EDUARDO N. RIGUER vs. ATTY. EDRALIN S. MATEO (PROBLEM AREAS IN LEGAL ETHICS)

G.R. No. 222538

EDUARDO N. RIGUER, Petitioner
vs.
ATTY. EDRALIN S. MATEO, Respondent

MENDOZA, J.:

FACTS:

Sometime in 2002, petitioner Eduardo N. Riguer (Riguer) engaged the services of respondent Atty. Edralin S. Mateo (Atty. Mateo) to represent him in civil and criminal cases involving a parcel of land covered by Transfer Certificate of Title (TCT) No. 12112. They agreed that the compensation for Atty. Mateo's legal services would be the acceptance fee, appearance fee, and pleading fees, which Riguer religiously paid.6

On January 16, 2007, the RTC rendered a judgment favorable to Riguer in the civil case. During the pendency of the appeal, Atty. Mateo was able to make him sign a document entitled "Kasunduan." 7 The said document stated that Riguer agreed to pay Atty. Mateo the following: a)₱30,000.00 as reimbursement for the latter's expenses in the civil case; b) ₱50,000.00 in case of a favorable decision in the civil case; and c) ₱250,000.00 once the land covered by TCT No. 12112 was sold. ⁸

On May 21, 2009, the appeal was decided in favor of Riguer, prompting Atty. Mateo to demand payment of the fees agreed upon in the Kasunduan. toRiguer refused pay.

ISSUE:

WHETHER ATTY. MATEO IS ENTITLED TO RECOVER ₱250,000.00 IN ATTORNEY'S FEES PURSUANT TO THE KASUNDUAN.

RULING:

The Court, nevertheless, reduces the agreed attorney's fees for being unconscionable. Section 24, Rule 138 of the Rules of Court provides:

Sec. 24. Compensation of attorneys; agreement as to fees. - An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject-matter of the controversy, the extent of the services rendered, and professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation but may disregard such testimony and base its conclusion on its professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. [Emphases supplied]

Accordingly, whether there is an agreement or not, the courts can fix a reasonable compensation which lawyers may receive for their professional services. ²⁰ As an officer of the court, the lawyer submits himself to the authority of the court and, as such, the power to determine the reasonableness or unconscionable character of attorney's fees stipulated by the parties is a matter falling within the regulatory prerogative of the courts.21

We have identified the circumstances to be considered in determining the reasonableness of a claim for attorney's fees as follows: (1) the amount and character of the service rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the litigation or business in which the services were rendered; (4) the responsibility imposed; (5) the amount of money or the value of the property affected by the controversy or involved in the employment; (6) the skill and experience called for in the performance of the services; (7) the professional character and social standing of the attorney; (8) the results secured; (9) whether the fee is absolute or contingent, it being recognized that an attorney may properly charge a much larger fee when it is contingent than when it is not; and (10) the financial capacity and economic status of the client have to be taken into account in fixing the reasonableness of the fee.23[Emphases supplied]

Applying the aforementioned standards, no other conclusion can be reached other than that the ₱250,000.00 attorney's fees was unconscionable.1avvphi1 First, the attorney's fees amounted to almost 50% of the value of theproperty litigated as it was only sold for ₱600,000.00. Second, Riguer was a farmer of advanced age with limited educational attainment. Third, the stipulated attorney's fees in the Kasunduan referred to Atty. Mateo's services for the appeal because the legal fees during the proceedings in the trial court had already been paid. Lastly, Atty. Mateo judicially admitted that he believed he was entitled to 10% attorney's fees. It was stated in the Kasunduan that Atty. Mateo was to be paid ₱250,000.00 because he claimedthat the litigated property had a fair market value of around P3 million. The same, however, was sold for only ₱600,000.00.

WHEREFORE, the April 13, 2015 Decision and the September 3, 2015 and January 14, 2016 Resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 136297 are AFFIRMED with MODIFICATION. The attorney's fees in the amount of ₱250,000.00 awarded to respondent Atty. Edralin S. Mateo is reduced to ₱l00,000.00.

SO ORDERED.

SPS. ZARAGOZA vs. COURT OF APPEALS (SUCCESSION)

[G.R. No. 106401. September 29, 2000]
SPOUSES FLORENTINO ZARAGOZA and ERLINDA ENRIQUEZ-ZARAGOZA, petitioners, vs. THE HONORABLE COURT OF APPEALS, ALBERTA ZARAGOZA MORGAN, respondents.

QUISUMBING, J.:

FACTS: 

Flavio Zaragoza Cano was the registered owner of certain parcels of land situated at the Municipalities of Cabatuan, New Lucena and Sta. Barbara, Province of Iloilo. He had four children: Gloria, Zacariaz, Florentino and Alberta, all surnamed Zaragoza. On December 9, 1964, he died without a will and was survived by his four children.
     On December 28, 1981, private respondent Alberta Zaragoza-Morgan filed a complaint with the Court of First Instance of Iloilo against Spouses Florentino and Erlinda, herein petitioners, for delivery of her inheritance share, consisting of Lots 943 and 871, and for payment of damages. She claims that she is a natural born Filipino citizen and the youngest child of the late Flavio. She further alleged that her father, in his lifetime, partitioned the aforecited properties among his four children.The shares of her brothers and sister were given to them in advance by way of deed of sale, but without valid consideration, while her share, which consists of lots no. 871 and 943, was not conveyed by way of deed of sale then.She averred that because of her marriage, she became an American citizen and was prohibited to acquire lands in the Philippines except by hereditary succession. For this reason, no formal deed of conveyance was executed in her favor covering these lots during her father's lifetime.
     Petitioners, in their Answer, admitted their affinity with private respondent and the allegations on the properties of their father.They, however, denied knowledge of an alleged distribution by way of deeds of sale to them by their father. They said that lot 871 is still registered in their father's name, while lot 943 was sold by him to them for a valuable consideration. They denied knowledge of the alleged intention of their father to convey the cited lots to Alberta, much more, the reason for his failure to do so because she became an American citizen. They denied that there was partitioning of the estate of their father during his lifetime.

ISSUE:

Whether the partition inter vivos by Flavio Zaragoza Cano of his properties, which include Lots 871 and 943, is valid.

RULING:

      On the issue, it is the main contention of the petitioner that the adjudication of Lots 943 and 871 in favor of private respondent, as her inheritance share, has no legal basis since there is no will nor any document that will support the transfer.

Both the trial court and the public respondent found that during the lifetime of Flavio, he already partitioned and distributed his properties among his three children, excepting private respondent, through deeds of sale. A deed of sale was not executed in favor of private respondent because she had become an American citizen and the Constitution prohibited a sale in her favor. Petitioner admitted Lots 871 and 943 were inheritance shares of the private respondent. These are factual determinations of the Court of Appeals, based on documentary and testimonial evidence. As a rule, we are bound by findings of facts of the Court of Appeals. Was the partition done during the lifetime of Flavio Zaragoza Cano valid? We think so. It is basic in the law of succession that a partition inter vivos may be done for as long as legitimes are not prejudiced. Art. 1080 of the Civil Code is clear on this. The legitime of compulsory heirs is determined after collation, as provided for in Article 1061:

   Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous title in order that it may be computed in the determination of the legitime of each heir, and in the account of the partition.

   Unfortunately, collation can not be done in this case where the original petition for delivery of inheritance share only impleaded one of the other compulsory heirs. The petition must therefore be dismissed without prejudice to the institution of a new proceeding where all the indispensable parties are present for the rightful determination of their respective legitime and if the legitimes were prejudiced by the partitioning inter vivos.

REPUBLIC OF THE PHILIPPINES vs. DAVID REY GUZMAN (SUCCESSION)

[G.R. No. 132964. February 18, 2000]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. DAVID REY GUZMAN, represented by his Attorney-in-Fact, LOLITA G. ABELA, and the REGISTER OF DEEDS OF BULACAN, MEYCAUAYAN BRANCH, respondents.

BELLOSILLO, J.:

FACTS:

David Rey Guzman, a natural-born American citizen, is the son of the spouses Simeon Guzman, a naturalized American citizen, and Helen Meyers Guzman, an American citizen. In 1968 Simeon died leaving to his sole heirs Helen and David an estate consisting of several parcels of land located in Bagbaguin, Sta. Maria, Bulacan.

On 29 December 1970 Helen and David executed a Deed of Extrajudicial Settlement of the Estate of Simeon Guzman dividing and adjudicating to themselves all the property belonging to the estate of Simeon. 

On 10 December 1981 Helen executed a Quitclaim Deed assigning, transferring and conveying to her son David her undivided one-half (1/2) interest on all the parcels of land subject matter of the Deed of Extrajudicial Settlement of the Estate of Simeon Guzman. 

On 18 October 1989 David executed a Special Power of Attorney where he acknowledged that he became the owner of the parcels of land subject of the Deed of Quitclaim executed by Helen on 9 August 1989.

On 16 March 1994 a certain Atty. Mario A. Batongbacal wrote the Office of the Solicitor General and furnished it with documents showing that Davids ownership of the one-half (1/2) of the estate of Simeon Guzman was defective. On the basis thereof, the Government filed before the Regional Trial Court of Malolos Bulacan a Petition for Escheat praying that one-half (1/2) of David's interest in each of the subject parcels of land be forfeited in its favor.

On 11 July 1995 the trial court dismissed the petition holding that the two (2) deeds of quitclaim executed by Helen Meyers Guzman had no legal force and effect so that the ownership of the property subject thereof remained with her. The Government appealed the dismissal of the petition but the appellate court affirmed the court a quo.

As a rule, only a Filipino citizen can acquire private lands in the Philippines. The only instances when a foreigner can acquire private lands in the Philippines are by hereditary succession and if he was formerly a natural-born Filipino citizen who lost his Philippine citizenship. Petitioner therefore contends that the acquisition of the parcels of land by David does not fall under any of these exceptions. It asserts that David being an American citizen could not validly acquire one-half (1/2) interest in each of the subject parcels of land by way of the two (2) deeds of quitclaim as they are in reality donations inter vivos. 

David maintains, on the other hand, that he acquired the property by right of accretion and not by way of donation, with the deeds of quitclaim merely declaring Helens intention to renounce her share in the property and not an intention to donate.

ISSUES:

(1) Whether Helen validly repudiated her right to inherit from the decedent.

(2) Whether the petition for escheat filed by the Government will prosper.

RULING:

(1) There is no valid repudiation of inheritance as Helen had already accepted her share of the inheritance when she, together with David, executed a Deed of Extrajudicial Settlement of the Estate of Simeon Guzman in 1970 dividing and adjudicating between the two of them all the property in Simeon’s estate.

Article 1056 of the Civil Code provides that “the acceptance or repudiation of an inheritance, once made is irrevocable and cannot be impugned, except when it was madethrough any of the causes that vitiate consent or when an unknown will appears.”

In this case, there is no showing that Helen's acceptance of her inheritance from Simeon was made through any of the causes which vitiated her consent nor is there any proof of the existence of an unknown will executed by Simeon.

Thus,pursuant to Article 1056, Helen cannot belatedly execute an instrument that has the effect of revoking or impugning her previous acceptance of her one-half share of the subject property from Simeon’s estate. Hence, the quitclaim deeds that she executed eleven years after she had accepted the inheritance have no legal force and effect.

(2) No, the nullity of the repudiation does not ipso facto operate to convert the parcels of land into res nullius to be escheated in favor of the Government. The repudiation being of no effect whatsoever the parcels of land should revert to their private owner, Helen, who, although being an American citizen, is qualified by hereditary succession to own the property subject of the litigation.

CRESCENT PETROLEUM, LTD., vs. M/V "LOK MAHESHWARI (TRANSPORTATION LAW)

CRESCENT PETROLEUM, LTD., Petitioner, vs. M/V "LOK MAHESHWARI," THE SHIPPING CORPORATION OF INDIA, and PORTSERV LIMITED

G.R. No. 155014 November 11, 2005

FACTS:

Respondent M/V "Lok Maheshwari" (Vessel) is an oceangoing vessel of Indian registry that is owned by respondent Shipping Corporation of India (SCI), a corporation organized and existing under the laws of India and principally owned by the Government of India. It was time-chartered by respondent SCI to Halla Merchant Marine Co. Ltd. (Halla), a South Korean company. Halla, in turn, sub-chartered the Vessel through a time charter to Transmar Shipping, Inc. (Transmar). Transmar further sub-chartered the Vessel to Portserv Limited (Portserv). Both Transmar and Portserv are corporations organized and existing under the laws of Canada.

On or about November 1, 1995, Portserv requested petitioner Crescent Petroleum, Ltd. (Crescent), a corporation organized and existing under the laws of Canada that is engaged in the business of selling petroleum and oil products for the use and operation of oceangoing vessels, to deliver marine fuel oils (bunker fuels) to the Vessel. Petitioner Crescent granted and confirmed the request through an advice via facsimile dated November 2, 1995. As security for the payment of the bunker fuels and related services, petitioner Crescent received two (2) checks in the amounts of US$100,000.00 and US$200,000.00. Thus, petitioner Crescent contracted with its supplier, Marine Petrobulk Limited (Marine Petrobulk), another Canadian corporation, for the physical delivery of the bunker fuels to the Vessel.

On or about November 4, 1995, Marine Petrobulk delivered the bunker fuels amounting to US$103,544 inclusive of barging and demurrage charges to the Vessel at the port of Pioneer Grain, Vancouver, Canada. The Chief Engineer Officer of the Vessel duly acknowledged and received the delivery receipt. Marine Petrobulk issued an invoice to petitioner Crescent for the US$101,400.00 worth of the bunker fuels. Petitioner Crescent issued a check for the same amount in favor of Marine Petrobulk, which check was duly encashed.

Having paid Marine Petrobulk, petitioner Crescent issued a revised invoice dated November 21, 1995 to "Portserv Limited, and/or the Master, and/or Owners, and/or Operators, and/or Charterers of M/V ‘Lok Maheshwari’" in the amount of US$103,544.00 with instruction to remit the amount on or before December 1, 1995. The period lapsed and several demands were made but no payment was received. Also, the checks issued to petitioner Crescent as security for the payment of the bunker fuels were dishonored for insufficiency of funds. As a consequence, petitioner Crescent incurred additional expenses of US$8,572.61 for interest, tracking fees, and legal fees.

On May 2, 1996, while the Vessel was docked at the port of Cebu City, petitioner Crescent instituted before the RTC of Cebu City an action "for a sum of money with prayer for temporary restraining order and writ of preliminary attachment" against respondents Vessel and SCI, Portserv and/or Transmar.

On May 3, 1996, the trial court issued a writ of attachment against the Vessel with bond at P2, 710,000.00. Petitioner Crescent withdrew its prayer for a temporary restraining order and posted the required bond.

On May 18, 1996, summonses were served to respondents Vessel and SCI, and Portserv and/or Transmar through the Master of the Vessel. On May 28, 1996, respondents Vessel and SCI, through Pioneer Insurance and Surety Corporation (Pioneer), filed an urgent ex-parte motion to approve Pioneer’s letter of undertaking, to consider it as counter-bond and to discharge the attachment. On May 29, 1996, the trial court granted the motion; thus, the letter of undertaking was approved as counter-bond to discharge the attachment. 
 

ISSUE:

Whether the Philippine court has or will exercise jurisdiction and entitled to maritime lien under our laws on foreign vessel docked on Philippine port and supplies furnished to a vessel in a foreign port?
 

RULING:

In a suit to establish and enforce a maritime lien for supplies furnished to a vessel in a foreign port, whether such lien exists, or whether the court has or will exercise jurisdiction, depends on the law of the country where the supplies were furnished, which must be pleaded and proved.

The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced such single-factor methodologies as the law of the place of supply. The multiple-contact test to determine, in the absence of a specific Congressional directive as to the statute’s reach, which jurisdiction’s law should be applied. The following factors were considered: (1) place of the wrongful act; (2) law of the flag; (3) allegiance or domicile of the injured; (4) allegiance of the defendant shipowner; (5) place of contract; (6) inaccessibility of foreign forum; and (7) law of the forum. This is applicable not only to personal injury claims arising under the Jones Act but to all matters arising under maritime law in general.

The Court cannot sustain petitioner Crescent’s insistence on the application of P.D. No. 1521 or the Ship Mortgage Decree of 1978 and hold that a maritime lien exists. Out of the seven basic factors listed in the case of Lauritzen, Philippine law only falls under one – the law of the forum. All other elements are foreign – Canada is the place of the wrongful act, of the allegiance or domicile of the injured and the place of contract; India is the law of the flag and the allegiance of the defendant shipowner. Applying P.D. No. 1521,a maritime lien exists would not promote the public policy behind the enactment of the law to develop the domestic shipping industry. Opening up our courts to foreign suppliers by granting them a maritime lien under our laws even if they are not entitled to a maritime lien under their laws will encourage forum shopping. In light of the interests of the various foreign elements involved, it is clear that Canada has the most significant interest in this dispute. The injured party is a Canadian corporation, the sub-charterer which placed the orders for the supplies is also Canadian, the entity which physically delivered the bunker fuels is in Canada, the place of contracting and negotiation is in Canada, and the supplies were delivered in Canada.

REYMA BROKERAGE, INC., vs. PHILIPPINE HOME ASSURANCE CORPORATION (TRANSPORTATION LAW)

G.R. No. 93464 October 7, 1991

REYMA BROKERAGE, INC., petitioner,
vs.
PHILIPPINE HOME ASSURANCE CORPORATION, and THE HONORABLE COURT OF APPEALS, respondents.

SARMIENTO, J.:

 FACTS:

On October 2, 1979, the vessel 'MS Malmros Monsoon' received onboard at Fremantle, Brisbane Queensland, Australia from shipper Craig Mostyn & Co., Pty. Ltd. (of Brisbane, Queensland) a shipment of 2,680 cartons of hard frozen boneless beef contained in five (5) containers complete and in good order and condition for transport to Manila in favor of the eventual consignee RFM Corp. under Bill of Lading No. 53149, dated October 2, 1979. On October 13, 1979, the MS 'Malmros Monsoon' arrived at Pier 3 of the Port of Manila and discharged the shipment into the possession and custody of the defendant, the arrastre operator in the case at bar. From Pier 3, the shipment was transferred to the Reefer Van Area of Pier 13 and on October 22, 1979, the defendant arrastre contractor loaded the containers in two (2) trucks and delivered them to Grech Food Industries Cold Storage in Pasig, Rizal arriving there at 1:00 o'clock A.M., the following morning, October 23, 1979. Four (4) personnel of defendant, a driver and a helper in each truck made the delivery. On October 23, 1979 at 9:00 o'clock in the morning, the containers were stripped and the representative of the defendant and consignee counted the contents of five (5) containers and after an inventory of Container No. BROU-430656[1], it was discovered that 203 cartons were found short out of the loaded 2,680 cartons of hard frozen boneless beef which according to the consignee was totally attributable to the defendant as it occurred while the said container in question was in the custody and responsibility of the defendant. Consignee filed claim for the recovery of the missing 203 cartons but the same was denied and consequently, consignee filed the claim with the plaintiff under its Marine Cargo Insurance Policy. The consignee was paid by plaintiff the amount of P88, 658.22. The payment of consignee's claim by the plaintiff had subrogated the latter to file this instant claim for the recovery of the said amount.

 

ISSUE:

Whether the petitioner be held liable for the shortage of the containerized goods.

 

RULING:

Yes, it must be noted that the bill of lading itself contains the printed stipulations:

x x x Weight, measurement marks and numbers (except loading marks for which the carrier is only responsible if stamped or otherwise shown clearly in letters at least 50 mm high) quality contents and value shown above are furnished by the Merchant and have not been checked and are to be considered unknown, unless expressly acknowledged and agreed to.

And in the bottom portion of the bill of lading there appears the statement:

“This bill of lading is a receipt only for the number of packages shown above which was duly signed by the carrier”.

Evidently, the carrier, by signifying in the bill of lading that "it is a receipt ... for the number of packages shown above," had explicitly admitted that the containerized shipments had actually the number of packages declared by the shipper in the bill of lading. And this conclusion is bolstered by the stipulation printed in the bill of lading, "Unless expressly acknowledged and agreed to." Therefore, the phrase "said to contain" also appearing in the bill of lading must give way to this reality.

Hence, this express acknowledgment of the carrier makes the case at bar an exception to the doctrine enunciated in United States Lines. The rule enunciated by United States Lines applies to a situation where the carrier of the containerized cargo simply admits the information furnished by the shipper with regard to the goods it shipped as reflected in the bill of lading ("said to contain") but not where the carrier of the containerized cargo makes an explicit admission as to the weight, measurement marks, numbers, quality contents, and value, and more so inscribed these admissions as stipulations in the bill of lading itself, or made them an addendum thereto, to which the carrier affixed its express acknowledgment as what happened in this case. In its stead, the dictum that the bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described governs. I was held that:

... [A] Bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and a contract to transport and deliver the same as therein stipulated. As a receipt, it recites the date and place of shipment, describes the goods as to quantity, weight, dimensions, Identification marks and condition, quality, and value. As a contract it names the contracting parties, which include the consignee, fixes the route, destination, and freight rates or charges, and stipulates the rights and obligations assumed by the parties.

 

KENG HUA PAPER PRODUCTS CO. INC. vs. COURT OF APPEALS (TRANSPORTATION LAW)

[G.R. No. 116863. February 12, 1998]

KENG HUA PAPER PRODUCTS CO. INC., petitioner, vs. COURT OF APPEALS; REGIONAL TRIAL COURT OF MANILA, BR. 21; and SEA-LAND SERVICE, INC., respondents.

PANGANIBAN, J.:

 

FACTS:

Plaintiff (herein private respondent), a shipping company, is a foreign corporation licensed to do business in the Philippines. On June 29, 1982, plaintiff received at its Hong Kong terminal a sealed container, Container No. SEAU 67523, containing seventy-six bales of unsorted waste paper for shipment to defendant (herein petitioner), Keng Hua Paper Products, Co. in Manila. A bill of lading to cover the shipment was issued by the plaintiff. On July 9, 1982, the shipment was discharged at the Manila International Container Port. Notices of arrival were transmitted to the defendant but the latter failed to discharge the shipment from the container during the free time period or grace period. The said shipment remained inside the plaintiffs container from the moment the free time period expired on July 29, 1982 until the time when the shipment was unloaded from the container on November 22, 1983, or a total of four hundred eighty-one (481) days. During the 481-day period, demurrage charges accrued. Within the same period, letters demanding payment were sent by the plaintiff to the defendant who, however, refused to settle its obligation which eventually amounted to P67, 340.00. Numerous demands were made on the defendant but the obligation remained unpaid. Plaintiff thereafter commenced this civil action for collection and damages.

ISSUE:

Whether or not petitioner had accepted the bill of lading thus be held liable for payment of demurrage charges.
 

RULING:

Yes, a bill of lading serves two functions. First, it is a receipt for the goods shipped. Second, it is a contract by which three parties, namely, the shipper, the carrier, and the consignee undertake specific responsibilities and assume stipulated obligations. A bill of lading delivered and accepted constitutes the contract of carriage even though not signed, because the (a) acceptance of a paper containing the terms of a proposed contract generally constitutes an acceptance of the contract and of all of its terms and conditions of which the acceptor has actual or constructive notice. In a nutshell, 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 a perfected and binding contract.

In the case at bar, both lower courts held that the bill of lading was a valid and perfected contract between the shipper (Ho Kee), the consignee (Petitioner Keng Hua), and the carrier (Private Respondent Sea-Land). Section 17 of the bill of lading provided that the shipper and the consignee were liable for the payment of demurrage charges for the failure to discharge the containerized shipment beyond the grace period allowed by tariff rules. Applying said stipulation, both lower courts found petitioner liable. The aforementioned section of the bill of lading reads:

17. COOPERAGE FINES. The shipper and consignee shall be liable for, indemnify the carrier and ship and hold them harmless against, and the carrier shall have a lien on the goods for, all expenses and charges for mending cooperage, baling, repairing or reconditioning the goods, or the van, trailers or containers, and all expenses incurred in protecting, caring for or otherwise made for the benefit of the goods, whether the goods be damaged or not, and for any payment, expense, penalty fine, dues, duty, tax or impost, loss, damage, detention, demurrage, or liability of whatsoever nature, sustained or incurred by or levied upon the carrier or the ship in connection with the goods or by reason of the goods being or having been on board, or because of shippers failure to procure consular or other proper permits, certificates or any papers that may be required at any port or place or shippers failure to supply information or otherwise to comply with all laws, regulations and requirements of law in connection with the goods of from any other act or omission of the shipper or consignee: (Underscoring supplied.)

In the case at bar, the prolonged failure of petitioner to receive and discharge the cargo from the private respondents’ vessel constitutes a violation of the terms of the bill of lading. It should thus be liable for demurrage to the former.

PHILIPPINE CHARTER INSURANCE CORPORATION vs. CHEMOIL LIGHTERAGE CORPORATION (TRANSPORTATION LAW)

[G.R. No. 136888. June 29, 2005]

PHILIPPINE CHARTER INSURANCE CORPORATION, petitioner, vs. CHEMOIL LIGHTERAGE CORPORATION, respondent.

CHICO-NAZARIO, J.:

FACTS:

Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of non-life insurance. Respondent Chemoil Lighterage Corporation is also a domestic corporation engaged in the transport of goods. On 24 January 1991, Samkyung Chemical Company, Ltd., based in South Korea, shipped 62.06 metric tons of the liquid chemical DIOCTYL PHTHALATE (DOP) on board MT “TACHIBANA” which was valued at US$90,201.57 and another 436.70 metric tons of DOP valued at US$634,724.89 to the Philippines. The consignee was Plastic Group Phils., Inc. in Manila. PGP insured the cargo with Philippine Charter Insurance Corporation against all risks. The insurance was under Marine Policies No. MRN-30721[5] dated 06 February 1991. Marine Endorsement No. 2786[7] dated 11 May 1991 was attached and formed part of MRN-30721, amending the latter’s insured value to P24,667,422.03, and reduced the premium accordingly. The ocean tanker MT “TACHIBANA” unloaded the cargo to the tanker barge, which shall transport the same to Del Pan Bridge in Pasig River and haul it by land to PGP’s storage tanks in Calamba, Laguna. Upon inspection by PGP, the samples taken from the shipment showed discoloration demonstrating that it was damaged. PGP then sent a letter where it formally made an insurance claim for the loss it sustained.

Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to conduct a Quantity and Condition Survey of the shipment which issued a report stating that DOP samples taken were discolored. Inspection of cargo tanks showed manhole covers of ballast tanks’ ceilings loosely secured and 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. Petitioner paid PGP the full and final payment for the loss and issued a Subrogation Receipt. Meanwhile, PGP paid the respondent the as full payment for the latter’s services.

On 15 July 1991, an action for damages was instituted by the petitioner-insurer against respondent-carrier before the RTC, Br.16, City of Manila. Respondent filed an answer which admitted that it undertook to transport the shipment, but alleged that before the DOP was loaded into its barge, the representative of PGP, Adjustment Standard Corporation, inspected it and found the same clean, dry, and fit for loading, thus accepted the cargo without any protest or notice. As carrier, no fault and negligence can be attributed against respondent as it exercised extraordinary diligence in handling the cargo. After due hearing, the trial court rendered a Decision in favor of plaintiff. On appeal, the Court of Appeals promulgated its Decision reversing the trial court. A petition for review on certiorari was filed by the petitioner with this Court.

ISSUE:

Whether or not the Notice of Claim was filed within the required period.

RULING:

Article 366 of the Code of Commerce has profound application in the case at bar, which 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.

As to the issue, the petitioner contends that the notice of contamination was given by PGP employee, to Ms. Abastillas, at the time of the delivery of the cargo, and therefore, within the required period. The respondent, however, claims that the supposed notice given by PGP over the telephone was denied by Ms. Abastillas. The Court of Appeals declared: that a telephone call made to defendant-company could constitute substantial compliance with the requirement of notice. However, it must be pointed out that compliance with the period for filing notice is an essential part of the requirement, i.e.. immediately if the damage is apparent, or otherwise within twenty-four hours from receipt of the goods, the clear import being that prompt examination of the goods must be made to ascertain damage if this is not immediately apparent. We have examined the evidence, and We are unable to find any proof of compliance with the required period, which is fatal to the accrual of the right of action against the carrier.

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 requirement that a notice of claim should be filed within the period stated by Article 366 of the Code of Commerce is not an empty or worthless proviso.

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.

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.

We do not believe so. As discussed at length above, there is no evidence to confirm that the notice of claim was filed within the period provided for under Article 366 of the Code of Commerce. Petitioner’s contention proceeds from a false presupposition that the notice of claim was timely filed.

MITSUI O.S.K. LINES LTD. vs. COURT OF APPEALS (TRANSPORTATION LAW)

[G.R. No. 119571. March 11, 1998]

MITSUI O.S.K. LINES LTD., represented by MAGSAYSAY AGENCIES, INC., petitioner, vs. COURT OF APPEALS and LAVINE LOUNGEWEAR MFG. CORP., respondents.

MENDOZA, J.:

FACTS:

Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage through Meister Transport, Inc., an international freight forwarder, with private respondent Lavine Loungewear Manufacturing Corporation to transport goods of the latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to France 28 days from initial loading. On July 24, 1991, petitioner’s vessel loaded private respondent’s container van for carriage at the said port of origin.

However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with the result that the shipment arrived in Le Havre only on November 14, 1991. The consignee allegedly paid only half the value of the said goods on the ground that they did not arrive in France until the off season in that country. The remaining half was allegedly charged to the account of private respondent which in turn demanded payment from petitioner through its agent.

ISSUE:

      Whether private respondents’ action is for loss or damage to goods shipped, within the meaning of 3(6) of the Carriage of Goods by Sea Act (COGSA).

RULING:

      No, As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act, loss contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered.

       In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the carrier’s breach of contract. Whatever reduction there may have been in the value of the goods is not due to their deterioration or disappearance because they had been damaged in transit.

      Precisely, the question before the trial court is not the particular sense of damages as it refers to the physical loss or damage of a shippers goods as specifically covered by 3(6) of COGSA but petitioners potential liability for the damages it has caused in the general sense and, as such, the matter is governed by the Civil Code, the Code of Commerce and COGSA, for the breach of its contract of carriage with private respondent.

SEALOADER SHIPPING CORPORATION vs GRAND CEMENT MANUFACTURING CORPORATION (TRANSPORTATION LAW)

G.R. No. 167363               December 15, 2010

SEALOADER SHIPPING CORPORATION, Petitioner,
vs.
GRAND CEMENT MANUFACTURING CORPORATION, JOYCE LAUNCH & TUG CO., INC., ROMULO DIANTAN & JOHNNY PONCE, Respondents.

LEONARDO-DE CASTRO, J.:

FACTS:

Sealoader Shipping Corporation (Sealoader) is a domestic corporation engaged in the business of shipping and hauling cargo from one point to another using sea-going inter-island barges.  Grand Cement Manufacturing Corporation (now Taiheiyo Cement Philippines, Inc.), on the other hand, is a domestic corporation engaged in the business of manufacturing and selling cement through its authorized distributors and, for which purposes, it maintains its own private wharf in San Fernando, Cebu, Philippines.  On March 24, 1993, Sealoader executed a Time Charter Party Agreement with Joyce Launch and Tug Co., Inc. (Joyce Launch), a domestic corporation, which owned and operated the motor tugboat M/T Viper. By virtue of the agreement, Sealoader chartered the M/T Viper in order to tow the former’s unpropelled barges for a minimum period of fifteen days from the date of acceptance, renewable on a fifteen-day basis upon mutual agreement of the parties. Subsequently, Sealoader entered into a contract with Grand Cement for the loading of cement clinkers and the delivery thereof to Manila. On March 31, 1994, Sealoader’s barge, the D/B Toploader, arrived at the wharf of Grand Cement tugged by the M/T Viper. The D/B Toploader, however, was not immediately loaded with its intended cargo as the employees of Grand Cement were still loading another vessel, the Cargo Lift Tres.

On April 4, 1994, Typhoon Bising struck the Visayas area. Public storm signal number 3 was raised over the province of Cebu. The D/B Toploader was, at that time, still docked at the wharf of Grand Cement. In the afternoon of said date, as the winds blew stronger and the waves grew higher, the M/T Viper tried to tow the D/B Toploader away from the wharf. The efforts of the tugboat were foiled, however, as the towing line connecting the two vessels snapped. This occurred as the mooring lines securing the D/B Toploader to the wharf were not cast off. The following day, the employees of Grand Cement discovered the D/B Toploader situated on top of the wharf, apparently having rammed the same and causing significant damage thereto. On October 3, 1994, Grand Cement filed a Complaint for Damages against Sealoader; Romulo Diantan, the Captain of the M/T Viper; and Johnny Ponce, the Barge Patron of the D/B Toploader.

ISSUE:

            Whether Sealoder exercise the extra ordinary diligence required.

RULING:

            No, the Court finds that Sealoader was indeed guilty of negligence in the conduct of its affairs during the incident in question.  In Layugan v. Intermediate Appellate Court, the Court defined negligence as "the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do, or as Judge Cooley defines it, ‘The failure to observe for the protection of the interests of another person, that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury.’"

           The Court holds that Sealoader had the responsibility to inform itself of the prevailing weather conditions in the areas where its vessel was set to sail. Sealoader cannot merely rely on other vessels for weather updates and warnings on approaching storms, as what apparently happened in this case. Common sense and reason dictates this. To do so would be to gamble with the safety of its own vessel, putting the lives of its crew under the mercy of the sea, as well as running the risk of causing damage to the property of third parties for which it would necessarily be liable.