1] Yu Con vs. Ipil, G.R. No. L-10195, Dec.

29, 1916

FACTS
Respondent, Yu Con (Yu Con), chartered the banca Maria owned by
petitioner Narciso Lauron (Lauron) with Gilcerio Ipil (Ipil) as its master and Juto
Solamo (Solamo) as it supercargo to transport certain merchandise and money from
the port of Cebu to Catmon.
Yu Con loaded the merchandise and delivered the money, placed in a trunk,
to Ipil and Solamo.
Allegedly because there was no more room for Yu Cons trunk, Ipil and Solamo
transferred the money to their own trunk in the stateroom.
Before the ship could sail, the trunk and the money placed therein
disappeared.

ISSUES/HELD
Are the petitioners liable for the loss? YES.

RATIONALE
It is therefore beyond all doubt that the loss of the money occurred through
the manifest fault and negligence of Ipil and Solamo.
o They failed to take the necessary precautions in order that the stateroom
containing the trunk in which they kept the money should be properly guarded by
members of the crew and they also did not expressly station some person inside
the stateroom for the guarding and safe-keeping of the trunk.
o All of these circumstances, together with that of its having been impossible to
know who took the trunk and the money, make the conduct of Ipil, Solamo, and the
other crew members eminently supicious and prevent our holding that the
disappearance or loss of the money was due to a fortuitous event, to force
majeure.

Ipil and Solamo were depositaries of the sum in question and, having failed to
exercise the diligence required by the nature of the obligation of safe-keeping
assumed by them and by the circumstances of the time and the place, it is evident
that they are liable for its loss or misplacement and must restore it.

With respect to Lauron, he is also liable in accordance with the provisions of the
Code of Commerce in force because, as the proprietor and owner of the vessel
who executed a contract of carriage with Yu Con, there occurred the loss, theft,
or robbery of the P450 that belonged to Yu Con through the negligence of Ipil and
Solamo and which theft does not appear to have been committed by a person not
belonging to the craft.
The old Code of Commerce absolved the ship owner from liability for the
negligence of the captain and its crew but, in the light of the principles of
modern law, this doctrine on the non-liability of the ship owner for the
unlawful acts, crimes or quasi crimes, committed by the captain and the
crew can no longer be maintained in its absolute and categorical terms.
o In maritime commerce, the shippers and passengers in making contracts with the
captain do so through the confidence they have in the ship owner who appointed
him; they presume that the owner made a most careful investigation before
 appointing him, and, above all, they themselves are unable to make such an
investigation, and even though they should do so, they could not obtain complete
security, inasmuch as the ship owner can, whenever he sees fit, appoint another
captain instead.
o Thus, it is only proper that the ship owner should be made liable.

2] Chua Yek Hong vs. IAC, Dec. 14, 1988;

FACTS:

Petitioner contracted with the herein private respondent to deliver 1,000 sacks of copra,
valued at P101,227.40, on board the vessel M/V Luzviminda I owned by the latter.
However it did not reach its destination, the vessel capsized and sank with all its cargo.

Petitioner instituted a complaint against private respondent for breach of contract

incurring damages.

Private respondents defense is that even assuming that the alleged cargo was truly
loaded aboard their vessel, their liability had been extinguished by reason of the total
loss of said vessel.

RTC rendered judgment in favor of Chua Yek Hong however CA reversed the decision by
applying Article 587 of the Code of Commerce and the doctrine in Yangco vs. Lasema (73
Phil. 330 [1941]) and held that private respondents' liability, as ship owners, for the loss
of the cargo is merely co-extensive with their interest in the vessel such that a total loss
thereof results in its extinction.

ISSUE:

Whether or not respondent Appellate Court erred in applying the doctrine of limited
liability under Article 587 of the Code of Commerce as expounded in Yangco vs. Laserna,
supra.

HELD:

As this Court held:

If the ship owner or agent may in any way be held civilly liable at all for injury to or death
of passengers arising from the negligence of the captain in cases of collisions or
shipwrecks, his liability is merely co-extensive with his interest in the vessel such that a
total loss thereof results in its extinction. (Yangco vs. Laserna, et al., supra).

The limited liability rule, however, is not without exceptions, namely: (1) where the injury
or death to a passenger is due either to the fault of the ship owner, or to the concurring
negligence of the ship owner and the captain (Manila Steamship Co., Inc. vs.
Abdulhaman supra); (2) where the vessel is insured; and (3) in workmen's compensation
claims Abueg vs. San Diego, supra). In this case, there is nothing in the records to show
that the loss of the cargo was due to the fault of the private respondent as shipowners,
or to their concurrent negligence with the captain of the vessel. The judgment sought to
be reviewed is hereby AFFIRMED.

Other case digest for #2

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 shipowners or agents 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.

3] PhilAmGen vs. CA, 273 SCRA 262;

Facts:
July 6, 1983 Coca-cola loaded on board MV Asilda, owned and operated by Felman, 7,500
cases of 1-liter Coca-Cola soft drink bottles to be transported to Zamboanga City to
Cebu. The shipment was insured with Philamgen.

July 7, the vessel sank in Zamboanga del Norte. July 15, cocacola filed a claim with
respondent Felman for recovery of damages. Felman denied thus prompted cocacola to
file an insurance claim with Philamgen. Philamgen later on claimed its right of
subrogation against Felman which disclaimed any liability for the loss.

Philamgen alleged that the sinking and loss were due to the vessel's unseaworthiness,
that the vessel was improperly manned and its officers were grossly negligent. Felman
filed a motion to dismiss saying that there is no right of subrogation in favor of
Philamgen was transmitted by the shipper.

RTC dismissed the complaint of Philamgen. CA set aside the dismissal and remanded the
case to the lower court for trial on the merits. Felman filed a petition for certiorari but
was denied.
RTC rendered judgment in favor of Felman. it ruled that the vessel was seaworthy when it
left the port of Zamboanga as evidenced by the certificate issued by the Phil. Coast
Guard and the ship owners surveyor. Thus, the loss is due to a fortuitous event, in
which, no liability should attach unless there is stipulation or negligence.

On appeal, CA rendered judgment finding the vessel unseaworthy for the cargo for being
top-heavy and the cocacola bottles were also improperly stored on deck. Nonetheless,
the CA denied the claim of Philamgen, saying that Philamgen was not properly
subrogated to the rights and interests of the shipper plus the filing of notice of
abandonment had absolved the ship owner from liability under the limited liability rule.

Issues: (a) Whether the vessel was seaworthy, (b) whether limited liability rule should
apply and (c) whether Philamgen was properly subrogated to the rights against Felman.

Ruling:
(a) The vessel was unseaworthy. The proximate cause thru the findings of the Elite
Adjusters, Inc., is the vessel's being top-heavy. Evidence shows that days after the
sinking coca-cola bottles were found near the vicinity of the sinking which would mean
that the bottles were in fact stowed on deck which the vessel was not designed to carry
substantial amount of cargo on deck. The inordinate loading of cargo deck resulted in the
decrease of the vessel's metacentric height thus making it unstable.

(b) Art. 587 of the Code of Commerce is not applicable, the agent is liable for the
negligent acts of the captain in the care of the goods. This liability however can be
limited through abandonment of the vessel, its equipment and freightage. Nonetheless,
there are exceptions wherein the ship agent could still be held answerable despite the
abandonment, as where the loss or injury was due to the fault of the ship owner and the
captain. The international rule is that the right of abandonment of vessels, as legal
limitation of liability, does not apply to cases where the injury was occasioned by the
fault of the ship owner. Felman was negligent, it cannot therefore escape liability.

(c) Generally, in marine insurance policy, the assured impliedly warrants to the assurer
that the vessel is seaworthy and such warranty is as much a term of the contract as if
expressly written on the face of the policy. However, the implied warranty of
seaworthiness can be excluded by terms in writing in the policy of the clearest language.
The marine policy issued by Philamgen to cocacola has dispensed that the
"seaworthiness of the vessel as between the assured and the underwriters in hereby
admitted."

The result of the admission of seaworthiness by Philamgen may mean two things: (1) the
warranty of seaworthiness is fulfilled and (2) the risk of unseaworthiness is assumed by
the insurance company. This waiver clause would mean that Philamgen has accepted the
risk of unseaworthiness, therefore Philamgen is liable.

4] Insurance Company of North America v. Asian Terminals, Inc., G.R. No.

180784, February 15, 2012;

FACTS:
On November 9, 2002, Macro-Lito Corporation, through M/V DIMI P vessel, 185
packages of electrolytic tin free steel, complete and in good condition.
The goods are covered by a bill of lading, had a declared value of $169,850.35 and
was insured with the Insuracne Company of North America (Petitioner) against all risk.
The carrying vessel arrived at the port of Manila on November 19, 2002, and when
the shipment was discharged therefrom, it was noted that 7 of the packages were
damaged and in bad condition.
On Novermber 21, 2002, the shipment was then turned over to the custody of Asian
Terminals. Inc. (Respondent) for storage and safekeeping pending its withrawal by the
consignee.
On November 29, 2002, prior to the withrawal of the shipment, a joint inspection of
the said cargo was conducted. The examination report showed that an additional 5
packages were found to be damaged and in bad order.
On January 6, 2003, the consignee, San Miguel Corporation filed separate claims
against both the Petioner and the Respondent for the damage caused to the packages.
The Petitioner then paid San Miguel Corporation the amound of PhP 431,592.14
which is based on a report of its independent adjuster.
The Petitioner then formally demanded reparation against the Respondent for the
amount it paid San Miguel Corporation.
For the failure of the Respondent to satisfy the demand of the Petitioner, the
Petitioner filed for an action for damages with the RTC of Makati.
The trial court found that indeed, the shipment suffered additional damage under the
custody of the Respondent prior to the turn over of the said shipment to San Miguel.
As to the extent of liability, Respondent invoked the Contract for Cargo Handling
Services executed between the Philippine Ports Authority and the Respondent. Under the
contract, the Respondents liability for damage to cargoes in its custody is limited to
PhP5,000 for each package, unless the value of the cargo shipment is otherwise
specified or manifested in writing together with the declared Bill of Lading. The trial
Court found that the shipper and consignee with the said requirements.
However, the trial court dismissed the complaint on the ground that the Petitioners
claim was barred by the statute of limitations. It held that the Carriage of Goods by Sea
Act (COGSA), embodied in Commonwealth Act No. 65 is applicable. The trial court held
that under the said law, the shipper has the right to bring a suit within one year after the
delivery of the goods or the date when the goods should have been delivered, in respect
of loss or damage thereto.
Petitioner then filed before the Supreme Court a petition for review on certiorari
assailing the trial courts order of dismissal.

ISSUE/S:
1.) Whether or not the trial court committed an error in dismissing the complaint of the
petitioner based on the one-year prescriptive period for filing a suit under the COGSA to
an arrastre operator? YES.
2.) Whether or not the Petitioner is entitled to recover actual damages against the
Respondent? YES, but only PhP164,428.76

HELD:
The term carriage of goods covers the period from the time when the goods are
loaded to the time when they are discharged from the ship. Thus, it can be inferred that
the period of time when the goods have been discharged from the ship and given to the
custody of the arrastre operator is not covered by the COGSA.
The Petitioner, who filed the present action for the 5 packages that were damaged
while in the custody of the respondent was not fortright in its claim, as it knew that the
damages it sought, based on the report of its adjuster covered 9 packages. Based on the
report, only four of the nine packages were damaged in the custody of the Respondent.
The Petitioner can be granted only the amount of damages that is due to it.
5] Inter-Orient Maritime Enterprises vs. CA, 235 SCRA 267;

Inter-Orient Maritime Enterprises, Inc. vs. NLRC | Feliciano (1994)

RATIO DECIDENDI
A ships captain must be accorded a reasonable measure of discretionary
authority to decide what the safety of the ship and of its crew and cargo
specifically requires on a stipulated ocean voyage.

FACTS
Captain Tayong was hired by Trenda World Shipping and Sea Horse Ship Management
through Inter-Orient Maritime Enterprises for a period of 1 year.
He took command of Inter-Orients vessel in Hong Kong.
o He was instructed to replenish bunker and diesel fuel, to sail forthwith to Richard
Bay, South Africa, and there to load 120, 000 metric tons of coal.
Since a storm would hit Hong Kong, precautionary measures were taken to secure the
vessels safety considering that the turbo-charger was leaking and the vessel was 14
years old.
Captain Tayong followed-up the requisition by the former Captain for supplies of
oxygen and acetylene, necessary for the welding-repair of the turbo-charger and
economizer.
The vessel sailed to Singapore.
o On the way to Singapore, the vessel stopped in the middle of the ocean for 6 hours
and 45 minutes due to a leaking economizer.
o He was instructed to shut down the economizer and use the auxiliary boiler
instead.
When the vessel arrived in Singapore, the Chief Engineer reminded Captain Tayong
that the oxygen and acetylene supplies had not been delivered.
o Upon inquiry, the Captain was informed that the supplies could only be delivered
on Aug. 1 as the stores had closed.
Captain Tayong called the shipowner, Seahorse Ship Management and informed them
that the departure of the vessel for South Africa may be affected because of the delay
in the delivery of the supplies.
o He was advised to contact Mr. Clark, the Technical Director.
o According to Mr. Clark, after being informed that the ship cannot travel without the
supplies, Captain Tayong agreed with him when he said by shutting off the water to
the turbo chargers and using the auxiliary boilers, there should be no further
problem.
o According to Captain Tayong, he was informed by Sea Horse to wait for the
supplies.
Captain Tayong immediately sailed for South Africa upon the delivery of the supplies.
Upon reaching South Africa, Captain Tayong was instructed to turn-over his post to the
new captain. He was thereafter repatriated to the Philippines.
o He was not informed of the charges against him.
He then instated a complaint for illegal dismissal.
 ISSUES/HELD
WoN Captain Tayong was illegally dismissed? YES.

RATIONALE
Confidential and managerial employees cannot be arbitrarily dismissed at any time,
and without cause as reasonably established in an appropriate investigation.
o They are also entitled to security of tenure, fair standards of employment and the
protection of labor laws.
The captain of a vessel is a confidential and managerial employee.
A captain commonly performs 3 distinct roles: (1) he is a general agent of the
shipowner; (2) he is also commander and technical director of the vessel; and (3) he
is a representative of the country under whose flag he navigates.
o The most important is the role performed by the captain as the commander of the
vessel. Such a role analogous to that of Chief Executive Officer of a present-day
corporate enterprise.
A ships captain must be accorded a reasonable measure of discretionary authority to
decide what the safety of the ship and of its crew and cargo specifically requires on a
stipulated ocean voyage.
o The captain is held responsible for such safety.
The captain has control of all departments of service in the vessel, and reasonable
discretion as to its navigation.
It is the right and duty of the captain, in the exercise of sound discretion and in good
faith, to do all things with respect to the vessel and its equipment and conduct of the
voyage which are reasonably necessary for the protection and preservation of the
interests under his charge.
o It is a basic principle of admiralty law that in navigating a merchantman, the
master must be left free to exercise his own best judgment.
o The requirements of safe navigation compel us to reject any suggestion that the
judgment and discretion of the captain of a vessel may be confined within a
straight jacket.
The master is entitled to delay for such a period as may be reasonable under the
circumstances.
Captain Tayong had reasonable grounds to believe that the safety of the vessel and
crew required him to wait for the delivery of the supplies needed.
o The vessel had stopped mid-ocean for 6 hours and 45 minutes on its way to
Singapore because of its leaking economizer.
o Captain Tayong did not maliciously and arbitrarily delay the voyage to South Africa.
The decision of Captain Tayong did not constitute a legal basis for his summary
dismissal.

6 ] Caltex Phils. vs. Sulpicio Lines, Inc., 315 SCRA 709

CASE DIGEST A.
Caltex [Philippines], Inc. vs. Sulpicio Lines, Inc.

Facts:

On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex,
collided in the open sea with passenger ship MV Doa Paz, causing the death of all but
25 of the latters passengers. Among those who died were Sebastian Canezal and his
daughter Corazon Canezal. On March 22, 1988, the board of marine inquiry found that
Vector Shipping Corporation was at fault. On February 13, 1989, Teresita Caezal and
Sotera E. Caezal, Sebastian Caezals wife and mother respectively, filed with the
Regional Trial Court of Manila a complaint for damages arising from breach of contract of
carriage against Sulpicio Lines. Sulpicio filed a third-party complaint against Vector and
Caltex. The trial court dismissed the complaint against Caltex, but the Court of Appeals
included the same in the liability. Hence, Caltex filed this petition.

Issue:

Is the charterer of a sea vessel liable for damages resulting from a collision between the
chartered vessel and a passenger ship?

Held:

First: The charterer has no liability for damages under Philippine Maritime
laws.

Petitioner and Vector entered into a contract of affreightment, also known as a voyage
charter.

A charter party is a contract by which an entire ship, or some principal part thereof, is let
by the owner to another person for a specified time or use; a contract of affreightment is
one by which the owner of a ship or other vessel lets the whole or part of her to a
merchant or other person for the conveyance of goods, on a particular voyage, in
consideration of the payment of freight. A contract of affreightment may be either time
charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or
voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-
party provides for the hire of the vessel only, either for a determinate period of time or
for a single or consecutive voyage, the ship owner to supply the ships store, pay for the
wages of the master of the crew, and defray the expenses for the maintenance of the
ship. If the charter is a contract of affreightment, which leaves the general owner in
possession of the ship as owner for the voyage, the rights and the responsibilities of
ownership rest on the owner. The charterer is free from liability to third persons in
respect of the ship.

Second: MT Vector is a common carrier

The charter party agreement did not convert the common carrier into a private carrier.
The parties entered into a voyage charter, which retains the character of the vessel as a
common carrier. It is imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or more persons,
provided the charter is limited to the ship only, as in the case of a time-charter or voyage
charter. It is only when the charter includes both the vessel and its crew, as in a bareboat
or demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or
voyage charter retains possession and control of the ship, although her holds may, for
the moment, be the property of the charterer. A common carrier is a person or
corporation whose regular business is to carry passengers or property for all persons who
may choose to employ and to remunerate him. 16 MT Vector fits the definition of a
common carrier under Article 1732 of the Civil Code.

The public must of necessity rely on the care and skill of common carriers in the
vigilance over the goods and safety of the passengers, especially because with the
modern development of science and invention, transportation has become more rapid,
more complicated and somehow more hazardous. For these reasons, a passenger or a
shipper of goods is under no obligation to conduct an inspection of the ship and its crew,
the carrier being obliged by law to impliedly warrant its seaworthiness.

Third: Is Caltex liable for damages under the Civil Code?

The charterer of a vessel has no obligation before transporting its cargo to ensure that
the vessel it chartered complied with all legal requirements. The duty rests upon the
common carrier simply for being engaged in "public service." The relationship between
the parties in this case is governed by special laws. Because of the implied warranty of
seaworthiness, shippers of goods, when transacting with common carriers, are not
expected to inquire into the vessels seaworthiness, genuineness of its licenses and
compliance with all maritime laws. To demand more from shippers and hold them liable
in case of failure exhibits nothing but the futility of our maritime laws insofar as the
protection of the public in general is concerned. Such a practice would be an absurdity in
a business where time is always of the essence. Considering the nature of transportation
business, passengers and shippers alike customarily presume that common carriers
possess all the legal requisites in its operation.

CASE DIGEST B.

FACTS:

December 19, 1987 8 pm: motor tanker MT Vector owned and operated by Vector
Shipping Corporation carried 8,800 barrels of petroleum products of Caltex by virtue
of a charter contract
December 20, 1987 6:30 am: MV Doa Paz passenger and cargo vessel owned and
operated by Sulpicio Lines, Inc. left the port of Tacloban headed for Manila with 1,493
passengers indicated in the Coast Guard Clear
December 20, 1987: MT Vector collided with MV Doa Paz in the open sea within
the vicinity of Dumali Point between Marinduque and Oriental Mindoro, killing almost
all the passengers and crew members of both ships except for 24 survivors
MV Doa Paz carried an estimated 4,000 passengers most were not in the
passenger manifest
board of marine inquiry in BMI Case No. 653-87 after investigation found that the
MT Vector, its registered operator Francisco Soriano, and its owner and actual
operator Vector Shipping Corporation, were at fault and responsible for its collision
with MV Doa Paz
February 13, 1989: Teresita Caezal and Sotera E. Caezal, Sebastian Caezals
wife and mother respectively, filed a complaint for Damages Arising from Breach of
Contract of Carriage against Sulpicio Lines, Inc. for the death of Sebastian E.
 Caezal (public school teacher 47 years old) and his 11-year old daughter Corazon G.
Caezal
Sulpicio, in turn, filed a 3rd party complaint against Francisco Soriano, Vector
Shipping Corporation and Caltex
Sulpicio alleged that Caltex chartered MT Vector with gross and evident
bad faith knowing fully well that MT Vector was improperly manned, ill-equipped,
unseaworthy and a hazard to safe navigation
RTC: dismissed the third party complaint and favored the Caezal's against Sulpicio
Lines
CA: included Caltex as liable party

ISSUE: W/N Caltex as a voyage charterer of a sea vessel liable for damages resulting
from a collision between the chartered vessel and a passenger ship

HELD: NO. Grants Petition. CA set aside.

respective rights and duties of a shipper and the carrier depends not on whether
the carrier is public or private, but on whether the contract of carriage:
bill of lading or equivalent shipping documents; or
charter party or similar contract on the other
Caltex and Vector entered into a contract of affreightment, also known
as a voyage charter
charter party
contract by which an entire ship, or some principal part thereof, is let by the
owner to another person for a specified time or use
Charter parties fall into three main categories:
(1) Demise or bareboat
charterer mans the vessel with his own people and becomes, in effect,
the owner for the voyage or service stipulated, subject to liability for damages caused
by negligence
common carrier becomes private
contract of affreightment
one by which the owner of a ship or other vessel lets the whole or part
of her to a merchant or other person for the conveyance of goods, on a particular
voyage, in consideration of the payment of freight
may be either:
(2)time charter - wherein the leased vessel is leased to the
charterer for a fixed period of time
(3) voyage charter - wherein the ship is leased for a single
voyage
charter-party provides for the hire of the vessel only, either for a
determinate period of time or for a single or consecutive voyage, the ship owner to
 supply the ships store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship
charterer is free from liability to third persons in respect of the ship
does not convert the common carrier into a private carrier
Carriage of Goods by Sea Act :

Sec. 3. (1) The carrier shall be bound before and at the beginning of the voyage to
exercise due diligence to -

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

xxx xxx xxx

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For
a vessel to be seaworthy, it must be adequately equipped for the voyage and manned
with a sufficient number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition the vessel involved in its contract of
carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code
a passenger or a shipper of goods is under no obligation to conduct an inspection
of the ship and its crew, the carrier being obliged by law to impliedly warrant its
seaworthiness
nature of the obligation of Caltex demands ordinary diligence like any other
shipper in shipping his cargoes
Caltex and Vector Shipping Corporation had been doing business since 1985, or for
about two years before the tragic incident occurred in 1987. Past services rendered
showed no reason for Caltex to observe a higher degree of diligence.
Caltex had the right to presume that the ship was seaworthy as even the Philippine
Coast Guard itself was convinced of its seaworthiness

7] Cathay Pacific Airways vs spouses Vasquez,

GR No. 150843, March 14, 2003

FACTS:

In respondents return flight to Manila from Hongkong, they were deprived of their
original seats in Business Class with their companions because of overbooking. Since
respondents were privileged members, their seats were upgraded to First Class.
Respondents refused but eventually persuaded to accept it. Upon return to Manila, they
demanded that they be indemnified in the amount of P1million for the humiliation and
embarrassment caused by its employees. Petitioners Country Manager failed to
respond. Respondents instituted action for damages. The RTC ruled in favor of
respondents. The Court of Appeals affirmed the RTC decision with modification in the
award of damages.
ISSUE:

Whether or not the petitioners (1) breached the contract of carriage, (2) acted with fraud
and (3) were liable for damages.

RULING:

(1) YES. Although respondents have the priority of upgrading their seats, such priority
may be waived, as what respondents did. It should have not been imposed on them over
their vehement objection.

(2) NO. There was no evident bad faith or fraud in upgrade of seat neither on
overbooking of flight as it is within 10% tolerance.

(3) YES. Nominal damages (Art. 2221, NCC) were awarded in the amount of P5,000.00.
Moral damages (Art.2220, NCC) and attorneys fees were set aside and deleted from the
Court of Appeals ruling.

8] PAL vs Vicente Lopez, GR No. 156654, November 20, 2008

FACTS:
Vicente Lopez claimed that PAL had unjustifiably downgraded his seat from business to
economy class in his return flight from Bangkok to Manila last November 30, 1991, and
that, PAL should be directed to pay him moral damages of at least P100,000, exemplary
damages of at least P20,000, attorney's fees in the sum of P30,000, as well as the costs
of suit.
Lopez averred that he purchased a Manila-Hongkong-Bangkok-Manila PAL business class
ticket and that his return flight to Manila was confirmed by PAL's booking personnel in
Bangkok on November 26, 1991. He was surprised to learn during his check-in for the
said return flight that his status as business class passenger was changed to economy
class, and that PAL was not able to offer any valid explanation for the sudden change
when he protested the change. Lopez added that although aggrieved, he nevertheless
took the said flight as an economy class passenger because he had important
appointments in Manila.
PAL denied any liability and claimed that whatever damage Lopez had suffered was due
to his own fault. PAL explained that the terms and conditions of the contract of carriage
required Lopez to reconfirm his booking for the Bangkok-to-Manila leg of his trip, and that
he did not protest the economy seat given to him when the change in his
accommodations was read to him by the person who received his phone reconfirmation.
PAL also asserted that Lopez did not complain against his economy seat during the
check-in and that he raised the issue only after the flight was over.
The trial court held PAL liable for damages. PAL's contention that Lopez might have
thought that he was holding an economy class ticket or that he waived his right to have
a business class seat is untenable, considering that Lopez is an experienced
businessman and a Bachelor of Science degree holder. It is held that had PAL's
employees examined his ticket in those instances, the error or oversight which might
have resulted from the phoned- in booking could have been easily rectified.
PAL's employees had been negligent in booking and confirming Lopez's travel
accommodations from Bangkok to Manila: (1) the admission of PAL's booking personnel
that she affixed the validation sticker on Lopez's ticket on the basis of the passenger's
name list showing that his reservation was for an economy class seat without examining
or checking the latter's ticket during his booking validation; and (2) the admission of
PAL's check-in clerk at the Bangkok Airport that when Lopez checked-in for his return trip
to Manila, she similarly gave Lopez an economy boarding pass based on the information
found in the coupon of the ticket and the passenger manifest without checking the
latter's ticket.
Court of Appeals affirmed in toto the trial court's decision after having been fully
convinced of the negligence of PAL's employees and after finding PAL's defenses to be
unworthy of belief and contrary to common observation and experience. PAL moved for
reconsideration but it was denied. Hence, this petition.
ISSUE:
Whether or not the Court of Appeals err in not ruling that Lopez agreed or allowed his
business class seat to be downgraded to economy class?
(Whether or not the Court of Appeals err in not ruling that Lopez's alleged contributory
negligence was the proximate cause of the downgrading of his seat?
Whether or not the Court of Appeals err in awarding moral damages, exemplary
damages and attorney's fees in favor of Lopez in view of the alleged absence of fraud or
bad faith of PAL?
RULING:
We had already specifically held that issues on the existence of negligence, fraud and
bad faith are questions of fact. PAL is also guilty of raising prohibited new matter and in
changing its theory of defense since it is only in the present petition that it alleged the
contributory negligence of Lopez.
PAL's procedural lapses notwithstanding, we had nevertheless carefully reviewed the
records of this case and found no compelling reason to depart from the uniform factual
findings of the trial court and the Court of Appeals that: (1) it was the negligence of PAL
which caused the downgrading of the seat of Lopez; and (2) the aforesaidnegligence of
PAL amounted to fraud or bad faith, considering our ruling in Ortigas.
We cannot agree with PAL that the amount of moral damages awarded by the trial court,
as affirmed by the Court of Appeals, was excessive. In Mercury Drug Corporation v.
Baking, we had stated that "there is no hard-and-fast rule in determining what would be
a fair and reasonable amount of moral damages, since each case must be governed by
its own peculiar facts. However, it must be commensurate to the loss or injury suffered.

9] Macondray vs. Provident Insurance Corporation

GR No. 154305, December 9, 2004

Facts:
CANPOTEX SHIPPING SERVICES LIMITED INC., shipped on board the vessel M/V Trade
carrier certain goods in favor of ATLAS FERTILIZER CORPORATION. Subject shipments
were insured with Provident Insurance Corp. against all risks. When the shipment arrived,
consignee discovered that the shipment sustained losses. Provident paid for said losses.
Formal claims were then filed with Trade & Transport but MACONDRAY refused and failed
to settle the same. MACONDRAY denies liability over the losses, it, having no absolute
relation with Trade & Transport, the alleged operator of the vessel who transported the
shipment; that accordingly, MACONDRAY is the local representative of the shipper; the
charterer of M/V Trade Carrier and not party to this case; that it has no control over the
acts of the captain and crew of the carrier and cannot be held responsible for any
damage arising from the fault or negligence of said captain and crew; that upon arrival
at the port, M/V Trade Carrier discharged the full amount of shipment as shown by the
draft survey.
Issue:
Whether or not MACONDRAY & CO. INC., as an agent, is responsible for any loss
sustained by any party from the vessel owned by Trade & Transport.

Held:
Although petitioner is not an agent of Trade & Transport, it can still be the ship agent of
the vessel M/V Trade Carrier. A ship agent is the person entrusted with provisioning or
representing the vessel in the port in which it may be found. Hence, whether acting as
agent of the owner of the vessel or as agent of the charterer, petitioner will be
considered as the ship agent and may be held liable as such, as long as the latter is the
one that provisions or represents the vessel.

The trial court found that petitioner was appointed as local agent of the vessel, which
duty includes arrangement for the entrance and clearance of the vessel. Further, the CA
found that the evidence shows that petitioner represented the vessel. The latter
prepared the Notice of Readiness, the Statement of Facts, the Completion Notice, the
Sailing Notice and Customs Clearance. Petitioners employees were present at the port
of destination one day before the arrival of the vessel, where they stayed until it
departed. They were also present during the actual discharging of the cargo. Moreover,
Mr. de la Cruz, the representative of petitioner, also prepared for the needs of the vessel.
These acts all point to the conclusion that it was the entity that represented the vessel at
the port of destination and was the ship agent within the meaning and context of Article
586 of the Code of Commerce.

10] KILUSANG MAYO UNO LABOR CENTER vs. GARCIA 239 SCRA 538 (1994)
DIGEST A.

FACTS :

Then Secretary of DOTC, Oscar M. Orbos, issued Memorandum Circular No. 90-395 to
then LTFRB Chairman, Remedios A.S. Fernando allowing provincial bus operators to
charge passengers rates within a range of 15% above and 15% below the LTFRB official
rate for a period of one (1) year.

This range was later increased by LTFRB thru a Memorandum Circular No. 92-009
providing, among others, that The existing authorized fare range system of plus or
minus 15 per cent for provincial buses and jeepneys shall be widened to 20% and -25%
limit in 1994 with the authorized fare to be replaced by an indicative or reference rate as
the basis for the expanded fare range.

Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation
policy of the DOTC allowing provincial bus operators to collect plus 20% and minus 25%
of the prescribed fare without first having filed a petition for the purpose and without the
benefit of a public hearing, announced a fare increase of twenty (20%) percent of the
existing fares.

On March 16, 1994, petitioner KMU filed a petition before the LTFRB opposing the upward
adjustment of bus fares, which the LTFRB dismissed for lack of merit.

ISSUE:

Whether or not the authority given by respondent LTFRB to provincial bus operators to
set a fare range of plus or minus fifteen (15%) percent, later increased to plus twenty
(20%) and minus twenty-five (-25%) percent, over and above the existing authorized fare
without having to file a petition for the purpose, is unconstitutional, invalid and illegal.

HELD:
Yes. Under section 16(c) of the Public Service Act, the Legislature delegated to the
defunct Public Service Commission the power of fixing the rates of public services.
Respondent LTFRB, the existing regulatory body today, is likewise vested with the same
under Executive Order No. 202 dated June 19, 1987. x x x However, nowhere under the
aforesaid provisions of law are the regulatory bodies, the PSC and LTFRB alike, authorized
to delegate that power to a common carrier, a transport operator, or other public service.
DIGEST B

FACTS:
-public utilities privately owned and operated businesses whose service are essential
tothe general public; enterprises which specially cater to the needs of the public andcon
ducive to their comfort and convenience
-DOTC Sec. issued Memorandum Circular No. 90-395 to then LTFRB Chairman
allowingprovincial bus operators to charge passengers rates within a range of 15% above
and 15%below the LTFRB official rate for a period of 1 year
-PBOAP pursuant to Memo. Cir. it filed an application for fare rate increase. An across-
the-board increase of eight and a half centavos (P0.085) per
kilometer for all types of provincial buses with a minimum-maximum fare range of fifteen
(15%) percent over andbelow the proposed basic per kilometer fare rate, with the said
minimum-maximum farerange applying only to ordinary, first class and premium class
buses and a fifty-centavo(P0.50) minimum per kilometer fare for aircon buses, was
sought
-respondent LTFRB rendered a decision granting the fare rate increase in accordance with
aspecified schedule of fares on a straight computation method
-DOTC Sec. issued Department Order No. 92-587 defining the policy framework on
theregulation of transport services. It provides inter alia that Passenger fares shall also
bederegulated, except for the lowest class of passenger service (normally third classpass
enger transport) for which the government will fix indicative or reference fares.Operators
of particular services may fix their own fares within a range 15% above andbelow the
indicative or reference rate.
-LTFRB issued Memorandum Circular No. 92-009 promulgating the guidelines for theimpl
ementation of DOTC Department Order No. 92-587, which provides, among
others,that:The issuance of a Certificate of Public Convenience is determined by public
need. Thepresumption of public need for a service shall be deemed in favor of the
applicant, whileburden of proving that there is no need for the proposed service shall be
the oppositors.The existing authorized fare range system of plus or minus 15 per cent
for provincialbuses and jeepneys shall be widened to 20% and -25% limit in 1994 with
the authorizedfare to be replaced by an indicative or reference rate as the basis for the
expanded farerange
-PBOAP - availing itself of the deregulation policy of the DOTC allowing provincial
busoperators to collect plus 20% and minus 25% of the prescribed fare without first
havingfiled a petition for the purpose and without the benefit of a public hearing,
announced afare increase of twenty (20%) percent of the existing fares
-KMU filed a petition before the LTFRB opposing the upward adjustment of bus fares.
ISSUE:
WON the above memoranda, circulars and/or orders of the DOTC and the
LTFRBwhich, among others, (a) authorize provincial bus and jeepney
operators to increase ordecrease the prescribed transportation fares without application
therefor with the LTFRB andwithout hearing and approval thereof by said agency is in
violation of Sec. 16(c) of CA 146,and in derogation of LTFRBs duty to fix and determine
just and reasonable fares bydelegating that function to bus operators, and (b) establish a
presumption of public need infavor of applicants for certificates of public convenience
and place on the oppositor theburden of proving that there is no need for the proposed
service, in patent violation not onlyof Sec. 16(c) of CA 146, as amended, but also of Sec.
20(a) of the same Act mandating thatfares should be just and reasonable
HELD:
Yes.
-Section 16(c) of the Public Service Act, as amended, reads:Sec. 16. Proceedings of the
Commission, upon notice and hearing. The Commission shallhave power, upon proper
notice and hearing in accordance with the rules and provisions of this Act, subject to the
limitations and exceptions mentioned and saving provisions to the contrary:xxx xxx
xxx(c) To fix and determine individual or joint rates, tolls, charges, classifications, orsche
dules thereof, as well as commutation, mileage kilometrage, and other special
rateswhich shall be imposed, observed, and followed thereafter by any public service:
Provided, That the Commission may, in its discretion, approve rates proposed by public
servicesprovisionally and without necessity of any hearing; but it shall call a hearing
thereon
withinthirty days thereafter, upon publication and notice to the concerns operating in the
territory affected: Provided, further, That in case the
public service equipment of anoperator is used principally or secondarily for the
promotion of a private business, the netprofits of said private business shall be
considered in relation with the public service of such operator for the purpose of fixing
the rates.
-LTFRB is authorized under EO 202, s. 1987 to determine, prescribe, approve andperiodic
ally review and adjust, reasonable fares, rates and other related charges, relativeto
the operation of public land transportation services provided by motorized vehicles
-LTFRB not authorized to delegate that power to a common carrier, a transport
operator,or other public service
-authority given by the LTFRB to the provincial bus operators to set a fare range over
andabove the authorized existing fare, is illegal and invalid as it is tantamount to an
unduedelegation of legislative authority
-rate should not be confiscatory as would place an operator in a situation where he
willcontinue to operate at a loss; rate should enable public utilities to generate
revenuessufficient to cover operational costs and provide reasonable return on
the investments
-CPC - authorization granted by the LTFRB for the operation of land transportation
servicesfor public use as required by law. Pursuant to Section 16(a) of the Public Service
Act, asamended, the following requirements must be met before a CPC may be granted,
to wit: (i)the applicant must be a citizen of the Philippines, or a corporation or co-
partnership,association or joint-stock company constituted and organized under the laws
of thePhilippines, at least 60 per centum of its stock or paid-up capital must belong
entirely tocitizens of the Philippines; (ii) the applicant must be financially capable
of undertaking theproposed service and meeting the responsibilities incident to its
operation; and (iii)
theapplicant must prove that the operation of the public service proposed and theauthori
zation to do business will promote the public interest in a proper and suitablemanner;
there must be proper notice and hearing before the PSC can exercise its power toissue a
CPC
-LTFRB Memorandum Circular No. 92-009, Part IV is incompatible and inconsistent
withSection 16(c)(iii) of the Public Service Act which requires that before a CPC will be
issued,the applicant must prove by proper notice and hearing that the operation of the
publicservice proposed will promote public interest in a proper and suitable manner. On
thecontrary, the policy guideline states that the presumption of public need
for a publicservice shall be deemed in favor of the applicant.

#11.
G.R. No. L-22491
DOMINGO ANG vs. AMERICAN STEAMSHIP AGENCIES INC
Facts:
Yau Yue Commercial Bank Ltd. of Hongkong, sell 140 packages of galvanized steel
durzinc sheets to one Herminio G. Teves, shipped by Tokyo Boeki Ltd. of Tokyo, Japan with
American Steamship Agencies, Inc. as the agent in the Philippines, under a shipping
agreement. The bill of lading was indorsed to the order of and delivered to Yau Yue by
the shipper. Upon receipt thereof, Yau Yue drew a demand draft together with the bill of
lading against Herminio G. Teves, through the Hongkong & Shanghai Bank. Upon arrival,
Hongkong & Shanghai Bank notified Teves, the "notify party" under the bill of lading, of
the arrival of the goods and requested payment of the demand draft representing the
purchase price of the articles. Teves, however, did not pay the demand draft, prompting
the bank to make the corresponding protest. The bank likewise returned the bill of lading
and demand draft to Yau Yue which indorsed the said bill of lading to Domingo Ang.
Despite non-payment Teves was able to secure a "Permit To Deliver Imported Articles"
which he presented to the Bureau of Customs which in turn released to him the articles
covered by the bill of lading. Subsequently, Domingo Ang claimed for the articles from
American Steamship Agencies, Inc., by presenting the indorsed bill of lading, but he was
informed by the latter that it had delivered the articles to Teves. A complaint was filed by
Ang against American Steamship for having allegedly wrongfully delivered and/or
converted the goods covered by the bill of lading. Defendant filed a motion to dismiss
upon the ground that plaintiff's cause of action has prescribed under the Carriage of
Goods by Sea Act. Lower court dismissed the case on the ground of prescription. Hence,
an appeal was filed to SC.
Issue:
Has plaintiff-appellant's cause of action prescribed under Section 3(6), paragraph 4 of
the Carriage of Goods by Sea Act? What is to be resolved in order to determine the
applicability of the prescriptive period of one year to the case at bar is whether or not
there was "loss" of the goods subject matter of the complaint.
Ruling:
From the allegations of the complaint, therefore, the goods cannot be deemed "lost".
They were delivered to Herminio G. Teves, so that there can only be either delivery, if
Teves really was entitled to receive them, or misdelivery, if he was not so entitled. It is
not for Us now to resolve whether or not delivery of the goods to Teves was proper, that
is, whether or not there was rightful delivery or misdelivery. There being no loss or
damage to the goods, the aforequoted provision of the Carriage of Good by Sea Act
stating that "In any event, 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," does not apply. It follows
that for suits predicated not upon loss or damage but on alleged misdelivery (or
conversion) of the goods, the applicable rule on prescriptions that found in the Civil
Code, namely, either ten years for breach of a written contract or four years for quasi-
delict. In either case, plaintiff's cause of action has not vet prescribed, since his right of
action would have accrued at the earliest on May 9, 1961 when the ship arrived in Manila
and he filed suit on October30, 1963.Wherefore, the dismissal order appealed from is
hereby reversed and set aside and this case is remanded to the court a quo for further
proceedings

#12
Trans-Asia Shipping vs. Court of Appeals
(254 SCRA 260)
Facts:

Plaintiff (herein private respondent Atty. Renato Arroyo) bought a ticket from herein
petitioner for the voyage of M/V Asia Thailand Vessel to Cagayan de Oro from Cebu City.
Arroyo boarded the vessel in the evening of November 12, 1991 at around 5:30. At that
instance, plaintiff noticed that some repair works were being undertaken on the evening
of the vessel. The vessel departed at around 11:00 in the evening with only one engine
running.

After an hour of slow voyage, vessel stopped near Kawit Island and dropped its anchor
threat. After an hour of stillness, some passenger demanded that they should be allowed
to return to Cebu City for they were no longer willing to continue their voyage to
Cagayan de Oro City. The captain acceded to their request and thus the vessel headed
back to Cebu City. At Cebu City, the plaintiff together with the other passengers who
requested to be brought back to Cebu City was allowed to disembark. Thereafter, the
vessel proceeded to Cagayan de Oro City. Plaintiff, the next day boarded the M/V Asia
Japan for its voyage to Cagayan de Oro City, likewise a vessel of the defendant.

On account of this failure of defendant to transport him to the place pf destination on

November 12, 1991, plaintiff filed before the trial court a complaint for damages against
the defendant.

Issue:

Whether or not the failure of a common carrier to maintain in seaworthy condition its
vessel involved in a contract of carriage a breach of its duty?

Held:

Undoubtedly, there was, between the petitioner and private respondent a contract of
carriage. Under Article 1733 of the Civil Code, the petitioner was bound to observed
extraordinary diligence in ensuring the safety of the private respondent. That meant that
the petitioner was pursuant to the Article 1755 off the said Code, bound to carry the
private respondent safely as far as human care and foresight could provide, using the
utmost diligence of very cautious persons, with due regard for all the circumstances. In
this case, the Supreme Court is in full accord with the Court of Appeals that the
petitioner failed or discharged this obligation.

Before commencing the contact of voyage, the petitioner undertook some repairs on the
cylinder head of one of the vessels engines. But even before it could finish these repairs
it allowed the vessel to leave the port of origin on only one functioning engine, instead of
two. Moreover, even the lone functioning engine was not in perfect condition at
sometime after it had run its course, in conked out. Which cause the vessel to stop and
remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop
anchor. Plainly, the vessel was unseaworthy even before the voyage begun. For the
vessel to be seaworthy, it must be adequately equipped for the voyage and manned with
the sufficient number of competent officers and crew. The Failure of the common carrier
to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear
breach of its duty prescribed in Article 1755 of the Civil Code.
#13

G.R. No. 172822 MOF COMPANY, INC. vs. SHIN YANG BROKERAGE CORPORATION

The necessity of proving lies with the person who sues.

Facts

On October 25, 2001, Halla Trading Co., a company based in Korea, shipped to Manila
secondhand cars and other articles on board the vessel Hanjin Busan 0238W. The bill of
lading covering the shipment, i.e., Bill of Lading No. HJSCPUSI14168303, which was
prepared by the carrier Hanjin Shipping Co., Ltd. (Hanjin), named respondent Shin Yang
Brokerage Corp. (Shin Yang) as the consignee and indicated that payment was on a
"Freight Collect" basis, i.e., that the consignee/receiver of the goods would be the one to
pay for the freight and other charges in the total amount of P57,646.00.

The shipment arrived in Manila on October 29, 2001. Thereafter, petitioner MOF
Company, Inc. (MOF), Hanjins exclusive general agent in the Philippines, repeatedly
demanded the payment of ocean freight, documentation fee and terminal handling
charges from Shin Yang. The latter, however, failed and refused to pay contending that it
did not cause the importation of the goods, that it is only the Consolidator of the said
shipment, that the ultimate consignee did not endorse in its favor the original bill of
lading and that the bill of lading was prepared without its consent.

The refusal of the consignee named in the bill of lading to pay the freightage on the
claim that it is not privy to the contract of affreightment propelled the shipper to sue for
collection of money, stressing that its sole evidence, the bill of lading, suffices to prove
that the consignee is bound to pay.

Issue

1. Whether or not a consignee, who is not a signatory to the bill of lading, bound by
the stipulations thereof.

2. Whether a respondent who was not an agent of the shipper and who did not make
any demand for the fulfillment of the stipulations of the bill of lading drawn in its
favor is liable to pay the corresponding freight and handling charges.

Ruling

A consignee, although not a signatory to the contract of carriage between the shipper
and the carrier, becomes a party to the contract by reason of either a) the relationship of
agency between the consignee and the shipper/ consignor; b) the unequivocal
acceptance of the bill of lading delivered to the consignee, with full knowledge of its
contents or c) availment of the stipulation pour autrui, i.e., when the consignee, a third
person, demands before the carrier the fulfillment of the stipulation made by the
consignor/shipper in the consignees favor, specifically the delivery of the goods/cargoes
shipped.

In civil cases, the party having the burden of proof must establish his case by
preponderance of evidence, which means evidence which is of greater weight, or more
convincing than that which is offered in opposition to it. Here, MOF failed to meet the
required quantum of proof. Other than presenting the bill of lading, which, at most,
proves that the carrier acknowledged receipt of the subject cargo from the shipper and
that the consignee named is to shoulder the freightage, MOF has not adduced any other
credible evidence to strengthen its cause of action. It did not even present any witness in
support of its allegation that it was Shin Yang which furnished all the details indicated in
the bill of lading and that Shin Yang consented to shoulder the shipment costs. There is
also nothing in the records which would indicate that Shin Yang was an agent of Halla
Trading Co. or that it exercised any act that would bind it as a named consignee. Thus,
the CA correctly dismissed the suit for failure of petitioner to establish its cause against
respondent.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated
March 22, 2006 dismissing petitioners complaint and the Resolution dated May 25, 2006
denying the motion for reconsideration are AFFIRMED.

SO ORDERED.

#14
EDGAR COKALIONG SHIPPING LINES, INC. VS UCPB
G.R. No. 146018 June 25, 2003
Facts:
- Nestor Angelia and Zosimo Mercado both delivered to petitioner cargo, valued on its
face 6,500 and 14,000 pesos respectively
- The Bills of Lading contain the stipulation that in case of claim for loss or for
damage to the shipped merchandise or property, the liability of the common
carrier shall not exceed the value of the goods appearing in the Bill of
Lading
- Nestor was both the shipper and consignee of the cargo
- Feliciana Legaspi insured the cargo of the 2 bills of lading for the amount of 50, 000
and 100,000 pesos against all risks
- Fire ensured in the engine room and destroyed the entire vessel and all the cargo
therein
- Feliciana filed a claim for the value of the cargo, it was approved for the amount of
49,500 and 99,000 pesos for both bills of lading
- Respondent filed a complaint in the RTC for the collection of 148,500 pesos, the total
principal amount it paid to Feliciana Legaspi
- Petitioners argued that after settling his claim, Nestor Angelia executed the Release
and Quitclaim hence it was absolved of any liability for the loss of the cargo and even
if it was, its liability should not exceed the value of the cargo as stated in
the Bills of Lading
- CA held that petitioner is not bound by the valuation of the cargo under the Bills of
Lading, nor is the value of the cargo under said Bills of Lading conclusive on the
respondentthe goods were insured with the respondent for the total amount of
150,000 pesos, which amount may be considered as the face value of the goods

Issue:
Amount of liability of petitioner: WON it is that which was stated in the Bills of Lading, or
the extent of the amount paid by the insurance company
Held: That which is stated in the Bills of Lading
Ratio:
- A stipulation that limits liability is valid as long as it is not against public policy
- A stipulation in the Bill of Lading limiting the common carriers liability for loss or
destruction of a cargo to a certain sum, unless the shipper or owner declares a
greater value, is sanctioned by law [1749, 1750]
- The present stipulation is not against public policy, it is just and reasonable; the
shippers/consignees may recover the full value of the goods by the simple expedient
of declaring the true value of the shipment in the bill of lading
- In fact, they even committed fraud in deliberately undervaluing the goods
- Purpose of the limiting stipulation is to protect the common carrierto notify it of the
amount it may be liable for and be able to take appropriate measures to cover or
protect itself i.e. getting insurance
- For assuming a higher risk, the insurance company was paid the correct higher
premium while the petitioner was paid a fee lower for transporting the goods that had
been deliberately undervalued
- Between the two of them, the insurer should bear the loss in excess of the value
declared in the bill of lading, this is a just and equitable solution

#15 BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES
TRANSPORT SERVICES, INC., petitioners,
vs.
PHILIPPINE FIRST INSURANCE CO., INC., respondents,
G.R. No. 143133, June 5, 2002

Proof of the delivery of goods in good order to a common carrier and of their arrival in
bad order at their destination constitutes prima facie fault or negligence on the part of
the carrier. If no adequate explanation is given as to how the loss, the destruction or the
deterioration of the goods happened, the carrier shall be held liable therefor.

Facts:
On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg,
Germany 242coils of various Prime Cold Rolled Steel sheets for transportation to Manila
consigned to the Philippine Steel Trading Corporation. On July 28, 1990, M/V 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. 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.

Petitioners refused to submit to the consignee's claim. Consequently, respondent paid

the consignee and was subrogated to the latter's rights. Subsequently, respondent
instituted this complaint for recovery of the amount paid by them, to the consignee as
insured.

Petitioners imputed that the damage and/or loss was due to pre-shipment damage. In
addition thereto, they 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,
they averred that, in any event, they exercised due diligence and foresight required by
law to prevent any damage/loss to said shipment.

RTC dismissed the Complaint because respondent had failed to prove its claims. In
reversing the trial court, the CA ruled that petitioners were liable for the loss or the
damage of the goods shipped, because they had failed to overcome the presumption of
negligence imposed on common carriers.

Issue #1: Whether or not a notation in the bill of lading at the time of loading is
sufficient to show pre-shipment damage and to exempt herein defendants from liability.

Held: NO.
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.
Petitioners failed to rebut the prima facie presumption of negligence in the case at bar.
True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill
of Lading; however, there is no showing that petitioners exercised due diligence to
forestall or lessen the loss. Having failed to discharge the burden of proving that they
have exercised the extraordinary diligence required by law, petitioners cannot escape
liability for the damage to the four coils.

Issue #2: Whether or not the consignee/plaintiff filed the required notice of loss within
the time required by law.

Held: YES.
Pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act (COGSA), a
failure to file a notice of claim within three days will not bar recovery if it is nonetheless
filed within one year. This one-year prescriptive period also applies to the shipper, the
consignee, the insurer of the goods or any legal holder of the bill of lading. In the present
case, the cargo was discharged on July 31, 1990, while the Complaint was filed by
respondent on July 25, 1991, within the one-year prescriptive period.

Issue #3: Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of
COGSA is applicable.

Held: YES.
In the case before us, there was no stipulation in the Bill of Lading limiting the carrier's
liability. Neither did the shipper declare a higher valuation of the goods to be shipped.
This fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the
basis for petitioners' liability.

A notation in the Bill of Lading which indicated the amount of the Letter of Credit
obtained by the shipper for the importation of steel sheets did not effect a declaration of
the value of the goods as required by the bill. In the light of the foregoing, petitioners'
liability should be computed based on US$500 per package and not on the per metric ton
price declared in the Letter of Credit.

16.ENGRACIO FABRE, JR. and PORFIRIO CABIL vs. COURT OF APPEALS

G.R. no. 111127, July 26, 1996
Mendoza, J.

FACTS:
Petitioner Fabre and his wife were the owners of 1982 model Mazda minibus. They were
using the said vehicle as a school bus service for children in Manila. They hired Cabil as
their driver. On November 2, 1982, private respondent Word for the World Christian
Fellowship (WWCF) arranged with petitioners for the transportation of members of young
adult ministry from Manila to La Union and back. While travelling, they met an accident.
The bus hit a fence and a coconut tree that caused passengers to be injured including
respondent Antonio.

The WWCF and Antonio then filed a criminal complaint against the driver, the trial court
decided in favor of respondents. All evidence presented showed the negligence of the
defendants ultimately resulted to the accident. The Court of Appeals affirmed the
decision of the Trial Court. Hence this petition.

ISSUE:
Whether or not the petitioners are liable for the injuries suffered by the respondents
based on culpa contractual and/or culpa aquiliana.

RULING:
The Court ruled that damages should be awarded based on the theory that petitioners
are liable for breach of contract of carriage or culpa contractual or on the theory of quasi
delict or culpa aquiliana holding that the relation of passenger and carrier is contractual
both in origin and nature, nevertheless the act that breaks the contract may be also a
tort. In both sources of obligation, the existence of negligence of petitioners must be
determined. In this case, Cabil drove his bus negligently, while his employer, the Fabres,
who owned the bus, failed to exercise the diligence of a good father of the family in the
selection and supervision of their employee is fully supported by the evidence on record.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the
presumption that his employers, the Fabres, were themselves negligent in the selection
and supervision of their employee. Thus, the finding of the Court that petitioners are
liable under Arts. 2176 and 2180 for quasi delict fully justify that they are guilty of
breach of contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.

17.MCC INDUSTRIAL SALES CORPORATION vs.SSANGYONG CORPORATION

G.R. No. 170633, October 17, 2007

Facts:

On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter, to confrm MCC
Industrial Sales and Sanyo Seiki's order of 220 metric tons (MT) of hot rolled stainless
steel addressed to MCC's manager and President of Sanyo Seiki Stainless Steel
Corporation Gregory Chan. On behalf of the corporations, Chan, assented and affixed his
signature on the conforme portion of the letter.

On April 17, 2000, Ssangyong forwarded to MCC Pro Forma Invoice No. ST2-
POSTSO401 containing the terms and conditions of the transaction. MCC sent back by
fax to Ssangyong the invoice bearing the conformity signature of Chan. As stated in the
pro forma invoice, payment for the ordered steel products would be made through an
irrevocable letter of credit (L/C) at sight in favor of Ssangyong. Following their usual
practice, delivery of the goods was to be made after the L/C had been opened. On the
same date, due to the fact that MCC could only open a partial letter of credit, the order
for 220MT of steel was split into two, one for 110MT and another for 110MT covered by
Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 respectively.

On June 20, 2000, Ssangyong, through its Manila Office, informed Sanyo Seiki and
Chan, by way of a fax transmittal, that stainless steel from Korea was ready to ship to the
Philippines. It requested that the opening of the L/C be facilitated. Chan affixed his
signature on the fax transmittal and returned the same, by fax, to Ssangyong. The first
L/C covering payment for 100MT of stainless steel coil under Pro Forma Invoice No. ST2-
POSTS080-2 was opened. The goods covered by the said invoice were then shipped to
and received by MCC. But, for the second L/C, MCC refused to open it that resulted to the
filing of civil action by SSangyong for damages due to breach of contract.

After Ssangyong rested its case, MCC filed a Demurrer to Evidence, alleging that
respondent failed to present the original copies of the pro forma invoices on which the
civil action was based. The court denied the demurrer, ruling that the documentary
evidence is admissible pursuant to RA 8792 and that both testimonial and documentary
evidence tended to substantiate the material allegations in the complaint, suffice for the
purposes of prima facie case. On appeal to the CA, the appellate court affirmed the
ruling of the trial court and ruled that the Pro Forma invoices were admissible in evidence
, although they were mere facsimile printouts of the steel orders.

Issue:

Whether or not the print out and/or photocopies of facsimile transmissions are
electronic evidence and admissible as such.
Held:

In an ordinary facsimile transmission, there exists an original paper-based information

or data that is scanned, sent through a phone line, and re-printed at the receiving end.
Further, in a virtual or paperless environment, technically, there is no original copy to
speak of, as all direct printouts of the virtual reality are the same, in all respects, and are
considered as originals. Ineluctably, the law's definition of "electronic data message,"
which, as aforesaid, is interchangeable with "electronic document," could not have
included facsimile transmissions, which have an original paper-based copy as sent and a
paper-based facsimile copy as received. These two copies are distinct from each other,
and have different legal effects.

The terms "electronic data message" and "electronic document," as defined under the
Electronic Commerce Act of 2000, do not include a facsimile transmission. Accordingly, a
facsimile transmission cannot be considered as electronic evidence. It is not the
functional equivalent of an original under the Best Evidence Rule and is not admissible as
electronic evidence.

Since a facsimile transmission is not an "electronic data message" or an "electronic

document," and cannot be considered as electronic evidence by the Court, with greater
reason is a photocopy of such a fax transmission not electronic evidence. Hence, the
Supreme court held that Pro Forma Invoices are mere photocopies of the original fax
transmittals and not electronic evidence, contrary to the position of both the trial and the
appellate courts.
In this case, the appeal is PARTIALLY GRANTED.

18.G.R. No. 168433, February 10, 2009

UCPB General Insurance Co., Inc.
vs Aboitiz Shipping Corp.
Ponente: Tinga

Facts:
On June 1991, 3 units of waste water treatment plant with accessories were purchased
by San Miguel Corp from Super Max Engineering. The goods came from Charleston, USA
and arrived in port of Manila on board MV Scandutch Star. From Manila it was transported
to Cebu on board of Aboitiz Supercon II. In Cebu, with clearance from the Bureau of
Customs, the goods were delivered and received by San Miguel at its plant site. It was
then discovered that the motor of the unit was damaged.

Pursuant to the insurance agreement, UCPB General Insurance paid San Miguel
P1,703,381.40 representing the value of the damaged unit. In turn, San Miguel executed
a subrogation form in favor of UCPB. Then, UCPB filed a complaint on Kuly 1992 as
subrogee of San Miguel seeking to recover from Aboitiz. Aboitiz moved to admit East
Asiatic Co. as general agent of DAMCO Intermodal System. RTC held Aboitiz, East Asiatic
and DAMCO solidarily liable.

CA reversed the decision of the RTC and ruled that UCPBs right of action did not accrue
because UCPB failed to file a formal notice within 24 hours from the damaged. In a
memorandum, UCPB asserts that the claim requirement does not apply to cases
concerning damages to the merchandise had already been known to the carrier. UCPB
revealed that the damage to the cargo was found upon discharge from the foreign carrier
witnessed by the carriers representative who signed the request for bad order survey
and the turnover of bad order cargoes. This knowledge, UCPB argues, dispenses with the
need to give the carrier a formal notice of claim. Incidentally, the carriers representative
mentioned by UCPB as present at the time the merchandise was unloaded was in fact a
representative of respondent Eagle Express Lines (Eagle Express). UCPB further claims
that the issue of the applicability of Art. 366 of the Code of Commerce was never raised
before the trial court and should, therefore, not have been considered by the CA.

Eagle Express, in its Memorandum dated February 7, 2007, asserts that it cannot be held
liable for the damage to the merchandise as it acted merely as a freight forwarders
agent in the transaction. It allegedly facilitated the transhipment of the cargo from
Manila to Cebu but represented the interest of the cargo owner, and not the carriers.

Aboitiz, on the other hand, points out, in its Memorandum dated March 29, 2007, that it
obviously cannot be held liable for the damage to the cargo which, by UCPBs admission,
was incurred not during transhipment to Cebu on board one of Aboitizs vessels, but was
already existent at the time of unloading in Manila. Aboitiz also argues that Art. 366 of
the Code of Commerce is applicable and serves as a condition precedent to the accrual
of UCPBs cause of action against it.

Issue: Whether any of the remaining parties may still be held liable by UCPB.

Ruling:
UCPB obviously made a gross misrepresentation to the Court when it claimed that the
issue regarding the applicability of the Code of Commerce, particularly the 24-hour
formal claim rule, was not raised as an issue before the trial court. The appellate court,
therefore, correctly looked into the validity of the arguments raised by Eagle Express,
Aboitiz and Pimentel Customs on this point after the trial court had so ill-advisedly
centered its decision merely on the matter of extraordinary diligence.

Interestingly enough, UCPB itself has revealed that when the shipment was discharged
and opened at the ICTSI in Manila in the presence of an Eagle Express representative,
the cargo had already been found damaged. In fact, a request for bad order survey was
then made and a turnover survey of bad order cargoes was issued, pursuant to the
procedure in the discharge of bad order cargo. The shipment was then repacked and
transhipped from Manila to Cebu on board MV Aboitiz Supercon II. When the cargo was
finally received by SMC at its Mandaue City warehouse, it was found in bad order,
thereby confirming the damage already uncovered in Manila.

We have construed the 24-hour claim requirement as 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 fulfilment of the condition. Otherwise, no
right of action against the carrier can accrue in favor of the former.

The shipment in this case was received by SMC on August 2, 1991. However, as found by
the Court of Appeals, the claims were dated October 30, 1991, more than three (3)
months from receipt of the shipment and, at that, even after the extent of the loss had
already been determined by SMCs surveyor. The claim was, therefore, clearly filed
beyond the 24-hour time frame prescribed by Art. 366 of the Code of Commerce.
Petition was denied. CA's decision was affirmed.

19.PHILIPPINE CHARTER INSURANCE CORPORATION VS. CHEMOIL LIGHTERAGE

HITE GOLD CORPORATION
G.R. No. 136888. June 29, 2005

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
latters 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 PGPs 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
latters 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 courts decision stated that the notice of claim was relayed or filed
with the respondent-carrier immediately or within a period of twenty-four hours from the
time the goods were received. The Court of Appeals made the same finding. Having
examined the entire records of the case, we cannot find a shred of evidence that will
precisely and ultimately point to the conclusion that the notice of claim was timely
relayed or filed.

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

The object sought to be attained by the requirement of the submission of claims in

pursuance of this article is to compel the consignee of goods entrusted to a carrier to
make prompt demand for settlement of alleged damages suffered by the goods while in
transport, so that the carrier will be enabled to verify all such claims at the time of
delivery or within twenty-four hours thereafter, and if necessary fix responsibility and
secure evidence as to the nature and extent of the alleged damages to the goods while
the matter is still fresh in the minds of the parties.

The filing of a claim with the carrier within the time limitation therefore actually
constitutes a condition precedent to the accrual of a right of action against a carrier for
loss of, or damage to, the goods. The shipper or consignee must allege and prove the
fulfillment of the condition. If it fails to do so, no right of action against the carrier can
accrue in favor of the former. The aforementioned requirement is a reasonable condition
precedent; it does not constitute a limitation of action.

We do not believe so. As discussed at length above, there is no evidence to confirm that
the notice of claim was filed within the period provided for under Article 366 of the Code
of Commerce. Petitioners 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.

EXEMPTION SHOULD BE PROVEN IN ORDER TO QUALIFY UNDEREXCEPTION CLAUSE OF

INSURANCE POLICY

20. Mayer Steel Pipe Corp vs. CA [G.R. No. 124050. June 19, 1997]

MAYER STEEL PIPE CORPORATION (Mayer) and HONGKONG GOVERNMENT

SUPPLIES DEPARTMENT (Hongkong), Petitioners,

v. COURT OF APPEALS, SOUTH SEA SURETY AND INSURANCE CO., INC. (South
Sea) and the CHARTER INSURANCE CORPORATION (Charter), Respondents.

Facts:
Mayer, by virtue of a contract, shipped to Hongkong steel pipes. Upon arrival, it was
found out that some of the steel pipes were damaged. Because such steel pipes were
insured with South Sea and Charter, they demanded from them the amount for such
damage more than 2 years after the unloading of the goods. They denied paying for the
repair of the pipes because allegedly such were due to factory defects. The TC found that
the damage was not due to a factory defect thus ruled against the insurance companies.
The CA set aside the decision of the TC and dismissed the complaint on the ground of
prescription; that t based from the Sea Act, the suit against the insurer must be filed
within 1 year after the delivery of the goods or the date when they should be delivered.

Isuue: Whether the Sea Act applies to the insurers, and thus, they should not be held
liable because the right to file an action against them had already prescribed.

Held: No. the Sea Act does not apply, thus the right of action against them did not
prescribe. They are liable.

Under the Sea Act, only the carriers liability is extinguished if no suit is brought within 1
year. The insurers liability is not extinguished because the insurers liability is based on
the contract of insurance. The Sea Act governs the relationship between the carrier on
the one hand and the shipper, the consignee.
***************************
The 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.
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.

21. Spouses Renato Ong case, Gr 117103, Jan 21, 1999

FACTS:
On February 9, 1987, petitioners boarded as paying passengers an Inland bus which was
owned and operated by Inland Trailways under a Lease Agreement with Philtranco.
Around 3:50 in the morning of said date, when the Inland bus slowed down to avoid a
stalled cargo truck in Tiaong, Quezon, it was bumped from the rear by another bus,
owned and operated by Philtranco, causing injuries to the spouses.

On December 22, 1988, petitioners filed an action for damages against Philtranco and
Inland presenting documentary evidence of their expenses but failed to present
thepolice report as evidence. On May 7, 1991, the trial court rendered its judgment in
favor of the petitioners absolving Inland Trailways, Inc., from any liability whatsoever,
and against Philtranco Service Enterprise, Inc. based on culpa aquiliana which was
amended by the Court of Appeals absolving Philtranco Service Enterprise, Inc. from
liability instead against Inland based on culpa contractual and reducing the amount of
moral damages, medical and miscellaneous expenses and disallowing the award of
unearned income.

Issue: Whether damages were properly awarded.

RULING
The fundamental principle of the law on damages is that one injured by a breach of
contract (in this case, the contract of transportation) or by a wrongful or negligent act or
omission shall have a fair and just compensation, commensurate with the loss sustained
as a consequence of the defendant's acts. Hence, actual pecuniary compensation is the
general rule, except where the circumstances warrant the allowance of other kinds of
damages. Actual damages Actual damages are such compensation or damages for an
injury that will put the injured party in the position in which he had been before he was
injured. They pertain to such injuries or losses that are actually sustained and
susceptible of measurement. Except as provided by law or by stipulation, a party is
entitled to adequate compensation only for such pecuniary loss as he has duly proven. To
be recoverable, actual damages must be pleaded and proven in Court. No such proof
was offered to the P10,000 claim of damages. At the most, documentary evidence
showed P3, 977 only as damages.
Moral Damages and Diminution of use of arm
A person is entitled to the physical integrity of his or her body, and if that integrity is
violated, damages are due and assessable. However, physical injury, like loss or
diminution of use of an arm or a limb, is not a pecuniary loss. Indeed, it is nor
susceptible of exact monetary estimation. Thus, the usual practice is to award moral
damages for physical injuries sustained. In the case at bar, it was sufficiently shown
during the trial that Francia's right arm could not function in a normal manner and that,
as a result, she suffered mental anguish and anxiety. Thus, an increase in the amount of
moral damages awarded, from P30,000 to P50,000, appears to be reasonable and
justified. Renato also suffered mental anxiety and anguish from the accident. Thus, he
should be separately awarded P30,000 as moral damages.
Unrealized Income
Protesting the deletion of the award for Francia's unrealized income, petitioners contend
that
Francia's injuries and her oral testimony adequately support their claim. The Court
disagrees.
Although actual damages include indemnification for profits which the injured party
failed to
obtain (lucro cesante or lucrum cesans), the rule requires that said person produce the
"best
evidence of which his case is susceptible. The petitioners failed to do so, as she could
have
returned to work despite the plaster in her arm.
Attorney fees
Counsel's performance, however, does not justify the award of 25 percent attorney's
fees. It is
well-settled that such award is addressed to sound judicial discretion and subject to
judicial
control. Only a 10% attorneys fee is awarded.

22. AUGUSTO LOPEZ v. JUAN DURUELO, G.R. No. 29166. October 22, 1928.

Facts:
On 10 February 1927, Augusto Lopez, who is a resident of the municipality of Silay,
Occidental Negros, was desirous of embarking upon the interisland steamer San Jacinto
in order to go to Iloilo. This boat was at the time in the anchoring ground of the port of
Silay, some half a mile distant from the port. Lopez therefore embarked at the landing in
the motor boat Jison, which was then engaged in conveying passengers and luggage
back and forth from the landing to boats at anchor, and which was owned and operated
by Albino Jison, with Juan Duruelo as patron. The engineer (maquinista) aboard on this
trip was one Rodolin Duruelo, a boy of only 16 years of age. He is alleged to have been a
mere novice without experience in the running of motor boats; and the day of the
occurrence now in contemplation is said to have been the third day of his apprenticeship
in this capacity. It is alleged that the Jison, upon this trip, was grossly overladen, having
aboard 14 passengers, while its capacity was only for 8 or 9. As the motor boat
approached the San Jacinto in a perfectly quiet sea, it came too near to the stern of the
ship, and as the propeller of the ship had not yet ceased to turn, the blades of the
propeller struck the motor boat and sank it at once. As the Jison sank, Lopez was thrown
into the water against the propeller, and the revolving blades inflicted various injuries
upon him, consisting of a bruise in the breast, two serious fractures of the bones of the
left leg, and a compound fracture of the left femur. As a consequence of these injuries
Lopez was kept in bed in a hospital in the City of Manila from 28 February until 19
October 1927, or approximately 8 months. Lopez instituted an action in the CFI of
Occidental Negros for the purpose of recovering damages (P120,000) for personal
injuries inflicted upon him by reason of the negligence of Duruelo and Jison. Duruelo and
Jison demurred to the complaint, and the demurrer having been sustained, Lopez elected
to stand upon his complaint, which was accordingly dismissed. Lopez appealed. The
Supreme Court reversed the judgment appealed from, overruled the demurrer, and
required Jison to answer the complaint within 5 days after notification of the return of the
decision to the court of origin; with costs against Jison.

Issue:
WON it is required to make protest as a condition precedent to the right of action for the
injury suffered by the plaintiffs

Ruling:
As a general ground of demurrer it is assigned by the defendants that the complaint
does not show a right of action, and in the course of the argument submitted with the
demurrer attention is directed to the fact that the complaint does not allege that a
protest had been presented by the plaintiff, within twenty-four hours after the
occurrence, to the competent authority at the port where the accident occured. It is
accordingly insisted that, under article 835 of the Code of Commerce, the plaintiff has
shown no cause of action.
In Yu Con vs. Ipil (41 Phil., 770), this court held that a small vessel used for the
transportation of merchandise by sea and for the making of voyages from one port to
another of these Islands, equipped and victualed for this purpose by its owner, is a
vessel, within the purview of the Code of Commerce, for the determination of the
character and effect of the relations created between the owners of the merchandise
laden on it and its owner. In the case before us the Jison, as we are informed in the
complaint, was propelled by a second-hand motor, originally used for a tractor plow; and
it had a capacity for only eight persons. The use to which it was being put was the
carrying of passengers and luggage between the landing at Silay and ships in the harbor.
This was not such a boat as is contemplated in article 835 of the Code of Commerce,
requiring protest in case of collision.
It is therefore clear that a passenger on a boat like the Jison, in the case before us, is not
required to make protest as a condition precedent to his right of action for the injury
suffered by him in the collision described in the complaint. In other words, article 835 of
the Code of Commerce does not apply.

23. Luzon Stevedoring vs Ca, G.R. No. L-58897, December 3, 1987

Facts:
A maritime collision occurred within the vicinity of the entrance to the North Harbor,Mani
la between the tanker LSCO "Cavite" owned by Luzon Stevedoring Corporation and MV
"Fernando Escano" a passenger ship owned by Hijos de F. Escano, Inc. as a result of
which said passenger ship sunk. An action in admiralty was filed by Hijos de F. Escano,
Inc. and Domestic Insurance Company of the Philippines against the Luzon Stevedoring
Company (LSC) in the Court of First Instance of Cebu. In the course of the trial, the trial
court appointed two commissioners representing the plaintiffs and defendant to
determine the value of the LSCO "CAVITE." Said commissioners found the value thereof
to be P180,000.00.
Issue: WON the civil liability be limited to the appurtenances and freight earned during
the voyage.
Held:
The Supreme Court ruled that; Articles 587, 590, and 837 of the Code of Commerce
provide as follows: ART. 587. The ship agent shall also be civilly liable for the indemnities
in favor of third persons which arise from the conduct of the captain in the vigilance over
the goods which the vessel carried; but he may exempt himself therefrom by abandoning
the vessel with all her equipment and the freight he may have earned during the
voyage .xxx xxx xxx
ART. 590. The co-owners of the vessel shall be civilly liable in the proportion of their
contribution to the common fund for the results of the acts of the captain, referred to in
Article 587.Each co-owner may exempt himself from this liability by the abandonment,
before a notary, of that part of the vessel belonging to him .xxx xxx xxx
ART. 837. The civil liability incurred by the shipowners in the cases prescribed in this
section, shall be understood as limited to the value of the vessel with all her
appurtenances and freight earned during the voyage.
From the foregoing the rule is that in the case of collision, abandonment of the vessel is
necessary in order to limit the liability of the shipowner or the agent to the value of the
vessel, its appurtenances and freightage earned in the voyage in accordance with Article
837 of the Code of Commerce. The only instance where such abandonment is dispensed
with is when the vessel was entirely lost. In such case, the obligation is thereby
extinguished. Hence the rule is that in case of collision there should be abandonment of
the vessel by the shipowner or agent in order to enjoy the limited liability provided for
under said Article 837. In the case now before the Court there is no question that the
action arose from a collision and the fault is laid at the doorstep of LSCO "Cavite" of
petitioner. Undeniably petitioner has not abandoned the vessel. Hence petitioner can not
invoke the benefit of the provisions of Article 837 of the Code of Commerce to limit its
liability to the value of the vessel, all the appurtenances and freightage earned during
the voyage.

24. TEODORO R. YANGCO, ETC vs. MANUEL LASERNA, G.R. No. L-47447-47449,
October 29, 1941

Facts:
At about one o'clock in the afternoon of May 26, 1927, the steamer S.S. Negros,
belonging to petitioner here, Teodoro R. Yangco, left the port of Romblon on its return trip
to Manila. Typhoon signal No. 2 was then up, of which fact the captain was duly advised
and his attention thereto called by the passengers themselves before the vessel set sail.
The boat was overloaded as indicated by the loadline which was 6 to 7 inches below the
surface of the water. Baggage, trunks and other equipments were heaped on the upper
deck, the hold being packed to capacity. In addition, the vessel carried thirty sacks of
crushed marble and about one hundred sacks of copra and some lumber. The
passengers, numbering about 180, were overcrowded, the vessel's capacity being
limited to only 123 passengers. After two hours of sailing, the boat encountered strong
winds and rough seas between the islands of Banton and Simara, and as the waves
splashed the ladies' dresses, the awnings were lowered. As the sea became increasingly
violent, the captain ordered the vessel to turn left, evidently to return to port, but in the
manuever, the vessel was caught sidewise by a big wave which caused it to capsize and
sink. Many of the passengers died in the mishap, among them being Antolin Aldaa and
his son Victorioso, husband and son, respectively, of Emilia Bienvenida who, together
with her other children and a brother-in-law, are respondents in G.R. No. 47447; Casiana
Laserna, the daughter of respondents Manuel Laserna and P.A. de Laserna in G.R. 47448;
and Genaro Basaa, son of Filomeno Basaa, respondent in G.R. No. 47449. These
respondents instituted in the Court of First Instance of Capiz separate civil actions
against petitioner here to recover damages for the death of the passengers
aforementioned. The court awarded the heirs of Antolin and Victorioso Aldana the sum of
P2,000; the heirs of Casiana Laserna, P590; and those of Genaro Basana, also P590. After
the rendition of the judgment to this effect, petitioner, by a verified pleading, sought to
abandon the vessel to the plainitffs in the three cases, together with all its equipments,
without prejudice to his right to appeal. The abandonment having been denied, an
appeal was taken to the Court of Appeals, wherein all the judgments were affirmed
except that which sums was increased to P4,000. Petitioner, now deceased, appealed
and is here represented by his legal representative.
Issue:
May the shipowner or agent, notwithstanding the total loss of the vessel as a result of
the negligence of its captain, be properly held liable in damages for the consequent
death of its passengers?
Held:
We are of the opinion and so hold that this question is controlled by the provisions of
article 587 of the Code of Commerce. Said article reads:

The agent shall also be civilly liable for the indemnities in favor of third persons
which arise from the conduct of the captain in the care of the goods which the
vessel carried; but he may exempt himself therefrom by abandoning the vessel
with all her equipments and the freight he may have earned during the voyage.

The provisions accords a shipowner or agent the right of abandonment; and by

necessary implication, his liability is confined to that which he is entitled as of right to
abandon "the vessel with all her equipments and the freight it may have earned
during the voyage." It is true that the article appears to deal only with the limited liability
of shipowners or agents for damages arising from the misconduct of the captain in the
care of the goods which the vessel carries, but this is a mere deficiency of language and
in no way indicates the true extent of such liability. The consensus of authorities is to the
effect that notwithstanding the language of the aforequoted provision, the benefit of
limited liability therein provided for, applies in all cases wherein the shipowner or agent
may properly be held liable for the negligent or illicit acts of the captain.

In the light of all the foregoing, we therefore hold that if the shipowner or agent may in
any way be held civilly liable at all for injury to or death of passengers arising from the
negligence of the captain in cases of collisions or shipwrecks, his liability is merely co-
extensive with his interest in the vessel such that a total loss thereof results in its
extinction. In arriving at this conclusion, we have not been unmindful of the fact that the
ill-fated steamship Negros, as a vessel engaged in interisland trade, is a common carrier
(De Villata v. Stanely, 32 Phil., 541), and that the as a vessel engaged in interisland
trade, is a common carrier (De Villata v. Stanely, 32 Phil., 541), and that the relationship
between the petitioner and the passengers who died in the mishap rests on a contract of
carriage. But assuming that petitioner is liable for a breach of contract of carriage, the
exclusively "real and hypothecary nature" of maritime law operates to limit such liability
to the value of the vessel, or to the insurance thereon, if any. In the instant case it does
not appear that the vessel was insured.

25. Barrios vs Go Thong, Gr No. L-17192, March 30, 1963

FACTS:
Petitioner Honorio Barrios, captain and/or master of the MV Henry I, received or
otherwise intercepted an S.O.S. distress signal by blinkers from the MV Alfredo, owned
and/or operated by respondent Carlos Go Thong & Company. Thereafter, he altered the
course of said vessel, and steered and headed towards the beckoning MV Don Alfredo,
which Barrios found to be in trouble, due to engine failure and the loss of her propeller.
Upon getting close to the MV Don Alfreco, with the consent and knowledge of the captain
and/or master of the MV Don Alfredo, Barrios caused the latter vessel to be tied to, or
well-secured and connected with tow lines from the MV Henry, and proceeded moving
until such time that a sister ship of MV Don Alfredo was sighted so that the tow lines
were also released.

Brought to the CFI of Manila, the court therein dismissed the case; with cost against
Barrios. Barrios interposed an appeal.

ISSUE:
Whether under the facts of the case, the service rendered by plaintiff to defendant
constituted "salvage" or "towage", and if so, whether plaintiff may recover from
defendant compensation for such service.

HELD:
It is not a salvage service.

Salvage defined
Salvage has been defined as the compensation allowed to persons by whose
assistance a ship or her cargo has been saved, in whole or in part, from impending peril
on the sea, or in recovering such property from actual loss, as in case of shipwreck,
derelict, or recapture.

Elements for a valid salvage claim; Erlanger & Galinger case

In the Erlanger & Galinger case, it was held that three elements are necessary to a valid
salvage claim, namely, (1) a marine peril, (2) service voluntarily rendered when not
required as an existing duty or from a special contract, and (3) success in whole or in
part, or that the service rendered contributed to such success.

No marine peril to justify valid salvage claim

There was no marine peril to justify a valid salvage claim by Barrios against Go Thong. It
appears that although Go Thongs vessel in question was, on the night of 1 May 1958, in
a helpless condition due to engine failure, it did not drift too far from the place where it
was. The weather was fair, clear, and good. The waves were small and too slight, so
much so, that there were only ripples on the sea, which was quite smooth. During the
towing of the vessel on the same night, there was moonlight. Although said vessel was
drifting towards the open sea, there was no danger of its foundering or being stranded,
as it was far from any island or rocks. In case of danger of stranding, its anchor could be
released, to prevent such occurrence. There was no danger that Go Thongs vessel would
sink in view of the smoothness of the sea and the fairness of the weather. That there was
absence of danger is shown by the fact that said vessel or its crew did not even find it
necessary to lower its launch and two motor boats, in order to evacuate its passengers
aboard. Neither did they find occasion to jettison the vessels cargo as a safety measure.
Neither the passengers nor the cargo were in danger of perishing. All that the vessels
crew members could not do was to move the vessel on its own power. That did not make
the vessel a quasi-derelict.

26.ABOITIZ SHIPPING CORPORATION vs. GENERAL ACCIDENT FIRE AND LIFE,

G.R. No. 100446 January 21, 1993

Facts:
Petitioner is a corporation organized and operating under Philippine laws and engaged in
the business of maritime trade as a carrier. As such, it owned and operated the ill-fated
"M/V P. ABOITIZ," a common carrier which sank on a voyage from Hongkong to the
Philippines on October 31, 1980. Private respondent General Accident Fire and Life
Assurance Corporation, Ltd. (GAFLAC), on the other hand, is a foreign insurance
company pursuing its remedies as a subrogee of several cargo consignees whose
respective cargo sank with the said vessel and for which it has priorly paid.

The incident of said vessel's sinking gave rise to the filing of suits for recovery of lost
cargo either by the shippers, their successor-in-interest, or the cargo insurers like
GAFLAC as subrogees. The sinking was initially investigated by the Board of Marine
Inquiry (BMI Case No. 466, December 26, 1984), which found that such sinking was due
to force majeure and that subject vessel, at the time of the sinking was seaworthy. This
administrative finding notwithstanding, the trial court in said Civil Case No. 144425 found
against the carrier on the basis that the loss subject matter therein did not occur as a
result of force majeure. Thus, in said case, plaintiff GAFLAC was allowed to prove, and.
was later awarded, its claim. This decision in favor of GAFLAC was elevated all the way
up to this Court in G.R. No. 89757 (Aboitiz v. Court of Appeals, 188 SCRA 387 [1990]),
with Aboitiz, like its ill-fated vessel, encountering rough sailing. The attempted execution
of the judgment award in said case in the amount of P1,072,611.20 plus legal interest
has given rise to the instant petition.
Issue:
WON the doctrine of limited liability rule applies
Held:
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.
In the instant case, there is, therefore, a need to collate all claims preparatory to their
satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending
freightage at the time of its loss. No claimant can be given precedence over the others
by the simple expedience of having filed or completed its action earlier than the rest.
Thus, execution of judgment in earlier completed cases, even those already final and
executory, must be stayed pending completion of all cases occasioned by the subject
sinking. Then and only then can all such claims be simultaneously settled, either
completely or pro-rata should the insurance proceeds and freightage be not enough to
satisfy all claims.

27. LITONJUA SHIPPING COMPANY INC vs. NATIONAL SEAMEN BOARD, G.R. No.
L-51910 August 10, 1989

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 seamans handbook is the reason by
owners 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.

Litonjuas 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.

28] VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY, INC. case, G.R. No.
102316. June 30, 1997

Facts:
(Valenzuela Hardwood and Industrial Supply, Inc.) entered into an agreement with the
defendant Seven Brothers (Shipping Corporation) whereby the latter undertook to load
on board its vessel M/V Seven Ambassador the formers lauan round logs numbering 940
at the port of Maconacon, Isabela for shipment to Manila. Plaintiff insured the logs
against loss and/or damage with defendant South Sea Surety and Insurance Co., Inc. for
P2,000,000.00 and the latter issued its Marine Cargo Insurance Policy No. 84/24229 for
P2,000,000.00. The said vessel M/V Seven Ambassador sank on 25 January 1984
resulting in the loss of the plaintiffs insured logs. The charter party between Valenzuela
Hardwood and Seven Brothers stipulated that the owners shall not be responsible for
loss, split, short-landing, breakages and any kind of damages to the cargo.
Issue:
WON a stipulation in a charter party that the owners shall not be responsible for loss,
split, short-landing, breakages and any kind of damages to the cargo is valid.
Held : Yes. Seven Brothers had acted as private carrier in transporting petitioners; lauan
logs. Thus, Article 1745 and other Civil Code provisions on common carriers may not be
applied unless expressly stipulated by the parties in their charter party.
The proximate cause of the sinking of the vessel resulting in the loss of its cargo
was the snapping of the iron chains and the subsequent rolling of the logs to the portside
due to the negligence of the captain in stowing and securing the logs on board the vessel
and not due to fortuitous even.
In contract of private carriers, the parties may validly stipulate that responsibility
for the cargo rests solely on the charterer, exempting the shipowner from liability for loss
of or damage to the cargo caused even by the negligence of the ship captain. Pursuant
to Art. 1306, the assailed stipulation is valid because it is freely entered into by the
parties and the same is not contrary to law, morals, good customs, public order, or public
policy.

29. Merchants vs Alejandro, G.R. No. L-54140 October 14, 1986

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.

30. GREGORIO PESTAO vs. Spouses TEOTIMO SUMAYANG, G.R. No. 139875,
December 4, 2000
Facts:
It appears from the records that at around 2:00 oclock [o]n the afternoon of August 9,
1986, Ananias Sumayang was riding a motorcycle along the national highway in Ilihan,
Tabagon, Cebu. Riding with him was his friend Manuel Romagos. As they came upon a
junction where the highway connected with the road leading to Tabagon, they were hit
by a passenger bus driven by [Petitioner] Gregorio Pestao and owned by [Petitioner]
Metro Cebu Autobus Corporation (Metro Cebu, for brevity), which had tried to overtake
them, sending the motorcycle and its passengers hurtling upon the pavement. Both
Ananias Sumayang and Manuel Romagos were rushed to the hospital in Sogod, where
Sumayang was pronounced dead on arrival. Romagos was transferred to the Cebu
Doctors Hospital, but he succumbed to his injuries the day after.

Issue:
WON owners or managers are responsible for damages caused by their employees.

Held:
Under Articles 2180 and 2176 of the Civil Code, owners and managers are
responsible for damages caused by their employees. When an injury is caused by the
negligence of a servant or an employee, the master or employer is presumed to be
negligent either in the selection or in the supervision of that employee. This presumption
may be overcome only by satisfactorily showing that the employer exercised the care
and the diligence of a good father of a family in the selection and the supervision of its
employee.
The CA said that allowing Pestao to ply his route with a defective speedometer showed
laxity on the part of Metro Cebu in the operation of its business and in the supervision of
its employees. The negligence alluded to here is in its supervision over its driver, not in
that which directly caused the accident. The fact that Pestao was able to use a bus with a
faulty speedometer shows that Metro Cebu was remiss in the supervision of its
employees and in the proper care of its vehicles. It had thus failed to conduct its
business with the diligence required by law.

31. People vs. Mataro G.R. No. 130378 (March 8, 2001)

Facts:

On October 23, 1992, SPO 1 Enrique Castillo, Jr., stop a light brown Toyota Corona.
Mataro and Perucho disembarked and talked to Castillo. After a while, Mataro and
Perucho went to their car and returned with an armalite and a .45 cal. firearm.
Castillo raised his hands and motioned the two accused to move along and forget their
citation. The two accused shot him instead. And as a result Castillo died. RTC found them
guilty of murder and to pay jointly and severally the heirs of Enrique Castillo the
following: P725,000.00 as actual damages; P1,000,000.00 as moral damages; and to pay
the cost.

ISSUE:
Whether or not the RTC correctly award the above-mentioned damages and may
temperate damages be awarded?

RULING:
In our view, the amount of damages awarded must be modified. An appeal in a criminal
case opens the entire case for review on any question including one not raised by the
parties. The trial court awarded P725,000.00 as actual damages andP1,000,000.00 as
moral damages. In arriving at P725,000.00 as actual damages, the trial court added the
loss of earning capacity of the victim which it computed to beP660,000.00 and the other
expenses incurred by the heirs of the victim as a result of his death. We agree that the
life expectancy formula should be applied. However, the loss of earning capacity should
not be based on the net monthly income of the deceased. The proper computation
should be based on the gross annual income of the victim minus the necessary and
incidental living expenses which the victim would have incurred if he were alive,
estimated at 50% of the gross annual income. The prosecution proved through the
Certification of Employment and Compensation that the gross annual income (including
13th month pay and bonus) of the deceased is P65,906.00. Deducting from this the
estimated necessary and incidental living expenses, the net annual income is
P32,953.00. Multiplying this by the computed life expectancy of the victim which is
22years, the amount of loss of earning capacity should be P724,966.00.With respect to
actual damages, we have consistently ruled that the recovery of actual damages must
be premised upon competent proof and best evidence obtainable by the injured party
showing the actual expenses incurred in connection with the death, wakeor burial of the
victim. Courts cannot simply assume that damages are sustained by the injured party,
nor can it rely on speculation or guesswork in determining the fact and amount of
damages. In this case, of the expenses summarized by the injured party, only the one
incurred for funeral services amounting to P25,000.00 is duly evidenced by a receipt.

The trial court's award of P1,200.00 for hospital bills, P43,800.00 for funeral services and
P20,000.00 for transportation and representation expenses lacks sufficient basis and
should be deleted. In line with People vs. Suplito, 314 SCRA 493 (1999), however,
temperate damages maybe awarded, it appearing that the victim's heirs had
suffered pecuniary losses other than the actual damage but the amount thereof cannot
be proved with certainty. Taking into consideration the medical and burial services for the
victim, an award of P30,000.00 byway of temperate damages should suffice in
this regard. The award of P1,000,000.00 as moral damages should be reduced, bearing
in mind that the purpose for making such award is not to enrich the heirs of the victim
but to compensate them however inexact for injuries to their feelings. In line with
current jurisprudence on moral damages, an award of P50,000.00 is in order. Likewise,
based on prevailing case laws P50,000.00 is awarded as indemnity for wrongful death.
Attorney's fees of P24,000.00 is also proper.

32. FRANCISCO ORTIGAS, JR. VS. LUFTHANSA GERMAN AIRLINES G.R. NO. L-
28773 JUNE 30, 1975

Facts:

Francisco Ortigas, and defendant Lufthansa German Airlines, appealed from the
decision of the Court of First Instance of Manila, condemning the defendant to pay
plaintiff an indemnity for the former's failure to "comply with its obligation to give first
class accommodation to a Filipino passenger holding a first class ticket," This was due to
giving of the space instead to a Belgian and the improper conduct of its agents in dealing
with him which was filled with discrimination. During the trial, there were several
postponements of the trial from both sides. Three hearings were postponed on the
request of the plaintiffs, 4 on the request of both parties, and 10 on the request of
respondents. Due to so many postponements made by the respondent, including the no-
show of their European employees as witnesses, the case tilted out of their favor. One of
their witnesses was stricken from the list due to his non-appearance in the day that the
cross-exam on him was to be finished and the judge moved for a finality regarding the
postponements (ie. no postponements were to be made again) Ortigas claimed that
while in Rome, the discrimination against him took place. Moreover, when he asked for a
seat change to first class during the stopovers, he wasnt given any. He was only given
the option when he was already in Hong Kong, about 3 hours only from Manila.
Issue: Whether or not the lower court erred in making defendant pay indemnities.

Held:

There can be no doubt as to the right of Ortigas to damages, both moral and
exemplary. Precedents We have consistently adhered to so dictate. Jurisprudentially,
Honorable Fernando Lopez, then an incumbent senator and former Vice President of the
Philippines, together with his wife and his daughter and son-in-law, made first class
reservations with the Pan American World Airways in its Tokyo-San Francisco flight. The
reservation having been confirmed, first class tickets were subsequently issued in their
favor. Mistakenly, however, defendant's agent cancelled said reservation, but expecting
some cancellations before the flight scheduled about a month later, the reservations
supervisor decided to withhold the information from them, with the result that upon
arrival in Tokyo, the Lopezes discovered they had no first class accommodations and
were thus compelled to take the tourist class, just so the senator could be on time for his
pressing engagements in the United States. In the light of these facts, the Court held
there was a breach of the contract of carriage and viewed as the element of bad faith
entitling the plaintiffs to moral damages for such contractual breach, the failure of the
agents of the defendant to inform the plaintiffs on time that their reservation for first
class had long before been cancelled by mistake. According to the Court, such omission
placed plaintiffs in a predicament that enabled the company to keep the plaintiffs as
their passengers in the tourist class, thereby retaining the business and promoting the
company's self-interest at the expense of, embarrassment, discomfort and humiliation on
the part of the plaintiffs.
These precedents, as may be seen, apply four-square to herein plaintiffs case.
Defendant's liability for willful and wanton breach of its contract of carriage with plaintiff
is, therefore, indubitable.
Coming now to the amount that should be awarded by way of damages to the
plaintiff, it is also the teaching of the cases aforecited that defendant is liable not only for
moral but also for exemplary damages. "Exemplary damages are required by public
policy, for wanton acts must be repressed. They are an antidote so that the poison of
wickedness may not run through the body politic."

33. AIR FRANCE vs. RAFAEL CARRASCOSO, G.R. No. L-21438 , September 28,
1966

Facts:

In March 1958, Rafael Carrascoso and several other Filipinos were tourists en route
to Rome from Manila. Carrascoso was issued a first class round trip ticket by Air France.
But during a stop-over in Bangkok, he was asked by the plane manager of Air France to
vacate his seat because a white man allegedly has a better right than him. Carrascoso
protested but when things got heated and upon advise of other Filipinos on board,
Carrascoso gave up his seat and was transferred to the planes tourist class.

After their tourist trip when Carrascoso was already in the Philippines, he sued Air
France for damages for the embarrassment he suffered during his trip. In court,
Carrascoso testified, among others, that he when he was forced to take the tourist class,
he went to the planes pantry where he was approached by a plane purser who told him
that he noted in the planes journal the following:

First-class passenger was forced to go to the tourist class against his will, and
that the captain refused to intervene

The said testimony was admitted in favor of Carrascoso. The trial court eventually
awarded damages in favor of Carrascoso. This was affirmed by the Court of Appeals.

Air France is assailing the decision of the trial court and the CA. It avers that the
issuance of a first class ticket to Carrascoso was not an assurance that he will be seated
in first class because allegedly in truth and in fact, that was not the true intent between
the parties.

Air France also questioned the admissibility of Carrascosos testimony regarding

the note made by the purser because the said note was never presented in court.

Issue: Whether or not Air France is liable for damages and on what basis.

Held:

Yes. It appears that Air Frances liability is based on culpa-contractual and on culpa
aquiliana.

Culpa Contractual

There exists a contract of carriage between Air France and Carrascoso. There was a
contract to furnish Carrasocoso a first class passage; Second, That said contract was
breached when Air France failed to furnish first class transportation at Bangkok;
and Third, that there was bad faith when Air Frances employee compelled Carrascoso to
leave his first class accommodation berth after he was already, seated and to take a
seat in the tourist class, by reason of which he suffered inconvenience, embarrassments
and humiliations, thereby causing him mental anguish, serious anxiety, wounded
feelings and social humiliation, resulting in moral damages.

The Supreme Court did not give credence to Air Frances claim that the issuance of a first
class ticket to a passenger is not an assurance that he will be given a first class seat.
Such claim is simply incredible.

Culpa Aquiliana

Here, the SC ruled, even though there is a contract of carriage between Air France and
Carrascoso, there is also a tortuous act based on culpa aquiliana. Passengers do not
contract merely for transportation. They have a right to be treated by the carriers
employees with kindness, respect, courtesy and due consideration. They are entitled to
be protected against personal misconduct, injurious language, indignities and abuses
from such employees. So it is, that any rule or discourteous conduct on the part of
employees towards a passenger gives the latter an action for damages against the
carrier. Air Frances contract with Carrascoso is one attended with public duty. The stress
of Carrascosos action is placed upon his wrongful expulsion. This is a violation of public
duty by the Air France a case of quasi-delict. Damages are proper.

34. DR. HERMAN ARMOVIT vs CA, G.R. No. 88561, April 20, 1990

Facts:

Dr. Armovit, a Filipino physician and his family residing in the United States came
to the Philippines on a Christmas visit. They were bumped off at the Manila International
Airport on their return flight to the United States because of an erroneous entry in their
plane ticket relating to their time of departure.
In October 1981, they decided to spend their Christmas holidays with relatives and
friends in the Philippines so they purchased from Northwest three roundtrip Airline tickets
from the United States to Manila and back, plus three tickets for the rest of the children,
though not involved in the suit.
Each ticket of the petitioners which was in the handwriting of Northwests tickets
sales agent contains the following entry on the Manila to Tokyo portion of the return flight
'Manila to Tokyo, NW flight 002 dated 17 January, time 10:30 a.m. Status OK."
On their return trip from Manila to the U.S. scheduled on January 17,1982, Armovit
arrived at the check in counter of Northwest at the Manila International Airport at 9:15 in
the morning, a good one (1) hour and Fifteen (15) minutes ahead of the10:30 a.m.
scheduled flight time recited in their ticket. They were rudely informed that they cannot
be accommodated inasmuch as flight 002 scheduled at 9:15
a.m. was already taking off and the 10:30 a.m. flight entered in their plane ticket was
erroneous.
Previous to the said date of departure the petitioners re-confirmed their
reservations through their representatives who personally presented the three (3) tickets
at the Northwest office. The departure time in the three (3) tickets of the petitioners was
not changed when re-confirmed. The names of petitioners appeared in the passenger
manifest and confirmed.
Petitioner Dr. Armovit protested that because of the bumped-off he will not be able
to keep his appointment with his patients in the United States. Petitioners suffered
anguish, wounded feelings, and serious anxiety day and night of January 17th until the
morning of January 18th when they were finally informed that seats will be available for
them on the flight of that day. The trial court rendered judgment against the airline as
follows: P1,300.00 actual damages; P500,000.00 moral damages;P500,000.00 exemplary
damages; and P100,000.00 nominal damages in favor of Dr. Armovit; also moral
damages of P300,000.00; exemplary damages of P300,000.00; nominal damages of
P50,000.00 each in favor of Mrs. Armovit and Miss Jacqueline Armovit.
The Court of Appeals modified the trial courts judgment as follows: TheP900,000.
00 moral damages and P100,000.00 nominal damages awarded to petitioners were
eliminated; exemplary damages were reduced from P500,000.00to P50,000.00 in favor
of Mrs. Armovit and from P300,000.00 to P20,000.00 in favor of Miss Jacqueline Armovit

Issue: Whether or not the Armovits are entitled for nominal damages.

Held:
NO. NOMINAL DAMAGES CANNOT CO-EXIST WITH ACTUAL OR COMPENSATORY DAMAGES.
 The Supreme Court further modified the Court of Appeals judgment as follows: Actual
damages in favor of Dr. Armovit, P1,300.00 with legal interest from January 17, 1982;
moral damages at P100,000.00, and exemplary damages at P100,000.00 infavor of
Dr. Armovit; Moral damages at P100,000.00 and exemplary damages atP50,000.00 in
favor of Mrs. Armovit; Moral damages at P100,000.00 and exemplary damages of
P20,000.00 in favor of Mrs. Jacqueline Armovit; and attorneys fees at5% of the total
awards under above paragraphs, plus costs of suit, and
The gross negligence committed by Northwest in the issuance of the
tickets with entries as to the time of the flight; the failure to correct such erroneous
entries and the manner by which petitioners were rudely informed that
they were bumped off` are clear indicia of such malice and bad faith and establisht
hat respondent has committed a breach of contract which entitle petitioners to
moral damages.
Considering the circumstances of this case whereby Northwest attended to the
flight of the petitioners, taking care of their accommodation while waiting and
boarding them in the flight back to the United States the following dag;. The Court
finds that petitioners are entitled to moral damages in the amount of P100,000.00
each.
By the same token to provide an example for the public good, an award
of exemplary damages is also proper, the award of the appellate court is adequate.
The deletion of nominal damages by the appellate court is well-taken since there is
an award of actual damages. Nominal damages cannot co-exist with actual and
compensatory damages.

35. CENTENNIAL TRANSMARINE, INC. vs. RUBEN G. DELA CRUZ, G.R. No.
180719, August 22, 2008

Facts:

On May 9, 2000, petitioner Centennial Transmarine, Inc., for and in behalf of its
foreign principal, petitioner Centennial Maritime Services, Corp., hired respondent Dela
Cruz as Chief Officer of the oil tanker vessel "MT Aquidneck," owned by petitioner B+H
Equimar, Singapore, Pte. Ltd., for a period of nine months.
On May 15, 2000, respondent boarded "MT Aquidneck" and performed his
functions as Chief Officer. However, on September 14, 2000, respondent was relieved of
his duties and repatriated to the Philippines. Failing to get a satisfactory explanation from
petitioners for his relief, respondent filed a complaint for illegal dismissal with prayer for
payment of his salaries for the unexpired portion of contract, moral and exemplary
damages and attorneys fees on October 7, 2000.
Upon arrival in Manila, respondent inquired from Mr. Eduardo Jabla, President of
petitioner Centennial Transmarine, Inc., why he was relieved. However, Jabla could only
surmise that his relief was possibly due to the arguments he had with Capt. P. Bajaj, a
company superintendent who came on board in August 2000 while the vessel was
berthed in Los Angeles, regarding deck operations and deck work, and documentation
and safety procedures in the cargo control room.
 On the other hand, petitioner alleged that respondent was relieved of his functions
as Chief Officer due to his inefficiency and lack of job knowledge. Capt. Kowalewski
allegedly informed them of respondents lack of experience in tanker operations which
exposed the vessel and its crew to danger and caused additional expenses. Petitioners
allegedly advised respondent to take a refresher course in order to facilitate his
deployment to another vessel. However, instead of taking a refresher course, respondent
filed a case for illegal dismissal.
On April 23, 2001, Labor Arbiter Francisco A. Robles rendered a Decision dismissing
respondents complaint. He found that respondent was validly dismissed because he
committed acts in violation of his duties as Chief Officer, amounting to breach of trust
and confidence. He noted that on September 6, 2000, Capt. Kowalewski wrote in the
official log book of the vessel that respondent failed to follow entry procedures in loading
oil tanks while the vessel was navigating to Aruba; that the Safety Officer of the vessel
also submitted a report on the violations committed by respondent regarding safety rules
on entry procedures; that respondent admitted his inadequacy or lack of knowledge in
tanker operations; and that respondent was properly apprised of his violations and was
given ample opportunity to be heard.
Respondent appealed to the National Labor Relations Commission which rendered
its Decision7 on November 24, 2003 dismissing respondents appeal for lack of merit.

Issue: Whether or not moral damages and attorneys fees may be awarded without a
clear showing that the dismissal of an employee was attended with bad faith.
Held:

Except for the self-serving allegation that respondent was required to explain why
he should not be relieved for being incompetent, petitioners offered no proof to show
that they furnished respondent a written notice of the charges against him, or that there
was a formal investigation of the charges, or that respondent was furnished a written
notice of the penalty imposed upon him. Respondent was verbally ordered to disembark
the vessel and was repatriated to the Philippines without being told of the reasons for his
relief. Respondents dismissal was not for just cause and without due process. He is
therefore entitled to be paid his salaries for the unexpired portion of his employment
contract.

Thus, we affirm the award of moral damages in the amount of P50,000.00,

exemplary damages in the amount of P50,000.00, and attorneys fees at the rate of 10%
of the aggregate monetary award, the dismissal having been effected without just cause
and without observance of due process.

#36Magsaysay Inc. vs Anastacio Agan

Facts:
Transportation General Averages Stranding of a Vessel

In 1949, SS San Antonio, owned by AMInc, embarked on its voyage to Batanes via Aparri.
It was carrying various cargoes, one of which was owned by Agan. One fine weather day,
it accidentally ran aground the mouth of the Cagayan River due to the sudden shifting of
the sands below. SS San Antonio then needed the services of Luzon Stevedoring Co. to
tow the ship and make it afloat so that it can continue its journey. Later, AMInc required
the cargo owners to pay the expenses incurred in making the ship afloat (P841.40 each).
The expenses, AMInc claims, fall under the General Averages Rule under the Code of
Commerce, which is to be shared by ship owner and cargo owners as well.

ISSUE: Whether or not general averages exist in the case at bar.

HELD: No. General averages contemplate that the stranding of the vessel is intentionally
done in order to save the vessel itself from a certain and imminent danger. Here, the
stranding was accidental and it was made afloat for the purpose of saving the voyage
and not the vessel. Note that this happened on a fine weather day. Also, it cannot be said
that the towing was made to save the cargos, for the cargos were not in danger
imminent danger.

#37 R Transport Corp. vs. Eduardo Pante 599 SCRA 747 (2009)
FACTS:
R Transport operates a bus line which transports passengers from Cubao, Quezon City to
Gapan, Nueva Ecija. 27 January 1995: Pante rode a bus from Cubao (P48 fare). Along
ahighway in Bulacan, the bus hit a tree and a house due to the reckless driving of Johnny
Mediquia. Pante sustained a laceration frontal area, with fracture of the right
humerous1.o His operation, confinement, and medications caused him P30K. He
became unemployed as Goldilocks refused to re-employ him due to his condition.o He
had to undergo a second operation after four years. Hespent another P15k.o The only
assistance petitioner gave was the amount of P7K to reimburse him for the stainless
steel plate placed in his arm. Other than that, petitioner refused to assist Pante. 14
March 1995: Pante sued for damages. Petitioner in its answer denied fault claiming
that it exercised the diligence of a good father of the family in the selection and
supervision of employees, and that the accident was force majeure. The case went on
for 7 years. The delays were due to the multiple postponements and unexplained
absence of petitioners counsel. Itsrights to cross-examine and present evidence were
eventually forfeited as a consequence. RTC ruled in favour of Pante. CA affirmed RTCs
decision.

ISSUE:
W/N Petitioner is liable for damages despite Pante not presenting substantial evidence to
support his claim.

HELD:
1 The bone that extends from shoulder to elbow.YES. Petitioner is liable for damages.
Petitioner, as a common carrier, is expected to exercise extraordinary diligence, and has
the duty to transport its passengerssafely to their destination. ARTICLE 1756 OF THE
CIVIL CODE: In case of death or injuries to passengers, common carriers are presumed at
fault or negligent unless they are able to prove their exercise of extraordinary
diligence. ARTICLE 1759: Common carriers are also liable for the negligence of their
employees.o The liability of common carriers does not cease upon proof that they
exercised extraordinary diligence of a good father of the family in the selection and
supervision of employees. Petitioner cannot claim that it was denied due process which
prevented it from presenting evidence in his defense. Due to the unexplained absences
of his counsel, the hearings had to be constantly postponed, which resulted in a 7-year
delay of the case. It was given the opportunity to present its evidence, but was
considered to have waived its right. Petitioner also contends that the CA and TC erred
in awarding damages in favour of Pante in the amount of P22,000 based on a statement
issued by the Baliuag Hospital and not based on the receipt. The Court held that this was
without merit since in anothercase, the Court awarded damages for hospitalization
expenses based on the statement of account issued by the Makati Medical Center. The
Court also affirmed the award of moral damages, citing Spouses Ong vs. CA where moral
damages were given to passengers who suffered physical injuries. It is the usual practice
toaward moral damages for physical injuries sustained. Pante here suffered physical
pain, mental anguish and anxiety as a result of the accident. P50,000 is proper. An
award of exemplary damages is also proper, as the driver was manning the bus in a
reckless, negligent, and immodest manner. Thus will not provide a good example or a
correction to the public good.
PETITION IS DENIED.

#38 (full text)

(sorry kaayo wala jud joy nakita digested ani)

Air France vs. John Anthony de Camilis, GR No. 1889651, October 13, 2009
Respondent John Anthony de Camilis filed a case for breach of contract of carriage,
damages and attorneys fees against petitioner Air France Philippines/KLM Air France (AF)
in the Regional Trial Court (RTC) of Makati City, Branch 59.

Respondent alleged that he went on a pilgrimage with a group of Filipinos to selected

countries in Europe. According to respondent: (1) AFs agent in Paris failed to inform him
of the need to secure a transit visa for Moscow, as a result of which he was denied entry
to Moscow and was subjected to humiliating interrogation by the police; (2) another AF
agent (a certain Ms. Soeyesol) rudely denied his request to contact his travel
companions to inform them that he was being sent back to Paris from Moscow with a
police escort; Ms. Soeyesol even reported him as a security threat which resulted in his
being subjected to further interrogation by the police in Paris and Rome, and worse, also
lifted his flight coupons for the rest of his trip; (3) AF agents in Rome refused to honor his
confirmed flight to Paris; (4) upon reaching Paris for his connecting flight to Manila, he
found out that the AF agents did not check in his baggage and since he had to retrieve
his bags at the baggage area, he missed his connecting flight; (5) he had to shoulder his
extended stay in Paris for AFs failure to make good its representation that he would be
given a complimentary motel pass and (6) he was given a computer print-out of his flight
reservation for Manila but when he went to the airport, he was told that the flight was
overbooked. It was only when he made a scene that the AF agent boarded him on an AF
flight to Hongkong and placed him on a connecting Philippine Airlines flight to Manila.

The RTC found that AF breached its contract of carriage and that it was liable to pay
P200,000 actual damages, P1 million moral damages, P1 million exemplary damages and
P300,000 attorneys fees to respondent.

On appeal, the Court of Appeals (CA) affirmed the RTC decision with modifications.[1]

The CA ruled that it was respondent (as passenger), and not AF, who was responsible for
having the correct travel documents. However, the appellate court stated that this fact
did not absolve AF from liability for damages.

The CA agreed with the findings of fact of the RTC that AFs agents and representatives
repeatedly subjected respondent to very poor service, verbal abuse and abject lack of
respect and consideration. As such, AF was guilty of bad faith for which respondent
ought to be compensated.
The appellate court affirmed the award of P1 million moral damages and P300,000
attorneys fees. However, it reduced the actual damages to US$906 (or its peso
equivalent). According to the CA, this amount represented the expenses respondent
incurred from the time he was unable to join his group in Rome (due to the unfounded
communiqu of Ms. Soeyesol that he was a security threat) up to the time his flight
reservation from Paris to Manila was dishonored for which he was forced to stay in Paris
for two additional days. The appellate court pointed out that, on the other hand,
respondents expenses for the Moscow leg of the trip must be borne by him as AF could
not be faulted when he was refused entry to Moscow for lack of a transit visa.

The CA also decreased the exemplary damages from P1 million to P300,000. The CA
further imposed interest at the rate of 6% p.a. from the date of extrajudicial demand[2]
until full satisfaction, but before judgment becomes final. From the date of finality of the
judgment until the obligation is totally paid, 12% interest p.a. shall be imposed.

Hence, this recourse.

Essentially, AF assails the CAs award of moral and exemplary damages and attorneys
fees to respondent as the alleged injury sustained was not clearly established. AF added
that, even if respondent was entitled to the same, the amounts awarded were exorbitant.
Lastly, it argued that the interest rate should run not from the time of respondents
extrajudicial demand but from the time of judgment of the RTC.

We deny the petition.

Preliminarily, on the issue pertaining to whether or not respondent was entitled to

damages and attorneys fees, the same entails a resort to the parties respective
evidence. Thus, AF is clearly asking us to consider a question of fact.

Time and again, we have held that the jurisdiction of this Court in a petition for review on
certiorari under Rule 45 is limited only to questions of law,[3] save for certain exceptions,
[4] none of which are present in this case.

Both the RTC and the CA have competently ruled on the issue of respondents entitlement
to damages and attorneys fees as they properly laid down both the factual and legal
bases for their respective decisions. We see no reason to disturb their findings.

The above liabilities of AF shall earn legal interest pursuant to the Courts ruling in
Construction Development Corporation of the Philippines v. Estrella,[5] citing Eastern
Shipping Lines, Inc. v. CA.[6]

Pursuant to this ruling, the legal interest is 6% p.a. and it shall be reckoned from April 25,
2007 when the RTC rendered its judgment, not from the time of respondents extrajudicial
demand. This must be so as it was at the time the RTC rendered its judgment that the
quantification of damages may be deemed to have been reasonably ascertained. Then,
from the time this decision becomes final and executory, the interest rate shall be 12%
p.a. until full satisfaction.

WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals in CA-
G.R. CV No. 90151 is AFFIRMED. Petitioner is ordered to PAY legal interest of 6% p.a. from
the date of promulgation of the decision dated April 25, 2007 of the Regional Trial Court,
Branch 59, Makati City and 12% p.a. from the time the decision of this Court attains
finality, on all sums awarded until their full satisfaction.

#39G.R. No. 171092

March 15, 2010EDNA DIAGO LHUILLIER, Petitioner, vs.BRITISH AIRWAYS,
Respondent.

Facts:
On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for
damages againstrespondent British Airways before the Regional Trial Court (RTC) of
Makati City. She alleged that onFebruary 28, 2005, she took respondents flight 548 from
London, United Kingdom to Rome, Italy. Onceon board, she allegedly requested Julian
Halliday (Halliday), one of the respondents flight attendants, toassist her in placing her
hand-carried luggage in the overhead bin. However, Halliday allegedly refused tohelp
and assist her, and even sarcastically remarked that "If I were to help all 300 passengers
in thisflight, I would have a broken back!"Petitioner further alleged that when the plane
was about to land in Rome, Italy, another flightattendant, Nickolas Kerrigan (Kerrigan),
singled her out from among all the passengers in the businessclass section to lecture on
plane safety. Allegedly, Kerrigan made her appear to the other passengers tobe ignorant,
uneducated, stupid, and in need of lecturing on the safety rules and regulations of the
plane.Affronted, petitioner assured Kerrigan that she knew the planes safety
regulations being a frequenttraveler. Thereupon, Kerrigan allegedly thrust his face a
mere few centimeters away from that of thepetitioner and menacingly told her that "We
dont like your attitude."Upon arrival in Rome, petitioner complained to respondents
ground manager and demanded anapology. However, the latter declared that the flight
stewards were "only doing their job."Thus, petitioner filed the complaint for damages,
praying that respondent be ordered to pay P5million as moral damages, P2 million
as nominal damages, P1 million as exemplarydamages, P300,000.00 as attorneys
fees,P200,000.00 as litigation expenses, and cost of the suit.

Issue:
Whether Philippine courts have jurisdiction over a tortious conduct committed against a
Filipinocitizen and resident by airline personnel of a foreign carrier travelling beyond the
territorial limit of anyforeign country; and thus is outside the ambit of the Warsaw
Convention.

Held:
The Warsaw Convention applies because the air travel, where the alleged
tortious conductoccurred, was between the United Kingdom and Italy, which
are both signatories to the WarsawConvention.Article 1 of the Warsaw Convention
provides:1. This Convention applies to all international carriage of persons, luggage or
goods performed byaircraft for reward. It applies equally to gratuitous carriage
by aircraft performed by an airtransport undertaking.2. For the purposes of this
Convention the expression "international carriage" means any carriagein which,
according to the contract made by the parties, the place of departure and the place
ofdestination, whether or not there be a break in the carriage or a transhipment, are
situated eitherwithin the territories of two High Contracting Parties, or within
the territory of a single HighContracting Party, if there is an agreed stopping place
within a territory subject to the sovereignty,suzerainty, mandate or authority of another
Power, even though that Power is not a party to thisConvention. A carriage without such
an agreed stopping place between territories subject to thesovereignty, suzerainty,
mandate or authority of the same High Contracting Party is not deemedto be
international for the purposes of this Convention. (Emphasis supplied)Thus, when the
place of departure and the place of destination in a contract of carriage are situated
withinthe territories of two High Contracting Parties, said carriage is deemed an
"international carriage". TheHigh Contracting Parties referred to herein were the
signatories to the Warsaw Convention and thosewhich subsequently adhered to it.In the
case at bench, petitioners place of departure was London, United Kingdom while her
placeof destination was Rome. Italy, signed and ratified the warsaw convention. As such
the transport of the petitioner is deemed to be an "international carriage" within the
contemplation of the Warsaw convention.

#40 AMERICAN AIRLINES, petitioner, vs. COURT OF APPEALS,

HON. BERNARD L. SALAS and DEMOCRITO MENDOZA, respondents
G.R No. 116044-45. March 9, 2000

Facts:

Private respondent purchased from Singapore Airlines in Manila conjunction tickets from
Manila-Singapore-Athens-Larnaca-Rome-Turin-Zurich-Geneva-Copenhagen-New York. In
Geneva, he decided to forego his trip to Copenhagen and go straight to New York. In the
absence of a direct flight under his conjunction tickets from Geneva to New York, he
exchanged the unused portion of the conjunction ticket for a one way ticket from Geneva
to New York from American Airlines, which issued its own ticket to respondent in Geneva
and claimed the value of the unused portion of the conjunction ticket from the
International Air Transport Association (IATA) clearing house in Geneva. In September,
1989, respondent filed an action for damages before the Regional Trial Court of Cebu for
the alleged embarrassment and mental anguish he suffered at the Geneva Airport when
American Airlines security officers prevented him from boarding the plane.

Issue:

Whether or not the issuance of American Airlines of a new ticket in exchange of the
conjunction ticket the respondent purchased in Manila bar him from seeking recourse in
Philippine courts.

Ruling:

The petitioner contends that under Article 28 of the Warsaw Convention, action for
damages may only be brought upon the following courst:

a.) Domicile of the carrier

b.) Carriers principal place of business
c.) Place where carrier has a place of business
d.) Place of destination

Since neither of these elements is present in the case, the petitioner contends that
plaintiff cannot file the case in the Philippines. He further posits that the second contract
cannot be deemed as an extension of the first as the petitioner airline is not a
participating airline in any of the destinations under the first contract.
Respondent on the other hand contends that the second contract she entered into at
Geneva is part and parcel of the first contract, thus the third option under Article 28 of
the Warsaw Convention would apply to him. He further pointed out that petitioner cannot
deny the contract of agency with Singapore Airlines after it honored the conjunction
tickets issued by the latter.

The court ruled that petitioners argument is void of merit with reference to Article 1(3)
of the Warsaw Convention. According to the said article, transportation to be performed
by several carriers shall be deemed as one and undivided. The number of tickets issued
does not detract from the oneness of the contract of carriage. Hence, the third option of
the plaintiff under Article 28 of the Warsaw Convention is clothed with jurisdiction.

41] Fernandez vs. Thompson, (1 case) GR No. 12475, March 21, 1918 (another
case)
Fernandez vs. Thompson, GR. 13229, Sept 26,1918
FACTS: On Sept 13, 1914 , the British steamer Bengloe owned by W. Thompson & co.,
while en route from Manila to European ports, stranded on the Mayone shoal in the Sulu
sea some twenty-five miles from Brook's Point on the Island of Palawan. On the same
day, the first and third officers of the vessel, with four seamen, were sent in search of
assistance. No word having been received from these men, on 22 September, 1914,
another party, consisting of the second officer and some members of the crew, was
dispatched on a similar mission. On October 1, the captain later arrived at Puerto
Princesa, Palawan. While at that place, the captain sent the following telegram to the
agents of the vessel at Manila: Bengloe abandoned last Thursday eighteen days on
Corral Reef no assistance whatever to hand ship dangerous position settling down
forward and listed heavily to Port Cargo in aft holds possible to salve. Crew all safe.

Plaintiffs were residents of Palawan. On learning of the abandonment of the Bengloe by

her crew, these gentlemen formed a partnership, with a capital of P1,500, for the
purpose of salving the vessel and cargo. They hired the launch Florence of between
thirty and forty tons capacity from the provincial authorities of Puerto Princesa, and with
a number of laborers proceeded to the wreck to ascertain its condition.
The London Salvage Association acting in the interest of the underwriters of the ship and
the cargo, and with the consent of the ship's agents, engaged Ker & Co. to take charge of
the salvage operations. The latter firm in its turn employed William Swan, an engineer
and marine surveyor, to conduct the work. Swan left Manila on the Coast Guard
Cutter Polillo on October 6 for the scene of the wreck. Swan, the captain of the Bengloe,
and their assistants arrived at the wreck on October 9, that is, two days after the arrival
of Fernandez, Holmsen, and Macleod, and after the copra and other effects had been
removed. Macleod and the two laborers found on board were shown scant hospitality by
the second party, and were pointedly given to understand that their presence was not
desired. When the other plaintiffs Holmsen and Fernandez, returned on the launch, they
were prevented from taking any further part in the salvage operations.
Fernandez, Holmsen, and Macleod began action in the Court of First Instance of the city
of Manila to recover from the owners of the Bengloeand other parties the sum of
P179,780, claimed to be due as compensation for the salvage of merchandise and
effects of the value of P2,500 from the steamship Bengloe and as damages because of
having been forcibly deprived of the possession of the steamship and thereby prevented
from prosecuting salvage operations.
The defendants originally claimed the sole and exclusive possession of the wreck on the
ground that they had not abandoned it but only left to seek assistance. The trial court,
however, found that the appearances justified the conclusion that the Bengloe was
abandoned by the defendants on October 7, 1914, and that the plaintiffs commenced
the salvage operations in entire good faith. The trial court further found that the
equipment of the plaintiffs was utterly inadequate for the task they endeavored to
undertake, and that they had no right to insist upon retaining possession of the wreck as
against the representative of the owners and underwriters, who had superior equipment
and ample financial resources.

ISSUES: (1) Had the plaintiffs adequate equipment to effect the salvage of the ship and
cargo?
(2) Had plaintiffs the right to insist upon retaining possession of the Bengloe and her
cargo for the purpose of salvage as against the salvors employed by the owners and
underwriters?

HELD: NO. NO.

The only equipment actually in the possession of the plaintiffs for salving
the Bengloe and he cargo was a small launch and some baskets and sacks. This was the
best salvage equipment available in Puerto Princesa on the Island of Palawan. That such
equipment was inadequate for the salvage of a vessel valued at P100,000, laden with
sugar, copra, and bunker coal of a value of P352,500, perilously situated, seems
undeniable. But plaintiffs also made futile efforts, presumably in good faith, to acquire
adequate salvage equipment. We thus have presented this unique situation: Well-
intentioned men with inadequate equipment are first on the scene of a wreck, and while
in technical possession, are driven off and operations begun by a second salvage party
under an expert superintendent and with adequate equipment.
The services rendered by the plaintiffs contributed immediately to the preservation of a
small amount of property on the stranded vessel, but as an actual fact, their further
exertions, however meritorious they were intended to be were not successful in any
degree and cannot be compensated in damages.

Manila Railroad Co. vs Macondray, GR No. 12475, March 21, 1918

FACTS: plaintiff, the Manila Railroad Company, upon February 24, 1916, in the Court of
First Instance of the city of Manila to recover of the defendant, Macondray and Co., the
sum of P75,000, the alleged value of salvage service rendered on April 6, 1915, by the
steamer Hondagua, owned by the plaintiff, to the steamer Seward, which was owned by
the defendant. At the hearing judgment was rendered in favor of the plaintiff for the sum
of P4,000. From this judgment both parties have appealed, the plaintiff insisting that the
amount allowed by the lower court is inadequate, the defendant that it is excessive.
Seward left Saigon for the Philippine Islands, encountering a moderately high sea. The
ship was laden with a cargo of rice, the weight of which, taken in connection with the
condition of the sea, caused the vessel to spring a leak, and her master felt compelled to
return to Saigon. At this juncture the steamship Hondagua was sighted, whereupon the
Seward flew the international code signal "In distress; want immediate assistance." The
Hondagua changed her course and approached the Seward, the latter in succession
displaying the following signals: "I have sprung a leak;" "I wish to be taken in tow;" "Can
you spare hawser;" and "The leak is gaining rapidly." In response to signals from the
Hondagua the Seward sent her own boat to the Hondagua for a heaving line, by means
of which a hawser was passed from the Hondagua to the Seward and the former, with
the latter in tow, then proceeded at half speed towards Saigon.
ISSUES: (1) Is the plaintiff entitled to recover from the owner of the Seward, in this
action, remuneration for saving the cargo as well as for saving the ship?
(2) What is the reasonable compensation which should be allowed in this action?

HELD: (1) yes. There is no question as to the liability of the defendant, as owner of the
Seward, for the service rendered by the plaintiff in towing that ship to safety. Nor is there
any dispute over the fact that the service rendered was a salvage service and
remunerable as such.
The salvage allowance should be apportioned between the ship and cargo in the
proportion of their respective values, the same as in a case of general average; and
neither is liable for the salvage due from the other. The salvor must always bear in mind
that . . . the interests in ship and in cargo are only severally liable, each for its
proportionate share of the salvage remuneration. If one who has saved both ship and
cargo brings before the court in his salvage action only the ship, or only the cargo, he
will get judgment only for such an amount of reward as the court finds to be due in
respect of the value of that property which is before the court.
(2) In fixing the amount of compensation to be awarded for salvage service, it has bee n
declared by the Supreme Court of the United States that the principal circumstances to
be taken into consideration are: (1) The labor expended by the salvors in rendering the
salvage service; (2) The promptitude, skill, and energy displayed in rendering the service
and saving the property; (3) The value of the property employed by the salvors in
rendering the service, and the danger to which such property was exposed; (4) The risk
incurred by the salvors in rescuing the property from the impending peril; (5) The value
of the property salved; and (6) The degree of danger from which the property was
rescued.

In applying these criteria to the case now before us, the following circumstances, not
already noted, are pertinent, namely: the Hondagua was delayed in her voyage about
nine hours, during five of which she was engaged in towing the Seward. This delay
caused her to enter at Iloilo, the port of her arrival instead of the late afternoon of the
previous day; but the unloading of her cargo was not thereby retarded. Considered on
the basis of charter party contract under which she was operating, the Hondagua was
earning about P300 per day, which was considered reasonable compensation for her use,
including the services off officers and crew. The service rendered did not involve any
further expenditure of labor on the part of the salvors than such as was commonly
incident to working the ship. No unusual display of skill and energy on their part was
required; and the condition of the sea was not such as to involve any special risk either
to the Hondagua or her crew. Finally, the danger from which the Seward was rescued was
real, as the ship when taken in tow was confronted by a serious peril. The value of the
vessel when saved was, we think, properly fixed by the trial court at P20,000.

42] PEDRO VASQUEZ vs. CA, G.R. No. L-42926 September 13, 1985
Facts: MV Pioneer Cebu left the port of Manila and bounded for Cebu. Its officers were
aware of the upcoming typhoon Klaring that is already building up somewhere in
Mindanao. There being no typhoon signals on their route, they proceeded with their
voyage. When they reached the island of Romblon, the captain decided not to seek
shelter since the weather was still good. They continued their journey until the vessel
reached the island of Tanguingui, while passing through the island the weather suddenly
changed and heavy rains fell. Fearing that they might hit Chocolate island due to zero
visibility, the captain ordered to reverse course the vessel so that they could weather out
the typhoon by facing the strong winds and waves. Unfortunately, the vessel struck a
reef near Malapascua Island, it sustained a leak and eventually sunk.

The parents of the passengers who were lost due to that incident filed an action against
Filipinas Pioneer Lines for damages. The defendant pleaded force majeure but the Trial
Court ruled in favor of the plaintiff. On appeal to the Court of Appeals, it reversed the
decision of the lower stating that the incident was a force majeure and absolved the
defendants from liability.

Issue: Whether of not Filipinas Pioneer Lines is liable for damages and presumed to be at
fault for the death of its passenger?

Held: The Supreme Court held the Filipinas Pioneer Lines failed to observe that
extraordinary diligence required of them by law for the safety of the passengers
transported by them with due regard for all necessary circumstance and unnecessarily
exposed the vessel to tragic mishap. Despite knowledge of the fact that there was a
typhoon, they still proceeded with their voyage relying only on the forecast that the
typhoon would weaken upon crossing the island of Samar. The defense of caso fortuito is
untenable. To constitute caso fortuito to exempt a person from liability it necessary that
the event must be independent from human will, the occurrence must render it
impossible for the debtor to fulfill his obligation in a normal manner, the obligor must be
free from any participation or aggravation to the injury of the creditor. Filipina Pioneer
Lines failed to overcome that presumption o fault or negligence that arises in cases of
death or injuries to passengers.

45] NEGROS NAVIGATION CO vs. CA G.R. No. 110398. November 7, 1997

Facts: Private respondent Ramon Miranda purchased from the Negros Navigation Co.,
Inc. four special cabin tickets. The tickets were for Voyage No. 457-A of the M/V Don Juan,
leaving Manila and going to Bacolod.

Subsequently, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T
Tacloban City, an oil tanker owned by the Philippine National Oil Company (PNOC) and
the PNOC Shipping and Transport Corporation (PNOC/STC). As a result, the M/V Don Juan
sank. Several of her passengers perished in the sea tragedy. The bodies of some of the
victims were found and brought to shore, but the four members of private respondents
families were never found.

Private respondents filed a complaint against the Negros Navigation, the Philippine
National Oil Company (PNOC), and the PNOC Shipping and Transport Corporation
(PNOC/STC), seeking damages for the death. Petitioner, however, denied that the four
relatives of private respondents actually boarded the vessel as shown by the fact that
their bodies were never recovered. Petitioner further averred that the Don Juan was
seaworthy and manned by a full and competent crew, and that the collision was entirely
due to the fault of the crew of the M/T Tacloban City.

In finding petitioner guilty of negligence and in failing to exercise the extraordinary

diligence required of it in the carriage of passengers, both the trial court and the
appellate court relied on the findings of this Court in Mecenas v. Intermediate Appellate
Court, which case was brought for the death of other passengers. In Mecenas, SC found
petitioner guilty of negligence in (1) allowing or tolerating the ship captain and crew
members in playing mahjong during the voyage, (2) in failing to maintain the vessel
seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to
carry. Petitioner is, therefore, clearly liable for damages to the full extent.

Petitioner criticizes the lower courts reliance on the Mecenas case, arguing that,
although this case arose out of the same incident as that involved in Mecenas, the
parties are different and trial was conducted separately. Petitioner contends that the
decision in this case should be based on the allegations and defenses pleaded and
evidence adduced in it or, in short, on the record of this case.

Issues:

1. Whether the ruling in Mecenas v. Court of Appeals, finding the crew members of
petitioner to be grossly negligent in the performance of their duties, is binding in this
case;

2. Whether the award for damages in Mecenas v. Court of Appeals is applicable in this
case.

Held:

1. No. The contention is without merit.

Adherence to the Mecenas case is dictated by this Courts policy of maintaining stability
in jurisprudence. Where, as in this case, the same questions relating to the same event
have been put forward by parties similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis is a bar to any attempt to
relitigate the same issue.

2. No, it is not applicable.

Petitioner contends that, assuming that the Mecenas case applies, private respondents
should be allowed to claim only P43,857.14 each as moral damages because in the
Mecenascase, the amount of P307,500.00 was awarded to the seven children of the
Mecenas couple. Here is where the principle of stare decisis does not apply in view of
differences in the personal circumstances of the victims. For that matter, differentiation
would be justified even if private respondents had joined the private respondents in the
Mecenas case.

The doctrine of stare decisis works as a bar only against issues litigated in a previous
case. Where the issue involved was not raised nor presented to the court and not passed
upon by the court in the previous case, the decision in the previous case is not stare
decisis of the question presently presented.

The Mecenas case cannot be made the basis for determining the award for attorneys
fees. The award would naturally vary or differ in each case.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and
petitioner is ORDERED to pay private respondents damages.

46] Caltex vs Sulpicio Lines, Gr No. 131166, September 30, 1999

FACTS:

December 19, 1987 8 pm: motor tanker MT Vector owned and operated by Vector
Shipping Corporation carried 8,800 barrels of petroleum products of Caltex by virtue
of a charter contract

December 20, 1987 6:30 am: MV Doa Paz passenger and cargo vessel owned and
operated by Sulpicio Lines, Inc. left the port of Tacloban headed for Manila with 1,493
passengers indicated in the Coast Guard Clear

December 20, 1987: MT Vector collided with MV Doa Paz in the open sea within
the vicinity of Dumali Point between Marinduque and Oriental Mindoro, killing almost
all the passengers and crew members of both ships except for 24 survivors

MV Doa Paz carried an estimated 4,000 passengers most were not in the
passenger manifest

board of marine inquiry in BMI Case No. 653-87 after investigation found that the
MT Vector, its registered operator Francisco Soriano, and its owner and actual
operator Vector Shipping Corporation, were at fault and responsible for its collision
with MV Doa Paz

February 13, 1989: Teresita Caezal and Sotera E. Caezal, Sebastian Caezals
wife and mother respectively, filed a complaint for Damages Arising from Breach of
Contract of Carriage against Sulpicio Lines, Inc. for the death of Sebastian E.
Caezal (public school teacher 47 years old) and his 11-year old daughter Corazon G.
Caezal

Sulpicio, in turn, filed a 3rd party complaint against Francisco Soriano, Vector
Shipping Corporation and Caltex

Sulpicio alleged that Caltex chartered MT Vector with gross and evident
bad faith knowing fully well that MT Vector was improperly manned, ill-equipped,
unseaworthy and a hazard to safe navigation

RTC: dismissed the third party complaint and favored the Caezal's against Sulpicio
Lines

CA: included Caltex as liable party

ISSUE: W/N Caltex as a voyage charterer of a sea vessel liable for damages resulting
from a collision between the chartered vessel and a passenger ship

HELD: NO. Grants Petition. CA set aside.

 respective rights and duties of a shipper and the carrier depends not on whether
the carrier is public or private, but on whether the contract of carriage:

bill of lading or equivalent shipping documents; or

charter party or similar contract on the other

Caltex and Vector entered into a contract of affreightment, also known

as a voyage charter

charter party

contract by which an entire ship, or some principal part thereof, is let by the
owner to another person for a specified time or use

Charter parties fall into three main categories:

(1) Demise or bareboat

charterer mans the vessel with his own people and becomes, in effect,
the owner for the voyage or service stipulated, subject to liability for damages caused
by negligence

common carrier becomes private

contract of affreightment

one by which the owner of a ship or other vessel lets the whole or part
of her to a merchant or other person for the conveyance of goods, on a particular
voyage, in consideration of the payment of freight

may be either:

(2)time charter - wherein the leased vessel is leased to the

charterer for a fixed period of time

(3) voyage charter - wherein the ship is leased for a single

voyage

charter-party provides for the hire of the vessel only, either for a
determinate period of time or for a single or consecutive voyage, the ship owner to
supply the ships store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship

charterer is free from liability to third persons in respect of the ship

does not convert the common carrier into a private carrier

Carriage of Goods by Sea Act :

Sec. 3. (1) The carrier shall be bound before and at the beginning of the voyage to
 exercise due diligence to -

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

xxx xxx xxx

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For
a vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with a sufficient number of competent officers and crew. The failure of a
common carrier to maintain in seaworthy condition the vessel involved in its contract
of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code

a passenger or a shipper of goods is under no obligation to conduct an inspection

of the ship and its crew, the carrier being obliged by law to impliedly warrant its
seaworthiness

nature of the obligation of Caltex demands ordinary diligence like any other
shipper in shipping his cargoes

Caltex and Vector Shipping Corporation had been doing business since 1985, or for
about two years before the tragic incident occurred in 1987. Past services rendered
showed no reason for Caltex to observe a higher degree of diligence.

Caltex had the right to presume that the ship was seaworthy as even the Philippine
Coast Guard itself was convinced of its seaworthiness .