Transportation Cases
1. ABROGAR vs. COSMOS BOTTLING COMPANY and In the RTC decision dated May 10, 1991, judgment was
INTERGAMES INC.
G.R. No. 064749 March 15, 2017
Parties: ROMULO ABROGAR and ERLINDA ABROGAR,
Petitioners
COSMOS BOTTLING COMPANY and
INTERGAMES, INC., Respondents
Cause of Action: claim for damages arising from the
negligence causing the death of a participant in an
organized marathon bumped by a passenger jeepney on the
route of the race.
Decision of RTC: that the accident had happened because
of inadequate preparation and Intergames' failure to
exercise due diligence; that the respondents could not be
excused from liability by hiding behind the waiver executed
by Rommel and the permission given to him by his parents
because the waiver could only be effective for risks inherent
in the marathon, such as stumbling, heat stroke, heart
attack during the race, severe exhaustion and similar
occurrences; that the liability of the respondents towards
the participants and third persons was solidary, because
Cosmos, the sponsor of the event, had been the principal
mover of the event, and, as such, had derived benefits from
the marathon that in turn had carried responsibilities
towards the participants and the public.
Decision of CA: that the doctrine of assumption of risk finds
application to the case at bar even though getting hit or run
over by a vehicle is not an inherent risk in a marathon race.
Even assuming arguendo that deceased Abrogar made such
waiver as claimed, still there can be no valid waiver of one's
right to life and limb for being against public policy.
Facts:
ABROGAR on joined a commercial marathon where the
winner would be given P50,000. Aside from paying a certain
amount as a registration fee, he was required to submit a
waiver where it is stated that the organizer is exempted
from any liability arising from stumbling, stroke or any
injury acquired during the race. The race was held on a
highway manned by volunteers of the organizer but was not
exclusive to runners, because no lane of the road was
blocked. During the race, my son was hit by a jeepney,
which went out of control because it was racing with a bus. I
demanded compensation from the organizer for the injuries
suffered by my son, but it claimed it had no liability because
it was not negligent.
This case involves a claim for damages arising from the
negligence causing the death of a participant in an
organized marathon bumped by a passenger jeepney on the
route of the race. The issues revolve on whether the
organizer and the sponsor of the marathon were guilty of
negligence, and, if so, was their negligence the proximate
cause of the death of the participant; on whether the
negligence of the driver of the passenger jeepney was an
efficient intervening cause; on whether the doctrine of
assumption of risk was applicable to the fatality; and on
whether the heirs of the fatality can recover damages for
loss of earning capacity of the latter who, being then a
minor, had no gainful employment.
rendered in favor of plaintiffs-spouses Romulo Abrogar and
Erlinda Abrogar and against defendants Cosmos Bottling
Company, Inc. and Intergames, Inc., ordering both
defendants, jointly and severally, to pay and deliver to the
plaintiffs the amounts of Twenty Eight Thousand Sixty One
Pesos and Sixty Three Centavos (P28,061.63) as actual
damages; One Hundred Thousand Pesos (P100,000.00) as
moral damages; Fifty Thousand Pesos (P50,000.00) as
exemplary damages and Ten Percent (10%) of the total
amount of One Hundred Seventy Eight Thousand Sixty One
Pesos and Sixty Three Centavos (P178,061,63) or Seventeen
Thousand Eight Hundred Six Pesos and Sixteen Centavos
(P17,806.16) as attorney's fees. On the cross-claim of
defendant Cosmos Bottling Company, Inc., defendant
Intergames, Inc, is hereby ordered to reimburse to the
former any and all amounts which may be recovered by the
plaintiffs from it by virtue of this Decision.
The RTC observed that the safeguards allegedly instituted
by Intergames in conducting the marathon had fallen short
of the yardstick to satisfy the requirements of due diligence
as called for by and appropriate under the circumstances;
that the accident had happened because of inadequate
preparation and Intergames' failure to exercise due
diligence; that the respondents could not be excused from
liability by hiding behind the waiver executed by Rommel
and the permission given to him by his parents because the
waiver could only be effective for risks inherent in the
marathon, such as stumbling, heat stroke, heart attack
during the race, severe exhaustion and similar occurrences;
that the liability of the respondents towards the
participants and third persons was solidary, because
Cosmos, the sponsor of the event, had been the principal
mover of the event, and, as such, had derived benefits from
the marathon that in turn had carried responsibilities
towards the participants and the public; that the
respondents' agreement to free Cosmos from any liability
had been an agreement binding only between them, and
did not bind third persons; and that Cosmos had a cause of
action against Intergames for whatever could be recovered
by the petitioners from Cosmos.
All parties appealed to the CA. The petitioners contended
that the RTC erred in not awarding damages for loss of
earning capacity on the part of Rommel for the reason that
such damages were not recoverable due to Rommel not yet
having finished his schooling; and that it would be
premature to award such damages upon the assumption
that he would finish college and be gainfully employed. The
CA reduced the issues to four, namely:
1. Whether or not appellant Intergames were negligent in
its conduct of the 1st Pop Cola Junior Marathon" held on
June 15, 1980 and if so, whether its negligence was the
proximate cause of the death of Rommel Abrogar.
2. Whether or not appellant Cosmos can be held jointly and
solidarity liable with appellant Intergames for the death of
Rommel Abrogar, assuming that appellant Intergames is
found to have been negligent in the conduct of the Pop Cola
marathon and such negligence was the proximate cause of
the death of Rommel Abrogar.
3. Whether or not the appellants Abrogar are entitled to be
compensated for the "loss of earning capacity" of their son
Rommel.
4. Whether or not the appellants Abrogar are entitled to the
actual, moral, and exemplary damages granted to them by
the Trial Court. In its assailed judgment on March 10, 2004
and in view of the fact that both defendants are not liable
for the death of Rommel Abrogar, appellants-spouses are
not entitled to actual, moral, exemplary damages as well as
for the "loss of earning capacity" of their son. The third and
fourth issues are thus moot and academic. UPON THE VIEW
OF THIS CASE, THUS, the judgment appealed from must be,
as it hereby is, REVERSED and SET ASIDE and another
entered DISMISSING the complaint a quo. The appellants
shall bear their respective costs.
Issues:
1. Whether or not the CA gravely erred in reversing the RTC
Decision, (and) in holding that respondent Intergames was
not negligent considering that:
A. Respondent Intergames failed to exercise the diligence of
a good father of the family in the conduct of the marathon
in that it did not block off from traffic the marathon route;
and
B. Respondent Intergames' preparations for the race,
including the number of marshal during the marathon, were
glaringly inadequate to prevent the happening of the injury
to its participants.
2. Whether or not the CA gravely erred in reversing the RTC
Decision, (and) in holding that the doctrine of assumption of
risk finds application to the case at bar even though getting
hit or run over by a vehicle is not an inherent risk in a
marathon race. Even assuming arguendo that deceased
Abrogar made such waiver as claimed, still there can be no
valid waiver of one's right to life and limb for being against
public policy.
3. Whether or not the CA gravely erred in reversing the RTC
Decision (and) in absolving respondent Cosmos from liability
to petitioners on the sole ground that respondent Cosmos'
contract with respondent Intergames contained a
stipulation exempting the former from liability.
4. Whether or not the CA gravely erred in reversing the RTC
Decision and consequently holding respondents free from
liability, (and) in not awarding petitioners with actual, moral
and exemplary damages for the death of their child,
Rommel Abrogar.
Held:
1. Yes. Negligence is the failure to observe for the
protection of the interests of another person that degree of
care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury.
Under Article 1173 of the Civil Code, it consists of the
"omission of that diligence which is required by the nature
of the obligation and corresponds with the circumstances of
the person, of the time and of the place. The Civil Code
makes liability for negligence clear under Article 2176, and
Article 20.
2. Yes. The doctrine of assumption of risk means that one
who voluntarily exposes himself to an obvious, known and
appreciated danger assumes the risk of injury that may
result therefrom. It rests on the fact that the person injured
has consented to relieve the defendant of an obligation of
conduct toward him and to take his chance of injury from a
known risk, and whether the former has exercised proper
caution or not is immaterial. In other words, it is based on
voluntary consent, express or implied, to accept danger of a
known and appreciated risk; it may sometimes include
acceptance of risk arising from the defendant's negligence,
but one does not ordinarily assume risk of any negligence
which he does not know and appreciate. As a defense in
negligence cases, therefore, the doctrine requires the
concurrence of three elements, namely; the plaintiff must
know that the risk is present;he must further understand its
nature; and his choice to incur it must be free and
voluntary. Neither was the waiver by Rommel, then a
minor, an effective form of express or implied consent in
the context of the doctrine of assumption of risk. There is
ample authority, cited in Prosser, to the effect that a person
does not comprehend the risk involved in a known situation
because of his youth, or lack of information or experience,
and thus will not be taken to consent to assume the risk.
Clearly, the doctrine of assumption of risk does not apply to
bar recovery by the petitioners.
3. No. The sponsorship of the marathon by Cosmos was
limited to financing the race. Cosmos did nothing beyond
that, and did not involve itself at all in the preparations for
the actual conduct of the race. This verity was expressly
confirmed by Intergames, through Castro, Jr.
4. Yes. Art. 2202. In crimes and quasi-delicts, the defendant
shall be liable for all damages which are the natural and
probable consequences of the act or omission complained
of. It is not necessary that such damages have been
foreseen or could have reasonably been foreseen by the
defendant.
2. MONARCH v. ABOITIZ
G.R. No. 92735. June 8, 2000
Shippers: MONARCH INSURANCE CO., INC and
TABACALERA INSURANCE CO., INC
ALLIED GUARANTEE
INSURANCE COMPANY
(Peak Plastic and Metal Products Limited -  676 bags of PVC
compound and 10 bags of ABS plastic)
EQUITABLE INSURANCE
CORPORATION
(Axel Manufacturing Corporation - 76 drums of synthetic
organic tanning substances and 1,000 kilograms of optical
bleaching agents)
Carrier: ABOITIZ SHIPPING CORPORATION
Cause of Action: - Consolidated petition: All cases arose
from the loss of cargoes of various shippers when the M/V
P. Aboitiz, a common carrier owned and operated by
Aboitiz, sank on her voyage from Hong Kong to Manila on
October 31, 1980. Seeking indemnification for the loss of
their cargoes, the shippers, their successors-in-interest, and
the cargo insurers filed separate suits against Aboitiz before
the Regional Trial Courts. The claims numbered one
hundred and ten (110) for the total amount of
P41,230,115.00 which is almost thrice the amount of
insurance proceeds of P14,500,000.00 plus earned freight of
P500,000.00 according to Aboitiz.
Decision of RTC:
(Monarch vs Aboitiz) After receiving Monarchs and
Tabacaleras evidence, the trial court found that the
complete loss of the shipment on board the M/V P. Aboitiz
when it sank was neither due to a fortuitous event nor a
storm or natural cause. For Aboitiz failure to present
controverting evidence, the trial court also upheld
petitioners allegation that the M/V P. Aboitiz was
unseaworthy.
(Equitable vs. CA) the sinking of the M/V P. Aboitiz was not
due to an act of God or force majeure. It added that the
evidence presented by the petitioner Equitable
demonstrated the negligence of Aboitiz Shipping
Corporation in the management and operation of its vessel
M/V P. Aboitiz.[58]
(Allied vs. CA) M/V P. Aboitiz was not lost due to a
fortuitous event or force majeure, and that Aboitiz had
failed to satisfactorily establish that it had observed
extraordinary diligence in the vigilance over the goods
transported by it.
Decision of CA: reversed
(Monarch vs CA) that the unseaworthiness of the M/V P.
Aboitiz was not a fault directly attributable to Aboitiz but to
the captain, and that Aboitiz is entitled to the benefit of the
limited liability rule for having abandoned its ship.
That even if she (M/V P. Aboitiz) was found to be
unseaworthy, this fault (distinguished from civil liability)
cannot be laid on the shipowners door. Such fault was
directly attributable to the captain. This is so, because under
Art. 612 of the Code of Commerce, among the inherent
duties of a captain, are to examine the vessel before sailing
and to comply with the laws on navigation."[56];and that:
"x xx although the shipowner may be held civilly liable for
the captains fault x xx having abandoned the vessel in
question, even if the vessel was unseaworthy due to the
captains fault, Aboitiz is still entitled to the benefit under
the rule of limited liability accorded to shipowners by the
Code of Commerce."
FACTS:
Monarch and Tabacalera are insurance carriers of lost
cargoes. They indemnified the shippers and were
consequently subrogated to their rights, interests and
actions against Aboitiz, the cargo carrier. Because Aboitiz
refused to compensate Monarch, it filed two complaints
against Aboitiz which were consolidated and jointly tried.
Aboitiz rejected responsibility for the claims on the ground
that the sinking of its cargo vessel was due to force majeure
or an act of God. Aboitiz was subsequently declared as in
default and allowed Monarch and Tabacalera to present
evidence ex-parte.
ISSUE:
Whether or not the sinking was due to force majeure.
Whether or not the doctrine of limited liability applies in the
instant case.
HELD:
No.
The failure of Aboitiz to present sufficient evidence to
exculpate itself from fault and/or negligence in the sinking
of its vessel in the face of the foregoing expert testimony
constrains us to hold that Aboitiz was concurrently at fault
and/or negligent with the ship captain and crew ofthe M/V
P. Aboitiz.
This is in accordance with the rule that in cases involving the
limited liability of shipowners, the initial burden of proof of
negligence or unseaworthiness rests on the claimants.
However, once the vessel owner or any party asserts the
right to limit its liability, the burden of proof as to lack of
privity or knowledge on its part with respect to the matter
of negligence or unseaworthiness is shifted to it. This
burden, Aboitiz had unfortunately failed to discharge.]
Yes.
The failure of Aboitiz to discharge the burden of proving
that the unseaworthiness of its vessel was not due to its
fault and/or negligence should not however mean that the
limited liability rule will not be applied to the present cases.
The peculiar circumstances here demand that there should
be no strict adherence to procedural rules on evidence lest
the just claims of shippers/insurers be frustrated. The rule
on limited liability should be applied in accordance with the
latest ruling in Aboitiz Shipping Corporation v. General
Accident Fire and Life Assurance Corporation, Ltd.,]
promulgated on January 21, 1993, that claimants be treated
as "creditors in an insolvent corporation whose assets are
not enough to satisfy the totality of claims against it."
3.PAN AMERICAN WORLD AIRWAYS, INC. vs. RAPADAS
Nature: Petition to review ruling of the Court of Appeals
that Pan Am cannot avail of a limitation of liabilities for lost
baggages of passenger.
Facts:
On January 16, 1975,Private respondent Jose Rapadas
held passenger ticket and baggage claim check for
petitioner’s flight No. 841 with the route from Guam to
Manila. While standing in line to board the flight at the
Guam airport,private respondent Rapadas was ordered by
petitioner's handcarry control agent to check-in his
Samsonite attache case. Private respondent Rapadas
protested pointing to the fact that other co-passengers
were permitted to handcarry bulkier baggages. He stepped
out of the line only to go back again at the end of it to try if
he can get through without having to register his attache
case. However, the same man in charge of handcarry
control did not fail to notice him and ordered him again to
register his baggage. For fear that he would miss the plane
if he insisted and argued on personally taking the valise with
him, he acceded to checking it in. He then gave his attache
case to his brother who happened to be around and who
checked it in for him, but without declaring its contents or
the value of its contents.
Upon arriving in Manila private respondent Rapadas
claimed and was given all his checked-in baggages except
the attache case. He sent his son, Jorge Rapadas to request
for the search of the missing luggage. The petitioner
exerted efforts to locate the luggage through the Pan
American World Airways-Manila International Airport (PAN
AM-MIA) Baggage Service but they were not able to locate
the attache case. Private respondent Rapadas then received
a letter from the petitioner's counsel offering to settle the
claim for the sum of $160.00 representing the petitioner's
alleged limit of liability for loss or damage to a passenger's
personal property under the contract of carriage between
Rapadas and PAN AM. Refusing to accept this kind of
settlement, Rapadas filed the instant action for damages.
The lower court ruled in favor of Rapadas after finding
no stipulation giving notice to the baggage liability
limitation. On appeal, the Court of Appeals affirmed the trial
court decision. Hence, this petition.
Issue: Whether or not a passenger is bound by the
terms of a passenger ticket declaring the limitations of
carrier’s liability
Held:
Yes. The Warsaw Convention, as amended, specifically
provides that it is applicable to international carriage which
it defines in Article 1, par. 2 as follows:
(2) For the purposes of this Convention, the expression
"international carriage" means any carriage in which,
according to the agreement between the parties, the place
of departure and the place of destination, whether or not
there be a breach in the carriage or a transshipment, are
situated either within the territories of two High
Contracting Parties or within the territory of a single High
Contracting Party if there is an agreed stopping place within
the territory of another State, even if that State is not a
High Contracting Party. Carriage between two points within
the territory of a single High Contracting Party without an
agreed stopping place within the territory of another State
is not international carriage for the purposes of this
Convention. ("High Contracting Party" refers to a state
which has ratified or adhered to the Convention, or which
has not effectively denounced the Convention [Article
40A(l)]).
Nowhere in the Warsaw Convention, as amended, is such a
detailed notice of baggage liability limitations required.
Nevertheless, it should become a common, safe and
practical custom among air carriers to indicate beforehand
the precise sums equivalent to those fixed by the
Convention. The Convention governs the availment of the
liability limitations where the baggage check is combined
with or incorporated in the passenger ticket. In the case at
bar, the baggage check is combined with the passenger
ticket in one document of carriage. The passenger ticket
complies with Article 3, which provides:
(c) a notice to the effect that, if the passenger's journey
involves an ultimate destination or stop in a country other
than the country of departure, the Warsaw Convention may
be applicable and that the Convention governs and in most
cases limits the liability of carriers for death or personal
injury and in respect of loss of or damage to baggage.
What the petitioner is concerned about is whether or not
the notice, which it did not fail to state in the plane ticket
and which it deemed to have been read and accepted by
the private respondent will be considered by this Court as
adequate under the circumstances of this case. As earlier
stated, the Court finds the provisions in the plane ticket
sufficient to govern the limitations of liabilities of the airline
for loss of luggage. The passenger, upon contracting with
the airline and receiving the plane ticket, was expected to
be vigilant insofar as his luggage is concerned. If the
passenger fails to adduce evidence to overcome the
stipulations, he cannot avoid the application of the liability
limitations.
The facts show that the private respondent actually refused
to register the attache case and chose to take it with him
despite having been ordered by the PANAM agent to check
it in. In attempting to avoid registering the luggage by going
back to the line, private respondent manifested a disregard
of airline rules on allowable handcarried baggages.
Prudence of a reasonably careful person also dictates that
cash and jewelry should be removed from checked-in-
luggage and placed in one's pockets or in a handcarried
Manila-paper or plastic envelope.
The alleged lack of enough time for him to make a
declaration of a higher value and to pay the corresponding
supplementary charges cannot justify his failure to comply
with the requirement that will exclude the application of
limited liability.
Parties: Jose Rapadas and Pan American World Airways, Inc.
Cause of Action:
Jose Rapadas against Pan American World Airways:
Payment of damages due to the loss of the attache case.
Pan American World Airways against Jose Rapadas:
Limitation of liability
Decision of RTC: The lower court ruled in favor of Rapadas
after finding no stipulation giving notice to the baggage
liability limitation.
Decision of CA: On appeal, the Court of Appeals affirmed
the trial court decision. Hence, this petition.
4. UCPB Insurance v. Aboitiz Shipping
San Miguel Corporation (SMC) purchased 3 units of waste
water treatment plant with accessories from Super Max
Engineering Enterprises, Co., Ltd. of Taipei, Taiwan. Upon
arrival at the port of Manila (carried by East Asiatic Co. Ltd
as agent of DAMCO as inter-island carrier from a foreign
carrier), it was transferred again to Cebu (carried by Aboitiz
Shipping Corp. and the Eagle Express line as agents of the
owner of the cargo in facilitating the transhipmment). The
goods were delivered to and received by SMC but
discovered that one electrical motor was damaged.
Pursuant to insurance agreement, SMC was subrogated by
the UCPB, and paid the value of the loss suffered.
Consequently, this complaint was filed to recover the
amount from the defendants.
The RTC ruled that the defendants are solidarily liable to
pay the UCPB of the amount of recovery.
East Asiatic filed an appeal on the ground of prescription,
which was given due course by the CA and set aside the
lower courts decision, and the same became final and
executory.
As to Aboitiz and Eagle Express, the lower courts decision is
still enforced , thus, it prompts their appeal on the ground
that there is no more cause of action since pursuant to Art.
366 of Code of Commerce, consignee made no claim against
them (the carrier) within twenty four (24) hours following
the receipt of the cargo regarding the condition in which
said cargo was delivered. They have only learned of the
claim upon receipt of the complaint.
The CA ruled in favor of the defendants. Hence this petition.
The SC ruled by denying the petition of the UCPB and
affirming the CA.
The further contention of UCPB that there was already
damage to the cargo during the transfer to defendants
resulting to non-applicability of Art. 366 of Code of
Commerce, will have the Courts more reason to believe that
the carrier was at no fault if such cargo was damaged prior
to the transfer.
PLAINTIFF / Plaintiff-Subrogee UCPB Insurance
SHIPPER / owner of the goods San Miguel
Corporation (SMC)
Defendant; CARRIER (by sea) ABOITIZ ; EAGLE
EXPRESS; EAST
ISSUE: Whether the UCPB can recover the amount as
a subrogee to the shipper when it fails to meet the
condition precedent of Art. 366 of the code of Commerce.
Cause of action recovery of the value amounting to the
loss/damage to the cargo
Law applicable: Art. 366 of Code of Commerce:
“Within twenty-four hours following the receipt of the
merchandise, the claim against the carrier for damage or
average which may be found therein upon opening the
packages, may be made, provided that the indications of
the damage or average which gives 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.”
5. AUGUSTO BENEDICTO SANTOS III, represented by his
father and legal guardian, Augusto Benedicto Santos,
petitioner,
vs.
NORTHWEST ORIENT AIRLINES and COURT OF APPEALS,
respondents.
The petitioner is a minor and a resident of the Philippines.
Private respondent Northwest Orient Airlines (NOA) is a
foreign corporation with principal office in Minnesota,
U.S.A. and licensed to do business and maintain a branch
office in the Philippines.
On October 21, 1986, the petitioner purchased from NOA a
round-trip ticket in San Francisco, U.S.A., for his flight from
San Francisco to Manila via Tokyo and back. The scheduled
departure date from Tokyo was December 20, 1986. No
date was specified for his return to San Francisco.
On December 19, 1986, the petitioner checked in at the
NOA counter in the San Francisco airport for his scheduled
departure to Manila. Despite a previous confirmation and
re-confirmation, he was informed that he had no
reservation for his flight from Tokyo to Manila. He therefore
had to be wait-listed.
On March 12, 1987, the petitioner sued NOA for damages in
the Regional Trial Court of Makati. On April 13, 1987, NOA
moved to dismiss the complaint on the ground of lack of
jurisdiction.
Cause of Action: The petitioner sued NOA for damages in
the Regional Trial Court of Makati.
Ruling of RTC: The lower court granted the motion of NOA
and dismissed the caseon the ground of lack of jurisdiction.
Ruling of the CA: The Court of Appealsaffirmed the decision
of the lower court.
Issue: Whether or not the Philippine courts has
jurisdiction over the case.
Ruling:
Since the flight involved in the case at bar is international,
the same being from the United States to the Philippines
and back to the United States, it is subject to the provisions
of the Warsaw Convention, including Article 28(1), which
enumerates the four places where an action for damages
may be brought.
In other words, where the matter is governed by the
Warsaw Convention, jurisdiction takes on a dual concept.
Jurisdiction in the international sense must be established
in accordance with Article 28(1) of the Warsaw Convention,
following which the jurisdiction of a particular court must
be established pursuant to the applicable domestic law.
Only after the question of which court has jurisdiction is
determined will the issue of venue be taken up. This second
question shall be governed by the law of the court to which
the case is submitted.
Other issues raised:Constitutionality of Article 28(1) of the
Warsaw Convention.
The Supreme Court ruled that they cannot rule over the
matter for the SC is bound by the provisions of the Warsaw
Convention which was ratified by the Senate. Until and
unless there would be amendment to the Warsaw
Convention, the only remedy for Santos III is to sue in any of
the place indicated in the Convention such as in San
Francisco, USA.
The SC cannot rule upon the constitutionality of Article
28(1) of the Warsaw Convention. In the first place, it is a
treaty which was a joint act by the legislative and the
executive. 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. In this
case, Santos was not able to offer any compelling argument
to overcome the presumption.
Saludo v. Court of Appeals
6. ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO,
LEOPOLDO G. SALUDO and SATURNINO G. SALUDO,
petitioners,
vs.
HON. COURT OF APPEALS, TRANS WORLD AIRLINES, INC.,
and PHILIPPINE AIRLINES, INC., respondents.
Shipper - Pomierski and Son Funeral Home
Consignee – Maria Saludo
Carrier - Transworld Airlines (TWA) Chicago – San Francisco,
and
Philippine Airlines (PAL)- San Francisco – Manila
FACTS:
After the death of petitioner's mother, Crispina Galdo
Saludo, in Chicago Illinois, Pomierski and Son Funeral Home
of Chicago, made the necessary preparations and
arrangements for the shipment, of the remains from
Chicago to the Philippines. Philippine Vice Consul in
Chicago, Illinois, Bienvenido M. Llaneta, at the Pomierski &
Son Funeral Home, sealed the shipping case containing a
hermetically sealed casket that is airtight and waterproof
wherein was contained the remains of Crispina Saludo
Galdo. On the same date, Pomierski brought the remains to
C.M.A.S. (Continental Mortuary Air Services) at the airport
(Chicago) which made the necessary arrangements such as
flights, transfers, etc.; C.M.A.S. is a national service used by
undertakers to throughout the nation (U.S.A.). C.M.A.S.
booked the shipment with PAL thru the carrier's agent Air
Care International, with Pomierski F.H. as the shipper and
Maria (Maria) Saludo as the consignee. The requested
routing was from Chicago to San Francisco on board TWA
Flight 131 and from San Francisco to Manila on board PAL
Flight No. 107. Maria Saludo upon arriving at San Francisco
Airport, she then called Pomierski that her mother's
remains were not at the West Coast terminal, and Pomierski
immediately called C.M.A.S., which in a matter of 10
minutes informed him that the remains were on a plane to
Mexico City, that there were two bodies at the terminal,
and somehow they were switched. The following day, the
shipment or remains of CrispinaSaludo arrived in San
Francisco from Mexico on board American Airlines. This
shipment was transferred to or received by PAL. This casket
bearing the remains of CrispinaSaludo, which was
mistakenly sent to Mexico and was opened there was
resealed by Crispin F. Patagas for shipment to the
Philippines. The shipment was immediately loaded on PAL
flight for Manila that same evening and arrived Manila a
day after its expected arrival. Aggrieved by the incident, the
petitioners instituted an action against respondents and
were asked to pay for damages.
Petitioner allege that private respondents received the
casketed remains of petitioners' mother on October 26,
1976, as evidenced by the issuance of PAL Air Waybill by Air
Care International as carrier's agent; and from said date,
private respondents were charged with the responsibility to
exercise extraordinary diligence so much so that for the
alleged switching of the caskets on October 27, 1976, or one
day after private respondents received the cargo, the latter
must necessarily be liable.
RTC - absolved the two respondent airlines companies of
liability.
CA - affirmed the decision of the lower court in toto, and in
a subsequent resolution, denied herein petitioners' motion
for reconsideration for lack of merit. Hence, the petition for
review on certiorari to SC.
SC –The Supreme Court affirmed the appealed decision,
with the modification that an award or P40,000.00 as and
by way of nominal damages is granted in favor of the
Saludos to be paid by TWA.
ISSUE
W/N the delay in the delivery of the casketed remains of
petitioners' mother was due to the fault of respondent
airline companies.
HELD:
NO. PAL and TWA are not liable for switching of caskets
prior to their receipt of agreed cargo. TWA without
authority, even prohibited, to verify contents of casket
When the cargo was received from C.M.A.S. at the Chicago
airport terminal for shipment, which was supposed to
contain the remains of Crispina Saludo, Air Care
International and/or TWA, had no way of determining its
actual contents, since the casket was hermetically sealed by
the Philippine Vice-Consul in Chicago. At this point, it can be
categorically stated that, as culled from the findings of both
the trial court and appellate courts, the entire chain of
events which culminated in the present controversy was not
due to the fault or negligence of private respondents.
Rather, the facts of the case would point to CMAS as the
culprit. CMAS classified as forwarder, is an agent of the
shipper and not of the carrier. While the actual participation
of CMAS has been sufficiently and correctly established, to
hold that it acted as agent for TWA and PAL would be both
an inaccurate appraisal and an unwarranted categorization
of the legal position it held in the entire transaction. Court
cannot grant damages at expense of TWA and PAL; Possible
liability of CMAS best deferred to another time and
addressed to another forum. However, SC Award of
nominal damages warranted; Articles 2221 and 2222 NCC
The facts show that the Saludos' right to be treated with
due courtesy in accordance with the degree of diligence
required by law to be exercised by every common carrier
was violated by TWA and this entitles them, at least, to
nominal damages from TWA alone. cles 2221 and 2222 of
the Civil Code make it clear that nominal damages are not
intended for indemnification of loss suffered but for the
vindication or recognition of a right violated or invadedThey
are recoverable where some injury has been done but the
amount of which the evidence fails to show, the assessment
of damages being left to the discretion of the court
according to the circumstances of the case.
A bill of lading is a written acknowledgment of the receipt
of the goods and an agreement to transport and deliver
them at a specified place to a person named or on his order.
According to foreign and local jurisprudence, "the issuance
of a bill of lading carries the presumption 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 by the
carrier. . . . In the absence of convincing testimony
establishing mistake, recitals in the bill of lading showing
that the carrier received the goods for shipment on a
specified date controls.
However, except as may be prohibited by law, there is
nothing to prevent an inverse order of events, that is, the
execution of the bill of lading even prior to actual
possession and control by the carrier of the cargo to be
transported. There is no law which requires that the
delivery of the goods for carriage and the issuance of the
covering bill of lading must coincide in point of time or, for
that matter, that the former should precede the latter.
As between the shipper and the carrier, when no goods
have been delivered for shipment no recitals in the bill can
estop the carrier from showing the true facts . . . Between
the consignor of goods and receiving carrier, recitals in a bill
of lading as to the goods shipped raise only a rebuttable
presumption that such goods were delivered for shipment.
As between the consignor and a receiving carrier, the fact
must outweigh the recital."
In the case at bar, it was on October 26, 1976 the cargo
containing the casketed remains of CrispinaSaludo was
booked for PAL Flight Number PR-107 leaving San Francisco
for Manila on October 27, 1976, PAL Airway Bill No. 079-
01180454 was issued, not as evidence of receipt of delivery
of the cargo on October 26, 1976, but merely as a
confirmation of the booking thus made for the San
Francisco-Manila flight scheduled on October 27, 1976.
Actually, it was not until October 28, 1976 that PAL received
physical delivery of the body at San Francisco.
Explicit is the rule under Article 1736 of the Civil Code that
the extraordinary responsibility of the common carrier
begins from the time the goods are delivered to the carrier.
This responsibility remains in full force and effect even
when they are temporarily unloaded or stored in transit,
unless the shipper or owner exercises the right of
stoppageintransitu, 29 and terminates only after the lapse
of a reasonable time for the acceptance, of the goods by the
consignee or such other person entitled to receive them. 30
And, there is delivery to the carrier when the goods are
ready for and have been placed in the exclusive possession,
custody and control of the carrier for the purpose of their
immediate transportation and the carrier has accepted
them. 31 Where such a delivery has thus been accepted by
the carrier, the liability of the common carrier commences
eoinstanti.
As already demonstrated, the facts in the case at bar belie
the averment that there was delivery of the cargo to the
carrier on October 26, 1976. Rather, as earlier explained,
the body intended to be shipped as agreed upon was really
placed in the possession and control of PAL on October 28,
1976 and it was from that date that private respondents
became responsible for the agreed cargo under their
undertakings in PAL Airway Bill No. 079-01180454.
Consequently, for the switching of caskets prior thereto
which was not caused by them, and subsequent events
caused thereby, private respondents cannot be held liable.
7. EVERETT STEAMSHIP CORPORATION, petitioner, vs.
COURT OF APPEALS and HERNANDEZ TRADING CO. INC.,
respondents.
Plaintiff: Hernandez Trading; consignee
Defendant: Everett Steamship; carrier
Shipper: Maruman Trading Company, Ltd.
FACTS:
Hernandez Trading Co. Inc. (Hernandez) imported three
crates of bus spare parts marked as from its supplier,
Maruman Trading Company, Ltd. (Maruman Trading), a
foreign corporation based in, Japan. The crates were
shipped from Nagoya, Japan to Manila on board
ADELFAEVERETTE, a vessel owned by Everett Steamship
Corp’s principal, Everett Orient Lines. The said crates were
covered by a Bill of Lading.
Upon arrival at the port of Manila, it was discovered that
one cratewas missing. This was confirmed and admitted by
Everett. Hernandez made a formal claim upon petitioner for
the value of the lost cargo amounting to 1,552,500.00 Yen.
However, Everett offered to pay only Y100,000.00 Yen, the
maximum amount stipulated under Clause 18 of the
covering bill of lading which limits the liability of petitioner.
Hernandez rejected the offer and thereafter instituted a suit
for collection, against petitioner before the Regional Trial
Court of Caloocan City, Branch 126.
RTC: RULED IN FAVOR OF HERNANDEZ TRADING. EVERETT
LIABLE FOR THE ACTUAL VALUE OF THE PROPERTY
CA: AFFIRMED THE RTC DECISION BUT DELETED THE
AWARD OF ATTORNEYS FEES
As to the amount of liability, no evidence appears on record
to show that the appellee (Hernandez Trading Co.)
consented to the terms of the Bill of Lading. The shipper
named in the Bill of Lading is Maruman Trading Co., Ltd.
whom the appellant (Everett Steamship Corp.) contracted
with for the transportation of the lost goods.
Even assuming arguendo that the shipper Maruman Trading
Co., Ltd. accepted the terms of the bill of lading when it
delivered the cargo to the appellant, still it does not
necessarily follow that appellee Hernandez Trading
Company as consignee is bound thereby considering that
the latter was never privy to the shipping contract.
ISSUES:
1. Whether or not the petitioner, Everett is liable for the
actual value of the property or the stipulated maximum
value of its liability in the bill of lading?
2. Whether or not Hernandez, who is not a signatory to the
bill of lading bound by the stipulations thereof
HELD:
1. Everett is liable only to the amount stipulated in the bill
of lading which is 100,000 Yen. A stipulation in the bill of
lading limiting the common carriers liability for loss or
destruction of a cargo to a certain sum, unless the shipper
or owner declares a greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the Civil Code which
provide:
ART. 1749. A stipulation that the common carriers liability is
limited to the value of the goods appearing in the bill of
lading, unless the shipper or owner declares a greater value,
is binding.
ART. 1750. A contract fixing the sum that may be recovered
by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and
just under the circumstances, and has been freely and fairly
agreed upon.
The bill of lading subject of the present controversy
specifically provides, among others:
“The carrier shall not be liable for any loss of or any damage
to or in any connection with, goods in an amount exceeding
Y100,000.00 or its equivalent in any other currency per
package or customary freight unit (whichever is least)
unless the value of the goods higher than this amount is
declared in writing by the shipper before receipt of the
goods by the carrier and inserted in the Bill of Lading and
extra freight is paid as required. “
The above stipulations are reasonable and just. In the bill of
lading, the carrier made it clear that its liability would only
be up Y100,000.00Yen.However, the shipper, Maruman
Trading, had the option to declare a higher valuation if the
value of its cargo was higher than the limited liability of the
carrier. Considering that the shipper did not declare a
higher valuation, it had itself to blame for not complying
with the stipulations.
2. YES. Even if the consignee was not a signatory to the
contract of carriage between the shipper and the carrier,
the consignee can still be bound by the contract.The right of
a party to recover for loss of a shipment consigned to him
under a bill of lading drawn up only by and between the
shipper and the carrier, springs from either a relation of
agency that may exist between him and the shipper or
consignor, or his status as stranger 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 cargo
shipped. In neither capacity can he assert personally, in bar
to any provision of the bill of lading.There can, therefore, be
no doubt about the validity and enforceability of freely-
agreed-upon stipulations in a contract of carriage or bill of
lading limiting the liability of the carrier to an agreed
valuation unless the shipper declares a higher value and
inserts it into said contract or bill.
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.
9. Macam v. CA GR.125524
Parties: Benito Macam under the name of Ben-Mac
Enterprises (petitioner)
China Ocean Shipping CO. and/or local agent Wallen
Philippines Shipping Inc. (respondents) (appellants)
Cause of Action: the shipment was delivered by respondent
WALLEM directly to GPC, not to PAKISTAN BANK and
without the required bill of lading having been surrendered.
Subsequently, GPC failed to pay PAKISTAN BANK, such that
the latter, still in possession of original bill of lading, refused
to pay petitioner thru SOLIDBANK. Since SOLIDBANK already
pre-paid the value of shipment, it demanded payment from
respondent WALLEM but was refused. MACAM constrained
to return the amount paid by SOLIDBANK and demanded
payment from WALLEM but to no avail
Ruling of the RTC: On 14 May 1993 the trial court ordered
respondents to pay, jointly and severally, the following
amounts: (1) P546,033.42 plus legal interest from 6 April
1989 until full payment; (2) P10,000.00 as attorney's fees;
and, (3) the costs. The counterclaims were dismissed for
lack of merit.[5] The trial court opined that respondents
breached the provision in the bill of lading requiring that
"one of the Bills of Lading must be surrendered duly
endorsed in exchange for the goods or delivery order,"
when they released the shipment to GPC without
presentation of the bills of lading and the bank guarantee
that should have been issued by PAKISTAN BANK in lieu of
the bills of lading. The trial court added that the shipment
should not have been released to GPC at all since the
instruction contained in the telex was to arrange delivery to
the respective consignees and not to any party. The trial
court observed that the only role of GPC in the transaction
as notify party was precisely to be notified of the arrival of
the cargoes in Hongkong so it could in turn duly advise the
consignee.
CA: We emphasize that the extraordinary responsibility of
the common carriers lasts until actual or constructive
delivery of the cargoes to the consignee or to the person
who has a right to receive them.PAKISTAN BANK was
indicated in the bills of lading as consignee whereas GPC
was the notify party. However, in the export invoices GPC
was clearly named as buyer/importer. Petitioner also
referred to GPC as such in his demand letter to respondent
WALLEM and in his complaint before the trial court. This
premise draws us to conclude that the delivery of the
cargoes to GPC as buyer/importer which, conformably with
Art. 1736 had, other than the consignee, the right to receive
them was proper.
Art. 1736. The extraordinary responsibility of the common
carriers lasts from the time the goods are unconditionally
placed in the possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the
person who has a right to receive them, without prejudice
to the provisions of article 1738
Facts: Benito Macam, doing business under name Ben-Mac
Enterprises, shipped on board vessel Nen-Jiang, owned and
operated by respondent China Ocean Shipping Co. through
local agent Wallem Philippines Shipping Inc., 3,500 boxes of
watermelon covered by Bill of Lading No. HKG 99012, and
1,611 boxes of fresh mangoes covered by Bill of Lading
No.HKG 99013. The shipment was bound for Hongkong with
PAKISTAN BANK as consignee and Great Prospect Company
of Rowloon (GPC) as notify party. Upon arrival in Hongkong,
shipment was delivered by respondent WALLEM directly to
GPC, not to PAKISTAN BANK and without the required bill of
lading having been surrendered. Subsequently, GPC failed
to pay PAKISTAN BANK, such that the latter, still in
possession of original bill of lading, refused to pay petitioner
thru SOLIDBANK. Since SOLIDBANK already pre-paid the
value of shipment, it demanded payment from respondent
WALLEM but was refused. MACAM constrained to return
the amount paid by SOLIDBANK and demanded payment
from WALLEM but to no avail. WALLEM submitted in
evidence a telex dated 5 April 1989 as basis for delivering
the cargoes to GPC without the bills of lading and bank
guarantee. The telex instructed delivery of various
shipments to the respective consignees without need of
presenting the bill of lading and bank guarantee per the
respective shipper’s request since “for prepaid shiptofrt
charges already fully paid.” MACAM, however, argued that,
assuming there was such an instruction, the consignee
referred to was PAKISTAN BANK and not GPC. The RTC ruled
for MACAM and ordered value of shipment. CA reversed
RTC’s decision.
Issue: Are the respondents liable to the petitioner for
releasing the goods to GPC without the bills of lading or
bank guarantee?
Held: It is a standard maritime practice when immediate
delivery is of the essence, for shipper to request or instruct
the carrier to deliver the goods to the buyer upon arrival at
the port of destination without requiring presentation of bill
of lading as that usually takes time. Thus, taking into
account that subject shipment consisted of perishable
goods and SOLIDBANK pre-paid the full amount of value
thereof, it is not hard to believe the claim of respondent
WALLEM that petitioner indeed requested the release of
the goods to GPC without presentation of the bills of lading
and bank guarantee. To implement the said telex
instruction, the delivery of the shipment must be to GPC,
the notify party or real importer/buyer of the goods and not
the PAKISTANI BANK since the latter can very well present
the original Bills of Lading in its possession. Likewise, if it
were the PAKISTANI BANK to whom the cargoes were to be
strictly delivered, it will no longer be proper to require a
bank guarantee as a substitute for the Bill of Lading. To
construe otherwise will render meaningless the telex
instruction. After all, the cargoes consist of perishable fresh
fruits and immediate delivery thereof the buyer/importer is
essentially a factor to reckon with. We emphasize that the
extraordinary responsibility of the common carriers lasts
until actual or constructive delivery of the cargoes to the
consignee or to the person who has a right to receive them.
PAKISTAN BANK was indicated in the bills of lading as
consignee whereas GPC was the notify party. However, in
the export invoices GPC was clearly named as
buyer/importer. Petitioner also referred to GPC as such in
his demand letter to respondent WALLEM and in his
complaint before the trial court. This premise draws us to
conclude that the delivery of the cargoes to GPC as
buyer/importer which, conformably with Art. 1736 had,
other than the consignee, the right to receive them was
proper.
10. TRANSIMEX CO. vs MAFRE ASIAN INSURANCE CORP
G.R. No. 190271, September 14, 2016
PARTIES: Transimex Co, agent of common carrier –
Petitioner (SC case) Respondent (Original Case)
Mafre Asian Insurance Corp, insurer of Fertiphil–
Respondent (SC case) Petitioner (Original Case)
Fertiphil- consignee of a shipment of Prilled Urea
Fertilizer transported by M/V Meryem Ana.
FACTS:
On 21 May 1996,M/V Meryem Anareceived a shipment
consisting of21,857 metric tons of Prilled Urea Fertilizer
from Helm Duengemittel GMBH atOdessa, Ukraine.The
shipment was covered by two separate bills of lading
andconsigned to Fertiphil for delivery to two ports - one in
Poro Point, San Fernando, LaUnion; and the other in
Tabaco, Albay.Fertiphil insured the cargo against all
risksunder Marine Risk Note Nos. MN-MAR-HO-0001341
and MN-MAR-HO-0001347issued by respondent.M/V
Meryem Anaarrived at Poro Point, La Union,and discharged
14,339.507 metric tons of fertilizer under the first bill of
lading. The ship sailed on to Tabaco, Albay, to unload the
remainder of the cargo. The fertilizer unloaded at Albay
appeared to have a gross weight of 7,700 metric tons. The
present controversy involves only this second delivery.
As soon asthe vessel docked at the Tabaco port, the
fertilizer was bagged and stored inside awarehouse.When
the cargo was subsequently weighed, it was discovered that
only7,350.35 metric tons of fertilizer had been
delivered.The present controversy involves onthesecond
deliverybecause of the allegedshortage of 349.65 metric
tons.Fertiphil filed a claim with
respondentforP1,617,527.37. After payment,respondent
MAFRE Asian Insurance demanded reimbursement from
petitioneron the basis of the right of subrogation. The claim
was denied, prompting respondentto file a Complaint with
the RTCand ordered petitioner to pay the claim
ofP1,617,527.37was affirmed by the CA and denied
petitioner’s appeal.Hence, this Petition for Review
onCertiorari.
CAUSE OF ACTION:
Recovery of sum of money filed by Mafre Insurance Co.
against Transimex Co because when it demanded
reimbursement from petitioner on the basis of the right of
subrogation, the latter denied the claim.
RULING OF RTC:
The RTC ruled in favor of respondent and ordered petitioner
to pay the claim of P1,617,527.37. In its Decision, the trial
court found that there was indeed a shortage in the cargo
delivered, for which the common carrier must be held
responsible under Article 1734 of the Civil Code. The RTC
also refused to give credence to petitioner's claim of
overage and noted that the presumption of fault and/or
negligence on the part of the carrier remained unrebutted.
RULING OF CA:
The CA affirmed the ruling of the RTC and denied
petitioner's appeal. After evaluating the evidence presented
during trial, the appellate court found no reason to disturb
the trial court's conclusion that there was indeed a shortage
in the shipment. The CA also rejected the assertion that
petitioner was not a common carrier. Because the latter
offered services to the public for the transport of goods in
exchange for compensation, it was considered a common
carrier in accordance with Article 1732 of the Civil Code.
ISSUES:
1. Whether the transaction is governed by the provisions of
the Civil Codeon common carriers or by the provisions of
COGSA; and
2. Whether petitioner is liable for the loss or damage
sustained by thecargo because of bad weather.
HELD:
1. TheCourt upholds the ruling of the CA with respect to the
applicable law.As expressly provided in Article 1753 of the
Civil Code, "[t]he law of the country towhich the goods are
to be transported shall govern the liability of the common
carrierfor their loss, destruction or deterioration." Since the
cargo in this case wastransported from Odessa, Ukraine, to
Tabaco, Albay, the liability of petitioner for thealleged
shortage must be determined in accordance with the
provisions of the Civil Code on common carriers. The Code
takesprecedence as the primary law over the rights and
obligations ofcommon carriers with the Code of Commerce
and COGSA applyingsuppletorily.
2. Petitioner is liable for the shortage incurred by the
shipment. It must be emphasized that not all instances of
bad weather may be categorized as "storms" or "perils of
the sea" within the meaning of the provisions of the Civil
Code and COGSA on common carriers. To be considered
absolutory causes under either statute, bad weather
conditions must reach a certain threshold of
severity.Petitioner failed to prove the existence of a storm
or a peril of the sea within the context of Article 1734(1) of
the Civil Code or Section 4(2)(c) of COGSA. Furthermore,
there was no sufficient proof that the damage to the
shipment was solely and proximately caused by bad
weather.
11. TABACALERA INSURANCE CO. v. NORTH FRONT
SHIPPING SERVICES, INC.
G.R. No. 119197 May 16, 1997
PARTIES:
Petitioners – TabacaleraInsurance Co., Prudential
Guarantee & Assurance, Inc., and
New Zealand Insurance Co., Ltd.
(Insurer)
Respondents –NorthFront Shipping Services, Inc.,
(Carrier)and Court of Appeals
Consignee – RepublicFlour Mills Corporation
CAUSE OF ACTION: Subrogated to the rights of Republic
Flour Mills Corporation. Collection for
Damages against North Front Shipping Services, Inc.,
claiming that the loss was exclusively attributable to
the fault and negligence of the carrier.
RATIO: A public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is
limited to the shin only, as in the case of a time-charter or
voyage-charter.
The extraordinary diligence in the vigilance over the goods
tendered for shipment requires the common carrier to
know and to follow the required precaution for avoiding
damage to, or destruction of the goods entrusted to it for
safe carriage and delivery. It requires common carriers to
render service with the greatest skill and foresight and "to
use all reasonable means to ascertain the nature and
characteristics of goods tendered for shipment, and to
exercise due care in the handling and stowage, including
such methods as their nature requires"
FACTS:
Sacks of corn grains,consigned to Republic Flour Mills
Corporation and insured with the petitioners, were shipped
on board North Front 777, a vessel owned by private
respondent. The vessel was inspected prior to actual
loading and was found fit to carry the merchandise. The
cargo was covered with tarpaulins and wooden boards. The
hatches were sealed and could only be opened by
representatives of Republic Flour Mills.
When the vessel arrived Manila, Republic Flour Mills did not
immediately commence the unloading operations,and was
subsequently completed (20) days after its arrival. Upon
unloading of the cargo, there was a shortage of 26.333
metric tons and the remaining merchandise was already
moldy, rancid and deteriorating. The corn grains were
examined and revealed to be contaminated with salt water.
Hence, Republic Flour Mills rejected the entire cargo and
formally demanded from private respondent payment for
the damages. Upon refusal, petitioners were obliged to pay.
Petitioners filed a complaint against herein private
respondent alleging that there was negligence on the part
of the latter.
RTC: Dismissed the complaint and ruled that the contract
entered into between private respondent and Republic
Flour Mills was a charter-party agreement. As such, only
ordinary diligencein the care of goods was required
ofrespondent. The inspection of the barge before actual
loading, coupled with the Permit to Sail issued by the Coast
Guard, sufficed to meet the degree of diligence required of
the carrier.
CA: Ruled that as a common carrier required to observe a
higher degree of diligence, North Front 777 satisfactorily
complied with all the requirements, hence, was issued a
Permit to Sail after proper inspection. Consequently, the
complaint was dismissed and the motion for
reconsideration rejected.
ISSUES:
(1) Whether or not North Front Shipping Services is a
common carrier despite the charter-party agreement; and
(2) Whether or not North Front Shipping Services
observed the required diligence in the vigilance over the
goods placed in its care.
HELD:
(1) Yes, North Front Shipping Services is a common carrier.
A "charter-party" is defined as a contract by which an entire
ship, or some principal part thereof, is let by the owner to
another person for a specified time or use; a contract of
affreightment by which the owner of a ship or other vessel
lets the whole or a part of her to a merchant or other
person for the conveyance of goods, on a particular voyage,
in consideration of the payment of freight x x x
Upon the other hand, the term "common or public carrier"
underArt. 1732 of the Civil Code,extends to carriers either
by land, air or water which hold themselves out as ready to
engage in carrying goods or transporting passengers or both
for compensation as a public employment and not as a
casual occupation . . .
It is therefore imperative that a public carrier shall remain
as such, notwithstanding the charter of the whole or
portion of a vessel by one or more persons, provided the
charter is limited to the shin only, as in the case of a time-
charter or voyage-charter.North Front Shipping Services,
Inc., is a corporation engaged in the business of
transporting cargo and offers its services indiscriminately to
the public. It is without doubt a common carrier.
(2) No. Private respondent is required to observe
extraordinary diligence in its vigilance over the goods it
transports. When goods placed in its care are lost or
damaged, the carrier is presumed to have been at fault or
to have acted negligently. It has the burden of proving that
it observed extraordinary diligence in order to avoid
responsibility for the lost cargo.
The master of the vessel testified that the corn grains were
farm wet when loaded but was disproved by the clean bill
of lading issued by respondent, which did not contain a
notation that the corn grains were wet and improperly
dried.Having been in the service since 1968, the master of
the vessel would have known at the outset that corn grains
that were farm wet and not properly dried would eventually
deteriorate when stored in sealed and hot compartments as
in hatches of a ship. Equipped with this knowledge, the
master of the vessel and his crew should have undertaken
precautionary measures to avoid or lessen the cargo's
possible deterioration as they were presumed
knowledgeable about the nature of such cargo. But none of
such measures was taken. It was shown during the trial that
the vessel had rusty bulkheads and the wooden boards and
tarpaulins bore heavy concentration of molds. The
tarpaulins used were not new, as there were already several
patches on them, hence, making it highly probable for
water to enter.
Private respondent did not even endeavor to establish that
the loss, destruction or deterioration of the goods was due
to the following: (a) flood, storm, earthquake, lightning, or
other natural disaster or calamity; (b) act of the public
enemy in war, whether international or civil; (c) act or
omission of the shipper or owner of the goods; (d) the
character of the goods or defects in the packing or in the
containers; (e) order or act of competent public authority.
This is a closed list. If the cause of destruction, loss or
deterioration is other than the enumerated circumstances,
then the carrier is rightly liable therefor.
However, the destruction, loss or deterioration of the cargo
cannot be attributed solely to the carrier. Republic Flour
Mills is guilty of contributory negligence asit was seasonably
notified of the arrival of the barge but did not immediately
start the unloading operations. Had the unloading been
commenced immediately the loss could have been
completely avoided or at least minimized. For its
contributory negligence, Republic Flour Mills should share
at least 40% of the loss.
SC:The Decision of the Court of Appeals are REVERSED and
SET ASIDE. Private respondent is ordered to pay petitioners,
P1,313,660.00 which is 60% of the amount paid by the
insurance companies to Republic Flour Mills Corporation,
plus interest at the rate of 12% per annum from the time
this judgment becomes final until full payment.
12. Designer Baskets v. Air Sea Transport Inc. and Asia
Cargo Container Lines Inc.
GR No.184513, March 9, 2016
FACTS:
DBI is a domestic corporation engaged in the production of
housewares and handicrafts items for export. Ambiente, a
foreign based company ordered from DBI 223 cartons of
assorted wooden items. Ambiente designated Asia Cargo
Container Lines, Inc. (ACCLI) to ship out its order from the
Philippines to United States. ACCLI is a domestic corporation
acting as an agent of Air Sea Transport, Inc. (ASTI), a US
based corporation engaged in carrier transport business in
the Philippines.
DBI delivered the shipment to ACCLI to transport from
Manila to Ambiente. To acknowledge receipt and to serve
as the contract of sea carriage, ACCLI issued to BPI triplicate
copies of Bill of Lading of ASTI. DBI retained possession of
the originals of the bills pending the payment of the goods
by Ambiente.The bill of lading does not contain a provision
requiring the carrier to release or deliver the shipment to
the consignee only upon the surrender of the original bill of
lading.
Meanwhile, Ambiente and ASTI entered into an Indemnity
Agreement where the former obligated the latter to deliver
the shipment without the surrender of the bill of lading and
in return the buyer agreed to indemnify the carrier free
from any liability as a result of the release of the shipment.
DBI made several demands to Ambiente for the payment of
the shipment, but failed to pay DBI. Consequently, the latter
filed acomplaint against ASTI, ACCLI, Ambiente and ACCLFs
incorporators-stockholders for the payment of the
shipment.
ISSUE:
Whether or not the common carrier is liable on the release
of the goods to a consignee even without the surrender of
the bill of lading.
HELD:
No. A common carrier may release the goods to the
consignee even without the surrender of the bill of lading.
Although the general rule is that upon receipt of the goods,
the consignee surrenders the bill of lading, Article 353 of
the Code of Commerce provides two exceptions: When the
bill of lading gets lost or for other cause. In either case, the
consignee must provide a receipt to the carrier for the
goods delivered.
The DBI’s retention of the bill coupled with the indemnity
agreement entered into by the buyer and the carrier
resulted in substantial compliance with Article 353 of the
Code of Commerce.
The Supreme Court further held that Art. 1733, 1734 &
1735 of the NCC, which speaks of the carrier’s liability for
the loss, destruction, or deterioration of the goods and the
presumption of negligence do not apply. The responsibility
of the carrier under these provisions lasts from the time the
goods are unconditionally placed in possession of, and
received by the carrier for transportation, until the goods
are delivered by the carrier to the consignee. In this case it
is undisputed that the goods were timely delivered to the
proper consignee.
Finally, the SC said that the carrier cannot be held liable for
the unpaid value of the goods, as it is not a party to the
contract of sale. Hence, ASTI and its agent ACCLI were not
liable to DBI. Only Ambiente, as the buyer of the goods, has
the obligation to pay the value of shipment.
Parties:
Designer Baskets, Inc. (DBI) –Seller/ Petitioner
Ambiente - Buyer/ Respondent
Air Sea Transport, Inc. (ASTI) – Common
carrier/Respondent
Asia Cargo Container Lines, Inc. (ACCLI) – Agent of
ASTI/ Respondent
Cause of action:
The payment of the value of the goods and for the release
of goods without the surrender of the bill of lading
RTC ruling:
The trial court found ASTI, ACCLI, and Ambiente solidarily
liable to DBI for the value of the shipment.
Rationale:
The liability of Ambiente, as a buyer, it has an obligation to
pay for the value of the shipment because it is a contract of
sale which had been perfected by the delivery.
With respect to ASTI, as a common carrier, it is bound to
observe extraordinary diligence in the vigilance of the goods
yet was remiss in its duty when it allowed the release of the
shipment to Ambiente.
ACCLI, as the agent of ASTI, was well aware that the goods
cannot be delivered to the defendant Ambiente since DBI
retained possession of the originals of the bill of lading.
As regards ACCLFs incorporators-stockholders, they were
absolved from liability
CA ruling:
Affirmed the finding of the trial court with modifications.
Ambiente is liable to DBI but absolved ASTI and ACCLI from
liability.
Rationale:
As for ASTI, its only obligation as a common carrier was to
deliver the shipment in good condition. It did not include
ascertaining the payment of the goods.
The fact that ASTI is given the option to simply require a
receipt for the goods delivered suggests that the surrender
of the bill of lading may be dispensed with when it cannot
be produced by the consignee for whatever cause.
An agency between ASTI and ACCLI was established, hence,
the latter as a mere agent is not liable. No evidence
presented that the agent exceeded its authority.
SC ruling:
Affirmed the ruling of the CA.
Rationale:
It is clear that the moment the carrier has delivered the
subject goods, its responsibility ceases to exist and it is
therefore freed from all the liabilities arising from the
transaction. Any question regarding the payment of the
buyer to the seller is no longer the concern of the carrier.
The contract between DBI and ASTI is a contract of carriage
of goods. Hence, not being a party to the contract of sale
between DBI and Ambiente, ASTI cannot be held liable for
the payment of the shipment. Only Ambiente is liable to pay
for the value of the shipment.
Doctrine/ Applicable provision:
Article 353 of the Code of Commerce
“After the contract has been complied with, the bill of
lading which the carrier has issued shall be returned to him,
and by virtue of the exchange of this title with the thing
transported, the respective obligations shall be considered
cancelled xxx In case the consignee, upon receiving the
goods, cannot return the bill of lading subscribed by the
carrier because of its loss or of any other cause, he must
give the latter a receipt for the goods delivered, this receipt
producing the same effects as the return of the bill of
lading.
Simply put, the surrender of the bill of lading is not an
absolute and mandatory requirement for the release of the
goods to the consignee.
Definition of Bill of Lading:
A written acknowledgment of the receipt of goods and an
agreement to transport and to deliver them at a specified
place to a person named or on his order.
13. PHILIPPINE AIRLINES, INC.
vs.
HON. ADRIANO SAVILLO, Presiding Judge of RTC Branch 30
, Iloilo City, and SIMPLICIO GRIÑO
Original Plaintiff (now private respondent) : Simplicio Griño
Carrier: PAL – Air Transpo
Action: Complaint for Damages (Moral)
Right of action: private respondent, Griño, (and his
companions) were barred from boarding the Singapore
Airlines flight because PAL allegedly failed to endorse the
tickets of private respondent and his companions.
Cause of Action: They were subjected to humiliation,
embarrassment, mental anguish, serious anxiety, fear and
distress
RTC DECISION: Dismissed the Motion to Dismiss filed by
PAL.
CA: Affirmed RTC Decision
SC (applicable law): Governing law is the Civil Code not the
Warsaw Convention –
FACTS:
Private respondent was invited to participate in the 1993
ASEAN Seniors Annual Golf Tournament held in Jakarta,
Indonesia. He and several companions decided to purchase
their respective passenger tickets from PAL with the
following points of passage: MANILA-SINGAPORE-JAKARTA-
SINGAPORE-MANILA. Private respondent and his
companions were made to understand by PAL that its plane
would take them from Manila to Singapore, while Singapore
Airlines would take them from Singapore to Jakarta.
On 3 October 1993, private respondent and his companions
took the PAL flight to Singapore and arrived at about 6:00
o’clock in the evening. Upon their arrival, they proceeded to
the Singapore Airlines office to check-in for their flight to
Jakarta scheduled at 8:00 o’clock in the same evening.
Singapore Airlines rejected the tickets of private respondent
and his group because they were not endorsed by PAL. It
was explained to private respondent and his group that if
Singapore Airlines honored the tickets without PAL’s
endorsement, PAL would not pay Singapore Airlines for
their passage. Private respondent tried to contact PAL’s
office at the airport, only to find out that it was closed.
Stranded at the airport in Singapore and left with no
recourse, private respondent was in panic and at a loss
where to go; and was subjected to humiliation,
embarrassment, mental anguish, serious anxiety, fear and
distress. Eventually, private respondent and his companions
were forced to purchase tickets from Garuda Airlines and
board its last flight bound for Jakarta. When they arrived in
Jakarta at about 12:00 o’clock midnight, the party who was
supposed to fetch them from the airport had already left
and they had to arrange for their transportation to the hotel
at a very late hour. After the series of nerve-wracking
experiences, private respondent became ill and was unable
to participate in the tournament.
Upon his return to the Philippines, private respondent
brought the matter to the attention of PAL. He sent a
demand letter to PAL on 20 December 1993 and another to
Singapore Airlines on 21 March 1994. However, both
airlines disowned liability and blamed each other for the
fiasco. On 15 August 1997, private respondent filed a
Complaint for Damages before the RTC seeking
compensation for moral damages in the amount of
P1,000,000.00 and attorney’s fees.
PAL’s contention: PAL filed a Motion to Dismiss on the
ground that the said complaint was barred on the ground of
prescription. PAL argued that the Warsaw Convention,
particularly Article 29 thereof, governed this case, as it
provides that any claim for damages in connection with the
international transportation of persons is subject to the
prescription period of two years. Since the Complaint was
filed on 15 August 1997, more than three years after PAL
received the demand letter on 25 January 1994, it was
already barred by prescription.
ISSUE: Whether the action for damages is barred by
prescription applying the rules on WARSAW Convention
RULING:
NO, the action is not barred by prescription and WARSAW
Convention is not applicable.
In the case at hand, Singapore Airlines barred private
respondent from boarding the Singapore Airlines flight
because PAL allegedly failed to endorse the tickets of
private respondent and his companions, despite PAL’s
assurances to respondent that Singapore Airlines had
already confirmed their passage.x x x x an action based on
these allegations will not fall under the Warsaw Convention,
since the purported negligence on the part 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 statute of
limitations provided under Article 29 of the Warsaw
Convention.
In United Airlines v. Uy,18 this Court distinguished between
the (1) damage to the passenger’s baggage and (2)
humiliation he suffered at the hands of the airline’s
employees. The first cause of action was covered by the
Warsaw Convention which prescribes in two years, while
the second was covered by the provisions of the Civil Code
on torts, which prescribes in four years.
Had the present case merely consisted of claims incidental
to the airlines’ delay in transporting their passengers, the
private respondent’s Complaint would have been time-
barred under Article 29 of the Warsaw Convention.
However, the present case involves a special species of
injury resulting from the failure of PAL and/or Singapore
Airlines to transport private respondent from Singapore to
Jakarta – the profound distress, fear, anxiety and
humiliation that private respondent experienced when,
despite PAL’s earlier assurance that Singapore Airlines
confirmed his passage, he was prevented from boarding the
plane and he faced the daunting possibility that he would
be stranded in Singapore Airport because the PAL office was
already closed.
These claims are covered by the Civil Code provisions on
tort, and not within the purview of the Warsaw Convention.
Hence, the applicable prescription period is that provided
under Article 1146 of the Civil Code.
15. Valenzuela Hardwood vs. CA
(GR 102316, 30 June 1997)
FACTS:
Valenzuela Hardwood and Industrial Supply, Inc. (VHIS)
entered into an agreement with the Seven Brothers
whereby the latter undertook to load on board its vessel
M/V Seven Ambassador the former’s lauan round logs
numbering 940 at the port of Maconacon, Isabela for
shipment to Manila. VHIS insured the logs against loss
and/or damage with South Sea Surety and Insurance Co.
The said vessel sank resulting in the loss of VHIS’ insured
logs. VHIS demanded from South Sea Surety the payment of
the proceeds of the policy but the latter denied liability
under the policy for non-payment of premium. VHIS
likewise filed a formal claim with Seven Brothers for the
value of the lost logs but the latter denied the claim.
The RTC ruled in favor of the petitioner. Both Seven
Brothers and South Sea Surety appealed. The Court of
Appeals affirmed the judgment except as to the liability of
Seven Brothers.South Sea Surety and VHIS filed separate
petitions for review before the Supreme Court. In a
Resolution dated 2 June 1995, the Supreme Court denied
the petition of South Sea Surety. The present decision
concerns itself to the petition for review filed by VHIS.
ISSUE:
Is a stipulation in a charter party that the “(o)wners shall
not be responsible for loss, split, short-landing, breakages
and any kind of damages to the cargo” valid?
HELD:
Yes. Xxx [I]t is undisputed that private respondent had acted
as a private carrier in transporting petitioner’s lauan logs.
Thus, Article 1745 and other Civil Code provisions on
common carriers which were cited by petitioner may not be
applied unless expressly stipulated by the parties in their
charter party.
In a contract of private carriage, the parties may validly
stipulate that responsibility for the cargo rests solely on the
charterer, exempting the shipowner from liability for loss of
or damage to the cargo caused even by the negligence of
the ship captain. Pursuant to Article 1306 of the Civil Code,
such stipulation is valid because it is freely entered into by
the parties and the same is not contrary to law, morals,
good customs, public order, or public policy. Indeed, their
contract of private carriage is not even a contract of
adhesion. We stress that in a contract of private carriage,
the parties may freely stipulate their duties and obligations
which perforce would be binding on them. Unlike in a
contract involving a common carrier, private carriage does
not involve the general public. Hence, the stringent
provisions of the Civil Code on common carriers protecting
the general public cannot justifiably be applied to a ship
transporting commercial goods as a private carrier.
Consequently, the public policy embodied therein is not
contravened by stipulations in a charter party that lessen or
remove the protection given by law in contracts involving
common carriers.
x xx
The general public enters into a contract of transportation
with common carriers without a hand or a voice in the
preparation thereof. The riding public merely adheres to the
contract; even if the public wants to, it cannot submit its
own stipulations for the approval of the common carrier.
Thus, the law on common carriers extends its protective
mantle against one-sided stipulations inserted in tickets,
invoices or other documents over which the riding public
has no understanding or, worse, no choice. Compared to
the general public, a charterer in a contract of private
carriage is not similarly situated. It can -- and in fact it
usually does -- enter into a free and voluntary agreement. In
practice, the parties in a contract of private carriage can
stipulate the carrier’s obligations and liabilities over the
shipment which, in turn, determine the price or
consideration of the charter. Thus, a charterer, in exchange
for convenience and economy, may opt to set aside the
protection of the law on common carriers. When the
charterer decides to exercise this option, he takes a normal
business risk.
PARTIES: VALENZUELA HARDWOOD AND SEVEN BROTHERS Parties:
SHIPPING CORPORATION AND SOUTH SEA SURETY INC
CAUSE OF ACTION:
a)VALENZUELA AGAINST SOUTH SEA SURETY : non-
payment of the insurance claim of Valenzuela Hardwood
arising from the damages it suffered for the sinking of MV
Seven Ambassador
b) VALENZUELA AGAINST SEVEN BROTHERS SHIPPING
CORPORATION: damages incurred for the loss of the
plaintiff’s insured logs
LAW APPLIED: Civil Code and Code of Commerce
DECISION OF THE RTC:
Sustaining the liability of South Sea Surety and Insurance
Company ("South Sea")
DECISION OF THE CA:
The Court of Appeals affirmed in part the RTC judgment by overweight at the airline counter. To his utter humiliation, an
sustaining the liability of South Sea Surety and Insurance
Company ("South Sea"), but modified it by holding that
Seven Brothers Shipping Corporation ("Seven Brothers")
was not liable for the lost cargo. 5 In modifying the RTC
judgment, the respondent appellate court ratiocinated thus: repair his things and transfer some of them to the light ones.
It appears that there is a stipulation in the charter party that Respondent acceded but his luggage was still overweight.
the ship owner would be exempted from liability in case of Petitioner billed him overweight charges but its employee and
loss.
The court a quo erred in applying the provisions of the Civil listed on it, which he offered to pay with. Not wanting to leave
Code on common carriers to establish the liability of the
shipping corporation. The provisions on common carriers
should not be applied where the carrier is not acting as such
but as a private carrier.
Under American jurisprudence, a common carrier
undertaking to carry a special cargo or chartered to a
special person only, becomes a private carrier.
As a private carrier, a stipulation exempting the owner from
liability even for the negligence of its agent is valid (Home
Insurance Company, Inc. vs. American Steamship Agencies,
Inc., 23 SCRA 24).
The shipping corporation should not therefore be held liable
for the loss of the logs. 6
South Sea and herein Petitioner Valenzuela Hardwood and
Industrial Supply, Inc. ("Valenzuela") filed separate petitions
for review before this Court. In a Resolution dated June 2,
1995, this Court denied the petition of South
Sea. 7 There the Court found no reason to reverse the
factual findings of the trial court and the Court of Appeals
that Chua was indeed an authorized agent of South Sea
when he received Valenzuela's premium payment for the
marine cargo insurance policy which was thus binding on
the insurer. 8
The Court is now called upon to resolve the petition for
review filed by Valenzuela assailing the CA Decision which
exempted Seven Brothers from any liability for the lost
cargo.
16. UNITED AIRLINES, petitioner, vs. WILLIE J. UY, respondent.
UNITED AIRLINES, petitioner, public carrier.
WILLIE J. UY, respondent, passenger.
Doctrine/law discussed in the case:
Art. 29 of the Warsaw Convention-
(1) The right to damages shall be extinguished if an action is
not brought within two (2) years, reckoned from the date of
arrival at the destination, or from the date on which the
aircraft ought to have arrived, or from the date on which the
transportation stopped.
(2) The method of calculating the period of limitation shall be
determined by the law of the court to which the case is
submitted.
FACTS:
On October 13, 1989, WILLIE J. UY, a passenger of United
Airlines (San Francisco - Manila route), checked in together
with his luggage one piece of which was found to be
employee of petitioner rebuked him saying that he should have
known the maximum weight allowance per bag and that he
should have packed his things accordingly. Then, in a loud
voice in front of the milling crowd, she told respondent to
supervisor refused to honor the miscellaneous charges under
MCO (miscellaneous charges order), alleging conflicting figures
without his luggage, he paid with his credit card (American 1) Does the Warsaw Convention preclude the operation of
Express). the Civil Code and other pertinent laws?
Upon arrival in manila, he discovered that one of his bags had 2) Has the respondent’s cause of action prescribed?
been slashed and its contents stolen. In a letter dated October
3) Did the appellate court err in assuming jurisdiction over
16, 1989, he notified petitioner of his embarrassment and loss
respondent's appeal since it is clear that the notice of appeal
requesting reimbursement. Petitioner paid for his loss based
was filed out of time (2 days late)?
on the maximum liability per pound (US $9.70 per pound).
Respondent considered the amount grossly inadequate. He RULING:
sent two more letters to petition but to no avail. 1) No.
Cause of Action: On June 9, 1992, respondent filed a Within our jurisdiction we have held that the Warsaw
complaint for damages against petitioner. Convention can be applied, or ignored, depending on the
1. That petitioner airline accorded him ill and peculiar facts presented by each case. Convention provisions
shabby treatment to his extreme embarrassment and do not regulate or exclude liabilities for other breaches of
humiliation; (moral damages = P1,000,000.00, exemplary contract by the carrier or misconduct of its officers and
damages = P500,000.00, attorney's fees = P50,000.00); and employees, or for some particular or exceptional type of
damage. Neither may the Convention be invoked to justify the
2. The damage to his luggage and its stolen
disregard of some extraordinary sort of damage resulting to a
contents ($5,310.00).
passenger and preclude recovery therefore beyond the limits
Petitioner moved to dismiss the complaint invoking Article 29 set by said convention. Likewise, we have held that the
of the Warsaw Convention par. (1). (Prescription period of 2 Convention does not preclude the operation of the Civil Code
years to file action) and other pertinent laws. It does not regulate, much less
exempt, the carrier from liability for damages for violating the
Respondent countered that Warsaw Art. 29 par. (1) must be
rights of its passengers under the contract of carriage,
reconciled with par. (2) which states, “the method of
especially if willful misconduct on the part of the carriers
calculating the period of limitation shall be determined by the
employees is found or established.
law of the court to which the case is submitted.” Interpreting
thus, respondent noted that according to Philippine laws the 2) Respondent's complaint reveals two (2) causes of action:
prescription of actions is interrupted "(1) when they are filed
The first cause of action (an action for damages arising from
before the court, (2) when there is a written extrajudicial
the misconduct of the airline employees): No.
demand by the creditors, and (3) when there is any written
acknowledgment of the debt by the debtor." Respondent's failure to file his complaint within the two (2)-
year limitation of the Warsaw Convention does not bar his
Since he through his personal letter dated 16 October 1989;
action since petitioner airline may still be held liable for breach
second, 4 January 1990 from Atty. Pesigan; and, finally,
of other provisions of the Civil Code which prescribe a different
through a letter 28 October 1991 written for him by Atty.
period or procedure for instituting the action, specifically, Art.
Ampil, the two (2)-year period of limitation had not yet been
1146 thereof which prescribes four (4) years for filing an action
exhausted.
based on torts.
RTC:
The second cause of action (an action for damages arising
Dismissed of the action holding that the language of Art. 29 is from theft or damage to property or goods): No.
clear that the action must be brought within two (2) years from
The 2-yr limitation incorporated in Art. 29 of the Warsaw
the date of arrival at the destination.
Convention as an absolute bar to suit and not to be made
Respondent filed his appeal Two (2) days later, on respondent subject to the various tolling provisions of the laws of the
filed his notice of appeal. forum, forecloses the application of our own rules on
interruption of prescriptive periods. (Art. 29, par. 2 was
CA:
indented only to let local laws determine whether an action
Reversed RTC decision. Prescription of actions is interrupted shall be deemed commenced upon the filing of a complaint.)
where, among others, there is a written extrajudicial demand Since, it is indisputable that respondent filed the present action
by the creditors, and since respondent Uy sent several demand beyond the 2-yr time frame his 2nd cause of action must be
letters to petitioner United Airlines. The delay of two (2) days barred.
in filing his notice of appeal did not hinder it since
However, despite the express mandate of Article 29 of the
jurisprudence dictates that an appeal may be entertained
Warsaw Convention that an action for damages should be filed
despite procedural lapses anchored on equity and justice.
within 2 years from the arrival at the place of destination, such
Petitioner contends appellate court erred in assuming rule shall not be applied in the instant case because of the
jurisdiction over respondent's appeal since it was late by 2days. delaying tactics employed by petitioner airlines itself. It is
Petitioner likewise contends that the appellate court erred in obvious that respondent was forestalled from immediately
ruling that respondent's cause of action has not prescribed filing an action because petitioner gave him the runaround,
since delegates to the Warsaw Convention clearly intended as answering his letters but not giving in to his demands. Thus,
an absolute bar to suit and not to be made subject to the respondent’s 2nd cause of action cannot be considered as time
various tolling provisions of the laws of the forum. barred.
ISSUES: 3) No.
In the instant case, respondent filed his notice of appeal two
(2) days later than the prescribed period. Although his counsel
failed to give the reason for the delay, we are inclined to give
due course to his appeal due to the unique and peculiar facts
of the case and the serious question of law it poses. In the now
almost trite but still good principle, technicality, when it
deserts its proper office as an aid to justice and becomes its
great hindrance and chief enemy, deserves scant
consideration.
SC:
WHEREFORE, the assailed Decision of the Court of Appeals
reversing and setting aside the appealed order of the trial court
granting the motion to dismiss the complaint, as well as its
Resolution denying reconsideration, is AFFIRMED. Let the
records of the case be remanded to the court of origin for
further proceedings taking its bearings from this disquisition.
17. G.R. No. 114167 July 12, 1995
COASTWISE LIGHTERAGE CORPORATION, petitioner,
vs.
COURT OF APPEALS and the PHILIPPINE GENERAL
INSURANCE COMPANY, respondents.
FACTS:
Pag-asa Sales, Inc. entered into a contract to
transport molasses from the province of Negros to Manila
with Coastwise Lighterage Corporation, using the latter's
dumb barges.Upon reaching Manila Bay, while approaching
Pier 18, one of the barges, "Coastwise 9", struck an
unknown sunken object. The forward buoyancy
compartment was damaged, and water gushed in through a
hole "two inches wide and twenty-two inches long".The
molasses at the cargo tanks were contaminated and
rendered unfit for the use it was intended.Pag-asa Sales,
Inc.then rejected the shipment of molasses as a total loss.
Pag-asa Sales, Inc. filed a formal claim with the
insurer of its lost cargo, Philippine General Insurance
Companyand against the carrier, Coastwise Lighterage.
Coastwise Lighterage denied the claim and it was PhilGen
which paid Pag-asa Sales, Inc., the amount of P700, 000.00,
representing the value of the damaged cargo of molasses.
PhilGen then filed an action against Coastwise
Lighterage before the Regional Trial Court of Manila, to
recover the amount of P700, 000.00 which it paid to Pag-asa
Sales, Inc. for the latter's lost cargo.RTC awarded the
amount prayed for by PhilGen.Coastwise Lighterage
appealed to the Court of Appeals, and the award was
affirmed.
RTC Case:
Plaintiff - Philippine General Insurance Company
(PhilGen)– who sought to recover the amount of P700,
000.00 which it paid to Pag-asa Sales, Inc. for the
latter's lost cargo.
Defendant - Coastwise Lighterage Corporation
Cause of Action: Recovery of the amount of P700,
000.00 from Coastwise which PhilGen paid to Pag-asa
Sales, Inc. representing the value of the damaged cargo
of molasses.
Ruling of RTC: Awarded the amount prayed for by
PhilGen.
CA Case:
Who appealed - Coastwise Lighterage Corporation
Ruling of CA: Affimed award by RTC.
SC Case:
Petitioner - Coastwise Lighterage Corporation --
Common Carrier
Respondent- Philippine General Insurance Company --
Subrogee-Insurer of PAG-ASA
SALES, INC.
ISSUES:
1. Whether or not petitioner Coastwise Lighterage was
transformed into a private carrier, by virtue of the
contract of affreightment which it entered into with
the consignee, Pag-asa Sales, Inc. Corollarily, if it were
in fact transformed into a private carrier, did it exercise
the ordinary diligence to which a private carrier is in
turn bound?
2. Whether or not the insurer was subrogated into the
rights of the consignee against the carrier, upon
payment by the insurer of the value of the consignee's
goods lost while on board one of the carrier's vessels.
HELD:
1. No. by the contract of affreightment, Coastwise
Lighterage,was not converted into a private carrier,
but remained a common carrier and was still liable
as such.
The law and jurisprudence on common carriers
both hold that the mere proof of delivery of goods in
good order to a carrier and the subsequent arrival of
the same goods at the place of destination in bad order
makes for a prima facie case against the carrier.It
follows then that the presumption of negligence that
attaches to common carriers, once the goods it
transports are lost, destroyed or deteriorated, applies
to the petitioner. This presumption, which is overcome
only by proof of the exercise of extraordinary diligence,
remained unrebutted in this case.
*As to the degree of diligence
required:As a common carrier, petitioner is
required to exercise extraordinary diligence.
The damage to the barge which carried
the cargo of molasses was caused by its hitting an
unknown sunken object as it was heading for Pier
18. The object turned out to be a submerged
derelict vessel.
Evidence on record shows that far from
having rendered service with the greatest skill and
utmost foresight, and being free from fault, the
carrier was culpably remiss in the observance of
 its duties.Jesus R. Constantino, the patron of the former of all remedies which the latter may have
vessel "Coastwise 9" admitted that he was not against the third party whose negligence or wrongful
licensed. act caused the loss. The right of subrogation is not
The Code of Commerce, which dependent upon, nor does it grow out of, any privity of
subsidiarily governs common carriers provides: contract or upon written assignment of claim. It
Art. 609. — Captains, masters, or patrons of accrues simply upon payment of the insurance claim
vessels must be Filipinos, have legal capacity to by the insurer.
contract in accordance with this code, and prove
the skill capacity and qualifications necessary to
command and direct the vessel, as established by
marine and navigation laws, ordinances or
regulations, and must not be disqualified
according to the same for the discharge of the
duties of the position.

Petitioner Coastwise Lighterage's

embarking on a voyage with an unlicensed patron
violates this rule. It cannot safely claim to have
exercised extraordinary diligence, by placing a
person whose navigational skills are questionable,
at the helm of the vessel which eventually met
the fateful accident. It may also logically, follow
that a person without license to navigate, lacks
not just the skill to do so, but also the utmost
familiarity with the usual and safe routes taken by
seasoned and legally authorized ones. Had the
patron been licensed, he could be presumed to
have both the skill and the knowledge that would
have prevented the vessel's hitting the sunken
derelict ship that lay on their way to Pier 18.

2. Yes, the insurer, PhilGen, was subrogated into the

rights of the consignee.
Since the damage sustained by the loss of the
cargo was not paid by the carrier, Coastwise
Lighterage, to Pag-asa Sales, Inc. but by the latter's
insurer, PhilGen.Article 2207 of the Civil Code is
explicit on this point:
Art. 2207. If the plaintiff’s property has been
insured, and he has received indemnity from the
insurance company for the injury or loss arising
out of the wrong or breach of contract
complained of, the insurance company shall be
subrogated to the rights of the insured against
the wrongdoer or the person who violated the
contract. . . .

Article 2207 of the Civil Code is founded on the

well-settled principle of subrogation. If the insured
property is destroyed or damaged through the fault or
negligence of a party other than the assured, then the
insurer, upon payment to the assured will be
subrogated to the rights of the assured to recover from
the wrongdoer to the extent that the insurer has been
obligated to pay. Payment by the insurer to the
assured operated as an equitable assignment to the