items.
Ambiented designated AACLI as the forwarding agent. ACCLI is
the agent of ASTI. DBI delivered to AACLI the shipment. AACLI in
turn issued to DBI triplicate copies of ASTI Bill of Lading.

Ambiente and ASTI entered into an Agreemtn to deliver the

shipment without the surrender of the relevant bills of lading due
to non-arrival or loss thereof. In exchange, Ambiente undertook to
hold ASTI free from any liability as a result of release of shipment.

ASTI released the shipment to Ambiente without informing DBI

and without receiving total cost of the shipment. DBI made several
demands to Ambiente but to no avail.

DBI claimed that under the Bill of Lading, ASTI and ACCLI may
only release the cargo only after the original copy of the Bill of
Lading is surrendered to them. Otherwise, they shall be liable for
the value of the shipment.

Trial Court ruled that the Agreement between Ambiente and ASTI
does not discharge the latter of its liability to DBI. The Court
reversed.
- The Court said that the requirement of Bill of Lading
claimed by DBI cannot be found in the bill of lading
itself. Further, a carrier is allowed by law to release the