Monday, July 21, 2008

PHIL SUPREME COURT LIMITS FINANCIAL LIABILITY OF CARRIER IN CARGO LOSS

MANILA, July 20 — The Supreme Court, in a 10-page decision, affirmed an earlier ruling of the Court of Appeals (CA) which states that shipping company Neptune Orient Lines (NOL) and agent Overseas Agency Services, Inc.
(OASI) is only liable to reimburse shipper Fukuyama Manufacturing Corporation and its insurer, Philippine Charter Insurance Corporation (PCIC), US$ 1,500 for three sets of warp yarn which was lost at sea during the course of the voyage from Hongkong to Manila in 1993.

The SC’s First Division, in the decision penned by Associate Justice Adolfo Azcuna, junked the contention made by PCIC, who is acting as Fukuyama’s representative that the CA erred in limiting the damage to be paid by NOL and its agent OASI to US$ 500 per package. The SC also dismissed claims made PCCI that the crew of the ship threw overboard the three yarn shipments during the course of the voyage due to lack of merit as reports coming from the vessel’s commander, Capt. S.L. Halloway, who indicated that the cargo fell overboard when the ship encountered rough weather while cruising along “Lat. 20 degrees, 29 minutes North, Long. 115 degrees, 49 minutes East.” This report was further bolstered by the fact that the ship’s captain immediately filed a report regarding the loss upon arrival at the Port of Manila which was duly notarized.

”The records show that the subject cargoes fell overboard the ship and petitioner should not vary the facts of the case on appeal. This Court is not a trier of facts, and, in this case, the factual finding of the regional trial court and the CA, which is supported by the evidence on record, is conclusive upon this Court,” the decision added. In affirming the CA’s earlier ruling, the SC intensively quoted two sections of the Civil Code specifically Articles 1749 and 1750. Article 1749 states that a stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

While Article 1750 states contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon. In addition, the SC also quoted Section 4, paragraph 5 of the Carriage of Goods by Sea Act (COGSA) which is applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade, provides: ”Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding US$ 500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading shall be prima facie evidence, but shall be conclusive on the carrier.”

The SC also said that the bill of lading submitted by the petitioner “did not show that the shipper in Hong Kong declared the actual value of the goods as insured by Fukuyama before shipment and that the said value was inserted in the Bill of Lading, and so no additional charges were paid. Hence, the stipulation in the bill of lading that the carrier’s liability shall not exceed USD500 per package applies.” Court records showed that on Sept. 30, 1993, L.T. Garments Manufacturing Corp. Ltd. shipped from Hong Kong three sets of warp yarn on returnable beams aboard respondent Neptune Orient Lines’ vessel, M/V Baltimar Orion, for transport and delivery to Fukuyama Manufacturing Corporation (Fukuyama) of No. 7 Jasmin Street, AUV Subdivision, Metro Manila. The said cargoes were loaded in container no. IEAU-4592750 in good condition under Bill of Lading No. HKG-0396180. Fukuyama insured the shipment against all risks with petitioner PCIC under Marine Cargo Policy No. RN55581 in the amount of P228,085. During the course of the voyage, the container with the cargoes fell overboard and was lost.

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