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Transportation Law Cases for Finals (January 2016-May 2016)

1] Yu Con vs. Ipil, G.R. No. L-10195, Dec. 29, 1916


FACTS: Respondent, Yu Con (Yu Con), chartered the banca Maria owned by petitioner Narciso
Lauron (Lauron) with Gilcerio Ipil (Ipil) as its master and Juto Solamo (Solamo) as it supercargo
to transport certain merchandise and money from the port of Cebu to Catmon. Yu Con loaded
the merchandise and delivered the money, placed in a trunk, to Ipil and Solamo. Allegedly
because there was no more room for Yu Cons trunk, Ipil and Solamo transferred the money to
their own trunk in the stateroom. Before the ship could sail, the trunk and the money placed
therein disappeared.
ISSUES/HELD: Are the petitioners liable for the loss? YES.
RATIONALE: It is therefore beyond all doubt that the loss of the money occurred through the
manifest fault and negligence of Ipil and Solamo. They failed to take the necessary precautions
in order that the stateroom containing the trunk in which they kept the money should be properly
guarded by members of the crew and they also did not expressly station some person inside the
stateroom for the guarding and safe-keeping of the trunk. Thus, it is only proper that the
shipowner should be made liable.
2] Chua Yek Hong vs. IAC, Dec. 14, 1988;
FACTS: Petitioner loaded 1,000 sacks of copra on board a vessel owned by respondents, for
shipment from Puerto Galera to Manila. Along its way, the vessel capsized and sank. Petitioner
filed an action for damages for breach of contract of carriage.
ISSUE: Whether respondents can avail of the limited liability
HELD: The shipowners or agents liability is merely co-extensive with his interests in the vessel
such that the total loss thereof results in its extinction. The total destruction of the vessel
extinguishes maritime liens as there is no longer any res to which it can attach. The primary law
is the Civil Code and in default thereof, the Code of Commerce and other special laws are applied.
Since the Civil Code contains no provisions regulating liability of shipowners or agents in the event
of total loss or destruction of the vessel, it is the provisions of the Code of Commerce that govern
in this case.
3] PhilAmGen vs. CA, 273 SCRA 262;
FACTS: On March 1, 1987, San Miguel Corporation insured several beer bottle cases with
petitioner Philippine American General Insurance Company. The cargo were loaded on board the
M/V Peatheray Patrick-G to be transported from Mandaue City to Bislig, Surigao del Sur.
After having been cleared by the Coast Guard Station in Cebu the previous day, the vessel left
the port of Mandaue City for Bislig, Surigao del Sur on March 2, 1987. The weather was calm
when the vessel started its voyage.

The following day, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point, Cortes,
Surigao del Sur. As a consequence thereof, the cargo belonging to San Miguel Corporation was
lost.
Petitioner paid San Miguel Corporation the full amount of the cargo pursuant to the terms of
their insurance contract, and as subrogee filed with the Regional Trial Court (RTC) of Makati City
a case for collection against private respondents to recover the amount it paid.
Meanwhile, the Board of Marine Inquiry conducted its own investigation and found that the
cause of the sinking of the vessel was the existence of strong winds and enormous waves in
Surigao del Sur, a fortuitous event that could not have been for seen at the time the M/V
Peatheray Patrick-G left the port of Mandaue City. It was further held by the Board that said
fortuitous event was the proximate and only cause of the vessel's sinking.
ISSUE: Whether or not respondent MGG should be held liable.
HELD: No. [Common carriers, from the nature of their business and for reasons of public policy,
are mandated to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them. Owing to this high degree of diligence required of
them, common carriers, as a general rule, are presumed to have been at fault or negligent if the
goods transported by them are lost, destroyed or if the same deteriorated.
However, this presumption of fault or negligence does not arise in the cases enumerated under
Article 1734 of the Civil Code:
Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:(1) Flood, storm, earthquake, lightning or
other natural disaster or calamity;(2) Act of the public enemy in war, whether international or
civil;(3) Act or omission of the shipper or owner of the goods;(4) The character of the goods or
defects in the packing or in the containers;(5) Order or act of competent public authority.]
[In the case at bar, the issues may be narrowed down to whether the loss of the cargo was due
to the occurrence of a natural disaster, and if so, whether such natural disaster was the sole and
proximate cause of the loss or whether private respondents were partly to blame for failing to
exercise due diligence to prevent the loss of the cargo.
The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk, said vessel
encountered strong winds and huge waves ranging from six to ten feet in height. The vessel listed
at the port side and eventually sunk at Cawit Point, Cortes, Surigao del Sur.
The Court of Appeals, citing the decision of the Board of Marine Inquiry in the administrative case
against the vessel's crew (BMI--646-87), found that the loss of the cargo was due solely to the
existence of a fortuitous event, particularly the presence of strong winds and huge waves at
Cortes, Surigao del Sur on March 3, 1987:

4] Insurance Company of North America v. Asian Terminals, Inc., G.R. No. 180784, February
15, 2012;
On November 9, 2002, Macro-Lito Corporation, through M/V DIMI P vessel, 185 packages
of electrolytic tin free steel, complete and in good condition.
The goods are covered by a bill of lading, had a declared value of $169,850.35 and was
insured with the Insurance Company of North America (Petitioner) against all risk.
The carrying vessel arrived at the port of Manila on November 19, 2002, and when the
shipment was discharged therefrom, it was noted that 7 of the packages were damaged and in
bad condition.
On November 21, 2002, the shipment was then turned over to the custody of Asian
Terminals. Inc. (Respondent) for storage and safekeeping pending its withdrawal by the
consignee.
On November 29, 2002, prior to the withdrawal of the shipment, a joint inspection of the
said cargo was conducted. The examination report showed that an additional 5 packages were
found to be damaged and in bad order.
On January 6, 2003, the consignee, San Miguel Corporation filed separate claims against
both the Petitioner and the Respondent for the damage caused to the packages.
The Petitioner then paid San Miguel Corporation the amount of PhP 431,592.14 which is
based on a report of its independent adjuster. The Petitioner then formally demanded
reparation against the Respondent for the amount it paid San Miguel Corporation.
For the failure of the Respondent to satisfy the demand of the Petitioner, the Petitioner
filed for an action for damages with the RTC of Makati.
ISSUE/S:
1.) Whether or not the trial court committed an error in dismissing the complaint of the
petitioner based on the one-year prescriptive period for filing a suit under the COGSA to an
arrastre operator? YES.
2.) Whether or not the Petitioner is entitled to recover actual damages against the
Respondent? YES, but only PhP164,428.76
HELD:
The term carriage of goods covers the period from the time when the goods are loaded to
the time when they are discharged from the ship. Thus, it can be inferred that the period of
time when the goods have been discharged from the ship and given to the custody of the
arrastre operator is not covered by the COGSA.
The Petitioner, who filed the present action for the 5 packages that were damaged while in
the custody of the respondent was not forthright in its claim, as it knew that the damages it
sought, based on the report of its adjuster covered 9 packages. Based on the report, only four
of the nine packages were damaged in the custody of the Respondent. The Petitioner can be
granted only the amount of damages that is due to it

5] Inter-Orient Maritime Enterprises vs. CA, 235 SCRA 267;


6 ] Caltex Phils. vs. Sulpicio Lines, Inc., 315 SCRA 709;
FACTS: Caltex chartered MT Vector-Tanker of Vector Shipping Corp to transport its fuel products
from Limay, Bataan to Masbate. On Dec 2, 1987 while enroute the Tanker collided with MV Dona
Paz of Sulpicio Lines Inc resulting to the sinking of the latter vessel and the death of about 4000
passengers with only 24 survivors.
HELD: The charterer Caltex under a contract of affreightment has no liability for damages under
maritime laws. It is the shipowner Vector who is liable as it is in possession, control and
navigation of the tanker. As such Vector is a common carrier subject to the presumption of
negligence which it was found guilty by the Board of Maritime Inquiry in 1988. Thus Vector is
liable to reimburse/indemnify Sulpicio Lines for whatever damages, atty fees and cost the latter
is adjudged to pay. (Note Sulpicio was also negligent with respects to its passengers overloading
which contrary to maritime rules and regulation- liable for breach of carriage).
7] Cathay Pacific Airways vs spouses Vasquez, GR No. 150843, March 14, 2003
FACTS:
In respondents return flight to Manila from Hongkong, they were deprived of their original
seats in Business Class with their companions because of overbooking. Since respondents were
privileged members, their seats were upgraded to First Class. Respondents refused but
eventually persuaded to accept it. Upon return to Manila, they demanded that they be
indemnified in the amount of P1million for the humiliation and embarrassment caused by its
employees. Petitioners Country Manager failed to respond. Respondents instituted action for
damages. The RTC ruled in favor of respondents. The Court of Appeals affirmed the RTC
decision with modification in the award of damages.
ISSUE:
Whether or not the petitioners (1) breached the contract of carriage, (2) acted with fraud and
(3) were liable for damages.
RULING:
(1) YES. Although respondents have the priority of upgrading their seats, such priority may be
waived, as what respondents did. It should have not been imposed on them over their
vehement objection.
(2) NO. There was no evident bad faith or fraud in upgrade of seat neither on overbooking of
flight as it is within 10% tolerance.
(3) YES. Nominal damages (Art. 2221, NCC) were awarded in the amount of P5,000.00. Moral
damages (Art.2220, NCC) and attorneys fees were set aside and deleted from the Court of
Appeals ruling.

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


FACTS:
Vicente Lopez claimed that PAL had unjustifiably downgraded his seat from business to
economy class in his return flight from Bangkok to Manila last November 30, 1991, and that,
PAL should be directed to pay him moral damages of at least P100,000, exemplary damages of
at least P20,000, attorney's fees in the sum of P30,000, as well as the costs of suit.
Lopez averred that he purchased a Manila-Hongkong-Bangkok-Manila PAL business class ticket
and that his return flight to Manila was confirmed by PAL's booking personnel in Bangkok on
November 26, 1991. He was surprised to learn during his check-in for the said return flight that
his status as business class passenger was changed to economy class, and that PAL was not able
to offer any valid explanation for the sudden change when he protested the change. Lopez
added that although aggrieved, he nevertheless took the said flight as an economy class
passenger because he had important appointments in Manila.
PAL denied any liability and claimed that whatever damage Lopez had suffered was due to his
own fault. PAL explained that the terms and conditions of the contract of carriage required
Lopez to reconfirm his booking for the Bangkok-to-Manila leg of his trip, and that he did not
protest the economy seat given to him when the change in his accommodations was read to
him by the person who received his phone reconfirmation. PAL also asserted that Lopez did not
complain against his economy seat during the check-in and that he raised the issue only after
the flight was over.
The trial court held PAL liable for damages. PAL's contention that Lopez might have thought
that he was holding an economy class ticket or that he waived his right to have a business class
seat is untenable, considering that Lopez is an experienced businessman and a Bachelor of
Science degree holder. It is held that had PAL's employees examined his ticket in those
instances, the error or oversight which might have resulted from the phoned-in booking could
have been easily rectified.
PAL's employees had been negligent in booking and confirming Lopez's travel accommodations
from Bangkok to Manila: (1) the admission of PAL's booking personnel that she affixed the
validation sticker on Lopez's ticket on the basis of the passenger's name list showing that his
reservation was for an economy class seat without examining or checking the latter's ticket
during his booking validation; and (2) the admission of PAL's check-in clerk at the Bangkok
Airport that when Lopez checked-in for his return trip to Manila, she similarly gave Lopez an
economy boarding pass based on the information found in the coupon of the ticket and the
passenger manifest without checking the latter's ticket.
Court of Appeals affirmed in toto the trial court's decision after having been fully convinced of
the negligence of PAL's employees and after finding PAL's defenses to be unworthy of belief
and contrary to common observation and experience. PAL moved for reconsideration but it was
denied. Hence, this petition.

ISSUE:
Whether or not the Court of Appeals err in not ruling that Lopez agreed or allowed his business
class seat to be downgraded to economy class?
(Whether or not the Court of Appeals err in not ruling that Lopez's alleged contributory
negligence was the proximate cause of the downgrading of his seat?
Whether or not the Court of Appeals err in awarding moral damages, exemplary damages and
attorney's fees in favor of Lopez in view of the alleged absence of fraud or bad faith of PAL?
RULING:
We had already specifically held that issues on the existence of negligence, fraud and bad faith
are questions of fact. PAL is also guilty of raising prohibited new matter and in changing its
theory of defense since it is only in the present petition that it alleged the contributory
negligence of Lopez.
PAL's procedural lapses notwithstanding, we had nevertheless carefully reviewed the records of
this case and found no compelling reason to depart from the uniform factual findings of the
trial court and the Court of Appeals that: (1) it was the negligence of PAL which caused the
downgrading of the seat of Lopez; and (2) the aforesaid negligence of PAL amounted to fraud or
bad faith, considering our ruling in Ortigas.
We cannot agree with PAL that the amount of moral damages awarded by the trial court, as
affirmed by the Court of Appeals, was excessive. In Mercury Drug Corporation v. Baking, we had
stated that "there is no hard-and-fast rule in determining what would be a fair and reasonable
amount of moral damages, since each case must be governed by its own peculiar facts.
However, it must be commensurate to the loss or injury suffered.
9] Macondray vs. Provident Insurance Corporation, GR No. 154305, December 9, 2004
FACTS: CANPOTEX SHIPPING SERVICES LIMITED INC., shipped on board the vessel M/V Trade
carrier certain goods in favor of ATLAS FERTILIZER CORPORATION. Subject shipments were
insured with Provident Insurance Corp. against all risks. When the shipment arrived, consignee
discovered that the shipment sustained losses. Provident paid for said losses. Formal claims were
then filed with Trade & Transport but MACONDRAY refused and failed to settle the same.
MACONDRAY denies liability over the losses, it, having no absolute relation with Trade &
Transport, the alleged operator of the vessel who transported the shipment; that accordingly,
MACONDRAY is the local representative of the shipper; the charterer of M/V Trade Carrier and
not party to this case; that it has no control over the acts of the captain and crew of the carrier
and cannot be held responsible for any damage arising from the fault or negligence of said
captain and crew; that upon arrival at the port, M/V Trade Carrier discharged the full amount of
shipment as shown by the draft survey.
ISSUE: Whether or not MACONDRAY & CO. INC., as an agent, is responsible for any loss sustained
by any party from the vessel owned by Trade & Transport.

HELD: Although petitioner is not an agent of Trade & Transport, it can still be the ship agent of
the vessel M/V Trade Carrier. A ship agent is the person entrusted with provisioning or
representing the vessel in the port in which it may be found. Hence, whether acting as agent of
the owner of the vessel or as agent of the charterer, petitioner will be considered as the ship
agent and may be held liable as such, as long as the latter is the one that provisions or represents
the vessel.
The trial court found that petitioner was appointed as local agent of the vessel, which duty
includes arrangement for the entrance and clearance of the vessel. Further, the CA found that
the evidence shows that petitioner represented the vessel. The latter prepared the Notice of
Readiness, the Statement of Facts, the Completion Notice, the Sailing Notice and Customs
Clearance. Petitioners employees were present at the port of destination one day before the
arrival of the vessel, where they stayed until it departed. They were also present during the actual
discharging of the cargo. Moreover, Mr. de la Cruz, the representative of petitioner, also
prepared for the needs of the vessel. These acts all point to the conclusion that it was the entity
that represented the vessel at the port of destination and was the ship agent within the meaning
and context of Article 586 of the Code of Commerce.
10] KILUSANG MAYO UNO LABOR CENTER vs. GARCIA 239 SCRA 538 (1994)
KILUSANG MAYO UNO LABOR CENTER VS GARCIA 239 SCRA 538 (1994)
FACTS: The Kilusang Mayo Uno Labor Center (KMU) assails the constitutionality and validity of a
memorandum which, among others, authorize provincial bus and jeepney operators to increase
or decrease the prescribed transportation fares without application therefore with the LTFRB,
and without hearing and approval thereof by said agency.
ISSUE: Whether or not the absence of notice and hearing and the delegation of authority in the
increase or decrease of transportation fares to provincial bus and jeepney operators is illegal?
HELD: Under Section 16 (c) of the Public Service Act, as amended, the legislature delegated to
the defunct Public Service Commission the power of fixing the rates of public services. LTFRB, the
existing regulatory body today, is likewise vested with the same under Executive Order 202.
The authority given by the LTFRB to the bus operators to set fares over and above the
authorized existing fare is illegal and invalid, as it is tantamount to undue delegation of legislative
authority. Under the maxim potestas delegate non delegari potest what has been delegated
cannot be delegated.
The policy allowing provincial bus operators to change and increase their fares would
result not only to a chaotic situation but to an anarchic state of affairs. This would leave the riding
public at the mercy of transport operators who may increase fares, every hour, every day, every
month or every year, whenever it pleases them or whenever they deem it necessary to do so.
Furthermore, under the Section 16 (a) of Public Service Act, there must be proper notice and

hearing in the fixing of rates, to arrive at a just and reasonable rate acceptable to both the public
utility and the public.
11] ANG vs. AMERICAN STEAMSHIP AGENCIES 19 SCRA 631
FACTS: Yau Yue Commercial Bank of Hongkong agreed to sell 140 packages of galvanized steel
durzinc sheets to Herminio Teves for $32,458.26. Said agreement was subject to the following
terms: the purchase price should be covered by a bank draft which should be paid by Teves in
exchange for the delivery to him of the bill of lading to be deposited with Honkong and Shanghai
Bank of Manila; that Teves would present said bill of lading to carriers agent, American
Steamship Agencies which would then issue the permit to deliver imported articles to be
presented to the Bureau of customs to obtain the release of the articles.
Yau Yue shipped the articles aboard S.S. Tensai Maru owned by Nissho Shipping Co., of
which the American Shipping is the agent in the Philippines.
When the Articles arrived in manila, Honkong Shanghais Bank notified Teves of the arrival
of the goods and requested for the payment of the demand draft. Teves, however, failed to pay
the demand draft. So, the bank returned the bill of lading and the demand draft to Yau Yue which
endorsed the bill of lading to Domingo Ang.
Despite his non-payment, Teves was able to obtain a bank guarantee in favor of the
American Steamship Agencies, the carriers agent. Thus, Teves succeeded in securing a permit
to deliver imported articles from the carriers agent, which he presented to the Bureau of
Customs, that released the said articles to him.
Subsequently, Domingo Ang claimed the articles from American Steamship, by presenting
the indorsed bill of lading, but he was informed that it had delivered the articles to Teves. Ang
filed a complaint in the Court of First Instance of Manila against American shipping agencies, for
having wrongfully delivered the goods.
ISSUE: Whether or not the Carriage of Goods by Sea Act Section 3, Paragraph 4, applies to the
case at bar?
HELD: The provision of the law speaks of loss or damage. But there was no damage caused to
the goods which were delivered intact to Herminio Teves.
As defined by the Civil Code and as applied to section 3, paragraph 4, of the Carriage of
Goods by sea Act, loss contemplates a situation where no delivery at all was made by the
shipper of the goods because the same had perished, gone out of commerce, or disappeared that
their existence is unknown or they cannot be recovered. It does not include a situation where
there was indeed delivery, but delivery to the wrong person.
The applicable rule on prescription is that found in the Civil Code, either: ten years for
breach of contract or four years for quasi-delict. In either case, the plaintiffs cause of action has
not yet prescribed. Thus, the case is remanded to the court a quo for further proceedings.
12] TRANS-ASIA SHIPPING VS CA (254 scra 260)
FACTS: Plaintiff (herein private respondent Atty. Renato Arroyo) bought a ticket from herein
petitioner for the voyage of M/V Asia Thailand Vessel to Cagayan de Oro from Cebu City. Arroyo
boarded the vessel in the evening of November 12, 1991 at around 5:30. At that instance, plaintiff

noticed that some repair works were being undertaken on the evening of the vessel. The vessel
departed at around 11:00 in the evening with only one engine running.
After an hour of slow voyage, vessel stopped near Kawit Island and dropped its anchor
thereat. After an hour of stillness, some passenger demanded that they should be allowed to
return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro
City. The captain acceded to their request and thus the vessel headed back to Cebu City. At Cebu
City, the plaintiff together with the other passengers who requested to be brought back to Cebu
City was allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Plaintiff,
the next day boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel
of the defendant.
On account of this failure of defendant to transport him to the place of destination on
November 12, 1991, plaintiff filed before the trial court a complaint for damages against the
defendant.
ISSUE: Whether or not the failure of a common carrier to maintain in seaworthy condition its
vessel involved in a contract of carriage a breach of its duty?
HELD: Undoubtedly, there was, between the petitioner and private respondent a contract of
carriage. Under Article 1733 of the Civil Code, the petitioner was bound to observed
extraordinary diligence in ensuring the safety of the private respondent. That meant that the
petitioner was pursuant to the Article 1755 off the said Code, bound to carry the private
respondent safely as far as human care and foresight could provide, using the utmost diligence
of very cautious persons, with due regard for all the circumstances. The Failure of the common
carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear
breach of its duty prescribed in Article 1755 of the Civil Code.
13] MOF Company vs Shin yang Brokerage, GR 172822, Dec 18, 2009
FACTS: On October 25, 2001, Halla Trading Co., a company based in Korea, shipped to Manila
secondhand cars and other articles on board the vessel Hanjin Busan 0238W. The bill of lading
covering the shipment, i.e., Bill of Lading No. HJSCPUSI14168303, [2] which was prepared by the
carrier Hanjin Shipping Co., Ltd. (Hanjin), named respondent Shin Yang Brokerage Corp. (Shin
Yang) as the consignee and indicated that payment was on a Freight Collect basis, i.e., that the
consignee/receiver of the goods would be the one to pay for the freight and other charges in the
total amount of P57,646.00.
The shipment arrived in Manila on October 29, 2001. Thereafter, petitioner MOF Company, Inc.
(MOF), Hanjins exclusive general agent in the Philippines, repeatedly demanded the payment of
ocean freight, documentation fee and terminal handling charges from Shin Yang. The latter,
however, failed and refused to pay contending that it did not cause the importation of the goods,
that it is only the Consolidator of the said shipment, that the ultimate consignee did not endorse
in its favor the original bill of lading and that the bill of lading was prepared without its consent.

Thus, on March 19, 2003, MOF filed a case for sum of money before the Metropolitan
Trial Court of Pasay City (MeTC Pasay). MOF alleged that Shin Yang, a regular client, caused the
importation and shipment of the goods and assured it that ocean freight and other charges would
be paid upon arrival of the goods in Manila. Yet, after Hanjin's compliance, Shin Yang unjustly
breached its obligation to pay. MOF argued that Shin Yang, as the named consignee in the bill of
lading, entered itself as a party to the contract and bound itself to the Freight Collect
arrangement. MOF thus prayed for the payment of P57,646.00 representing ocean freight,
documentation fee and terminal handling charges as well as damages and attorneys fees.
Claiming that it is merely a consolidator/forwarder and that Bill of Lading No.
HJSCPUSI14168303 was not endorsed to it by the ultimate consignee, Shin Yang denied any
involvement in shipping the goods or in promising to shoulder the freightage. It asserted that it
never authorized Halla Trading Co. to ship the articles or to have its name included in the bill of
lading. Shin Yang also alleged that MOF failed to present supporting documents to prove that it
was Shin Yang that caused the importation or the one that assured payment of the shipping
charges upon arrival of the goods in Manila.
ISSUE: The issue for resolution is whether a consignee, who is not a signatory to the bill of lading,
is bound by the stipulations thereof.
HELD: Corollarily, whether respondent who was not an agent of the shipper and who did not
make any demand for the fulfilment of the stipulations of the bill of lading drawn in its favor is
liable to pay the corresponding freight and handling charges.
The bill of lading is oftentimes drawn up by the shipper/consignor and the carrier without the
intervention of the consignee. However, the latter can be bound by the stipulations of the bill of
lading when a) there is a relation of agency between the shipper or consignor and the consignee
or b) when the consignee demands fulfilment of the stipulation of the bill of lading which was
drawn up in its favor. [12]
In sum, a consignee, although not a signatory to the contract of carriage between the
shipper and the carrier, becomes a party to the contract by reason of either a) the relationship
of agency between the consignee and the shipper/ consignor; b) the unequivocal acceptance of
the bill of lading delivered to the consignee, with full knowledge of its contents or c) availment
of the stipulation pour autrui, i.e., when the consignee, a third person, demands before the
carrier the fulfilment of the stipulation made by the consignor/shipper in the consignees favor,
specifically the delivery of the goods/cargoes shipped. [16]
In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla
Trading, Co. to ship the goods on its behalf; or that it got hold of the bill of lading covering the
shipment or that it demanded the release of the cargo. Basic is the rule in evidence that the
burden of proof lies upon him who asserts it, not upon him who denies, since, by the nature of
things, he who denies a fact cannot produce any proof of it. [17] Thus, MOF has the burden to

controvert all these denials, it being insistent that Shin Yang asserted itself as the consignee and
the one that caused the shipment of the goods to the Philippines.

14] EDGAR COKALIONG SHIPPING LINES, INC., vs. UCPB GENERAL INSURANCE COMPANY,
INC., GR 146018 Jan 25, 2003
The liability of a common carrier for the loss of goods may, by stipulation in the bill of lading, be
limited to the value declared by the shipper. On the other hand, the liability of the insurer is
determined by the actual value covered by the insurance policy and the insurance premiums paid
therefor, and not necessarily by the value declared in the bill of lading.
Facts:
Sometime on December 11, 1991, Nestor Angelia delivered to the Edgar Cokaliong Shipping
Lines, Inc. (now Cokaliong Shipping Lines), [petitioner] for brevity, cargo consisting of one (1)
carton of Christmas decor and two (2) sacks of plastic toys, to be transported on board the M/V
Tandag on its Voyage No. T-189 scheduled to depart from Cebu City, on December 12, 1991, for
Tandag, Surigao del Sur. [Petitioner] issued Bill of Lading No. 58, freight prepaid, covering the
cargo. Nestor Angelia was both the shipper and consignee of the cargo valued, on the face
thereof, in the amount of P6,500.00. Zosimo Mercado likewise delivered cargo to [petitioner],
consisting of two (2) cartons of plastic toys and Christmas decor, one (1) roll of floor mat and one
(1) bundle of various or assorted goods for transportation thereof from Cebu City to Tandag,
Surigao del Sur, on board the said vessel, and said voyage. [Petitioner] issued Bill of Lading No.
59 covering the cargo which, on the face thereof, was valued in the amount of P14,000.00. Under
the Bill of Lading, Zosimo Mercado was both the shipper and consignee of the cargo.
On December 12, 1991, Feliciana Legaspi insured the cargo, covered by Bill of Lading No. 59, with
the UCPB General Insurance Co., Inc., [respondent] for brevity, for the amount of P100,000.00
against all risks under Open Policy No. 002/91/254 for which she was issued, by [respondent],
Marine Risk Note No. 18409 on said date. She also insured the cargo covered by Bill of Lading No.
58, with [respondent], for the amount of P50,000.00, under Open Policy No. 002/91/254 on the
basis of which [respondent] issued Marine Risk Note No. 18410 on said date.
When the vessel left port, it had thirty-four (34) passengers and assorted cargo on board,
including the goods of Legaspi. After the vessel had passed by the Mandaue-Mactan Bridge, fire
ensued in the engine room, and, despite earnest efforts of the officers and crew of the vessel,
the fire engulfed and destroyed the entire vessel resulting in the loss of the vessel and the cargoes
therein. The Captain filed the required Marine Protest.
Shortly thereafter, Feliciana Legaspi filed a claim, with [respondent], for the value of the cargo
insured under Marine Risk Note No. 18409 and covered by Bill of Lading No. 59. She submitted,
in support of her claim, a Receipt, dated December 11, 1991, purportedly signed by Zosimo
Mercado, and Order Slips purportedly signed by him for the goods he received from Feliciana
Legaspi valued in the amount of P110,056.00. [Respondent] approved the claim of Feliciana
Legaspi and drew and issued UCPB Check No. 612939, dated March 9, 1992, in the net amount

of P99,000.00, in settlement of her claim after which she executed a Subrogation Receipt/Deed,
for said amount, in favor of [respondent]. She also filed a claim for the value of the cargo covered
by Bill of Lading No. 58. She submitted to [respondent] a Receipt, dated December 11, 1991 and
Order Slips, purportedly signed by Nestor Angelia for the goods he received from Feliciana
Legaspi valued at P60,338.00. [Respondent] approved her claim and remitted to Feliciana Legaspi
the net amount of P49,500.00, after which she signed a Subrogation Receipt/Deed, dated March
9, 1992, in favor of [respondent].
On July 14, 1992, [respondent], as subrogee of Feliciana Legaspi, filed a complaint anchored on
torts against [petitioner], with the Regional Trial Court of Makati City, for the collection of the
total principal amount of P148,500.00, which it paid to Feliciana Legaspi for the loss of the cargo,
praying that judgment be rendered in its favor and against the [petitioner]
Issues: (1) Is petitioner liable for the loss of the goods? (2) If it is liable, what is the extent of its
liability?
HELD: The Petition is partly meritorious.
First Issue: Liability for Loss
Petitioner argues that the cause of the loss of the goods, subject of this case, was force majeure.
It adds that its exercise of due diligence was adequately proven by the findings of the Philippine
Coast Guard.
We are not convinced. The uncontroverted findings of the Philippine Coast Guard show that the
M/V Tandag sank due to a fire, which resulted from a crack in the auxiliary engine fuel oil service
tank. Fuel spurted out of the crack and dripped to the heating exhaust manifold, causing the ship
to burst into flames. The crack was located on the side of the fuel oil tank, which had a mere twoinch gap from the engine room walling, thus precluding constant inspection and care by the crew.
Having originated from an unchecked crack in the fuel oil service tank, the fire could not have
been caused by force majeure. Broadly speaking, force majeure generally applies to a natural
accident, such as that caused by a lightning, an earthquake, a tempest or a public enemy.[14]
Hence, fire is not considered a natural disaster or calamity and the common carrier shall be
presumed to have been at fault or to have acted negligently, unless it proves that it has observed
the extraordinary diligence required by law.
Where loss of cargo results from the failure of the officers of a vessel to inspect their ship
frequently so as to discover the existence of cracked parts, that loss cannot be attributed to force
majeure, but to the negligence of those officials.[16]

Second Issue: Extent of Liability


The records show that the Bills of Lading covering the lost goods contain the stipulation that in
case of claim for loss or for damage to the shipped merchandise or property, [t]he liability of the
common carrier x x x shall not exceed the value of the goods as appearing in the bill of lading.
The attempt by respondent to make light of this stipulation is unconvincing. As it had the
consignees copies of the Bills of Lading, it could have easily produced those copies, instead of
relying on mere allegations and suppositions. However, it presented mere photocopies thereof
to disprove petitioners evidence showing the existence of the above stipulation.
A stipulation that limits liability is valid as long as it is not against public policy. In Everett
Steamship Corporation v. Court of Appeals, the Court stated:
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 provides:
15] BELGIAN OVERSEAS case, GR 143133 , June 5, 2002
Proof of the delivery of goods in good order to a common carrier and of their arrival in bad order
at their destination constitutes prima facie fault or negligence on the part of the carrier. If no
adequate explanation is given as to how the loss, the destruction or the deterioration of the
goods happened, the carrier shall be held liable therefor.
FACTS: On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg,
Germany 242coils of various Prime Cold Rolled Steel sheets for transportation to Manila
consigned to the Philippine Steel Trading Corporation. On July 28, 1990, M/V Anangel Sky arrived
at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils
were found to be in bad order. Finding the four (4) coils in their damaged state to be unfit for the
intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total
loss. Petitioners refused to submit to the consignee's claim. Consequently, respondent paid the
consignee and was subrogated to the latter's rights. Subsequently, respondent instituted this
complaint for recovery of the amount paid by them, to the consignee as insured. Petitioners
imputed that the damage and/or loss was due to pre-shipment damage. In addition thereto, they
argued that their liability, if there be any, should not exceed the limitations of liability provided
for in the bill of lading and other pertinent laws.
ISSUES/HELD:
1. Whether or not a notation in the bill of lading at the time of loading is sufficient to show
pre-shipment damage and to exempt herein defendants from liability.
NO. Mere proof of delivery of the goods in good order to a common carrier and of their
arrival in bad order at their destination constitutes a prima facie case of fault or
negligence against the carrier. If no adequate explanation is given as to how the

deterioration, the loss or the destruction of the goods happened, the transporter shall be
held responsible. Petitioners failed to rebut the prima facie presumption of negligence in
the case at bar. True, the words "metal envelopes rust stained and slightly dented" were
noted on the Bill of Lading; however, there is no showing that petitioners exercised due
diligence to forestall or lessen the loss. Having failed to discharge the burden of proving
that they have exercised the extraordinary diligencerequired by law, petitioners cannot
escape liability for the damage to the four coils.
2. Whether or not the consignee/plaintiff filed the required notice of loss within the time
required by law.
YES. Pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act (COGSA), a
failure to file anotice of claim within three dayswill not bar recovery if it is nonetheless
filed within one year. This one-year prescriptive period also applies to the shipper, the
consignee, the insurer of the goods or any legal holder of the bill of lading. In the present
case, the cargo was discharged on July 31, 1990, while the Complaint was filed by
respondent on July 25, 1991, within the one-year prescriptive period.
3. Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of COGSA is
applicable.
YES. In the case before us, there was no stipulation in the Bill of Lading limiting the
carrier's liability. Neither did the shipper declare a higher valuation of the goods to be
shipped. This fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot
be the basis for petitioners' liability. A notation in the Bill of Lading which indicated the
amount of the Letter of Credit obtained by the shipper for the importation of steel sheets
did not effect a declaration of the value of the goods as required by the bill. In the light of
the foregoing, petitioners' liability should be computed based on US$500 per package and
not on the per metric ton price declared in the Letter of Credit.
16] Fabre case, GR 111127, July 26, 1996
FACTS: Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazda minibus. They used
the bus principally in connection with a bus service for school children which they operated in
Manila. It was driven by Porfirio Cabil.
On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF)
arranged with the petitioners for the transportation of 33 members of its Young Adults Ministry
from Manila to La Union and back in consideration of which private respondent paid petitioners
the amount of P3,000.00.
The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at
Carmen was under repair, so that petitioner Cabil, who was unfamiliar with the area (it being his
first trip to La Union), was forced to take a detour through the town of Ba-ay in Lingayen,
Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway. The

road was slippery because it was raining, causing the bus, which was running at the speed of 50
kilometers per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and
sign along the road and rammed the fence of one Jesus Escano, then turned over and landed on
its left side, coming to a full stop only after a series of impacts. The bus came to rest off the road.
A coconut tree which it had hit fell on it and smashed its front portion. Because of the mishap,
several passengers were injured particularly Amyline Antonio.
Criminal complaint was filed against the driver and the spouses were also made jointly liable.
Spouses Fabre on the other hand contended that they are not liable since they are not a common
carrier.
ISSUE: Whether the spouses Fabre are common carriers?
HELD: Petition was denied. Spouses Fabre are common carriers.
The Supreme Court held that this case actually involves a contract of carriage. Petitioners,
the Fabres, did not have to be engaged in the business of public transportation for the provisions
of the Civil Code on common carriers to apply to them. As this Court has held: 10 Art. 1732,
Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose principal business activity is
the carrying of persons or goods or both, and one who does such carrying only as an ancillary
activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular or scheduled basis
and one offering such service on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the
general community or population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1732 deliberately refrained from
making such distinctions.
17] MCC Industrial Sales Corporation v. Ssangyong Corporation, G.R. No. 170633, October 17,
2007
18] UCPB GENERAL INSURANCE case G.R. No.168433, Feb 10, 2009
Deadline for claim. San Miguel Corporation (SMC) purchased three (3) units of waste water
treatment plant with accessories from a company in Taiwan. After its arrival at the port of Cebu
and clearance from the Bureau of Customs, the goods were delivered to and received by SMC at
its plant site on August 2, 1991. It was then discovered that one electrical motor of DBS Drive
Unit Model DE-30-7 was damaged. Pursuant to an insurance agreement, UCPB paid SMC the
amount of P1,703,381.40 representing the value of the damaged unit. In turn, SMC executed a
Subrogation Form dated March 31, 1992 in favor of UCPB, which them filed an action against the
respondents for the amount it paid to SMC. The trial court ruled in favor of UCPB but the Court
of Appeals reversed. The Supreme Court affirmed the decision of the Court of Appeals and held

that under Article 366 of the Code of Commerce, the claim for damage or average must be made
within 24 hours from receipt of the merchandise if, as in this case, damage cannot be ascertained
merely from the outside packaging of the cargo. The Supreme Court affirmed its earlier rulings
that the 24-hour claim requirement is a condition precedent to the accrual of a right of action
against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and
prove the fulfillment of the condition. Otherwise, no right of action against the carrier can accrue
in favor of the former.
18] PHILIPPINE CHARTER INSURANCE CORPORATION VS. CHEMOIL LIGHTERAGE HITE GOLD
CORPORATION G.R. No. 136888. June 29, 2005
Facts:
Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of
non-life insurance. Respondent Chemoil Lighterage Corporation is also a domestic corporation
engaged in the transport of goods. On 24 January 1991, Samkyung Chemical Company, Ltd.,
based in South Korea, shipped 62.06 metric tons of the liquid chemical DIOCTYL PHTHALATE
(DOP) on board MT TACHIBANA which was valued at US$90,201.57 and another 436.70 metric
tons of DOP valued at US$634,724.89 to the Philippines. The consignee was Plastic Group Phils.,
Inc. in Manila. PGP insured the cargo with Philippine Charter Insurance Corporation against all
risks. The insurance was under Marine Policies No. MRN-30721[5] dated 06 February 1991.
Marine Endorsement No. 2786[7] dated 11 May 1991 was attached and formed part of MRN30721, amending the latters insured value to P24,667,422.03, and reduced the premium
accordingly. The ocean tanker MT TACHIBANA unloaded the cargo to the tanker barge, which
shall transport the same to Del Pan Bridge in Pasig River and haul it by land to PGPs storage tanks
in Calamba, Laguna. Upon inspection by PGP, the samples taken from the shipment showed
discoloration demonstrating that it was damaged. PGP then sent a letter where it formally made
an insurance claim for the loss it sustained.
Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to conduct a Quantity and Condition
Survey of the shipment which issued a report stating that DOP samples taken were discolored.
Inspection of cargo tanks showed manhole covers of ballast tanks ceilings loosely secured and
that the rubber gaskets of the manhole covers of the ballast tanks re-acted to the chemical
causing shrinkage thus, loosening the covers and cargo ingress. Petitioner paid PGP the full and
final payment for the loss and issued a Subrogation Receipt. Meanwhile, PGP paid the respondent
the as full payment for the latters services.
On 15 July 1991, an action for damages was instituted by the petitioner-insurer against
respondent-carrier before the RTC, Br.16, City of Manila. Respondent filed an answer which
admitted that it undertook to transport the shipment, but alleged that before the DOP was
loaded into its barge, the representative of PGP, Adjustment Standard Corporation, inspected it
and found the same clean, dry, and fit for loading, thus accepted the cargo without any protest
or notice. As carrier, no fault and negligence can be attributed against respondent as it exercised
extraordinary diligence in handling the cargo.
Issues:
1. Whether or not the Notice of Claim was filed within the required period.
2. Whether or not the damage to the cargo was due to the fault or negligence of the respondent.

19] PHILIPPINE CHARTER INSURANCE CORPORATION vs. CHEMOIL LIGHTERAGE


CORPORATION, [G.R. No. 136888. June 29, 2005]
Facts:
Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of
non-life insurance. Respondent Chemoil Lighterage Corporation is also a domestic corporation
engaged in the transport of goods. On 24 January 1991, Samkyung Chemical Company, Ltd.,
based in South Korea, shipped 62.06 metric tons of the liquid chemical DIOCTYL PHTHALATE
(DOP) on board MT TACHIBANA which was valued at US$90,201.57 and another 436.70 metric
tons of DOP valued at US$634,724.89 to the Philippines. The consignee was Plastic Group Phils.,
Inc. in Manila. PGP insured the cargo with Philippine Charter Insurance Corporation against all
risks. The insurance was under Marine Policies No. MRN-30721[5] dated 06 February 1991.
Marine Endorsement No. 2786[7] dated 11 May 1991 was attached and formed part of MRN30721, amending the latters insured value to P24,667,422.03, and reduced the premium
accordingly. The ocean tanker MT TACHIBANA unloaded the cargo to the tanker barge, which
shall transport the same to Del Pan Bridge in Pasig River and haul it by land to PGPs storage tanks
in Calamba, Laguna. Upon inspection by PGP, the samples taken from the shipment showed
discoloration demonstrating that it was damaged. PGP then sent a letter where it formally made
an insurance claim for the loss it sustained.
Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to conduct a Quantity and Condition
Survey of the shipment which issued a report stating that DOP samples taken were discolored.
Inspection of cargo tanks showed manhole covers of ballast tanks ceilings loosely secured and
that the rubber gaskets of the manhole covers of the ballast tanks re-acted to the chemical
causing shrinkage thus, loosening the covers and cargo ingress. Petitioner paid PGP the full and
final payment for the loss and issued a Subrogation Receipt. Meanwhile, PGP paid the respondent
the as full payment for the latters services.
On 15 July 1991, an action for damages was instituted by the petitioner-insurer against
respondent-carrier before the RTC, Br.16, City of Manila. Respondent filed an answer which
admitted that it undertook to transport the shipment, but alleged that before the DOP was
loaded into its barge, the representative of PGP, Adjustment Standard Corporation, inspected it
and found the same clean, dry, and fit for loading, thus accepted the cargo without any protest
or notice. As carrier, no fault and negligence can be attributed against respondent as it exercised
extraordinary diligence in handling the cargo.
Issues:
1. Whether or not the Notice of Claim was filed within the required period.
2. Whether or not the damage to the cargo was due to the fault or negligence of the respondent.
Held:
We have examined the evidence, and We are unable to find any proof of compliance with the
required period, which is fatal to the accrual of the right of action against the carrier.
Nothing in the trial courts decision stated that the notice of claim was relayed or filed with the
respondent-carrier immediately or within a period of twenty-four hours from the time the goods
were received. The Court of Appeals made the same finding. Having examined the entire records
of the case, we cannot find a shred of evidence that will precisely and ultimately point to the
conclusion that the notice of claim was timely relayed or filed.

The requirement that a notice of claim should be filed within the period stated by Article 366 of
the Code of Commerce is not an empty or worthless proviso.
The object sought to be attained by the requirement of the submission of claims in pursuance of
this article is to compel the consignee of goods entrusted to a carrier to make prompt demand
for settlement of alleged damages suffered by the goods while in transport, so that the carrier
will be enabled to verify all such claims at the time of delivery or within twenty-four hours
thereafter, and if necessary fix responsibility and secure evidence as to the nature and extent of
the alleged damages to the goods while the matter is still fresh in the minds of the parties.
The filing of a claim with the carrier within the time limitation therefore actually constitutes a
condition precedent to the accrual of a right of action against a carrier for loss of, or damage to,
the goods. The shipper or consignee must allege and prove the fulfilment of the condition. If it
fails to do so, no right of action against the carrier can accrue in favour of the former. The
aforementioned requirement is a reasonable condition precedent; it does not constitute a
limitation of action.
Considering that we have resolved the first issue in the negative, it is therefore unnecessary to
make a resolution on the second issue.
20] MAYER STEEL PIPE CORPORATION case, [G.R. No. 124050. June 19, 1997]
Facts; Shipper, prior to shipping, insured the merchandise against all risks with South Sea Surety.
During the voyage, the merchandise were damaged. Insurer opposed claim on the ground,
among others, that it was filed more than one (1) year from discovery of the damage to the
merchandise and therefore barred by the provisions of COGSA.
HELD: Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall
be discharged from all liability for loss or damage to the goods if no suit is filed within one year
after delivery of the goods or the date when they should have been delivered. Under this
provision, only the carriers liability is extinguished if no suit is brought within one year. But the
liability of the insurer is not extinguished because the insurers liability is based not on the
contract of carriage but on the contract of insurance. A close reading of the law reveals that the
Carriage of Goods by Sea Act governs the relationship between the carrier on the one hand and
the shipper, the consignee and/or the insurer on the other hand. It defines the obligations of the
carrier under the contract of carriage. It does not, however, affect the relationship between the
shipper and the insurer.
21] Spouses Renato Ong case, Gr 117103, Jan 21, 1999
FACTS: Spouses Ong sustained injuries when Inland Bus, which was owned by Inland Trailways
under a Lease Agreement with Philtranco, slowed down to avoid a cargo truck but was hit from
behind by another bus, owned and operated by Philtranco. The court ruled, base on the police
report, that the proximate cause of the accident was the bumping of the bus from behind hence
ruled against Philtranco and awarded damages. However, this police report was contested as it
was formally offered as evidence but merely as an annex to Inlands answer.
ISSUE: Whether damages were properly awarded.
HELD: The fundamental principle of the law on damages is that one injured by a breach of
contract (in this case, the contract of transportation) or by a wrongful or negligent act or omission
shall have a fair and just compensation, commensurate with the loss sustained as a consequence

of the defendant's acts. Hence, actual pecuniary compensation is the general rule, except where
the circumstances warrant the allowance of other kinds of damages. Actual damages Actual
damages are such compensation or damages for an injury that will put the injured party in the
position in which he had been before he was injured. They pertain to such injuries or losses that
are actually sustained and susceptible of measurement. Except as provided by law or by
stipulation, a party is entitled to adequate compensation only for such pecuniary loss as he has
duly proven. To be recoverable, actual damages must be pleaded and proven in Court. No such
proof was offered to the P10,000 claim of damages. At the most, documentary evidence showed
P3, 977 only as damages. Moral Damages and Diminution of use of arm A person is entitled to
the physical integrity of his or her body, and if that integrity is violated, damages are due and
assessable. However, physical injury, like loss or diminution of use of an arm or a limb, is not a
pecuniary loss. Indeed, it is nor susceptible of exact monetary estimation. Thus, the usual practice
is to award moral damages for physical injuries sustained. In the case at bar, it was sufficiently
shown during the trial that Francia's right arm could not function in a normal manner and that,
as a result, she suffered mental anguish and anxiety. Thus, an increase in the amount of moral
damages awarded, from P30,000 to P50,000, appears to be reasonable and justified. Renato also
suffered mental anxiety and anguish from the accident. Thus, he should be separately awarded
P30,000 as moral damages. Unrealized Income Protesting the deletion of the award for Francia's
unrealized income, petitioners contend that Francia's injuries and her oral testimony adequately
support their claim. The Court disagrees. Although actual damages include indemnification for
profits which the injured party failed to obtain (lucro cesante or lucrum cesans), the rule requires
that said person produce the "best evidence of which his case is susceptible. The petitioners
failed to do so, as she could have returned to work despite the plaster in her arm. Attorney fees
Counsel's performance, however, does not justify the award of 25 percent attorney's fees. It is
well-settled that such award is addressed to sound judicial discretion and subject to judicial
control. Only a 10% attorneys fee is awarded. Art. 2197.
22] AUGUSTO LOPEZ v. JUAN DURUELO, G.R. No. 29166. October 22, 1928.
Facts: On February 10, 1927, plaintiff Augusto Lopez was desirous of embarking upon the
interisland steamer San Jacinto in order to go to Cebu, the plaintiff embarked at the landing in
the motorboat Jison which was engaged in conveying passengers and luggage back and forth
from the landing to the boats at anchor.
As the motorboat approached San Jacinto in a perfectly quiet sea, it came too near to the stern
of the ship, and as the propeller of the ship had not yet ceased to turn, the blades of the propeller
strucked the motorboat and sank it at once. As it sank, the plaintiff was thrown into the water
against the propeller, and the revolving blades inflicted various injuries upon him. The plaintiff
was hospitalized. He filed a complaint seeking to recover damages from the defendant. The
defendant however alleged that the complaint does not have a right of action, a demurrer was
submitted directed to the fact that the complaint does not allege that the protest had been
presented by the plaintiff, within twenty-four hours after the occurrence to the competent
authority at the port where the accident occurred as provided for Article 835 of the Code of
Commerce.

Issue: Whether the motorboat Jison is a vessel provided for by Article 835 of the Code of
Commerce?
Held: The word vessel as used in the third section of tile IV, Book III of the Code of Commerce,
dealing with collisions, does not include all ships, craft or floating structures of any kind without
limitation. The said section does not apply to minor craft engaged in a river and bay
traffic.Therefore, a passenger on boat like the Jison, is not required to make protest as a condition
precedent to his right of action for the injury suffered by him in the collision described in the
complaint.Article 835 of the Code of Commerce does not apply.
23] Luzon Stevedoring vs Ca, G.R. No. L-58897, December 3, 1987
Facts: A maritime collision occurred between the tanker CAVITE owned by LSCO and MV
Fernando Escano (a passenger ship) owned by Escano, as a result the passenger ship sunk. An
action in admiralty was filed by Escano against Luzon. The trial court held that LSCO Cavite was
solely to blame for the collision and held that Luzons claim that its liability should be limited
under Article 837 of the Code of Commerce has not been established. The Court of Appeals
affirmed the trial court. The SC also affirmed the CA. Upon two motions for reconsideration, the
Supreme Court gave course to the petition.
Issue: Whether or not in order to claim limited liability under Article 837 of the Code of
Commerce, it is necessary that the owner abandon the vessel
Held: Yes, abandonment is necessary to claim the limited liability wherein it shall be limited to
the value of the vessel with all the appurtenances and freightage earned in the voyage. However,
if the injury was due to the ship owners fault, the ship owner may not avail of his right to avail
of limited liability by abandoning the vessel.
The real nature of the liability of the ship owner or agent is embodied in the Code of Commerce.
Articles 587, 590 and 837 are intended to limit the liability of the ship owner, provided that the
owner or agent abandons the vessel. Although Article 837 does not specifically provide that in
case of collision there should be abandonment, to enjoy such limited liability, said article is a
mere amplification of the provisions of Articles 587 and 590 which makes it a mere superfluity.
The exception to this rule in Article 837 is when the vessel is totally lost in which case there is no
vessel to abandon, thus abandonment is not required. Because of such loss, the liability of the
owner or agent is extinguished. However, they are still personally liable for claims under the
Workmens Compensation Act and for repairs on the vessel prior to its loss.
In case of illegal or tortious acts of the captain, the liability of the owner and agent is subsidiary.
In such cases, the owner or agent may avail of Article 837 by abandoning the vessel. But if the
injury is caused by the owners fault as where he engages the services of an inexperienced captain
or engineer, he cannot avail of the provisions of Article 837 by abandoning the vessel. He is
personally liable for such damages.
In this case, the Court held that the petitioner is a t fault and since he did not abandon the vessel,
he cannot invoke the benefit of Article 837 to limit his liability to the value of the vessel, all
appurtenances and freightage earned during the voyage.

24] TEODORO R. YANGCO, ETC vs. MANUEL LASERNA, G.R. No. L-47447-47449, October 29,
1941
Facts: On the afternoon of May 26, 1927, the steamer SS Negros left the port of Romblon on its
return trip to Manila. Typhoon signal no. 2 was then up and in fact, the passengers duly advised
the captain before sailing. The boat was overloaded. After 2 hours of sailing, the boat
encountered strong winds and rough seas between the islands of Banton and Simara. While in
the act of maneuvering, the vessel was caught sidewise by a big wave which caused it to capsize
and sink. Many of the passengers died on the mishap. Civil actions were instituted in the CFI of
Capiz, the petitioner sought to abandon the vessel to the plaintiffs in three cases.
Issue: Whether the shipowner or agent is liable for damages for the consequent death of its
passengers notwithstanding the total loss of the vessel?
Held: The petitioner is absolved from all complaints.
Under Article 587 the ship agent shall also be civilly liable for indemnities in favor of
third persons which arise from the conduct of the captain in the vigilance over the goods which
the vessels carried; BUT he may exempt himself therefrom by abandoning the vessel with all her
equipment and the freight he may have earned during the voyage.
Whether the abandonment of the vessel sought by the petitioner in the case was in
accordance with the law or not, is immaterial. The vessel having totally perished, any act of
abandonment would be idle ceremony.
NO VESSEL, NO LIABILITY.

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


Facts: Honorio Barrios was the captain and master of the MV Henry I operated by William Lines,
Inc. which plied the route from Cebu to Davao City. On its voyage on May 1, 1958 the MV Henry
I intercepted an SOS signal from the MV Don Alfredo owned and operated by Go Thong & Co.
Responding to the SOS, Henry I approached the Don Alfredo and found out that the Don
Alfredo was suffering from engine failure. After agreeing to assist the disabled ship, the crew of
Henry I attached tow lines and proceeded to tow the Don Alfredo heading towards the port of
Dumaguete City. The following morning, they encountered a sister ship of Don Alfredo, the MV
Lux. Upon the request of the captain of the Don Alfredo, the crew of the Henry I released the
towlines and continued on their voyage.
After the incident, Barrios as captain of MV Henry I claimed entitlement to compensation under
the salvage law which was opposed by Go Thong and Co. who claimed that what occurred was
only mere towage.
The trial court dismissed the claim.
Issue: Whether the rescue of the MV Don Alfredo should be classified as a salvage, thus
entitling Barrios et al. to reward?

Held: No. Not all the requisites were present for the rescue to be considered as salvage under
the law.
The claim of Barrios is anchored on the provisions of the Salvage Law that stipulates that a ship
that is lost or abandoned at sea is considered as a derelict and the proper subject of salvage. A
ship in a desperate condition with passengers and persons on board but who are unable to do
anything for their own safety may be considered a quasi-derelict.
Further, the Salvage Law provides that those assisting in saving a vessel in its cargo from
shipwreck shall be entitled to a reward. There are three elements that are necessary for a
salvage claim:
the existence of a marine peril
service is voluntarily rendered when not required as an existing duty or a special contract; and
success in whole or in part, or that the service rendered contributed to such success.
It is therefore imperative to establish whether the MV Don Alfredo was exposed to any form of
marine peril when it was assisted by the MV Henry I. The Supreme Court however noted that
the nature of its disability and the circumstances surrounding it could be construed as a marine
peril as contemplated in the Salvage Law. When the engine failure occurred the seas were calm
and the weather was clear. In fact the ship did not drift too far from the location where its
engines failed. Further, the captain and crew of the MV Don Alfredo did not find it necessary to
jettison the vessels cargo as a safety measure. Therefore the MV Don Alfredo cannot even be
considered as a quasi derelict.
Although the service of the defendant did not constitute as salvage, it can be considered as a
quasi contract of towage. However in a contract of towage, only the owner of the towing vessel
is entitled to remuneration. It is noteworthy that the owner of MV Henry I, William Lines, Inc.,
already waived its claim for compensation.
26] ABOITIZ SHIPPING CORPORATION vs.
GENERAL ACCIDENT FIRE AND LIFE, G.R. No. 100446 January 21, 1993
Facts: Petitioner is a corporation engaged in the business of maritime trade as a carrier. As such,
it owned and operated the M/V P/ ABOITIZ, a common carrier that sank on voyage from Hong
Kong to Manila. Private respondent GAFLAC is a foreign insurance company pursuing its remedy
as a subrogee of several cargo consignees whose respective cargo sank with the said vessel and
for which it has priory paid. The sinking of vessel gave rise to filling of suit to recover the lost
cargo either by shippers, their successors-in-interest, or the cargo insurers like GAFLAC as
subrogees. The sinking was initially investigated by the Board of Marine Inquiry, which found that
such sinking was due to fortuitous event.
Issue: Whether or not the doctrine of limited liability is applicable to the case?
Held:
Rights of the parties to claim against an agent or owner of vessel may be compared to those of
creditors against an insolvent corporation whose assets are not enough to satisfy the totality of
claims against it.

Creditors must limit their recovery to what is left in the name of the corporation
In the sinking of a vessel, the claimants of creditors are limited in their recovery to the remaining
value of accessible assets. In the case of lost vessel, these assets are the insurance proceeds and
pending freightage for the particular voyage.
27] LITONJUA SHIPPING COMPANY INC vs. NATIONAL SEAMEN BOARD, G.R. No. L-51910
August 10, 1989
Facts: Petitioner Litonjua is the duly appointed local crewing Managing Office of the Fairwind
Shipping Corporation ('Fairwind). The M/V Dufton Bay is an ocean-going vessel of foreign registry
owned by the R.D. Mullion Ship Broking Agency Ltd. ("Mullion"). On 11 September 1976, while
the Dufton Bay was in the port of Cebu and while under charter by Fairwind, the vessel's master
contracted the services of, among others, private respondent Gregorio Candongo to serve as
Third Engineer for a period of twelve (12) months with a monthly wage of US$500.00. This
agreement was executed before the Cebu Area Manning Unit of the NSB. Thereafter, private
respondent boarded the vessel. On 28 December 1976, before expiration of his contract, private
respondent was required to disembark at Port Kelang, Malaysia, and was returned to the
Philippines on 5 January 1977. The cause of the discharge was described in his Seaman's Book as
'by owner's arrange".
Shortly after returning to the Philippines, private respondent filed a complaint before public
respondent NSB, which complaint was docketed as NSB-1331-77, for violation of contract,
against Mullion as the shipping company and petitioner Litonjua as agent of the shipowner and
of the charterer of the vessel.
Issues: Whether or not the admiralty law as embodied in the Philippine Code of Commerce
fastens liability for payment of the crew's wages upon the ship owner, and not the charterer.
Held:
It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro
hac vice of the vessel, the charterer assuming in large measure the customary rights and liabilities
of the shipowner in relation to third persons who have dealt with him or with the vessel. In such
case, the Master of the vessel is the agent of the charterer and not of the shipowner. The
charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for the
expenses of the voyage including the wages.
28] VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY, INC. case, G.R. No. 102316. June 30,
1997
Facts: On January 16, 1984, plaintiff entered into an agreement with Seven Brothers Shipping
corporation whereby the latter undertook to load on board its vessel M/V Seven Ambassadors
940 Lauan round logs for shipment from Isabela to Manila. On January 20, plaintiff insured the
cargo with South Sea Surety and Insurance for two million pesos. However on January 25, 1984,
the M/V Seven Ambassador sank, resulting in the loss of petitioners logs. Pursuant to the loss,
petitioner filed a claim with South Sea Surety and Insurance for the insured amount of the logs,
but the latter refused, denying liability under the policy. Petitioner likewise filed a formal claim

against Seven Brothers Shipping Corporation for the value of the lost logs, but the latter likewise
denied their claim.
The trial court found for the plaintiff, holding South Sea and Seven Brothers liable for the
loss. On appeal, the Court of Appeals affirmed in part the decision of the trial court. The Court of
Appeals affirmed the liability of South Sea Surety and Assurance but exonerated Seven Brothers,
stating that the latter is a private carrier therefore the provisions on common carriers is not
applicable to their contract. Hence the present appeal.
Issue: Whether or not respondent Court of Appeals committed a reversible error in upholding
the validity of the stipulation in the charter party executed between petitioner and Seven
Brothers exempting the latter from liability of loss arising from the negligence of its captain.
Held: The decision of the Court of appeals is correct. The contract between petitioner and Seven
Brothers is one of Private Carriage hence the provisions on common carriage do not apply. In a
contract of private carriage parties are free to stipulate that the responsibility for the cargo rests
solely in the charterer, such stipulations are valid because they are freely entered into by the
parties and the same is not contrary to law, morals, good custom, public order or public policy.
29] Merchants vs Alejandro, G.R. No. L-54140 October 14, 1986
Facts: Plaintiff Choa Tiek Seng filed a complaint against the petitioner before the then Court of
First Instance of Manila for recovery of a sum of money under the marine insurance policy on
cargo. Mr. Choa alleged that the goods he insured with the petitioner sustained loss and damage
in the amount of P35, 987.26. The said goods were delivered to the arrastre operator E. Razon,
Inc., on December 17, 1976 and on the same date were received by the consignee-plaintiff.
Petitioner disclaims liability and imputes against plaintiff the commission of fraud. A
similar complaint was filed by Joseph Benzon Chua against the petitioner for recovery under the
marine insurance policy for cargo alleging that the goods insured with the petitioner sustained
loss and damage in the sum of P55,996.49. The goods were delivered to the plaintiff-consignee
on or about January 25-28, 1977.
Petitioner filed third-party complaints against private respondents for indemnity,
subrogation, or reimbursement in the event that it is held liable to the plaintiff.
The private respondents, carriers Frota Oceanica Brasiliera and Australia-West Pacific Line
alleged in their separate answers that the petitioner is already barred from filing a claim because
under the Carriage of Goods by Sea Act, the suit against the carrier must be filed within one year
after delivery of the goods or the date when the goods should have been delivered
Petitioner contended that provision relied upon by the respondents applies only to the
shipper and not to the insurer of the goods.
Respondent judge dismissed both third-party complaints.

Issue: Whether or not the one-year period within which to file a suit against the carrier and the
ship, in case of damage or loss as provided for in the Carriage of Goods by Sea Act applies to the
insurer of the goods.
Held: The coverage of the Act includes the insurer of the goods. Otherwise, what the Act intends
to prohibit after the lapse of the one-year prescriptive period can be done indirectly by the
shipper or owner of the goods by simply filing a claim against the insurer even after the lapse of
one year. This would be the result if we follow the petitioner's argument that the insurer can, at
any time, proceed against the carrier and the ship since it is not bound by the time-bar provision.
In this situation, the one-year limitation will be practically useless. This could not have been the
intention of the law which has also for its purpose the protection of the carrier and the ship from
fraudulent claims by having "matters affecting transportation of goods by sea be decided in as
short a time as possible" and by avoiding incidents which would "unnecessarily extend the period
and permit delays in the settlement of questions affecting the transportation."
In the case at bar, the petitioner's action has prescribed under the provisions of the
Carriage of Goods by Sea Act. Hence, whether it files a third-party complaint or chooses to
maintain an independent action against herein respondents is of no moment.
30] GREGORIO PESTAO vs. Spouses TEOTIMO SUMAYANG, G.R. No. 139875, December 4,
2000
The fact that the driver was able to use a bus with a faulty speedometer shows that the
employer was remiss in the supervision of its employees and in the proper care of its vehicles.
Under Arts. 2180 and 2176 of Civil Code, owners and managers are responsible for damages
caused by their employees.
31] PP vs. ARNEL MATARO, G.R. No. 130378 March 8, 2001
-No transportation-related issue

32] FRANCISCO ORTIGAS, JR. VS. LUFTHANSA GERMAN AIRLINES


G.R. NO. L-28773 JUNE 30, 1975
Facts: Direct appeals of both parties plaintiff, Francisco Ortigas, and defendant Luthansa German
Airlines, from the decision of the Court of First Instance of Manila Branch Y, condemning the
defendant to pay plaintiff the amount of P100,000 as moral damages, P30,000 as exemplary or
corrective damages, with interest of both sums at the legal rate from the commencement of this
suit until fully paid, P20,000 as attorneys fees and the costs for the former failure to comply
with its obligation to give first accommodation to (the latter) a (Filipino) passenger holding a first
class ticket, aggravated by the giving of the space instead to a Belgian and the improper conduct
of its agents in dealing with him during the occasion of such discriminatory violence of its contract
of carriage.
Issue: Whether Lufthansa is liable for damages?

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

33] AIR FRANCE vs. RAFAEL CARRASCOSO, G.R. No. L-21438 , September 28, 1966
Facts: Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila
for Lourdes on March 30, 1958.
On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine
Air Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome.
From Manila to Bangkok, plaintiff traveled in "first class", but at Bangkok, the Manager of the
defendant airline forced plaintiff to vacate the "first class" seat that he was occupying because,
in the words of the witness Ernesto G. Cuento, there was a "white man", who, the Manager
alleged, had a "better right" to the seat. When asked to vacate his "first class" seat, the plaintiff,
as was to be expected, refused, and told defendant's Manager that his seat would be taken over
his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, "many of the
Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was
having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso
and pacified Mr. Carrascoso to give his seat to the white man" and plaintiff reluctantly gave his
"first class" seat in the plane after being threatened that he will be thrown out of the plane if he
does not oblige. The captain of the plane, when asked to intervene, refused to do so.
Issue: Whether or not there was bad faith on the part of Air France, petitioner, entitling Rafael
Carrascoso, respondent for moral and exemplary damages as against the petitioner?

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


The responsibility of an employer for the tortious act of its employees need not be
essayed. It is well settled in law. For the willful malevolent act of petitioner's manager, petitioner,
his employer, must answer.
A contract to transport passengers is quite different in kind and degree from any other
contractual relation. And this, because of the relation which an air-carrier sustains with the
public. Its business is mainly with the traveling public. It invites people to avail of the comforts
and advantages it offers. The contract of air carriage, therefore, generates a relation attended
with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give
ground for an action for damages.
Passengers do not contract merely for transportation. They have a right to be treated by
the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled
to be protected against personal misconduct, injurious language, indignities and abuses from
such employees. So it is that any rule or discourteous conduct on the part of employees towards
a passenger gives the latter an action for damages against the carrier.
34] DR. HERMAN ARMOVIT vs CA, G.R. No. 88561, April 20, 1990
This is a case which involves a Filipino physician and his family residing in the United States who
came home to the Philippines on a Christmas visit. They were bumped off at the Manila
International Airport on their return flight to the U.S. because of an erroneous entry in their
plane tickets relating to their time of departure.
In October 1981, the petitioners decided to spend their Christmas holidays with relatives and
friends in the Philippines, so they purchased from private respondent, (Northwest Airlines, Inc.)
three (3) round trip airline tickets from the U.S. to Manila and back, plus three (3) tickets for the
rest of the children, though not involved in the suit. Each ticket of the petitioners which was in
the handwriting of private respondent's tickets sales agent contains the following entry on the
Manila to Tokyo portion of the return flight:
from Manila to Tokyo, NW flight 002, date 17 January, time 10:30 A.M. Status, OK.
On their return trip from Manila to the U.S. scheduled on January 17, 1982, petitioner arrived at
the check-in counter of private respondent at the Manila International Airport at 9:15 in the
morning, which is a good one (1) hour and fifteen (15) minutes ahead of the 10:30 A.M.
scheduled flight time recited in their tickets. Petitioners were rudely informed that they cannot
be accommodated inasmuch as Flight 002 scheduled at 9:15 a.m. was already taking off and the
10:30 A.M. flight time entered in their plane tickets was erroneous.
Previous to the said date of departure petitioners re-confirmed their reservations through their
representative Ernesto Madriaga who personally presented the three (3) tickets at the private

respondent's Roxas Boulevard office. 2 The departure time in the three (3) tickets of petitioners
was not changed when re-confirmed. The names of petitioners appeared in the passenger
manifest and confirmed as Passenger Nos. 306, 307, and 308, Flight 002. 3
Herein petitioner Dr. Armovit protested in extreme agitation that because of the bump-off he
will not be able to keep his appointments with his patients in the U.S. Petitioners suffered
anguish, wounded feelings, and serious anxiety day and night of January 17th until the morning
of January 18th when they were finally informed that seats will be available for them on the
flight that day.
Because of the refusal of the private respondent to heed the repeated demands of the
petitioners for compensatory damages arising from the aforesaid breach of their air-transport
contracts, 4 petitioners were compelled to file an action for damages.
The appellate court observed that private respondent was guilty of gross negligence not only in
the issuance of the tickets by the erroneous entry of the date of departure and without
changing or correcting the error when the said three (3) tickets were presented for reconfirmation. Nevertheless it deleted the award of moral damages on the ground that
petitioners did not take the witness stand to testify on "their social humiliation, wounded
feelings and anxiety, and that the breach of contract was not malicious or fraudulent." 8
We disagree.
The gross negligence committed by private respondent in the issuance of the tickets with
entries as to the time of the flight, the failure to correct such erroneous entries and the manner
by which petitioners were rudely informed that they were bumped off are clear indicia of such
malice and bad faith and establish that private respondent committed a breach of contract
which entitles petitioners to moral damages.
The appellate court observed that the petitioners failed to take the witness stand and testify on
the matter. It overlooked however, that the failure of the petitioner to appear in court to testify
was explained by them. The assassination of Senator Benigno Aquino, Jr. on August 21, 1983
following the year they were bumped off caused turmoil in the country. This turmoil spilled
over to the year 1984 when they were scheduled to testify. However, the violent
demonstrations in the country were sensationalized in the U.S. media so petitioners were
advised to refrain from returning to the Philippines at the time.
Nevertheless, Atty. Raymund Armovit, brother of petitioner Dr. Armovit, took the witness stand
as he was with the petitioners from the time they checked in up to the time of their ultimate
departure. He was a witness when the check-in officer rudely informed the petitioners that
their flight had already taken off, while petitioner Dr. Armovit remonstrated that their tickets
reflected their flight time to be 10:30 A.M.; that in anger and frustration, Dr. Armovit told the
said check-in-officer that he had to be accommodated that morning so that he could attend to
all his appointments in the U.S.; that petitioner Jacqueline Armovit also complained about not

being able to report for work at the expiration of her leave of absence; that while petitioner
had to accept private respondent's offer for hotel accommodations at the Philippine Village
Hotel so that they could follow up and wait for their flight out of Manila the following day,
petitioners did not use their meal coupons supplied because of the limitations thereon so they
had to spend for lunch, dinner, and breakfast in the sum of P1,300.00 while waiting to be flown
out of Manila; that Dr. Armovit had to forego the professional fees for the medical
appointments he missed due to his inability to take the January 17 flight; that the petitioners
were finally able to fly out of Manila on January 18, 1982, but were assured of this flight only on
the very morning of that day, so that they experienced anxiety until they were assured seats for
that flight.
No doubt Atty. Raymund Armovit's testimony adequately and sufficiently established the
serious anxiety, wounded feelings and social humiliation that petitioners suffered upon having
been bumped off. However, considering the circumstances of this case whereby the private
respondent attended to the plight of the petitioners, taking care of their accommodations while
waiting and boarding them in the flight back to the U.S. the following day, the Court finds that
the petitioners are entitled to moral damages in the amount of P100,000.00 each.
By the same token to provide an example for the public good, an award of exemplary damages
is also proper. The award of the appellate court is adequate.
Nevertheless, the deletion of the nominal damages by the appellate court is well-taken since
there is an award of actual damages. Nominal damages cannot co-exist with actual or
compensatory damages.

35] CENTENNIAL TRANSMARINE, INC. vs. RUBEN G. DELA CRUZ, G.R. No. 180719, August 22,
2008
This petition for review on certiorari assails the August 31, 2007 Decision [1] of the Court of
Appeals in CA-G.R. SP No. 91054 reversing the Decision of the National Labor Relations
Commission and finding that respondent Ruben G. Dela Cruz was illegally dismissed from
service, as well as the November 16, 2007 Resolution [2] denying the motion for
reconsideration.
On May 15, 2000, respondent boarded MT Aquidneck and performed his functions as
Chief Officer. However, on September 14, 2000, respondent was relieved of his duties and
repatriated to the Philippines. Failing to get a satisfactory explanation from petitioners for his
relief, respondent filed a complaint for illegal dismissal with prayer for payment of his salaries
for the unexpired portion of contract, moral and exemplary damages and attorneys fees on
October 7, 2000.
Respondent alleged that while the vessel was docked in Lake Charles in the United States,
another Chief Officer boarded the vessel. He inquired from the master of the vessel, Captain
Kowalewski, why he had a reliever, however the latter disclaimed any knowledge. At the same

time, he showed respondent an electronic mail (e-mail) from petitioner B+H Equimar
Singapore, Pte. Ltd. stating that there was an incoming Chief Officer who was to take over the
operations upon boarding.
On April 23, 2001, [6] Labor Arbiter Francisco A. Robles rendered a Decision dismissing
respondents complaint. He found that respondent was validly dismissed because he committed
acts in violation of his duties as Chief Officer, amounting to breach of trust and confidence. He
noted that on September 6, 2000, Capt. Kowalewski wrote in the official log book of the vessel
that respondent failed to follow entry procedures in loading oil tanks while the vessel was
navigating to Aruba; that the Safety Officer of the vessel also submitted a report on the
violations committed by respondent regarding safety rules on entry procedures; that
respondent admitted his inadequacy or lack of knowledge in tanker operations; and that
respondent was properly apprised of his violations and was given ample opportunity to be
heard.

ISSUE: WON ENTRIES IN THE OFFICIAL LOGBOOK OF A VESSEL SHOULD NOT BE GIVEN WEIGHT
FOR BEING SELF-SERVING

1) WON LACK OF SKILL OR INCOMPETENCE IN HANDLING AN OIL TANKER VESSEL MAY BE


CONSIDERED AS AN ANALOGOUS CAUSE FOR A VALID TERMINATION OF EMPLOYMENT OF A
CHIEF OFFICER
The petition lacks merit.
Article 627 of the Code of Commerce defines the Chief Mate, also called Chief Officer or
Sailing Mate, as the second chief of the vessel, and unless the agent orders otherwise, shall take
the place of the captain in cases of absence, sickness, or death, and shall then assume all his
powers, duties, and responsibilities. A Chief Officer, therefore, is second in command, next only
to the captain of the vessel.
In the instant case, respondent has consistently assailed the genuineness of the purported
entry and the authenticity of such copy. He alleged that before his repatriation, there was no
entry in the ships official logbook regarding any incident that might have caused his relief; [20]
that Captain Kowalewskis signature in such purported entry was forged. [21] In support of his
allegations, respondent submitted three official documents [22] bearing the signature of Capt.
Sczepan Kowalewski which is different from the one appearing in Annex E. Thus, it was
incumbent upon petitioners to prove the authenticity of Annex E, which they failed to do.
Likewise, the purported report of Capt. Kowalewski dated September 1, 2000 (Annex D), [23]
and the statements of Safety Officer Khaldun Nacem Faridi and Chief Officer Josip Milin
(Annexes G [24] and H [25]) also cannot be given weight for lack of authentication.

Although technical rules of evidence do not strictly apply to labor proceedings, however, in the
instant case, authentication of the above-mentioned documents is necessary because their
genuineness is being assailed, and since petitioners offered no corroborating evidence. These
documents and their contents have to be duly identified and authenticated lest an injustice
would result from a blind adoption of such contents. [26] Thus, the unauthenticated documents
relied upon by petitioners are mere self-serving statements of their own officers and were
correctly disregarded by the Court of Appeals.
Except for the self-serving allegation that respondent was required to explain why he should
not be relieved for being incompetent, petitioners offered no proof to show that they furnished
respondent a written notice of the charges against him, or that there was a formal investigation
of the charges, or that respondent was furnished a written notice of the penalty imposed upon
him. Respondent was verbally ordered to disembark the vessel and was repatriated to the
Philippines without being told of the reasons for his relief.
36] Magsaysay v Agan, GR No. L-6393, January 31, 1955
In 1949, SS San Antonio, owned by AMInc, embarked on its voyage to Batanes via Aparri. It was
carrying various cargoes, one of which was owned by Agan. One fine weather day, it
accidentally ran aground the mouth of the Cagayan River due to the sudden shifting of the
sands below. SS San Antonio then needed the services of Luzon Stevedoring Co. to tow the ship
and make it afloat so that it can continue its journey. Later, AMInc required the cargo owners to
pay the expenses incurred in making the ship afloat (P841.40 each). The expenses, AMInc
claims, fall under the General Averages Rule under the Code of Commerce, which is to be
shared by ship owner and cargo owners as well.
ISSUE: Whether or not general averages exist in the case at bar.
HELD: No. General averages contemplate that the stranding of the vessel is intentionally done
in order to save the vessel itself from a certain and imminent danger. Here, the stranding was
accidental and it was made afloat for the purpose of saving the voyage and not the vessel. Note
that this happened on a fine weather day. Also, it cannot be said that the towing was made to
save the cargos, for the cargos were not in danger imminent danger.
37] R Transport vs Eduardo Pante, Gr 162104, September 15, 2009
FACTS:
R Transport operates a bus line which transports passengers from Cubao, Quezon City to
Gapan, Nueva Ecija.
27 January 1995: Pante rode a bus from Cubao (P48 fare). Along a highway in Bulacan,
the bus hit a tree and a house due to the reckless driving of Johnny Mediquia.
Pante sustained a laceration frontal area, with fracture of the right humerous1.
o His operation, confinement, and medications caused him P30K. He became
unemployed as Goldilocks refused to re-employ him due to his condition.

o He had to undergo a second operation after four years. He spent another P15k.
o The only assistance petitioner gave was the amount of P7K to reimburse him for
the stainless steel plate placed in his arm. Other than that, petitioner refused to
assist Pante.
14 March 1995: Pante sued for damages.
Petitioner in its answer denied fault claiming that it exercised the diligence of a good
father of the family in the selection and supervision of employees, and that the accident
was force majeure.
The case went on for 7 years. The delays were due to the multiple postponements and
unexplained absence of petitioners counsel. Its rights to cross-examine and present
evidence were eventually forfeited as a consequence.
RTC ruled in favour of Pante. CA affirmed RTCs decision.

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

Petitioner, as a common carrier, is expected to exercise extraordinary diligence, and has


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

An award of exemplary damages is also proper, as the driver was manning the bus in a
reckless, negligent, and imprudent manner. This will provide as an example or as a
correction for the public good.

38] Air France vs. John Anthony de Camilis, GR No. 1889651, October 13, 2009

39] Lhuilier vs British Airways, GR No. 171092, March 15, 2010


Facts: On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for damages against
respondent British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that
on February 28, 2005, she took respondents flight 548 from London, United Kingdom to Rome,
Italy. Once on board, she allegedly requested Julian Halliday (Halliday), one of the respondents
flight attendants, to assist her in placing her hand-carried luggage in the overhead bin. However,
Halliday allegedly refused to help and assist her, and even sarcastically remarked that "If I were
to help all 300 passengers in this flight, I would have a broken back!"
Petitioner further alleged that when the plane was about to land in Rome, Italy, another
flight attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in
the business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the
other passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety rules
and regulations of the plane. Affronted, petitioner assured Kerrigan that she knew the planes
safety regulations being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a mere
few centimeters away from that of the petitioner and menacingly told her that "We dont like
your attitude."
Upon arrival in Rome, petitioner complained to respondents ground manager and
demanded an apology. However, the latter declared that the flight stewards were "only doing
their job."
Thus, petitioner filed the complaint for damages, praying that respondent be ordered to
pay P5 million as moral damages, P2 million as nominal damages, P1 million as exemplary
damages, P300,000.00 as attorneys fees,P200,000.00 as litigation expenses, and cost of the suit.
Issue: Whether Philippine courts have jurisdiction over a tortious conduct committed against a
Filipino citizen and resident by airline personnel of a foreign carrier travelling beyond the
territorial limit of any foreign country; and thus is outside the ambit of the Warsaw Convention.
Held: The Warsaw Convention applies because the air travel, where the alleged tortious conduct
occurred, was between the United Kingdom and Italy, which are both signatories to the Warsaw
Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage or goods
performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft
performed by an air transport undertaking.
2. For the purposes of this Convention the expression "international carriage" means any
carriage in which, according to the contract made by the parties, the place of departure
and the place of destination, whether or not there be a break in the carriage or a

transhipment, are situated either within the territories of two High Contracting Parties,
or within the territory of a single High Contracting Party, if there is an agreed stopping
place within a territory subject to the sovereignty, suzerainty, mandate or authority of
another Power, even though that Power is not a party to this Convention. A carriage
without such an agreed stopping place between territories subject to the sovereignty,
suzerainty, mandate or authority of the same High Contracting Party is not deemed to be
international for the purposes of this Convention. (Emphasis supplied)
Thus, when the place of departure and the place of destination in a contract of carriage are
situated within the territories of two High Contracting Parties, said carriage is deemed an
"international carriage". The High Contracting Parties referred to herein were the signatories to
the Warsaw Convention and those which subsequently adhered to it.
In the case at bench, petitioners place of departure was London, United Kingdom while
her place of destination was Rome, Italy. Both the United Kingdom and Italy signed and ratified
the Warsaw Convention. As such, the transport of the petitioner is deemed to be an
"international carriage" within the contemplation of the Warsaw Convention.

40] American Airlines vs CA, GR No. 116044-45, March 9, 2000


Facts:
Private respondent purchased from Singapore Airlines in Manila conjunction tickets from
Manila-Singapore-Athens-Larnaca-Rome-Turin-Zurich-Geneva-Copenhagen-New York. In
Geneva, he decided to forego his trip to Copenhagen and go straight to New York. In the
absence of a direct flight under his conjunction tickets from Geneva to New York, he exchanged
the unused portion of the conjunction ticket for a one way ticket from Geneva to New York
from American Airlines, which issued its own ticket to respondent in Geneva and claimed the
value of the unused portion of the conjunction ticket from the International Air Transport
Association (IATA) clearing house in Geneva. In September, 1989, respondent filed an action for
damages before the Regional Trial Court of Cebu for the alleged embarrassment and mental
anguish he suffered at the Geneva Airport when American Airlines security officers prevented
him from boarding the plane.
Issue:
Whether or not the issuance of American Airlines of a new ticket in exchange of the conjunction
ticket the respondent purchased in Manila bar him from seeking recourse in Philippine courts.
Ruling:
The petitioner contends that under Article 28 of the Warsaw Convention, action for damages
may only be brought upon the following courst:
a.) Domicile of the carrier
b.) Carriers principal place of business
c.) Place where carrier has a place of business
d.) Place of destination
Since neither of these elements is present in the case, the petitioner contends that plaintiff
cannot file the case in the Philippines. He further posits that the second contract cannot be
deemed as an extension of the first as the petitioner airline is not a participating airline in any
of the destinations under the first contract.

Respondent on the other hand contends that the second contract she entered into at Geneva is
part and parcel of the first contract, thus the third option under Article 28 of the Warsaw
Convention would apply to him. He further pointed out that petitioner cannot deny the
contract of agency with Singapore Airlines after it honored the conjunction tickets issued by the
latter.
The court ruled that petitioners argument is void of merit with reference to Article 1(3) of the
Warsaw Convention. According to the said article, transportation to be performed by several
carriers shall be deemed as one and undivided. The number of tickets issued does not detract
from the oneness of the contract of carriage. Hence, the third option of the plaintiff under
Article 28 of the Warsaw Convention is clothed with jurisdiction.
41] Fernandez vs. Thompson, GR No. 12475, March 21, 1918
42] PEDRO VASQUEZ vs. CA, G.R. No. L-42926 September 13, 1985
FACTS: The litigation involves a claim for damages for the loss at sea of petitioners respective
children after the shipwreck of MV Pioneer Cebu due to typhoon Klaring in May of 1966. When
the inter-island vessel MV Pioneer Cebu left the Port of Manila in the early morning of May 15,
1966 bound for Cebu, it had on board the spouses Alfonso Vasquez and Filipinas Bagaipo and a
four-year old boy, Mario Vasquez, among her passengers. The MV Pioneer Cebu encountered
typhoon Klaring and struck a reef on the southern part of Malapascua Island, located somewhere
north of island of Cebu and subsequently sunk. The aforementioned passengers were unheard
from since then.
Due to the loss of their children, petitioners sued for damages before the Court Instance
of Manila. Respondent defended on the plea of force majeure, and extinction of its liability by
the actual loss of the vessel. After proper proceedings, the trial court awarded damages. On
appeal, respondent Court reversed judgment and absolved private respondent from any liability.
Hence, this Petition for Review on Certiorari.
Issue: Whether the shipowners liability is extinguished despite of the loss of the ship?
Held: With respect for the private respondents submission that the total loss of the vessel
extinguished its liability pursuant to Article 587 of the Code of Commerce as construed in Yangco
vs. Laserna, 73 Phil. 330 (1941), suffice it to state that even in the cited case, it was held that the
liability of the shipowner is limited to the value of the vessel or to the insurance thereon, Despite
the total loss of the vessel therefore, its insurance answers for the damages that the shipowners
agent may be held liable for by reason of the death of its passengers. Judgment of the CFI
reinstated.
45] NEGROS NAVIGATION CO vs. CA G.R. No. 110398. November 7, 1997
Facts:
In April of 1980, private respondent Ramon Miranda purchased from the Negros Navigation Co.,
Inc. four special cabin tickets for his wife, daughter, son and niece who were going to Bacolod
City to attend a family reunion. The tickets were for Voyage No. 457-A of the M/V Don Juan,
leaving Manila at 1:00 p.m. on April 22, 1980. The ship sailed from the port of Manila on schedule.

At about 10:30 in the evening of April 22, 1980, the Don Juan collided off the Tablas Strait in
Mindoro, with the M/T Tacloban City, an oil tanker owned by the Philippine National Oil Company
(PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). As a result, the M/V Don
Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some of the
victims were found and brought to shore, but the four members of private respondents families
were never found.
Private respondents filed a complaint on July 16, 1980 in the Regional Trial Court of Manila,
Branch 34, against the Negros Navigation, the Philippine National Oil Company (PNOC), and the
PNOC Shipping and Transport Corporation (PNOC/STC), seeking damages for the death of Ardita
de la Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and Elfreda de la
Victoria, 26. In its answer, petitioner admitted that private respondents purchased ticket
numbers 74411, 74412, 74413 and 74414; that the ticket numbers were listed in the passenger
manifest; and that the Don Juan left Pier 2, North Harbor, Manila on April 22, 1980 and sank that
night after being rammed by the oil tanker M/T Tacloban City, and that, as a result of the collision,
some of the passengers of the M/V Don Juan died. Petitioner, however, denied that the four
relatives of private respondents actually boarded the vessel as shown by the fact that their bodies
were never recovered. Petitioner further averred that the Don Juan was seaworthy and manned
by a full and competent crew, and that the collision was entirely due to the fault of the crew of
the M/T Tacloban City.
On January 20, 1986, the PNOC and petitioner Negros Navigation Co., Inc. entered into a
compromise agreement whereby petitioner assumed full responsibility for the payment and
satisfaction of all claims arising out of or in connection with the collision and releasing the PNOC
and the PNOC/STC from any liability to it. The agreement was subsequently held by the trial court
to be binding upon petitioner, PNOC and PNOC/STC. Private respondents did not join in the
agreement.
ISSUES:
1) Whether the members of private respondents families were actually passengers of the Don
Juan;
2) Whether the ruling in Mecenas v. Court of Appeals, finding the crew members of petitioner to
be grossly negligent in the performance of their duties, is binding in this case;
3) Whether the total loss of the M/V Don Juan extinguished petitioners liability; and
4)Whether the damages awarded by the appellate court are excessive, unreasonable and
unwarranted.
HELD:
First. The trial court held that the fact that the victims were passengers of the M/V Don Juan was
sufficiently proven by private respondent Ramon Miranda, who testified that he purchased
tickets numbered 74411, 74412, 74413, and 74414 at P131.30 each from the Makati office of
petitioner for Voyage No. 47-A of the M/V Don Juan, which was leaving Manila on April 22, 1980.
This was corroborated by the passenger manifest (Exh. E) On which the numbers of the tickets
and the names of Ardita Miranda and her children and Elfreda de la Victoria appear.
Second. In finding petitioner guilty of negligence and in failing to exercise the extraordinary
diligence required of it in the carriage of passengers, both the trial court and the appellate court

relied on the findings of this Court in Mecenas v. Intermediate Appellate Court, which case was
brought for the death of other passengers. In that case it was found that although the proximate
cause of the mishap was the negligence of the crew of the M/T Tacloban City, the crew of the
Don Juan was equally negligent as it found that the latters master, Capt. Rogelio Santisteban,
was playing mahjong at the time of collision, and the officer on watch, Senior Third Mate Rogelio
De Vera, admitted that he failed to call the attention of Santisteban to the imminent danger
facing them. This Court found that Capt. Santisteban and the crew of the M/V Don Juan failed to
take steps to prevent the collision or at least delay the sinking of the ship and supervise the
abandoning of the ship.
Third. The next issue is whether petitioner is liable to pay damages notwithstanding the total loss
of its ship. The issue is not one of first impression. The rule is well-entrenched in our
jurisprudence that a ship-owner may be held liable for injuries to passengers notwithstanding
the exclusively real and hypothetic nature of maritime law if fault can be attributed to the shipowner.
Fourth. Petitioner contends that, assuming that the Mecenas case applies, private respondents
should be allowed to claim only P43,857.14 each as moral damages because in the Mecenas case,
the amount of P307,500.00 was awarded to the seven children of the Mecenas couple. Under
petitioners formula, Ramon Miranda should receive P43, 857.14, while the De la Victoria spouses
should receive P97, 714.28