Common Carrier's
Liability Due to Delay On 12 November 1976
Etel Laboratories ordered from
El Libi, Inc. of Puerto Rico 6,000 empty gelatin
capsules for the manufac-ture of its phar-maceutical
products. Through a Memorandum of Shipment, the
shipper El Libi, Inc. advised the consignee that
the "capsules" were shipped on board
the MV "Andy" for shipment to the Philippines
via Oakland, California, USA. In the same Memorandum,
El Libi, Inc. specified the date of arrival to
be 3 April 1977. For unknown reasons, the said
cargo was misshipped and diverted to Richmond,
Virginia, USA and then transported back to Oakland,
California. The goods finally arrived in the Philippines
on 10 June 1977. Etel Laboratories as the consignee
refused to take delivery of the goods due to their
failure to arrive on time. Etel Laboratories filed
an action with the trial court for recission of
contract with damages against the shipping line/common
carrier and El Libi, Inc. But the trial court
subsequently dismissed the case against El Libi,
Inc. upon motion of Etel Laboratories as the delay
in the arrival of the goods was allegedly due
solely to the gross negligence of the shipping
line. After trial on the merits, the trial court
adjudged the common carrier liable to the consignee.
On appeal, the Court of Appeals affirmed the decision
of the trial court with some modifications. The
common carrier elevated the case to the Supreme
Court. And the Supreme Court ruled as follows:
" x x x , the aforequoted ruling applies
only if such contracts will not create an absurd
situation as in the case at bar. The questioned
provision in the subject bill of lading has the
same effect of practically leaving the date of
arrival of the subject shipment on the sole determination
and will of the carrier. While it is true that
common carriers are not obligated by law to carry
and deliver merchandise and persons are not vested
with the right to prompt delivery, unless such
common carriers previously assume the obligation
to deliver at a given date or time. x x x An examination
of the subject bill of lading shows that the subject
shipment was estimated to arrive in Manila on
3 April 1977. While there was no special contract
entered into by the parties indicating the date
of arrival of the subject shipment, petitioner
(common carrier) nevertheless, was very well aware
of the specific date when the goods were expected
to arrive as indicated in the bill of lading itself.
In this regard, there arises no need to execute
another contract for the purpose as it would be
a mere superfluity. In the case before us, we
find that a delay in the delivery of the goods
spanning a period of two (2) months and seven
(7) days was beyond the realm of reasonableness.
x x x. Petitioner's insistence that it cannot
be held liable for the delay finds no merit."
Let us bear in mind that common carriers are not
obligated by law to carry and deliver merchandise
and persons are not vested with the right to prompt
delivery, unless such common carriers previously
assume the obligation to deliver at a given date
or time. But if a common carrier assumed the obligation
to deliver at at given date and time and it indeed
incurs delay in the delivery of goods, the consignee
is entitled to actual, moral and exemplary damages
and attorney's fees provided that the length of
delay must be beyond the realm of reasonableness.
For comments or questions, email the author at
jtb@pac-atlantic.com.ph.
Back to top
Is a Customs Broker a Common
Carrier?
CAN a charterer's agent be considered a ship agent?
YES. And this is the story.
On 16 February 1991, at Vancouver,
Canada, LOTEX SHIPPING, INC. as the shipper-charterer
of the M/V Trade Carrier shipped and loaded on
board the said vessel 5,000 metric tons of potash
in bulk for transportation and delivery at the
port of Toledo City, Cebu, in favor of ALTAS FERTILIZER
CORPORATION (AFC). The said shipment was insured
with TRIDENT INSURANCE CORP. (TIC) against all
risks.
When the shipment arrived in
Cebu, AFC claimed a shortage of 476.140 metric
tons valued at P1,657,700.95. TIC as the insurer,
paid the insurance claim of AFC. And as subrogee,
it filed a complaint with the Regional Trial Court
of Manila against MACON & Co. ( MC) as the
charterer's agent and TRADE AND TRANSPORT as the
owner/operator of the MV Trade Carrier.
As summons could not be served
to TRADE AND TRANSPORT, the case against it was
considered dismissed, without prejudice.
MC interposed the defense that
it was not the agent of the owner/operator of
the vessel. But it admitted that it was the agent
of the charterer. And as such, it attended to
the formalities and the needs of the vessel.
After trial on the merits, the trial court dismissed
the case as it found out that MC was not the ship
agent of the owner/operator of the vessel.
But the Court of Appeals ruled
that MC can still be held liable for the shortage
of the shipment because it was the ship agent
of the shipper-charterer of the vessel.
MC elevated the case to the Supreme
Court. And the Supreme Court held:
"In the present case, we
find no compelling reason to overturn the Court
of Appeals in its categorical finding that petitioner
(MC) was the ship agent. Such factual finding
was not in conflict with the trial court's ruling,
which merely stated that petitioner was not the
ship agent of Trade and Transport. Indeed, although
it is not an agent of Trade and Transport, petitioner
can still be the ship agent of the vessel MV "Trade
Carrier".
Article 586 of the Code of Commerce states that
a ship agent is "person entrusted with provisioning
or representing the vessel in the port in which
it may be found.
Hence, whether acting as agent
of the owner or as agent of the charterer, petitioner
will be considered as the ship agent and may be
liable as such, as long as the latter is the one
that provisions or represents the vessel.
x x x "
Thus, let us bear in mind that
when a charterer's agent prepares the needs of
a vessel such as money, provisions, water and
fuel, it shall be considered as the ship agent
within the context of Article 586 of the Code
of Commerce.
For comments or inquiries, please
contact the author at jtb@pac-atlantic.com.ph.
Back to top
Is a Customs Broker a Common
Carrier?
YES. And this is the story. In
1992, WS Laboratories, Inc. (WS) imported via
airfreight from Germany oral contraceptives which
were packed in one aluminum container and in two
pallets. WS insured the shipment with LGU Insurance
(LGU).
Upon arrival of the shipment at the Ninoy Aquino
International Airport, it was discharged "without
exception" and delivered to the PSI Warehouse
for safekeeping. Swift Brokerage, Inc. (Swift)
as the customs broker of WS through its representatives,
paid the corresponding duties, taxes and fees.
Upon receipt of the shipment,
a representative of Swift acknowledged that he
received the cargoes consisting of three pieces
in good condition. Swift delivered the cargoes
to WS. A representative of WS acknowledged the
delivery of the cargoes. But upon inspection,
he discovered some cartons were in bad order.
Thus, he placed a notation on the delivery receipt
that 44 cartons of oral contraceptives were in
bad order condition. The rest were accepted as
complete and in good order.
WS later demanded from Swift
the payment of the value of its loss arising from
the damaged contraceptives. But the latter refused.
WS filed an insurance claim against LGU and LGU
paid the claim of WS. And WS issued a subrogation
receipt in favor of LGU. On demand by LGU, Swift
disclaimed any liability. Hence, LGU filed a complaint
for damages before the Regional Trial Court. But
the trial court after trial on the merits, dismissed
the complaint.
On appeal, the Court of Appeals
reversed the decision of the trial court, holding
that Swift was engaged not only in the business
of customs brokerage but also in the transportation
and delivery of the cargo of its clients hence,
a common carrier within the context of the Civil
Code.
The motion for reconsideration
of Swift was denied by the Court of Appeals, prompting
Swift to elevate the case to the Supreme Court.
The Supreme Court ruled: "The appellate court
did not err in finding petitioner (Swift), a customs
broker, to be also a common carrier, as defined
under Article 1732 of the Civil Code x x x.
Article 1732 does not distinguish
between one whose principal business activity
is the carrying of goods and one who does such
carrying only as an ancillary activity. The contention,
therefore, of petitioner that it is not a common
carrier but a customs broker whose principal function
is to prepare the correct customs declaration
and proper shipping documents as required by law
is bereft of merit.
It suffices that petitioner undertakes
to deliver the goods for pecuniary consideration.
In this light, petitioner as a common carrier
is mandated to observe, under Article 1733 of
the Civil Code, extraordinary diligence in the
vigilance over the goods it transports according
to all circumstances of each case. In the event
that the goods are lost, destroyed or deteriorated,
it is presumed to have been at fault or to have
acted negligently, unless it proves that it observed
extraordinary diligence.
" Let us bear in mind that
a customs broker engaged not only in the business
of customs brokerage but also in the transportation
and delivery of the cargo/es of its clients is
a common carrier within the context of the Civil
Code.
Back to top
Common
Carrier to Private Carrier
WILL a voyage charter convert
a common carrier into a private carrier? No. And
this is the story. On 6 June 1984, Lotus Shipping
Co., Inc. entered into a voyage-charter with Mindanao
Transport Company for the carriage of 65,000 bags
of cement from Iligan City to Manila. Prior to
the voyage, Market Developers, Inc. as the consignee
insured the shipment with Pure Insurance Co. At
12:50 in the afternoon of 24 June 1984, the MV
"Weasel" left Iligan City for Manila.
But in the morning of the next day, the Master
ordered the vessel to be forced aground. Thus,
the entire cement in bags shipment was damaged
due to exposure to sea water. The consignee demanded
from Lotus Shipping Co. full reimbursement of
the cost of the lost shipment but the latter refused
to do so. Subsequently, Pure Insurance Co. paid
the consignee and the latter executed a Loss and
Subrogation Receipt in favor of the former.Hence,
Pure Insurance Co. filed a complaint against Lotus
Shipping Co. with the Regional Trial Court. After
trial on the merits, the trial court rendered
a decision in favor of the insurance company.
The trial court concluded that the cause of the
loss was not the tropical storm or any other force
majeure but the gross negligence of the MV "Weasel".
The Court of Appeals affirmed the decision of
the RTC with a slight modification on attorney's
fees and expenses. The case was elevated to the
Supreme Court. And the Supreme Court ruled in
the following tenor: Petitioner (Lotus
Shipping Co.) is a corporation engaged in the
business of transporting cargo by water and for
compensation, offering its services indiscriminately
to the public. Thus, without doubt, it is a common
carrier. However, petitioner entered into a voyage-charter.
Now, had the voyage-charter converted petitioner
into a private carrier?We think not. Conformably,
petitioner remains a common carrier notwithstanding
the existence of the charter agreement since the
said charter is limited to the ship only and does
not involve both the vessel and its crew. As elucidated
in Planters Products, its charter is only a voyage
charter, not a bareboat charter. Let us always
bear in mind that a public carrier shall remain
as such, notwithstanding the charter of the whole
or portion the said carrier by one or more persons,
provided the charter is limited to the ship only,
as in the case of a time-charter or voyage-charter.
It is only when the charter includes both the
vessel and its crew, as in a bareboat or demise
that a common carrier becomes private, at least
insofar as the particular voyage covering the
charter party is concerned.
Back to top
For comment or inquiries, contact
the writer at jtb@pac-atlantic.com.ph.
You are now in: Narrow
Channel Archive : 2006 Q1
Back to top |
