UCPB GENERAL INSURANCE CO., INC., Petitioner, vs.

ABOITIZ SHIPPING CORP. EAGLE EXPRESS LINES, DAMCO INTERMODAL

SERVICES, INC., and PIMENTEL CUSTOMS BROKERAGE CO., Respondents.
FACTS: On June 18, 1991, three (3) units of waste water treatment plant with
accessories were purchased by San Miguel Corporation (SMC for brevity) from Super
Max Engineering Enterprises, Co., Ltd. of Taipei, Taiwan. The goods came from
Charleston, U.S.A. and arrived at the port of Manila on board MV "SCANDUTCH
STAR". The same were then transported to Cebu on board MV "ABOITIZ
SUPERCON II". After its arrival at the port of Cebu and clearance from the Bureau of
Customs, the goods were delivered to and received by SMC at its plant site on
August 2, 1991. It was then discovered that one electrical motor of DBS Drive Unit
Model DE-30-7 was damaged.
The appellate court, as previously mentioned, reversed the decision of the trial court
and ruled that UCPBs right of action against respondents did not accrue because
UCPB failed to file a formal notice of claim within 24 hours from (SMCs) receipt of the
damaged merchandise as required under Art. 366 of the Code of Commerce.
According to the Court of Appeals, the filing of a claim within the time limitation in Art.
366 is a condition precedent to the accrual of a right of action against the carrier for
the damages caused to the merchandise.
UCPB claims that under the Carriage of Goods by Sea Act (COGSA), notice of loss
need not be given if the condition of the cargo has been the subject of joint inspection
such as, in this case, the inspection in the presence of the Eagle Express
representative at the time the cargo was opened at the ICTSI.
ISSUE: Whether any of the remaining parties may still be held liable by UCPB. Is the
filing of a notice of claim a condition precedent to the accrual of a right of action
against the carrier for the damages caused to the merchandise?
HELD: The consignee failed to file a formal notice of claim within 24 hours from
receipt of the damaged merchandise as required under Article 366 of the Code of
Commerce.
The requirement to give notice of loss or damage to the goods is not an empty
formalism. The fundamental reason or purpose of such a stipulation is not to relieve
the carrier from just liability, but reasonably to inform it that the shipment has been
damaged and that it is charged with liability therefor, and to give it an opportunity to
examine the nature and extent of the injury. This protects the carrier by affording it an
opportunity to make an investigation of a claim while the matter is still fresh and easily
investigated so as to safeguard itself from false and fraudulent claims.
The 24-hour claim requirement has been construed 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 fulfillment of the condition. Otherwise,
no right of action against the carrier can accrue in favor of the former.
PHILIPPINE CHARTER INSURANCE CORPORATION VS. CHEMOIL
LIGHTERAGE HITE GOLD CORPORATION (G.R. No. 136888. June 29, 2005)

Facts: Philippine Charter Insurance Corporation is a domestic corporation engaged in
the business of non-life insurance. Respondent Chemoil Lighterage Corporation is
also a domestic corporation engaged in the transport of goods. On 24 January 1991,
Samkyung Chemical Company, Ltd., based in South Korea, shipped 62.06 metric
tons of the liquid chemical DIOCTYL PHTHALATE (DOP) on board MT
TACHIBANA which was valued at US$90,201.57 and another 436.70 metric tons of
DOP valued at US$634,724.89 to the Philippines. The consignee was Plastic Group
Phils., Inc. in Manila. PGP insured the cargo with Philippine Charter Insurance
Corporation against all risks. The insurance was under Marine Policies No. MRN-
30721[5] dated 06 February 1991. Marine Endorsement No. 2786[7] dated 11 May
1991 was attached and formed part of MRN-30721, amending the latters insured
value to P24,667,422.03, and reduced the premium accordingly. The ocean tanker
MT TACHIBANA unloaded the cargo to the tanker barge, which shall transport the
same to Del Pan Bridge in Pasig River and haul it by land to PGPs storage tanks in
Calamba, Laguna. Upon inspection by PGP, the samples taken from the shipment
showed discoloration demonstrating that it was damaged. PGP then sent a letter
where it formally made an insurance claim for the loss it sustained.
On 15 July 1991, an action for damages was instituted by the petitioner-insurer
against respondent-carrier before the RTC, Br.16, City of Manila. Respondent filed an
answer which admitted that it undertook to transport the shipment, but alleged that
before the DOP was loaded into its barge, the representative of PGP, Adjustment
Standard Corporation, inspected it and found the same clean, dry, and fit for loading,
thus accepted the cargo without any protest or notice. As carrier, no fault and
negligence can be attributed against respondent as it exercised extraordinary
diligence in handling the cargo. After due hearing, the trial court rendered a Decision
in favor of plaintiff. On appeal, the Court of Appeals promulgated its Decision
reversing the trial court. A petition for review on certiorar[ was filed by the petitioner
with this Court.

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

Held: Article 366 of the Code of Commerce has profound application in the case at
bar, which provides that; Within twenty-four hours following the receipt of the
merchandise a claim may be made against the carrier on account of damage or
average found upon opening the packages, provided that the indications of the
damage or average giving rise to the claim cannot be ascertained from the exterior of
said packages, in which case said claim shall only be admitted at the time of the
receipt of the packages. After the periods mentioned have elapsed, or after the
transportation charges have been paid, no claim whatsoever shall be admitted
against the carrier with regard to the condition in which the goods transported were
delivered.

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

Aboitiz Shipping Corp. V. Insurance Co. Of North America (2008)
FACTS: June 20, 1993: MSAS Cargo International Limited and/or Associated and/or
Subsidiary Companies (MSAS) procured an "all-risk" marine insurance policy from
ICNA UK Limited of London for wooden work tools and workbenches purchased by
consignee Science Teaching Improvement Project (STIP), Ecotech Center, Sudlon
Lahug, Cebu City.
July 26, 1993: the cargo was received by Aboitiz Shipping Corporation (Aboitiz)
through its duly authorized booking representative, Aboitiz Transport System
August 5, 1993: Stripping Report, checker noted that the crates were slightly broken
or cracked at the bottom
August 11, 1993: cargo was withdrawn by the representative of the consignee,
Science Teaching Improvement Project (STIP) and delivered to Don Bosco Technical
High School, Punta Princesa, Cebu City
August 13, 1993: Mayo B. Perez, Head of Aboiti received a call from the receiver Mr.
Bernhard Willig that the cargo sustained water damage so he checked the other
cargo but they were dry
In a letter dated August 15, 1993, Willig informed Aboitiz that the damage was caused
by water entering through the broken bottom parts of the crate
Consignee filed a claim against ICNA
Aboitiz refused to settle the claim
ICNA paid the amount of P280,176.92 to consignee and a subrogation receipt was
duly signed by Willig.
ICNA then advised Aboitiz of the receipt signed in its favor but received no reply so it
filed for collection at the RTC.
RTC: against ICNA - subrogation Form is self-serving and has no probative value
since Wellig was not presented to the witness stand
CA: reversed RTC ruling - right of subrogation accrues simply upon payment by the
insurance company of the insurance claim even assuming that it is an unlicensed
foreign corporation
ISSUE: WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR IN RULING THAT THE EXTENT AND KIND
OF DAMAGE SUSTAINED BY THE SUBJECT CARGO WAS CAUSED BY THE
FAULT OR NEGLIGENCE OF ABOITIZ
HELD: The giving of notice of loss or injury is a condition precedent to the action for
loss or injury or the right to enforce the carriers liability. Circumstances peculiar to
this case lead Us to conclude that the notice requirement was complied with. As held
in the case of Philippine American General Insurance Co., Inc. v. Sweet Lines,
Inc.,[33] this notice requirement protects the carrier by affording it an opportunity to
make an investigation of the claim while the matter is still fresh and easily
investigated. It is meant to safeguard the carrier from false and fraudulent claims.
Under the Code of Commerce, the notice of claim must be made within twenty four
(24) hours from receipt of the cargo if the damage is not apparent from the outside of
the package. For damages that are visible from the outside of the package, the claim
must be made immediately. The law provides:
Article 366. Within twenty four hours following the receipt of the merchandise, the
claim against the carrier for damages or average which may be found therein upon
opening the packages, may be made, provided that the indications of the damage or
average which give rise to the claim cannot be ascertained from the outside part of
such packages, in which case the claim shall be admitted only at the time of receipt.
MITSUI O.S.K. LINES LTD., represented by MAGSAYSAY AGENCIES,
INC., petitioner, vs. COURT OF APPEALS and LAVINE LOUNGEWEAR MFG.
CORP., respondents.
FACTS: Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the
Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage
through Meister Transport, Inc., an international freight forwarder, with private
respondent Lavine Loungewear Manufacturing Corporation to transport goods of the
latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to
France 28 days from initial loading. On July 24, 1991, petitioner's vessel loaded
private respondent's container van for carriage at the said port of origin.
However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with
the result that the shipment arrived in Le Havre only on November 14, 1991. The
consignee allegedly paid only half the value of the said goods on the ground that they
did not arrive in France until the "off season" in that country. The remaining half was
allegedly charged to the account of private respondent which in turn demanded
payment from petitioner through its agent.
As petitioner denied private respondent's claim, the latter filed a case in the Regional
Trial Court on April 14, 1992. In the original complaint, private respondent impleaded
as defendants Meister Transport, Inc. and Magsaysay Agencies, Inc., the latter as
agent of petitioner Mitsui O.S.K. Lines Ltd. On May 20, 1993, it amended its
complaint by impleading petitioner as defendant in lieu of its agent. The parties to the
case thus became private respondent as plaintiff, on one side, and Meister Transport
Inc. and petitioner Mitsui O.S.K. Lines Ltd. as represented by Magsaysay Agencies,
Inc., as defendants on the other.
ISSUE: WHETHER OR NOT COURT OF APPEALS COMMITTED A SERIOUS
ERROR OF LAW IN RULING THAT PRIVATE RESPONDENT'S AMENDED
COMPLAINT HAS NOT PRESCRIBED PURSUANT TO SECTION 3(6) OF THE
CARRIAGE OF GOODS BY SEA ACT.
RULING: Unless notice of loss or damage and the general nature of such loss or
damage be given in writing to the carrier or his agent at the port of discharge or at the
time of the removal of the goods into the custody of the person entitled to delivery
thereof under the contract of carriage, such removal shall be prima facie evidence of
the delivery by the carrier of the goods as described in the bill of lading. If the loss or
damage is not apparent, the notice must be given within three days of the delivery.
In the case at bar, there is neither deterioration nor disappearance nor destruction of
goods caused by the carrier's breach of contract. Whatever reduction there may have
been in the value of the goods is not due to their deterioration or disappearance
because they had been damaged in transit.
We conclude by holding that as the suit below is not for "loss or damage" to goods
contemplated in 3(6), the question of prescription of action is governed not by the
COGSA but by Art. 1144 of the Civil Code which provides for a prescriptive period of
ten years.
Filipino Merchants Insurance Company, Inc. vs Judge Jose Alejandro
FACTS: In 1976, Choa Tiek Seng contracted Frota Oceanica Brasiliera for the latter
to deliver goods. Choa Tiek Seng insured the goods with Filipino Merchants
Insurnace Company. The goods left the port of Manila on December 13, 1976 and
reached its point of destination on December 17, 1976. The goods were however
damaged.
Choa Tiek Seng then filed an insurance claim. Filipino Merchants refused to pay so in
August 1977, it was sued by Choa Tiek Seng. In January 1978, Filipino Merchants
filed a third party complaint against the carrier Frota Oceanica Brasiliera as it alleged
that it is the carrier who is liable to pay damages to Choa Tiek Seng. Judge Jose
Alejandro of the trial court ruled against Filipino Merchants. The Court of Appeals
affirmed the ruling of the judge. The lower courts ruled that Filipino Merchants is
already barred from filing a claim because under the Carriage of Goods by Sea Act,
the suit against the carrier must be filed within one year after delivery of the goods or
the date when the goods should have been delivered or one year from December 17,
1976. The insurance company is already barred for it filed its third party complaint
only in January 1978.
ISSUE: Whether or not Filipino Merchants is precluded by the said time-bar rule.
HELD: Yes. The pertinent provision of the Carriage of Goods by Sea Act does not
only apply to the shipper but also applies to the insurer. The coverage of the Carriage
of Goods by Sea Act includes the insurer of the goods. Otherwise, what the Act
intends to prohibit after the lapse of the one year prescriptive period can be done
indirectly by the shipper or owner of the goods by simply filing a claim against the
insurer even after the lapse of one year. This would be the result if the insurer can, at
any time, proceed against the carrier and the ship since it is not bound by the time-
bar provision. In this situation, the one year limitation will be practically useless. This
could not have been the intention of the law which has also for its purpose the
protection of the carrier and the ship from fraudulent claims by having matters
affecting transportation of goods by sea be decided in as short a time as possible
and by avoiding incidents which would unnecessarily extend the period and permit
delays in the settlement of questions affecting the transportation.
Mayer Steel Pipe Corp. vs. Court of Apeals
G.R. No. 124050. June 19, 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 3rd 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.

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. V. PHILIPPINE FIRST
INSURANCE CO.
FACTS: CMC Trading A.G. shipped on board the M/V Anangel Sky at Hamburg,
Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to
Manila consigned to the Philippine Steel Trading Corporation.
- On July 28, 1990, M/V Anangel Sky arrived at the port of Manila and, within the
subsequent days, discharged the subject cargo. Four (4) coils were found to be in
bad order.
- Finding the four (4) coils in their damaged state to be unfit for the intended
purpose, the consignee Philippine Steel Trading Corporation declared the same as
total loss.
- Philippine First Insurance paid the claim of Philippine Steel and was thus
subrogated.
- Philippine First then instituted a complaint for recovery of the amount paid to the
consignee as insured.
- Belgian claims that the damage and/or loss was due to pre-shipment damage, to
the inherent nature, vice or defect of the goods, or to perils, danger and accidents of
the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper
of the goods or their representatives. Belgian further argued that their liability, if there
be any, should not exceed the limitations of liability provided for in the bill of lading
and other pertinent laws. Finally, Belgian averred that, in any event, they exercised
due diligence and foresight required by law to prevent any damage/loss to said
shipment.
- The RTC dismissed the complaint.
- The CA reversed and ruled that Belgian were liable for the loss or the damage of
the goods shipped, because they had failed to overcome the presumption of
negligence imposed on common carriers.
ISSUES:
- Whether the notice of loss was timely filed. (Belgian claims that pursuant to
Section 3, paragraph 6 of COGSA, respondent should have filed its Notice of Loss
within three days from delivery. They assert that the cargo was discharged on July
31, 1990, but that respondent filed its Notice of Claim only on September 18, 1990.)
HELD:
- NO. Mere proof of delivery of the goods in good order to a common carrier and of
their arrival in bad order at their destination constitutes a prima facie case of fault or
negligence against the carrier.
- In this case, Belgian failed to rebut the prima facie presumption of negligence.
First, as stated in the Bill of Lading, Belgian received the subject shipment in good
order and condition in Germany. Second, prior to the unloading of the cargo, an
Inspection Report prepared and signed by representatives of both parties showed the
steel bands broken, the metal envelopes rust-stained and heavily buckled, and the
contents thereof exposed and rusty. Third, Bad Order Tally Sheet issued by Jardine
Davies Transport Services stated that the four coils were in bad order and condition.
Normally, a request for a bad order survey is made in case there is an apparent or a
presumed loss or damage.Fourth, the Certificate of Analysis stated that, based on the
sample submitted and tested, the steel sheets found in bad order were wet with fresh
water. Fifth, Belgian -- in a letteraddressed to the Philippine Steel --admitted that they
were aware of the condition of the four coils found in bad order and condition.
EDNA DIAGO LHUILLIER v . BRITISH AIRWAYSG.R. No. 171092, March 15,
2010, SECOND DIVISION (Del Castillo, J.)
FACTS: Edna Diago Lhuillier took British Airway flight 548 from London to Rome.
Once on board,she requested Julian Halliday, one of its flight attendants, to assist her
in placing her hand-carried luggage in the overhead bin. 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!". Edna further alleged that when
the plane was about to land in Rome, another flight attendant, Nickolas Kerrigan
(Kerrigan), singled her out from among all the passengers in the business class
section to lecture on plane safety. Upon arrival in Rome, petitioner complained to
British Airwayss ground manager and demanded an apology. However, the latter
declared that the flight stewards were "only doing their job." Edna then filed a
complaint against British Airways before the Regional Trial Court (RTC) of Makati
City. Summons, together with a copy of the complaint, was served on British Airways
through Violeta Echevarria, General Manager of Euro-Philippine Airline Services, Inc.
British Airways filed a Motion to Dismiss on grounds of lack of jurisdiction over the
case and over the person of the respondent. It alleged that only the courts of London,
United Kingdom or Rome, Italy, have jurisdiction over the complaint for damages
pursuant to the Warsaw Convention, Article 28(1).
The RTC of Makati City granted the Motion to Dismiss. Edna filed a Motion for
Reconsiderationbut the motion was denied. Hence, this petition.
ISSUES:
Whether Philippine Courts have jurisdiction over a tortious conduct committed against
aFilipino citizen and resident by airline personnel of a foreign carrier travelling beyond
the territorial limit of any foreign country
HELD:
Petition DENIED.It is settled that the Warsaw Convention has the force and effect of
law in this country.
The Convention is thus a treaty commitment voluntarily assumed by the Philippine
government and, as such, has the force and effect of law in this country. 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.
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. Since the Warsaw Convention applies in the instant case, then the
jurisdiction over the subject matter of the action is governed by the provisions of the
Warsaw Convention.
China Airlines vs. Chiok
G.R. No. 152122. July 30, 2003

Facts: Daniel Chiok purchased from China Airlines a passenger ticket for air
transportation covering Manila-Taipei-Hong Kong-Manila. The said ticket was
exclusively endorsable to PAL.

Before Chiok his trip, the trips covered by the ticket were pre-scheduled and
confirmed by the former. When petitioner arrived in Taipei, he went to CAL to confirm
his Hong Kong- Manila trip on board PAL. The CAL office attached a yellow sticker
indicating the status was OK.

When Chiok reached Hong Kong, he then went to PAL office to confirm his flight back
to Manila. The PAL also confirmed the status of his ticket and attached a ticket
indicating a status OK. Chiok proceeded to Hong Kong airport for his trip to Manila.
However, upon reaching the PAL counter, he was told that the flight to Manila was
cancelled due to typhoon. He was informed that all confirmed flight ticket holders of
PAL were automatically booked for the next flight the following day.

The next day, Chiok was not able to board the plane because his name did not
appear on the computer as passenger for the said flight to Manila.

Issue: Whether or not CAL is liable for damages?

Held: The contract of air transportation between the petitioner and respondent, with
the former endorsing PAL the segment of Chioks journey. Such contract of carriage
has been treated in this jurisprudence as a single operation pursuant to Warsaw
Convention, to which the Philippines is a party.

In the instant case, PAL as the carrying agent of CAL, the latter cannot evade liability
to respondent, Chiok, even though it may have been only a ticket issuer for Hong
Kong- Manila sector.

FEDEX vs. AHAC and PHILAM INSURANCE COMPANY, INC (G.R. No. 150094
August 18, 2004)
FACTS: Shipper SMITHKLINE USA delivered to carrier Burlington Air Express
(BURLINGTON), an agent of [Petitioner] Federal Express Corporation, a shipment of
109 cartons of veterinary biologicals for delivery to consignee SMITHKLINE and
French Overseas Company in Makati City. The shipment was covered by Burlington
Airway Bill No. 11263825 with the words, REFRIGERATE WHEN NOT IN TRANSIT
and PERISHABLE stamp marked on its face. That same day, Burlington insured the
cargoes with American Home Assurance Company (AHAC). The following day,
Burlington turned over the custody of said cargoes to FEDEX which transported the
same to Manila.
As a consequence of the foregoing result of the veterinary biologics test,
SMITHKLINE abandoned the shipment and, declaring total loss for the unusable
shipment, filed a claim with AHAC through its representative in the Philippines, the
Philam Insurance Co., Inc. (PHILAM) which recompensed SMITHKLINE for the whole
insured amount. Thereafter, PHILAM filed an action for damages against the FEDEX
imputing negligence on either or both of them in the handling of the cargo.
Trial ensued and ultimately concluded with the FEDEX being held solidarily liable for
the loss. Aggrieved, petitioner appealed to the CA. The appellate court ruled in favor
of PHILAM and held that the shipping Receipts were a prima facie proof that the
goods had indeed been delivered to the carrier in good condition.
ISSUE: Is FEDEX liable for damage to or loss of the insured goods
HELD: petition granted. Assailed decision reversed insofar as it pertains to FEDEX
Prescription of Claim
From the initial proceedings in the trial court up to the present, petitioner has tirelessly
pointed out that respondents claim and right of action are already barred. Indeed,
this fact has never been denied by respondents and is plainly evident from the
records.
Airway Bill No. 11263825, issued by Burlington as agent of petitioner, states:
6. No action shall be maintained in the case of damage to or partial loss of the
shipment unless a written notice, sufficiently describing the goods concerned, the
approximate date of the damage or loss, and the details of the claim, is presented by
shipper or consignee to an office of Burlington within (14) days from the date the
goods are placed at the disposal of the person entitled to delivery, or in the case of
total loss (including non-delivery) unless presented within (120) days from the date of
issue of the [Airway Bill]. xxx
Philippine Airlines v. Savillo
Facts:
Savillo was a judge of the RTC of Iloilo
He was invited to participate in the 1993 ASEAN Seniors Annual Golf
Tournament in Jakarta Indonesia.
So, in order to take part in such event, he purchased a ticket from PAL with
the following itinerary: Manila-Singapore-Jakarta-Singapore-Manila.
PAL would take them from Manila to Signapore, while Singapore Airlines
would take them from Singapore to Jakarta.
When they arrived in Singapore, Singapore Airlines rejected the tickets of
Savillo because they were not endorsed by PAL. It was explained that if
Singapore Airlines honoured the tickets without PALS endorsement, PAL
would not pay Singapore Airlines for their passage.
Savillo demanded compensation from both PAL and Singapore Airlines, but
his efforts were futile. He then sued PAL after 3 years, demanding moral
damages.
PAL , in its MTD, claimed that the cause of action has already prescribed
invoking the Warsaw Convention (providing for a 2 year prescriptive period).
Both RTC and CA ruled against PAL.
Issues:
What is the applicable law, the Civil Code or the Warsaw Convention? Has the action
prescribed?
Held:
The Civil Code is applicable. Therefore the action has not yet prescribed for the
prescription period is 4 years.
If cause of action claims moral damages, not covered by Warsaw Convention.
Article 19 of the Warsaw Convention provides for liability on the part of a carrier for
damages occasioned by delay in the transportation by air of passengers, baggage or
goods. Article 24 excludes other remedies by further providing that (1) in the cases
covered by articles 18 and 19, any action for damages, however founded, can only be
brought subject to the conditions and limits set out in this convention. Therefore, a
claim covered by the Warsaw Convention can no longer be recovered under local
law, if the statue of limitations of two years has elapsed.
When the negligence happened before the performance of the contract of
carriage, not covered by the Warsaw Convention. Also, this case is comparable to
Lathigra v. British Airways. In that case, it was held that the airlines negligent act of
reconfirming the passengers reservation days before departure and failing to inform
the latter that the flight had already been discontinued is not among the acts covered
by the Warsaw Convention, since the alleged negligence did not occur during the
performance of the contract of carriage but, rather, days before the scheduled flight.
In the case at hand, Singapore Airlines barred Savillo from boarding the Singapore
Airlines flight because PAL allegedly failed to endorse the tickets of private
respondent and his companions, despite PALs assurances to Savillo that Singapore
Airlines had already confirmed their passage. While this fact still needs to heard and
established by adequate proof before the RTC, an action based on these allegations
will not fall under the Warsaw Convention, since the purported negligence on the
party of PAL did not occur during the performance of the contract of carriage but days
before the scheduled flight. Thus, the present action cannot be dismissed based on
the Statue of Limitations provided under Article 29 of the Warsaw Convention.
Cathay Pacific Airways vs. CA (1993)
Facts: On 19 October 1975, respondent Tomas L. Alcantara was a first class
passenger of petitioner Cathay Pacific Airways from Manila to Hongkong and onward
from Hongkong to Jakarta. The purpose of his trip was to attend the following day,
October 20, 1975, a conference with the Director General of Trade of Indonesia. He
checked in his luggage which contained not only his clothing and articles for personal
use but also papers and documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his luggage was missing.
Private respondent was told that his luggage was left behind in Hongkong. For this,
respondent Alcantara was offered $20.00 as "inconvenience money" to buy his
immediate personal needs until the luggage could be delivered to him. The
respondent, as a result of the incident had to seek postponement of his pre-arranged
conference.
When his luggage finally reached Jakarta more than twenty four hours later, it was
not delivered to him at his hotel but was required by petitioner to be picked up by an
official of the Philippine Embassy.
Respondent filed a case for damages in the CFI of Lanao del Norte which ruled in his
favour.
Both parties appealed to the Court of Appeals. Court of Appeals rendered its decision
affirming the decision of the CFI but by modifying its awards by increasing the
damages.
Issue: Whether or not the Court of Appeals erred in not applying the Warsaw
Convention to limit the liability of the respondent airline.
Ruling: No.
xxx although the Warsaw Convention has the force and effect of law in this country,
being a treaty commitment assumed by the Philippine government, said convention
does not operate as an exclusive enumeration of the instances for declaring a carrier
liable for breach of contract of carriage or as an absolute limit of the extent of that
liability. The Warsaw Convention declares the carrier liable for damages in the
enumerated cases and under certain limitations. However, it must not be construed
to preclude the operation of the Civil Code and other pertinent laws. It does not
regulate, much less exempt, the carrier from liability for damages for violating the
rights of its passengers under the contract of carriage, especially if wilfull misconduct
on the part of the carrier's employees is found or established, which is clearly the
case before Us. For, the Warsaw Convention itself provides in Art. 25 that
"(1) The carrier shall not be entitled to avail himself of the provisions of this
convention which exclude or limit his liability, if the damage is caused by his wilfull
misconduct or by such default on his part as, in accordance with the law of the court
to which the case is submitted, is considered to be equivalent to wilfull misconduct."
(2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if
the damage is caused under the same circumstances by any agent of the carrier
acting within the scope of his employment."
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.

CHUA YEK HONG vs. INTERMEDIATE APPELLATE COURT, MARIANO GUNO,
and DOMINADOR OLIT
G.R. No. 74811 September 30, 1988

FACTS:

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

Petitioner instituted a complaint against private respondent for breach of contract
incurring damages.

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

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

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

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

The limited liability rule, however, is not without exceptions, namely: (1) where the
injury or death to a passenger is due either to the fault of the ship owner, or to the
concurring negligence of the ship owner and the captain (Manila Steamship Co., Inc.
vs. Abdulhaman supra); (2) where the vessel is insured; and (3) in workmen's
compensation claims Abueg vs. San Diego, supra). In this case, there is nothing in
the records to show that the loss of the cargo was due to the fault of the private
respondent as shipowners, or to their concurrent negligence with the captain of the
vessel. The judgment sought to be reviewed is hereby AFFIRMED
Lintojua Shipping Company Inc VS National Seaman Board and Gregorio P.
Candongo (G.R. No. L-51910 August 10, 1989)

FACTS: Petitioner is the duly appointed local crewing managing office of the Fairwind
Shipping Corporation.

On September 11, 1976 M/V Dufton Bay an ocean-going vessel of foreign registry
owned by the R.D. Mullion ship broking agency under charter by Fairwind, while in
the port of Cebu contracted the services (among others) of Gregorio Candongo as
Third Engineer for 12 months with a monthly wage of US$500.00. The agreement
was executed before the Cebu Area Manning Unit of the NSB, after which respondent
boarded the vessel.

On December 28, 1976 before the expiration of contract, respondent was required to
disembark at Port Kilang, Malaysia. Describe in his seamans handbook is the reason
by owners arrange.

Condongo filed a complaint against Mullion (Shipping company) for violation of
contract and against Litonjua as agent of shipowner.

On February 1977, NSB rendered a judgment by default for failure of petitioners to
appear during the initial hearing, rendering the same to pay Candongo because there
was no sufficient or valid cause for the respondents to terminate the service of the
complainant.

Litonjuas defense:
Contends that the shipowner, nor the charterer, was the employer of private
respondent; and that liability for damages cannot be imposed upon petitioner which
was a mere agent of the charterer.

ISSUE: Whether or not Litonjua may be held liable to the private respondent on the
contract of employment?

HELD: YES. The first basis is the charter party which existed between Mullion, the
shipowner, and Fairwind, the charterer.

It is well settled that in a demise or bare boat charter, the charterer is treated as
owner pro hac vice of the vessel, the charterer assuming in large measure the
customary rights and liabilities of the shipowner in relation to third persons who have
dealt with him or with the vessel. In such case, the Master of the vessel is the agent
of the charterer and not of the shipowner. The charterer or owner pro hac vice, and
not the general owner of the vessel, is held liable for the expenses of the voyage
including the wages of the seamen

Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that
it was not such, we believe and so hold that petitioner Litonjua, as Philippine agent of
the charterer, may be held liable on the contract of employment between the ship
captain and the private respondent.

There is a second and ethically more compelling basis for holding petitioner Litonjua
liable on the contract of employment of private respondent. The charterer of the
vessel, Fairwind, clearly benefitted from the employment of private respondent as
Third Engineer of the Dufton Bay, along with the ten (10) other Filipino crewmembers
recruited by Captain Ho in Cebu at the same occasion.

Philippine National Bank vs. Court of Appeals [337 SCRA 381 (Aug. 8, 2000)]
Facts: To finance the acquisition of 7 shipping vessels, the Philippine International
Shipping Corporation (PISC) applied for and was granted by National Investment
Development Corporation (NIDC) guaranty accomodations. As security for these
guaranty accomodations, PISC executed chattel mortgages on the vessels to be
acquired by it. Meanwhile, PISC entered into a contract with Hong Kong United
Dockyards, Ltd. for the repair and conversion of one of the vessels, M/V Asean
Liberty. The Central Bank of the Phils. authorized PISC to open with China Banking
Corporation (CBC) a standby letter of credit for US$545,000 in favor of Citibank, N.A.
to cover the repair and partial conversion of the vessel M/V Asean Liberty.
PISC executed an Application and Agreement for Commercial Letter of Credit for
US$545,000 with CBC in favor of Citibank. CBC then issued its Irrevocable Standby
Letter of Credit for US$545,000 in favor of Citibank for the account of PISC. PISC
executed a promissory note for US$545,000 in favor of Citibank pursuant to the Loan
Agreement between PISC and Citibank. Upon failure of PISC to fulfill its obligations,
Citibank sent CBC a letter drawing on the Letter of Credit. CBC then instructed its
correspondent Irving Trust Co. to pay to Citibank the amount of US$242,225.
Subsequently, for failure of PISC to settle its obligations under the guaranty
accommodations, the Philippine National Bank (PNB) conducted an auction sale of
the mortgaged vessels. NIDC emerged as the highest bidder in these auctions.
PISC, claiming that the foreclosure sale of its mortgaged vessels was illegal and
irregular, instituted a civil case for the annulment of the foreclosure and auction sale.
CBC filed a complaint in intervention for recovery upon a maritime lien against the
proceeds of the sale of the foreclosed vessels.
Issue: Whether or not CBCs claim as evidenced by its Irrevocable Letter of Credit is
in the nature of a maritime lien under the provisions of P.D. No. 1521; and if so,
whether or not said maritime lien is preferred over the mortgage lien of PNB/NIDC on
the foreclosed vessel M/V Asean Liberty
Held: Under the provisions of P.D. No. 1521, any person furnishing repairs,
supplies, or other necessities to a vessel on credit will have a maritime lien. Such
maritime lien, if it arose prior to the recording of a preferred mortgage lien, shall have
priority over the said mortgage lien. In this case, it was Hongkong United Dockyards,
Ltd. which originally possessed a maritime lien over the vessel M/V Asean Liberty by
virtue of its repair of the said vessel on credit. CBC, however, stands as guarantor of
the loan extended by Citibank to PISC. It was Citibank which advanced the money to
PISC. It was only upon the failure of PISC to fulfill its obligations under its promissory
note to Citibank that CBC was called upon by Citibank to exercise its duties under the
Standby Letter of Credit. The applicable law, which is the Shipping Mortgage Decree
of 1978, was patterned closely after the U.S. Ship Mortgage Act of 1920. Being of
foreign origin, the provisions of the Ship Mortgage Decree of 1978 may thus be
construed with the aid of foreign jurisprudence.
POLIAND INDUSTRIAL LIMITED vs. NATIONAL DEVELOPMENT COMPANY,
DEVELOPMENT BANK OF THE PHILIPPINES [G.R. No. 143866. August 22, 2005]
FACTS:
Poliand is an assignee of the of the rights of Asian Hardwood over the outstanding
obligation of National Development Corporation (NDC), the latter being the owner of
Galleon which previously secured credit accommodations from Asian Hardwood for
its expenses on provisions, oil, repair, among others.
Galleon also obtained loans from Japanese lenders to finance acquisition of vessels
which was guaranteed by DBP in consideration of a promise by Galleon to secure a
first mortgage on the vessels. DBP later transferred ownership of the vessel to NDC.
A collection suit was filed after repeated demands of Poliand for the satisfaction of the
obligation from Galleon, NDC and DBP went unheeded.
ISSUE: Whether POLIAND has a maritime lien enforceable against NDC or DBP or
both.
HELD: Yes, Poliand has a maritime lien which is more superior than DBPs mortgage
lien.
SECTION 21. Maritime Lien for Necessaries; persons entitled to such lien. Any
person furnishing repairs, supplies, towage, use of dry dock or marine railway, or
other necessaries to any vessel, whether foreign or domestic, upon the order of the
owner of such vessel, or of a person authorized by the owner, shall have a maritime
lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to
allege or prove that credit was given to the vessel.
Under the aforequoted provision, the expense must be incurred upon the order of the
owner of the vessel or its authorized person and prior to the recording of the ship
mortgage. Under the law, it must be established that the credit was extended to the
vessel itself.
However, Only NDC is liable on the maritime lien
x x x [O]nly NDC is liable for the payment of the maritime lien. A maritime lien is akin
to a mortgage lien in that in spite of the transfer of ownership, the lien is not
extinguished. The maritime lien is inseparable from the vessel and until discharged, it
follows the vessel. Hence, the enforcement of a maritime lien is in the nature and
character of a proceeding quasi in rem.[65] The expression action in rem is, in its
narrow application, used only with reference to certain proceedings in courts of
admiralty wherein the property alone is treated as responsible for the claim or
obligation upon which the proceedings are based.[66] Considering that DBP
subsequently transferred ownership of the vessels to NDC, the Court holds the latter
liable on the maritime lien. Notwithstanding the subsequent transfer of the vessels to
NDC, the maritime lien subsists.