Transpo Case Digest (Part 2)

Erezo v Jepte Lim v CA Servando v Philippine Steam Navigator Facts: 1. Clara UyBico and AmparoServando loaded on board a vessel of Philippine Steam Navigation Co. for carriage from Manila to Negros Occidental 1,528 cavans of rice and 44 cartons of colored paper, toys and general merchandise. 2. The contract of carriage of cargo was evidenced by a Bill of Lading (B/L). There was a stipulation limiting the responsibility of the carrier for loss or damage that may be caused to the shipment a. ―carrier shall not be responsible for loss or damage to shipments billed ‗owner‘s risk‘ unless such loss or damage is due to the negligence of the carrier. Nor shall the carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea, war, public enemies, fire‖. 3. Upon arrival of the vessel at its destination, the cargoes were discharged in good condition and placed inside the warehouse of the Bureau of Customs. 4. UyBico was able to take delivery of 907 cavans of rice. 5. Unfortunately, the warehouse was razed by fire of unknown origin later that same day destroying the remaining cargoes. 6. UyBico and Servando filed a claim for the value of the goods against the carrier. 7. The lower court ruled in their favor. It held that the delivery of the shipment to the warehouse is not the delivery contemplated by Art. 1736 of the CC. And since the burning of the warehouse occurred prior to the actual or constructive delivery of the goods, the loss is chargeable against the vessel. Issue: Whether or not the carrier is liable for the loss of the goods. Held:No. 1. Article 1736 of the CC imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them, without prejudice to the provisions of Article 1738.‖ The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. 2. It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier. The stipulation is valid not being contrary to law, morals or public policy. 3. The petitioners however, contend that the stipulation does not bind them since it was printed at the back of the B/L and that they did not sign the same. However, as the Court held in OngYiu vs. CA, while it may be true that a passenger had not signed the plane ticket, he is nevertheless bound by the provisions thereof. Such provisions have been held to be a part

of the contract of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the regulation. 4. Also, where fortuitous event is the immediate and proximate cause of the loss, the obligor is exempt from liability for non-performance.In the case at bar, the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant. The latter could not have foreseen the event. 5. There is nothing in the record to show that the carrier incurred in delay in the performance of its obligation. It appears that it had not only notified UyBico and Servando of the arrival of their shipment, but had demanded that the same be withdrawn. In fact, pursuant to such demand, UyBico had taken delivery of 907 cavans of rice before the burning of the warehouse. 6. Nor can the carrier or its employees be charged with negligence. The storage of the goods in the Customs warehouse pending withdrawal thereof by UyBico and Servando was undoubtedly made with their knowledge and consent. Since the warehouse belonged to and was maintained by the government, it would be unfair to impute negligence to the carrier, the latter having no control whatsoever over the same. Edgar Cokaliong Shippineg Lines v Philippine Steam Navigator Calvo v UCPB General Insurance Co. FACTS: • Virgines Calvo, owner of Transorient Container Terminal Services Inc – a sole proprietorship customs broker • Contract with San Miguel Corporation – transfer of 114 reels of semi-chemical fluting paper and 124 reels of Kraft liner board from Manila Port Area to SMC‘s warehouse in Tabacalera Compound, Romuladez St., Ermita, Manila •

Cargo insured with UCPB General Insurance Co.

• July 14, 1990 – shipment contained in 30 metal vans on board MV Hayakawa Maru arrived in Manila • Inc

July 15 – unloaded to the custody of the arrastre operator – Manila Port Services

•

July 23 – July 25 – withdrew cargo and delivered according to the contract

•

July 25 – cargo inspected by Marine Cargo Surveyors

o

15 reels of semi-chemical fluting paper wet/stained/torn

o

3 reels of kraft liner boars were torn

o

Damage cost: Php 93,112

•

SMC collected from UCPB

• December 20 - UCPB, as subvrogee of SMC, brought a suit against TCTSI in Makati RTC Brancg 148 • Makati RTC: it has been held that the mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of destination in bad order, makes out a prima facie case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon the carrier to prove that the loss was due to accident or some other circumstances inconsistent with its liability. o

Pay Php 93,112 + 25% as lawyer‘s fee + cost of suit

• Calvo: Not a common carrier but a private carrier because, as a customs broker and warehouseman, she does not indiscriminately hold her services out to the public but only offers the same to select parties with whom she may contract in the conduct of her business. •

CA affirmed RTC decision.

ISSUE: W/N she is a common carrier. HELD: Yes • The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary • There is greater reason for holding petitioner to be a common carrier because the transportation of goods is an integral part of her business. To uphold petitioner‘s contention would be to deprive those with whom she contracts the protection which the law affords them notwithstanding the fact that the obligation to carry goods for her customers, as already noted, is part and parcel of petitioner‘s business. • When Calvo's employees withdrew the cargo from the arrastre operator, they did so without exception or protest either with regard to the condition of container vans or their contents • Calvo must do more than merely show the possibility that some other party could be responsible for the damage. It must prove that it used "all reasonable means to

ascertain the nature and characteristic of goods tendered for transport and that it exercised due care in the handling For 1734(4) to apply, the rule is that if the improper packaging or, in this case, the defects in the container, is/are known to the carrier or his employees or apparent upon ordinary obserobservation he nevertheless accepts the same without protest or exception notwithstanding such condition, he is not relieved of liability for damage resulting therefrom. Belgian Overseas Chartering v Philippine First Insurance Facts: CMC Trading A.G. shipped on board the MN ‗Anangel Sky‘ at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss. Despite receipt of a formal demand, Phil. First insurance refused to submit to the consignee‘s claim. Consequently, Belgian Overseas paid the consignee P506,086.50, and was subrogated to the latter‘s rights and causes of action against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for recovery of the amount paid by them, to the consignee as insured. Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their representatives. In addition thereto, defendants-appellees argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading and other pertinent laws. Finally, defendants-appellees averred that, in any event, they exercised due diligence and foresight required by law to prevent any damage/loss to said shipment.‖ Issue: Whether or not petitioners have overcome the presumption of negligence of a common carrier Held: No. Petitioners contend that the presumption of fault imposed on common carriers should not be applied on the basis of the lone testimony offered by private respondent. The contention is untenable. Corollary to the foregoing, mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no

adequate explanation is given as to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held responsible. That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by a review of the records and more so by the evidence adduced by respondent Samar Mining Co v Nordeutscher Lloyd FACTS: The case arose from an importation made by Samar Mining Co. Inc. of 1 crate Optima welded wedge wire sieves through the M/S Schwabenstein, a vessel owned by Nordeutscher Lloyd, (represented in the Philippines by its agent, C.F. Sharp & Co., Inc.), which shipment is covered by Bill of Lading No. 18 duly issued to consignee Samar Mining. Upon arrival of the vessel at the port of Manila, the importation was unloaded and delivered in good order and condition to the bonded warehouse of AMCYL. The goods were however never delivered to, nor received by, the consignee at the port of destination — Davao. When the letters of complaint sent to Nordeutscher Lloyd failed to elicit the desired response, Samar Mining filed a formal claim for P1,691.93, the equivalent of $424.00 at the prevailing rate of exchange at that time, against the former, but neither paid. Samar Mining filed a suit to enforce payment. Nordeutscher Lloyd and CF Sharp & Co. brought in AMCYL as third party defendant. The trial court rendered judgment in favor of Samar Mining, ordering Nordeutscher Lloyd, et. al. to pay the amount of P1,691.93 plus attorney‘s fees and costs. However, the Court stated that Nordeutscher Lloyd, et. al. may recoup whatever they may pay Samar Mining by enforcing the judgment against third party defendant AMCYL, which had earlier been declared in default. Nordeutscher Lloyd and C.F. Sharp & Co. appealed from said decision. ISSUE: Whether or not a stipulation in the bill of lading exempting the carrier from liability for loss of goods not in its actual custody (i.e., after their discharge from the ship) is valid. HELD: It is clear that in discharging the goods from the ship at the port of Manila, and delivering the same into the custody of AMCYL, the bonded warehouse, appellants were acting in full accord with the contractual stipulations contained in Bill of Lading No. 18. The delivery of the goods to AMCYL was part of appellants' duty to transship (meaning to transfer for further transportation from one ship or conveyance to another) the goods from Manila to their port of destination-Davao. Dangwa Transportation v CA Facts: Private respondents filed a complaint for damages against petitioners for the death of Pedrito Cudiamat. The deceased was attempting to board a bus, but it suddenly accelerated forward. He fell off and the bus ran over him, resulting to his death.

Issue: Whether the bus is liable as a common carrier to the deceased who was still attempting to board Held: It is the duty of common carriers of passengers to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so. Vda. De Nueca vs Manila Railroad Company Facts: At 3 p.m. on Dec. 22, 1958, Fermin Nueca brought 7 sacks of palay to Manila Railroad Co. (MRC) at its station in Barrio del Rosario, Camarines Sur, to be shipped to the municipality of Libmanan of the same province. -

He paid P 0.70 as freight charge and was issued Way Bill No. 56515.

The cargo was loaded on the freight wagon of Train 537. Passengers boarded the train and shunting operations started to hook a wagon thereto. Before the train reached the turnoff switch, its passenger coach fell on its side some 40 m from the station. The wagon pinned Nueca, killing him instantly. Nueca‘s widow and children bring this claim for damages, alleging that the Nueca was a passenger and his death was caused by MRC‘s negligence. MRC disclaimed liability stating: (1) it exercised due care in safeguarding the passengers during the shunting operation, (2) Nueca was not a passenger but a trespasser, (3) even if Nueca were a passenger, he illegally boarded the train without permission by not paying the fare, (4) the mishap was not attributable to any defect in MRC equipment, (5) that the accident happened due to force majeur. MRC presented evidence showing there was no mechanical defect, but it did not explain why the accident occurred or show that force majeur caused the mishap. The lower court absolved MRC of liability and held that Nueca was a trespasser since he did not buy any ticket, and in any case, was not in a proper place for passengers. Issue: 1.

W/N Nueca was a passenger?

2.

W/N MRC is liable?

3.

Was the accident due to MRC‘s negligence or force majeur?

4.

Is Nueca liable for contributory negligence?

Held: 1. No, Nueca was not a passenger thus, MRC did not owe him extraordinary diligence. A passenger is one who travels in a public conveyance by virtue of a contract, express or implied, with the carrier as to the payment of the fare, or that which is accepted as an equivalent. The relation of passenger and carrier commences when one puts himself in the care of the carrier, or directly under its control, with the bona fide intention of becoming a passenger, and is accepted as such by the carrier – as where he makes a contract for trasportation and presents himself at the proper place and in a proper manner to be transported. Even disregarding the matter of tickets, and assuming Nueca intended to be a passenger, he was never accepted as such by MRC as he did not present himself at the proper place and in a proper manner to be transported. 2. Yes, the liability of railroad companies to persons upon the premises is determined by the general rules of negligence relating to duties of owners/occupiers of property. While railroad companies are not bound to the same degree of care in regard to strangers who are unlawfully upon the premises of its passengers, it may still be liable to such strangers for negligent or tortious acts. Here, Nueca was not on the track, but either unlawfully inside the baggage car or beside the track. It is normal for people to walk on the track or roadbed when there is no oncoming train and to walk beside the track when a train passes. This practice is tolerated by MRC. Generally, MRC‘s stations are not enclosed, and is easily accessible to the public. 3.

MRC is negligent; doctrine of res ipsa loquitur applied.

The train was under the complete control of the railroad company at the time of the accident. The baggage car would not have been derailed if the train had been properly operated. Res ipsa loquitur is a rule of evidence peculiar to the law of negligence which recognizes that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof of negligence. 4. No.

An invitation to stay in the premises is implied from the lack of prohibition to outsiders to keep off the premises, hence, a stranger who is injured by a derailed train while staying beside a railroad track is not guilty of contributory negligence. Tiu v Arriesgado Facts: At about 10:00 p.m. of March 15, 1987, the cargo truck marked "Condor Hollow Blocks and General Merchandise" bearing plate number GBP-675 was loaded with firewood in Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the truck passed over a bridge, one of its rear tires exploded. The driver, Sergio Pedrano, then parked along the right side of the national highway and removed the damaged tire to have it vulcanized at a nearby shop, about 700 meters away. Pedrano left his helper, Jose Mitante, Jr. to keep watch over the stalled vehicle, and instructed the latter to place a spare tire six fathoms away behind the stalled truck to serve as a warning for oncoming vehicles. The trucks tail lights were also left on. It was about 12:00 a.m., March 16, 1987. At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by Virgilio Te Laspiñas was cruising along the national highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come from Maya, Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and Felisa Pepito Arriesgado, who were seated at the right side of the bus, about three (3) or four (4) places from the front seat. As the bus was approaching the bridge, Laspiñas saw the stalled truck, which was then about 25 meters away. He applied the breaks and tried to swerve to the left to avoid hitting the truck. But it was too late; the bus rammed into the trucks left rear. The impact damaged the right side of the bus and left several passengers injured. Pedro Arriesgado lost consciousness and suffered a fracture in his right colles. His wife, Felisa, was brought to the Danao City Hospital. She was later transferred to the Southern Island Medical Center where she died shortly thereafter. Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage, damages and attorneys fees before the Regional Trial Court of Cebu City, Branch 20, against the petitioners, D Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspiñas on May 27, 1987. The respondent alleged that the passenger bus in question was cruising at a fast and high speed along the national road, and that petitioner Laspiñas did not take precautionary measures to avoid the accident. The petitioners, for their part, filed a Third-Party Complaint against the following: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII), petitioner Tiu‘s insurer; respondent Benjamin Condor, the registered owner of the cargo truck; and respondent Sergio Pedrano, the driver of the truck. They alleged that petitioner Laspiñas was negotiating the uphill climb along the national highway of Sitio Aggies, Poblacion, Compostela, in a moderate and normal speed. It was further alleged that the truck was parked in a slanted manner, its rear portion almost in the middle of the highway, and that no early warning device was displayed. Petitioner

Laspiñas promptly applied the brakes and swerved to the left to avoid hitting the truck head-on, but despite his efforts to avoid damage to property and physical injuries on the passengers, the right side portion of the bus hit the cargo truck‘s left rear. ISSUE: W/N common carrier is liable? HELD: The rules which common carriers should observe as to the safety of their passengers are set forth in the Civil Code, Articles 1733, 1755and 1756. It is undisputed that the respondent and his wife were not safely transported to the destination agreed upon. In actions for breach of contract, only the existence of such contract, and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination are the matters that need to be proved. This is because under the said contract of carriage, the petitioners assumed the express obligation to transport the respondent and his wife to their destination safely and to observe extraordinary diligence with due regard for all circumstances. Any injury suffered by the passengers in the course thereof is immediately attributable to the negligence of the carrier. Upon the happening of the accident, the presumption of negligence at once arises, and it becomes the duty of a common carrier to prove that he observed extraordinary diligence in the care of his passengers. It must be stressed that in requiring the highest possible degree of diligence from common carriers and in creating a presumption of negligence against them, the law compels them to curb the recklessness of their drivers. While evidence may be submitted to overcome such presumption of negligence, it must be shown that the carrier observed the required extraordinary diligence, which means that the carrier must show the utmost diligence of very cautious persons as far as human care and foresight can provide, or that the accident was caused by fortuitous event. As correctly found by the trial court, petitioner Tiu failed to conclusively rebut such presumption. The negligence of petitioner Laspiñas as driver of the passenger bus is, thus, binding against petitioner Tiu, as the owner of the passenger bus engaged as a common carrier. Juntilla v Fontanar Facts: Herein plaintiff was a passenger of the public utility jeepney on course from Danao City to Cebu City. The jeepney was driven by driven by defendant Berfol Camoro and registered under the franchise of Clemente Fontanar. When the jeepney reached Mandaue City, the right rear tire exploded causing the vehicle to turn turtle. In the process, the plaintiff who was sitting at the front seat was thrown out of the vehicle. Plaintiff suffered a lacerated wound on his right palm aside from the injuries he suffered on his left arm, right thigh, and on his back. Plaintiff filed a case for breach of contract with damages before the City Court of Cebu City. Defendants, in their answer, alleged that the tire blow out was beyond their control, taking into account that the tire that exploded was newly bought and was only slightly used at the time it blew up.

Issue: Whether or not the tire blow-out is a fortuitous event. Held: No. In the case at bar, the cause of the unforeseen and unexpected occurrence was not independent of the human will. The accident was caused either through the negligence of the driver or because of mechanical defects in the tire. Common carriers should teach drivers not to overload their vehicles, not to exceed safe and legal speed limits, and to know the correct measures to take when a tire blows up thus insuring the safety of passengers at all times. LRT v Navidad FACTS: Navidad was drunk when he entered the boarding platform of the LRT. He got into an altercation with the SG Escartin. They had a fistfight and Navidad fell onto the tracks and was killed when a train came and ran over him. The Heirs of Navidad filed a complaint for damages against Escartin, the train driver, (Roman) the LRTA, the Metro Transit Organization and Prudent Security Agency (Prudent). The trial court found Prudent and Escartin jointly and severally liable for damages to the heirs. The CA exonerated Prudent and instead held the LRTA and the train driver Romero jointly and severally liable as well as removing the award for compensatory damages and replacing it with nominal damages. The reasoning of the CA was that a contract of carriage already existed between Navidad and LRTA (by virtue of his havA ing purchased train tickets and the liability was caused by the mere fact of Navidad's death after being hit by the train being managed by the LRTA and operated by Roman. The CA also blamed LRTA for not having presented expert evidence showing that the emergency brakes could not have stopped the train on time. ISSUES: (1) Whether or not LRTA and/or Roman is liable for the death. (2) Whether or not Escartin and/or Prudent are liable. (3) Whether or not nominal damages may coexist with compensatory damages. HELD: (1) Yes. The foundation of LRTA's liability is the contract of carriage and its obligation to indemnify the victim arising from the breach of that contract by reason of its failure to exercise the high diligence required of a common carrier. (2) Fault was not established. Liability will be based on Tort under Art. 2176 of the New Civil Code. (3) No. It is an established rule that nominal damages cannot co-exist with compensatory damages.

Gacal v PAL Facts: Plaintiffs Franklin G. Gacal and his wife, Corazon M. Gacal along with three others were then passengers boarding defendant‘s BAC 1-11 at Davao Airport for a flight to Manila, not knowing that on the same flight were members of the MNLF armed with grenades and pistols. Ten minutes after takeoff, the MNLF announced the hijacking of the aircraft and directed its pilot to fly to Libya. With the pilot explaining to them of the fuel limitations of the plane, the hijackers directed the pilot to fly to Sabah. So they landed in Zamboanga Airport to refuel. At the Zamboanga Airport, there ensued hostilities between the military and the hijackers. As a result of such faceoff, the wives of Gacal and Anislag suffered injuries. Now, plaintiffs are claiming for damages averring that PAL exercised negligence, finding basis on its breach of contract of carriage. There was a failure to frisk the passengers adequately in order to discover hidden weapons in the bodies of the hijackers. Despite the prevalence of skyjacking, PAL did not use a metal detector which is the most effective means of discovering potential skyjackers among the passengers. PAL invokes the defense of force majeure or caso fortuito. Issue: W/N PAL can invoke caso fortuito to exculpate itself from paying damages to herein plaintiffs. Held: YES. The existence of force majeure has been established exempting respondent PAL from the payment of damages to its passengers who suffered death or injuries in their persons and for loss of their baggage. The source of a common carrier‘s legal liability is the contract of carriage, and by entering into said contract, it binds itself to carry the passengers safely as far as human care and foresight can provide. There is breach of this obligation if it fails to exert extraordinary diligence according to all the circumstances of the case in exercise of the utmost diligence of a very cautious person. The failure to transport petitioners safely from Davao to Manila was due to the skyjacking incident, all members of the MNLF, without any connection with private respondent, hence, independent of the will of either the PAL or of its passengers. Under normal circumstances, PAL might have foreseen the skyjacking incident which could have been avoided had there been a more thorough frisking of passengers and inspection of baggages as authorized by R.A. No. 6235. But the incident in question occurred during Martial Law where there was a military take-over of airport security including the frisking of passengers and the inspection of their luggage preparatory to boarding domestic and international flights. Pilapil v CA FACTS: Petitioner Pilapil, on board respondent‘s bus was hit above his eye by a stone hurled by an unidentified bystander. Respondent‘s personnel lost no time in bringing him to a hospital, but eventually petitioner partially lost his left eye‘s vision and sustained a

permanent scar. Thus, Petitioner lodged an action for recovery of damages before the Court of First Instance of Camarines Sur which the latter granted. On appeal, the Court of Appeals reversed said decision. ISSUE: Whether or not common carriers assume risks to passengers such as the stoning in this case HELD: In consideration of the right granted to it by the public to engage in the business of transporting passengers and goods, a common carrier does not give its consent to become an insurer of any and all risks to passengers and goods. It merely undertakes to perform certain duties to the public as the law imposes, and holds itself liable for any breach thereof. While the law requires the highest degree of diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence against them, it does not, however, make the carrier an insurer of the absolute safety of its passengers. Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Clearly under the above provision, a tort committed by a stranger which causes injury to a passenger does not accord the latter a cause of action against the carrier. The negligence for which a common carrier is held responsible is the negligent omission by the carrier's employees to prevent the tort from being committed when the same could have been foreseen and prevented by them. Further, under the same provision, it is to be noted that when the violation of the contract is due to the willful acts of strangers, as in the instant case, the degree of care essential to be exercised by the common carrier for the protection of its passenger is only that of a good father of a family. Mapa v CA Facts: Mapa purchased from TWA Trans World Airlines 2 airline tickets in Bangkok Thailand, for Los Angeles- New York –Boston St. Louis –Chicago, all of the USA. The domicile of the carrier TWA was Kansas City, Missouri USA, Where its principal place of business was likewise located. The place of business of TWA where the contract was made was in Bangkok Thailand. The place of destination was Chicago-USA. The MAPAS left Manila on board Pal for L-A, They left checked in 7 pieces of luggage‘s at TWA counter at JFK airport but failed to board the plane because they went to the wrong gate. Hey were however allowed to take a later TWA plane to Boston which was delayed because of the thunder storm. Upon arrival at Boston they were only retrieved 3 out of 7 luggage‘s which loss was immediately reported to TWA with a total value of S 2,560 as constituting full satisfaction of their claim which the MAPAS accepted as partial payment for the actual loss of their baggage‘s. Thereafter MAPA filed a case against TWA in the Philippines Similar to the case of Santos III , TWA move to dismiss for lack of

jurisdiction based on section 28(1) warsaw contending that the complaint should have been brought either in Bangkok where the contract was entered into , or in Boston which was the place of destination or in Kansas City which was the carriers domicile and principal place of business. MAPAS claimed that the WARSAW convention was not applicable because the contract was not an Internationl Transportation as contemplated under the provision of the WARSAW convention the RTC as affirmed by the C-A dismiss the case for lack of jurisdiction. ISSUE: Is the Warsaw Convention applicable? Held: Warsaw convention was not applicable because the contract does not involve an ―INTERANTIONALTRANPORTATION‖ base on the two categories. (1) that where the place of departure and the place of destination are situated within the territories of two High Contracting Parties regardless of whether or not there be a break in the transportation or a transshipment; and(2) that where the place of departure and the place of destination are within the territory of a single High Contracting Party if there is an agreed stopping place within a territory subject to the sovereignty, mandate, or authority of another power, even though the power is not a party of the Convention. Whether the contracts were of international transportation is to be solely determined from the TWA tickets issued to them in Bangkok, Thailand, which showed that their itinerary was Los Angeles-New York-Boston-St. Louis-Chicago. Accordingly, since the place of departure (Los Angeles) and the place of destination (Chicago) are both within the territory of one High Contracting Party, with no agreed stopping place in a territory subject to the sovereignty, mandate, suzerainty or authority of another Power, the contracts did not constitute 'international transportation' as defined by the convention. China Airlines v Daniel Chiok FACTS: Daniel Chiok purchased a ticket from China Airlines Ltd. Covering ManilaTaipei-Hong Kong-Manila. The ticket was exclusively endorsable to Philippine Airlines. The trips covered by the ticket were pre-scheduled and confirmed. In Taipei, Chiok went to CAL office to confirm his Hong Kong-Manila flight. CAL attached a yellow sticker, indicating that flight was OK. In Hong Kong, Chiok went to PAL office to confirm his Manila flight. PAL confirmed and attached its own sticker. During the scheduled flight bound to Manila, it was cancelled due to a typhoon. All confirmed ticket holders were booked automatically for it‘s next flight (next day). However on the following day, a PAL employee informed Chiok that his name did not appear in PAL‘s computer list of passengers and therefore could not be permitted to board PAL flight no. PR 307. Chiok filed a complaint for damages. The Regional Trial Court held that CAL and PAL jointly and severely liable to correspondent, affirmed by Court of Appeals. ISSUE: W/N China Airline is liable as a principal carrier?

HELD: In citing several cases: As the principal in the contract of carriage, the petitioner in British Airways v. Court of Appeals was held liable, even when the breach of contract had occurred, not on its own flight, but on that of another airline. The Decision followed our ruling in Lufthansa German Airlines v. Court of Appeals, in which we had held that the obligation of the ticket-issuing airline remained and did not cease, regardless of the fact that another airline had undertaken to carry the passengers to one of their destinations. In the instant case, following the jurisprudence cited above, PAL acted as the carrying agent of CAL. In the same way that we ruled against British Airways and Lufthansa in the aforementioned cases, we also rule that CAL cannot evade liability to respondent, even though it may have been only a ticket issuer for the Hong Kong-Manila sector. American Airlines v CA Facts: Private respondent Amadeo Seno purchased from Singapore Airlines in Manila conjunction tickets. In Geneva, the petitioner decided to forego his trip to Copenhagen, and go straight to New York, private respondent exchanged the unused portion of the conjunction ticket from International Air Transport Association clearing house in Geneva. Private respondent filed an action for damages before the RTC of Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport when the petitioner‘s security officers prevented him from boarding the plane, detained him for about an hour and allowed him to board the plane only after all the passengers have boarded. ISSUE: Whether or not the Philippine courts have jurisdiction over the action for damages. HELD: The Supreme Court ruled that the case was properly filed in the Philippines. It held that the petitioner acted as an agent of the Singapore Airlines under IATA rules and as an agent of the principal carrier the petitioner may be held liable under contract of carriage in Manila. Cervantes v CA Facts: On March 27, 1989, private respondent PAL issued to herein petitioner Nicholas Cervantes a round trip ticket for Manila-Honolulu-Los Angeles-Honolulu-Manila, which is valid until March 27, 1990. On March 23, 1990, petitioner used it. Upon his arrival in Los Angeles, he immediately booked a flight to Manila, which was confirmed on April 2. Upon learning that the plane would make a stop-over in San Francisco, and because he would be there on April 2, petitioner made arrangements to board in San Francisco. On April 2, he was not allowed to board due to the expiration of his ticket. He filed a complaint for damages. It was not given due course by both the trial court and the Court of Appeals.

Issues: (1) Whether or not the act of the PAL agents in confirming subject ticket extended the period of validity of petitioner's ticket (2) Whether or not the denial of the award for damages was proper Held: (1) From the facts, it can be gleaned that the petitioner was fully aware that there was a need to send a letter to the legal counsel of PAL for the extension of the period of validity of his ticket. Under Article 1898 11 of the New Civil Code, the acts of an agent beyond the scope of his authority do not bind the principal, unless the latter ratifies the same expressly or impliedly. Furthermore, when the third person (herein petitioner) knows that the agent was acting beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the said third person is aware of such limits of authority, he is to blame, and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's ratification. (2) An award of damages is improper because petitioner failed to show that PAL acted in bad faith in refusing to allow him to board its plane in San Francisco. In awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately injurious or the one responsible acted fraudulently or with malice or bad faith. Petitioner knew there was a strong possibility that he could not use the subject ticket, so much so that he bought a back-up ticket to ensure his departure. Should there be a finding of bad faith, we are of the opinion that it should be on the petitioner. What the employees of PAL did was one of simple negligence. No injury resulted on the part of petitioner because he had a back-up ticket should PAL refuse to accommodate him with the use of subject ticket. Neither can the claim for exemplary damages be upheld. Such kind of damages is imposed by way of example or correction for the public good, and the existence of bad faith is established. The wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. Here, there is no showing that PAL acted in such a manner. An award for attorney's fees is also improper. Philippine Natural Railways v CA FACTS: On September 10, 1972, at about 9:00 o'clock in the evening, Winifredo Tupang, husband of plaintiff Rosario Tupang, boarded 'Train No. 516 of appellant at Libmanan, Camarines Sur, as a paying passenger bound for Manila. Due to some mechanical defect, the train stopped at Sipocot, Camarines Sur, for repairs, taking some two hours before the train could resume its trip to Manila. Unfortunately, upon passing Iyam Bridge at Lucena, Quezon, Winifredo Tupang fell off the train resulting in his death.The train did not stop despite the alarm raised by the other passengers that somebody fell from the train. Instead, the train conductor Perfecto Abrazado, called the

station agent at Candelaria, Quezon, and requested for verification of the information. Police authorities of Lucena City found the lifeless body of Winifredo Tupang. ISSUE:Whether or not Winifredo Tupang is chargeable of contributory negligence. HELD: The petitioner does not deny, that the train boarded by the deceased Winifredo Tupang was so over-crowded that he and many other passengers had no choice but to sit on the open platforms between the coaches of the train. It is likewise undisputed that the train did not even slow down when it approached the Iyam Bridge which was under repair at the time, Neither did the train stop, despite the alarm raised by other passengers that a person had fallen off the train at lyam Bridge. The petitioner has the obligation to transport its passengers to their destinations and to observe extraordinary diligence in doing so. Death or any injury suffered by any of its passengers gives rise to the presumption that it was negligent in the performance of its obligation under the contract of carriage. Thus, as correctly ruled by the respondent court, the petitioner failed to overthrow such presumption of negligence with clear and convincing evidence. But while petitioner failed to exercise extraordinary diligence as required by law, 8 it appears that the deceased was chargeable with contributory negligence. Since he opted to sit on the open platform between the coaches of the train, he should have held tightly and tenaciously on the upright metal bar found at the side of said platform to avoid falling off from the speeding train. Such contributory negligence, while not exempting the PNR from liability, nevertheless justified the deletion of the amount adjudicated as moral damages. By the same token, the award of exemplary damages must be set aside.

Mecenas v CA FACTS: On the evening of 22 April 1980, at about 10:30 o'clock, the "Tacloban City" bound to Bataan (barge-type oil tanker of Philippine Registry, owned by Philippine National Oil Company and operated by PNOC Shipping Corporation) and the "Don Juan" bound to Bacolod (owned and operated by Negros Navigation, Co., Inc) collided at the Talbas Strait near Maestra de Ocampo Island in the vicinity of the island of Mindoro. When the collision occurred, the sea was calm, the weather fair and visibility good. As a result of this collision, the M/V "Don Juan" sank and hundreds of its passengers perished. Among the ill-fated passengers were the parents of petitioners, the spouses Perfecto Mecenas and Sofia Mecenas, whose bodies were never found despite intensive search by petitioners. On 29 December 1980, petitioners filed a complaint in the then Court- of First Instance of Quezon City, docketed as Civil Case No. Q-31525, against private respondents Negros Navigation and Capt. Roger Santisteban, the captain of the "Don

Juan" without, however, impleading either PNOC or PNOC Shipping. In their complaint, petitioners alleged that they were the seven (7) surviving legitimate children of Perfecto Mecenas and Sofia Mecenas and that the latter spouses perished in the collision ISSUE: Whether or not Negros Navigation and Capt. Santisteban are liable for damages. HELD: Firstly, the "Don Juan" was more than twice as fast as the "Tacloban City." The "Don Juan's" top speed was 17 knots; while that of the "Tacloban City" was 6.3. knots. Secondly, the "Don Juan" carried the full complement of officers and crew members specified for a passenger vessel of her class. Thirdly, the "Don Juan" was equipped with radar which was functioning that night. Fourthly, the "Don Juan's" officer on-watch had sighted the "Tacloban City" on his radar screen while the latter was still four (4) nautical miles away. Visual confirmation of radar contact was established by the "Don Juan" while the "Tacloban City" was still 2.7 miles away. In the total set of circumstances which existed in the instant case, the "Don Juan," had it taken seriously its duty of extraordinary diligence, could have easily avoided the collision with the "Tacloban City," Indeed, the "Don Juan" might well have avoided the collision even if it had exercised ordinary diligence merely. In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when it was still a long way off was negligent in failing to take early preventive action and in allowing the two (2) vessels to come to such close quarters as to render the collision inevitable when there was no necessity for passing so near to the "Tacloban City" as to create that hazard or inevitability, for the "Don Juan" could choose its own distance. It is noteworthy that the "Tacloban City," upon turning hard to port shortly before the moment of collision, signaled its intention to do so by giving two (2) short blasts with horn. The "Don Juan " gave no answering horn blast to signal its own intention and proceeded to turn hard to starboard. We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross negligence in connection with the collision of the "Don Juan" and "Tacloban City" and the sinking of the "Don Juan" leading to the death of hundreds of passengers. We find no necessity for passing upon the degree of negligence or culpability properly attributable to PNOC and PNOC Shipping or the master of the "Tacloban City," since they were never impleaded here. Vda. De Abeto v PAL Facts: About 5:30 in the afternoon of November 23, 1960, Judge Quirico Abeto, with the necessary tickets, boarded the Philippine Air Lines' PI-C133 plane at the Mandurriao Airport, Iloilo City for Manila. He was listed as the No. 18 passenger in its Load Manifest. The plane which would then take two hours from Iloilo to Manila did not reach its destination and the next day there was news that the plane was missing. After three

weeks, it was ascertained that the plane crashed at Mt. Baco, Province of Mindoro. All the passengers, including Judge Abeto, must have been killed instantly and their remains were scattered all over the area. Among the articles recovered on the site of the crash was a leather bag with the name "Judge Quirico Abeto." PAL tried to prove that the plane crash at Mt. Baco was beyond the control of the pilot. Further, deviation from its prescribed route was due to the bad weather conditions between Mt. Baco and Romblon and strong winds which caused the plane to drift to Mt. Baco. Under the circumstances, appellant argues that the crash was a fortuitous event. ISSUE: Whether or not PAL is liable for violation of its contract of carriage. HELD: The prescribed airway of plane PI-C133 that afternoon of November 23, 1960, with Capt. de Mesa, as the pilot, was Iloilo-Romblon-Manila, denominated as airway "Amber l," and the prescribed elevation of the flight was 6,000 ft. The fact is, the plane did not take the designated route because it was some 30 miles to the west when it crashed at Mt. Baco. According to defendant's witness, Ramon A. Pedroza, Administrative Assistant of the Philippine Air Lines, Inc., this tragic crash would have not happened had the pilot continued on the route indicated. And, Assistant Director Cesar Mijares of the Civil Aeronautics Administration testified that the pilot of said plane was "off course." It is clear that the pilot did not follow the designated route for his flight between Romblon and Manila. The weather was clear and he was supposed to cross airway "Amber I" over Romblon; instead, he made a straight flight to Manila in violation of air traffic rules. At any rate, in the absence of a satisfactory explanation by appellant as to how the accident occurred, the presumption is, it is at fault. In an action based on a contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible to pay the damages sought for by the passenger. By the contract of carriage, the carrier assumes the express obligation to transport the passenger to his destination safely and to observe extraordinary diligence with a due regard for all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier (Art. 1756, New Civil Code). This is an exception to the general rule that negligence must be proved. Nocum v Laguna Tayabas Bus Co. Facts: Herminio L. Nocum, a passenger in Laguna Tayabas Bus Co.‘s Bus 120, which was then making a trip within the barrio of Dita, Municipality of Bay, Laguna, was injured as a consequence of the explosion of firecrackers, contained in a box, loaded in

said bus and declared to its conductor as containing clothes and miscellaneous items by a co-passenger. Nocum filed a case against Laguna Tayabas Bus for damages. The CFI of Batangas (Civil Case 834) sentenced Laguna Tayabas to pay Nocum the sum of P1,351.00 for actual damages and P500.00 as attorney‘s fees, with legal interest from the filing of the complaint plus costs. Laguna Tayabas appealed. Issue: W/N common carrier is liable. Held: No. The Bus Company has succeeded in rebutting the presumption of negligence by showing that it has exercised extraordinary diligence for the safety of its passengers, ―according to the circumstances of the (each) case.‖ Article 1733 qualifies the extraordinary diligence required of common carriers for the safety of the passengers transported by them to be ―according to all the circumstances of each case.‖ In this case, the circumstance that must be considered in measuring a common carrier‘s duty towards its passengers is the reliance that should be reposed on the sense of responsibility of all the passengers in regard to their common safety. It is to be presumed that a passenger will not take with him anything dangerous to the lives and limbs of his co-passengers, not to speak of his own. Not to be lightly considered must be the right to privacy to which each passenger is entitled. He cannot be subjected to any unusual search, when he protests the innocuousness of his baggage and nothing appears to indicate the contrary, as in the case at bar. (Hence, the bus company‘s failure to confiscate the baggage cannot be considered as a negligent act, but in accord to the circumstance of the case.) Batangas Transportation v Caguimbal FACTS: The deceased Pedro Caguimbal, Barrio Lieutenant of Barrio Calansayan, San Jose, Batangas, was a paying passenger of BTCO bus, going south on its regular route from Calamba, Laguna to Batangas, Batangas, driven by Tomas Perez, its regular driver. Caguimbal‘s destination was his residence at Calansayan, San Jose, Batangas. As the BTCO bus was nearing a house, a passenger requested the conductor to stop as he was going to alight, and when he heard the signal of the conductor, the driver Tomas Perez slowed down his bus swerving it farther to the right in order to stop; at this juncture, a calesa, then driven by Benito Makahiya was at a distance of several meters facing the BTCO bus coming from the opposite direction; that at the same time the Biñan bus was about 100 meters away likewise going northward and following the direction of the calesa; that upon seeing the Biñan bus the driver of the BTCO bus dimmed his light as established by Magno Ilaw, the very conductor of the Biñan bus at the time of the accident; that as the calesa and the BTCO bus were passing each other from the opposite directions, the Biñan bus following the calesa swerved to its left in an attempt to pass

between the BTCO bus and the calesa; that without diminishing its speed of about seventy (70) kilometers an hour, the Biñan bus passed through the space between the BTCO bus and the calesa hitting first the left side of the BTCO bus with the left front corner of its body and then bumped and struck the calesa which was completely wrecked. ISSUE: Whether or not BTCO liable for damages. HELD: In order to permit one of them to disembark, Perez drove his BTCO bus partly to the right shoulder of the road and partly on the asphalted portion thereof. Yet, he could have and should have seen to it — had he exercised "extraordinary diligence" — that his bus was completely outside the asphalted portion of the road, and fully within the shoulder thereof, the width of which being more than sufficient to accommodate the bus. When Perez slowed down his BTCO bus to permit said passenger to disembark, he must have known, therefore, that the Biñan bus would overtake the calesa at about the time when the latter and BTCO bus would probably be on the same line, on opposite sides of the asphalted portions of the road, and that the space between the BTCO bus and the "calesa" would not be enough to allow the Biñan bus to go through. Perez whose duty was to exercise "utmost" or "extraordinary" diligence for their safety. Perez was thus under obligation to avoid a situation which would be hazardous for his passengers, and, make their safety dependent upon the diligence of the Biñan driver. Such obligation becomes more patent when we considered the fact — of which the Court may take judicial cognizance — that our motor vehicle drivers, particularly those of public service utilities, have not distinguished themselves for their concern over the safety, the comfort or the convenience of others. Mallari v CA Facts: Mallari Jr. was the driving a passenger jeepney owned by his father, co-petitioner herein. The jeep collided with the delivery van of Bulletin Publishing Corp. while travelling on the National Highway in Bataan. Mallari Jr. proceeded to overtake a fiera which had stopped in front of him. He negotiated the curve and moved in the opposite lane in order to overtake the fiera. As he passed the vehicle he saw the delivery van of Bulletin and the vehicles collided. The points of collision werethe left rear portion of the passenger jeepney and the left front side of the delivery van. The 2 right wheels of the delivery van were on the right shoulder of the road and pieces of debris from the accident were found scattered along the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries. The widow of Reyes filed a complaint to recover damages from Mallari, Jr. and Sr. and Bulletin as well. The trial court found that the proximate cause of the collision was the negligence of the driver of the Bulletin delivery van, considering the fact that the left front portion of the delivery truck hit and

bumped the left rear portion of the passenger jeepney. On appeal, the court reversed the decision of the lower court and held that it was Mallari Jr. who was negligent. Hence this petition. Issue: Whether or not petitioners herein should be held liable for the death of Reyes. Held: The Court affirmed the decision of the Court of Appeals and held that Mallari Jr. and Sr. who are responsible for the death of Reyes. The collision was caused by the sole negligence of petitioner Alfredo Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the highway, he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera. This act of overtaking was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known as The Land Transportation and Traffic Code. The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety. Article 2185 of the NCC, there is a presumption of negligence on the part of a person driving a motor vehicle if at the time of the mishap he was violating a traffic regulation. Petitioners herein failed to present satisfactory evidence to overcome this legal presumption. Therefore they shall be liable for the loss of Reyes‘ life. PAL v CA Facts: Samson is a licensed aviator employed by the Philippine Airlines. He was partnered with another pilot Bustamante. Samson had complained on previous occasions to PAL that Bustamante was slow in reacting and was having lapses of poor judgment during flights. PAL however still allowed Bustamante to continue flying. On a certain flight, Bustamante overshot the airfield while landing the plane at the Daet airport. Samson tried to control the plane, but did not succeed. The plane crash-landed beyond the runway into a mangrove. Samson hit his head on the windshield due to the impact of the crash. He suffered head injuries such as brain concussions and wounds on his forehead. To make matters worse, plaintiff was discharged from employment. Samson then filed an action for damages against PAL. Issue: Whether or not PAL is liable for damages. Held: The Court held that PAL is liable for damages. There was gross negligence on the part of PAL because despite the knowledge of Bustamante‘s condition the still allowed him to continue flying. Bustamante had a tumor in his nasopharynx which affected his vision. As provided in Articles 1732, 1733, and 1756 of the NCC, PAL being a common carrier should have exercised extraordinary diligence in the supervision of their employees and utmost diligence in bringing passengers to their destination. The court affirmed the decision of the trial court in awaring damages. Private respondent is entitled

to P198,000.00 as unearned income or compulsory damages, P80,000.00 for moral damages, P20,000 as attorney‘s fees and P5,000 as expenses for litigation. This claim of the plaintiff for loss and impairment of earning capacity is based on the provision of Art. 2205, NCC. Even from the standpoint of the petitioner that there is employer-employee relationship between it and private respondent arising from the contract of employment, private respondent is still entitled to moral damages in view of the finding of bad faith or malice, applying the provisions of Art. 2220 of the NCC. Magellan Manufacturing v CA  Choju Co., Ltd purchased from Magellan Manufacturers Marketing Corp. (MMMC) 136,000 anahaw fans for $23,220  MMMC contracted with F.E. Zuellig, a shipping agent of Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an on-board bill of lading and that transhipment is not allowed under the letter of credit  MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of lading which was presented to Allied Bank. The bank then credited the amount of US$23,220 covered by the letter of credit to MMMC  When MMMC's President James Cu, went back to the bank later, he was informed that the payment was refused by the buying for lack of bill of lading and there was a transhipment of goods  The anahaw fans were shipped back to Manila through OOCL who are demanding from MMMC P246,043.43 (freight charges from Japan to Manila, demurrage incurred in Japan and Manila from October 22, 1980 up to May 20, 1981 and charges for stripping the container van of the Anahaw fans on May 20, 1981)  MMMC abandoned the whole cargo and asked OOCL for damages  OOCL: bill of lading clearly shows that there will be a transhipment and that petitioner was well aware that MV (Pacific) Despatcher was only up to Hongkong where the subject cargo will be transferred to another vessel for Japan  RTC: favored OOCL:  consented because the bill of lading where it is clearly indicated that there will be transhipment  MMMC was the one who ordered the reshipment of the cargo from Japan to Manila  CA: Affirmed with modification of excluding demurrage in Manila ISSUE: W/N the bill of lading which reflected the transhipment against the letter of credit is consented by MMMC HELD: YES. CA Affirmed with modification  Transhipment

 act of taking cargo out of one ship and loading it in another  the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached  transfer for further transportation from one ship or conveyance to another  the fact of transhipment is not dependent upon the ownership of the transporting ships or conveyances or in the change of carriers, as the petitioner seems to suggest, but rather on the fact of actual physical transfer of cargo from one vessel to another  appears on the face of the bill of lading the entry "Hong Kong" in the blank space labeled "Transhipment," which can only mean that transhipment actually took place  bill of lading  operates both as a receipt and as a contract  receipt for the goods shipped  contract to transport and deliver the same as therein stipulated  names the parties, which includes the consignee, fixes the route, destination, and freight rates or charges, and stipulates the rights and obligations assumed by the parties  law between the parties who are bound by its terms and conditions provided that these are not contrary to law, morals, good customs, public order and public policy  GR: acceptance of the bill without dissent raises the presumption that all the terms therein were brought to the knowledge of the shipper and agreed to by him and, in the absence of fraud or mistake, he is estopped from thereafter denying that he assented to such term  There clearly appears on the face of the bill of lading under column "PORT OF TRANSHIPMENT" an entry "HONGKONG'  On board bill of lading vs. received for shipment bill of lading:  on board bill of lading  stated that the goods have been received on board the vessel which is to carry the goods  received for shipment bill of lading  stated that the goods have been received for shipment with or without specifying the vessel by which the goods are to be shipped  issued whenever conditions are not normal and there is insufficiency of shipping space  certification of F.E. Zuellig, Inc. cannot qualify the bill of lading, as originally issued, into an on board bill of lading as required by the terms of the letter of credit issued in favor of petitioner - it is a received for shipment bill of lading

 issued only on July 19, 1980, way beyond the expiry date of June 30, 1980 specified in the letter of credit for the presentation of an on board bill of lading  Demurrage  compensation provided for in the contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading  claim for damages for failure to accept delivery  before it could be charged for demurrage charges it should have been notified of the arrival of the goods first  Since abandon option was communicated, the same is binding upon the parties on legal and equitable considerations of estoppel UCPB General Insurance v Aboitiz Shipping Philippine Charter Insurance v Chemoil Ligterage 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 certiorar[ was filed by the petitioner with this Court.

Issues: 1. Whether or not the Notice of Claim was filed within the required period. 2.Whether or not the damage to the cargo was due to the fault or negligence of the respondent. Held: 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 first 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.[27] 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.[31] 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. Considering that we have resolved the first issue in the negative, it is therefore unnecessary to make a resolution on the second issue. Aboitiz Shipping v Insurance Co. of North America FACTS: On June 20, 1993: MSAS Cargo International Limited and/or Associated and/or Subsidiary Companies (MSAS) procured an "all-risk" marine insurance policy from ICNA UK Limited of London for wooden work tools and workbenches purchased by consignee Science Teaching Improvement Project (STIP), Ecotech Center, Sudlon Lahug, Cebu City. July 26, 1993: the cargo was received by Aboitiz Shipping Corporation (Aboitiz) through its duly authorized booking representative, Aboitiz Transport System. August 1, 1993: container van was loaded on board MV Super Concarrier, the vessel left Manila en route to Cebu City. August 3, 1993: shipment arrived in Cebu City. August 5, 1993: Stripping Report, checker noted that the crates were slightly broken or cracked at the bottom. August 11, 1993: cargo was withdrawn by

the representative of the consignee, Science Teaching Improvement Project (STIP) and delivered to Don Bosco Technical High School, Punta Princesa, Cebu City. August 13, 1993: Mayo B. Perez, Head of Aboiti received a call from the receiver Mr. Bernhard Willig that the cargo sustained water damage so he checked the other cargo but they were dry. In a letter dated August 15, 1993, Willig informed Aboitiz that the damage was caused by water entering through the broken bottom parts of the crate. Consignee filed a claim against ICNA. CAC reported to ICNA that the shipment was placed outside the warehouse when it was delivered on July 26, 1993 and it was only on July 31, 1993 when the shipment was stuffed inside another container van for shipment to Cebu. Weather report shows that the heavy rains on July 28 and 29, 1993 caused the damages. Aboitiz refused to settle the claim. ICNA paid the amount of P280,176.92 to consignee and a subrogation receipt was duly signed by Willig. ICNA then advised Aboitiz of the receipt signed in its favor but received no reply so it filed for collection at the RTC. RTC: against ICNA - subrogation Form is self-serving and has no probative value since Wellig was not presented to the witness stand. CA: reversed RTC ruling - right of subrogation accrues simply upon payment by the insurance company of the insurance claim even assuming that it is an unlicensed foreign corporation ISSUE: W/N ICNA can claim under the right of subrogation HELD: YES. CA affirmed. Only when that foreign corporation is "transacting" or "doing business" in the country will a license be necessary before it can institute suits. It may, however, bring suits on isolated business transactions, which is not prohibited under Philippine law The policy benefits any subsequent assignee, or holder, including the consignee, who may file claims on behalf of the assured. The shipment delivered to the consignee sustained water damage. We agree with the findings of the CA that petitioner failed to overturn this presumption Mitsui v CA FACTS: Mitsui Lines entered into a contract of carriage with Lavine Longewear Manufacturing to transport goods the latter from Manila to France. Mitsui Lines undertook to deliver the goods to France 28 days from initial loading. On July 24, 1991, Mitui‘s vessel loaded Lavine'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 France 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 Lavine which in turn demanded payment from Mitsui through its agent. Mitsui denied Lavine‘s claim.

Issue: W/N Lavine's action is for "loss or damage" to goods shipped, within the meaning of §3(6) of the Carriage of Goods by Sea Act (COGSA). Held: No. 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 shipper's goods as specifically covered by §3(6) of COGSA but Mitsui's 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 Lavine. Fil-Merchants v Alejandro Facts: In 1976, Choa Tiek Seng contracted Frota Oceanica Brasiliera for the latter to deliver goods. Choa Tiek Seng insured the goods with Filipino Merchants Insurnace Company. The goods left the port of Manila on December 13, 1976 and reached its point of destination on December 17, 1976. The goods were however damaged. Choa Tiek Seng then filed an insurance claim. Filipino Merchants refused to pay so in August 1977, it was sued by Choa Tiek Seng. In January 1978, Filipino Merchants filed a third party complaint against the carrier Frota Oceanica Brasiliera as it alleged that it is the carrier who is liable to pay damages to Choa Tiek Seng. Judge Jose Alejandro of the trial court ruled against Filipino Merchants. The Court of Appeals affirmed the ruling of the judge. The lower courts ruled that Filipino Merchants is already barred from filing a claim because under the Carriage of Goods by Sea Act, the suit against the carrier must be filed ―within one year after delivery of the goods or the date when the goods should have been delivered‖ or one year from December 17, 1976. The insurance company is already barred for it filed its third party complaint only in January 1978. ISSUE: Whether or not Filipino Merchants is precluded by the said time-bar rule. HELD: Yes. The pertinent provision of the Carriage of Goods by Sea Act does not only apply to the shipper but also applies to the insurer. The coverage of the Carriage of Goods by Sea Act includes the insurer of the goods. Otherwise, what the Act intends to prohibit after the lapse of the one year prescriptive period can be done indirectly by the shipper or owner of the goods by simply filing a claim against the insurer even after the lapse of one year. This would be the result if the insurer can, at any time, proceed against the carrier and the ship since it is not bound by the time-bar provision. In this situation, the one year limitation will be practically useless. This could not have been the intention of the law which has also for its purpose the protection of the carrier and the ship from fraudulent claims by having ―matters affecting transportation of goods by sea be decided

in as short a time as possible‖ and by avoiding incidents which would ―unnecessarily extend the period and permit delays in the settlement of questions affecting the transportation.‖ Mayer Steel Pipe Corporation v CA Facts: In 1983, Hongkong Government Supplies Department (HGSD) contracted Mayer Steel Pipe Corporation for the latter to manufacture and deliver various steel pipes and fittings. Before Mayer Steel shipped the said pipes, it insured them with two insurance companies namely, South Sea Surety and Insurance Co., Inc. and Charter Insurance Corporation – each insurer covering different portions of the shipment. The insurance policies cover ―all risks‖ which include all causes of conceivable loss or damage. When the pipes reached Hongkong, the pipes were discovered to have been damaged. The insurance companies refused to make payment. On April 17 1986, Mayer Steel sued the insurance companies. The case reached the Court of Appeals. The CA ruled that the case filed by Mayer Steel should be dismissed. It held that the action is barred under Section 3(6) of the Carriage of Goods by Sea Act since it was filed only on April 17, 1986, more than two years from the time the goods were unloaded from the vessel. Section 3(6) of the Carriage of Goods by Sea Act provides that ―the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.‖ The CA ruled that this provision applies not only to the carrier but also to the insurer, citing the case of Filipino Merchants Insurance Co., Inc. vs Alejandro. ISSUE: Whether or not the Court of Appeals is correct. HELD: No. Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be discharged from all liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date when they should have been delivered. Under this provision, only the carrier‘s liability is extinguished if no suit is brought within one year. But the liability of the insurer is not extinguished because the insurer‘s liability is based not on the contract of carriage but on the contract of insurance. A close reading of the law reveals that the Carriage of Goods by Sea Act governs the relationship between the carrier on the one hand and the shipper, the consignee and/or the insurer on the other hand. It defines the obligations of the carrier under the contract of carriage. It does not, however, affect the relationship between the shipper and the insurer. The latter case is governed by the Insurance Code. The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was the insurer which filed a claim against the carrier for reimbursement of the amount it paid to the shipper. In the case at bar, it was the shipper which filed a claim against the

insurer. The basis of the shipper‘s claim is the ―all risks‖ insurance policies issued by the insurers to Mayer Steel. The ruling in Filipino Merchants should apply only to suits against the carrier filed either by the shipper, the consignee or the insurer. Belgian Overseas Chartering v Phil. Insurance Co. Facts: CMC Trading A.G. shipped on board the MN ‗Anangel Sky‘ at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss. Despite receipt of a formal demand, Phil. First insurance refused to submit to the consignee‘s claim. Consequently, Belgian Overseas paid the consignee P506,086.50, and was subrogated to the latter‘s rights and causes of action against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for recovery of the amount paid by them, to the consignee as insured. Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their representatives. In addition thereto, defendants-appellees argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading and other pertinent laws. Finally, defendants-appellees averred that, in any event, they exercised due diligence and foresight required by law to prevent any damage/loss to said shipment.‖ Issue: Whether or not petitioners have overcome the presumption of negligence of a common carrier Held: No. Petitioners contend that the presumption of fault imposed on common carriers should not be applied on the basis of the lone testimony offered by private respondent. The contention is untenable. Well-settled is the rule that common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport. Thus, common carriers are required to render service with the greatest skill and foresight and ―to use all reasonable means to ascertain the nature and characteristics of the goods tendered for

shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.‖ The extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of and received for transportation by the carrier until they are delivered, actually or constructively, to the consignee or to the person who has a right to receive them. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such diligence. However, the presumption of fault or negligence will not arise if the loss is due to any of the following causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) an act of the public enemy in war, whether international or civil; (3) an act or omission of the shipper or owner of the goods; (4) the character of the goods or defects in the packing or the container; or (5) an order or act of competent public authority. This is a closed list. If the cause of destruction, loss or deterioration is other than the enumerated circumstances, then the carrier is liable therefor. Corollary to the foregoing, mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held responsible. That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by a review of the records and more so by the evidence adduced by respondent Lhuillier v British Airways FACTS: On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint for damages against respondent British Airways before the Regional Trial Court (RTC) of Makati City. The tortuous conduct by the flight attendants of said Airways, which prompted petitioner to file a case for damages, allegedly transpired when petitione rboarded respondent‘s flight 548 from London, United Kingdom to Rome, Italy. On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion to Dismiss on grounds of lack of jurisdiction over the case and over the person of the respondent. Respondent alleged that only the courts of London, United Kingdom or Rome, Italy, have jurisdiction over the complaint for damages pursuant to the Warsaw Convention, Article 28(1) of which provides:

―An action for damages must be brought at the option of the plaintiff, either before the court of domicile of the carrier or his principal place of business, or where he has a place of business through which the contract has been made, or before the court of the place of destination.‖ ISSUE: W/N Philippines, a signatory to the Warsaw Convention, should adhere to the provision of the Warsaw Convention. HELD: Yes. It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos III v. Northwest Orient Airlines, 210 SCRA 256 (1992), we held that: The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February 13, 1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio Quirino on October 13, 1950, and was deposited with the Polish government on November 9, 1950. The Convention became applicable to the Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto, ―to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the citizens thereof.‖ The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this country. Federal Express Corp. v American Home Assurance FACTS: shipper SMITHKLINE USA delivered to carrier Burlington Air Express (BURLINGTON), an agent of [Petitioner] Federal Express Corporation, a shipment of 109 cartons of veterinary biologicals for delivery to consignee SMITHKLINE and French Overseas Company in Makati City. The shipment was covered by Burlington Airway Bill No. 11263825 with the words, ‗REFRIGERATE WHEN NOT IN TRANSIT‘ and ‗PERISHABLE‘ stamp marked on its face. That same day, Burlington insured the cargoes with American Home Assurance Company (AHAC). The following day, Burlington turned over the custody of said cargoes to FEDEX which transported the same to Manila. The shipments arrived in Manila and was immediately stored at [Cargohaus Inc.‘s] warehouse. Prior to the arrival of the cargoes, FEDEX informed GETC Cargo International Corporation, the customs broker hired by the consignee to facilitate the release of its cargoes from the Bureau of Customs, of the impending arrival of its client‘s cargoes.

12 days after the cargoes arrived in Manila, DIONEDA, a non-licensed custom‘s broker who was assigned by GETC, found out, while he was about to cause the release of the said cargoes, that the same [were] stored only in a room with 2 air conditioners running, to cool the place instead of a refrigerator. DIONEDA, upon instructions from GETC, did not proceed with the withdrawal of the vaccines and instead, samples of the same were taken and brought to the Bureau of Animal Industry of the Department of Agriculture in the Philippines by SMITHKLINE for examination wherein it was discovered that the ‗ELISA reading of vaccinates sera are below the positive reference serum.‘ As a consequence of the foregoing result of the veterinary biologics test, SMITHKLINE abandoned the shipment and, declaring ‗total loss‘ for the unusable shipment, filed a claim with AHAC through its representative in the Philippines, the Philam Insurance Co., Inc. (PHILAM) which recompensed SMITHKLINE for the whole insured amount. Thereafter, PHILAM filed an action for damages against the FEDEX imputing negligence on either or both of them in the handling of the cargo. Trial ensued and ultimately concluded with the FEDEX being held solidarily liable for the loss. Aggrieved, petitioner appealed to the CA. The appellate court ruled in favor of PHILAM and held that the shipping Receipts were a prima facie proof that the goods had indeed been delivered to the carrier in good condition. ISSUE: Is FEDEX liable for damage to or loss of the insured goods? HELD: petition granted. Assailed decision reversed insofar as it pertains to FEDEX. Condition Precedent. In this jurisdiction, the filing of a claim with the carrier within the time limitation therefor actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of or damage to the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. The aforementioned requirement is a reasonable condition precedent; it does not constitute a limitation of action. The requirement of giving notice of loss of or injury to the goods is not an empty formalism. The fundamental reasons for such a stipulation are (1) to 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 extent of the injury. ―This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims. Philippine Airlines v Savillo

Facts: Savillo was a judge of the RTC of Iloilo. He was invited to participate in the 1993 ASEAN Seniors Annual Golf Tournament in Jakarta Indonesia. So, in order to take part in such event, he purchased a ticket from PAL with the following itinerary: ManilaSingapore-Jakarta-Singapore-Manila. PAL would take them from Manila to Singapore, while Singapore Airlines would take them from Singapore to Jakarta. When they arrived in Singapore, Singapore Airlines rejected the tickets of Savillo because they were not endorsed by PAL. It was explained that if Singapore Airlines honoured the tickets without PALS‘ endorsement, PAL would not pay Singapore Airlines for their passage. Savillo demanded compensation from both PAL and Singapore Airlines, but his efforts were futile. He then sued PAL after 3 years, demanding moral damages. PAL , in its MTD, claimed that the cause of action has already prescribed invoking the Warsaw Convention (providing for a 2 year prescriptive period). Both RTC and CA ruled against PAL. Issue: What is the applicable law, the Civil Code or the Warsaw Convention? Has the action prescribed? Held: The Civil Code is applicable. Therefore the action has not yet prescribed for the prescription period is 4 years. If cause of action claims moral damages, not covered by Warsaw Convention. Article 19 of the Warsaw Convention provides for liability on the part of a carrier for ―damages occasioned by delay in the transportation by air of passengers, baggage or goods. Article 24 excludes other remedies by further providing that ―(1) in the cases covered by articles 18 and 19, any action for damages, however founded, can only be brought subject to the conditions and limits set out in this convention.‖ Therefore, a claim covered by the Warsaw Convention can no longer be recovered under local law, if the statue of limitations of two years has elapsed. Nevertheless, this Court notes that jurisprudence in the Philippines and the United States also recognizes that the Warsaw Convention does not ―exclusively regulate‖ the relationship between passenger and carrier on an international flight. In U.S. v. Uy, this Court distinguished between the (1) damage to the passenger‘s baggage and (2) humiliation he suffered at the hands of the airline‘s employees. The First cause of action was covered by the Warsaw Convention which prescribes in two years, while the second was covered by the provisions of the Civil Code on torts, which prescribes in four years. In the Petition at bar, Savillo‘s Complaint alleged that both PAL and Singapore Airlines were guilty of gross negligence, which resulted in his being subjected to ―humiliation, embarrassment, mental anguish, serious anxiety, fear and distress‖ therefore this case is not covered by the Warsaw Convention.

In the case at hand, Singapore Airlines barred Savillo from boarding the Singapore Airlines flight because PAL allegedly failed to endorse the tickets of private respondent and his companions, despite PAL‘s assurances to Savillo that Singapore Airlines had already confirmed their passage. While this fact still needs to heard and established by adequate proof before the RTC, an action based on these allegations will not fall under the Warsaw Convention, since the purported negligence on the party of PAL did not occur during the performance of the contract of carriage but days before the scheduled flight. Thus, the present action cannot be dismissed based on the Statue of Limitations provided under Article 29 of the Warsaw Convention. Lufthansa German Airlines v CA Facts: On September 17, 1984, Lufthansa, through SGV, issued ticket for Antiporda's confirmed flights to Malawi, Africa. Thus, on September 25,1984, Antiporda took the Lufthansa flight to Singapore from where he proceeded to Bombay on board the same airline. He arrived in Bombay as scheduled and waited at the transit area of the airport for his connecting flight to Nairobi which was, per schedule given him by Lufthansa, to leave Bombay in the morning of September 26, 1984.Finding no representative of Lufthansa waiting for him at the gate, Antiporda was able to get in touch with Lufthansa, through the help ofAir India. Ten minutes later, Gerard Matias, Lufthansa's traffic officer, arrived, asked for Antiporda's ticket and told him to just sit down and wait. Matias returned with one Leslie Benent, duty officer of Lufthansa, who informed Antiporda that his seat in Air Kenya Flight 203to Nairobi had been given to a very important person of Bombay who was attending a religious function in Nairobi. Antiporda protested,stressing that he had an important professional engagement in Blantyre, Malawi. He requested that the situation be remedied but Air Kenya Flight 203 left for Nairobi without him on board. Stranded in Bombay, Antiporda was booked for Nairobi via Addis Ababa only on September 27,1984. He finally arrived in Blantyre at 9:00 o'clock in the evening of September 28, 1984, days late for his appointment with people from the institution he was to work with in Malawi. Antiporda's counsel wrote the general manager of Lufthansa in Manila demanding damages for the airline's malicious, wanton, disregard of the contract of carriage. Apparently getting no positive action from Lufthansa, he filed with the Regional Trial Court of Quezon City a complaint against Lufthansa which the trial court in its decision favored Antiporda. Lufthansa elevated the case to the Court of Appeals arguing that it cannot be held liable for the acts committed by Air Kenya on th ebasis of that they merely acted as a ticket-issuing agent in behalf of Air Kenya; consequently the contract of carriage entered into is between respondent Antiporda and Air Kenya, to the exclusion of petitioner Lufthansa; under sections (1) and (2) Article 30 of the Warsaw Convention, an airline carrier is liable only to untoward occurrences on its own line. The Court of Appeals affirmed the decision on the trial court. Failing to obtain a favorable decision, Lufthansa filed this petition for review on certiorari. Hence this petition.

Issue: Whether or not Lufthansa is liable for damages in the case at bar. Held: In light of the stipulations expressly specified in the ticket defining the true nature of its contract of carriage with Antiporda, Lufthansa cannot claim that its liability thereon ceased at Bombay Airport and thence, shifted to the various carriers that assumed the actual task of transporting said private respondent. We, therefore, reject Lufthansa's theory that from the time another carrier was engaged to transport Antiporda on another segment of his trip, it merely acted as a ticket-issuing agent in behalf of said carrier. Inthe very nature of their contract, Lufthansa is clearly the principal in the contract of carriage with Antiporda and remains to be so, regardless of those instances when actual carriage was to be performed by various carriers. The issuance of a confirmed Lufthansa ticket in favor of Antiporda covering his entire five-leg trip abroad successive carriers concretely attests to this. This also serves as proof that Lufthansa, in effect guaranteed that the successive carriers, such as Air Kenya would honor his ticket; assure him of a space therein and transport him on a particular segment of his trip. Cathay Pacific Airways v CA Facts: On 19 October 1975, respondent Tomas L. Alcantara was a first class passenger of petitioner Cathay Pacific Airways from Manila to Hong Kong and onward from Hong Kong to Jakarta. The purpose of his trip was to attend the following day, October 20, 1975, a conference with the Director General of Trade of Indonesia. He checked in his luggage which contained not only his clothing and articles for personal use but also papers and documents he needed for the conference. Upon his arrival in Jakarta, respondent discovered that his luggage was missing. Private respondent was told that his luggage was left behind in Hong Kong. For this, respondent Alcantara was offered $20.00 as "inconvenience money" to buy his immediate personal needs until the luggage could be delivered to him. The respondent, as a result of the incident had to seek postponement of his pre-arranged conference. When his luggage finally reached Jakarta more than twenty four hours later, it was not delivered to him at his hotel but was required by petitioner to be picked up by an official of the Philippine Embassy. Respondent filed a case for damages in the CFI of Lanao del Norte which ruled in his favour. Both parties appealed to the Court of Appeals. Court of Appeals rendered its decision affirming the decision of the CFI but by modifying its awards by increasing the damages. Issue: Whether or not the Court of Appeals erred in not applying the Warsaw Convention to limit the liability of the respondent airline. Ruling: No. Although the Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by the Philippine government, said convention does not operate as an exclusive enumeration of the instances for declaring a

carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable for damages in the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if wilfull misconduct on the part of the carrier's employees is found or established, which is clearly the case before Us. For, the Warsaw Convention itself provides in Art. 25 that "(1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court to which the case is submitted, is considered to be equivalent to willful misconduct." (2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused under the same circumstances by any agent of the carrier acting within the scope of his employment." When petitioner airline misplaced respondent's luggage and failed to deliver it to its passenger at the appointed place and time, some special species of injury must have been caused to him. For sure, the latter underwent profound distress and anxiety, and the fear of losing the opportunity to fulfill the purpose of his trip. In fact, for want of appropriate clothings for the occasion brought about by the delay of the arrival of his luggage, to his embarrassment and consternation respondent Alcantara had to seek postponement of his pre-arranged conference with the Director General of Trade of the host country. In one case, his Court observed that a traveller would naturally suffer mental anguish, anxiety and shock when he finds that his luggage did not travel with him and he finds himself in a foreign land without any article of clothing other than what he has on. Aboitiz Shipping v General Accident Fire and Life Assurance Facts: Aboitiz Shipping is the owner of M/V P. Aboitiz, a vessel w/c sank on a voyage from Hongkong to the Philippines. Thissinking of the vessel gave rise to the filing of several suits for recovery of the lost cargo either by the shippers their successors-ininterest, or the cargo insurers like General Accident (GAFLAC).Board of Marine Inquiry (BMI), on its initial investigation found that such sinking was due to force majeure and that subject vessel, at the time of the sinking was seaworthy. The trial court rules against the carrier on the ground that the loss did not occur as a result of force majeure. This was affirmed by the CA and ordered the immediate execution of the full judgment award. However, other cases have resulted in the finding that vessel was seaworthy at the time of the sinking, and that such sinking was due to force majeure. Due to these different rulings, Aboitiz seeks a pronouncement as to the applicability of the doctrine of limited

liability on the totality of the claims vis a vis the losses brought about by the sinking of the vessel M/V P. ABOITIZ, as based on the real and hypothecary nature of maritime law. Aboitiz argued that the Limited Liability Rule warrants immediate stay of execution of judgment to prevent impairment of other creditors' shares. ISSUE: Whether the Limited Liability Rule arising out of the real and hypothecary nature of maritime law should apply in this and related cases. RULING: The SC ruled in the affirmative. The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as the guaranty for their settlement. It has its origin by reason of the conditions and risks attending maritime trade in its earliest years when such trade was replete with innumerable and unknown hazards since vessels had to go through largely uncharted waters to ply their trade. It was designed to offset such adverse conditions and to encourage people and entities to venture into maritime commerce despite the risks and the prohibitive cost of shipbuilding. Thus, the liability of the vessel owner and agent arising from the operation of such vessel were confined to the vessel itself, its equipment, freight, and insurance, if any, which limitation served to induce capitalists into effectively wagering their resources against the consideration of the large profits attainable in the trade. The Limited Liability Rule in the Philippines is taken up in Book III of the Code of Commerce, particularly in Articles 587,590, and 837. The only time the Limited Liability Rule does not apply is when there is an actual finding of negligence on the part of the vessel owner or agent Chua Yek Hong v IAC Facts: Petitioner loaded 1,000 sacks of copra on board a vessel owned by respondents, for shipment from Puerto Galera to Manila. Along its way, the vessel capsized and sank. Petitioner filed an action for damages for breach of contract of carriage. Issue: Whether respondents can avail of the limited liability Held: The shipowner‘s or agent‘s liability is merely co-extensive with his interests in the vessel such that the total loss thereof results in its extinction. The total destruction of the vessel extinguishes maritime liens as there is no longer any res to which it can attach. The primary law is the Civil Code and in default thereof, the Code of Commerce and other special laws are applied. Since the Civil Code contains no provisions regulating liability of shipowners or agents in the event of total loss or destruction of the vessel, it is the provisions of the Code of Commerce that govern in this case. Litonjua Shipping v National Seamen Board

FACTS: Petitioner is the duly appointed local crewing managing office of the Fairwind Shipping Corporation. On September 11, 1976 M/V Dufton Bay an ocean-going vessel of foreign registry owned by the R.D. Mullion ship broking agency under charter by Fairwind, while in the port of Cebu contracted the services (among others) of Gregorio Candongo as Third Engineer for 12 months with a monthly wage of US$500.00. The agreement was executed before the Cebu Area Manning Unit of the NSB, after which respondent boarded the vessel. On December 28, 1976 before the expiration of contract, respondent was required to disembark at Port Kilang, Malaysia. Describe in his seaman‘s handbook is the reason ―by owner‘s arrange.‖ Condongo filed a complaint against Mullion (Shipping company) for violation of contract and against Litonjua as agent of shipowner. On February 1977, NSB rendered a judgment by default for failure of petitioners to appear during the initial hearing, rendering the same to pay Candongo because there was no sufficient or valid cause for the respondents to terminate the service of the complainant. Litonjua‘s defense: Contends that the shipowner, nor the charterer, was the employer of private respondent; and that liability for damages cannot be imposed upon petitioner which was a mere agent of the charterer. ISSUE: Whether or not Litonjua may be held liable to the private respondent on the contract of employment? HELD: YES.The first basis is the charter party which existed between Mullion, the shipowner, and Fairwind, the charterer. It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, the charterer assuming in large measure the customary rights and liabilities of the shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the Master of the vessel is the agent of the charterer and not of the shipowner. The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for the expenses of the voyage including the wages of the seamen Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it was not such, we believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held liable on the contract of employment between the ship captain and the private respondent. There is a second and ethically more compelling basis for holding petitioner Litonjua liable on the contract of employment of private respondent. The charterer of the vessel, Fairwind, clearly benefitted from the employment of private respondent as Third Engineer of the Dufton Bay, along with the ten (10) other Filipino crewmembers recruited by Captain Ho in Cebu at the same occasion. In so doing, petitioner Litonjua certainly in effect represented that it was taking care of the crewing and other requirements of a vessel chartered by its principal, Fairwind.

Last, but certainly not least, there is the circumstance that extreme hardship would result for the private respondent if petitioner Litonjua, as Philippine agent of the charterer, is not held liable to private respondent upon the contract of employment. PNB v CA Facts: In November 1961, GSIS advised PNB that a check bearing check number 645915- B has been lost. On January 15, 1962, Augusto Lim, holding GSIS Check No. 645915- B which was in the amount of P57,415.00, went to PCIB to have the check deposited in his PCIB account. Apparently, the check was indorsed to him by Manuel Go, which was previously indorsed by Mariano Pulido to Go. Pulido was the named payee in the check. PCIB did not encash the check in favor of Augusto Lim but rather it deposited the amount to Lim‘s PCIB account. Lim cannot withdraw the amount yet as it needs clearing. PCIB stamped the check with ―All prior indorsements and/or Lack of Endorsement Guaranteed, Philippine Commercial and Industrial Bank‖. PCIB then sent the check to PNB for clearing. PNB did not act on the check but it paid PCIB the amount of the check. PCIB considered this as a manifestation that the check was good hence it cleared Lim to withdraw the amount. On January 31, 1962, GSIS demanded PNB to restore the amount and PNB complied. PNB then demanded PCIB to refund the amount of the check. PCIB refused. The lower court ruled in favor of PCIB. This was affirmed by the Court of Appeals. PNB argued that the indorsements are forged hence it has no liability. ISSUE: Whether or not PCIB should refund the amount to PNB. HELD: No. The question whether or not the indorsements have been falsified is immaterial to PNB‘s liability as a drawee or to its right to recover from the PCIB for, as against the drawee, the indorsement of an intermediate bank does not guarantee the signature of the drawer, since the forgery of the indorsement is not the cause of the loss. With respect to the warranty on the back of the check, it should be noted that the PCIB thereby guaranteed ―all prior indorsements,‖ not the authenticity of the signatures of the officers of the GSIS who signed on its behalf, because the GSIS is not an indorser of the check, but its drawer. Further, PNB has been negligent. It has been notified months before about the lost check. Poland Industrial Ltd. V National Development Monarch Insurance Co. v CA Facts: The M/V P. Aboitiz left Hong Kong for Manila at about 7:30 in the evening of October 29, 1980 after securing a departure clearance from the Hong Kong Port

Authority. The departure was delayed for two hours because he (Capt. Racines) was observing the direction of the storm that crossed the Bicol Region. He proceeded with the voyage only after being informed that the storm had abated. The M/V P. Aboitiz sank at about 7:00 p.m. of October 31, 1980.Justo Iglesias, meteorologist of PAGASA, testified in both cases that during the inclusive dates of October 28-31, 1980, a stormy weather condition prevailed within the Philippine area of responsibility, particularly along the sea route from Hong Kong to Manila, because of tropical depression "Yoning." Petitioners allied and Equitable refuted the allegation that the M/V P. Aboitiz and its cargo were lost due to force majeure, relying mainly on the marine protest filed by Capt. Racines under scale No. 4 that describes the sea condition as "moderate breeze," and "small waves becoming longer, fairly frequent white horses." Monarch and Tabacalera are insurance carriers of lost cargoes. They indemnified the shippers and were consequently subrogated to their rights, interests and actions against Aboitiz. Because Aboitiz refused to compensate Monarch, it filed two complaints against Aboitiz. In its answer with counterclaim, Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was due to force majeure or an act of God. Aboitiz had repeatedly failed to appear in court, it then allowed Monarch and

Tabacalera to present evidence ex-parte. The survey established that on her voyage to Manila from Hong Kong, the vessel did not encounter weather so inclement that Aboitiz would be exculpated from liability for losses. The survey added that the seaworthiness of the vessel was in question especially because the breaches of the hull and the serious flooding of two (2) cargo holds occurred simultaneously in "seasonal weather." In due course, the trial court rendered judgment against Aboitiz. It was appealed to the Court of Appeals but the appeal was dismissed for its failure to file appellant's brief. Consequently, Monarch and Tabacalera moved for execution of judgment. The trial court granted the motion and issued separate writs of execution. However, Aboitiz, invoking the real and hypothecary nature of liability in maritime law, filed an urgent motion to quash the writs of execution. According to Aboitiz, since its liability is limited to the value of the vessel which was insufficient to satisfy the aggregate claims of all 110 claimants, to indemnify Monarch and Tabacalera ahead of the other claimants would be prejudicial to the latter. Aboitiz filed with the Court of Appeals a petition for certiorari and prohibition with prayer for preliminary injunction and/or temporary restraining order, the same was granted by the court. Issue: W/N the respondent Court of Appeals erred in finding, upon review, that Aboitiz is entitled to the Limited Liability Rule.

Held: NO. The petitioners assert in common that the vessel M/V P. Aboitiz did not sink by reason of force majeure but because of its unseaworthiness and the concurrent fault and/or negligence of Aboitiz, the captain and its crew, thereby barring Aboitiz from availing of the benefit of the limited liability rule. Fernandez v Thompson Standard Oil Co. v Manuel Lopez