HE Heacock Vs Macondray

SBU Transportation Law Case Doctrines|Mario Trinchera Jr.
|2018-2019|
Cases Doctrine
Bill of Lading
HE Heacock vs Macondray Issues: May a common carrier, by stipulations inserted in the bill of lading, limit its liability
for the loss of or damage to the cargo to an agreed valuation of the latter?
On June 1919, the plaintiff
delivered on board of Whether or not clause 1 or clause 9 of the bill should be adopted to determine defendant’s
steamship Bolton Castle in liability.
New York, four cases of
merchandise one of which Yes.
contained twelve (12) 8-day
Edmond clocks for Three kinds of stipulations have often been made in a bill of lading. The first is one
transportation to Manila, and exempting the carrier from any and all liability for loss or damage occasioned by its own
paid freight on said clocks negligence. The second is one providing for an unqualified limitation of such liability to an
from New York to Manila in agreed valuation. And the third is one limiting the liability of the carrier to an agreed
advance. The said steampship valuation unless the shipper declares a higher value and pays a higher rate of freight.
arrived in Manila on According to an almost uniform weight of authority, the first and second kinds of
September 1919, consigned stipulations are invalid as being contrary to public policy, but the third is valid and
to the defendant herein as enforceable.
agent and representative of
said vessel in said port. The authorities relied upon by the plaintiff-appellant support the proposition that the first
Neither the master of said and second stipulations in a bill of lading are invalid.
vessel nor the defendant
herein, as its agent, delivered A reading of clauses 1 and 9 of the bill of lading here in question, however, clearly shows
to the plaintiff the aforesaid that the present case falls within the third stipulation, to wit: That a clause in a bill of lading
twelve 8-day Edmond clocks, limiting the liability of the carrier to a certain amount unless the shipper declares a higher
although demand was made value and pays a higher rate of freight, is valid and enforceable. This proposition is
upon them for their delivery. supported by a uniform lien of decisions of the Supreme Court of the United States rendered
both prior and subsequent to the passage of the Harter Act, from the case of Hart vs.
The invoice value of the said Pennsylvania.
twelve 8-day Edmond clocks
in the city of New York was “Where a contract of carriage, signed by the shipper, agreeing on a valuation of the property
P22 and the market value of carried, with the rate of freight based on the condition that the carrier assumes liability only
the same in the City of to the extent of the agreed valuation, even in case of loss or damage by the negligence of
Manila at the time when they the carrier, the contract will be upheld as proper and lawful mode of securing a due
should have been delivered to proportion between the amount for which the carrier may be responsible and the freight he
the plaintiff was P420. receives, and protecting himself against extravagant and fanciful valuations." (Hart vs
Pennyslavania)
The bill of lading issued
contained, among others, the “If a common carrier gives to a shipper the choice of two rates, the lower of the conditioned
following clauses: upon his agreeing to a stipulated valuation of his property in case of loss, even by the
carrier's negligence, if the shipper makes such a choice, understandingly and freely, and
1. The value of the goods names his valuation, he cannot thereafter recover more than the value which he thus places
receipted does not exceed upon his property. As a matter of legal distinction, estoppel is made the basis of this ruling,
$500 per freight ton, or, in — that, having accepted the benefit of the lower rate, in common honesty the shipper may
proportion for any part of a not repudiate the conditions on which it was obtained, — but the rule and the effect of it
ton, unless the value be are clearly established." (Union Pacific Railways vs Burke)
expressly stated herein and ad
valorem freight paid thereon. A limitation of liability based upon an agreed value to obtain a lower rate does not conflict
with any sound principle of public policy; and it is not conformable to plain principles of
9. In the event of claims for justice that a shipper may understate value in order to reduce the rate and then recover a
short delivery of, or damage larger value in case of loss.
to, cargo being made, the
carrier shall not be liable for It seems clear from the foregoing authorities that the clauses (1 and 9) of the bill of lading
more than the net invoice here in question are not contrary to public order. Article 1255 of the Civil Code provides
price plus freight and that "the contracting parties may establish any agreements, terms and conditions they may
insurance less all charges deem advisable, provided they are not contrary to law, morals or public order." Said clauses
saved, and any loss or of the bill of lading are, therefore, valid and binding upon the parties thereto.
damage for which the carrier
may be liable shall be No.
adjusted pro rata on the said
basis.
Caveat Lector: Read at your own risk. AGDV

SBU Transportation Law Case Doctrines|Mario Trinchera Jr. |2018-2019|
The defendant-appellant contends that these two clauses, if construed together, mean that
The case containing the the shipper and the carrier stipulate and agree that the value of the goods receipted for does
aforesaid twelve 8-day not exceed $500 per freight ton, but should the invoice value of the goods be less than $500
Edmond clocks measured 3 per freight ton, then the invoice value governs; that since in this case the invoice value is
cubic feet, and the freight ton more than $500 per freight ton, the latter valuation should be adopted and that according to
value thereof was $1,480, U. that valuation, the proportionate value of the clocks in question is only P76.36 which the
S. currency. defendant is ready and willing to pay to the plaintiff.
No greater value than $500, It will be noted, however, that whereas clause 1 contains only an implied undertaking to
U. S. currency, per freight ton settle in case of loss on the basis of not exceeding $500 per freight ton, clause 9 contains
was declared by the plaintiff an express undertaking to settle on the basis of the net invoice price plus freight and
on the aforesaid clocks, and insurance less all charges saved. "Any loss or damage for which the carrier may be liable
no ad valorem freight was shall be adjusted pro rata on the said basis," clause 9 expressly provides. It seems to us that
paid thereon. there is an irreconcilable conflict between the two clauses with regard to the measure of
defendant's liability. It is difficult to reconcile them without doing violence to the language
On or about October 9, 1919, used and reading exceptions and conditions into the undertaking contained in clause 9 that
the defendant tendered to the are not there.
plaintiff P76.36, the
proportionate freight ton This being the case, the bill of lading in question should be interpreted against the defendant
value of the aforesaid twelve carrier, which drew said contract. "A written contract should, in case of doubt, be
8-day Edmond clocks, in interpreted against the party who has drawn the contract."
payment of plaintiff's claim,
which tender plaintiff It is a well-known principle of construction that ambiguity or uncertainty in an agreement
rejected. must be construed most strongly against the party causing it. These rules as applicable to
contracts contained in bills of lading. "In construing a bill of lading given by the carrier for
the safe transportation and delivery of goods shipped by a consignor, the contract will be
construed most strongly against the carrier, and favorably to the consignor, in case of doubt
in any matter of construction."
Macondray vs. Acting Issue: Whether or not the deficiency of the vessel’s manifest have been supplied by the bill
Commissioner of Customs of lading by indicating the whole shipment therein.
On November 2, 1962, the No.

vessel S/S TAI PING", of
which petitioner is the local The inclusion of the unmanifested cargoes in the Bill of Lading does not satisfy the
agent, arrived at the port of requirement of the aforequoted sections of the Tariff and Customs Code. It is to be noted
Manila from California that nowhere in the said section is the presentation of a Bill of Lading required, but only
conveying shipments among the presentation of a Manifest containing a true and accurate description of the cargoes.
which was a shipment of one This is for the simple reason that while a manifest is a declaration of the entire cargo, a bill
(1) coil carbon steel, one (1) of lading is but a declaration of a specific part of the cargo and is a matter of business
bundle carbon steel flat and convenience based exclusively on a contract.The object of a manifest is to furnish the
one (1) carton containing customs officers with a list to check against, to inform our revenue officers what goods are
carbon tool holders carbide being brought into the country, and to provide a safeguard against goods being brought into
cutters, ground, all of which this country on a vessel and then smuggled ashore.
appeared in the Bill of
Lading. The shipment, In short, while a bill of lading is ordinarily merely a convenient commercial instrument
except the one (1) coil designed to protect the importer or consignee, a manifest of the cargo is absolutely essential
carbon steel was not to the exportation or importation of property in all vessels, the evident intent and object of
reflected in the Inward which is to impose upon the owners and officers of such vessel an imperative obligation to
Cargo Manifest as required submit lists of the entire loading of the ship in the prescribed form, to facilitate the labors
by the Tariff and Customs of the customs and immigration officers and to defeat any attempt to make use of such
Code of the Philippines. vessels to secure the unlawful entry of persons or things into the country.3 Since therefore,
the purpose served by the manifest is far different from that of the bill of lading, We cannot
The Collector of Customs acceptor place an imprimatur on the contention of petitioner that the entries in the bill of
required petitioner to show lading adequately supplied the deficiency of the manifest and cured it of its infirmity. The
cause why no administrative mandate of the law is clear and We cannot settle for less. The law imposes the absolute
fine should be imposed upon obligation, under penalty for failure, upon every vessel from a foreign port to have "on
said vessel. Counsel for board complete written or typewritten manifests of all her cargo, signed by the master".
petitioner wrote a letter to the Where the law requires a manifest to be kept or delivered, it is not complied with unless the
Collector of Customs manifest is true and accurate.

informing that from our

client's records, the disputed
shipment was described in
the ship's manifest as "1 coil
carbon steel" only. However,
the bill of lading issued and
surrendered to our client,
duly endorsed by the
consignee, called for the
delivery of 1 coil carbon
steel, 1 bundle carbon steel
flat and 1 carbon containing
tool holders carbide cutters
ground. Upon investigation
by our client, it was verified
that the vessel actually
carried on board and
discharged at Manila as
called for in the bill of lading.
The Collector of Customs

replied that petitioner is free
to file a protest but have to
pay fine first. Thus petitioner
paid the fine under protest.
Magellan vs CA Issue: Whether or not the bill of lading, which reflected the transhipment in violation of the
letter of credit was consented to by petitioner Magellan.
On May 1980, plaintiff
Magellan Manufacturers Yes.
(MMMC) entered into a
contract with Choju Co. of It is a long standing jurisprudential rule that a bill of lading operates both as a receipt and
Japan to export anahaw fans as a contract. It is a receipt for the goods shipped and a contract to transport and deliver the
for and in consideration of same as therein stipulated. As a contract, it names the parties, which includes the consignee,
$23,220.00. As payment fixes the route, destination, and freight rates or charges, and stipulates the rights and
thereof, a letter of credit was obligations assumed by the parties. Being a contract, it is the law between the parties who
issued to plaintiff MMMC by are bound by its terms and conditions provided that these are not contrary to law, morals,
the buyer. Through its good customs, public order and public policy.
president, James Cu, MMMC
then contracted F.E. Zuellig, A bill of lading usually becomes effective upon its delivery to and acceptance by the
a shipping agent, through its shipper. It is presumed that the stipulations of the bill were, in the absence of fraud,
solicitor, one Mr. King, to concealment or improper conduct, known to the shipper, and he is generally bound by his
ship the anahaw fans through acceptance whether he reads the bill or not.
the other appellee, Orient
Overseas Container Lines, The holding in most jurisdictions has been that a shipper who receives a bill of lading
Inc., (OOCL) specifying that without objection after an opportunity to inspect it, and permits the carrier to act on it by
he needed an on-board bill of proceeding with the shipment is presumed to have accepted it as correctly stating the
lading and that transhipment contract and to have assented to its terms. In other words, the acceptance of the bill without
is not allowed under the letter dissent raises the presumption that all the terms therein were brought to the knowledge of
of credit. On June 30, 1980, the shipper and agreed to by him and, in the absence of fraud or mistake, he is estopped
appellant MMMC paid F.E. from thereafter denying that he assented to such terms. This rule applies with particular
Zuellig the freight charges force where a shipper accepts a bill of lading with full knowledge of its contents and
and secured a copy of the bill acceptance under such circumstances makes it a binding contract.
of lading which was
presented to Allied Bank. In the light of the series of events that transpired in the case at bar, there can be no logical
The bank then credited the conclusion other than that the petitioner had full knowledge of, and actually consented to,
amount of US$23,220.00 the terms and conditions of the bill of lading thereby making the same conclusive as to it,
covered by the letter of credit and it cannot now be heard to deny having assented thereto. As borne out by the records,
to appellant's account. James Cu himself, in his capacity as president of MMMC, personally received and signed
However, when appellant's the bill of lading. On practical considerations, there is no better way to signify consent than
president James Cu, went by voluntarry signing the document which embodies the agreement.

back to the bank later, he was

informed that the payment Article 1371 of the Civil Code provides that "(i)n order to judge the intention of the
was refused by the buyer contracting parties, their contemporaneous and subsequent acts shall be principally
allegedly because there was considered."
no on-board bill of lading,
and there was a transhipment The terms of the contract as embodied in the bill of lading are clear and thus obviates the
of goods. As a result of the need for any interpretation. The intention of the parties which is the carriage of the cargo
refusal of the buyer to accept, under the terms specified thereunder and the wordings of the bill of lading do not contradict
upon appellant's request, the each other.
anahaw fans were shipped
back to Manila by appellees, Note:
for which the latter Transhipment: "the act of taking cargo out of one ship and loading it in another,"or "the
demanded from appellant transfer of goods from the vessel stipulated in the contract of affreightment to another vessel
payment of P246,043.43. before the place of destination named in the contract has been reached,"or "the transfer for
further transportation from one ship or conveyance to another."
The fact of transhipment is not dependent upon the ownership of the transporting ships or
conveyances or in the change of carriers, as the petitioner seems to suggest, but rather on
the fact of actual physical transfer of cargo from one vessel to another.
Saludo vs CA Issue: Whether or not respondent PAL should be liable for the switch of the bodies which
happened on October 27, 1976 since PAL issued its Air Waybill on October 26, and from
After the death of plaintiffs' that day, it is charged with exercising extraordinary diligence.
mother, Crispina Galdo
Saludo, in Chicago Illinois, No.
(on) October 23, 1976 (Exh.
A), Pomierski and Son A bill of lading is a written acknowledgment of the receipt of the goods and an agreement
Funeral Home of Chicago, to transport and deliver them at a specified place to a person named or on his order. Such
made the necessary instrument may be called a shipping receipt, forwarder's receipt and receipt for
arrangements for the transportation. The designation, however, is immaterial. It has been hold that freight tickets
shipment, of the remains for bus companies as well as receipts for cargo transported by all forms of transportation,
from Chicago to the whether by sea or land, fall within the definition. Under the Tariff and Customs Code, a bill
Philippines. Pomierski of lading includes airway bills of lading.
brought the remains to
C.M.A.S. (Continental The two-fold character of a bill of lading is all too familiar; it is a receipt as to the quantity
Mortuary Air Services) at the and description of the goods shipped and a contract to transport the goods to the
airport (Chicago) C.M.A.S. consignee or other person therein designated, on the terms specified in such
booked the shipment with instrument.
PAL with Pomierski F.H. as
the shipper and Mario Logically, since a bill of lading acknowledges receipt of goods to be transported, delivery
(Maria) Saludo as the of the goods to the carrier normally precedes the issuance of the bill; or, to some extent,
consignee. PAL Airway Bill delivery of the goods and issuance of the bill are regarded in commercial practice as
No. 079-01180454 Ordinary simultaneous acts. However, except as may be prohibited by law, there is nothing to
was issued. The routing was prevent an inverse order of events, that is, the execution of the bill of lading even prior
from Chicago to San to actual possession and control by the carrier of the cargo to be transported. There is
Francisco on October 27, no law which requires that the delivery of the goods for carriage and the issuance of the
1976 and from San Francisco covering bill of lading must coincide in point of time or, for that matter, that the former
to Manila on board PAL should precede the latter.
Flight No. 107 of the same
date, and from Manila to A bill of lading, when properly executed and delivered to a shipper, is evidence that the
Cebu on board PAL Flight carrier has received the goods described therein for shipment. Except as modified by statute,
149 of October 29, 1976 it is a general rule as to the parties to a contract of carriage of goods in connection with
which a bill of lading is issued reciting that goods have been received for transportation,
Upon arrival at San Francisco that the recital being in essence a receipt alone, is not conclusive, but may be explained,
by petitioner, she went to the varied or contradicted by parol or other evidence.
TWA counter there to inquire
about her mother's remains. While we agree with petitioners' statement that "an airway bill estops the carrier from
She was told they did not denying receipt of goods of the quantity and quality described in the bill," a further reading
know anything about it. and a more faithful quotation of the authority cited would reveal that "(a) bill of lading may
contain constituent elements of estoppel and thus become something more than a contract
between the shipper and the carrier. . . . (However), as between the shipper and the

She then called Pomierski carrier, when no goods have been delivered for shipment no recitals in the bill can
that her mother's remains estop the carrier from showing the true facts . . . Between the consignor of goods and
were not at the West Coast receiving carrier, recitals in a bill of lading as to the goods shipped raise only a rebuttable
terminal, and Pomierski presumption that such goods were delivered for shipment. As between the consignor and
immediately called C.M.A.S., a receiving carrier, the fact must outweigh the recital."
which informed him that the
remains were on a plane to Note:
Mexico City, that there were
two bodies at the terminal, To support their assertion, petitioners rely on the jurisprudential dictum, both under
and somehow they were American and Philippine law, that "(t)he issuance of a bill of lading carries the presumption
switched. that the goods were delivered to the carrier issuing the bill, for immediate shipment, and it
is nowhere questioned that a bill of lading is prima facie evidence of the receipt of the goods
The following day October by the carrier. . . . In the absence of convincing testimony establishing mistake, recitals in
28, 1976, remains of Crispina the bill of lading showing that the carrier received the goods for shipment on a specified
Saludo arrived (in) San date control
Francisco from Mexico on
board American Airlines.
This shipment was
transferred to or received by
PAL at 1945H or 7:45 p.m. It
arrived (in) Manila on
October 30, 1976, a day after
its expected arrival on
October 29, 1976.
Ysmael &Co. vs Limgengco Issues: Whether or not the plaintiff filed the complaint out of time.
Whether or not the limitation printed in the bill of lading is controlling.
Plaintiff, a domestic
corporation, seeks to recover Yes.
from the defendants
P9,940.95 the alleged value It appears that the plaintiff made its claim of loss within seven days after receipt of
of four cases of merchandise information that 160 cases only were delivered.
which it delivered to the
steamship Andres on October In the case of Aguinaldo vs. Daza in which the printed conditions on the bill of lading were
25, 1922, at Manila to be identical with those in the instant case, the action was not commenced for more than year
shipped to Surigao, but which after the delivery of the goods by the plaintiff and the receipt of the bill of lading, and it
were never delivered to was there held that:
Salomon Sharuff, the
consignee, or returned to the We are of the opinion that, having regard to the situation involved in this shipment, and the
plaintiff. slowness of communication between Manila and Catbalogan, the contractual limitation
stated in this bill of lading with respect to the time for presentation of the written claim was
The defendants alleged insufficient.
among others: that under the
printed conditions appearing We are clearly of the opinion that the action was brought with a "reasonable time" as those
on the back of the bill of words are specified and defined in the authorities cited. It is true that both the plaintiff and
lading, plaintiff's right of the defendants are residents of the City of Manila, but it is also true that Surigao where the
action is barred for the reason goods in question were to be delivered is one of the most distant places from Manila in the
that it was not brought within Philippine Islands. In the very nature of things, plaintiff would not want to commence its
sixty days from the time the action until such time as it had made a full and careful investigation of all of the material
cause of action accrued and facts and even the law of the case, so as to determine whether or not defendants were liable
that as contained in the bill of for its loss.
lading, the defendants are not
liable in excess of three No.
hundred pesos (P300) for any
package of silk unless the The ship in question was a common carrier and, as such, must have been operated as a
value and contents of such public utility. It is a matter of common knowledge that large quantities of silk are imported
packages are correctly in the Philippine Islands. Clause 12 above quoted places a limit of P300 "for any single
declared in the bill of lading package of silk." The evidence shows that 164 "cases" were shipped, and that the value of
at the time of shipment, etc. each case was very near P2,500. In this situation, the limit of defendants' liability for each
case of silk "for loss or damage from any cause or for any reason" would put it in the power
of the defendants to have taken the whole cargo of 164 cases of silk at a valuation of P300

for each case, or less than one-eight of its actual value. If that rule of law should be
sustained, no silk would ever be shipped from one island to another in the Philippines.
Such a limitation of value is unconscionable and void as against public policy.
Corpus Juris, volume 10, p. 154, says:
PAR. 194. 6. Reasonable of Limitation. — The validity of stipulations limiting the carriers
liability is to be determined by their reasonableness and their conformity to the sound public
policy, in accordance with which the obligations of the carrier to the public are settled. It
cannot lawfully stipulate for exemption from liability, unless such exemption is just and
reasonable, and unless the contract is freely and fairly made. No contractual limitation is
reasonable which is subversive of public policy.
Shewaram vs PAL Issue: Whether or not PAL’s liability should be limited to the printed conditons at the back
of the ticket.
Parmanand Shewaram, was
on November 23, 1959, a No.
paying passenger on
defendant's aircraft flight In accordance with the above-quoted provision of Article 1750 of the New Civil Code, the
from Zamboanga City bound pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It is
for Manila; that on the above- required, however, that the contract must be "reasonable and just under the circumstances
mentioned date of November and has been fairly and freely agreed upon."
23, 1959, he checked in three
(3) pieces of baggages — a The requirements provided in Article 1750 of the New Civil Code must be complied with
suitcase and two (2) other before a common carrier can claim a limitation of its pecuniary liability in case of loss,
pieces; that the suitcase was destruction or deterioration of the goods it has undertaken to transport. In the case before
mistagged by defendant's us We believe that the requirements of said article have not been met. It can not be said that
personnel in Zamboanga the appellee had actually entered into a contract with the appellant, embodying the
City, as I.G.N. (for Iligan) conditions as printed at the back of the ticket stub that was issued by the appellant to the
with claim check No. B-3883, appellee. The fact that those conditions are printed at the back of the ticket stub in letters so
instead of MNL (for Manila). small that they are hard to read would not warrant the presumption that the appellee was
aware of those conditions such that he had "fairly and freely agreed" to those conditions.
When plaintiff Parmanand The trial court has categorically stated in its decision that the "Defendant admits that
Shewaram arrived in Manila passengers do not sign the ticket, much less did plaintiff herein sign his ticket when he made
on the date of November 23, the flight on November 23, 1959." We hold, therefore, that the appellee is not, and can not
1959, his suitcase did not be, bound by the conditions of carriage found at the back of the ticket stub issued to him
arrive with his flight because when he made the flight on appellant's plane on November 23, 1959.
it was sent to Iligan. that after
inquiries made by defendant's It having been clearly found by the trial court that the transistor radio and the camera of the
personnel it was found to appellee were lost as a result of the negligence of the appellant as a common carrier, the
have reached Iligan and the liability of the appellant is clear — it must pay the appellee the value of those two articles.
station agent of the PAL in
Iligan caused the same to be In the case of Ysmael and Co. vs. Barreto, 51 Phil. 90, cited by the trial court in support
sent to Manila for delivery to of its decision, this Court had laid down the rule that the carrier can not limit its liability
Mr. Shewaram; that when the for injury to or loss of goods shipped where such injury or loss was caused by its own
plaintiff's suitcase arrived in negligence.
Manila his Transistor Radio 7
and Rollflex Camera were
missing, combined value of
which is at 373 pesos.

Ong Yiu vs CA Issue: Whether or not the lower court correctly limited the liability of PAL on account of
the contract printed at the back of the ticket.
On August 26, 1967,
petitioner was a passenger of Yes.
respondent PAL from
Mactan Cebu, bound for There is no dispute that petitioner did not declare any higher value for his luggage, much
Butuan City. He was less did he pay any additional transportation charge.
scheduled to attend the trial
of a case on August 28-31, But petitioner argues that there is nothing in the evidence to show that he had actually
1967. He checked in one entered into a contract with PAL limiting the latter's liability for loss or delay of the baggage
piece of luggage, a blue of its passengers, and that Article 1750* of the Civil Code has not been complied with.
"maleta". The plane left
Mactan Airport, Cebu, at While it may be true that petitioner had not signed the plane ticket. he is nevertheless bound
about 1:00 o'clock P.M., and by the provisions thereof. "Such provisions have been held to be a part of the contract of
arrived at Bancasi airport, carriage, and valid and binding upon the passenger regardless of the latter's lack of
Butuan City, at past 2:00 knowledge or assent to the regulation". It is what is known as a contract of "adhesion", in
o'clock P.M., of the same regards which it has been said that contracts of adhesion wherein one party imposes a ready
day. Upon arrival, petitioner made form of contract on the other, as the plane ticket in the case at bar, are contracts not
claimed his luggage but it entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely;
could not be found. PAL if he adheres, he gives his consent.
Manila wired PAL Cebu
advising that the luggage had And as held in Randolph v. American Airlines, "a contract limiting liability upon an
been over carried to Manila agreed valuation does not offend against the policy of the law forbidding one from
and that it would be contracting against his own negligence.
forwarded to Cebu on the
same day. Instructions were Considering, therefore, that petitioner had failed to declare a higher value for his baggage,
also given that the luggage be he cannot be permitted a recovery in excess of P100.00.Besides, passengers are advised not
immediately forwarded to to place valuable items inside their baggage but "to avail of our V-cargo service”. I t is
Butuan City on the first likewise to be noted that there is nothing in the evidence to show the actual value of the
available flight. PAL Cebu goods allegedly lost by petitioner.
sent a message to PAL
Butuan that the luggage
would be forwarded on the Note:
following day, August 27,
196' 8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or damaged
baggage of the passenger is LIMITED TO P100.00 for each ticket unless a passenger
Early in the morning of the declares a higher valuation in excess of P100.00, but not in excess, however, of a total
next day, August 27, 1967, valuation of P1,000.00 and additional charges are paid pursuant to Carrier's tariffs.
petitioner went to the Bancasi
Airport to inquire about his
luggage. He did not wait,
however, for the morning
flight which arrived at 10:00
o'clock that morning. Then
Emilio Dagorro then
delivered the "maleta" to
petitioner, with the
information that the lock was
open. Upon inspection,
petitioner found that a folder
containing certain exhibits,
transcripts and private
documents on the civil case
were missing, aside from two
gift items for his parents-in-
law. Petitioner refused to
accept the luggage.

Aboitiz vs CA Issue: Whether or not liability of the petitioner should be fixed at US$500.00 per
package/container, as stipulated in the bill of lading and not at the actual value of the cargo.
On October 28, 1980, the
vessel M/V "P. Aboitiz" took
on board in Hongkong for No.
shipment to Manila some
cargo consisting of one (1) While it is true that in the bill of lading there is such stipulation that the liability of the
twenty (20)-footer container carrier is US$500.00 per package/container/customary freight, there is an exception, that
holding 271 rolls of goods for is, when the nature and value of such goods have been declared by the shipper before
apparel covered by Bill of shipment and inserted in the bill of lading. This is provided for in Section 4(5) of the
Lading No. 515-M and one Carriage of Goods by Sea Act to wit —
(1) forty (40)-footer container
holding four hundred forty- (5) Neither the carrier nor the ship shall in any event be or become liable for any loss
seven (447) rolls, ten (10) or damage to or in connection with the transportation of goods in an amount exceeding
bulk and ninety-five (95) $500 per package of lawful money of the United States, or in case of goods not shipped in
cartons of goods for apparel packages, per customary freight unit, or the equivalent of that sum in other currency, unless
covered by Bill of Lading No. the nature and value of such goods have been inserted in the bill of lading. This declaration,
505-M. The total value, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive
including invoice value, on the carrier.
freightage, customs duties,
taxes and similar imports By agreement between the carrier, master or agent of the carrier, and the shipper another
amounts to US$39,885.85 for maximum amount than that mentioned in this paragraph may be fixed: Provided, that such
the first shipment while that maximum shall not be less than the figure above named. In no event shall the carrier be
of the second shipment liable for more than the amount of damage actually sustained.
amounts to US$94,190.55.
Both shipments were Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in
consigned to the Philippine connection with the transportation of the goods if the nature or value thereof has been
Apparel, Inc. and insured knowingly and fraudulently mis-stated by the shipper in the bill of lading. (Emphasis
with the General Accident supplied.)
Fire and Life Assurance
Corporation, Ltd. (GAFLAC In this case the description of the nature and the value of the goods shipped are declared
for short). The vessel is and reflected in the bills of lading. Thus, it is the basis of the liability of the carrier as the
owned and operated by actual value of the loss.
Aboitiz Shipping Corporation
(Aboitiz for short). Moreover, it is absurd to interpret "container," as provided in the bill of lading to be valued
at US$500.00 each, to refer to the container which is the modern substitute for the hold of
On October 31, 1980 on its the vessel. 9 The package/container contemplated by the law to limit the liability of the
way to Manila the vessel sunk carrier should be sensibly related to the unit in which the shipper packed the goods and
and it was declared lost with described them, not a large metal object, functionally a part of the ship, in which the carrier
all its cargoes. GAFLAC paid used them to be contained. 10 Such "container" must be given the same meaning and
the consignee the amounts classification as a "package" and "customary freight unit."
US$39,885.85 or
P319,086.80 and
US$94,190.55 or
P753,524.40 for the lost
cargo. As GAFLAC was
subrogated to all the rights,
interests and actions of the
consignee against Aboitiz, it
filed an action for damages
against Aboitiz in the
Regional Trial Court of
Manila alleging that the loss
was due to the fault and
negligence of Aboitiz and the
master and crew of its vessel
in that they did not observe
the extraordinary diligence
required by law as regards
common carriers.

Sea-Land vs IAC Issue: Whether or not the stipulation limiting the liability of petitioner is valid and should
thus be controlling.
On January 8, 1981, Sea-
Land Service, Inc., received Yes.
from Seaborne Trading
Company in California a It seems clear that even if said section 4(5) of the Carriage of Goods by Sea Act did not
shipment consigned to Sen exist, the validity and binding effect of the liability limitation clause in the bill of lading
Hiap Hing the business name here are nevertheless fully sustainable on the basis alone of the cited Civil Code provisions.
used by Paulino Cue in the That said stipulation is just and reasonable is arguable from the fact that it echoes Art. 1750
wholesale and retail trade itself in providing a limit to liability only if a greater value is not declared for the shipment
Cebu City. in the bill of lading. To hold otherwise would amount to questioning the justice and fairness
of that law itself, and this the private respondent does not pretend to do. But over and above
The shipper not having that consideration, the lust and reasonable character of such stipulation is implicit in it
declared the value of the giving the shipper or owner the option of avoiding acrrual of liability limitation by the
shipment, no value was simple and surely far from onerous expedient of declaring the nature and value of the
indicated in the bill of lading. shipment in the bill of lading. And since the shipper here has not been heard to complaint
The bill described the of having been "rushed," imposed upon or deceived in any significant way into agreeing to
shipment only as "8 CTNS on ship the cargo under a bill of lading carrying such a stipulation — in fact, it does not appear
2 SKIDS-FILES. Based on that said party has been heard from at all insofar as this dispute is concerned — there is
volume measurements Sea- simply no ground for assuming that its agreement thereto was not as the law would require,
land charged the shipper the freely and fairly sought and given.
total amount of US$209.28 2
for freight age and other The private respondent had no direct part or intervention in the execution of the contract of
charges. The shipment was carriage between the shipper and the carrier as set forth in the bill of lading in question. As
loaded on board the MS pointed out in Mendoza vs. PAL, supra, the right of a party in the same situation as
Patriot, a vessel owned and respondent here, to recover for loss of a shipment consigned to him under a bill of lading
operated by Sea-Land, for drawn up only by and between the shipper and the carrier, springs from either a relation of
discharge at the Port Of agency that may exist between him and the shipper or consignor, or his status as a stranger
Cebu. in whose favor some stipulation is made in said contract, and who becomes a party thereto
when he demands fulfillment of that stipulation, in this case the delivery of the goods or
The shipment arrived in cargo shipped. In neither capacity can he assert personally, in bar to any provision of the
Manila on February 12, 1981, bill of lading, the alleged circumstance that fair and free agreement to such provision was
and there discharged into the vitiated by its being in such fine print as to be hardly readable.
custody of the arrastre
contractor and the customs Parenthetically, it may be observed that in one comparatively recent case where this Court
and port authorities. found that a similar package limitation clause was "(printed in the smallest type on the back
Between February 13 and 16, of the bill of lading, it nonetheless ruled that the consignee was bound thereby on the
1981, it was stolen by strength of authority holding that such provisions on liability limitation are as much a part
pilferers and has never been of a bill of lading as though physically in it and as though placed therein by agreement of
recovered. the parties.
On March 10, 1981, Paulino There can, therefore, be no doubt or equivocation about the validity and enforceability of
Cue, the consignee, made freely-agreed-upon stipulations in a contract of carriage or bill of lading limiting the
formal claim upon Sea-Land liability of the carrier to an agreed valuation unless the shipper declares a higher value and
for the value of the lost inserts it into said contract or bill. This pro position, moreover, rests upon an almost uniform
shipment allegedly weight of authority.
amounting to P179,643.48.
Sea-Land offered to settle for Note:
US$4,000.00, or its then The liability of a common carrier for loss of or damage to goods transported by it under a
Philippine peso equivalent of contract of carriage is governed by the laws of the country of destination.
P30,600.00. asserting that
said amount represented its
maximum liability for the
loss of the shipment under the
package limitation clause in
the covering bill of lading.

Citadel vs CA
Issue: Whether the stipulation limiting the liability of the carrier contained in the bill of
Petitioner Citadel Lines, Inc. lading is binding on the consignee.
(CARRIER) is the general
agent of the vessel "Cardigan Yes.
Bay/Strait Enterprise," while
respondent Manila Wine We, however, find the award of damages in the amount of P312,800.00 for the value of the
Merchants, Inc. (hereafter, goods lost, based on the alleged market value thereof, to be erroneous. It is clearly and
the CONSIGNEE) is the expressly provided under Clause 6 of the aforementioned bills of lading issued by the
consignee. CARRIER that its liability is limited to $2.00 per kilo. Basic is the rule, long since enshrined
as a statutory provision, that a stipulation limiting the liability of the carrier to the value of
On March 17, 1979, the the goods appearing in the bill of lading, unless the shipper or owner declares a greater
vessel "Cardigan Bay/Strait value, is binding. 14 Further, a contract fixing the sum that may be recovered by the owner
Enterprise" loaded on board or shipper for the loss, destruction or deterioration of the goods is valid, if it is reasonable
at England, for carriage to and just under the circumstances, and has been fairly and freely agreed upon.
Manila, 180 Filbrite cartons
of mixed British The CONSIGNEE itself admits in its memorandum that the value of the goods shipped
manufactured cigarettes does not appear in the bills of lading. Hence, the stipulation on the carrier's limited liability
called "Dunhill International applies. There is no question that the stipulation is just and reasonable under the
Filter" and "Dunhill circumstances and have been fairly and freely agreed upon. In Sea-land Service, Inc. vs.
International Menthol," as Intermediate Appellate Court, et al. we there explained what is a just and reasonable, and a
evidenced by Bill of Lading. fair and free, stipulation, in this wise:
The shipment arrived on
Manila on April 18, 1979. It . . . That said stipulation is just and reasonable arguable from the fact that it echoes Art. 1750 itself in
was received by E. Razon, providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading.
Inc. (later known as Metro To hold otherwise would amount to questioning the justice and fairness of that law itself, and this the
private respondent does not pretend to do. But over and above that consideration the just and reasonable
Port Service, Inc. and
character of such stipulation is implicit in it giving the shipper or owner the option of avoiding accrual
referred to herein as the of liability limitation by the simple and surely far from onerous expedient of declaring the nature and
ARRASTRE). value of the shipment in the bill of lading. And since the shipper here has not been heard to complain
of having been "rushed," imposed upon or deceived in any significant way into agreeing to ship the
On April 30, 1979, the cargo under a bill of lading carrying such a stipulation — in fact, it does not appear, that said party has
container van, which been heard from at all insofar as this dispute is concerned — there is simply no ground for assuming
contained two shipments was that its agreement thereto was not as the law would require, freely and fairly sought and well.
stripped. One shipment was
delivered and the other The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per carton. Since
shipment consisting of the 90 cartons were lost and the weight of said cartons is 2,233.80 kilos, at $2.00 per kilo the
imported British CARRIER's liability amounts to only US$4,467.60.
manufactured cigarettes was
palletized. Due to lack of
space at the Special Cargo
Coral, the aforesaid cigarettes
were placed in two containers
duly padlocked and sealed by
the representative of the
CARRIER.
In the morning of May 1,

1979, the CARRIER'S
headchecker discovered that
container van No. BENU
201009-9 had a different
padlock and the seal was
tampered with. It was found
that 90 cases of imported
British manufactured
cigarettes were missing.

Everett vs CA Issues: Whether or not the limited liability clause in the bill of lading is valid.
Whether or not consignee is bound by the stipulations in the bill of lading.
Private respondent imported
three crates of bus spare parts Yes.
marked as MARCO C/No.
12, MARCO C/No. 13 and ART. 1749, ART. 1750.
MARCO C/No. 14, from its
supplier, Maruman Trading Sea Land Service, Inc. vs Intermediate Appellate Court:
Company, Ltd. (Maruman
Trading), a foreign It seems clear that even if said section 4 (5) of the Carriage of Goods by Sea Act did not
corporation based in exist, the validity and binding effect of the liability limitation clause in the bill of lading
Inazawa, Aichi, Japan. The here are nevertheless fully sustainable on the basis alone of the cited Civil Code Provisions.
crates were shipped from That said stipulation is just and reasonable is arguable from the fact that it echoes Art. 1750
Nagoya, Japan to Manila on itself in providing a limit to liability only if a greater value is not declared for the shipment
board ADELFAEVERETTE, in the bill of lading. To hold otherwise would amount to questioning the justness and
a vessel owned by petitioners fairness of the law itself, and this the private respondent does not pretend to do. But over
principal, Everett Orient and above that consideration, the just and reasonable character of such stipulation is implicit
Lines. The said crates were in it giving the shipper or owner the option of avoiding accrual of liability limitation by the
covered by Bill of Lading No. simple and surely far from onerous expedient of declaring the nature and value of the
NGO53MN. shipment in the bill of lading..
Upon arrival at the port of Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the
Manila, it was discovered common carriers liability for loss must be reasonable and just under the circumstances, and
that the crate marked has been freely and fairly agreed upon.
MARCO C/No. 14 was
missing. This was confirmed The stipulations are, to our mind, reasonable and just. In the bill of lading, the carrier made
and admitted by petitioner in it clear that its liability would only be up to One Hundred Thousand (Y100,000.00) Yen.
its letter of January 13, 1992 However, the shipper, Maruman Trading, had the option to declare a higher valuation if the
addressed to private value of its cargo was higher than the limited liability of the carrier. Considering that the
respondent, which thereafter shipper did not declare a higher valuation, it had itself to blame for not complying with the
made a formal claim upon stipulations.
petitioner for the value of the
lost cargo amounting to One Yes.
Million Five Hundred Fifty
Two Thousand Five Hundred Sealand vs CA:
(Y1,552,500.00) Yen, the
amount shown in an Invoice x x x the right of a party in the same situation as respondent here, to recover for loss of a
No. MTM-941, dated shipment consigned to him under a bill of lading drawn up only by and between the shipper
November 14, 1991. and the carrier, springs from either a relation of agency that may exist between him and the
However, petitioner offered shipper or consignor, or his status as stranger in whose favor some stipulation is made in
to pay only One Hundred said contract, and who becomes a party thereto when he demands fulfillment of that
Thousand (Y100,000.00) stipulation, in this case the delivery of the goods or cargo shipped. In neither capacity can
Yen, the maximum amount he assert personally, in bar to any provision of the bill of lading, the alleged circumstance
stipulated under Clause 18 of that fair and free agreement to such provision was vitiated by its being in such fine print as
the covering bill of lading to be hardly readable. Parenthetically, it may be observed that in one comparatively recent
which limits the liability of case (Phoenix Assurance Company vs. Macondray & Co., Inc., 64 SCRA 15) where this
petitioner. Court found that a similar package limitation clause was printed in the smallest type on the
back of the bill of lading, it nonetheless ruled that the consignee was bound thereby on the
strength of authority holding that such provisions on liability limitation are as much a part
of a bill of lading as though physically in it and as though placed therein by agreement of
the parties.
When private respondent formally claimed reimbursement for the missing goods from
petitioner and subsequently filed a case against the latter based on the very same bill of
lading, it (private respondent) accepted the provisions of the contract and thereby made
itself a party thereto, or at least has come to court to enforce it. Thus, private respondent
cannot now reject or disregard the carriers limited liability stipulation in the bill of lading.
In other words, private respondent is bound by the whole stipulations in the bill of lading
and must respect the same.

British Airways vs CA Issue: Whether or not petitioner’s liability to private respondent should be limited.
On April 16, 1989, Mahtani No. There was a waiver.

decided to visit his relatives
in Bombay, India. In In the instant case, it is apparent that the contract of carriage was between Mahtani and BA.
anticipation of his visit, he Moreover, it is indubitable that his luggage never arrived in Bombay on time.
obtained the services of a
certain Mr. Gumar to prepare In this regard, the trial court granted the following award as compensatory damages:
his travel plans. The latter, in
turn, purchased a ticket from Since plaintiff did not declare the value of the contents in his luggage and even failed to
BA. show receipts of the alleged gifts for the members of his family in Bombay, the most that
can be expected for compensation of his lost luggage (2 suit cases) is Twenty U.S. Dollars
Since BA had no direct ($20.00) per kilo, or a combined value of Four Hundred ($400.00) U.S. Dollars for Twenty
flights from Manila to kilos representing the contents plus Seven Thousand (P7,000.00) Pesos representing the
Bombay, Mahtani had to take purchase price of the two (2) suit cases.
a flight to Hongkong via
PAL, and upon arrival in However, as earlier stated, it is the position of BA that there should have been no separate
Hongkong he had to take a award for the luggage and the contents thereof since Mahtani failed to declare a separate
connecting flight to Bombay higher valuation for the luggage, and therefore, its liability is limited, at most, only to the
on board BA. amount stated in the ticket.
Prior to his departure, Considering the facts of the case, we cannot assent to such specious argument.
Mahtani checked in at the
PAL counter in Manila his Admittedly, in a contract of air carriage a declaration by the passenger of a higher value is
two pieces of luggage needed to recover a greater amount. Article 22(1) of the Warsaw Convention, provides as
containing his clothings and follows:
personal effects, confident
that upon reaching xxxxxxxxx
Hongkong, the same would
be transferred to the BA (2) In the transportation of checked baggage and goods, the liability of the carrier shall be limited to a
flight bound for Bombay. sum of 250 francs per kilogram, unless the consignor has made, at the time the package was handed
over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if
the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum,
Unfortunately, when Mahtani
unless he proves that the sum is greater than the actual value to the consignor at delivery.
arrived in Bombay he
discovered that his luggage
American jurisprudence provides that an air carrier is not liable for the loss of baggage in
was missing and that upon
an amount in excess of the limits specified in the tariff which was filed with the proper
inquiry from the BA
authorities, such tariff being binding on the passenger regardless of the passengers lack of
representatives, he was told
knowledge thereof or assent thereto. This doctrine is recognized in this jurisdiction.
that the same might have
been diverted to London.
Notwithstanding the foregoing, we have, nevertheless, ruled against blind reliance on
After patiently waiting for his
adhesion contracts where the facts and circumstances justify that they should be
luggage for one week, BA
disregarded.
finally advised him to file a
claim by accomplishing the
In addition, we have held that benefits of limited liability are subject to waiver such as when
Property Irregularity Report.
the air carrier failed to raise timely objections during the trial when questions and answers
regarding the actual claims and damages sustained by the passenger were asked.
Back in the Philippines, on
June 11, 1990, Mahtani filed
Given the foregoing postulates, the inescapable conclusion is that BA had waived the
his complaint for damages
defense of limited liability when it allowed Mahtani to testify as to the actual damages he
and attorneys fees against BA
incurred due to the misplacement of his luggage, without any objection.
and Mr. Gumar before the
trial court.

Sweetline vs Teves Issue: Whether or not the conditions printed on the ticket is valid and binding.
Private respondents Atty. No.

Leovigildo Tandog and
Rogelio Tiro, a contractor by By the peculiar circumstances under which contracts of adhesion are entered into —
professions, bought tickets namely, that it is drafted only by one party, usually the corporation, and is sought to be
Nos. 0011736 and 011737 for accepted or adhered to by the other party, in this instance the passengers, private
Voyage 90 on December 31, respondents, who cannot change the same and who are thus made to adhere thereto on the
1971 at the branch office of "take it or leave it" basis — certain guidelines in the determination of their validity and/or
petitioner, a shipping enforceability have been formulated in order to that justice and fan play characterize the
company transporting inter- relationship of the contracting parties. Thus, this Court speaking through Justice J.B.L.
island passengers and Reyes held:
cargoes, at Cagayan de Oro
City. Respondents were to The courts cannot ignore that nowadays, monopolies, cartels and concentration of capital endowed
board petitioner's vessel, M/S with overwhelm economic power, manage to impose upon parties d with them y prepared 'agreements'
"Sweet Hope" bound for that the weaker party may not change one whit his participation in the 'agreement' being reduced to the
alternative 'to take it or leave it,' labelled since Raymond Saleilles 'contracts by adherence' (contracts
Tagbilaran City via the port
d' adhesion) in contrast to those entered into by parties bargaining on an equal footing. Such contracts
of Cebu. (of which policies of insurance and international bill of lading are prime examples) obviously cap for
greater strictness and vigilance on the part of the courts of justice with a view to protecting the weaker
Upon learning that the vessel party from abuses and imposition, and prevent their becoming traps for the unwary.
was not proceeding to Bohol,
since many passengers were
bound for Surigao, private We find and hold that Condition No. 14 printed at the back of the passage tickets should be
respondents per advice, went held as void and unenforceable for the following reasons:
to the branch office for proper
relocation to M/S "Sweet 1. It is a matter of public knowledge, that there is a dearth of and acute shortage in
Town". Because the said inter- island vessels plying between the country's several islands, and the facilities they
vessel was already filled to offer leave much to be desired. Thus, even under ordinary circumstances, the piers are
capacity, they were forced to congested with passengers and their cargo waiting to be transported. The conditions are
agree "to hide at the cargo even worse at peak and/or the rainy seasons, when Passengers literally scramble to whatever
section to avoid inspection of accommodations may be availed of, even through circuitous routes, and/or at the risk of
the officers of the Philippine their safety — their immediate concern, for the moment, being to be able to board vessels
Coastguard." with the hope of reaching their destinations. The schedules are — as often as not if not more
so — delayed or altered.
Private respondents alleged
that they were, during the Under these circumstances, it is hardly just and proper to expect the passengers to examine
trip," "exposed to the their tickets received from crowded/congested counters, more often than not during rush
scorching heat of the sun and hours, for conditions that may be printed much charge them with having consented to the
the dust coming from the conditions, so printed, especially if there are a number of such conditions in fine print, as
ship's cargo of corn grits," in this case.
and that the tickets they
bought at Cagayan de Oro 2. Condition No. 14 is subversive of public policy on transfers of venue of actions.
City for Tagbilaran were not For, although venue may be changed or transferred from one province to another by
honored and they were agreement of the parties in writing t to Rule 4, Section 3, of the Rules of Court, such an
constrained to pay for other agreement will not be held valid where it practically negates the action of the claimants,
tickets. In view thereof, such as the private respondents herein.
private respondents sued
petitioner for damages and The philosophy underlying the provisions on transfer of venue of actions is the convenience
for breach of contract of of the plaintiffs as well as his witnesses and to promote the ends of justice. Considering
carriage in the alleged sum of the expense and trouble a passenger residing outside of Cebu City would incur to prosecute
P10,000.00 before a claim in the City of Cebu, he would most probably decide not to file the action at all. The
respondents Court of First condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand,
Instance of Misamis Oriental. petitioner has branches or offices in the respective ports of call of its vessels and can afford
to litigate in any of these places.
Note:
Public policy is "that principle of the law which holds that no subject or citizen can lawfully
do that which has a tendency to be injurious to the public or against the public good.

Alitalia vs IAC Issue: Whether or not the petitioner should be liable for damages, despite returning the
luggage to respondent.
Dr. Felipa Pablo, an
associate professor in the Yes.
University of the Philippines,
was invited to take part at a The Hague Protocol amended the Warsaw Convention by removing the provision that if
meeting of the Department of the airline took all necessary steps to avoid the damage, it could exculpate itself completely,
Research and Isotopes of the and declaring the stated limits of liability not applicable "if it is proved that the damage
Joint FAO-IAEA Division of resulted from an act or omission of the carrier, its servants or agents, done with intent to
Atomic Energy in Food and cause damage or recklessly and with knowledge that damage would probably result." The
Agriculture of the United same deletion was effected by the Montreal Agreement of 1966, with the result that a
Nations in Ispra, Italy. She passenger could recover unlimited damages upon proof of wilful misconduct.
was invited in view of her
specialized knowledge in The Convention does not thus operate as an exclusive enumeration of the instances of an
"foreign substances in food airline's liability, or as an absolute limit of the extent of that liability. Such a proposition is
and the agriculture not borne out by the language of the Convention, as this Court has now, and at an earlier
environment." She accepted time, pointed out. Moreover, slight reflection readily leads to the conclusion that it should
the invitation, and was then be deemed a limit of liability only in those cases where the cause of the death or injury to
scheduled by the organizers, person, or destruction, loss or damage to property or delay in its transport is not attributable
to read a paper on "The Fate to or attended by any wilful misconduct, bad faith, recklessness, or otherwise improper
of Radioactive Fusion conduct on the part of any official or employee for which the carrier is responsible, and
Products Contaminating there is otherwise no special or extraordinary form of resulting injury. The Convention's
Vegetable Crops." 3 The provisions, in short, do not "regulate or exclude liability for other breaches of contract by
program announced that she the carrier" 26 or misconduct of its officers and employees, or for some particular or
would be the second speaker exceptional type of damage. Otherwise, "an air carrier would be exempt from any liability
on the first day of the for damages in the event of its absolute refusal, in bad faith, to comply with a contract of
meeting. To fulfill this carriage, which is absurd."
engagement, Dr. Pablo
booked passage on petitioner In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw Convention
airline, ALITALIA. was applied as regards the limitation on the carrier's liability, there being a simple loss of
baggage without any otherwise improper conduct on the part of the officials or employees
She arrived in Milan on the of the airline or other special injury sustained by the passenger.
day before the meeting in
accordance with the itinerary In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the
and time table set for her by employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her,
ALITALIA. She was belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some
however told by the special species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced
ALITALIA personnel there her baggage and failed to deliver it to her at the time appointed — a breach of its contract
at Milan that her luggage was of carriage, to be sure — with the result that she was unable to read the paper and make the
"delayed inasmuch as the scientific presentation (consisting of slides, autoradiograms or films, tables and tabulations)
same . . . (was) in one of the that she had painstakingly labored over, at the prestigious international conference, to
succeeding flights from attend which she had traveled hundreds of miles, to her chagrin and embarrassment and the
Rome to Milan." disappointment and annoyance of the organizers. She felt, not unreasonably, that the
invitation for her to participate at the conference, extended by the Joint FAO/IAEA Division
By then feeling desperate, of Atomic Energy in Food and Agriculture of the United Nations, was a singular honor not
she went to Rome to try to only to herself, but to the University of the Philippines and the country as well, an
locate her bags herself. opportunity to make some sort of impression among her colleagues in that field of scientific
There, she inquired about her activity. The opportunity to claim this honor or distinction was irretrievably lost to her
suitcases in the domestic and because of Alitalia's breach of its contract.
international airports, and
filled out the forms Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and
prescribed by ALITALIA for anxiety, which gradually turned to panic and finally despair, from the time she learned that
people in her predicament. her suitcases were missing up to the time when, having gone to Rome, she finally realized
However, her baggage could that she would no longer be able to take part in the conference. As she herself put it, she
not be found. Completely "was really shocked and distraught and confused."
distraught and discouraged,
she returned to Manila Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the
without attending the circumstances be restricted to that prescribed by the Warsaw Convention for delay in the
meeting in Ispra, Italy. transport of baggage.

She is not, of course, entitled to be compensated for loss or damage to her luggage. As
already mentioned, her baggage was ultimately delivered to her in Manila, tardily but
safely. She is however entitled to nominal damages — which, as the law says, is adjudicated
in order that a right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated and recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered.
Pan American vs IAC Issue: Whether or not plaintiff’s liability for the lost baggage of private respondent Pangan
is limited to $600.00 ($20.00 x 30 kilos) as the latter did not declare a higher value for his
By virtue of two agreements, baggage and pay the corresponding additional charges.
one in Guam and the other in
California, plaintiff Rene Yes.
Pangan, on May 18, 1978,
obtained from defendant Pan
Am's Manila Office, an We find the ruling in Ong Yiu squarely applicable to the instant case:
economy class airplane ticket
with Manila to Guam on May While it may be true that petitioner had not signed the plane ticket (Exh. "12"), he is nevertheless bound
27,1978, upon payment by by the provisions thereof. "Such provisions have been held to be a part of the contract of carriage, and
said plaintiff of the regular valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the
regulation." It is what is known as a contract of "adhesion," in regards which it has been said that
fare.
contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the
plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract
On May 27, 1978, is in reality free to reject it entirely; if he adheres, he gives his consent, "a contract limiting liability
defendant's ticket counter at upon an agreed valuation does not offend against the policy of the law forbidding one from contracting
the Manila International against his own negligence."
Airport and presented his
ticket and checked in his two Considering, therefore, that petitioner had failed to declare a higher value for his baggage,
luggages. Subsequently, he cannot be permitted a recovery in excess of P100.00....
Pangan was informed that his
name was not in the manifest On the other hand, the ruling in Shewaram v. Philippine Air Lines, Inc. [G.R. No. L-20099,
and so he could not take the July 2, 1966, 17 SCRA 606], where the Court held that the stipulation limiting the carrier's
in the economy class. Since liability to a specified amount was invalid, finds no application in the instant case, as the
there was no space in the ruling in said case was premised on the finding that the conditions printed at the back of
economy class, so plaintiff the ticket were so small and hard to read that they would not warrant the presumption that
Pangan took the first class the passenger was aware of the conditions and that he had freely and fairly agreed thereto.
In the instant case, similar facts that would make the case fall under the exception have not
When plaintiff Pangan been alleged, much less shown to exist.
arrived in Guam on the date
of May 27, 1978, his two In view thereof petitioner's liability for the lost baggage is limited to $20.00 per kilo or
luggages did not arrive with $600.00, as stipulated at the back of the ticket.
his flight, as a consequence of
which his agreements with Note:
Slutchnick and Quesada for Condition in the ticket:
the exhibition of the films in
Guam and in the United Liability for loss, delay, or damage to baggage is limited as follows unless a higher value
States were cancelled. ideclared in advance and additional charges are paid: (1)for most international travel
(including domestic portions of international journeys) to approximately $9.07 per pound
($20.00 per kilo) for checked baggage.

China Airlines vs Chiok Issue: Whether or not CA correctly ruled that petitioner is liable for damages.
On September 18, 1981, Yes.

Daniel Chiok purchased from
China Airlines, Ltd a ticket CA based its decision on the case of KLM Royal Dutch vs CA:
for air transportation
covering Manila-Taipei- “Moreover, as maintained by the respondents and the Court of Appeals, the passage tickets of the
Hongkong-Manila. Said respondents provide that the carriage to be performed thereunder by several successive carriers is to
ticket was exclusively be regarded as a single operation, which is diametrically incompatible with the theory of the KLM that
the respondents entered into a series of independent contracts with the carriers which took them on the
endorseable to PAL.
various segments of their trip. This position of KLM we reject. The respondents dealt exclusively with
the KLM which issued them tickets for their entire trip and which in effect guaranteed to them that
Subsequently, on November they would have sure space in Aer Lingus flight 861. The respondents, under that assurance of the
21, 1981, Chiok took his trip internationally prestigious KLM, naturally had the right to expect that their tickets would be honored
from Manila to Taipei using by Aer Lingus to which, in the legal sense, the KLM had indorsed and in effect guaranteed the
[the] CAL ticket. Before he performance of its principal engagement to carry out the respondents' scheduled itinerary previously
left for said trip, the trips and mutually agreed upon between the parties.”
covered by the ticket were
pre-scheduled and confirmed Under the contract of transportation, petitioner -- as the ticket-issuing carrier (like KLM) --
by the former. When he was liable regardless of the fact that PAL was to perform or had performed the actual
arrived in Taipei, he went to carriage. The CA elucidated on this point as follows:
the CAL office and
confirmed his Hongkong to By the very nature of their contract, defendant-appellant CAL is clearly liable under the
Manila trip on board PAL contract of carriage with [respondent] and remains to be so, regardless of those instances
Flight No. PR 311. The CAL when actual carriage was to be performed by another carrier. The issuance of a confirmed
office attached a yellow CAL ticket in favor of [respondent] covering his entire trip abroad concretely attests to this.
sticker appropriately This also serves as proof that defendant-appellant CAL, in effect guaranteed that the carrier,
indicating that his flight such as defendant-appellant PAL would honor his ticket, assure him of a space therein and
status was OK. transport him on a particular segment of his trip.
When Chiok reached

Hongkong, he went to the
PAL office and sought to
reconfirm his flight back to
Manila. The PAL office
confirmed his return trip on
board Flight No. PR 311 and
attached its own sticker. On
November 24, 1981, Chiok
proceeded to Hongkong
International Airport for his
return trip to Manila.
However, upon reaching the
PAL counter, Chiok saw a
poster stating that PAL Flight
No. PR 311 was cancelled
because of a typhoon in
Manila. He was then
informed that all the
confirmed ticket holders of
PAL Flight No. PR 311 were
automatically booked for its
next flight, which was to
leave the next day. Chiok
went to the airport the next
day. He was not allowed to
board however, because his
name was not on the list.

Santos vs Northwest Airlines Issues: Whether or not Warsaw Convention is unconstitutional.

Whether or not Warsaw Convention is merely a rule of venue or Jurisdiction.
The petitioner is a minor and Whether or not case was properly filed in Manila because it was the place of
a resident of the Philippines. destination.
Private respondent Northwest Whether or not the case was properly filed in the Philippines since defendant has
Orient Airlines (NOA) is a his domicile in the Philippines.
foreign corporation with
principal office in Minnesota, No.
U.S.A. and licensed to do
business and maintain a On due process and equal protection.
branch office in the
Philippines. It is well-settled that courts will assume jurisdiction over a constitutional question only if it
is shown that the essential requisites of a judicial inquiry into such a question are first
On October 21, 1986, the satisfied. Thus, there must be an actual case or controversy involving a conflict of legal
petitioner purchased from rights susceptible of judicial determination; the constitutional question must have been
NOA a round-trip ticket in opportunely raised by the proper party; and the resolution of the question is unavoidably
San Francisco. U.S.A., for his necessary to the decision of the case itself.
flight from San Francisco to
Manila via Tokyo and back. Courts generally avoid having to decide a constitutional question. This attitude is based on
The scheduled departure date the doctrine of separation of powers, which enjoins upon the departments of the government
from Tokyo was December a becoming respect for each other's acts.
20, 1986. No date was
specified for his return to San The treaty which is the subject matter of this petition was a joint legislative-executive act.
Francisco. The presumption is that it was first carefully studied and determined to be constitutional
before it was adopted and given the force of law in this country.
On December 19, 1986, the
petitioner checked in at the The petitioner's allegations are not convincing enough to overcome this presumption.
NOA counter in the San
Francisco airport for his On ‘rebus sic stantibus’
scheduled departure to
Manila. Despite a previous According to Jessup"this doctrine constitutes an attempt to formulate a legal principle
confirmation and re- which would justify non-performance of a treaty obligation if the conditions with relation
confirmation, he was to which the parties contracted have changed so materially and so unexpectedly as to create
informed that he had no a situation in which the exaction of performance would be unreasonable."
reservation for his flight from
Tokyo to Manila. He The key element of this doctrine is the vital change in the condition of the contracting
therefore had to be wait- parties that they could not have foreseen at the time the treaty was concluded.
listed.
It is true that at the time the Warsaw Convention was drafted, the airline industry was still
On March 12, 1987, the in its infancy. However, that circumstance alone is not sufficient justification for the
petitioner sued NOA for rejection of the treaty at this time. The changes recited by the petitioner were, realistically,
damages in the Regional not entirely unforeseen although they were expected in a general sense only. In fact, the
Trial Court of Makati. Convention itself, anticipating such developments, contains the following significant
provision:
Article 41. Any High Contracting Party shall be entitled not earlier than two years
after the coming into force of this convention to call for the assembling of a new
international conference in order to consider any improvements which may be made in this
convention. To this end, it will communicate with the Government of the French Republic
which will take the necessary measures to make preparations for such conference.
But the more important consideration is that the treaty has not been rejected by the
Philippine government. The doctrine of rebus sic stantibus does not operate automatically
to render the treaty inoperative. There is a necessity for a formal act of rejection, usually
made by the head of State, with a statement of the reasons why compliance with the treaty
is no longer required.
Jurisdiction.
Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
authorities are sharply divided. While the petitioner cites several cases holding that Article

28(1) refers to venue rather than jurisdiction, there are later cases cited by the private
respondent supporting the conclusion that the provision is jurisdictional.
Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by
consent or waiver upon d court which otherwise would have no jurisdiction over the
subject-matter of an action; but the venue of an action as fixed by statute may be changed
by the consent of the parties and an objection that the plaintiff brought his suit in the wrong
county may be waived by the failure of the defendant to make a timely objection. In either
case, the court may render a valid judgment. Rules as to jurisdiction can never be left to the
consent or agreement of the parties, whether or not a prohibition exists against their
alteration.
A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction

and not a venue provision. First, the wording of Article 32, which indicates the places where
the action for damages "must" be brought, underscores the mandatory nature of Article
28(1). Second, this characterization is consistent with one of the objectives of the
Convention, which is to "regulate in a uniform manner the conditions of international
transportation by air." Third, the Convention does not contain any provision prescribing
rules of jurisdiction other than Article 28(1), which means that the phrase "rules as to
jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last sentence of
Article 32 specifically deals with the exclusive enumeration in Article 28(1) as
"jurisdictions," which, as such, cannot be left to the will of the parties regardless of the time
when the damage occurred.
No.
The place of destination, within the meaning of the Warsaw Convention, is determined by
the terms of the contract of carriage or, specifically in this case, the ticket between the
passenger and the carrier. Examination of the petitioner's ticket shows that his ultimate
destination is San Francisco. Although the date of the return flight was left open, the
contract of carriage between the parties indicates that NOA was bound to transport the
petitioner to San Francisco from Manila. Manila should therefore be considered merely an
agreed stopping place and not the destination.
Article 1(2) also draws a distinction between a "destination" and an "agreed stopping
place." It is the "destination" and not an "agreed stopping place" that controls for purposes
of ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with the place of departure and
ending with the ultimate destination. The use of the singular in this expression indicates the
understanding of the parties to the Convention that every contract of carriage has one place
of departure and one place of destination. An intermediate place where the carriage may be
broken is not regarded as a "place of destination."
No.
Notably, the domicile of the carrier is only one of the places where the complaint is allowed
to be filed under Article 28(1). By specifying the three other places, to wit, the principal
place of business of the carrier, its place of business where the contract was made, and
the place of destination, the article clearly meant that these three other places were not
comprehended in the term "domicile."

United Airlines vs Uy Issue: Whether respondent’s second cause of action is time-barred by the Warsaw
Convention.
On 13 October 1989 respondent
Willie J. Uy, a revenue passenger No.
on United Airlines Flight No. 819
for the San Francisco - Manila Within our jurisdiction we have held that the Warsaw Convention can be applied, or
route, checked in together with ignored, depending on the peculiar facts presented by each case.
his luggage one piece of which
was found to be overweight at the Respondent's complaint reveals that he is suing on two (2) causes of action: (a) the shabby
airline counter. To his utter and humiliating treatment he received from petitioner's employees at the San Francisco
humiliation, an employee of Airport which caused him extreme embarrassment and social humiliation; and, (b) the
petitioner rebuked him saying slashing of his luggage and the loss of his personal effects amounting to US $5,310.00.
that he should have known the
maximum weight allowance to be While his second cause of action - an action for damages arising from theft or damage to
70 kgs. per bag and that he should property or goods - is well within the bounds of the Warsaw Convention, his first cause of
have packed his things action -an action for damages arising from the misconduct of the airline employees and the
accordingly. Then, in a loud violation of respondent's rights as passenger - clearly is not.
voice in front of the milling
crowd, she told respondent to Consequently, insofar as the first cause of action is concerned, respondent's failure to file
repack his things and transfer his complaint within the two (2)-year limitation of the Warsaw Convention does not bar his
some of them from the action since petitioner airline may still be held liable for breach of other provisions of the
overweight luggage to the lighter Civil Code which prescribe a different period or procedure for instituting the action,
ones. Not wishing to create specifically, Art. 1146 thereof which prescribes four (4) years for filing an action based on
further scene, respondent torts.
acceded only to find his luggage
still overweight. The airline then As for respondent's second cause of action, indeed the travaux preparatories of the Warsaw
billed him overweight charges Convention reveal that the delegates thereto intended the two (2)-year limitation
which he offered to pay with a incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the various
miscellaneous charge order tolling provisions of the laws of the forum.
(MCO) or an airline pre-paid
credit. However, the airlines Nonetheless, it cannot be doubted that respondent exerted efforts to immediately convey
employee, and later its airport his loss to petitioner, even employed the services of two (2) lawyers to follow up his claims,
supervisor, adamantly refused to and that the filing of the action itself was delayed because of petitioner's evasion.
honor the MCO pointing out that
there were conflicting figures In this regard, Philippine Airlines, Inc. v. Court of Appeals is instructive. In this case of
listed on it. Despite the PAL, private respondent filed an action for damages against petitioner airline for the
explanation from respondent that breakage of the front glass of the microwave oven which she shipped under PAL Air
the last figure written on the Waybill. Petitioner averred that, the action having been filed seven (7) months after her
MCO represented his balance, arrival at her port of destination, she failed to comply with par. 12, of the Air Waybill which
petitioners employees did not expressly provided that the person entitled to delivery must make a complaint to the carrier
accommodate him. Faced with in writing in case of visible damage to the goods, immediately after discovery of the damage
the prospect of leaving without and at the latest within 14 days from receipt of the goods.
his luggage, respondent paid the
overweight charges with his Despite non-compliance therewith the Court held that by private respondent's immediate
American Express credit card. submission of a formal claim to petitioner, which however was not immediately entertained
as it was referred from one employee to another, she was deemed to have substantially
Respondents troubles did not end complied with the requirement. The Court noted that with private respondent's own zealous
there. Upon arrival in Manila, he efforts in pursuing her claim it was clearly not her fault that the letter of demand for
discovered that one of his bags damages could only be filed, after months of exasperating follow-up of the claim, on 13
had been slashed and its contents August 1990, and that if there was any failure at all to file the formal claim within the
stolen. He particularized his prescriptive period contemplated in the Air Waybill, this was largely because of the carrier's
losses to be around US own doing, the consequences of which could not in all fairness be attributed to private
$5,310.00. respondent.
In the same vein must we rule upon the circumstances brought before us. Verily, respondent
filed his complaint more than two (2) years later, beyond the period of limitation prescribed
by the Warsaw Convention for filing a claim for damages. However, it is obvious that
respondent was forestalled from immediately filing an action because petitioner airline gave
him the runaround, answering his letters but not giving in to his demands. True, respondent
should have already filed an action at the first instance when his claims were denied by
petitioner but the same could only be due to his desire to make an out-of-court settlement

for which he cannot be faulted. Hence, despite the express mandate of Art. 29 of the
Warsaw Convention that an action for damages should be filed within two (2) years from
the arrival at the place of destination, such rule shall not be applied in the instant case
because of the delaying tactics employed by petitioner airline itself. Thus, private
respondent's second cause of action cannot be considered as time-barred under Art. 29 of
the Warsaw Convention.

HE Heacock Vs Macondray

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SBU Transportation Law Case Doctrines|Mario Trinchera Jr.

Caveat Lector: Read at your own risk. AGDV

On November 2, 1962, the No.

Caveat Lector: Read at your own risk. AGDV

informing that from our

The Collector of Customs

Caveat Lector: Read at your own risk. AGDV

back to the bank later, he was

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Corpus Juris, volume 10, p. 154, says:

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

In the morning of May 1,

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

On April 16, 1989, Mahtani No. There was a waiver.

Caveat Lector: Read at your own risk. AGDV

Private respondents Atty. No.

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

On September 18, 1981, Yes.

When Chiok reached

Caveat Lector: Read at your own risk. AGDV

Santos vs Northwest Airlines Issues: Whether or not Warsaw Convention is unconstitutional.

Caveat Lector: Read at your own risk. AGDV

A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

Caveat Lector: Read at your own risk. AGDV

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