KILUSANG MAYO UNO LABOR CENTER VS GARCIA

239 SCRA 538 (1994)

Facts: The Kilusang Mayo Uno Labor Center (KMU) assails the constitutionality and validity of a memorandum which,
among others, authorize provincial bus and jeepney operators to increase or decrease the prescribed transportation
fares without application therefore with the LTFRB, and without hearing and approval thereof by said agency.

Issue: Whether or not the absence of notice and hearing and the delegation of authority in the increase or decrease of
transportation fares to provincial bus and jeepney operators is illegal?

Held: Under Section 16 (c) of the Public Service Act, as amended, the legislature delegated to the defunct Public
Service Commission the power of fixing the rates of public services. LTFRB, the existing regulatory body today, is
likewise vested with the same under Executive Order 202.

The authority given by the LTFRB to the bus operators to set fares over and above the authorized existing fare
is illegal and invalid, as it is tantamount to undue delegation of legislative authority. Under the maxim potestas
delegate non delegari potest what has been delegated cannot be delegated.

The policy allowing provincial bus operators to change and increase their fares would result not only to a
chaotic situation but to an anarchic state of affairs. This would leave the riding public at the mercy of transport
operators who may increase fares, every hour, every day, every month or every year, whenever it pleases them or
whenever they deem it necessary to do so. Furthermore, under the Section 16 (a) of Public Service Act, there must be
proper notice and hearing in the fixing of rates, to arrive at a just and reasonable rate acceptable to both the public
utility and the public.

MAYER STEEL PIPE CORP. VS. CA (19 KIME 1997)

Facts: Hongkong Government Supplies Department henceforth, Hong Kong contracted petitioner Mayer Steel Pipe
Corp to manufacture and supply various steel pipes and fittings from August to October 1983, Mayer shipped the said
items to Hong Kong. Prior to shipment the items were insured against all risks with respondent South Sea Surety and
Insurance Co. and Charter Insurance Corp for $212,772.09 with South Sea and $149,470 with Charter.

Petitioners jointly appointed Industrial Inspection Inc as 3 rd party inspector to examine the items to see if they
were in accordance with the contract. They certified it as such prior to shipment. However, when they reached Hong
Kong it was revealed that a substantial portion was damaged. Petitioners now claim for damages against the
respondents for indemnity under the insurance contract.

Respondents paid part of the petitioners demand but declined the rest claiming that the insurance surveyors
report allegedly showed that the damage was a factory defect and hence not covered by the insurance policies. The
lower court ruled in favor of the petitioner finding the damage not caused by manufacturing defects. It also noted that
the insurance contract insured against all risks or all causes of conceivable loss or damage save those caused by
fraud or intentional misconduct. At the court of appeals the CA found the all risks provision covered the damage
endured but set aside the decision because the complaint had been bared by prescription. Sec 3(6) of the COGSA
specifically bared it because it had been more than 1 year since the damage had been done before the demand was
made.

Held: The cause of action had not yet prescribed.

Ratio: Sec 3(6) of the COGSA covers only the liability of the carrier which is extinguished if no suit is brought
within a period of one year. However, the liability of the insurer is not extinguished because the COGSA governs the
relationship between carrier and shipper, and consignee and insurer. It defines a contract of carriage. The relationship
at bar is properly governed by the Insurance code. Thus the CAs finding of prescription as per the COGSA is
overturned.

MERCHANTS INSURANCE COMPANY VS. ALEJANDRO

(145 SCRA 42)

Facts: Plaintiff Choa Tiek Seng filed a complaint against the petitioner before the then Court of First Instance of
Manila for recovery of a sum of money under the marine insurance policy on cargo. Mr. Choa alleged that the goods
he insured with the petitioner sustained loss and damage in the amount of P35, 987.26. The said goods were
delivered to the arrastre operator E. Razon, Inc., on December 17, 1976 and on the same date were received by the
consignee-plaintiff.

Petitioner disclaims liability and imputes against plaintiff the commission of fraud. A similar complaint was filed
by Joseph Benzon Chua against the petitioner for recovery under the marine insurance policy for cargo alleging that
the goods insured with the petitioner sustained loss and damage in the sum of P55,996.49. The goods were delivered
to the plaintiff-consignee on or about January 25-28, 1977.

Petitioner filed third-party complaints against private respondents for indemnity, subrogation, or
reimbursement in the event that it is held liable to the plaintiff.
The private respondents, carriers Frota Oceanica Brasiliera and Australia-West Pacific Line alleged in their
separate answers that the petitioner 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

Petitioner contended that provision relied upon by the respondents applies only to the shipper and not to the
insurer of the goods.

Respondent judge dismissed both third-party complaints.

Issue: Whether or not the one-year period within which to file a suit against the carrier and the ship, in case of
damage or loss as provided for in the Carriage of Goods by Sea Act applies to the insurer of the goods.

Held: The coverage of the 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 we follow the petitioner's
argument that 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."

In the case at bar, the petitioner's action has prescribed under the provisions of the Carriage of Goods by Sea
Act. Hence, whether it files a third-party complaint or chooses to maintain an independent action against herein
respondents is of no moment.

ANG VS. AMERICAN STEAMSHIP AGENCIES (19 SCRA 631)

Facts: Yau Yue Commercial Bank of Hongkong agreed to sell 140 packages of galvanized steel durzinc sheets to
Herminio Teves for $32,458.26. Said agreement was subject to the following terms: the purchase price should be
covered by a bank draft which should be paid by Teves in exchange for the delivery to him of the bill of lading to be
deposited with honking and Shanghai Bank of Manila; that Teves would present said bill of lading to carriers agent,
American Steamship Agencies which would then issue the permit to deliver imported articles to be presented to the
Bureau of customs to obtain the release of the articles.

Yau Yue shipped the articles aboard S.S. Tensai Maru owned by Nissho Shipping Co., of which the American
Shipping is the agent in the Philippines.

When the Articles arrived in manila, Honkong Shanghais Bank notified Teves of the arrival of the goods and
requested for the payment of the demand draft. Teves, however, failed to pay the demand draft. So, the bank returned
the bill of lading and the demand draft to Yau Yue which endorsed the bill of lading to Domingo Ang.

Despite his non-payment, Teves was able to obtain a bank guarantee in favor of the American Steamship
Agencies, the carriers agent. Thus, Teves succeeded in securing a permit to deliver imported articles from the
carriers agent, which he presented to the Bureau of Customs, that released the said articles to him.

Subsequently, Domingo Ang claimed the articles from American Steamship, by presenting the indorsed bill of
lading, but he was informed that it had delivered the articles to Teves. Ang filed a complaint in the Court of First
Instance of Manila against American shipping agencies, for having wrongfully delivered the goods.

The American Steamship filed for a motion to dismiss, citing the carriage of Goods by Sea Act, section 3
paragraph 4, which states: in any event, the carrier and the ship shall be discharged from all liability in respect to loss
or damage unless suit is brought within one year, after delivery of goods or the date when the goods should have
been delivered.

Thus, the lower court dismissed the action, on the ground of prescription.

Issue: Whether or not the Carriage of Goods by Sea Act Section 3, Paragraph 4, applies to the case at bar?
Held: The provision of the law speaks of loss or damage. But there was no damage caused to the goods which
were delivered intact to Herminio Teves.

As defined by the Civil Code and as applied to section 3, paragraph 4, of the Carriage of Goods by sea Act,
loss contemplates a situation where no delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared that their existence is unknown or they cannot be recovered. It does
not include a situation where there was indeed delivery, but delivery to the wrong person.

The applicable rule on prescription is that found in the Civil Code, either: ten years for breach of contract or
four years for quasi-delict. In either case, the plaintiffs cause of action has not yet prescribed. Thus, the case is
remanded to the court a quo for further proceedings.

TRANS-ASIA SHIPPING VS. CA (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.

VALENZUELA HARDWOOD VS. CA (30 JUNE 1997,274 SCRA 643)

Facts: On January 16, 1984, plaintiff entered into an agreement with Seven Brothers Shipping corporation whereby
the latter undertook to load on board its vessel M/V Seven Ambassadors 940 Lauan round logs for shipment from
Isabela to Manila. On January 20, plaintiff insured the cargo with South Sea Surety and Insurance for two million
pesos. However on January 25, 1984, the M/V Seven Ambassador sank, resulting in the loss of petitioners logs.
Pursuant to the loss, petitioner filed a claim with South Sea Surety and Insurance for the insured amount of the logs,
but the latter refused, denying liability under the policy. Petitioner likewise filed a formal claim against Seven Brothers
Shipping Corporation for the value of the lost logs, but the latter likewise denied their claim.

The trial court found for the plaintiff, holding South Sea and Seven Brothers liable for the loss. On appeal, the
Court of Appeals affirmed in part the decision of the trial court. The Court of Appeals affirmed the liability of South Sea
Surety and Assurance but exonerated Seven Brothers, stating that the latter is a private carrier therefore the
provisions on common carriers is not applicable to their contract. Hence the present appeal.
Issue: Whether or not respondent Court of Appeals committed a reversible error in upholding the validity of the
stipulation in the charter party executed between petitioner and Seven Brothers exempting the latter from liability of
loss arising from the negligence of its captain.

Held: The decision of the Court of appeals is correct. The contract between petitioner and Seven Brothers is one of
Private Carriage hence the provisions on common carriage do not apply. In a contract of private carriage parties are
free to stipulate that the responsibility for the cargo rests solely in the charterer, such stipulations are valid because
they are freely entered into by the parties and the same is not contrary to law, morals, good custom, public order or
public policy.

LITONJUA SHIPPING VS. NATIONAL SEAMEN BOARD (176 SCRA 189)

Facts: Petitioner Litonjua is the duly appointed local crewing Managing Office of the Fairwind Shipping Corporation
('Fairwind). The M/V Dufton Bay is an ocean-going vessel of foreign registry owned by the R.D. Mullion Ship Broking
Agency Ltd. ("Mullion"). On 11 September 1976, while the Dufton Bay was in the port of Cebu and while under charter
by Fairwind, the vessel's master contracted the services of, among others, private respondent Gregorio Candongo to
serve as Third Engineer for a period of twelve (12) months with a monthly wage of US$500.00. This agreement was
executed before the Cebu Area Manning Unit of the NSB. Thereafter, private respondent boarded the vessel. On 28
December 1976, before expiration of his contract, private respondent was required to disembark at Port Kelang,
Malaysia, and was returned to the Philippines on 5 January 1977. The cause of the discharge was described in his
Seaman's Book as 'by owner's arrange".
Shortly after returning to the Philippines, private respondent filed a complaint before public respondent NSB, which
complaint was docketed as NSB-1331-77, for violation of contract, against Mullion as the shipping company and
petitioner Litonjua as agent of the shipowner and of the charterer of the vessel.

Issues: Whether or no the admiralty law as embodied in the Philippine Code of Commerce fastens liability for
payment of the crew's wages upon the ship owner, and not the charterer.

Held: The first basis is the charter party which existed between Mullion, the shipowner, and Fairwind, the charterer. In
modern maritime law and usage, there are three (3) distinguishable types of charter parties: (a) the "bareboat" or
"demise" charter; (b) the "time" charter; and (c) the "voyage" or "trip" charter. A bareboat or demise charter is a demise
of a vessel, much as a lease of an unfurnished house is a demise of real property. The shipowner turns over
possession of his vessel to the charterer, who then undertakes to provide a crew and victuals and supplies and fuel for
her during the term of the charter. The shipowner is not normally required by the terms of a demise charter to provide
a crew, and so the charterer gets the "bare boat", i.e., without a crew. Sometimes, of course, the demise charter might
provide that the shipowner is to furnish a master and crew to man the vessel under the charterer's direction, such that
the master and crew provided by the shipowner become the agents and servants or employees of the charterer, and
the charterer (and not the owner) through the agency of the master, has possession and control of the vessel during
the charter period. A time charter, upon the other hand, like a demise charter, is a contract for the use of a vessel for a
specified period of time or for the duration of one or more specified voyages. In this case, however, the owner of a
time-chartered vessel (unlike the owner of a vessel under a demise or bare-boat charter), retains possession and
control through the master and crew who remain his employees. What the time charterer acquires is the right to utilize
the carrying capacity and facilities of the vessel and to designate her destinations during the term of the charter. A
voyage charter, or trip charter, is simply a contract of affreightment, that is, a contract for the carriage of goods, from
one or more ports of loading to one or more ports of unloading, on one or on a series of voyages. In a voyage charter,
master and crew remain in the employ of the owner of the vessel.

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

BARRIOS VS. GO THONG & CO. (7 SCRA 535)

Facts: Honorio Barrios was the captain and master of the MV Henry I operated by William Lines, Inc. which plied the
route from Cebu to Davao City. On its voyage on May 1, 1958 the MV Henry I intercepted an SOS signal from the MV
Don Alfredo owned and operated by Go Thong & Co. Responding to the SOS, Henry I approached the Don Alfredo
and found out that the Don Alfredo was suffering from engine failure. After agreeing to assist the disabled ship, the
crew of Henry I attached tow lines and proceeded to tow the Don Alfredo heading towards the port of Dumaguete City.
The following morning, they encountered a sister ship of Don Alfredo, the MV Lux. Upon the request of the captain of
the Don Alfredo, the crew of the Henry I released the towlines and continued on their voyage.

After the incident, Barrios as captain of MV Henry I claimed entitlement to compensation under the salvage
law which was opposed by Go Thong and Co. who claimed that what occurred was only mere towage.
 The trial court dismissed the claim.

Issue: Whether the rescue of the MV Don Alfredo should be classified as a salvage, thus entitling Barrios et al. to
reward?

Held: No. Not all the requisites were present for the rescue to be considered as salvage under the law.

The claim of Barrios is anchored on the provisions of the Salvage Law that stipulates that a ship that is lost or
abandoned at sea is considered as a derelict and the proper subject of salvage. A ship in a desperate condition with
passengers and persons on board but who are unable to do anything for their own safety may be considered a quasi-
derelict.

Further, the Salvage Law provides that those assisting in saving a vessel in its cargo from shipwreck shall be
entitled to a reward. There are three elements that are necessary for a salvage claim:
1. the existence of a marine peril
2. service is voluntarily rendered when not required as an existing duty or a special contract; and
3. success in whole or in part, or that the service rendered contributed to such success.

It is therefore imperative to establish whether the MV Don Alfredo was exposed to any form of marine peril
when it was assisted by the MV Henry I. The Supreme Court however noted that the nature of its disability and the
circumstances surrounding it could be construed as a marine peril as contemplated in the Salvage Law. When the
engine failure occurred the seas were calm and the weather was clear. In fact the ship did not drift too far from the
location where its engines failed. Further, the captain and crew of the MV Don Alfredo did not find it necessary to
jettison the vessels cargo as a safety measure. Therefore the MV Don Alfredo cannot even be considered as a quasi
derelict.

Although the service of the defendant did not constitute as salvage, it can be considered as a quasi contract of
towage. However in a contract of towage, only the owner of the towing vessel is entitled to remuneration. It is
noteworthy that the owner of MV Henry I, William Lines, Inc., already waived its claim for compensation.

ABOITIZ SHIPPING VS. GENERAL ACCIDENT FIRE AND LIFE (GR NO. 100446 JANUARY 21, 1993)

Facts: Petitioner is a corporation engaged in the business of maritime trade as a carrier. As such, it owned and
operated the M/V P/ ABOITIZ, a common carrier that sank on voyage from Hong Kong to Manila. Private respondent
GAFLAC is a foreign insurance company pursuing its remedy as a subrogee of several cargo consignees whose
respective cargo sank with the said vessel and for which it has priory paid. The sinking of vessel gave rise to filling of
suit to recover the lost cargo either by shippers, their successors-in-interest, or the cargo insurers like GAFLAC as
subrogees. The sinking was initially investigated by the Board of Marine Inquiry, which found that such sinking was
due to fortuitous event.

Issue: Whether or not the doctrine of limited liability is applicable to the case?

Held: The real an hypothecary nature of maritime law simple 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. Thus, the liability of the vessel owner and agent arising form the
operation of such vessel were confined to the vessel itself, its equipment, freight and insurance, if any, which limitation
served to induce capitalist into effectively wagering their resources against consideration of the large attainable in the
trade.

LUZON STEVEDORING CORPORATION VS. COURT OF APPEALS

(156 SCRA 169)

Facts: A maritime collision occurred between the tanker CAVITE owned by LSCO and MV Fernando Escano (a
passenger ship) owned by Escano, as a result the passenger ship sunk. An action in admiralty was filed by Escano
against Luzon. The trial court held that LSCO Cavite was solely to blame for the collision and held that Luzons claim
that its liability should be limited under Article 837 of the Code of Commerce has not been established. The Court of
Appeals affirmed the trial court. The SC also affirmed the CA. Upon two motions for reconsideration, the Supreme
Court gave course to the petition.

Issue: Whether or not in order to claim limited liability under Article 837 of the Code of Commerce, it is necessary that
the owner abandon the vessel
Held: Yes, abandonment is necessary to claim the limited liability wherein it shall be limited to the value of the vessel
with all the appurtenances and freightage earned in the voyage. However, if the injury was due to the ship owners
fault, the ship owner may not avail of his right to avail of limited liability by abandoning the vessel.

The real nature of the liability of the ship owner or agent is embodied in the Code of Commerce. Articles 587,
590 and 837 are intended to limit the liability of the ship owner, provided that the owner or agent abandons the vessel.
Although Article 837 does not specifically provide that in case of collision there should be abandonment, to enjoy such
limited liability, said article is a mere amplification of the provisions of Articles 587 and 590 which makes it a mere
superfluity.

The exception to this rule in Article 837 is when the vessel is totally lost in which case there is no vessel to
abandon, thus abandonment is not required. Because of such loss, the liability of the owner or agent is extinguished.
However, they are still personally liable for claims under the Workmens Compensation Act and for repairs on the
vessel prior to its loss.

In case of illegal or tortious acts of the captain, the liability of the owner and agent is subsidiary. In such
cases, the owner or agent may avail of Article 837 by abandoning the vessel. But if the injury is caused by the
owners fault as where he engages the services of an inexperienced captain or engineer, he cannot avail of the
provisions of Article 837 by abandoning the vessel. He is personally liable for such damages.

In this case, the Court held that the petitioner is a t fault and since he did not abandon the vessel, he cannot
invoke the benefit of Article 837 to limit his liability to the value of the vessel, all appurtenances and freightage earned
during the voyage.

FRANCISCO ORTIGAS, JR. VS. LUFTHANSA GERMAN AIRLINES

(G.R. NO. L-28773 JUNE 30, 1975)

Facts: Direct appeals of both parties plaintiff, Francisco Ortigas, and defendant Luthansa German Airlines, from the
decision of the Court of First Instance of Manila Branch Y, condemning the defendant to pay plaintiff the amount of
P100,000 as moral damages, P30,000 as exemplary or corrective damages, with interest of both sums at the legal
rate from the commencement of this suit until fully paid, P20,000 as attorneys fees and the costs for the former
failure to comply with its obligation to give first accommodation to (the latter) a (Filipino) passenger holding a first
class ticket, aggravated by the giving of the space instead to a Belgian and the improper conduct of its agents in
dealing with him during the occasion of such discriminatory violence of its contract of carriage.

Issue: Whether Lufthansa is liable for damages?

Held: The court said that when it comes to contracts of common carriage, inattention and lack of care on the part of
the carrier resulting in the failure of the passenger to be accommodated in class contracted for amounts to bad faith
and fraud which entitles the passenger to the award of moral damages in accordance with the 2220 of the Civil Code.
But in the instant case, the breach appears to the graver nature, since the preference given to the Belgian passenger
over plaintiff was done willfully and in wanton disregard of plaintiffs rights and his dignity as a human being and as a
Filipino, who may not be discriminated against with impunity, as found by the court below what worsened the situation
of Ortigas was that Lufthansa succeeded in keeping him as its passenger by assuring him that he would be given first
class accommodation at Cairo, the next station, the proper arrangements therefore having been made already, when
in truth such was not the case. Although molested and embarrassed to the point that he had to take nitroglycerine pills
to ward off a possible heart attack, Ortigas hardly had any choice, since his luggage was already in the plane. To his
disappointment, when the plane reached Cairo, he was told by Lufthansa office there that no word at all had been
received from Rome and they had no space for him in first class. Worse, similar false representations were made to
him at Dharham and Calcutta. It was only at Bangkok where for the first time. Ortigas was at last informed that he
could have a first class seat in the leg of the flight, from Bangkok to Hong Kong. This Ortigas rejected, if only to make
patent his displeasure and indignation at being so inconsiderately treated in the earlier part of his journey. In the light
of all foregoing, there can be no doubt as to the right of Ortigas to damages, both moral and exemplary. Precedents
we have consistently adhere to so dictate.

1. FABRE VS. CA 259 SCRA 426 (G.R. NO. 111127, JULY 26, 1996)

Facts: Petitioner and his wife were owners of a minibus. They used the bus principally in connection with a bus
service for school children which they operated in Manila and was driven by Porfirio Cabil. His job was to take school
children to and from the school. Sometime during November private respondent WWCF arranged with petitioners for
the transportation of 33 members of its ministry form Manila to La Union and back in consideration of which private
respondent shall pay petitioners the stipulated amount. On the day of the trip, several members of the ministry came
in late, hence, the departure was delayed. On the may to La Union, the minibus caught an accident causing damages
and injury to several passengers particularly Amyline Antonio. Apparently, the driver was unable to see a sharp curve
ahead of time for him to be able to avoid the mishap. A criminal complaint was them filed against the driver, while
defendant spouses were also made jointly liable.
Issue: Whether or not defendant spouses failed to exercise diligence of a good father of the family?

Held: Court ruled that defendant spouses were negligent in the exercise of their duties as owners of the minibus for it
was clearly established by evidence that said vehicle was not properly check if it was fit for the long trip. Moreover,
defendants were also negligent in the selection and supervision of their employee, particularly, the driver, who was
only used to driving short distances.

AIR FRANCE VS CARRASCOSO (18 SCRA 155)

Facts: Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on March
30, 1958.

On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued
to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff traveled in
"first class", but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the "first class" seat that he
was occupying because, in the words of the witness Ernesto G. Cuento, there was a "white man", who, the Manager
alleged, had a "better right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be
expected, refused, and told defendant's Manager that his seat would be taken over his dead body; a commotion
ensued, and, according to said Ernesto G. Cuento, "many of the Filipino passengers got nervous in the tourist class;
when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager], they came all
across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man" and plaintiff reluctantly gave
his "first class" seat in the plane after being threatened that he will be thrown out of the plane if he does not oblige.
The captain of the plane, when asked to intervene, refused to do so.

Issue: Whether or not there was bad faith on the part of Air France, petitioner, entitling Rafael Carrascoso, respondent
for moral and exemplary damages as against the petitioner?

Held: The court held in favor of the respondent, Carrascoso.

The responsibility of an employer for the tortious act of its employees need not be essayed. It is well settled in
law. For the willful malevolent act of petitioner's manager, petitioner, his employer, must answer.

A contract to transport passengers is quite different in kind and degree from any other contractual relation. And
this, because of the relation which an air-carrier sustains with the public. Its business is mainly with the traveling
public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore,
generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could
give ground for an action for damages.

Passengers do not contract merely for transportation. They have a right to be treated by the carrier's
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.

The court held that the judgment of the Court of Appeals does not suffer from reversible error. CA decision
affirmed.

Yu Con vs. Ipil | Araullo (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 shipowner 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 shipowner 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 shipowner 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 shipowner can, whenever he sees fit, appoint another captain instead.
o Thus, it is only proper that the shipowner should be made liable.

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.

Chua Yek Hong v. IAC

Facts:

Petitioner loaded 1,000 sacks of copra on board a vessel owned by respondents, for shipment from
Puerto Galera to Manila. Along its way, the vessel capsized and sank. Petitioner filed an action for
damages for breach of contract of carriage.

Issue:

Whether respondents can avail of the limited liability

Held:

The 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.

CALTEX vs. SULPICIO LINES

FACTS
MT Vector left Limay, Bataan, at about 8:00 p.m., enroute to Masbate, loaded with 8,800 barrels of petroleum
products shipped by petitioner Caltex. MT Vector is a tramping motor tanker owned and operated by Vector
Shipping Corporation, engaged in the business of transporting fuel products such as gasoline, kerosene, diesel and
crude oil.

The passenger ship MV Doa Paz left the port of Tacloban headed for Manila with a complement of 59 crew
members including the master and his officers, and passengers totaling 1,493 as indicated in the Coast Guard
Clearance. The MV Doa Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines.

The two vessels collided in the open sea within the vicinity of Dumali Point between Marinduque and Oriental
Mindoro. All the crewmembers of MV Doa Paz died, while the two survivors from MT Vector claimed that they
were sleeping at the time of the incident.
The MV Doa Paz carried an estimated 4,000 passengers; many indeed, were not in the passenger manifest. Only
24 survived the tragedy after having been rescued from the burning waters by vessels that responded to distress
calls. Among those who perished were public school teacher Sebastian Caezal (47 years old) and his daughter
Corazon Caezal (11 years old), both unmanifested passengers but proved to be on board the vessel.

The 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.

Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife and mother respectively, filed with the Regional
Trial Court, Branch 8, Manila, a complaint for Damages Arising from Breach of Contract of Carriage against
Sulpicio Lines, Inc. (hereafter Sulpicio). Sulpicio, in turn, filed a third party complaint against Francisco Soriano,
Vector Shipping Corporation and Caltex (Philippines), Inc. 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; as a result, it rammed against MV Doa Paz in the open sea setting MT Vectors
highly flammable cargo ablaze.

The trial court dismissed the 3rd party complaint and held Sulpicio lines liable.

The Court of Appeal modified the trial courts ruling and included petitioner Caltex as one of those liable for
damages:

Third party defendants Vector Shipping Co. and Caltex (Phils.), Inc. are held equally liable under the third
party complaint to reimburse/indemnify defendant Sulpicio Lines, Inc. of the above-mentioned damages,
attorneys fees and costs which the latter is adjudged to pay plaintiffs, the same to be shared half by Vector
Shipping Co. (being the vessel at fault for the collision) and the other half by Caltex (Phils.), Inc. (being the
charterer that negligently caused the shipping of combustible cargo aboard an unseaworthy vessel).

Hence the appeal.

ISSUE
1) Should Caltex (charterer) be held liable? NO
2) Is MT Vector a common carrier and therefore liable? YES
3) Should Caltex be held liable for damages? NO

RULING
1) The charterer has no liability for damages under Philippine Maritime laws.

Petitioner CALTEX 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.

Under a demise or bareboat charter on the other hand, the 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.

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.

2) MT Vector is a common carrier.

Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage charter.
Does a charter party agreement turn the common carrier into a private one?

In this case, 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.

In Planters Products, Inc. vs. Court of Appeals, we said:

 It is therefore 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.
Later, we ruled in Coastwise Lighterage Corporation vs. Court of Appeals:
Although a charter party may transform a common carrier into a private one, the same however is not true
in a contract of affreightment xxx

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. MT Vector fits the definition of a common carrier
under Article 17321 of the Civil Code.

Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such services on a an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier offering its services to the general public, i.e., the
general community or population, and one who offers services or solicits business only from a narrow segment of
the general population.

Under the 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;

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.
The provisions owed their conception to the nature of the business of common carriers. This business is
impressed with a special public duty. 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.

3) Sulpicio argues that Caltex negligently shipped its highly combustible fuel cargo aboard an unseaworthy
vessel such as the MT Vector when Caltex:

Did not take steps to have M/T Vectors certificate of inspection and coastwise license renewed; Proceeded to ship
its cargo despite defects found by Mr. Carlos Tan of Bataan Refinery Corporation; Witnessed M/T Vector submitting
fake documents and certificates to the Philippine Coast Guard.

Sulpicio further argues that Caltex chose MT Vector to transport its cargo despite these deficiencies:

The master of M/T Vector did not posses the required Chief Mate license to command and navigate the
vessel;The second mate, Ronaldo Tarife, had the license of a Minor Patron, authorized to navigate only in bays
and rivers when the subject collision occurred in the open sea; The Chief Engineer, Filoteo Aguas, had no
license to operate the engine of the vessel; The vessel did not have a Third Mate, a radio operator and a
lookout; and The vessel had a defective main engine.

As basis for the liability of Caltex, the Court of Appeals relied on Articles 20 2 and 21763 of the Civil Code.
In Southeastern College, Inc. vs. Court of Appeals, we said that negligence, as commonly understood, is conduct
which naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree
of care, precaution, and vigilance, which the circumstances justly demand, or the omission to do something which
ordinarily regulate the conduct of human affairs, would do.

The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered

1 Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers for passengers or goods or both, by land, water, or air for compensation, offering their services to the
public
2 Article 20. - Every person who contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for
the same.
3 Article 2176. - Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
complied with all legal requirements. The duty rests upon the common carrier simply for being engaged in public
service. The Civil Code demands diligence which is required by the nature of the obligation and that which
corresponds with the circumstances of the persons, the time and the place. Hence, considering the nature of the
obligation between Caltex and MT Vector, the liability as found by the Court of Appeals is without basis.

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. By the same token, we cannot expect passengers to inquire every
time they board a common carrier, whether the carrier possesses the necessary papers or that all the carriers
employees are qualified. 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.

Thus, the 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.

Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as even the
Philippine Coast Guard itself was convinced of its seaworthiness.

BELGIAN OVERSEAS vs. PHIL FIRST

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

Upon arrival, four coils were discovered to be in bad order, consignee declared the shipment as total loss.
Petitioner Belgian refused to submit to consignees claim, thus respondent Philippine First Insurance paid
P506,086.50 and was subrogated to consignees rights and causes of action.

Petitioners contend that the damage was due to pre-shipment, inherent nature and defect of the goods, to perils,
insufficiency of packing, act or omission on the part of the shipper. In addition, they argue that their liability, if
any, should not exceed the limitations of liability provided for in the bill of lading.

RTC dismissed the complaint while the CA reversed, ruling that petitioners were liable who failed to overcome the
presumption of negligence. As to the extent of liability, CA held the COGSA package limitation was not applicable
and that the words L/C No. 90/02447 indicating a higher value prevailed.

ISSUE
W/N Petitioner has overcome the presumption of negligence? No.
W/N the claim is barred by prescription? No.
W/N Petitioners liability is limited to stipulation in the Bill of Lading or the L/C? Bill of Lading.

RULING
In the case at hand, there was mere proof of delivery of the goods in good order to the common carrier and the
fact of their arrival in bad order 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.

Furthermore, the records provide that prior to the unloading of the cargo, Inspection Report prepared and signed
by representative of both parties showed the steel bands broken and the contents thereof exposed and rusty.

Petitioners claim that pursuant to Sec. 3 of COGSA, respondent should have filed its Notice of Loss within three
days from delivery. The cargo was discharged on July 31, 1990 but the respondent filed its claim only on Sept. 18,
1990. SC that the notice of claim need not be given if the state of the goods, at the time of their receipt, has been
the subject of a joint inspection or survey. Also, a failure to file a notice within three days will not bar recovery if it
is nonetheless filed within one year.

Lastly, respondent argues that COGSA limitation of $500 per package also stipulated in the Bill of Lading is
inapplicable, because the value of the subject shipment was declared by petitioners through the insertion of the
Letter of Credit which provides a per metric ton price. The Bill of Lading serves as receipt for the goods shipped
and as a contract and a limitation of liability therein is sanctioned by law provided that (1) it is reasonable and just
and (2) it has been fairly and freely agreed upon. SC decision affirmed all except on this last issue, modifying
petitioners liability as found in the bill of lading in the total amount of $2k.
INSURANCE COMPANY OF NORTH AMERICA vs. ASIAN TERMINALS, INC.

DOCTRINE:
The term carriage of goods in the Carriage of Goods by Sea Act (COGSA) covers the period from
the time the goods are loaded to the vessel to the time they are discharged therefrom.

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.

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.

Cathay Pacific Airways Ltd. Vs. Vasquez (399

SCRA 207)
06MAR
CATHAY PACIFIC AIRWAYS LTD., petitioner,
vs. SPOUSES DANIEL VASQUEZ and MARIA LUISA MADRIGAL VASQUEZ, respondents.
[G.R. 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.

PHILIPPINE AIRLINES, INC., vs. VICENTE LOPEZ, JR.

G.R. 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
aforesaid negligence 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.

MACONDRAY & CO., INC., petitioner, vs. PROVIDENT INSURANCE CORPORATION, respondent.
DECISION
PANGANIBAN, J.:
Hornbook is the doctrine that the negligence of counsel binds the client. Also settled is the rule that clients should take the
initiative of periodically checking the progress of their cases, so that they could take timely steps to protect their interest.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the February 28, 2002
Decision[2] and the July 12, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR CV No. 57077. The dispositive portion of
the Decision reads as follows:
WHEREFORE, premises considered, the assailed Decision dated September 17, 1996 is hereby REVERSED and SET
ASIDE. Accordingly, [Petitioner] Macondray & Co., Inc., is hereby ORDERED to pay the [respondent] the amount
of P1,657,700.95.
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The CA adopted the factual antecedents narrated by the trial court, as follows:
x x x. On February 16, 1991, at Vancouver, B.C. Canada, CANPOTEX SHIPPING SERVICES LIMITED INC., of Saskatoon,
Saskatchewan, (hereinafter the SHIPPER), shipped and loaded on board the vessel M/V Trade Carrier, 5000 metric tons of
Standard Grade Muriate of Potash in bulk for transportation to and delivery at the port of Sangi, Toledo City, Cebu, in favor of
ATLAS FERTILIZER CORPORATION, (hereinafter CONSIGNEE) covered by B/L Nos. VAN-SAN-1 for the 815.96 metric tons
and VAN-SAN-2 for the 4,184.04 metric tons. Subject shipments were insured with [respondent] against all risks under and by
virtue of an Open Marine Policy No. MOP-00143 and Certificate of Marine Insurance No. CMI-823-91.
When the shipment arrived, CONSIGNEE discovered that the shipment sustained losses/shortage of 476.140 metric tons valued at
One Million Six Hundred Fifty Seven Thousand Seven Hundred Pesos and Ninety Five Centavos (P1,657,700.95), Philippine
Currency. Provident paid losses.Formal claims was then filed with Trade & Transport and Macondray but the same refused and
failed to settle the same. Hence, this complaint.
As per Officers Return dated 4 June 1992, summons was UNSERVED to defendant TRADE AND TRANSPORT at the given
address for reason that TRADE AND TRANSPORT is no longer connected with Macondray & Co. Inc., and is not holding office
at said address as alleged by Ms. Guadalupe Tan. For failure to effect service of summons the case against TRADE &
TRANSPORT was considered dismissed without prejudice.
Defendant MACONDRAY filed ANSWER, denying liability over the losses, having NO absolute relation with defendant TRADE
AND TRANSPORT, the alleged operator of the vessel who transported the subject 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 of Sangi, Toledo City, Cebu, the M/V Trade Carrier discharged
the full amount of shipment, as shown by the draft survey with a total quantity of 5,033.59 metric tons discharged from the vessel
and delivered to the CONSIGNEE.
ISSUES: Whether or not Macondray and Co. Inc., as an agent is responsible for any loss sustained by any party from the vessel
owned by defendant Trade and Transport. Whether or not Macondray is liable for loss which was allegedly sustained by the
plaintiff in this case.
EVIDENCE FOR THE PLAINTIFF
Plaintiff presented the testimonies of Marina Celerina P. Aguas and depositions of Alberto Milan and Alfonso Picson submitted as
additional witnesses for PROVIDENT to prove the material facts of the complaint are deemed admitted by defendant
MACONDRAY, on their defense that it is not an agent of TRADE AND TRANSPORT.
EVIDENCE FOR THE DEFENDANT MACONDRAY:
Witness Ricardo de la Cruz testified as Supercargo of MACONDRAY, that MACONDRAY was not an agent of defendant
TRADE AND TRANSPORT; that his functions as Supercargo was to prepare a notice of readiness, statement of facts, sailing
notice and customs clearance in order to attend to the formalities and the need of the vessel; that MACONDRAY is performing
functions in behalf of CANPOTEX and was appointed as local agent of the vessel, which duty includes arrangement of the
entrance and clearance of the vessel.
The trial court, in the decision dated September 17, 1996 earlier adverted to, ruled in favor of the [petitioner] x x x, the dispositive
portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the case as against [petitioner] MACONDRAY is hereby DISMISSED.
No pronouncement as to costs.[4]
Ruling of the Court of Appeals
The CA affirmed the trial courts finding that petitioner was not the agent of Trade and Transport. The appellate court ruled,
however, that petitioner could still be held liable for the shortages of the shipment, because the latter was the ship agent of
Canpotex Shipping Services Ltd. -- the shipper and charterer of the vessel M/V Trade Carrier.
All told, the CA held petitioner liable for the losses incurred in the shipment of the subject cargoes to the [respondent], who, being
the insurer of the risk, was subrogated to the rights and causes of action which the consignee, Atlas Fertilizer Corporation, had
against the [petitioner].[5]
Hence, this Petition.[6]
The Issues
Petitioner raises the following issues for our consideration:
Whether or not liability attached to petitioner despite the unequivocal factual findings, that it was not a ship agent.
Whether or not the 28 February 2002 Decision of the Court of Appeals has attained finality.
Whether or not by filing the instant Petition for Review on Certiorari, petitioner is guilty of forum-shopping. [7]
The Courts Ruling
The Petition has no merit.
First Issue:
Petitioners Liability
As a rule, factual findings of the Court of Appeals -- when not in conflict with those of the trial court -- are not disturbed by this
Court,[8] to which only questions of law may be raised in an appeal by certiorari.[9]
In the present case, we find no compelling reason to overturn the Court of Appeals in its categorical finding that petitioner was the
ship agent. Such factual finding was not in conflict with the trial courts ruling, which had merely stated that petitioner was not the
agent of Trade and Transport. Indeed, although it is not an agent of Trade and Transport, petitioner can still be the ship agent of the
vessel M/V Trade Carrier.
Article 586 of the Code of Commerce states that 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[10] of the vessel or as agent of the charterer,[11] petitioner will be considered as the ship
agent[12] 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.[13] Further, the CA found and 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.
[14]
Petitioners employees were present at Sangi, Toledo City, 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.[15] Moreover, Mr. de la Cruz, the representative of
petitioner, also prepared for the needs of the vessel, like money, provision, water and fuel. [16]
These acts all point to the conclusion that it was the entity that represented the vessel in the Port of Manila and was the ship
agent[17] within the meaning and context of Article 586 of the Code of Commerce.
As ship agent, it may be held civilly liable in certain instances. The Code of Commerce provides:
Article 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain and for the obligations contracted
by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed was invested for the
benefit of the same.
Article 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the
conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt himself therefrom by
abandoning the vessel with all her equipments and the freight it may have earned during the voyage.
Petitioner does not dispute the liabilities of the ship agent for the loss/shortage of 476.140 metric tons of standard-grade Muriate
of Potash valued at P1,657,700.95. Hence, we find no reason to delve further into the matter or to disturb the finding of the CA
holding petitioner, as ship agent, liable to respondent for the losses sustained by the subject shipment.
Second Issue:
Finality of the CA Decision
Petitioner claims that it picked up the February 28, 2002 Decision of the CA on May 14, 2002, after receiving the postal notice the
day before. It further attributes gross negligence to its previous counsel for not informing the CA of his change of address. It thus
contends that notice of the assailed Decision given to the previous counsel cannot be considered as notice to petitioner.
We are not persuaded. It is well-settled that when a party is represented by counsel, notice should be made upon the counsel of
record at his given address to which notices of all kinds emanating from the court should be sent in the absence of a proper and
adequate notice to the court of a change of address.[18]
In the present case, service of the assailed Decision was made on petitioners counsels of record, Attys. Moldez and Galoz,
on March 6, 2002. That copy of the Decision was, however, returned to the sender for the reason that the addressee had move[d]
out. If counsel moves to another address without informing the court of that change, such omission or neglect is inexcusable and
will not stay the finality of the decision.[19] The court cannot be expected to take judicial notice of the new address of a lawyer who
has moved or to ascertain on its own whether or not the counsel of record has been changed and who the new counsel could
possibly be or where he probably resides or holds office.[20]
It is unfortunate that the lawyer of petitioner neglected his duties to the latter. Be that as it may, the negligence of counsel binds
the client.[21] Service made upon the present counsel of record at his given address is service to petitioner. Hence, the assailed
Decision has already become final and unappealable.
In the present case, there is no compelling reason to overturn well-settled jurisprudence or to interpret the rules liberally in favor
of petitioner, who is not entirely blameless. It should have taken the initiative of periodically keeping in touch with its counsel,
checking with the court, and inquiring about the status of its case. [22] In so doing, it could have taken timely steps to neutralize the
negligence of its chosen counsel and to protect its interests. Litigants represented by counsel should not expect that all they need
to do is sit back, relax and await the outcome of their case.[23]
In view of the foregoing, there is no necessity of passing upon the third issue raised by petitioner.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioner.
SO ORDERED.
Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ., concur.
Corona, J., on leave.

MOF COMPANY, INC., G.R. No. 172822

 Petitioner,
Present:

CARPIO, J., Chairperson,

- versus - LEONARDO-DE CASTRO,
BRION,
DEL CASTILLO, and
ABAD, JJ.
SHIN YANG BROKERAGE
CORPORATION, Promulgated:
Respondent. December 18, 2009

Our Ruling

Since the CA and the trial courts arrived at different conclusions, we are constrained to depart from the general rule that only
errors of law may be raised in a Petition for Review on Certiorari under Rule 45 of the Rules of Court and will review the
evidence presented.[11]

The bill of lading is oftentimes drawn up by the shipper/consignor and the carrier without the intervention of the
consignee. However, the latter can be bound by the stipulations of the bill of lading when a) there is a relation of agency between
the shipper or consignor and the consignee or b) when the consignee demands fulfillment of the stipulation of the bill of lading
which was drawn up in its favor.[12]

In Keng Hua Paper Products Co., Inc. v. Court of Appeals,[13] we held that once the bill of lading is received by the consignee who
does not object to any terms or stipulations contained therein, it constitutes as an acceptance of the contract and of all of its terms
and conditions, of which the acceptor has actual or constructive notice.

In Mendoza v. Philippine Air Lines, Inc.,[14] the consignee sued the carrier for damages but nevertheless claimed that he was never
a party to the contract of transportation and was a complete stranger thereto. In debunking Mendozas contention, we held that:

x x x First, he insists that the articles of the Code of Commerce should be applied; that he invokes the provisions of said Code
governing the obligations of a common carrier to make prompt delivery of goods given to it under a contract of transportation.
Later, as already said, he says that he was never a party to the contract of transportation and was a complete stranger to it, and that
he is now suing on a tort or a violation of his rights as a stranger (culpa aquiliana). If he does not invoke the contract of carriage
entered into with the defendant company, then he would hardly have any leg to stand on. His right to prompt delivery of the can of
film at the Pili Air Port stems and is derived from the contract of carriage under which contract, the PAL undertook to carry the
can of film safely and to deliver it to him promptly. Take away or ignore that contract and the obligation to carry and to deliver
and right to prompt delivery disappear. Common carriers are not obligated by law to carry and to deliver merchandise, and persons
are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation. Said rights and
obligations are created by a specific contract entered into by the parties. In the present case, the findings of the trial court
which as already stated, are accepted by the parties and which we must accept are to the effect that the LVN Pictures Inc.
and Jose Mendoza on one side, and the defendant company on the other, entered into a contract of transportation (p. 29,
Rec. on Appeal). One interpretation of said finding is that the LVN Pictures Inc. through previous agreement
with Mendoza acted as the latter's agent. When he negotiated with the LVN Pictures Inc. to rent the film 'Himala ng
Birhen' and show it during the Naga town fiesta, he most probably authorized and enjoined the Picture Company to ship
the film for him on the PAL on September 17th. Another interpretation is that even if the LVN Pictures Inc. as consignor of
its own initiative, and acting independently of Mendoza for the time being, made Mendoza a consignee. [Mendoza made
himself a party to the contract of transportaion when he appeared at the Pili Air Port armed with the copy of the Air Way
Bill (Exh. 1) demanding the delivery of the shipment to him.] The very citation made by appellant in his memorandum
supports this view. Speaking of the possibility of a conflict between the order of the shipper on the one hand and the order of the
consignee on the other, as when the shipper orders the shipping company to return or retain the goods shipped while the consignee
demands their delivery, Malagarriga in his book Codigo de Comercio Comentado, Vol. 1, p. 400, citing a decision of the Argentina
Court of Appeals on commercial matters, cited by Tolentino in Vol. II of his book entitled 'Commentaries and Jurisprudence on the
Commercial Laws of the Philippines' p. 209, says that the right of the shipper to countermand the shipment terminates when
the consignee or legitimate holder of the bill of lading appears with such bill of lading before the carrier and makes himself
a party to the contract. Prior to that time he is a stranger to the contract.

Still another view of this phase of the case is that contemplated in Art. 1257, paragraph 2, of the old Civil Code (now Art.
1311, second paragraph) which reads thus:
Should the contract contain any stipulation in favor of a third person, he may demand its fulfillment provided he has given
notice of his acceptance to the person bound before the stipulation has been revoked.'

Here, the contract of carriage between the LVN Pictures Inc. and the defendant carrier contains the stipulations of
delivery to Mendoza as consignee. His demand for the delivery of the can of film to him at the Pili Air Port may be
regarded as a notice of his acceptance of the stipulation of the delivery in his favor contained in the contract of carriage
and delivery. In this case he also made himself a party to the contract, or at least has come to court to enforce it. His cause
of action must necessarily be founded on its breach.[15] (Emphasis Ours)

In sum, 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. [16]

In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla Trading, Co. to ship the goods on
its behalf; or that it got hold of the bill of lading covering the shipment or that it demanded the release of the cargo. Basic is the
rule in evidence that the burden of proof lies upon him who asserts it, not upon him who denies, since, by the nature of things, he
who denies a fact cannot produce any proof of it.[17] Thus, MOF has the burden to controvert all these denials, it being insistent
that Shin Yang asserted itself as the consignee and the one that caused the shipment of the goods to the Philippines.

In civil cases, the party having the burden of proof must establish his case by preponderance of evidence, [18] which means
evidence which is of greater weight, or more convincing than that which is offered in opposition to it.[19] 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.

DGAR COKALIONG SHIPPING LINES, INC.,

petitioner, vs
.UCPB GENERAL INSURANCE COMPANY, INC.,

respondent
.PANGANIBAN,

J
.:DOCTRINE: The liability of a common carrier for the loss of goods may, by stipulation in the bill of lading, belimited to the
value declared by the shipper. On the other hand, the liability of the insurer is determined bythe actual value covered by the
insurance policy and the insurance premiums paid therefor, and notnecessarily by the value declared in the bill of
lading.FACTS:Shipper: ZosimaMercardo, Nestor AmeliaCarrier: EDGAR COKALIONG SHIPPING LINES, INC.Vessel: M/V
TandagInsurer: UCPB General Insurance Co. Inc. (Feliciana Legaspi insured the cargoes)Event: FIREEdgar did not pay UCPB.
UCPB filed a complaint. RTC absolved Edgar of any liability. CA affirmed.ISSUE: 1. W/N Edgar is liable2. What is the basis of
liability? Amount in the bill of lading or actual amount?RULING:1. Yes. The uncontroverted findings of the Philippine Coast
Guard show that the
M/V Tandag
sank due to a fire,which resulted from a crack in the auxiliary engine fuel oil service tank. Fuel spurted out of the crack
anddripped to the heating exhaust manifold, causing the ship to burst into flames. The crack was located on theside of the fuel
oil tank, which had a mere two-inch gap from the engine room walling, thus precludingconstant inspection and care by the
crew.Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused byforce majeure.
May refer to
Eastern Shipping Lines, Inc. v. Intermediate Appellate Court.
A stipulation that limits liability is valid as long as it is not against public policy.
Art. 1749. A stipulation that the common carriers liability
is limited to the value of the goods appearing in the
bill of lading, unless the shipper or owner declares a greater value, is binding.

Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction,
or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely
and fairly agreed upon.

2. Bill of lading. The bill of lading subject of the present controversy specifically provides, among others:
18. All claims

for which the carrier may be liable shall be adjusted and settled on the basis of the shippers net
invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier be liable for any lossof possible profits
or any consequential loss.
The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an amount
exceeding One Hundred Thousand Yen in Japanese Currency (100,000.00) or its equivalent in any othercurrency per package or
customary freight unit (whichever is least)
unless the value of the goods higher thanthis amount is declared in writing by the shipper before receipt of the goods by the carrier
and inserted in theBill of Lading and extra freight is paid as required.

In the presen
t case, the stipulation limiting petitioners liability is not contrary to public policy. In fact, its just
and reasonable character is evident. The shippers/consignees may recover the full value of the goods by thesimple expedient of
declaring the true value of the shipment in the Bill of Lading. Other than the payment of ahigher freight, there was nothing to stop
them from placing the actual value of the goods therein. In fact, theycommitted fraud against the common carrier by deliberately
undervaluing the goods in their Bill of Lading,thus depriving the carrier of its proper and just transport fare.It is well to point out
that, for assuming a higher risk (the alleged actual value of the goods) the insurancecompany was paid the correct higher premium
by Feliciana Legaspi; while petitioner was paid a fee lower thanwhat it was entitled to for transporting the goods that had been
deliberately undervalued by the shippers inthe Bill of Lading. Between the two of them, the insurer should bear the loss in excess
of the value declared inthe Bills of Lading.

MCC INDUSTRIAL SALES CORPORATION, petitioner, vs.

SSANGYONG CORPORATION, respondents.
G.R. No. 170633; October 17, 2007
Facts:
Petitioner is engaged in the business of importing and wholesaling stainless steel products. One of its suppliers is the responded,
an international trading company with head office in Seoul, South Korea and regional headquarters in Makati City, Philippines.
The two corporations conducted business through telephone calls and facsimile or telecopy transmissions. Respondent would send
the pro forma invoices containing the details of the steel product order to petitioner; if the latter conforms thereto, its
representative affixes his signature on the faxed copy and sends it back to the respondent, again by fax.
Respondent filed a civil action for damages due to breach of contract against petitioner before the Regional Trial Court of
Makati City. In its complaint, respondent alleged that defendants breached their contract when they refused to open the letter of
credit in the amount of US$170,000.00 for the remaining 100MT of steel under Pro Forma Invoice Nos. ST2-POSTS0401-1 and
ST2-POSTS0401-2.
After respondent rested its case, petitioner 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. Petitioner contends that the photocopies of the pro forma
invoices presented by respondent Ssangyong to prove the perfection of their supposed contract of sale are inadmissible in
evidence and do not fall within the ambit of R.A. No. 8792, because the law merely admits as the best evidence the original
fax transmittal. On the other hand, respondent posits that, from a reading of the law and the Rules on Electronic Evidence, the
original facsimile transmittal of the pro forma invoice is admissible in evidence since it is an electronic document and, therefore,
the best evidence under the law and the Rules. Respondent further claims that the photocopies of these
fax transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are admissible under the Rules on Evidence because the
respondent sufficiently explained the non-production of the original fax transmittals.
Issue:
Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence and admissible as such?
Held:
Electronic document shall be regarded as the equivalent of an original document under the Best Evidence Rule, as long as it is a
printout or output readable by sight or other means, showing to reflect the data accurately. Thus, to be admissible in evidence as an
electronic data message or to be considered as the functional equivalent of an original document under the Best Evidence Rule,
the writing must foremost be an electronic data message or an electronic document.
The Implementing Rules and Regulations (IRR) of R.A. No. 8792 defines the Electronic Data Message refers to information
generated, sent, received or stored by electronic, optical or similar means, but not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy.
The phrase but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy in the
IRRs definition of electronic data message is copied from the Model Law on Electronic Commerce adopted by the United
Nations Commission on International Trade Law (UNCITRAL), from which majority of the provisions of R.A. No. 8792 were
taken. While Congress deleted this phrase in the Electronic Commerce Act of 2000, the drafters of the IRR reinstated it. The
deletion by Congress of the said phrase is significant and pivotal.
Moreover, when Congress formulated the term electronic data message, it intended the same meaning as the term electronic
record in the Canada law. This construction of the term electronic data message, which excludes telexes or faxes, except
computer-generated faxes, is in harmony with the Electronic Commerce Laws focus on paperless communications and the
functional equivalent approach that it espouses. Facsimile transmissions are not, in this sense, paperless, but verily are paper-
based.
[I]n 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. [I]n 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
laws 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. While Congress anticipated future developments in
communications and computer technology when it drafted the law, it excluded the early forms of technology, like telegraph, telex
and telecopy (except computer-generated faxes, which is a newer development as compared to the ordinary fax machine to fax
machine transmission), when it defined the term electronic data message.
[T]he 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.

G.R. No. 168433 Case Digest

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.

PHILIPPINE CHARTER INSURANCE CORPORATION VS.CHEMOIL LIGHTERAGE HITE GOLD CORPORATIONG.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 adomestic corporation engaged in the transport of goods.
On24 January 1991, Samkyung Chemical Company, Ltd., basedin South Korea, shipped 62.06 metric tons of the liquidchemical
DIOCTYL PHTHALATE (DOP) on board MTTACHIBANA which was valued at US$90,201.57 andanother 436.70 metric
tons of DOP valued at US$634,724.89to 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 wasunder Marine Policies No. MRN-
30721[5] dated 06 February1991.
Marine Endorsement No. 2786[7] dated 11 May 1991was attached and formed part of MRN-30721, amending thelatters insured
value to P24,667,422.03, and reduced thepremium accordingly. The ocean tanker MT TACHIBANAunloaded the cargo to the
tanker barge, which shall transportthe same to Del Pan Bridge in Pasig River and haul it by landto PGPs storage tanks in
Calamba, Laguna. Upon inspectionby PGP, the samples taken from the shipment showeddiscoloration demonstrating that it was
damaged. PGP thensent a letter where it formally made an insurance claim for theloss it sustained.Petitioner requested the GIT
Insurance Adjusters, Inc. (GIT),to conduct a Quantity and Condition Survey of the shipmentwhich issued a report stating that
DOP samples taken
werediscolored. Inspection of cargo tanks showed manhole coversof ballast tanks ceilings loosely secured and that the rubber
gaskets of the manhole covers of the ballast tanks re-acted tothe chemical causing shrinkage thus, loosening the coversand cargo
ingress.
Petitioner paid PGP the full and finalpayment 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 damageswas instituted by the petitioner-insurer against
respondent-carrier before the RTC, Br.16, City of Manila. Respondentfiled an answer which admitted that it undertook to
transportthe shipment, but alleged that before the DOP was loadedinto its barge, the representative of PGP, AdjustmentStandard
Corporation, inspected it and found the same clean,dry, and fit for loading, thus accepted the cargo without anyprotest or notice.
As carrier, no fault and negligence can beattributed against respondent as it exercised extraordinarydiligence in handling the
cargo. After due hearing, the trialcourt rendered a Decision in favor of plaintiff. On appeal, theCourt of Appeals promulgated its
Decision reversing the trialcourt. A petition for review on certiorar[ was filed by thepetitioner with this Court.
Issues:1. Whether or not the Notice of Claim was filed within therequired period. 2.Whether or not the damage to the cargo was
due to the faultor negligence of the respondent.
Held: Article 366 of the Code of Commerce has profoundapplication in the case at bar, which provides that; Withintwenty-four
hours following the receipt of the merchandise aclaim may be made against the carrier on account of damageor average found
upon opening the packages, provided thatthe indications of the damage or average giving rise to theclaim cannot be ascertained
from the exterior of saidpackages, in which case said claim shall only be admitted atthe time of the receipt of the packages. After
the periodsmentioned have elapsed, or after the transportation chargeshave been paid, no claim whatsoever shall be
admittedagainst the carrier with regard to the condition in which thegoods 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, withinthe required period. The respondent, however, claims that thesupposed
notice given by PGP over the telephone wasdenied by Ms. Abastillas. The Court of Appeals declared: thata telephone call made to
defendant-company could constitutesubstantial compliance with the requirement of notice.However, it must be pointed out that
compliance with theperiod for filing notice is an essential part of the requirement,i.e.. immediately if the damage is apparent, or
otherwisewithin twenty-four hours from receipt of the goods, the clear import being that prompt examination of the goods must
bemade to ascertain damage if this is not immediately apparent.We have examined the evidence, and We are unable to find

Lopez vs. Duruelo Case Digest

Lopez vs. Duruelo
52 Phil 229

Facts: On February 10, 1927, plaintiff Augusto Lopez was desirous of embarking upon the interisland steamer
San Jacinto in order to go to Cebu, the plaintiff embarked at the landing in the motorboat Jison which was
engaged in conveying passengers and luggage back and forth from the landing to the boats at anchor.

As the motorboat approached 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 strucked the motorboat and
sank it at once. As it sank, the plaintiff was thrown into the water against the propeller, and the revolving blades
inflicted various injuries upon him. The plaintiff was hospitalized. He filed a complaint seeking to recover
damages from the defendant. The defendant however alleged that the complaint does not have a right of action,
a demurrer was submitted directed to the fact that the complaint does not allege that the protest had been
presented by the plaintiff, within twenty-four hours after the occurrence to the competent authority at the port
where the accident occurred as provided for Article 835 of the Code of Commerce.

Issue: Whether the motorboat Jison is a vessel provided for by Article 835 of the Code of Commerce?

Held: The word vessel as used in the third section of tile IV, Book III of the Code of Commerce, dealing with
collisions, does not include all ships, craft or floating structures of any kind without limitation. The said section
does not apply to minor craft engaged in a river and bay traffic.Therefore, a passenger on boat like the Jison, 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.Article 835 of the Code of Commerce does not apply.

TEODORO R. YANGCO, ETC vs. MANUEL LASERNA, G.R. No. L-47447-

47449, October 29, 1941
LIABILITY OF OWNER NOT TO EXCEED INTEREST. The liability of the owner of any vessel, for any embezzlement,
loss, or destruction, by any person, of any property, goods, or merchandise, shipped or put on board of such vessel, or for any loss,
damage, or injury by collision, or for any act, matter or thing, loss, damage, or forfeiture, done, occasioned, or incurred without
the privity, or knowledge of such owner or owners, shall in no case exceed the amount or value of the interest of such owner in
such vessel, and her freight then pending.
The policy which the rule is designed to promote is the encouragement of shipbuilding and investment in maritime commerce.
(Vide: Norwich & N. Y. Trans. Co. v. Wright, supra; The Main v. Williams, 152 U. S. 122; 58 C. J. 634.) And it is in that spirit that
the American courts construed the Limited Liability Act of Congress whereby the immunities of the Act were applied to claims
not only for lost goods but also for injuries and "loss of life of passengers, whether arising under the general law of admiralty, or
under Federal or State statutes." (The City of Columbus, 22 Fed. 460; The Longfellow, 104 Fed. 360; Butler v. Boston & Savannah
Steamship Co., 32 Law. ed. 1017; Craig v. Continental Insurance Co., 35 Law. ed. 836.) The Supreme Court of the United States
in Norwich & N. Y. Trans. Co. v. Wright, 80 U. S. 104, 20 Law. ed. 585, 589-590, accounting for the history of the principle,
clinches our exposition of the supporting authorities:
The history of the limitation of liability of shipowners is matter of common knowledge. The learned opinion of Judge Ware in the
case of The Rebecca, 1 Ware, 187-194, leaves little to be desired on the subject. He shows that it originated in the maritime law of
modern Europe; that whilst the civil, as well as the common law, made the owner responsible to the whole extent of damage
caused by the wrongful act or negligence of the matter or crew, the maritime law only made then liable (if personally free from
blame) to the amount of their interest in the ship. So that, if they surrendered the ship, they were discharged.
Grotius, in his law of War and Peace, says that men would be deterred from investing in ships if they thereby incurred the
apprehension of being rendered liable to an indefinite amount by the acts of the master and, therefore, in Holland, they had never
observed the Roman Law on that subject, but had a regulation that the ship owners should be bound no farther than the value of
their ship and freight. His words are: Navis et eorum quae in navi sunt," "the ship and goods therein." But he is speaking of the
owner's interest; and this, as to the cargo, is the freight thereon, and in that sense he is understood by the commentators. Boulay
Paty, Droit Maritime, tit. 3, sec. 1, p. 276; Book II, c. XI, sec. XIII. The maritime law, as codified in the celebrated
French Ordonance de la Marine, in 1681, expressed the rule thus: 'The proprietors of vessels shall be responsible for the acts of
the master, but they shall be discharged by abandoning the ship and freight.' Valin, in his commentary on this passage, lib. 2, tit. 8,
art. 2, after specifying certain engagements of the master which are binding on the owners, without any limit of responsibility,
such as contracts for the benefit of the vessel, made during the voyage (except contracts of bottomry) says: "With these exceptions
it is just that the owner should not be bound for the acts of the master, except to the amount of the ship and freight. Otherwise he
would run the risk of being ruined by the bad faith or negligence of his captain, and the apprehension of this would be fatal to the
interests of navigation. It is quite sufficient that he be exposed to the loss of his ship and of the freight, to make it his interest,
independently of any goods he may have on board to select a reliable captain." Pardessus says: 'The owner is bound civilly for all
delinquencies committed by the captain within the scope of his authority, but he may discharge himself therefrom by abandoning
the ship and freight; and, if they are lost, it suffices for his discharge, to surrender all claims in respect of the ship and its freight,"
such as insurance, etc. Droit Commercial, part 3, tit. 2, c. 3, sec. 2.
The same general doctrine is laid down by many other writers on maritime law. So that it is evident that, by this law, the owner's
liability was coextensive with his interest in the vessel and its freight, and ceased by his abandonment and surrender of these to the
parties sustaining loss.
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 steamshipNegros, 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.
Whether the abandonment of the vessel sought by the petitioner in the instant case was in accordance with law of not, is
immaterial. The vessel having totally perished, any act of abandonment would be an idle ceremony.
Judgement is reversed and petitioner is hereby absolved of all the complaints, without costs.

GREGORIO PESTAO and METRO CEBU AUTOBUS CORPORATION, petitioners, vs. Spouses TEOTIMO
SUMAYANG and PAZ C. SUMAYANG, respondents.
DECISION
PANGANIBAN, J.:
Factual findings of the Court of Appeals, affirming those of the trial judge, are binding on this Court. In quasi-delicts, such
findings are crucial because negligence is largely a matter of evidence. In computing an award for lost earning capacity, the life
expectancy of the deceased, not that of the heir, is used as basis.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the April 21, 1999 Decision and the
August 6, 1999 Resolution of the Court of Appeals[1] (CA) in CA-GR CV No. 30289. The questioned Decision disposed as
follows:
WHEREFORE, premises considered, the instant appeal is hereby DENIED. The assailed Decision of the lower court is hereby
AFFIRMED with the aforesaid modification regarding the award of death penalty.
The Resolution of August 6, 1999 denied reconsideration.[2]
The Facts
The events leading to this Petition were summarized by the Court of Appeals as follows:
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.
Apart from the institution of criminal charges against Gregorio Pestao, [Respondents] Teotimo and Paz Sumayang, as heirs of
Ananias Sumayang, filed this civil action for damages against Gregorio Pestao, as driver of the passenger bus that rammed the
deceaseds motorcycle, Metro Cebu, as owner and operator of the said bus, and Perla Compania de Seguros, as insurer of Metro
Cebu. The case was docketed as Civil Case No. CEB-6108.
On November 9, 1987, upon motion of [Petitioner] Pestao, Judge Pedro C. Son ordered the consolidation of the said case with
Criminal Case No. 10624, pending in Branch 16 of the same Court, involving the criminal prosecution of Gregorio Pestao for
[d]ouble [h]omicide thru [r]eckless [i]mprudence. Joint trial of the two cases thereafter ensued, where the following assertions
were made:
[Respondents] rely mainly on the testimonies of Ignacio Neis, Pat. Aquilino Dinoy and Teotimo Sumayang, father of the
deceased. Neis declared that he saw the incident while he was sitting on a bench beside the highway; that both vehicles c[a]me
from the North; that as the motorcycle approached the junction to Tab[a]gon, the driver Ananias Sumayang signalled with his left
arm to indicate that he was taking the Tab[a]gon Road; that the motorcycle did turn left but as it did so, it was bumped by an
overspeeding bus; that the force of the impact threw Ananias Sumayang and his companion Manuel Romagos about 14 meters
away. The motorcycle, Neis continued, was badly damaged as it was dragged by the bus.
On the other hand, Pat. Dinoy testified that he was in the nearby house of Ruben Tiu [when] he heard the sound or noise caused by
the collision; that he immediately went to the scene where he found Ananias Sumayang and Manuel Romagos lying on the road
bleeding and badly injured; that he requested the driver of a PU vehicle to take them to a hospital; that he took note of the various
distances which he included in his sketch (Exh. J) that the probable point of impact was at the left lane of the highway and right at
the junction to Tab[a]gon (Exh J-11); that he based his conclusion on the scratches caused by the motorcycles footrest on the
asphalt pavement; that he described the damage caused to the motorcycle in his sketch (Exh J); that on the part of the bus, the
right end of its front bumper was bent and the right portion of the radiator grill was dented. Pat. Dinoy acknowledged that he met
at the scene Ignacio Neis who informed him that he saw the incident.
On the contrary, Pestao blamed Sumayang for the accident. He testified that when he first blew the horn the motorcycle which was
about 15 or 20 meters ahead went to the right side of the highway that he again blew the horn and accelerated in order to overtake
the motorcycle; that when he was just one meter behind, the motorcycle suddenly turned left towards the Tab[a]gon [R]oad and
was bumped by his bus; that he was able to apply his break only after the impact. Pestaos testimony was corroborated by Ireneo
Casilia who declared that he was one of the passengers of the bus; that the motorcycle suddenly turned left towards Tab[a]gon
[R]oad without giving any signal to indicate its maneuver; that the bus was going at 40 kph when the accident occurred.
To substantiate its defense of bonos pater familias [petitioner] [c]orporation recalled to the witness box Gregorio Pestao who
explained how his driving experience and ability were tested by the company before he was hired. He further declared that the
management gave regular lectures to drivers and conductors touching on various topics like speeding, parking, loading and
treatment of passengers, and that before he took to the road at 2:30 AM of that day he checked together with the mechanic the
tires, brake, signal lights as well as the tools to be brought along. He did the same thing before commencing his return trip from
Hagnaya, San Remegio later in the day.
The corporation also presented its maintenance supervisor, Agustin Pugeda, Jr., and its manager, Alfonso Corominas, Jr. who
corroborated Pestaos testimony that his driving ability was thoroughly tested, and that all drivers underwent periodic lecture on
various aspects of safety driving including pertinent traffic regulations. They also confirmed the thorough checkup of every
vehicle before it would depart and that the performance of the drivers was being monitored by several inspectors posted at random
places along the route.
In judgment, the lower court found [petitioners] liable to the [respondents], in the amounts of P30,000.00 for death indemnity,
P829,079 for loss of earning capacity of the deceased Ananias Sumayang, and P36,000.00 for necessary interment expenses. The
liability of defendant Perla Compania de Seguros, Inc., however, was limited only to the amount stipulated in the insurance policy,
which [was] P12,000 for death indemnity and P4,500.00 for burial expenses.
In so ruling, the lower court found [Petitioner] Pestao to have been negligent in driving the passenger bus that hit the deceased. It
was shown that Pestao negligently attempted to overtake the motorcycle at a dangerous speed as they were coming upon a
junction in the road, and as the motorcycle was about to turn left towards Tabagon. The court likewise found Metro Cebu directly
and primarily liable, along with Pestao, the latters employer under Article 2180 of the Civil Code, as [Petitioner] Metro Cebu
failed to present evidence to prove that it had observed x x x [the] diligence of a good father of a family to prevent damage. Nor
has Metro Cebu proven that it had exercised due diligence in the supervision of its employees and in the maintenance of vehicles.
[3]

Ruling of the Court of Appeals

The CA affirmed respondents liability for the accident and for Sumayangs death. Pestao was negligent when he tried to overtake
the victims motorcycle at the Tabagon junction. As a professional driver operating a public transport vehicle, he should have taken
extra precaution to avoid accidents, knowing that it was perilous to overtake at a junction, where adjoining roads had brought
about merging and diverging traffic.
The appellate court opined that Metro Cebu had shown laxity in the conduct of its operations and in the supervision of its
employees. By allowing the bus to ply its route despite the defective speedometer, said petitioner showed its indifference towards
the proper maintenance of its vehicles. Having failed to observe the extraordinary diligence required of public transportation
companies, it was held vicariously liable to the victims of the vehicular accident.
In accordance with prevailing jurisprudence, the CA raised to P50,000 the granted indemnity for the death of the victim. It also
affirmed the award of loss of earning capacity based on his life expectancy. Such liability was assessed, not as a pension for the
claiming heirs, but as a penalty and an indemnity for the drivers negligent act.
Hence, this Petition.[4]
Issues
Petitioners submit the following issues[5] for our consideration:
1. The Court of Appeals misapplied facts of weight and substance affecting the result of the case.
2. The Court of Appeals misapplied R.A. 4136 as regards the behavior of the deceased at the time of the accident.
3. The Court of Appeals erred in ruling that the award of damages representing income that deceased could have earned be
considered a penalty.
4. The Court of Appeals, contrary to Article 2204, Civil Code, raised the award of P30,000.00 damages representing indemnity for
death to P50,000.00.
5. The Court of Appeals used as basis for the loss of earning capacity, the life expectancy of the [d]eceased instead of that of the
respondents which was shorter.[6]
In short, they raise these questions: whether the CA erred (1) in applying Section 45 of RA 4136 when it ruled that negligence in
driving was the proximate cause of the accident; (2) in increasing the civil indemnity from P30,000 to P50,000; and (3) in using
the life expectancy of the deceased instead of the life expectancies of respondents.
The Courts Ruling
The Petition has no merit.
First Issue: Negligence
Petitioners contend that Pestao was not under any obligation to slow down when he overtook the motorcycle, because the
deceased had given way to him upon hearing the bus horn. Seeing that the left side of the road was clearly visible and free of
oncoming traffic, Pestao accelerated his speed to pass the motorcycle. Having given way to the bus, the motorcycle driver should
have slowed down until he had been overtaken.
They further contend that the motorcycle was not in the middle of the road nearest to the junction as found by the trial and the
appellate courts, but was on the inner lane. This explains why the damage on the bus were all on the right side the right end of the
bumper and the right portion of the radiator grill were bent and dented. Hence, they insist that it was the victim who was
negligent.
We disagree. Petitioners are raising a question of fact based on Pestaos testimony contradicting that of Eyewitness Ignacio Neis
and on the location of the dents on the bumper and the grill. Neis testified that as the two vehicles approached the junction, the
victim raised his left arm to signal that he was turning left to Tabagon, but that the latter and his companion were thrown off the
motorcycle after it was bumped by the overspeeding bus.
These contentions have already been passed upon by the trial and the appellate courts. We find no cogent reason to reverse or
modify their factual findings. The CA agreed with the trial court that the vehicular collision was caused by Pestaos negligence
when he attempted to overtake the motorcycle. As a professional driver operating a public transport bus, he should have
anticipated that overtaking at a junction was a perilous maneuver and should thus have exercised extreme caution.
Factual findings of the CA affirming those of the trial court are conclusive and binding on this Court. Petitioners failed to
demonstrate that this case falls under any of the recognized exceptions to this rule. [7] Indeed, the issue of negligence is basically
factual and, in quasi-delicts, crucial in the award of damages.
Petitioners aver that the CA was wrong in attributing the accident to a faulty speedometer and in implying that the accident could
have been avoided had this instrument been properly functioning.
This contention has no factual basis. 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.[8]
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.
Second Issue: Life Indemnity
Petitioners aver that the CA erred in increasing the award for life indemnity from P30,000 to P50,000, without specifying any
aggravating circumstance to justify the increment as provided in the Civil Code. [9]
This contention is untenable. The indemnity for death caused by a quasi-delict used to be pegged at P3,000, based on Article 2206
of the Civil Code. However, the amount has been gradually increased through the years because of the declining value of our
currency. At present, prevailing jurisprudence fixes the amount at P50,000.[10]
Third Issue: Loss of Earning Capacity
Petitioners cite Villa Rey Transit, Inc. v. Court of Appeals,[11] which held:
The determination of the indemnity to be awarded to the heirs of a deceased person has therefore no fixed basis. x x x The life
expectancy of the deceased or of the beneficiary, whichever is shorter, is an important factor. x x x.
They contend that the CA used the wrong basis for its computation of earning capacity.
We disagree. The Court has consistently computed the loss of earning capacity based on the life expectancy of the deceased,
[12]
and not on that of the heir.[13] Even Villa Rey Transit did likewise.
The award for loss of earning capacity is based on two factors: (1) the number of years on which the computation of damages is
based and (2) the rate at which the loss sustained by the heirs is fixed.[14] The first factor refers to the life expectancy, which takes
into consideration the nature of the victims work, lifestyle, age and state of health prior to the accident. The second refers to the
victims earning capacity minus the necessary living expenses. Stated otherwise, the amount recoverable is that portion of the
earnings of the deceased which the beneficiary would have received -- the net earnings of the deceased.[15]

Magsaysay Inc. vs Anastacio Agan

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.

DR. HERMAN ARMOVIT, DORA ARMOVIT AND JACQUELINE ARMOVIT, petitioners, vs. COURT OF APPEALS, AND
NORTHWEST AIRLINES, INC., respondents.
Facts: In October 1981, the petitioners decided to spend their Christmas holidays with relatives and friends in the Philippines, so they
purchased from private respondent, three (3) round trip airline tickets from the U.S. to Manila and back, plus three (3) tickets for the rest
of the children.
On their return trip from Manila to the U.S. scheduled on January 17, 1982, petitioner arrived at the check-in counter of respondent 9:15
in the morning, which is a good one (1) hour and fifteen (15) minutes ahead of the 10:30 A.M. scheduled flight time recited in their
tickets. Petitioners 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 time entered in their plane tickets was erroneous.
Herein petitioner Dr. Armovit protested in extreme agitation that because of the bump-off he will not be able to keep his appointments
with his patients in the U.S. 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 that day.
Because of the refusal of the private respondent to heed the repeated demands of the petitioners for compensatory damages, petitioners
were compelled to file an action for damages in the Regional Trial Court of Manila.
decision was rendered on July 2, 1985, the dispositive part of which reads as follows: "WHEREFORE, in view of the foregoing
considerations, judgment is hereby rendered ordering defendant to pay plaintiffs actual, moral, exemplary and nominal damages, plus
attorney's fees..
Not satisfied therewith, private respondent interposed an appeal to the Court of Appeals wherein in due course a decision was rendered:
On the allowance of damages, the trial court has discretion to grant and fix the amounts. In this case, there was gross
negligence on the part of defendant-appellant in reconfirming the time and date of departure of Flight No. 002
Appellees' actual damages in the amount of P1,300.00 is maintained for being unrebutted by the Appellant.
However, We modify the allowance of the other awards made by the trial court.
The moral damages of P900,000.00 awarded to Appellees must be eliminated considering the following: llcd
-That the appellees did not take the witness stand to testify on their "social humiliation, wounded feelings and anxiety" and
the breach of contract was not malicious or fraudulent.
- Furthermore, moral damages, though incapable of pecuniary estimation, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.
-However, there is no question that appellant acted with negligence in not informing appellees about the change of hour of
departure. To provide an example or correction for the public good, therefore, the award of exemplary damages is proper.
Nonetheless, the awards granted by the trial court are far too exorbitant and excessive compared to the actual loss of
P1,300.00. The authority of the Court of Appeals to modify or change the amounts of awards has been upheld in a long line of
decisions. We reduce the award of exemplary damages...
The award of nominal damages has to be eliminated since we are already awarding actual loss. Nominal damages cannot co-
exist with actual or compensatory damages.
The award of 5% of the total damages as attorney's fees is reasonable.
WHEREFORE, with the above modifications, the decision appealed from is hereby AFFIRMED in all other respects." 6
A motion for reconsideration thereof filed by the petitioners was denied in a resolution dated May 29, 1989. 7
Both petitioners and private respondent elevated the matter to this Court for review by certiorari.
Issue: Whether or not Petitioners are entitled to moral damages; WON the breach of contract was malicious or fraudulent.
Held: The petition is impressed with merit.
The appellate court observed that private respondent was guilty of gross negligence not only in the issuance of the tickets by the
erroneous entry of the date of departure and without changing or correcting the error when the said three (3) tickets were presented for
re-confirmation. Nevertheless it deleted the award of moral damages on the ground that petitioners did not take the witness stand to
testify on "their social humiliation, wounded feelings and anxiety, and that the breach of contract was not malicious or fraudulent." 8
We disagree.
In Air France vs. Carrascoso, 9 Lopez vs. Pan American World Airways, 10 and Zulueta vs. Pan American World Airways, 11 this Court
awarded damages for the gross negligence of the airline which amounted to malice and bad faith and which tainted the breach of air
transportation contract.
The gross negligence committed by private respondent 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 establish that private respondent committed a breach of contract which entitles petitioners to
moral damages.
The appellate court overlooked, that the failure of the petitioner to appear in court to testify was explained by them. The assassination of
Senator Benigno Aquino, Jr. on August 21, 1983 following the year they were bumped off caused a turmoil in the country.
Nevertheless, Atty. Raymund Armovit, brother of petitioner Dr. Armovit, took the witness stand as he was with the petitioners from the
time they checked in up to the time of their ultimate departure.
No doubt Atty. Raymund Armovit's testimony adequately and sufficiently established the serious anxiety, wounded feelings and social
humiliation that petitioners suffered upon having been bumped off. However, considering the circumstances of this case whereby the
private respondent attended to the plight of the petitioners, taking care of their accommodations while waiting and boarding them in the
flight back to the U.S. the following day, the Court finds that the 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. 14 The award of the
appellate court is adequate. llcd
Nevertheless, the deletion of the nominal damages by the appellate court is well-taken since there is an award of actual damages.
Nominal damages cannot co-exist with actual or compensatory damages. 15 GRANTED.

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 a highway 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 humerous4.
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. He spent 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. Its rights 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:
YES. Petitioner is liable for damages.

Petitioner, as a common carrier, is expected to exercise extraordinary diligence, and has the duty to transport its
passengers safely 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.
4 The bone that extends from shoulder to elbow.
 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 another case, 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 to award 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 imprudent
manner. This will provide as an example or as a correction for the public good.

PETITION IS DENIED

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 flightunder 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 conjunctionticket 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 ticketthe 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 filethe 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.

G.R. No. 171092 March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner,
vs.
BRITISH AIRWAYS, Respondent.

Facts: On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint 2 for damages against
respondent British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that on
February 28, 2005, she took respondents flight 548 from London, United Kingdom to Rome, Italy. Once
on board, she allegedly requested Julian Halliday (Halliday), one of the respondents flight attendants,
to assist her in placing her hand-carried luggage in the overhead bin. However, Halliday allegedly
refused to help and assist her, and even sarcastically remarked that "If I were to help all 300
passengers in this flight, I would have a broken back!"
Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight
attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the business
class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the other passengers to
be 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
frequent traveler. Thereupon, Kerrigan allegedly thrust his face a mere few centimeters away from that
of the petitioner and menacingly told her that "We dont like your attitude."
Upon arrival in Rome, petitioner complained to respondents ground manager and demanded an
apology. 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 P5
million as moral damages, P2 million as nominal damages, P1 million as exemplary
damages, 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 Filipino citizen and resident by
airline personnel of a foreign carrier travelling beyond the territorial limit of any foreign country; and thus is outside the ambit of
the Warsaw Convention.

Held: The Warsaw Convention applies because the air travel, where the alleged tortious conduct
occurred, was between the United Kingdom and Italy, which are both signatories to the Warsaw
Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or goods performed
by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air
transport undertaking.
2. For the purposes of this Convention the expression "international carriage" means any
carriage in which, according to the contract made by the parties, the place of departure and the
place of destination, whether or not there be a break in the carriage or a transhipment, are
situated either within the territories of two High Contracting Parties, or within the territory of a
single High Contracting 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 this Convention. A carriage without such an agreed stopping place between
territories subject to the sovereignty, suzerainty, mandate or authority of the same High
Contracting Party is not deemed to 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
within the territories of two High Contracting Parties, said carriage is deemed an "international
carriage". The High Contracting Parties referred to herein were the signatories to the Warsaw
Convention and those which subsequently adhered to it.
In the case at bench, petitioners place of departure was London, United Kingdom while her
place of destination was Rome, Italy. Both the United Kingdom and 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.

Vasquez v. CA
138 SCRA 553

Facts: Petitioners lost their children in a shipwreck involving the vessel of private respondent when it
sailed despite a typhoon.

Issue: 1) W/n it is a fortuitous event

2) W/n respondents are liable

HELD:

1) No. It is not a caso fortuito. The elements to consider in sustaining a case of caso fortuito are the ff:
1) the event must be independent of the human will, 2) the occurrence must render it impossible for the
debtor to fulfill the obligation in a normal manner, 3) the obligor must be free of participation in,
aggravation of, the injury to the creditor,

2) Petitioners are liable as it is not a caso fortutito. There is no caso fortuito when the ship captain
proceeded en route despite a typhoon advice close to the area where the vessel will pass. Moreover, the
Board of Marines inquiry conclusion that the ship captain was not negligent is not binding on the Court
when said finding is not complete. The liability of the ship owner also extends to the value of vessel and
the insurance proceeds thereon.
- See more at: http://lawsandfound.blogspot.com/2008/12/vasquez-v-ca.html#sthash.AaQMqjNY.dpuf

G.R. No. 110398 November 7, 1997

NEGROS NAVIGATION CO., INC., petitioner,
vs.
THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE LA VICTORIA, respondents.

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.